Public Policy Agenda Number 4. Attachment 1. Federal Legislative Update. Federal Update. Public Policy Committee October 5, 2017

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1 Public Policy Agenda Number 4. Attachment 1 Federal Legislative Update Public Policy Committee October 5, 2017 Jeff Gray Legislative Affairs Manager Federal Update Congressional Activities Focus after the August recess has been on disaster relief, healthcare reform, defense authorization, FAA reauthorization, and government funding. Congress extended the September 30 deadline to pass a FY 2018 budget by passing a Continuing Resolution that funds the federal government through December 8. FY 2018 Budget House passed all of its appropriations bills. Senate worked on appropriations bills, but none made it to the floor. Senate is unlikely to take up House budget bills. Leadership/appropriators will have until Dec. 8 to negotiate a budget for the remainder of FY

2 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. Sens. Flake and McCain introduced the Hualapai Tribe s water rights settlement bill, S.1770, on September 7. Bill is substantively similar to the bill introduced by the Senators last year: - Construction of pipeline to deliver Colorado River water to the reservation; - 4,000 AF of CAP NIA priority water. CAWCD is party to the settlement agreement. On June 29, 2016, the CAWCD Board voted to support the agreement, as well as last year s Hualapai bill. Infrastructure Congress work on President Trump s proposed $1 Billion infrastructure plan continues to be in process. Congress recently has had to focus on other legislative priorities, including hurricane disaster relief. Work on an infrastructure bill may be coupled with tax reform, which has also been cited as a priority of congressional leadership this year. 2

3 Agency Appointments Brenda Burman (Reclamation Commissioner) Nomination has passed the Senate Energy and Natural Resources Committee. Awaits confirmation vote by the full Senate, but has not yet been scheduled. EPA The President recently announced the following EPA nominations: David P. Ross as Assistant Administrator of the Office of Water; and William Wehrum as Assistant Administrator of the Office of Air and Radiation. Both posts require Senate confirmation. Questions 6 3

4 Public Policy Agenda Number 4. Attachment 2 TO: FR: CC: CAWCD Board Members and Ted Cooke, General Manager Ryan Smith, Shareholder Bella Sewall Wolitz, Consulting Attorney Emily Sullivan, Associate and Policy Advisor Bridget Schwartz-Manock, Director of Public Affairs Jeff Gray, Legislative Affairs Manager DA: September 25, 2017 RE: Federal Legislative Monthly Report Fall Delay Congress returned from its August break to face looming deadlines to raise the debt ceiling and fund the federal government through fiscal year 2018 (FY18), as well as provide emergency funds to help areas devastated by September s hurricanes. Congressional leaders and the White House agreed to combine the three issues and, on September 8, the President signed into law a measure to provide nearly $15 million for emergency aid, a continuing resolution (CR) to fund the government through December 8, and a provision to raise the nation's borrowing limit for three months. While the measure passed both chambers with overwhelming support, some Republicans were unhappy with the deal and argued leaders should have negotiated a longer debt ceiling extension. Some also tried unsuccessfully to divorce the funding/debt ceiling provisions from the emergency relief bill. FY 2018 Appropriations The House finished work on all 12 of its FY18 spending bills before the end of FY17. The House passed a package of spending bills (the Make America Secure and Prosperous Appropriations Act) on September 14 by a largely party-line vote of Under the package s Interior and Environment Title, the Department of the Interior would receive a funding bump from the $11.7 billion requested by the White House to $11.9 billion (still less than the $12.3 billion Congress appropriated in FY17). EPA s funding would be cut from FY17 levels by $500 million. Hundreds of amendments were considered during negotiations of the package, and members agreed to measures that would bar Obama-era rules related to methane emissions and the use of the social cost of carbon metric in environmental reviews, address the maintenance backlog at the National Park Service, and block EPA from issuing any regulations under Section 115 of the Clean Air Act.

5 The Senate has yet to debate any FY18 spending bills on the floor and the House bills have no chance of passing the Senate. Thanks to CR, lawmakers have until December to agree on new spending levels for FY18. Agency Posts Following a hearing in early September, the Senate Energy and Natural Resources Committee advanced five of the President s nominees to the Federal Energy Regulatory Commission (FERC), Department of Interior (DOI), and Department of Energy (DOE) on September 19: Richard Glick to be a FERC commissioner; Kevin McIntyre to be a FERC commissioner and chairman; Joseph Balash to be assistant secretary of Interior for land and minerals management; Ryan Nelson to be DOI solicitor; and, David Jonas to be DOE general counsel. The Committee approved Glick, McIntyre, Balash, and Nelson by a voice vote and approved Jonas by a vote of The nominees now need to be approved by the full Senate and the timing on these votes has not yet been announced. The nomination of Brenda Burman to be Commissioner of the Bureau of Reclamation is also waiting for a full Senate vote. The Senate Environment and Public Works Committee was planning to hold a hearing to consider several EPA nominees in mid-september but the hearing was postponed. The four EPA nominees awaiting their hearing are Matthew Leopold to be general counsel; William Wehrum to run the Office of Air and Radiation; Michael Dourson to run the Office of Chemical Safety and Pollution Prevention; and, David Ross to run the Office of Water. Federal Infrastructure Proposal Still Uncertain While an infrastructure proposal remains a priority for the Administration, in Congress the package has taken a backseat to other legislative priorities. Other issues continued to overtake infrastructure in September such as efforts to repeal Obamacare, negotiations on tax reform, and pressure to provide funds for disaster relief. Legislation to Watch S. 140, a bill that amends the White Mountain Apache Tribe Water Rights Quantification Act of 2010 This Act specifies that settlement funds may be used for the planning, design, and construction of the tribe s rural water system. It passed the Senate in May and is awaiting action in the House. CAP supports this legislation. S.1770, Hualapai Tribe Water Rights Settlement Act of 2017 Introduced by Sens. Jeff Flake and John McCain, the Act settles the water rights claims of the Hualapai Tribe and authorizes construction of a water project for the delivery of Colorado River water pursuant to the settlement agreement negotiated last year. The bill has been referred to the Senate Indian Affairs Committee. CAP supports the legislation.

6 H.R. 1654/S. 677, Water Supply Permitting Coordination Act The bill would streamline the federal and state permitting process for new surface water storage projects on public lands, designating Reclamation as the lead agency to process permits for those projects. The bill passed the House on June 22, and has had a hearing in the Senate. S. 930/H.R. 2371, Western Area Power Administration Transparency Act This legislation is sponsored by the Arizona Senators, Flake and McCain, and Representative Gosar. Through a pilot project, the bill would require the Administrator of WAPA to provide increased transparency for customers. WAPA would have to publish on public website a database with information dating back to 2008 on WAPA on rates charged to customers, capacity or energy sold, capital/staff costs, etc. The Senate held a hearing on S. 930 in June, at which WAPA Administrator Mark Gabriel stated that the bill was in line with WAPA s commitment to transparency. The House Natural Resources Committee held a markup of H.R. 2371, the House s companion bill, at the end of July and reported the bill out of Committee by unanimous consent. H.R. 3281, Reclamation Title Transfer Act Representative Doug Lamborn s (R-CO) bill would authorize the Secretary of the Interior to facilitate the transfer of certain Reclamation projects to non-federal ownership. At a House Natural Resources Committee hearing on June 7, Bureau of Reclamation Chief of Staff James Hess stated that the Bureau supports the goals of the legislation and would work with Congress to develop changes to the bill. The Committee reported the bill favorably to the full House at the end of July. H.R. 723/S. 239, Energy Savings Through Public-Private Partnerships Act of 2017 This bill would amend the National Energy Conservation Policy Act to revise requirements for energy savings performance contracts and utility energy service contracts (performance contracts). These contracts allow federal agencies to work with private contractors on energy efficiency upgrades to federal facilities, unless the facilities are dams, reservoirs, or hydropower facilities owned or operated by federal agencies. The bill has been reported out of committees in both the House and Senate. H.R. 23, the Gaining Responsibility on Water ( GROW ) Act This bill was introduced by Congressman David Valadao (R-CA) and 11 other Republican members and passed the House on July 12. Senator Dianne Feinstein (D-CA) and Senator Kamala Harris (D-CA) have voiced their opposition, so the bill is unlikely to move in the Senate. The first four titles of the bill are California-specific and provide a set of reforms aimed at increasing water supply reliability for projects served by Reclamation s Central Valley Project and California s State Water Project. The last three titles provide for more general reforms. Title V is aimed at facilitating the construction of non-federal dams by requiring the Bureau of Reclamation to be the lead agency in coordinating multi-agency permitting reviews. Title VI focuses on federal construction activities. This provision is aimed at streamlining construction of Bureau of Reclamation projects, essentially aiming to speed up Reclamation s review of new

7 water storage projects, water recycling or desalination projects, or rural water projects. Specifically, this title would require that future Reclamation feasibility studies be completed within three years and at a federal cost of no more than $3 million (with allowance for an extension but only after the Secretary of the Interior provides a detailed justification to the nonfederal project sponsor and Congress). Title VII aims to eliminate perceived overreach by the federal government in Western water law. It prohibits the Departments of the Interior and Agriculture from conditioning any land use permit upon an agreement to transfer a water right or a part of a water right to the United States. Title VII also would stop the federal government from asserting jurisdiction over groundwater withdrawals by prohibiting the federal government from assert[ing] any connection between surface and groundwater that is inconsistent with such a connection recognized by State water laws. H.R. 1873, Electricity Reliability and Forest Protection Act The bill facilitates the clearing of vegetation around power lines. It would require the Interior and Agriculture Departments to provide owners and operators of transmission lines on federal lands the option of submitting integrated vegetation management plans that provide certainty and flexibility for managing vegetation affecting power lines and associated facilities. The bill provides liability protections to utilities in certain circumstances. The House passed H.R on June 21. Democrats, including Representative Raul Grijalva (R-AZ), have raised concerns about the way the bill alters the application of NEPA to projects that could have environmental impacts. The Senate has included a similar measure in the chamber s broad energy bill (Section 2310 of S. 1460), and the Senate Energy and Natural Resources Committee held a hearing on both measures on September. H.R. 584, Cyber Preparedness Act of 2017 Among its provisions, the bill would direct the Department of Homeland Security to work with critical infrastructure owners and operators and state, local, tribal, and territorial entities to manage risk and strengthen the security and resilience of the nation's critical infrastructure. The bill passed the House, and it is awaiting action in the Senate.

8 Public Policy Agenda Number 4. Attachment 3 September 27, 2017 Federal Update Upon their return from August recess, Congress had several funding issues to address, including the September 30 deadline for adopting a federal FY 2018 budget; raising the debt ceiling (federal borrowing limit); and, providing emergency funding for hurricanestricken areas. Congress chose to pass a short-term Continuing Resolution (CR) to deal with these issues and keep the government operating through December 8. FY 2018 Budget: The House completed its work on 12 appropriations bills and passed a package of spending bills, , on September 14. The bill would cut the EPA by 6.5 percent over FY 2017 levels and Interior s budget would be reduced to $11.7 billion, from $12.3 billion last year. The Senate has not approved any individual FY18 appropriations bills so far this year. With the passage of the CR, congressional leaders and appropriators have slightly more than two months (December 8) to negotiate what s included in a final package. Update on Infrastructure: Although infrastructure remains a priority for President Trump, no legislation has been introduced. Congress continues to be focused on other legislative issues, including disaster relief, defense reauthorization, and tax and healthcare reform measures. Agency Posts: President Trump recently nominated David P. Ross to head the EPA s Office of Water, which will require Senate confirmation. Ross is a former Wisconsin assistant Attorney General and currently is the director of the state Justice Department s Environmental Protection Unit. The President also nominated William Wehrum to serve as the Assistant Administrator of the EPA s Office of Air and Radiation. Wehrum is an environmental engineer who previously served as the office s acting assistant administrator. President Trump s nominee for Bureau of Reclamation Commissioner, Brenda Burman, still awaits a confirmation vote by the full Senate. The following Legislative Issues Update outlines the status of the Board-approved 2017 Legislative Agenda as well as other relevant federal issues. Public Affairs staff 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 year. 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

9 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. Navajo Generating Station (NGS) Continue efforts to engage elected officials, stakeholders, and governmental agencies regarding federal activities that affect the Navajo Generating Station. Cybersecurity Threats and Legislation Monitor legislative efforts to address cybersecurity and potential threats to critical infrastructure and vital computer systems. 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. Energy Legislation Monitor legislative efforts that may impact CAP operations, including CAP s ability to secure affordable energy and ensure reliable transmission delivery.

10 Energy and Natural Resources Chairwoman Lisa Murkowski (R-AK) and ranking member Maria Cantwell (D-WA) continue to prioritize a bipartisan energy reform package. Sen. Murkowski has introduced S.1460, the Energy and Natural Resources Act of 2017, which is a broad energy bill that similar to recent years places an emphasis on updating energy efficiency standards for commercial and federal buildings; modernizing energy infrastructure, especially with regard to grid reliability; and increasing supplies of renewables and traditional energy sources. The Senate Energy and Natural Resources held a hearing on the bill on September 19. 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. 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. On September 7, Senators Jeff Flake and John McCain introduced the Hualapai Tribe Water Rights Settlement Act of 2017 (S.1770). The bill authorizes the construction of a water project (pipeline) on the Hualapai Reservation to deliver Colorado River water to the Tribe. This includes 4,000 acre feet of Non-Indian Agricultural Priority CAP Water (NIA Water) that would be re-allocated by the Interior Secretary from the pool of NIA Water set aside by the Arizona Water Settlements Act of 2004 for future tribal water rights settlements. The bill is substantively similar to legislation introduced last year by the Arizona Senators. On June 29, 2016, the CAWCD Board approved the negotiated agreement and voted to support last year s bill, S CAWCD is party to the settlement agreement.

11 The legislation and agreement are referred to as Phase two of the settlement and would comprehensively resolve the Tribe s water rights claims to any remaining waters of the State of Arizona, including to the main-stem of the Colorado River. Water will be diverted from Diamond Creek, located on the Hualapai Reservation, and delivered through a pipeline to Peach Springs and Grand Canyon West. The costs of this project will be borne by the United States through a federal appropriation. The State of Arizona and the United States have each agreed to firm acre-feet of the NIA Water (for a total of 1125 acre-feet) to a priority equivalent to CAP Municipal and Industrial Priority Water. In 2014, the CAWCD Board officially supported Phase one of the settlement, which became enforceable in 2015 after enactment of the Bill Williams River Water Rights Settlement Act (Pub. L. No ). Phase one resolved the Tribe s claims to the Bill Williams River and, among several other things, provided for the lease of certain land located within Planet Ranch to benefit the Lower Colorado River Multi-Species Conservation Program. CAP Position: SUPPORT. Federal Rulemaking Continue to monitor federal rulemaking and implementation related to energy, emissions, water quality, and other issues that may affect CAP operations. Water Quality Monitor water quality issues impacting the Colorado River that may affect CAP operations. If you have any questions or would like more information regarding any of the issues contained in this report, please contact CAP Legislative Affairs,