1. WWW.TOWNSENDPA.COM SACRAMENTO WASHINGTON, DC SOUTHERN CALIFORNIA NORTHERN CALIFORNIA Federal Drought Relief Legislation – What’s It Gonna Take? February 10, 2016

2. Slide 2 Slide 2 Devastating Drought $2.7 billion loss to California economy in 2015 Agricultural Sector Losses: –$1.8 billion loss in 2015 –$1.5 billion loss in 2014 –1 million+ acres fallowed Job Losses: –35,000 permanent jobs –21,000 seasonal and part-time agricultural jobs Federal Drought Relief Legislation – What’s It Gonna Take?

3. Slide 3 Slide 3 Devastating Drought Human Impacts: –Nearly 70 communities facing significant water supply and water quality issues –Roughly 3,000 wells are critically low in the Central Valley –Growing homeless population Environment –Salmon and smelt species pushed to the brink –88 million dead and dying trees – fire threat –Land subsidence Federal Drought Relief Legislation – What’s It Gonna Take?

4. Slide 4 Slide 4 HOW DID WE GET HERE? Federal Drought Relief Legislation – What’s It Gonna Take?

5. Slide 5 Slide 5 California Drought – How Did We Get Here? Water Infrastructure Designed for 1960 –California population then: 16 million –California population now: 39 million Lack of adequate storage –Shasta, Sites, Temperance Flat & Los Vaqueros Environmental Concerns –2008 Salmon Biological Opinion –2009 Smelt Biological Opinion –Central Valley Project Improvement Act Federal Drought Relief Legislation – What’s It Gonna Take?

6. Slide 6 Slide 6 California Drought – How Did We Get Here? Drought Happens Federal Drought Relief Legislation – What’s It Gonna Take?

7. Slide 7 Slide 7 California Drought – How Did We Get Here? But rarely so severe and widespread Federal Drought Relief Legislation – What’s It Gonna Take?

8. Slide 8 Slide 8 CONGRESSIONAL RESPONSE Federal Drought Relief Legislation – What’s It Gonna Take?

9. Slide 9 Slide 9 Congressional Response to California’s Drought 112 th Congress –House: HR 1837 - Sacramento-San Joaquin Valley Water Reliability Act (Nunes) Introduced May 11, 2011 Passed the House February 29, 2012 (246 - 175, 1) near party line Died in the Senate –Senate: Seek administrative actions Increased operational flexibility Expanded water transfers Similar actions successful in 2007-2009 drought Federal Drought Relief Legislation – What’s It Gonna Take?

10. Slide 10 Slide 10 Congressional Response to California’s Drought 113 th Congress –House: H.R. 3964 – Sacramento-San Joaquin Valley Emergency Water Delivery Act (Valadao) Introduced January 29, 2014 Passed the House February 5, 2014 (229 – 191) Died in the Senate –Senate: S. 2016 California Emergency Drought Relief Act / S.2198 - Emergency Drought Relief Act of 2014 $300 million authorization from original bill stripped; passed Senate by Unanimous Consent –Fall 2014: No House / Senate Omnibus agreement Federal Drought Relief Legislation – What’s It Gonna Take?

11. Slide 11 Slide 11 Congressional Response to California’s Drought 114 th Congress –House: H.R. 2898 – Western Water and American Food Security Act of 2015 (Valadao) Introduced June 25, 2015 Passed the House July 16, 2015 (245 – 176) –Senate: S. 1894 California Emergency Drought Relief Act Introduced June 29, 2015 ENR Committing hearing October 8, 2015 –Fall 2015: House and Senate Discussions – surprise “McCarthy/Feinstein” Omnibus proposal Federal Drought Relief Legislation – What’s It Gonna Take?

12. Slide 12 Slide 12 Congressional Response to California’s Drought 114 th Congress –Feinstein Discussion Draft: “California Long-Term Provisions for Water Supply and Short-Term Provisions for Emergency Drought Relief Act” –Released January 21, 2016 - introduction pending –Key Provisions: Short-term – Improving Operational Flexibility o Capturing additional winter storm flows o More flexible rules for water transfers o Opening the Cross Channel Gates o Sunset two years after enactment or drought emergency expires Federal Drought Relief Legislation – What’s It Gonna Take?

13. Slide 13 Slide 13 Congressional Response to California’s Drought Long-term – Drought Relief and $1.3b Infrastructure Investments o $150 million WaterSMART grants o $600 million for storage o $200 million for RIFIA (Reclamation Infrastructure Finance and Innovation Act) o $200 million for water recycling projects (and Title XVI reforms) o $100 million for desalination No mandates on pumping levels Federal Drought Relief Legislation – What’s It Gonna Take?

14. Slide 14 Slide 14 IS CONSENSUS POSSIBLE? Federal Drought Relief Legislation – What’s It Gonna Take?

15. Slide 15 Slide 15 Is Consensus Possible? Federal Drought Relief Legislation – What’s It Gonna Take? Obstacles to getting a drought bill enacted: –Stakeholder “must-haves” Environmental groups – no pumping mandates or ESA- related impacts Agricultural groups – pumping mandates and guaranteed deliveries Water contractors – no redirected adverse impacts –Competing legislative and funding priorities San Luis Drainage bill Klamath Settlement San Joaquin River Restoration Arizona – Lake Mead shortage provision

16. Slide 16 Slide 16 Is Consensus Possible? Federal Drought Relief Legislation – What’s It Gonna Take? Obstacles to getting a drought bill enacted: –Freedom Caucus funding objections –Finding a viable, moving, must-pass vehicle Omnibus Energy bill Western drought bill –Distrust among members –Timing & election year politics

17. Slide 17 Slide 17 Is Consensus Possible? HuffmanHuffman GaramendiGaramendi NapolitanoNapolitano CostaCosta ThompsonThompson MatsuiMatsui Federal Drought Relief Legislation – What’s It Gonna Take? FeinsteinFeinstein BoxerBoxer MurkowskiMurkowski McConnellMcConnell ReidReid McCarthyMcCarthy NunesNunes CalvertCalvert McClintockMcClintock DenhamDenham ValadaoValadao SENATE HOUSE Key Congressional Members

18. Slide 18 Slide 18 Is Consensus Possible? Federal Drought Relief Legislation – What’s It Gonna Take? Reasons for hope: –Senate and House staff discussions in Fall 2015 resulted in significant progress towards a consensus bill, though several contentious issues remained. –Senator Lisa Murkowski, Chair of the Senate Energy and Natural Resources Committee, has been helpful and appears willing to consider including the drought legislation in a Westwide drought bill this year. –House Majority Leader McCarthy’s continued involvement could help ensure passage in the House.

19. Slide 19 Slide 19 Is Consensus Possible? Federal Drought Relief Legislation – What’s It Gonna Take? Reasons for hope: –And some members simply refuse to quit trying:

20. Slide 20 Slide 20 BOTTOM LINE, WHAT’S IT GONNA TAKE? Federal Drought Relief Legislation – What’s It Gonna Take?

21. Slide 21 Slide 21 What’s It Gonna Take? Federal Drought Relief Legislation – What’s It Gonna Take? Concessions will be required from all sides: –House Republicans – accept increased spending authorizations for water infrastructure and drop mandatory pumping requirements that violate the ESA –House Democrats – accept additional pumping when there is no threat to species in exchange for investments in water recycling, habitat restoration, etc. –CA Senators – accept additional pressure on the regulatory agencies to pump in the absence of harm to fish and potentially drop list of potential recycling and desal projects

22. Slide 22 Slide 22 What’s It Gonna Take? Federal Drought Relief Legislation – What’s It Gonna Take? Passage by the Senate Energy and Natural Resources Committee is key. And there is limited time this year. –The bill will not be taken up on the floor without first passing the ENR Committee. Past efforts to expedite consideration of the bill have resulted in strong opposition from environmental groups, derailing its progress. –Inclusion in a Westwide drought bill offers the best chance to meet the 60-vote threshold necessary for cloture. –The committee will not include California drought provisions unless the California delegation develops a general consensus on the bill.

23. Slide 23 Slide 23Questions Federal Drought Relief Legislation – What’s It Gonna Take? Christopher Townsend President ctownsend@townsendpa.com James Peterson Director Federal Office Southern California Office jpeterson@townsendpa.com