Updated April 12, 2018May 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-likebusinesslike 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 (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
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 1. Major Reclamation Fund Revenue Sources
Year
Authorized
Source
Description
Public Land and
Timber Sales
95% of proceeds from
sales in western states
1902
BOR Project
Repayments and
Water
Contracts/Sales
100% of receipts/proceeds
1902
BOR Project
Power Revenues
100% of proceeds
1938
Federal Public
Lands Natural
Resource Royalties
40% of bonuses, royalties,
and rentals from onshore
public lands (excluding
Alaska)
1920
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 FY2017FY2018, the average difference
between credits and appropriations was $1.027 billion. As
of 980 million. As of
the end of FY2017FY2018, the fund’s balance was $13.816.6 billion.
Trends in fund credits, appropriations, and balances are
shown below in Figure 1.
https://crsreports.congress.gov
The Reclamation Fund
Figure 1. Reclamation Fund Receipts and
Appropriations, FY1990-FY2017
appropriations by Congress. The surplus balance tracked for
the fund shows that in recent years, receipts credited to the
fund have significantly exceeded appropriations made from
it. Some point out that this runs contrary to the
congressional intent of the Reclamation Act of 1902.
However, Congress’s direction since 1914 that fund
expenditures be subject to annual appropriations means that
the final say on the use of the fund rests with congressional
appropriators. That is, Congress may at any time choose to
increase or decrease appropriations from the fund to better
correlate with incoming receipts and/or other congressional
priorities.
Recent Proposals
Source: CRS, based on Bureau of Reclamation dataFY2018
Source: CRS, based on Bureau of Reclamation data.
Note: Balances reflect FY2017-FY2018 balance reconciliation
adjustment of $2.1 billion.
Appropriations. Most expenditures of Reclamation Fund
balances are made through appropriations to the Bureau offor
Reclamation’s Water and Related Resources account,
which funds operations and maintenance and construction
costs for designated BOR water projects. (As noted above,
othersome Reclamation projects are funded by the General Fund
or by
individual project funds.) Appropriations also are are also
made for
the expenses under Reclamation’s Policy and
Administrative account (approximately $60 million/year),
and Western Area Power Administration’s construction and
maintenance activities (approximately $180 million/year).
SinceFrom FY2003 to FY2018, average appropriations from the
fund have
been $1.006024 billion.
Receipts. Average receipts since FY2000 have beenfrom FY2003 to FY2018 were
approximately $1.782785 billion per year. Receipts from natural
natural resource royalties and hydropower sales are by far the
the largest sources of credits to the fund and the primary reason
reason for the fund’s recent balance increase. From FY2003 to
FY2017, 91increasing balance. Over the
aforementioned period, 90% of the Reclamation Fund’s
receipts came
from these two sources, including 7574% from natural
natural resource royalties. Based on the source (by state) of natural
natural resource royalties credited to the Reclamation Fund from
FY2003 to FY2017, ,
CRS estimates that an average of 98%
of natural resource
royalty receipts came from seven
western states: Wyoming
(50%), New Mexico (27%),
Colorado (7%), Utah (7%),
California (3%), Montana (2%),
and North Dakota (2%).
(Pursuant to statute, natural
resource royalties from Alaska
are handled separately and
do not accrue to the Reclamation
Fund.)
Understanding “Surplus” Fund Balances
Similar to other special funds that are subject to
appropriation, the Reclamation Fund is an accounting
mechanism within the larger federal budget and the fund’s
apparent “surplus” does not . Thus, the
fund’s multi-billion-dollar “surplus” balance does not
represent real resources
available for spending. Instead, it reflects the status of the
intended uses of the fund compared with actual
Some have proposed increasing appropriations from the
Reclamation Fund, either by funding new projects or as a
supplement to ongoing authorized BOR
reflects a record of the fund’s authorized uses compared
with actual appropriations by Congress. The current surplus
reflects the fact that over time, receipts have significantly
exceeded appropriations. Some point out that this runs
contrary to congressional intent. However, Congress’s
direction since 1914 that fund expenditures be subject to
annual appropriations means that congressional
appropriators have the final say on whether appropriations
are set at a level that corresponds with receipts. That is,
Congress may at any time choose to increase or decrease
appropriations from the fund to better correlate with
incoming receipts and/or other congressional priorities but
has generally chosen not to do so.
Some have proposed increasing appropriations from the
Reclamation Fund either by funding new projects or as a
supplement to ongoing authorized Reclamation project
expenditures. Such a change could take one or more forms,
each of which may have associated budget scoring impacts.
For instance, Congress could significantly increase
the
overall level of discretionary appropriations from the
Reclamation Fund to
match collections, but such an increase still
increase would have to
compete with other appropriations occur despite competition with other
appropriations accounts (including those from
the Treasury’s General Fund) as they would be subject to
congressional 302(b) allocations. Congress also could
dedicate a stream of revenue from the Reclamation Fund
for a subset of specific projects or to a new account. This
could be done with or without further appropriations (i.e.,
discretionary funding or mandatory funding). Congressional
PAYGO requirements might necessitate offsets in
mandatory spending corresponding to these changes.
Congressional Interest
Some have proposed altering the balance between receipts
and appropriations by funding new or ongoing water
projects (such as those related to drought) with dedicated
funding from the Reclamation Fund. In the 115th Congress,
S. 1556, the Authorized Rural Water Project Completion
Act, proposes to direct $115 million annually from FY2018
to FY2038 ($2.3 billion total) that otherwise would have
been credited to the Reclamation Fund to a set of newly
established accounts to fund qualifying BOR rural water
projects ($80 million per year) and water rights settlements
($35 million per year). These funds would be available for
expenditure by the Secretary of the Interior without further
appropriation (i.e., mandatory funds).
Congress has previously enacted changes to how the
Reclamation Fund may be used in future years. Title X of
the Omnibus Public Lands Management Act of 2009 (P.L.
111-11) redirected $120 million per year of Reclamation
Fund receipts for FY2020-FY2034 toward qualifying
Indian water rights settlement projects, without further
appropriations. (For more information, see CRS Report
R44148, Indian Water Rights the
Treasury’s General Fund) that factor into the congressional
budget allocation process. Congress could also dedicate
revenue accruing to the Reclamation Fund to a subset of
specific projects or to a new account or accounts focusing
on specific goals. This could be done via discretionary
funding or mandatory funding. In the latter case,
congressional PAYGO requirements may necessitate
offsets corresponding to these changes. Thus, some have
pushed for changes outside of the 10-year scoring window.
Congressional Interest
Some in Congress have pointed to the discrepancy between
Reclamation Fund receipts and appropriations and
advocated for newly dedicated funding from the
Reclamation Fund. In the 116th Congress, H.R. 2473, the
Securing Access for the Central Valley and Enhancing
Water Resources Act (SAVE Act), proposes to direct $300
million annually, without further appropriation, from
FY2030 to FY2060 that would have otherwise been
credited to the Reclamation Fund. This funding is to be
made available for (1) authorized surface and groundwater
storage projects, (2) authorized water reclamation and reuse
projects, and (3) WaterSmart program water
efficiency/conservation grants. Each category would
receive $100 million per year.
Previously enacted legislation has also altered the
distribution of funds related to the Reclamation Fund. Title
X of the Omnibus Public Lands Management Act of 2009
(P.L. 111-11) redirected $120 million per year of
Reclamation Fund receipts for FY2020-FY2034 toward
qualifying Indian water rights settlement projects without
further appropriations. The FY2020 budget request includes
mandatory funding for these projects. (For more
information, see CRS Report R44148, Indian Water Rights
Settlements.)
Charles V. Stern, Specialist in Natural Resources Policy
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IF10042
The Reclamation Fund
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