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Congressional Research Service
Informing the legislative debate since 1914
Updated April 12, 2018
The Reclamation Fund
The Reclamation Act of 1902 authorized the Secretary of
the Interior to construct irrigation works in western states
through the Reclamation Service (later renamed the Bureau
of Reclamation [BOR]). It also established the Reclamation
Fund to pay for these projects. The Reclamation Fund was
established as a special fund within the U.S. Treasury.
(Special funds are fund accounts for receipts and spending
with specific taxes or revenues earmarked for a specific
purpose.) The fund was designated to receive receipts from
the sale of federal lands in the western United States, as
well as other sources. It was originally conceived as a
revolving fund (i.e., a business-like fund). That is, after its
initial capitalization by federal appropriations, receipts from
existing project repayments were expected to fund new
projects. Congress later made substantial changes to the
fund, including adding new receipt sources and making it
subject to annual appropriations.
Early Issues with Reclamation Fund
During its early years, the Reclamation Fund was unable to
operate as a revolving fund. Due in part to difficulties
maintaining the fund's solvency, Congress provided it with
additional funding and made changes to the fund over time.
Following its earliest construction projects, the fund
received additional amounts from Congress via the
Treasury's General Fund in 1910 ($20 million) and 1931
($5 million). In an effort to avoid future funding shortfalls,
Congress in 1914 limited Reclamation's ability to carry out
the 1902 act to those items for which Congress made annual
appropriations to BOR (thereby rescinding its ability to
build projects without further appropriation). Despite these
changes, the Reclamation Fund was not sufficient to fund
many of the large investments in water infrastructure
throughout the West that were initiated beginning in the
1930s. Thus, construction of some large projects (e.g.,
Hoover and Glen Canyon Dams) was funded by the
General Fund.
New Receipts/Revenue Sources
Originally, the Reclamation Fund was expected to be
funded by three main revenue sources: public land and
timber sales in the western United States, BOR project
repayment, and BOR project water contracts and sales (the
latter two categories are typically referred to collectively as
proprietary receipts). As a result of the aforementioned
shortfalls in the fund, over time Congress directed
additional receipts toward the Reclamation Fund, in the
form of 40% of onshore royalties from mineral and natural
resource leasing on public lands (authorized in 1920) and
the full amount of Reclamation project power revenues
(authorized in 1938). The latter change, known as the
Hayden-O'Mahoney amendment, was enacted to secure
power revenues from projects under construction at the
time, such as Grand Coulee Dam and Shasta Dam. Later
projects, such as the Pick-Sloan Missouri Basin Program
and the Central Valley Project, also provided significant
hydropower revenues. Hydropower revenues from some
other projects (e.g., the Boulder Canyon Project, the
Colorado River Storage Project, and the Colorado River
Basin Project) are deposited into their own special funds, in
accordance with congressional direction. Major sources of
receipts credited to the Reclamation Fund are shown below
in Table 1.
Table I. Major Reclamation Fund Revenue Sources
Year
Source Description Authorized
Public Land and 95% of proceeds from 1902
Timber Sales sales in western states
BOR Project 100% of receipts/proceeds 1902
Repayments and
Water
Contracts/Sales
BOR Project 100% of proceeds 1938
Power Revenues
Federal Public 40% of bonuses, royalties, 1920
Lands Natural and rentals from onshore
Resource Royalties public lands (excluding
Alaska)
Sources: 43 U.S.C. §391; 43 U.S.C. §392a; 30 U.S.C. § 191.
Recent Trends
After the Reclamation Fund's early issues with solvency, it
maintained a relatively stable balance through the early
1990s. At that point the fund's balance began to increase as
revenues from natural resource royalties significantly
exceeded appropriations from the fund. For every year
since FY1994, except FY2009 (when the American
Recovery and Reinvestment Act [P.L. 111-5] also
appropriated funding for Reclamation projects from the
fund), receipts going into the Reclamation Fund have
exceeded appropriations made from it by more than $100
million. From FY2010 to FY2017, the average difference
between credits and appropriations was $1.027 billion. As
of the end of FY2017, the fund's balance was $13.8 billion.
Trends in fund credits, appropriations, and balances are
shown below in Figure 1.
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