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The San Carlos Irrigation Project Divestiture Act of 2026 aims to transfer the electric transmission and distribution system of the San Carlos Irrigation Project (SCIP) from federal ownership to a group of local tribal and non-profit utility entities. SCIP, managed by the Bureau of Indian Affairs, currently operates infrastructure including Coolidge Dam and an electric system serving about 10,000 customers across parts of Arizona. However, the system faces challenges such as outdated infrastructure, unreliable power supply, and high costs due to reliance on short-term power contracts and federal regulations that limit long-term planning and funding options. The bill responds to petitions from the Arizona Legislature, tribal communities, and local utilities seeking to divest federal ownership to improve operational efficiency and service reliability. It authorizes the Secretary of the Interior to coordinate a transfer plan with all relevant stakeholders and allows the new owners to assume responsibility for administrative costs. The bill also supports reallocating federal hydroelectric power resources to the new owners and encourages tribal self-determination and economic development. Additionally, it permits the Secretary to enter contracts with tribes for operation and maintenance of Bureau of Indian Affairs electric utilities under terms beneficial to both parties, subject to congressional review. This divestiture is intended to modernize the electric system, reduce costs, and provide more reliable power to residents and businesses in the affected areas while respecting tribal rights and interests.