Middle Rio Grande Native Water Leasing and Habitat Restoration Pilot Program | BOR UC 17 N012

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The Middle Rio Grande Native Water Leasing and Habitat Restoration Pilot Program is a five-year cooperative agreement led by the Bureau of Reclamation in partnership with the National Fish and Wildlife Foundation, working closely with the Middle Rio Grande Conservancy District. The basic idea is to build and test a voluntary, compensated water leasing program that can acquire irrigation water from willing sellers and then use that water for environmental purposes in the Middle Rio Grande in New Mexico. The program is explicitly tied to implementation of the December 2016 Final Biological Opinion (the 2016 BiOp), which lays out flow and habitat actions needed to support listed species and overall river health. Early on, Reclamation expects the leased water to be used to prevent or reduce river drying during the irrigation season in problem areas, especially the Isleta and San Acacia reaches, while leaving room for the program to adapt over time to other flow and restoration priorities identified through adaptive management under the BiOp.

A central goal is to create a workable model that benefits multiple interests at once: helping keep water in the river when it is most needed, supporting riparian habitat and fish and wildlife, and offering agricultural producers and local communities a voluntary, compensated option rather than a mandate. Although it is framed as a pilot, the long-term purpose is bigger than a one-off effort. By demonstrating that native (local) leasing can function within the Middle Rio Grande water management reality, the project is meant to set the foundation for expanded leasing and other voluntary water transactions at a scale that meaningfully supports river restoration. The program is also positioned as a bridge between water transactions and on-the-ground habitat work, with the expectation that instream water leasing, riparian restoration, and even upper watershed habitat improvements can be combined into a more durable, landscape-scale approach.

Work under the agreement is organized into two phases. Phase I covers the first two years and is focused on program development and setup. During this period, the recipient launches the cooperative agreement, mobilizes staffing and management systems, and develops requests for proposals to competitively select one or more local partners who can help design and carry out the leasing pilot. A key early deliverable is a formal partnership structure with the Middle Rio Grande Conservancy District, established through a Memorandum of Understanding that defines roles, responsibilities, and operational expectations. Phase I also includes a Restoration Water Inventory and scenario development effort, which is essentially a planning and targeting exercise: it inventories water rights to identify potential participants and builds leasing scenarios tied to specific restoration goals, including estimating how many acre-feet might be needed under different scenarios to meet biological and habitat objectives.

Building on that inventory, Phase I requires development of a water acquisition strategy that translates the restoration scenarios into a realistic plan for obtaining leases. This includes thinking through which lease types and how many transactions are needed, what they will cost, which tactics are feasible in the Middle Rio Grande context, and how each strategy component contributes to meeting the overall water needs identified in the inventory. Another major Phase I task is the actual pilot program design, meaning the rules and operating framework that will govern an agricultural water leasing program. This framework is expected to cover practical and sometimes sensitive issues such as how participating water rights will be validated (with specific attention to pre-1907 water rights), how the program will be advertised and enrollment encouraged, what farmer participation agreements will look like, how non-use on leased acreage will be measured and managed, how acreage targets and enrollment priorities will be set, and how the Conservancy District can maintain flexibility to manage farm-to-farm transfers while also enabling farm-to-river transfers that deliver water to priority in-channel locations.

Phase I also includes regulatory and institutional compliance planning, with an assessment of what existing NEPA coverage or other compliance pathways may already apply and what additional compliance work will be needed as the program design becomes clearer. Reclamation leads the federal compliance activities, which matters because water leasing tied to federal action and federal funding can trigger specific review and approval requirements. Finally, Phase I establishes a program refinement plan that functions as the adaptive management backbone of the pilot. That plan is meant to track leases and deliveries, coordinate with the agencies implementing the 2016 BiOp, monitor changes in water needs for listed species and restoration projects, and continually update implementation strategies based on monitoring and evaluation of what is working.

Phase II covers years three through five and is where the leasing pilot is actually implemented, using annual scoping, planning, and budgeting to set the specific activities, milestones, and expenditures for each year. Implementation is described as falling into three main buckets: executing water leases and other environmental water transactions (the core of the pilot), making irrigation infrastructure improvements needed to measure and deliver the leased water effectively, and carrying out habitat restoration projects that complement the environmental water outcomes. Alongside basic implementation, Phase II includes an explicit program expansion element. Once the pilot framework is functioning, the partners are expected to explore scaling up participation and adding transaction types where feasible, potentially varying the size and type of transfers, experimenting with different transaction structures, and considering market mechanisms that could make participation broader and more financially sustainable.

Program refinement continues throughout Phase II, meaning the pilot is not treated as a fixed design but as something that is adjusted in response to field results, stakeholder feedback, monitoring data, and evolving biological and operational needs under the 2016 BiOp. In the final six months, the recipient produces a concise pilot program report summarizing what was done, what was accomplished, what challenges were encountered, and what lessons learned should inform any longer-term or expanded leasing program in the Middle Rio Grande.

Reclamation plays an unusually hands-on role because this is a cooperative agreement rather than a simple grant. The agency provides active federal oversight through review and approval of performance and financial reports, payment requests, and scope deliverables, and may also conduct site visits and regular coordination calls. Beyond routine oversight, Reclamation is expected to be substantively involved in policy alignment, consultation, and approvals for any agreements that require federal sign-off, including the foundational agreement with the Middle Rio Grande Conservancy District and any arrangements with state agencies related to permits or operational modifications. Reclamation also reviews and comments on program documents and is involved in oversight of water lease agreements with willing sellers, due diligence on the water rights being considered, negotiations with third parties, and ensuring the pilot stays integrated with broader 2016 BiOp commitments.

A notable feature is Reclamation's role in helping integrate multiple potential water sources into a coherent, practical market strategy. The program is not intended to operate in isolation from other water tools already in play. Reclamation anticipates leveraging existing leases it holds, San Juan-Chama Project water, water that may be available through Reclamation's Supplemental Water program, and water acquired by private or nonprofit conservation buyers for environmental purposes. The agency also plans to help identify commercial and municipal water rights holders who might be interested in longer-term leasing arrangements. Reclamation further provides guidance on how Middle Rio Grande water delivery and management functions in practice and directly oversees operational modification agreements that may be necessary to move and account for leased water as intended, while ensuring federal compliance requirements, including NEPA, are met for leasing, infrastructure, restoration, and monitoring expenditures.

From an administrative standpoint, this opportunity (Funding Opportunity Number BOR UC 17 N012, CFDA 15.517) was offered by the Department of the Interior, Bureau of Reclamation as a discretionary cooperative agreement. Eligibility was limited to nonprofit organizations with 501(c)(3) status (excluding institutions of higher education). The opportunity anticipated a single award with a ceiling of $9,045,859, reflecting the scale and complexity of building a functioning leasing program, supporting associated infrastructure and restoration work, and maintaining the monitoring, coordination, and compliance needed to make environmental water transactions credible and durable in the Middle Rio Grande setting.

• The Department of the Interior, Bureau of Reclamation in the natural resources sector is offering a public funding opportunity titled "Middle Rio Grande Native Water Leasing and Habitat Restoration Pilot Program" and is now available to receive applicants.
• Interested and eligible applicants and submit their applications by referencing the CFDA number(s): 15.517.
• This funding opportunity was created on Sep 12, 2017.
• Applicants must submit their applications by Sep 26, 2017. (Agency may still review applications by suitable applicants for the remaining/unused allocated funding in 2026.)
• Each selected applicant is eligible to receive up to $9,045,859.00 in funding.
• The number of recipients for this funding is limited to 1 candidate(s).
• Eligible applicants include: Nonprofits having a 501(c)(3) status with the IRS, other than institutions of higher education.

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