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I' Congressional Research Service
Inftfo rming the lative debate since 1914
Updated May 21, 2019
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 or Reclamation]). 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.
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
and utilized for project operations and maintenance and
other project-related purposes 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 FY20 10 to FY2018, the average difference
between credits and appropriations was $980 million. As of
the end of FY2018, the fund's balance was $16.6 billion.
Trends in fund credits, appropriations, and balances are
shown below in Figure 1.
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