January 8, 2015
The Reclamation Fund
The Reclamation Act of 1902 authorized the Secretary of
Expanded Revenue Sources
the Interior to construct irrigation works in western states
and established the Reclamation Fund to pay for these
Receipts accruing to the Reclamation Fund are shown
projects. The Reclamation Fund was established as a
below in Table 1. Originally the Reclamation Fund was
special fund within the U.S. Treasury. (Special funds are
expected to be funded by three main revenue sources:
fund accounts for receipts and spending with specific taxes
public land and timber sales in the western United States,
or revenues earmarked for a specific purpose. See CRS
Reclamation Project repayment, and Reclamation Project
Report R41328, Federal Trust Funds and the Budget, by
water contracts and sales. As a result of the aforementioned
Mindy R. Levit, for more information.) The Reclamation
shortfalls in the fund, over time Congress directed
Fund was designated to receive receipts from the sale of
additional receipts toward the Reclamation Fund in the
federal land in the western United States, as well as other
form of 40% of onshore royalties from mineral and natural
sources.
resource leasing on public lands (authorized in 1920) and
the full amount of Reclamation Project power revenues
All moneys received from the sale and disposal of public
(authorized in 1938). The latter change, known as the
lands in … [the western United States] … shall be, and the
Hayden-O’Mahoney amendment, was enacted to secure
same are hereby, reserved set aside, and appropriated as a
power revenues from projects under construction at the time
special fund in the Treasury to be known as the “reclamation
such as Grand Coulee Dam and Shasta Dam. Later projects
fund, ” to be used in the examination and survey for and the
construction and maintenance of irrigation works for the
such as the Pick-Sloan Missouri Basin Program and the
storage, diversion, and development of waters for the
Central Valley Project also provided significant
reclamation of arid and semiarid lands in the said States and
hydropower revenues. Several other Reclamation projects,
Territories, and for the payment of all other expenditures
(e.g., the Boulder Canyon Project, the Colorado River
provided for in this Act.
Storage Project, and the Colorado River Basin Project) are
deposited into separate special funds in accordance with
The fund was conceived as a revolving fund, with receipts
congressional direction.
from existing project repayments expected to be sufficient
to fund new projects. The 1902 Act made funding from the
Table 1. Major Sources of Reclamation Fund Revenue
Reclamation Fund available for the purposes outlined in the
Year
legislation without further appropriation by Congress.
Source Description Authorized
However, subsequently Congress required appropriations to
utilize the funds.
Public Land Sales
95% of proceeds from
1902
public land sales in
Early Issues with the Reclamation Fund
western states
During its early years, the Reclamation Fund was unable to
Reclamation
100% of receipts
1902
operate as a “revolving” fund. Due in part to difficulties
Project
maintaining the fund’s solvency, Congress provided
Repayments
advances and made changes to the fund over time.
Following its earliest construction projects, the fund
Reclamation
100% of proceeds
1902
received advances from Congress via the General Fund in
Project Water
1910 ($20 million) and 1931 ($5 million). In an effort to
Contracts/Sales
avoid future funding shortfalls, Congress in 1914 limited
Reclamation
100% of proceeds
1938
Reclamation’s ability to carry out the 1902 act to those
Project Power
items for which Congress made annual appropriations to
Revenues
Reclamation (thereby rescinding Reclamation’s ability to
build projects without further appropriation). Despite these
Natural
40% of bonuses, royalties,
1920
changes, the Reclamation Fund was not sufficient to fund
Resource/Mineral
and rentals from onshore
many of the large investments in water infrastructure
Royalties
public lands
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

Treasury’s General Fund.


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The Reclamation Fund
Recent Trends
Understanding “Surplus” Fund Balances
After the early financial issues between the Reclamation
Similar to other special funds that are subject to
Fund’s establishment in 1902 and the supplemental funding
appropriation, the Reclamation Fund is an accounting
from the General Fund in the 1930s, the fund maintained a
mechanism within the larger federal budget, and it is
relatively stable balance through the early 1990s. Beginning
important to note that the fund’s apparent “surplus” does
in the mid-1990s, the fund’s balance began to increase
not represent real resources available for spending. Instead,
significantly as revenues from power sales and natural
it reflects the status of the intended uses of the fund
resource royalties significantly exceeded appropriations
compared to actual appropriations. It shows that in recent
from the fund. For every year since FY1994, receipts going
years, receipts credited to the fund have significantly
into the Reclamation Fund have exceeded appropriations
outstripped its expenditures. Some point out that this runs
made from it by more than $100 million, and in some years
contrary to the congressional intent of the Reclamation Act
receipts have exceeded appropriations by more than $1
of 1902 and subsequent acts affecting the Reclamation
billion. The exception to this trend was FY2009, when the
Fund. However, Congress’s direction that the fund’s
American Recovery and Reinvestment Act (P.L. 111-5)
expenditures be subject to annual appropriations means that
appropriated funding for Reclamation from the Reclamation
the final say on the fund’s expenditures rests with
Fund. Trends in the fund credits and appropriations are
congressional appropriators. That is, Congress may at any
shown below in Figure 1.
time choose to increase or decrease appropriations from the
fund to match incoming receipts, and/or dedicate these
Figure 1. Reclamation Fund Receipts and
funds to other purposes.
Appropriations, FY1990-FY2012
Recent Proposals
Some have proposed increasing appropriations from the
Reclamation Fund, either by funding new projects or as a
supplement to ongoing authorized expenditures. Such a
change could take one or more forms, each of which may
have associated budget scoring impacts. For instance,
Congress could increase appropriations from the
Reclamation Fund in annual discretionary appropriations,
but such an increase would have to compete with other
appropriations (including General Fund appropriations)
subject to congressional 302 (b) allocations. Congress could
also dedicate a stream of revenue from the Reclamation
Fund for a subset of specific projects and make it available,
with or without further appropriations (i.e., discretionary
funding or mandatory funding). Congressional PAYGO
requirements might necessitate offsets in spending
corresponding to some of these changes.

Source: CRS, with Bureau of Reclamation data.
Congress in 2009 enacted changes to the Reclamation
Fund. Title X of the Omnibus Lands Act (P.L. 111-11)
Appropriations. The largest recipient of the fund’s
redirected $120 million per year of Reclamation Fund
appropriations is Reclamation’s Water and Related
receipts for FY2020-FY2034 toward Indian water rights
Resources Account, which funds operations and
settlement projects, without further appropriation. In the
maintenance and construction of qualifying Reclamation
113th Congress, the Authorized Rural Water Projects
projects (other projects are funded by the General Fund, or
Completion Act (S. 715) proposed to direct funds that
individual project funds). These appropriations have been
would otherwise be credited to the Reclamation Fund to a
declining in real terms in recent years.
set of newly established accounts for water projects,
including new accounts for rural water projects, Indian
Receipts. Natural resource royalties and hydropower
irrigation projects, and other purposes. This proposal would
revenues are the largest sources of receipts accruing to the
have directed the status quo approach, in which these funds
fund and are the primary reason for the fund’s recent
would have been subject to appropriations (i.e.,
imbalance between receipts and appropriations. From
appropriated as discretionary funds). However some have
FY1990 to FY2011, an average of 87% of the Reclamation
advocated for making this funding available for expenditure
Fund’s receipts came from these two sources. Data on the
without further appropriations (i.e., mandatory funds). To
source (by state) of the natural resource receipts going into
date, these proposals have not been enacted.
the Reclamation Fund indicated that from FY2006 to
FY2011, an average of 93% of these receipts came from
Charles V. Stern, cstern@crs.loc.gov, 7-7786
five western states: Wyoming, New Mexico, Colorado,

California, and Utah. Two states, Wyoming and New
IF10042
Mexico, accounted for about 64% of these receipts.
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