On Wednesday, February 29, 2012, the House is scheduled to consider H.R. 1837, the San Joaquin Valley Water Reliability Act, subject to a rule. The bill was introduced on May 11, 2011, by Rep. Devin Nunes (R-CA) and referred to the Natural Resources Committee. On February 16, 2012, the Committee held a mark-up on the bill and reported the legislation, as amended, by a vote of 27-17.  The rule for consideration of H.R. 1837 provides for one hour of general debate equally divided and controlled by the chair and ranking minority member of the Committee on Natural Resources. The rule also makes nine amendments in order, each of which is summarized below.

TITLE I—CENTRAL VALLEY PROJECT WATER RELIABILITY

H.R. 1837 would amend the Central Valley Project Improvement Act (CVPIA, Public Law 102-575) by adding new purposes to the Act which would require that water dedicated to fish and wildlife be replaced and provided to Central Valley Project by the end of 2016 and require expedited water transfers between willing sellers. The bill would require that 800,000 acre feet (one acre-foot equals roughly 325,850 gallons of water) of water that was re-allocated from farms for fish and wildlife purposes be replaced at a reasonably low cost. H.R. 1837 would also authorize 40-year renewals of existing Central Valley Project (CVP) water-use contracts, if requested by the contract holder. The current contractual term is 25 years, under the CVPIA.

The legislation would require the Secretary of Interior, or the appropriate water district, to determine whether a proposal for a water transfer is complete within 45 days of its submission. If the proposal is not complete, the bill would require the appropriate agency to specify what must be added or revised to complete the transfer proposal. The bill would also stipulate that the water district of origin would retain authority to approve a proposed transfer as provided under state law. This provision is meant to expedite water conveyance agreements under the Central Valley Project. In addition, the bill would clarify that transfers, exchanges and water banking arrangements among water users which could have been conducted prior to the enactment of the CVPIA may still take place and are not subject to the CVPIA, which imposed regulations on existing and future water transfers.

H.R. 1837 would amend the CVPIA to clarify that 800,000 acre-feet of water from the CVP designated for fish and wildlife habitat is a ceiling, rather than a floor, on the amount of water re-allocated from water users. The bill would also require the reuse or diversion of any part of the 800,000 acre-feet to agriculture or municipal and industrial purposes after it has fulfilled its fish and wildlife purposes. Additionally the bill would require that if the annual water allocation for the Delta Division water unit of the CVP is below 75 percent, then the 800,000 acre-feet mandate for fish and wildlife would be reduced by 25 percent.

The bill would modify the CVP Restoration Fund which was created as an environmental mitigation fund financed by water and power users under the CVPIA, by capping fund charges and deleting references to fund activities that have already been accomplished. The bill would also require the CVPIA to create a Restoration Fund Advisory Board to make recommendations regarding priorities and spending levels on projects and programs. In addition, H.R. 1837 would remove the current requirement that at least 67 percent of project-related environmental and mitigation fees be deposited in the Restoration Fund.

The bill would require that the CVP and the State Water Project (SWP) be operated in a manner consistent with the Bay-Delta Accord of 1994. The bill would codify the Bay-Delta Accord’s flows as it relates to the CVP and prevent the State of California from imposing further flow reductions in order to ensure the Bay-Delta Accord commitments. Under the bill, project operations that comply with Bay-Delta Accord requirements would be permitted without consideration of the Endangered Species Act. 

TITLE II—SAN JOAQUIN RIVER RESTORATION

H.R. 1837 would repeal provisions of the San Joaquin Settlement Act which was enacted in 2009 under the Omnibus Lands Act. The 2009 law implemented a judicial settlement between the Bureau of Reclamation’s Friant Division of the Central Valley Project (CVP) in Northern California and a coalition of environmental and fishing groups (Natural Resources Defense Council, et. al). Under the Omnibus Lands Act, the Secretary of the Interior was authorized to design and construct improvements to the San Joaquin River; modify operations of Friant Dam; acquire water or water rights; and implement terms of the settlement relating to recapture.

H.R. 1837 would establish an alternative set of mitigation, planning and restoration flow requirements. The bill would amend current law to end the legal settlement and replace it with a warm water fishery restoration, with the intent of saving water for local farmers. The bill would authorize the Secretary of Interior to, within one year of enactment, develop and implement a plan to fully re-circulate, recapture, reuse, exchange or transfer all “Restoration Flows” from the Friant Dam. The Secretary would be directed to address any impact on groundwater resources within the Friant service area and the bill would stipulate that mitigation may include groundwater banking and recharge projects. Under the legislation, “Restoration Flows” would mean additional water released from Friant Dam to ensure the flow does not fall below 50 cubic feet per second. The bill would preempt and supersede any state law, regulation or requirement that imposes more restrictive requirements or regulations on these activities. The bill would deauthorize $300 million originally authorized to be appropriated for restoration activities in the San Joaquin River Restoration Settlement Act.

TITLE III—REPAYMENT CONTRACTS AND ACCELERATION OF REPAYMENT OF CONSTRUCTION COSTS

The bill would require the Department of Interior, upon request of a contractor, to convert existing long-term Central Valley Project contracts to contracts that require the repayment of remaining construction costs in either in a lump sum or accelerated prepayments.

TITLE IV—BAY-DELTA WATERSHED WATER RIGHTS PRESERVATION AND PROTECTION

H.R. 1837 would require the Secretary of Interior to strictly adhere to state water rights laws and priorities and to honor water rights senior to those held by the CVP, notwithstanding provisions of the Endangered Species Act. In addition, the bill would require the Secretary of Interior to provide certain amounts of water to Sacramento Valley water service contractors who receive water from the CVP based on the amount of water available in a given year.

The San Joaquin Valley in California is home to numerous farm communities that are suffering from high levels of unemployment because they have been blocked from accessing water. According to Committee Report 112-403, California has experienced drought twelve times since 1850. The Central Valley Project (CVP) is a federal multi-purpose system of reservoirs and canals that collects and delivers waters from northern California and the Sierra Nevada mountains. Even as infrastructure is not being built on an adequate scale to account for population growth and other factors, environmental regulations continue to restrict water supplies for human needs.

In 1992, Congress passed the Central Valley Project Improvement Act (CVPIA, Public Law 102-575) to include the “protection, restoration, and mitigation of fish and wildlife” as a new purpose for the CVP.  The CVPIA required that of 800,000 acre-feet/year of CVP water be reallocated from farmers and cities and dedicated for fish and wildlife purposes. According to the Natural Resources Committee, many have accused the Department of the Interior (DOI) of allocating more than 800,000 acre feet due to vague language in the statute.

The CVPIA and the Endangered Species Act (ESA) have contributed significantly to water supply uncertainty and instability in California. Environmental organizations blaming the water pumps as the main cause of endangered Delta smelt declines successfully used the federal court system to achieve many of their objectives. In May 2007, a Federal District Court judge ruled in Natural Resources Defense Council vs. Kempthorne a DOI Biological Opinion on Delta smelt was “arbitrary, capricious and contrary to law.” This eventually led to a revised Biological Opinion that caused massive water shut-offs in 2009 and 2010. Under that Biological Opinion, increased amounts of water were re-allocated towards Delta smelt during the time farm communities in the west side of the San Joaquin Valley needed it most. A Biological Opinion on salmon and orcas led to additional water restrictions. There is disagreement about the causes of the salmon fisheries declines in California rivers, but a 2010 report by the National Marine Fisheries Service determined that poor ocean conditions were the most important factor causing this decline.

According to the Natural Resources Committee, the results of the water restrictions were devastating. Over one million acre feet of water were lost due to the smelt and salmon Biological Opinions. Although jobs estimates differ, thousands of jobs were lost and hundreds of thousands of acres of land were fallowed in 2010. The City of Mendota experienced an unemployment rate of 40 percent as a result of such restrictions. Since 1992, with the enactment of the CVPIA and in light of ESA restrictions, San Joaquin Valley irrigators have gone from receiving an average of 92 percent of their water supply to a current annual average of 35 to 40 percent.

H.R. 1837 attempts to reverse the impacts of the ESA lawsuits by declaring that the CVP and SWP are compliant with the ESA if the projects are implemented in a manner consistent with the 1994 Bay-Delta Accord. In addition, the bill would codify the standards set forth in the Bay-Delta Accord to return balance and certainty to Sacramento-San Joaquin flows.

According to CBO, implementing H.R. 1837 would increase offsetting receipts (a credit against direct spending) by $254 million and decrease revenues by $33 million over the 2013-2022 period. Together, those changes would reduce future budget deficits by $221 million over the next 10 years, CBO estimates.

In addition, CBO estimates that implementing the legislation would reduce discretionary spending for restoration activities associated with the San Joaquin River by $190 million over the 2013-2017 period, assuming appropriation actions consistent with the authorization levels in the bill.

Amendment No. 1—Rep. McClintock (R-CA): The Manager’s Amendment would make a number of clerical and technical changes to the bill and would clarify that any existing long-term repayment or water service contract for the delivery of water from the Central Valley Project would be administered pursuant to current law unless expressly provided by the underlying legislation.

Amendment No. 2—Rep. Thompson (D-CA)/Rep. Eshoo (D-CA): The amendment would prohibit the bill from taking effect until the Secretary of Interior certifies that the provisions of this Act and the amendments made by this Act will not result in the loss of agriculture, agriculture-related, fishery, or fishery-related jobs or revenue in California counties north of the Sacramento-San Joaquin River Delta.

Amendment No. 3—Rep. McNerney (D-CA): The amendment would prohibit the bill from taking effect until the Secretary of Interior determines that this Act and the amendments made by this Act shall not have a harmful effect on the quality or safety of drinking water supplies for residents of the five Delta Counties (Contra Costa County, Sacramento County, San Joaquin County, Solano County, and Yolo County, California).

Amendment No. 4—Rep. McNerney (D-CA): The amendment would prohibit the bill from taking effect until the Secretary of Interior determines that this Act and the amendments made by this Act shall not have a harmful effect on water quality or water availability for agricultural producers in the five Delta Counties (Contra Costa County, Sacramento County, San Joaquin County, Solano County, and Yolo County, California).

Amendment No. 5—Rep. Garamendi (D-CA): The amendment would strike section 103 from the legislation. This section amends the Central Valley Project Improvement Act to allow for 40-year renewal of existing Central Valley Project (CVP) long-term water user contracts with the Bureau of Reclamation (Reclamation) and retains the existing CVPIA provision requiring that contracts shall include a provision to charge such water users only for water actually delivered. The current contractual term is 25 years, under the CVPIA. The intent of Section 103 is to return the contractual duration back to the 40-year term allowed for in similar water user contracts with Reclamation throughout the western United States.

Amendment No. 6—Rep. Napolitano (D-CA): The amendment would require irrigators to repay project debt with interest, as determined by the Secretary of the Treasury, on the basis of average market yields on outstanding marketable obligations of the United States with the remaining periods of maturity comparable to the applicable reimbursement period of the project, adjusted to the nearest 1⁄8 of 1 percent on the underpaid balance of the allocable project cost.

Amendment No. 7—Rep. Garamendi (D-CA): The amendment would strike section 105 from the legislation. This section amends the Central Valley Project Improvement Act to clarify that 800,000 acre-feet of water from the CVP designated for fish and wildlife habitat is a ceiling, rather than a floor, on the amount of water re-allocated from water users.

Amendment No. 8—Reps. Markey (D-MA)/Thompson (D-CA)/Matsui (D-CA): The amendment would require, notwithstanding any other provisions of the bill, that the Central Valley Project and the State Water Project shall be operated in a manner that meets all obligations under State and Federal law, with operational constraints that are based on the best available science. 

Amendment No. 9—Rep. Garamendi (D-CA): The amendment would require that that new water deliveries to Kettleman City come from the San Luis Unit of the Central Valley Project.