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1 [1] (January 11, 2018)

handle is hein.crs/govcgzr0001 and id is 1 raw text is: 01;0i E~$~ & January 11, 2018 Bureau of Reclamation Project Authorization and Financing The Bureau of Reclamation (Reclamation), an agency within the Department of the Interior (DOI), is responsible for the construction and maintenance of the majority of the large dams and water diversion structures in the 17 conterminous U.S. states west of the Mississippi River. Along with the U.S. Army Corps of Engineers (Corps), it is one of the two principal federal agencies that own and operate water resources facilities. Reclamation was created by Congress in the Reclamation Act of 1902, which authorized the Secretary of the Interior to construct irrigation works in western states. Today, Reclamation manages hundreds of dams and diversion projects in the West. Reclamation facilities also provide flood control, recreation, and fish and wildlife benefits. Reclamation is an agency in transition. It has constructed few new projects in recent years and has been increasingly involved in other mission areas. Whether to facilitate new Reclamation project development and, if so, how has been of interest to many in recent congresses. These issues take on added significance due to Reclamation's nexus with state and local water project development in the West. This report summarizes the process for developing and funding new Reclamation projects, including recent proposals to alter the agency's process and role. rojectflinancing The Reclamation Fund, a special fund in the U.S. Treasury, is the primary means of funding Reclamation projects. It was established in the Reclamation Act of 1902 and receives receipts from several sources (see Table 1). It is available for appropriation by Congress, typically in annual Energy and Water appropriations acts. The fund was originally conceived as a revolving fund, with receipts from existing project repayments expected to fund new projects, without appropriation. Since 1914, Congress has required that the fund's balances be accessed only with specific appropriations. Over time, Congress has directed additional receipts toward the Reclamation Fund, including 40% of onshore royalties from mineral and natural resource leasing on federal public lands (authorized in 1920) and Reclamation project power revenues (authorized in 1938). The Reclamation Fund's balance has increased in recent years, largely due to a spike in mineral and natural resource royalties in several western states. For almost every year since FY1994, receipts going into the fund have exceeded appropriations made from it, and in most years, receipts have more than doubled appropriations. Some have cited this incongruity as an argument for increased funding for new Reclamation projects. For more information, see CRS In Focus IF10042, The Reclamation Fund. Table I. Major Sources of Reclamation Fund Revenue Year Source Description Auth. Public Land Sales 95% of proceeds from public 1902 land sales in western states Reclamation 100% of receipts 1902 Project Repayment Reclamation 100% of proceeds 1902 Project Water Contracts/Sales Reclamation 100% of proceeds 1938 Project Power Revenues Natural 40% of bonuses, royalties, and 1920 Resource/Mineral rentals from onshore public Royalties lands Source: Congressional Research Service. Not all Reclamation projects draw financing from the Reclamation Fund. Several projects (e.g., the Colorado River Storage Project) have their revenues deposited into separate funds in the Treasury that are set aside to finance their operations in accordance with enacted legislation. Additionally, some Reclamation programs and projects have been funded from the General Fund of the Treasury. Reclamation's role in project development has largely been limited to congressionally authorized, geographically specific water storage projects. These projects typically are authorized for study by Congress and then authorized for construction after studies are complete. For most projects, the federal government initially funds 100% of the costs of study and construction and is repaid by beneficiaries (e.g., irrigation contractors, municipal governments) over a 40-50 year term for their estimated share of the project's costs. Some irrigation beneficiaries are not charged interest on their repayment, and some have their repayment obligations reduced based on their ability to pay. Some project costs are assigned as nonreimbursable because they are considered federal in nature (e.g., fish and wildlife enhancements). As result, the amount repaid to the federal government may be significantly less than the initial cost of construction, and the federal subsidy for these projects varies widely. Few new Reclamation projects have been built in recent years, and some stakeholders have called for alterations to the agency's role in facilitating water project development. They argue that Reclamation should build more water storage projects to address water shortages in the West. K~:> p\w -- , gnom goo mppm qq\ a , q 's I 11LINUALiN,

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