Massive $46 Billion Energy and Water Budget Passes: Strict New Rules Block DEI Funding and China Tech Buys

This bill is the annual appropriations package for Energy and Water Development for Fiscal Year 2026, essentially laying out the federal government’s spending plan for everything from dams and harbors to nuclear energy and scientific research. We’re talking about massive funding: over $46 billion poured into the Army Corps of Engineers (Title I), the Bureau of Reclamation (Title II), and the Department of Energy (Title III).

The core purpose is to keep the lights on and the water flowing by funding the operations, maintenance, and construction of critical infrastructure across the country. But this bill isn't just about dollar signs; it’s loaded with new rules that dictate how and where those billions can be spent, creating significant shifts in policy and operations across three major federal agencies.

The Infrastructure Lifeline: Keeping Water and Power Running

If you live near a major waterway, rely on flood control, or get power from a federal dam, this budget is what keeps those systems maintained. The Army Corps of Engineers gets a massive injection of cash, including $6.14 billion for Operations and Maintenance (O&M) and $2.55 billion for new construction and planning of water projects. For instance, if you’re a farmer or a shipping company, this money ensures that harbors are dredged and flood control systems are ready. A key procedural note is that once the Secretary of the Army submits the work plan for these projects to Congress, they are locked in and cannot be changed, ensuring that local communities get the projects that were promised.

Similarly, the Bureau of Reclamation (Title II) gets over $1.7 billion for managing water resources, especially important for the Western states dealing with drought. This includes $32 million for water supply improvements in areas like California’s CALFED program. They are also boosting funding limits for drought relief and water desalination projects, a direct response to the increasing strain on water resources that affects everything from agriculture to city taps.

Big Science, Big Money: DOE’s Billions

The Department of Energy (DOE) receives the largest portion of the budget, funding everything from basic science to nuclear weapons defense. Civilian science programs get a whopping $8.4 billion, and nuclear energy programs receive $1.79 billion. If you work in tech, R&D, or manufacturing, this money fuels the national labs and university research that drives innovation. For defense, the bill allocates over $20 billion for atomic energy defense weapons activities, ensuring the security infrastructure remains funded.

Crucially, the bill introduces a mandatory independent cost estimate for any DOE construction project costing over $100 million before it can move forward. This is a huge win for taxpayers, as it means fewer runaway budgets and better accountability for massive federal construction projects like new research facilities or nuclear cleanup sites.

The New Red Lines: Spending Restrictions That Hit Hard

Beyond the budget numbers, this bill is notable for several policy riders that impose strict limits on how federal agencies operate, reflecting current political battles. These restrictions will have a direct impact on who gets federal contracts and how agencies run their internal affairs:

• The DEI/CRT Ban (Sec. 505): This is a hard stop. The bill explicitly prohibits using any appropriated funds for Diversity, Equity, and Inclusion (DEI) training, offices, or personnel, and bans funding for any activity that seeks to advance Critical Race Theory (CRT). For federal employees or contractors, this means the budget for these specific programs is zeroed out, fundamentally changing internal agency culture and hiring priorities.

• China Tech and Contracts: The bill severely restricts federal engagement with entities tied to the Chinese Communist Party. For the DOE, this means a ban on buying certain office equipment (like computers and printers) from companies with Chinese ownership (Sec. 320). Even more consequentially, the DOE cannot award any grant, contract, or loan of $10 million or more to an “entity of concern” (Sec. 319). If you’re a company seeking a major federal contract, expect intense scrutiny regarding your ownership and supply chain.

• Banning COVID Mandates (Sec. 507): None of the funds in this bill can be used to implement, administer, or enforce any COVID-19 mask or vaccine mandate. This provision affects any state or local entity receiving federal funds under this Act, ensuring federal money cannot be used to enforce these public health policies.

• Stopping Clean Energy Rules: The bill blocks the DOE from using any funds to finalize or enforce the “Clean Energy for New Federal Buildings” rule (Sec. 322). This essentially prevents the DOE from setting stricter energy efficiency standards for new federal construction projects, a significant rollback of a recent regulatory effort.

The Bottom Line for You

This appropriations bill is a mixed bag. On one hand, it ensures that essential infrastructure—from the dams that provide your electricity to the water systems that irrigate your food—is maintained and funded for the next fiscal year. On the other hand, it uses the power of the purse to enforce specific political agendas, fundamentally changing how federal agencies approach internal policies (like DEI) and external relationships (like contracting with certain foreign-linked entities). If you work with the federal government or rely on its services, the procedural changes and spending restrictions are just as important as the billions of dollars being allocated.