The Federal Water Projects Consultation Improvement Act of 2026 aims to significantly enhance consultation and cooperation between federal agencies and local entities regarding the operation of federal water projects in Reclamation States. Specifically, it mandates that during Endangered Species Act (ESA) Section 7 consultations, federal agencies must provide "covered entities"—public or quasi-municipal agencies and water user associations with Bureau of Reclamation contracts—with routine and continuous opportunities for engagement. These opportunities include discussing and submitting information for biological assessments , engaging in their preparation, and being informed of preparation schedules. Crucially, if an agency action might lead to less than full water delivery under a contract, federal agencies must provide detailed justifications, including the legal authority, scientific basis, and reasons why less impactful alternatives are insufficient. Covered entities will also receive draft biological opinions for review and comment. Furthermore, the bill ensures that local contractors have the chance to confer on reasonable and prudent alternatives before they are identified. If the Secretary proposes such alternatives or reasonable and prudent measures to avoid species "take," detailed information must be provided on their scientific basis, contribution to species protection, and why alternatives with fewer adverse water supply or economic impacts are inadequate. The legislation defines "engage" as direct written and in-person communications fostering candor and cooperation, thereby promoting greater transparency and local input in critical water management decisions.