Drainage District No. 2 was established in February of 1920. The District was originally formed to make improvements to approximately eight miles of Little Dry Creek, which flows through the District's boundaries. Additionally, the District maintains a lateral canal connecting Little Dry Creek to Butte Creek. The District provides drainage services to 51 residential and agricultural parcels for irrigation and stormwater flows. The District is located south and west of the community of Nelson, in the Butte Creek Watershed.
The majority of the District has been identified as a 100-year flood zone on the Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps. Additionally, mapping performed by the State of California Office of Emergency Services (OES) includes large portions of the District in a number of dam failure inundation areas, including Oroville Dam, Thermalito Afterbay and Thermalito Forebay.