States have long held the exclusive right to allocate their surface and groundwater supplies absent some express federal authority, usually via a contract with a federal agency for stored water in a federally sponsored and funded project. Over time, however, an emphasis on federal involvement has led to scrutiny of projects where there are no federal dollars being expended—only federal permits needed to implement projects by the states. This federal involvement can sometimes have extremely costly impacts to states, effectively creating an invisible dam of laws and regulations under the guise of protecting the environment. This paper will explore a few of those actions that are currently being experienced in the arid southwest where new reservoirs are needed to support a growing population and a thirst for water that cannot be quenched by conservation alone.