The Reclamation Act of 1902 established the Bureau of Reclamation and authorized the construction and operation of federal water supply projects for the irrigation of lands in the West. This legislation opened up much of the otherwise arid West to settlement by providing for federal investment in large scale irrigation projects, which otherwise lacked sufficient private capital to support them. Subsequent legislation extended the potential purposes of reclamation projects to include hydropower, industrial and municipal uses, with recreation, fish and wildlife protection, flood control, and navigation benefits also being authorized for particular reclamation projects.
As of 1990, the federal investment in completed project facilities since the inception of the Reclamation program totaled approximately $9.9 billion, with these projects providing irrigation water for approximately 9.3 million acres – approximately 19% of the nation’s total irrigated acreage. Although it was initially contemplated that revenues from the projects would eventually repay the United States’ entire investment, substantial federal subsidies – in the form of interest-free repayment and repayment based on an estimate of the irrigators’ “ability to pay” rather than actual costs – were subsequently approved in order to allow these projects to remain viable. As a result, the United States has retained a substantial financial interest in these projects, as well as ownership of project works, such as dams, reservoirs, and outlet facilities.