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115th Congress     }                                          {   Report
                          HOUSE OF REPRESENTATIVES
 1st Session       }                                          {  115-349

======================================================================



 
                 SAN LUIS UNIT DRAINAGE RESOLUTION ACT

                                _______
                                

October 16, 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Bishop of Utah, from the Committee on Natural Resources, submitted 
                             the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1769]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 1769) to affirm an agreement between the United 
States and Westlands Water District dated September 15, 2015, 
and for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``San Luis Unit 
Drainage Resolution Act''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Approval of agreement.
Sec. 4. Relief from drainage obligation.
Sec. 5. Drainage implementation.
Sec. 6. Water delivery contracts.
Sec. 7. Repayment obligations.
Sec. 8. Transfer of title to certain facilities.
Sec. 9. Compliance with applicable law.
Sec. 10. No water supply or financial impacts on other Central Valley 
Project contractors.
Sec. 11. Restoration Fund payments by Westlands Water District.

SEC. 2. DEFINITIONS.

  In this Act:
          (1) Central valley project improvement act of 1992 
        definitions.--As used herein, the terms ``repayment 
        contractor'', ``water service contractor'', ``water service 
        contract'', ``exchange contractor'', ``exchange contract'', 
        ``water rights settlement contractor'', ``water rights 
        settlement contract'', ``refuge contractor'', and ``refuge 
        contract'' shall have the same meanings respectively as each of 
        those terms has in title XXXIV of the Central Valley Project 
        Improvement Act of 1992 (106 Stat. 4706).
          (2) Condition of shortage.--The term ``Condition of 
        Shortage'' means ``Condition of Shortage'' as that term is 
        defined in existing San Luis Unit water service contracts.
          (3) Contracting officer.--The term ``Contracting Officer'' 
        means ``Contracting Officer'' as that term is defined in 
        existing San Luis Unit water service contracts.
          (4) Project.--The term ``Project'' means the Central Valley 
        Project, owned by the United States and managed by the 
        Department of the Interior, Bureau of Reclamation.
          (5) Project water.--The term ``Project Water'' means all 
        water that is developed, diverted, stored, or delivered by the 
        Secretary in accordance with the statutes authorizing the 
        Project and in accordance with the terms and conditions of 
        water rights acquired pursuant to California law.
          (6) Repayment contract.--The term ``repayment contract'' 
        means the repayment contract converted under section 6(a).
          (7) San luis act.--The term ``San Luis Act'' means the Act of 
        June 3, 1960 (Public Law 86-488), and all Acts amendatory 
        thereof and supplementary thereto.
          (8) San luis unit.--The term ``San Luis Unit'' means those 
        lands identified in section 1 of the San Luis Act.
          (9) Secretary.--The term ``Secretary'' means the Secretary of 
        the Interior.
          (10) Westlands agreement.--The term ``Westlands Agreement'' 
        means the ``Agreement between the United States and Westlands 
        Water District August 2015'', signed September 15, 2015.
          (11) Westlands.--The term ``Westlands'' means the Westlands 
        Water District (including Broadview Water District lands 
        annexed within Westlands Water District) located in Fresno and 
        Kings Counties, California.

SEC. 3. APPROVAL OF AGREEMENT.

  Notwithstanding any other provision of law, unless otherwise 
specified herein, the Westlands Agreement is approved and the Secretary 
is hereby directed to implement the terms and conditions of the 
Westlands Agreement.

SEC. 4. RELIEF FROM DRAINAGE OBLIGATION.

  The San Luis Act is amended as follows:
          (1) In the second sentence of section 1(a) after the words 
        ``related facilities,'', strike ``but'' and add ``but such 
        features do not include distribution systems or drains within 
        Westlands, and''.
          (2) In the sixth sentence of section 1(a), by inserting the 
        following at the end of the sentence before the period: ``, 
        except that the provision of drainage or drainage service under 
        section 1(a) shall not apply to lands within Westlands''.
          (3) In section 5, by striking the first sentence and 
        inserting ``Notwithstanding any other provision of law, the 
        Secretary of the Interior shall have no duty to provide 
        drainage or drainage service to Westlands. Westlands shall be 
        responsible for the management of drainage water within its 
        boundaries, in accordance with Federal and California law 
        consistent with the `Agreement between the United States and 
        Westlands Water District August 2015', signed September 15, 
        2015.''.
          (4) In the first sentence of section 8 by striking the words 
        ``other than distribution systems and drains,''.
          (5) In the third sentence of section 8, strike everything 
        between the word ``required'' through and including ``(b)'', 
        inserting a period following the word ``unit'', and striking 
        the remainder of the proviso in section 8.

SEC. 5. DRAINAGE IMPLEMENTATION.

  Upon enactment of this Act, and as provided in the Westlands 
Agreement, Westlands shall assume all legal responsibility for the 
management of drainage water within its boundaries in accordance with 
Federal and California law, provided that Westlands shall not discharge 
drainage water outside of its boundaries.

SEC. 6. WATER DELIVERY CONTRACTS.

  (a) Contract Conversion.--The Secretary shall convert Westlands' 
existing long-term or interim renewal water service contracts entered 
into under section 9(e) of the Act of August 4, 1939 (53 Stat. 1196), 
to a repayment contract under sections 9(d) and 9(c)(1) of the Act of 
August 4, 1939 (53 Stat. 1195, 1194), consistent with the Westlands 
Agreement. Such contract shall continue so long as Westlands fulfills 
its obligations under the contract.
  (b) Allocation Decisions.--
          (1) Notwithstanding subsection (a) and as provided in the 
        Westlands Agreement, the Secretary shall make allocation 
        decisions in the Project affecting Westlands consistent with 
        the requirements of all current or future enacted Federal law 
        including, but not limited, to the Endangered Species Act of 
        1973 (16 U.S.C. 1531 et seq.), Reclamation law, and all 
        decisions of the California State Water Resources Control Board 
        establishing conditions on applicable licenses and permits for 
        the Central Valley Project.
          (2) Conversion of Westlands' contracts in subsection (a) 
        shall not afford Westlands a greater or lesser right to an 
        annual allocation of Project Water than it had prior to the 
        conversion of its contract under this Act.
          (3) If there is a Condition of Shortage in the amount of 
        water available for delivery to Westlands because of errors in 
        physical operations of the Project, drought, other physical 
        causes beyond the control of the Contracting Officer or actions 
        taken by the Contracting Officer to meet legal obligations, no 
        liability shall accrue against the United States or any of its 
        officers, agents or employees for any damage, direct or 
        indirect, arising therefrom.
  (c) Water Service Contract for Lemoore Naval Air Station.--
          (1) The Secretary shall enter into a contract under section 
        9(d) and 9(c)(1) of the Act of August 4, 1939 (53 Stat. 1195, 
        1194), with the Secretary of the Navy for the delivery of 
        Project Water to the Lemoore Naval Air Station to meet the 
        needs, as determined under paragraph (2), of Lemoore Naval Air 
        Station, and all associated remaining repayment obligations 
        owing to the United States on the date of enactment of this Act 
        are discharged, and the Secretary shall certify that the lands 
        within the Lemoore Naval Air Station are free from the 
        ownership and full cost pricing limitations of Federal 
        Reclamation law. Such contract shall continue so long as the 
        Secretary of the Navy pays all applicable charges consistent 
        with applicable law.
          (2) The contract amount of Project Water made available to 
        the Lemoore Naval Air Station under the contract entered into 
        pursuant to paragraph (1) shall be determined by the Secretary 
        through technical analysis in cooperation with the Lemoore 
        Naval Air Station.
          (3) In any year in which there may occur a Condition of 
        Shortage in the amount of water available for delivery, the 
        Contracting Officer shall allocate the available Project Water 
        to Lemoore Naval Air Station in the same percentage as 
        allocated to municipal and industrial water service contractors 
        in the San Luis Unit of the Project.

SEC. 7. REPAYMENT OBLIGATIONS.

  (a) Suspension of Capital Obligation.--Upon enactment of this Act, 
Westlands' capital repayment obligation and payments under its existing 
water service contracts and the April 1, 1965, repayment contract 
between the United States and Westlands (contract numbered 14-06-200-
2020-A) as further defined in subsection (d), shall be suspended until 
the execution of the section 9(d) repayment contract referenced in 
section 6(a) of this Act, and upon execution of the section 9(d) 
repayment contract, Westlands shall receive a credit against future 
operation and maintenance costs payable to the United States in the 
amount of the capital costs under the existing water service contracts 
and the 1965 Repayment Contract paid by Westlands between the date of 
the Westlands Agreement and the date of enactment of this Act.
  (b) Costs.--Costs incurred by the United States for purposes of re-
evaluating, planning, or providing drainage service to Westlands shall 
be non-reimbursable as set forth in paragraph (9)(C)(iv) of the 
Westlands Agreement.
  (c) Relief of Capital Repayment Obligations.--
          (1) Upon the date of execution of the section 9(d) repayment 
        contracts referenced in section 6(a) of this Act, and as set 
        forth in the Westlands Agreement, Westlands shall be relieved 
        of--
                  (A) its capital repayment obligations under the June 
                5, 1963, water service contract between the United 
                States and Westlands (contract number 14-06-200-495-A) 
                providing for water service, or any renewals thereof, 
                and any water service contracts assigned to Westlands, 
                Westlands Distribution District No. 1, and Westlands 
                Distribution District No. 2 existing as of the date of 
                execution of the Westlands Agreement; and
                  (B) Westlands shall be relieved of any remaining 
                repayment obligation under the April 1, 1965, repayment 
                contract between the United States and Westlands 
                (contract numbered 14-06-200-2020-A).
          (2) Repayment relief granted in paragraph (1) shall not 
        extend to Westlands' operation and maintenance obligations, 
        whether payable to the United States or to an operating non-
        Federal entity, or to construction costs or other capitalized 
        costs not yet allocated to or incurred by Westlands as of the 
        date of the Westlands Agreement, respectively, including, but 
        not limited to costs attributable to the Folsom Safety of Dams 
        modifications, or the B.F. Sisk corrective action study, or any 
        Safety of Dams or to the repayment of future capital costs 
        incurred after the date of execution of the Westlands 
        Agreement.
          (3) Central Valley Project construction costs or other 
        capitalized costs allocated to Westlands after the date of the 
        Westlands Agreement, and properly assignable to Westlands, 
        shall be repaid in not more than 5 years after notification of 
        the allocation of such amount of less than $5,000,000. If such 
        amount is $5,000,000 or greater, such cost shall be repaid as 
        provided by applicable Reclamation law. Any additional costs 
        that may have been assigned to Westlands pursuant to paragraph 
        (9)(C)(iv) of the Westlands Agreement related to the Central 
        Valley Project final cost allocation shall be non-reimbursable.
  (d) Applicability of Certain Provisions.--
          (1) Reclamation reform act.--Upon discharge of the capital 
        repayment obligation as provided in subsection (c), the 
        provisions of section 213(a) and (b) of the Reclamation Reform 
        Act of 1982 (96 Stat. 1269) shall be deemed to apply to lands 
        in Westlands, and the ownership and full cost pricing 
        limitations in any provision of Federal reclamation law shall 
        not apply to lands in Westlands notwithstanding the subsequent 
        allocation of construction costs or other capitalized costs to 
        Westlands. These exemptions shall be carried out in accordance 
        with the process set forth in the Westlands Agreement.
          (2) Other provisions.--Nothing in this Act is intended to 
        relieve Westlands of any other obligations under Reclamation 
        law including Restoration Fund charges pursuant to section 
        3407(d) of Public Law 102-575.

SEC. 8. TRANSFER OF TITLE TO CERTAIN FACILITIES.

  (a) In General.--Upon the execution of the section 9(d) repayment 
contract, or as soon thereafter as practicable, the Secretary shall 
transfer to Westlands title to:
          (1) San Luis Canal System, excluding the main canal which is 
        integrated with the California Aqueduct. These appurtenant 
        features include:
                  (A) Internal water distribution system within 
                Westlands, including approximately 1,045 miles of 
                buried pipeline.
                  (B) Pumping plants within Westlands, including: San 
                Luis Canal Left and Right Bank pumping plants which 
                includes but is not limited to, Pumping Plants P1 
                through P38 located at the head end of the gravity 
                laterals to supply the head required for the ``P'' 
                laterals; and pumping plants, tanks, reservoirs, and 
                re-lift pumping plants to serve lands west of the San 
                Luis Canal; and Pumping Plant 7.05 off Lateral 7.
                  (C) Related structures, appurtenances, pumping 
                plants, pumps, motors, meters, valves, tanks, 
                transformers and electrical equipment as specifically 
                identified through the title transfer process of 
                federally owned facilities, equipment, and real 
                property.
          (2) Mendota Pool diversion facilities operated by Westlands, 
        including:
                  (A) Inlet Canal from the Fresno Slough.
                  (B) Pumping plants 6-1, 6-2, 7-1, 7-2.
                  (C) Related structures, appurtenances, pumps, motors, 
                meters, valves, tanks, transformers and electrical 
                equipment as specifically identified through the title 
                transfer process of federally owned facilities, 
                equipment, and real property.
          (3) Pleasant Valley System, including:
                  (A) Intake canal and pipeline.
                  (B) Pleasant Valley Pumping Plant.
                  (C) Coalinga Canal, including related check 
                structures, turnouts, and headworks.
                  (D) Pleasant Valley distribution system and pumping 
                plants along the Coalinga Canal.
                  (E) Related structures, appurtenances, pumps, motors, 
                meters, valves, tanks, transformers and electrical 
                equipment as specifically identified through the title 
                transfer process of federally owned facilities, 
                equipment, and real property.
          (4) Drainage collection system, including:
                  (A) Carrier and collector pipelines, sumps, and sump 
                pumps.
                  (B) San Luis Drain from Sta 6678+45 to Sta 8520+22.87 
                (Crossing with DMC to Laguna Ave. crossing).
                  (C) Related structures, appurtenances, pumps, motors, 
                meters, valves, tanks, transformers, and electrical 
                equipment as specifically identified through the title 
                transfer process of federally owned facilities, 
                equipment, and real property.
          (5) Tranquillity Field Office, including:
                  (A) Buildings at 32650 West Adams Avenue, 
                Tranquillity, CA 93668.
                  (B) All related fixtures and furnishings as 
                specifically identified through the title transfer 
                process of federally owned facilities, equipment, and 
                real property.
          (6) Huron Field Office, including:
                  (A) Buildings at 32450 South Lassen Avenue, Huron, CA 
                93234.
                  (B) All related fixtures and furnishings as 
                specifically identified through the title transfer 
                process of federally owned facilities, equipment, and 
                real property.
          (7) All real property interests held by the United States in 
        lands underlying or otherwise associated with the facilities 
        and equipment listed in this subsection, including all fee 
        title, easements, and rights of way.
  (b) Transfer of Title.--Except as specifically provided in this Act, 
any transfer of title to the Pleasant Valley Pumping Plant, the 
Coalinga Canal, and any associated facilities shall not relieve any 
other Project Water service or repayment contractor of the requirement 
to pay any allocated costs associated with those conveyance or pumping 
facilities that are properly allocated to those contractors under 
existing law and Project rate setting policies.
  (c) Condition of Transfer.--Upon transfer of title to any facilities 
pursuant to this section, Westlands shall, as a condition to such 
transfer, formally agree that as of the date of transfer--
          (1) to hold the United States harmless and indemnify the 
        United States for any and all claims, cost, damages, and 
        judgments of any kind arising out of any act, omission, or 
        occurrence relating to the transferred facilities, except for 
        such claims, costs, damages arising from acts of negligence 
        committed by the United States or by its employees, agents, or 
        contractors, prior to the date of title transfer, for which the 
        United States is found liable under the Federal Tort Claims 
        Act; and
          (2) the United States shall have no responsibility for 
        correcting and financing any repairs or deficiencies that may 
        exist at the time of or following title transfer.
  (d) Applicable Law.--The Secretary shall transfer title pursuant to 
this section consistent with all applicable Federal Reclamation 
policies and procedures. The Secretary and Westlands shall comply with 
all applicable requirements under Federal and California law before 
title to a facility is transferred pursuant to this section.

SEC. 9. COMPLIANCE WITH APPLICABLE LAW.

  In implementing the measures authorized by this Act, the Secretary 
shall comply with all applicable Federal laws, rules, and regulations, 
including the National Environmental Policy Act of 1969 (42 U.S.C. 4321 
et seq.) and the Endangered Species Act of 1973 (16 U.S.C. 1531 et 
seq.), as necessary.

SEC. 10. NO WATER SUPPLY OR FINANCIAL IMPACTS ON OTHER CENTRAL VALLEY 
                    PROJECT CONTRACTORS.

  Implementation of this Act and the Agreements authorized thereunder 
shall not--
          (1) result in the involuntary reduction in the contract water 
        allocation to any Project water service or repayment 
        contractor, water rights settlement contractor, exchange 
        contractor, or refuge contractor including contractors in the 
        Friant Division of the Project;
          (2) modify, amend or affect any of the rights or obligations 
        of the parties to any Project water service or repayment 
        contract, water rights settlement contract, exchange contract, 
        or refuge contract, including contracts in the Friant Division 
        of the Project;
          (3) alter the repayment obligation, if any, of any Project--
                  (A) water service or repayment contractor;
                  (B) settlement, refuge, or exchange contractor; or
                  (C) preference power contractor receiving water or 
                power from the Project, or shift any costs to such 
                contractors that would otherwise have been properly 
                assignable to Westlands, including operations and 
                maintenance costs, construction costs, or other 
                capitalized costs allocated to Westlands after the date 
                of this Act;
          (4) impair the ability of the United States to implement the 
        Stipulation of Settlement approved by the district court in 
        Natural Resources Defense Council, et al. v. Rogers, et al. 
        (Case No. CIV S-88-1658 (LKK/GGH) E.D.Cal.), on October 23, 
        2006, as authorized to be implemented by title X of Public Law 
        111-11, including the Restoration Goal and Water Management 
        Goal; and
          (5) diminish, impair, or otherwise affect in any manner any 
        priorities for the allocation, delivery or use of water under 
        applicable law, including any purposes of use and priorities 
        established by sections 3402 and 3406 of the Central Valley 
        Project Improvement Act (Public Law 102-575; 106 Stat. 4706, 
        4714).

SEC. 11. RESTORATION FUND PAYMENTS BY WESTLANDS WATER DISTRICT.

  For any year in which the allocation of water for south-of-Delta 
Project long-term water irrigation service contractors or irrigation 
repayment contractors is greater than 75 percent, the Secretary shall 
calculate for Westlands a per acre foot Restoration Fund payment based 
on a projection that Westlands would take delivery of the full 
allocation made to south-of-Delta Project long-term water service 
contractors or repayment contractors.

                          Purpose of the Bill

    The purpose of H.R. 1769 is to affirm an agreement between 
the United States and Westlands Water District dated September 
15, 2015.

                  Background and Need for Legislation

    H.R. 1769 affirms a settlement between the federal 
government and other parties in an attempt to bring about final 
resolution to decades-long litigation over the federal 
government's responsibility to provide drainage for certain 
lands in central California.
    Public Law 86-488 authorized the San Luis Unit as part of 
the Central Valley Project (CVP) on June 3, 1960. The principal 
purpose of the San Luis Unit, located in California's San 
Joaquin Valley, is irrigation water supply for almost one 
million acres of farmland. The federal government and the State 
of California joint-use facilities include O'Neill Dam and 
Forebay, B.F. Sisk San Luis Dam, San Luis Reservoir and the San 
Luis Canal. The federal-only features include the O'Neill 
Pumping Plant and Intake Canal, Coalinga Canal and the San Luis 
Drain.
    Since clay layers beneath the agricultural lands prevent 
excess irrigation water from draining deeper into the soil, 
construction of the San Luis Drain began in 1968 to collect and 
transport subsurface drainage water from the San Luis Unit to 
the Sacramento-San Joaquin Bay-Delta. Of the planned 188 miles 
of drain, only approximately 80 miles were completed due to 
concerns over water quality of the drain water. The unfinished 
San Luis Drain ended at Kesterson Reservoir, where the 
accumulation of drainage helped contribute to dying waterfowl 
and deformed embryos in 1982. In 1985, the Bureau of 
Reclamation halted drainage services, closed the Drain and 
began cleaning up contaminated ponds at the Reservoir.
    A number of irrigation districts relied on the San Luis 
Drain and entered into contracts with the federal government to 
pay for irrigation water and drainage. One such irrigation 
district, the Westlands Water District, entered into contracts 
in 1963 and 1965 for these purposes. Westlands is made up of 
more than 1,000 square miles of farmland in western Fresno and 
Kings Counties in the San Joaquin Valley, and receives a 
majority of its irrigation water supply from the San Luis Unit.
    Impaired drainage services to the San Luis Unit resulted in 
litigation brought by landowners in the Westlands service area. 
In 1995, the U.S. District Court for the Eastern District of 
California concluded that the San Luis Act (Public Law 86-488) 
imposed a mandatory duty on the Secretary of the Interior to 
provide drainage service to lands served by the San Luis Unit 
(Summer Peck Ranch et al v. Reclamation Bureau et al, No. 1:91-
cv-00048, E. D. CA).
    In February 2000, the U.S. Court of Appeals for the Ninth 
Circuit upheld this ruling, but held that the Department of the 
Interior (DOI) had discretion as to the means of satisfying 
this requirement (Firebaugh Canal Co. et al v. United States of 
America, 203 F. 3d 568 (9th Cir. 2000)). Later that year, the 
Ninth Circuit directed that the Secretary ``shall, without 
delay, provide drainage to the San Luis Unit pursuant to the 
statutory duty imposed by section 1(a) of the San Luis 
Act.''\1\ In 2007, the Bureau of Reclamation signed a Record of 
Decision selecting a drainage plan and found that the cost of 
providing drainage would be $2.7 billion. Using April 2015 cost 
indices, these costs are now estimated to be approximately $3.8 
billion.
---------------------------------------------------------------------------
    \1\Firebaugh Canal Co. et al v. United States, Case No. F-88-cv-
634-OWWW (E.D. Cal.)
---------------------------------------------------------------------------
    In the 2011, individual landowners within Westlands filed a 
takings claim in the Court of Federal Claims against the United 
States, alleging that the failure by the United States to 
provide drainage service caused a physical taking of their 
lands without just compensation in violation of the Fifth 
Amendment (Etchegoinberry, et al. v. United States, No. 11-564L 
(Fed. Cl.)). The takings claim was generally based on the 
inundation of lands with drainage water, which rendered such 
lands useless for agricultural production. The plaintiffs 
brought the suit as a class action on behalf of all landowners 
within Westlands ``whose farmlands have not received the 
necessary drainage service the United States is required to 
provide under the San Luis Act.'' In 2013, a United States 
District Court denied the United States' motion to dismiss the 
case. In an April 21, 2016, letter to Congressman David Valadao 
(R-CA) from then Deputy Secretary of the Interior Mike Connor, 
according to the United States, the decision contains 
``language sharply critical of the United States' delay in 
providing drainage to Westlands.'' The case was stayed by the 
Court of Federal Claims to allow for settlement negotiations to 
proceed.
    In 2012, the Westlands Water District filed its own lawsuit 
against the United States in the Court of Federal Claims 
(Westlands Water District v. United States, No. 12-12C (Fed. 
Cl.)). The suit charged that the federal government's failure 
to provide drainage service to the Westlands service area 
constituted a breach of its 1963 water service and 1965 
repayment contracts (including renewals of those contracts). In 
2013, the Claims Court dismissed the motion on the grounds that 
none of the contracts contained an enforceable promise to 
provide drainage to Westlands. Westlands appealed this ruling.
    Shortly after this ruling and subsequent appeal, Westlands 
and the United States entered into settlement negotiations. In 
September 2015, the parties reached a settlement agreement that 
required Congressional authorization for full implementation.
    On April 21, 2016, DOI transmitted a letter to Congressman 
David Valadao (R-CA) outlining the benefits of the settlement 
agreement for both Westlands and the federal government. 
According to the letter, the agreement relieves DOI of all 
drainage obligations imposed by the San Luis Act, including the 
2007 Bureau of Reclamation Record of Decision, which found that 
the cost of providing drainage to the San Luis Unit would be 
$2.7 billion ($3.8 billion in 2015 dollars). Westlands would 
seek dismissal of the appeal of the 2012 case, Westlands Water 
District v. United States, and would join the United States in 
petitioning for vacating the 2000 Order Modifying Partial 
Judgment in Firebaugh Canal Co. et al v. United States. 
Westlands agrees to waive any and all claims, past, present and 
future relating to the provision of drainage service or lack 
thereof within the its service area, including claims from 
individual landowners, and further agrees to indemnify the 
federal government for claims relating to the provision of 
drainage service or lack thereof within its service area. 
Westlands will retire at least 100,000 acres of lands within 
its boundaries (utilizing those lands only for certain purposes 
outlined in the Settlement agreement), while also agreeing to 
cap its CVP water deliveries at 75 percent of its contract 
quantity. Any water savings above the 75 percent cap would 
become available to the United States for other CVP authorized 
purposes. Westlands also agrees to wheel all CVP water made 
available to the Lemoore Naval Air Station under a future water 
service contract.
    According to the Letter, the benefits to Westlands includes 
relief of its current, unpaid capitalized construction costs 
for the CVP, which is currently estimated to be $295 million. 
Westlands will still be responsible for operation and 
maintenance and for future CVP construction charges associated 
with new construction for the Project. The Secretary of the 
Interior will convert Westlands' current water service 
contract, pursuant to section 9(e) of the Reclamation Project 
Act of 1939, to a repayment contract pursuant to section 9(d) 
of the same Act. The contract conversion will treat Westlands 
as a ``paid out'' project; as a result, the Westlands Water 
District would receive a contract with no expiration term, 
consistent with other paid-out reclamation projects. However, 
the contract will contain terms and conditions that are nearly 
identical to those in the current 9(e) contract. In addition, 
Westlands will be relieved of acreage limitations and full cost 
pricing provisions under the Reclamation Reform Act (96 Stat. 
1269). Westlands will also take title to certain facilities 
including the portion of the San Luis Drain that lies within 
its service area.
    The DOI letter indicated that several aspects regarding its 
obligation to provide drainage were evaluated when determining 
the overall net benefit to the United States, including avoided 
drainage construction costs, repayment to the United States of 
reimbursable costs, relief from Reclamation Reform Act fees, 
and unpaid CVP capital obligations. The Department's analysis 
concluded that enactment of settlement legislation would save 
the United States at least $968.9 million in regard to 
Westlands, plus the potential liabilities associated with the 
Etchegoinberry et al v. United States claim which the United 
states estimates could be as high as $2 billion.
    The settlement agreement between the United States and 
Westlands, as extended, sets a January 2018, deadline for 
Congress to enact settlement legislation before litigation will 
continue to move forward. H.R. 1769 provides the Congressional 
authorization necessary for full implementation of the 
settlement, putting an end to decades-long controversy.

                      Section-by-Section Analysis

    Section 1 sets forth the table of contents and states that 
the Act may be cited as the ``San Luis Unit Drainage Resolution 
Act''.
    Section 2 defines key terms that are used throughout the 
Act.
    Section 3 directs the Secretary of the Interior to 
implement the terms and conditions of the September 15, 2015, 
Agreement between the United States and the Westlands Water 
District to settle litigation concerning the United States' 
duty to provide drainage service.
    Section 4 amends the San Luis Act (Public Law 86-488) to 
eliminate requirements for the Secretary to provide drainage 
services to the San Luis Unit of the CVP within Westlands.
    Section 5 asserts that Westlands shall assume all legal 
responsibility for the management of drainage within its 
boundaries, and shall not discharge drain water outside of its 
boundaries.
    Section 6 directs the Secretary to convert the Westlands' 
Reclamation Project Act of 1939 section 9(e) water service 
contract to a section 9(d) and (c)(1) repayment contract. This 
section also requires the Secretary to enter into a water 
service contract with the Lemoore Naval Air Station to provide 
a guaranteed quantity of CVP water to meet the irrigation needs 
of the Naval Air Station associated with air operations.
    Section 7 suspends Westlands' capital repayment obligation 
and payments under its water service contracts and the April 
11, 1965, repayment contract with the United States until the 
repayment contract is executed. Once the repayment contract is 
executed, Westlands will receive a credit against future 
operation and maintenance costs payable to the United States 
and will be relieved of its capital repayment obligations. 
Westlands will still be responsible for operation and 
maintenance obligations, and for future construction or other 
capitalized costs not yet allocated to Westlands as of the date 
of the Settlement.
    Section 8 directs DOI to transfer to Westlands the title to 
several facilities specified in the Settlement, including a 
portion of the San Luis Drain that lies within Westlands' 
service area, upon execution of the repayment contract.
    Section 9 requires the Secretary to comply with all 
applicable Federal laws, rule, and regulations, including the 
National Environmental Policy Act of 1969 and the Endangered 
Species Act of 1973 when implementing this Settlement 
agreement, as necessary.
    Section 10 states that implementation of the Settlement 
will have no negative impacts on other CVP contractors.
    Section 11 directs the Secretary, for any year in which the 
allocation for south-of-Delta CVP long-term water service 
contractors or repayment contractors is greater than 75%, to 
calculate for Westlands a per acre foot Restoration Fund 
payment based on a projection that Westlands would take 
delivery of the allocation in order to avoid shifting CVP 
Restoration Fund payments from Westlands to CVP preference 
power contractors.

                            Committee Action

    H.R. 1769 was introduced on March 28, 2017, by Congressman 
David G. Valadao (R-CA). The bill was referred to the Committee 
on Natural Resources, and within the Committee to the 
Subcommittee on Water, Power and Oceans. On April 26, 2017, the 
Full Natural Resources Committee met to consider the bill. The 
Subcommittee on Water, Power and Oceans was discharged by 
unanimous consent. Congressman Doug Lamborn (R-CO) offered an 
amendment designated #1; it was agreed to by voice vote. 
Congressman Jared Huffman (D-CA) offered an amendment 
designated 038; it was not agreed to by a bipartisan roll call 
vote of 16 ayes and 24 noes, as follows:


    Congressman Huffman offered and withdrew an amendment 
designated 039. Congressman Huffman offered an amendment 
designated 040; it was not agreed to by a bipartisan roll call 
vote of 16 ayes and 24 noes, as follows:


    Congressman Huffman offered an amendment designated 041; it 
was not agreed to by voice vote. Congressman Jim Costa (D-CA) 
offered and withdrew an amendment designated 003. Congressman 
Raul M. Grijalva (D-AZ) offered an amendment designated 029; it 
was not agreed to by a bipartisan roll call vote of 16 ayes and 
24 noes, as follows:


    No additional amendments were offered, and on April 27, 
2017, the bill, as amended, was ordered favorably reported by a 
bipartisan roll call of 23 ayes and 16 noes, as follows:


            Committee Oversight Findings and Recommendations

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

      Compliance With House Rule XIII and Congressional Budget Act

    1. Cost of Legislation and the Congressional Budget Act. 
With respect to the requirements of clause 3(c)(2) and (3) of 
rule XIII of the Rules of the House of Representatives and 
sections 308(a) and 402 of the Congressional Budget Act of 
1974, the Committee has received the following estimate for the 
bill from the Director of the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, July 7, 2017.
Hon. Rob Bishop,
Chairman, Committee on Natural Resources,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1769, the San Luis 
Unit Drainage Resolution Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Aurora 
Swanson.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 1769--San Luis Unit Drainage Resolution Act

    Summary: H.R. 1769 would ratify a settlement agreement 
negotiated in 2015 between the United States and the Westlands 
Water District (district) in California and would amend current 
law in accordance with provisions of that agreement. 
Specifically, the bill would:
           Eliminate the statutory requirement for the 
        United States to provide drainage services for farmland 
        irrigated within the district's boundaries;
           Direct the Bureau of Reclamation (BOR) to 
        enter into a water contract with the district 
        consistent with the terms of the settlement agreement;
           Cancel the district's obligation to repay 
        the federal government for its share of constructing 
        the Central Valley Project (CVP) and the costs 
        allocated to the district to plan and design drainage 
        infrastructure; and
           Require BOR to apply a credit against the 
        district's CVP operating costs equal to payments the 
        district made for its capital obligations between the 
        date of the settlement agreement (September 2015) and 
        enactment of the legislation.
    CBO estimates that enacting the legislation would reduce 
offsetting receipts (which has the effect of increasing direct 
spending) by $309 million over the 2017-2027 period. Because 
enacting H.R. 1769 would affect direct spending, pay-as-you-go 
procedures apply. Enacting the bill would not affect revenues.
    CBO also estimates that implementing the legislation would 
reduce the need for discretionary appropriations to construct 
the drainage facilities in the district. CBO expects that those 
facilities will take more than a decade to complete under 
current law. According to estimates from BOR, completing the 
part of the project that will provide drainage for the district 
will cost about $2.5 billion. By relieving the federal 
government of those obligations, CBO estimates that 
implementing H.R. 1769 would reduce spending subject to 
appropriation for the project by about $1.5 billion over the 
next ten years (and by $1 billion in later years). Under 
current law, the district water users are required to repay 
those costs in the decades following the project's completion 
(that is, after 2027).
    Under the 2015 settlement agreement that would be ratified 
by H.R. 1769, the district would cooperate with the federal 
government to resolve pending litigation stemming from the 
government's failure to provide drainage services to the 
district. The outcome, timing, and amount of judgments or 
settlements, if any, that would resolve the litigation under 
current law are highly speculative. Consequently, this cost 
estimate does not reflect any potential savings to the federal 
government from avoiding such litigation. However, on the basis 
of information from the Department of Justice (DOJ), BOR, and 
other stakeholders, CBO estimates that the cost of such 
judgments or settlements to resolve ongoing litigation under 
current law could range from $0 to $2 billion.
    Further information about the potential costs of the 
pending litigation against the federal government is included 
below under the heading ``Additional Information.''
    CBO estimates that enacting the bill would not increase net 
direct spending or on-budget deficits by more than $5 billion 
in any of the four consecutive 10-year periods beginning in 
2028.
    H.R. 1769 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the federal government: The estimated 
budgetary effects of H.R. 1769 are shown in the following 
table. The costs of this legislation fall within budget 
function 300 (natural resources and environment).
    Basis of estimate: For this estimate, CBO assumes that H.R. 
1769 will be enacted near the end of 2017 and that the 
provisions of the settlement agreement will be implemented as 
required by the legislation.

                                                                        TABLE 1--ESTIMATED BUDGETARY EFFECTS OF H.R. 1769
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           By fiscal year, in millions of dollars--
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                                                                2017      2018      2019      2020      2021      2022      2023      2024      2025      2026      2027    2017-2022  2017-2027
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  INCREASES IN DIRECT SPENDING
 
Capital Obligation Canceled:
    Estimated Budget Authority..............................        26        26        26        26        26        26        26        26        26        26        26        157        288
    Estimated Outlays.......................................        26        26        26        26        26        26        26        26        26        26        26        157        288
Planning Costs Canceled:
    Estimated Budget Authority..............................         3         1         1         1         I         1         1         1         1         1         1          6          9
    Estimated Outlays.......................................         3         1         1         1         1         I         I         1         1         1         1          6          9
Credit for CVP Operating Costs:
    Estimated Budget Authority..............................         9         4         0         0         0         0         0         0         0         0         0         13         13
    Estimated Outlays.......................................         9         4         0         0         0         0         0         0         0         0         0         13         13
    Total Costs:
        Estimated Budget Authority..........................        38        31        27        27        27        27        27        27        27        27        27        176        309
        Estimated Outlays...................................        38        31        27        27        27        27        27        27        27        27        27        176        309
 
                                                                         DECREASES IN SPENDING SUBJECT TO APPROPRIATION
 
Estimated Budget Authority..................................         0      -100      -100      -150      -150      -200      -200      -250      -250      -300      -300       -700     -2,000
Estimated Outlays...........................................         0       -30       -50       -80      -100      -140      -160      -190      -210      -240      -260       -400     -1,460
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: CVP = Central Valley Project. Components may not sum to totals because of rounding. Enacting the bill also would increase direct spending by about $96 million atter 2027 from additional
  costs related to canceling the district's capital obligations and repayment of planning costs.

Increases in direct spending

    Capital Obligation Canceled. H.R. 1769 would direct BOR to 
cancel the district's remaining obligation to repay the federal 
government for a share of the costs to construct the CVP. That 
cancelation would be contingent upon BOR and the district 
negotiating a new contract to repay the costs of supplying 
irrigation water to the district consistent with the terms 
specified in the settlement agreement.\1\ BOR also would 
transfer to the district title to seven facilities located 
within the district's service area. The district has already 
assumed the responsibility for operating and maintaining those 
facilities.
---------------------------------------------------------------------------
    \1\The proposed repayment contract would replace existing water 
service contracts between BOR and the district. Typically, agreements 
between the federal government and water contractors to deliver water 
for irrigation, municipal, and industrial purposes from federally built 
projects are governed by either water service contracts or repayment 
contracts. Water service contracts are used when a construction project 
is still in progress and the final costs--including the contractors' 
share of those costs--are not yet known. They are also used when a 
contractor does not want a permanent contract. Repayment contracts are 
available to contractors when final construction costs and the 
contractor's share of those costs are known.
---------------------------------------------------------------------------
    Based on an analysis of information from BOR about the 
district's remaining obligation to the government for repaying 
the cost of constructing the CVP, CBO estimates that canceling 
annual payments from the district to the federal government for 
those obligations would increase direct spending (by reducing 
offsetting receipts) by $288 million over the 2017-2027 period 
and about $78 million after 2027.
    Planning Costs Canceled. Under current law, the costs to 
plan and design facilities to drain irrigation water are an 
obligation of the beneficiaries of the federal irrigation 
project. The district's share of those costs total $24 million 
and will be repaid in annual installments of $600,000 over a 
40-year period. Under the bill, that obligation also would be 
canceled. Additionally the bill would cancel the district's 
obligation to pay BOR $3 million for a portion of costs to 
operate and maintain a subsurface drainage project that 
protects wildlife refuges and wetlands in the region.
    In total, CBO estimates that enacting those provisions 
would reduce offsetting receipts by $9 million over the 2017-
2027 period and about $17 million after 2027.
    Credit for CVP Operating Costs. The settlement agreement 
between the district and the federal government was signed in 
September 2015. Since then the district has paid the federal 
government $13 million toward its share of CVP's construction 
costs. H.R. 1769 would require BOR to credit those amounts 
against the district's share of the project's future operating 
costs. On the basis of information from BOR about the 
district's annual payments for operating the CVP, CBO estimates 
that enacting this provision would reduce offsetting receipts 
by $9 million in 2017 and $4 million in 2018.

Decreases in spending subject to appropriation

    Under current law, BOR is required to provide services to 
drain waste water from irrigated farmland in the San Luis Unit 
(SLU). In 2000, the Ninth Circuit Court of Appeals ordered BOR 
to provide that service promptly; the ruling stems from 
litigation (Firebaugh Canal Co. v. United States) brought 
against the federal government for failure to provide drainage 
pursuant to the San Luis Act (Public Law 86-488). The court 
temporarily postponed that requirement until January 2018 to 
allow time to negotiate the settlement and pass related 
legislation.
    In 2012 the district also sued the United States claiming 
that the federal government's failure to provide drainage 
services constituted a breach of contract (Westlands Water 
District v. United States). In January 2013 the Court of 
Federal Claims determined that water contracts between the 
government and the district did not include an enforceable 
promise to provide drainage to the district and the United 
States' request to dismiss the district's claim was granted. 
The district appealed the decision to the Federal Circuit, 
which also stayed that case until January 2018.
    Under current law, after the stays expire in January 2018, 
the drainage system could be constructed over the following 10 
to 15 years, assuming the Congress appropriated the necessary 
amounts and the district agreed to repay those costs. Under the 
bill, CBO estimates that by eliminating that requirement, the 
federal government would no longer have to spend $1.5 billion 
in appropriated funds over the 2018-2027 period (and the 
district would no longer be obligated to repay those costs in 
later years).
    Pay-as-you-go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending and 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

     TABLE 2--CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1769, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON NATURAL RESOURCES ON APRIL 27, 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2017    2018    2019    2020    2021    2022    2023    2024    2025    2026    2027   2017-2022  2017-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact............      38      31      27      27      27      27      27      27      27      27      27       176        309
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term direct spending and deficits: CBO 
estimates that enacting H.R. 1769 would not increase net direct 
spending or on-budget deficits by more than $5 billion in any 
of the four consecutive 10-year periods beginning in 2028.
    Intergovernmental and private-sector impact: H.R. 1769 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would benefit the Westlands Water District 
in California's Central Valley. Any costs incurred by the 
district associated with implementing the terms of settlement 
agreement would result from voluntary commitments.
    Additional information:

Background

    The SLU of the Westlands Irrigation District consists of 
about 500,000 acres of irrigated farm land within the CVP. In 
1960, the San Luis Act, which established the SLU, required 
that water delivered to the unit for irrigation purposes also 
include services to drain waste water and prevent salt from 
accumulating in the soil. Despite the 2000 court decision, to 
date BOR has not provided consistent or comprehensive drainage 
services and some local landowners contend that the lack of 
drainage has caused salt to accumulate in the soil, limiting 
its usefulness for farming.
    Some landowners have sued the federal government alleging 
that damage to the soil from failing to provide drainage has 
caused them financial harm. Under current law, the Court of 
Federal Claims may find the federal government owes the 
landowners compensation for the loss in their property value. 
However, the statutory requirement for the United States to 
construct drainage facilities would persist absent the pending 
settlement agreement and enactment of H.R. 1769.
    Enacting H.R. 1769 and implementing the settlement 
agreement in accordance with the legislation aims to resolve 
the existing litigation related to drainage in the SLU.

Litigation

    In 2011 landowners within the district filed a claim 
against the United States (Etchegoinberry v. United States) 
alleging that the government's failure to provide drainage 
services damaged nearly 200,000 acres of farm land resulting in 
a partial physical taking of their property without just 
compensation. DOJ and other stakeholders have estimated that 
the federal government's liability for the pending case could 
range from nothing to as much as $2 billion to resolve the 
claim.
    To date, the Etchegoinberry court has not issued a decision 
on the merits, and there is no direct precedent for the claim. 
Additionally, there is a history of litigation delays, a 
significant likelihood of appeals, and these parties have been 
litigating related issues for nearly two decades. For these 
reasons, it is unclear whether the plaintiffs would ultimately 
prevail in the takings case, the amount of the damages 
assessed, if any, and when that litigation would finally be 
resolved.
    A previous settlement reflects one possible outcome. In 
2002 the federal government settled a similar takings lawsuit 
involving landowners in the district for about $4,200 per acre. 
Extrapolating from that settlement and assuming additional 
amounts for appreciation in the market value of farmland, the 
potential exposure for the pending takings case would total 
about $1 billion, roughly in the middle of the range of 
possible outcomes.
    If the federal government incurs compensation costs related 
to the pending 2011 lawsuit--through a settlement or court 
order--payments would come from the Judgment Fund (a permanent, 
indefinite appropriation for claims and judgments against the 
United States) and would increase direct spending. However, 
because of uncertainty about the outcome, timing, and magnitude 
of a potential judgment or settlement payment, CBO has no basis 
for assessing the outcome of this litigation.
    Estimate prepared by: Federal costs: Aurora Swanson; Impact 
on state, local, and tribal governments: Jon Sperl; Impact on 
the private sector: Amy Petz.
    Estimate approved by: Theresa A. Gullo, Assistant Director 
for Budget Analysis.
    2. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is to affirm an agreement between the 
United States and Westlands Water District dated September 15, 
2015.

                           Earmark Statement

    This bill does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined 
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of 
the House of Representatives.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                       Compliance With H. Res. 5

    Directed Rule Making. This bill does not contain any 
directed rule makings.
    Duplication of Existing Programs. This bill does not 
establish or reauthorize a program of the federal government 
known to be duplicative of another program. Such program was 
not included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-139 
or identified in the most recent Catalog of Federal Domestic 
Assistance published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169) as relating to other programs.

                Preemption of State, Local or Tribal Law

    This bill is not intended to preempt any State, local or 
tribal law.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                           PUBLIC LAW 86-488


Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, That (a) for 
the principal purpose of furnishing water for the irrigation of 
approximately five hundred thousand acres of land in Merced, 
Fresno, and Kings Counties, California, hereinafter referred to 
as the Federal San Luis unit service area, and as incidents 
thereto of furnishing water for municipal and domestic use and 
providing recreation and fish and wildlife benefits, the 
Secretary of the Interior (hereinafter referred to as the 
Secretary) is authorized to construct, operate, and maintain 
the San Luis unit as an integral part of the Central Valley 
project. The principal engineering features of said unit shall 
be a dam and reservoir at or near the San Luis site, a forebay 
and afterbay, the San Luis Canal, the Pleasant Valley Canal, 
and necessary pumping plants, distribution systems, drains, 
channels, levees, flood works, and related facilities, [but] 
but such features do not include distribution systems or drains 
within Westlands, and no facilities shall be constructed for 
electric transmission or distribution service which the 
Secretary determines, on the basis of an offer of a firm fifty-
year contract from a local public or private agency, call 
through such contract be obtained at less cost to the Federal 
Government than by construction and operation of Government 
facilities. The works (hereinafter referred to as joint-use 
facilities) for joint use with the State of California 
(hereinafter referred to as the State) shall be the dam and 
reservoir at or near the San Luis site, forebay and afterbay, 
pumping plants, and the San Luis Canal. The joint-use 
facilities consisting o ? the dam and reservoir shall be 
constructed, and other joint-use facilities may be constructed, 
so as to permit future expansion; or the joint-use facilities 
shall be constructed initially to the capacities necessary to 
serve both the Federal San Luis unit service area and the 
State's service area, as hereinafter provided. In constructing, 
operating, and maintaining the San Luis unit, the Secretary 
shall be governed by the Federal reclamation laws (Act of June 
17, 1902 (32 Stat. 388), and Acts amendatory thereof or 
supplementary thereto). Construction of the San Luis unit shall 
not be commenced until the Secretary has (1) secured, or has 
satisfactory assurance of his ability to secure, all rights to 
the use of water which are necessary to carry out the purposes 
of the unit and the terms and conditions of this Act, and (2) 
received 'satisfactory assurance from the State of California 
that it will make provision for a master drainage outlet and 
disposal channel for the San Joaquin Valley, as generally 
outlined in the California water plan, Bulletin Numbered 3, of 
the California Department of Water Resources, which will 
adequately serve, by connection therewith, the drainage system 
for the San Luis unit or has made provision for constructing 
the San Luis interceptor drain to the delta designed to meet 
the drainage requirements of the San Luis unit as generally 
outlined in the report of the Department of the Interior, 
entitled ``San Luis Unit, Central Valley Project,'' dated 
December 17, 1956, except that the provision of drainage or 
drainage service under section 1(a) shall not apply to lands 
within Westlands.
  (b) No water provided by the Federal San Luis unit shall be 
delivered in the Federal San Luis service area to any water 
user for the production on newly irrigated lands of any basic 
agricultural commodity, as defined in the Agricultural Act of 
1949, or any amendment thereof, if the total supply of such 
commodity as estimated by the Secretary of Agriculture for the 
marketing year in which the bulk of the crop would normally be 
marketed and which will be in excess of the normal supply as 
defined in section 301(b) (10) of the Agricultural Adjustment 
Act of 1938, as amended, unless the Secretary calls for an 
increase in production of such commodity in the interest of 
national security.

           *       *       *       *       *       *       *

  Sec. 5. [In constructing, operating, and maintaining a 
drainage system for the San Luis unit, the Secretary is 
authorized to permit the use thereof by other parties under 
contracts the terms of which are as nearly similar as is 
practicable to those required by the Federal reclamation laws 
in the case of irrigation repayment or service contracts and is 
further authorized to enter into agreements and participate in 
construction and operation of drainage facilities designed to 
serve the general area of which the lands to be served by the 
San Luis unit are a part, to the extent the works authorized in 
section 1 of this Act contribute to drainage requirements of 
said area.] Notwithstanding any other provision of law, the 
Secretary of the Interior shall have no duty to provide 
drainage or drainage service to Westlands. Westlands shall be 
responsible for the management of drainage water within its 
boundaries, in accordance with Federal and California law 
consistent with the ``Agreement between the United States and 
Westlands Water District August 2015'', signed September 15, 
2015. The Secretary is also authorized to permit the use of the 
irrigation facilities of the San Luis unit, including its 
facilities for supplying pumping energy, under contracts 
entered into pursuant to section 1 of the Act of February 
21,1911 (36 Stat. 925; 43 U.S.C. 523).

           *       *       *       *       *       *       *

  Sec. 8. There is hereby authorized to be appropriated for 
construction of the works of the San Luis unit, including 
joint-use facilities, authorized by this Act, [other than 
distribution systems and drains,] the sum of $290,430,000, plus 
such additional amount, if any, as may be required by reason of 
changes in costs of construction of the types involved in the 
San Luis unit as shown by engineering indexes. Said base sum of 
$290,430,000 shall, however, be diminished to the extent that 
the State makes funds or lands or interests in land available 
to the Secretary pursuant to sections 2 or 3 of this Act which 
decrease the costs which would be incurred if the works 
authorized in section 1 of of this Act (including provision for 
their subsequent expansion) were constructed solely as a 
Federal project. There are also authorized to be appropriated, 
in addition thereto, such amounts as are required [(a) for 
construction of such distribution systems and drains as are not 
constructed by local interests, but not to exceed in total cost 
the sum of $192,650,000, and (b)] for operation and maintenance 
of the unit.[: Provided, That no funds shall be appropriated 
for construction of distribution systems and drains prior to 
ninety calendar days (which ninety days, however, shall not 
include days on which either the House of Representatives or 
the Senate is not in session because of an adjournment of more 
than three calendar days to a day certain) after a contract has 
been submitted to the Congress calling for complete repayment 
of the distribution systems and drains within a period of forty 
years from the date such works are placed in service. All 
moneys received by the Secretary from the State under this Act 
shall be covered into the same accounts as moneys appropriated 
hereunder and shall be available, without further 
appropriation, to carry out the purposes of this Act.]

                            DISSENTING VIEWS

    H.R. 1769 would approve a legal settlement between the 
federal government and the Westlands Water District 
(Westlands). Unfortunately, the agreement is missing 
significant budgetary, public health, and environmental 
safeguards, including several previously deemed essential by 
the Obama Administration. As such, we oppose H.R. 1769 and the 
Westlands Settlement Agreement it would approve.
    The San Luis Act of 1960 authorized construction projects 
to provide irrigation water for the San Luis Unit, which is 
comprised of the Westlands Water District and three smaller 
water districts. The 600,000-acre Westlands Water District is 
the largest irrigation district in the United States and covers 
approximately three-quarters of the San Luis Unit's service 
area. Westlands contracts with the U.S. Bureau of Reclamation 
to deliver water primarily to agricultural water users that 
produce an average of $1 billion in crop sales each year.\1\ 
H.R. 1769 would relieve the federal government of an obligation 
under the San Luis Act to build agricultural drainage for 
Westlands in exchange for taxpayer-financed benefits.
---------------------------------------------------------------------------
    \1\Westlands Water District Homepage, available at: http://
wwd.ca.gov/about-westlands/.
---------------------------------------------------------------------------
    Recognizing that much of the land in the San Luis Unit has 
saline and poorly drained soil, the San Luis Act required the 
state of California or the federal government to agree to build 
a drainage system. The U.S. Bureau of Reclamation eventually 
agreed to build a drain after the legislation passed and in 
1968 began construction of a 200-mile drain to transport 
drainage wastewater from the San Luis Unit and discharge it 
into the Sacramento-San Joaquin River Delta (Delta). After 
significant public concerns were raised about dumping drainage 
wastewater into the Delta--California's most important drinking 
water source the federal government halted construction of the 
drain at a place called the Kesterson Reservoir.
    In the 1980s, field studies by the U.S. Fish and Wildlife 
Service revealed that drainage wastewater from Westlands and 
the San Luis Unit contained a highly toxic element called 
selenium, which is common to the soils of the San Luis Unit, 
and is deadly in high concentrations to humans and wildlife. 
The drainage wastewater killed thousands of waterfowl and 
caused severe wildlife deformities at the Kesterson Reservoir. 
As a result, the U.S. Bureau of Reclamation closed the San Luis 
Drain, litigation against the federal government ensued, and 
court rulings subsequently found that unless the San Luis Act 
of 1960 is amended, the Department of Interior is still 
obligated to finance drainage for Westlands and San Luis Unit 
water contractors.
    H.R. 1769 rightfully amends the San Luis Act of 1960 to 
remove the federal government's drainage obligation for 
Westlands (though not for the rest of the San Luis Unit); 
however, the legislation also includes several harmful 
provisions and lacks other necessary provisions previously 
identified by the Obama Administration as necessary for any 
balanced drainage settlement.
    For example, the Obama Administration previously stated 
that any settlement should require the Westlands Water District 
to prepare a comprehensive drainage management plan ``with 
measurable environmental objectives, including water quality 
and specific, enforceable performance measures.''\2\ The 
current settlement agreement approved by H.R. 1769 includes 
neither.
---------------------------------------------------------------------------
    \2\Letter from Michael L. Connor, Commissioner of the Bureau of 
Reclamation, to Senator Dianne Feinstein, September 1, 2010.
---------------------------------------------------------------------------
    The Obama Administration also called for the Westlands 
Water District to ``permanently retire a minimum of 200,000 
acres of the most drainage impaired lands''\3\ to reduce the 
amount of drainage wastewater being generated. The current 
settlement agreement calls for the permanent retirement of just 
100,000 acres, much of which has already been retired according 
to the Department of Interior.\4\ In addition, the George W. 
Bush Administration previously recommended the retirement of 
194,000 acres of land within Westlands and found 308,000 acres 
of land retirement to be the National Economic Development 
Alternative.\5\
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    \3\Ibid.
    \4\Briefing held by Department of the Interior officials for House 
and Senate staff on September 21, 2015.
    \5\United States Bureau of Reclamation (2007). San Luis Drainage 
Feature Re-evalaution Record of Decision. Available at http.//
www.usbr.gov/mp/mp150/envdocs/San_Luis_Drainage_Feature_Re-
evaluation_ROD.pdf.
---------------------------------------------------------------------------
    The Obama Administration previously called for reducing the 
water contract quantity for Westlands ``to an annual amount of 
806,000 acre-feet of Project Water for irrigation.''\6\ The 
current settlement agreement would not reduce Westlands'' 1.193 
million acre-feet contract amount. The Environmental Protection 
Agency (EPA) has stated that Westlands' current contract 
quantities are ``unrealistic given the current and anticipated 
restraints on deliveries of an oversubscribed Delta 
system.''\7\ The Hoopa Valley Tribe and other water users have 
rightly raised concerns about the settlement agreement's 
potential to lock in unsustainable water diversions to meet 
Westlands' water demands.
---------------------------------------------------------------------------
    \6\Letter from Michael L Connor, Commissioner of the Bureau of 
Reclamation, to Senator Dianne Feinstein, September 1, 2010.
    \7\United States Environmental Protection Agency Associate Director 
Karen Schwinn. April 16, 2008 Letter to United States Bureau of 
Reclamation.
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    The Obama Administration previously called for requiring 
the Westlands Water District's total water contract quantity to 
``remain subject to renewal in the future.''\8\ The current 
settlement agreement does not include provisions that the 
contract quantity be subject to renewal in the future.
---------------------------------------------------------------------------
    \8\Letter from Michael L. Connor, Commissioner of the Bureau of 
Reclamation, to Senator Dianne Feinstein, September 1, 2010.
---------------------------------------------------------------------------
    H.R. 1769 also forgives approximately $375 million owed by 
Westlands, a water district that boasts of billion dollar crop 
sales every year, gives Westlands a permanent water contract, 
hands over federal facilities worth millions, and exempts large 
agribusiness in the Westlands service area from legal 
restrictions meant to limit taxpayer subsidies for large 
industrial farms.
    While proponents of H.R. 1769 have claimed that the 
taxpayer costs of the bill would be outweighed by the cost 
savings from settling litigation, the Congressional Budget 
Office (CBO) found in a preliminary estimate last year that 
enacting legislation to approve the Westlands settlement would 
result in ``a loss of offsetting receipts [to the federal 
government] totaling roughly $300 million over the 10-year 
budget window from debt relief and other concessions to the 
Westlands Water District.'' CBO said further that while there 
could be savings from enacting settlement legislation, there is 
``significant uncertainty about the likelihood, timing, and 
amount of any savings'' and ``CBO expects any potential savings 
would not fully offset the more certain costs.''\9\
---------------------------------------------------------------------------
    \9\November 9, 2016 email correspondence from Congressional Budget 
Office to House Natural Resources Committee staff.
---------------------------------------------------------------------------
    Drainage wastewater from Westlands and the San Luis Unit 
can cause serious damage and H.R. 1769 has no specific 
enforcement and performance standards to ensure that Westlands 
pays for a drainage system that protects California's 
environment and drinking water. The need for robust enforcement 
and performance standards is especially evident in light of 
charges last year against the Westlands Water District by the 
Securities and Exchange Commission for ``misleading investors 
about its financial condition.''\10\
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    \10\March 9, 2016 United States Securities and Exchange Commission 
Press Release, available at: https://www.sec.gov/news/pressrelease/
2016-43.html.
---------------------------------------------------------------------------
    Several amendments were offered during Committee markup to 
improve H.R. 1769. One amendment offered by Ranking Member 
Grijalva would have required federal agencies to certify that 
the Westlands Settlement Agreement is a net-benefit for 
American taxpayers before the settlement is enacted. Chairman 
Bishop has established a similar requirement for committee 
consideration of water settlements for Indian tribes. Committee 
Republicans rejected the amendment.
    An amendment offered by Water, Power, and Oceans 
Subcommittee Ranking Member Huffman would have prohibited self-
dealing by barring former employees and registered lobbyists 
for the Westlands Water District from enforcing and carrying 
out the settlement agreement should they join the Trump 
Administration. Last month, President Trump nominated a former 
Westlands lobbyist to be the Deputy Secretary of Interior. 
Committee Republicans rejected Representative Huffman's 
amendment.
    Other amendments offered by Representative Huffman would 
have required the United States to be indemnified against all 
drainage-related litigation before settlement enactment and 
would have required the development of a comprehensive drainage 
management plan to protect human health, the environment, and 
water quality. Committee Republicans rejected these amendments 
as well.
    Without significant changes, H.R. 1769 constitutes a bad 
deal for taxpayers, the environment, and public health and 
should be rejected by Congress.
                                   Raul M. Grijalva,
                                           Ranking Member, House 
                                               Committee on Natural 
                                               Resources.
                                   Jared Huffman,
                                           Ranking Member, Subcommittee 
                                               on Water, Power and 
                                               Oceans.
                                   Colleen Hanabusa,
                                           Member of Congress.
                                   Darren Soto,
                                           Member of Congress.
                                   Grace F. Napolitano,
                                           Ranking Member.
                                   Donald S. Beyer, Jr.,
                                           Member of Congress.
                                   Nanette Diaz Barragan,
                                           Member of Congress.
                                   A. Donald McEachin,
                                           Ranking Member, Subcommittee 
                                               on Oversight and 
                                               Investigations.