Public Policy Agenda Number 3.

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1 Public Policy Agenda Number 3. April 26, 2017 Federal Update Congress will return from a two-week work recess period the week of April 24. During the break, CAP was able to host Congressman Ruben Gallego s Legislative Director, Matt Lee, for a tour and briefing at CAP headquarters. FY 2017 Budget: Congress has less than one week to address the April 28 deadline to keep the federal government funded through the remainder of FY 2017 (through September 30). There is strong movement toward enacting a continuing resolution (CR) to fund the government for the remainder of FY 2017, perhaps at current levels. Meanwhile, the Trump Administration has indicated that it would like to see its priorities addressed in a FY 2017 spending bill, including funding for the border wall, more immigration enforcement agents, and defense. In this respect, there is also the possibility that Congress will enact a short-term CR to give them additional time to work through the spending issues. FY 2018 Budget: President Trump s topline budget was released on March 16. It proposes to cut the EPA s budget by 31 percent and the Department of the Interior by 12 percent. More details regarding his FY 2018 budget are expected to be released in May. Congress focus for the balance of April, however, is addressing the remainder of FY 2017 funding. Agency Posts: On April 24, the Senate confirmed President Trump s nominee for the Secretary of Agriculture, Sonny Perdue, by a vote of At the time of this report, no formal announcements have been made by the Trump Administration for Interior Deputy Secretary or Bureau of Reclamation Commissioner. These positions, once announced, will also require Senate confirmation. On April 20, Secretary of the Interior Ryan Zinke and Bureau of Reclamation Acting Commissioner David Murillo announced the appointment of Alan Mikkelsen as Reclamation's Deputy Commissioner. Mikkelsen was previously in the private sector representing clients on land acquisition, management, wildlife, timber and agricultural issues. Mikkelsen also served as the treasurer for the National Water Resources Association while representing Montana on NWRA's Board of Directors. The following Legislative Issues Update outlines the status of the Board-approved 2017 Legislative Agenda as well as other relevant federal issues. The Public Affairs group comes before the Public Policy Committee on a regular basis to seek guidance and direction on these and other proposed rules and legislation that may arise during the coming year.

2 Colorado River Sustainability Legislation Continue to engage in legislative and funding solutions to promote Colorado River sustainability, including efforts to address the structural deficit and prolonged drought conditions such as the Lower Colorado River Basin Drought Contingency Plan (DCP), in cooperation with the State of Arizona, Arizona stakeholders, Basin States, federal agencies, Tribes, and other Colorado River water users. Support legislation as needed to implement multistate agreements relating to the Colorado River, including the DCP. Continue to promote CAP s Protect Lake Mead campaign to raise awareness and support for cooperative efforts that are aimed at improving water elevations in the reservoir. No update to report at this time. Navajo Generating Station (NGS) Continue efforts to engage elected officials, stakeholders, and governmental agencies regarding federal activities that affect the Navajo Generating Station. On April 12, stakeholders met in Washington, DC for the second time to discuss plans on addressing the future of the Navajo Generating Station. These meetings are convened by the Department of the Interior (DOI). CAP s Power Taskforce Co-Chairs, General Manager and Deputy General Manager attended. There were about 85 people in attendance, including Navajo Nation President Russell Begaye, Gila River Indian Community Governor Stephen Lewis, Governor Ducey s Chief of Staff Kirk Adams, and Arizona Corporation Commissioners Andy Tobin and Boyd Dunn. Among the action items coming out the meeting were prioritization of a lease extension to get to 2019 and exploration of possible subsidies for coal. DOI also announced that it will start a new NEPA process for the NGS lease extension. The next meeting is scheduled for May 16 in Phoenix. Cybersecurity Threats and Legislation Monitor legislative efforts to address cybersecurity and potential threats to critical infrastructure and vital computer systems.

3 No update to report at this time. Central Arizona Project Water Supply Continue to collaborate with Federal, State, Tribal, and other stakeholders to mitigate potential impacts on the CAP water supply and support efforts to supplement and augment water supplies with desalination, weather modification, innovative conservation programs, and water reuse and recycling programs. No update to report at this time. Energy Legislation Monitor legislative efforts that may impact CAP operations, including CAP s ability to secure affordable energy and ensure reliable transmission delivery. A handful of bills have been introduced that are aimed at assisting coal communities. H.R. 1731, introduced by Rep. Harold Rogers (R-KY), would amend the Surface Mining Control Act to allocate $1 billion from the Abandoned Mine Land Reclamation Fund over the next five years for states and Native American tribes to promote economic revitalization, diversification and development in economically stressed mining communities. The fund contains about $2.4 billion. Senate Majority Leader Mitch McConnell (R- KY) introduced a version of the bill, S. 728, in the Senate. S. 175, the Miners Protection Act of 2017 sponsored by Sen. Joe Manchin (D-WV), proposes to draw from the abandoned mine fund to help provide health coverage to retired mine workers. Colorado River Basin Salinity Issues Continue to support the operation of the Yuma Desalting Plant or suitable alternatives to reduce system losses. Support the activities of the Colorado River Basin Salinity Control Forum, including efforts to secure adequate funding and improve water management. CAP continues to submit testimony in support of FY 2018 funding for Colorado River salinity control programs to the Appropriations subcommittees responsible for that subject matter.

4 Indian Water Rights Settlement Legislation Continue to collaborate with Arizona Tribes and other stakeholders on issues related to resolving water rights claims. Continue to support legislation necessary and appropriate to enact the Hualapai Tribe water rights settlement. No update to report at this time. Federal Rulemaking Continue to monitor federal rulemaking and implementation related to energy, emissions, water quality, and other issues that may affect CAP operations. Water Transfer Rule - In January, the Second Circuit Court of Appeals held 2-1 that the Water Transfers Rule was a reasonable interpretation of the Clean Water Act and thus the EPA validly exercised its authority in promulgating the rule. The Water Transfers Rule exempts water transfers (such as CAP operations) from the National Pollutant Discharge Elimination System water quality regulations under the Clean Water Act. On April 19, the U.S. Court of Appeals for the Second Circuit denied a petition to rehear the January 18 ruling. As with the January ruling, the April action is favorable for CAP. CAP, along with other western water providers, have argued the importance of water transfers to operations and the potentially prohibitive costs of compliance with the Clean Water Act. Waters of the United States Rulemaking (WOTUS)/Clean Water Rule On April 20, the EPA stated its plan to roll back the WOTUS rule by defining protected waters in a more limited scope that is consistent with Justice Scalia s opinion in Rapanos v. U.S. Justice Scalia stated that navigable waters refers to relatively permanent, standing or flowing bodies of waters and not ephemeral flows. In analyzing how to move forward, the EPA is considering three approaches to defining relatively permanent waters and three approaches to protecting wetlands with continuous surface connections to permanent waters. This recent agency action was prompted by the February 28 release of President Trump s executive order that directed leaders at the EPA and Army Corps of Engineers to conduct a review to propose rescinding or revising the Clean Water Rule. That rule has been under a stay of implementation by the 6th U.S. Circuit Court of Appeals since October On January 13, 2017, the U.S. Supreme

5 Court agreed to decide whether challenges to the case should fall within a federal appellate court or federal district courts (i.e. jurisdiction). As a final note on WOTUS, the Senate Environment and Public Works Committee will hold a hearing entitled A Review of the Technical, Scientific, and Legal Basis of the WOTUS Rule on April 26. Water Quality Monitor water quality issues impacting the Colorado River that may affect CAP operations. No update to report at this time. OTHER BILLS/LEGISLATIVE ISSUES OF INTEREST Bureau of Reclamation Transparency Act The Bureau of Reclamation Transparency Act (H.R. 660), introduced by Congressman Paul Gosar (R-AZ), is scheduled to be marked up in the House Natural Resources Committee on April 27. The bill requires Reclamation to submit an Asset Management Report to Congress every two years that details and prioritizes the aging infrastructure needs of Reclamation s facilities and "transferred works," which would include the CAP canal and associated infrastructure. CAP s reporting requirements to Reclamation would be limited to "major repair and rehabilitation needs," as defined by the bill. CAP sought this limiting and clarifying language in Sen. John Barrasso (R-WY) has introduced an identical bill in the Senate, S.216. Western Area Power Administration Transparency Act On April 25, Sen. Jeff Flake introduced S.930, the Western Area Power Administration (WAPA) Act. As a 7-year pilot project, the bill requires the WAPA Administrator publish on its website the following information, beginning with FY 2008: rates charged to customers for power and transmission service; amount of capacity or energy sold; detailed accounting of all expenditures, capital costs and staffing costs; number of FTEs; and, all annual and capital costs for WAPA headquarters in each region.

6 In addition, the bill requires annual updates to the publicly-posted information as well as the amount of unobligated balances, among several other requirements. Sen. John McCain and Sen. Angus King, Jr. (I-ME) have signed on as co-sponsors. Trump Administration s Infrastructure Package Additional details have not been released on a possible infrastructure package promoted by President Trump. Director of the Office of Management and Budget, Mick Mulvaney, however, recently announced that the package will call for $200 billion in federal funding to be offset by $800 billion in private funding in order to reach the $1 trillion target over 10 years. It is expected that portions of the package will be revealed in May along with expanded detail in the President s proposed FY 2018 budget. Staff continues to work internally to discuss short- and long-term projects that may fit into a federal stimulus package. If you have any questions or would like more information regarding any of the issues contained in this report, please contact CAP Public Affairs department,

7 Public Policy Agenda Number 3. Attachment 1. Federal Legislative Update Public Policy Committee May 4, 2017 Jeff Gray Legislative Affairs Manager Federal Update Congressional Activities Congress returned from a two-week district work period on April 24. Focus will be on passing a spending measure to fund the government through Sept. 30 On April 24, the Senate confirmed Agriculture Secretary Sonny Perdue by an vote. Budget FY17 spending authority expires April 28. Path forward being negotiated for balance of fiscal year, with President advocating for inclusion of key priorities. The President is expected to release a more detailed FY18 budget proposal in May, as compared to his topline budget from March 16. 1

8 Federal Rulemaking Continue to monitor federal rulemaking and implementation related to energy, emissions, water quality, and other issues that may affect CAP operations. Water Transfers Rule Federal appeals court denied petition on April 19 to rehear its previous ruling. Upholds EPA decision to exempt water transfers from Clean Water Act regulation. Favorable ruling for CAP. Waters of the United States Rule (WOTUS) EPA and Army Corps to review Clean Water Rule to limit its scope by defining protected waters under the Clean Water Act. Announcement is consistent with President Trump s February 28 Executive Order directing the agencies to rescind or revise the rule. Other Bills/Legislative Issues of Interest Infrastructure Package No specifics have been released on a proposed $1 Trillion infrastructure package. More details are expected to be released in May when more detail on the President s FY 2018 budget is released. OMB Director recently said $200 billion will be in federal funding and $800 billion in private funding to get to the $1 trillion target. CAP staff continues to discuss potential short and long-term CAP projects. 2

9 Interior Department Appointments Recent appointments at the U.S. Dept of Interior: Alan Mikkelsen, Deputy Commissioner of Reclamation Aurelia Skipwith, Deputy Assistant Secretary for Fish, Wildlife and Parks Katharine MacGregor, Deputy Assistant Secretary for Land and Minerals Management DOI Organizational Chart 3

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11 Public Policy Agenda Number 3. Attachment 2. TO: FR: CC: Ted Cooke and CAWCD Board Members Tracy Tucker, Clara Pratte, Terry Bracy, Jim Brown & Michael Bracy Bridget Schwartz-Manock, Director of Public Affairs Jeff Gray, Legislative Affairs Manager DA: April 21, 2017 RE: Federal Legislative Monthly Report for March Board Meeting Congressional Spring District Work Week Beginning on April 10, members adjourned for the district work period in their respective home states. Members are expected to return on April 24 with the first votes scheduled the evening of April 25. With the current continuing resolution expiring on April 28, lawmakers will be spending the week working on the passage of measures to continue government operations for the remainder of Fiscal Year Fiscal 2017 Spending Continuing Resolution Expires April 28 The House and Senate Appropriations Committee chairs continue to work on a plan to complete action on the 11 remaining spending bills for FY While the House voted on a Defense spending bill and sent it to the Senate for their consideration, movement on the defense spending measure is not expected to occur until an action plan for the remaining measures is outlined and can receive support in the Senate. Intelligence received from the Hill indicates strong movement towards a full-year continuing resolution to fund the government for the remainder of FY 2017, through September 30, The Trump Administration is asserting its prerogative to include priorities in the spending bill, including funding for the border wall, more immigration enforcement agents, and defense. Trump Administration Skinny/ Top-Line Budget Update The Trump Administration released its FY 2018 skinny or "top-line" budget proposal on March 16. More details are still expected be released in May. We are working with CAP staff to draft and submit testimony for the record to highlight priorities of CAP including funding for the salinity control program and Colorado River drought activities. 1

12 Infrastructure Package President Trump s Director of the Office of Management and Budget, Mick Mulvaney, recently announced that the President s infrastructure package will call for $200 billion in federal funding to be offset by $800 billion in private funding to reach the $1 trillion target over 10 years. The package is still in the works, but portions of it will be revealed in May, along with the larger budget release. Affordable Care Act The Administration and GOP fell short of the needed votes to repeal and replace the Affordable Care Act in February and lawmakers left town last week without a clear path on how to move forward. As they return to the Hill next week, no further deal has been struck on how to best proceed but, according to aides, the negotiations are continuing regarding health care and to make good on campaign promises. On April 20, President Trump made the following statement during a press conference that a new effort would be forthcoming whether it s next week or shortly thereafter, signaling the Administration s commitment to continue work on the negotiations. With members hearing from constituents over the last two weeks during recess, they are expected to return with a renewed sense of energy toward finding a legislative solution. Bills Introduced to Assist Struggling Coal Communities HR 1731, introduced by Rep. Harold Rogers (R-KY), would amend the Surface Mining Control Act (PL 95-87) to allocate $1 billion from the Abandoned Mine Land Reclamation Fund over the next five years for states and Native American tribes to promote economic revitalization, diversification and development in economically stressed mining communities. The fund contains about $2.4 billion that could be used to boost economic activities in coal towns. A separate bill, S. 175, also proposes to draw from the abandoned mine fund to shore up a nearly exhausted union fund that provides health coverage to retired mine workers. Senate Majority Leader Mitch McConnell of Kentucky introduced a version of the bill, S. 728 in the Senate on March 27. Hearings have not been scheduled for any measure. Water Transfers Rule On April 19, the U.S. Court of Appeals for the Second Circuit denied a petition to rehear its January 18 ruling that upheld the EPA s 2008 rule exempting water transfers from National Pollutant Discharge Elimination System (NPDES) permitting requirements. This means that farmers, drinking water utilities and power plants will not need Clean Water Act permits to transfer water for flood control, electricity generation and irrigation because a federal appeals court nixed an attempt to overturn the federal policy. 2

13 The appeals court s decision overturned a 2014 ruling by the U.S. District Court for the Southern District of New York that struck down the agency rule as being inconsistent with the Clean Water Act. Waters of the United States Rulemaking On April 20, the Administration, through the EPA, revealed the plan to roll back the Waters of the United States (WOTUS) rule through defining the term of protected waters in line with the late Justice Scalia s opinion in the 2006 Rapanos v. U.S. case. The Rapanos case was contentious and ended in a split decision. The EPA would consider the following approaches to defining relatively permanent waters: The most restrictive option would include only perennial streams, which flow all year except in extreme droughts. A second option would include perennial streams and streams with "seasonal" flow, which the slides note are waters present for at least three months a year. The third would include perennial streams and those measured with another metric that EPA and the corps have yet to identify, but that could include the frequency of flow or whether streams intersect with the water table. This move follows the February 28 executive order issued by President Trump, calling for the leaders at the EPA and Army Corps of Engineers to conduct a review to propose rescinding or revising the rule. On April 26, the Senate Environment and Public Works Committee will hold a hearing on A Review of the Technical, Scientific, and Legal Basis of the WOTUS Rule at 10:00 am. Witnesses are pending. Alan Mikkelsen, Deputy Commissioner of Reclamation Secretary Zinke named Alan Mikkelsen as the new deputy commissioner of Reclamation. Mikkelsen was campaign manager of Zinke s first successful bid for Congress in He has a lot of experience working on water, tribal and natural resources issues. As detailed in Reclamation s press release: Mikkelsen has extensive experience in mediation and facilitation as the owner of a consulting business which focuses on work with Native American tribes and water users in the west. Mikkelsen has represented various public and private natural resource clients where he consulted on land acquisition, management, wildlife, timber and agricultural issues, and has represented various irrigation districts before the U.S. Congress. Mikkelsen served as the treasurer for the National Water Resources Association while representing Montana on NWRA's Board of Directors. 3

14 In 2001 and 2002, Mikkelsen served as former Congressman Denny Rehberg s Chief of Staff and as the executive director of the Flathead Joint Board of Control. In addition, Mikkelsen is an experienced pilot who earned the Conservation Pilot of the Year award for his work on wildlife surveys and aerial photography from Barrow to Belize. Mikkelsen also values water from an angling, conservation, and outdoor recreation business perspective as he is an Idaho-licensed fishing guide on the Clearwater River. Mikkelsen studied Agricultural Economics at the University of Montana and Montana State University and took classes in water law, Indian law, and Indian Water Law from the University of Colorado in Boulder, Colorado. Kiel Weaver, New Energy and Environment Advisor to Speaker Ryan Kiel Weaver, a top aide for the House Natural Resources Subcommittee on Water, Power and Oceans, is moving to Speaker Paul Ryan s office to serve as advisor on energy and environment issues. He will begin in his new role on May 1. Replacing him as the Water, Power and Oceans subcommittee staff director is William Ball. Ball currently works as a professional staffer on the committee, and worked for Senator Susan Collins of Maine from He ran his own commercial fishing business in Maine from Cabinet Confirmations Almost all of President Trump s cabinet officials have been confirmed with the exception of Sonny Perdue, nominee for the Secretary of Agriculture, and Alexander Acosta, nominee for Secretary of Labor. The confirmation vote for Perdue is set for April 24 and the vote on Acosta is expected later that week. 4