Ag Today September 18, 2017

Follow the money – Delta tunnel foes try new strategy

By Dale Kasler and Ryan Sabalow, Sacramento Bee

Opponents of the Delta tunnels proposal, facing a long-shot bid to kill the controversial project on environmental grounds, are now trying to undermine the plan’s financial structure.

Six environmental groups filed court papers late Thursday attempting to derail the state Department of Water Resources’ plans to bankroll the tunnels with billions of dollars in bond financing. The groups said bonds can’t be issued because the tunnels violate California environmental laws and because the project has received illegal subsidies from the U.S. Bureau of Reclamation.

The groups are challenging the state’s authority to finance the $17.1 billion tunnels project, known formally as California WaterFix, said John Buse, an attorney for the Center for Biological Diversity, one of the environmental groups that jumped into the case.

“It has the potential … to really be a knock-out blow to the entire WaterFix scheme,” Buse said.

The challenge comes as the project enters a critical phase. The board of Westlands Water District, the farm-water agency whose participation in the project is considered crucial to its success, is tentatively scheduled to vote Tuesday on whether to pay for its approximately $3.5 billion share of the tunnels. Other major water purchasers plan to make their decisions in late September or early October.

Tunnels foes face an uphill climb as they pursue challenges on environmental grounds.

In late July, Gov. Jerry Brown’s administration gave the tunnels its official blessing, saying WaterFix complies with the California Environmental Quality Act and won’t harm fish, wildlife or humans. Dozens of environmental groups, plus government agencies in the Delta region and greater Sacramento, promptly challenged that finding in court. Experts say lawsuits could prompt further environmental reviews or modifications but are unlikely to kill the tunnels project completely.

It’s unclear whether tunnels opponents can wreck the project’s financing, either.

DWR filed a lawsuit in late July against “all persons interested in the matter” of the tunnels’ financing, in Sacramento Superior Court. The suit, known as a “bond validation action,” is designed to establish that DWR has the authority to issue bonds to pay for WaterFix. Championed by Gov. Jerry Brown, the tunnels are designed to improve water deliveries to State Water Project contractors and customers of the Central Valley Project, a parallel system run by the U.S. government. The contractors would repay the debt over the next several decades.

The environmental groups’ court filing is a response to the state’s bond suit. The groups say DWR can’t issue the bonds in part because federal officials revealed last week that the project received an improper $50 million subsidy from the U.S. Bureau of Reclamation. The U.S. Department of the Interior’s inspector general said the money was spent helping Central Valley Project contractors, such as Westlands, plan the tunnels project.

In their court filing Thursday, the environmental groups say the subsidy violates the state Delta Reform Act, which requires that all costs of the project be paid by those receiving water. They also say financing can’t go forward while the environmental lawsuits already pending haven’t been resolved. Environmental lawsuits in California can take years.

The groups are Friends of the River, the Center for Biological Diversity, Sierra Club California, Restore the Delta, the Center for Food Safety and the Planning and Conservation League.

Lisa Lien-Mager, a spokeswoman for Brown’s Natural Resources Agency, declined to comment on the litigation.

Even if the environmental groups defeat DWR’s ability to sell bonds, the project wouldn’t necessarily die. South-of-Delta water agencies are considering forming a joint powers authority, or JPA, that could take ownership of the project and handle the financing responsibilities.

“If DWR does not have the (bond) authority, a process would be established leading to the potential conveyance of interest in the project to the Finance JPA,” the staff of the Metropolitan Water District of Southern California wrote in a recent memo to its board. Metropolitan’s board plans to vote Oct. 10 whether to pay for its roughly one-fourth share of the tunnels.

The tunnels comprise Brown’s plan to improve the Delta’s fragile eco-system and improve the reliability of water deliveries to Southern California, Silicon Valley and San Joaquin Valley farmers.

The state and federal pumps, located near Tracy in the south Delta, often have to be throttled back to protect fish whose numbers have been decimated by decades of pumping and other environmental woes.

That allows water to flow to the ocean, leaving less for delivery to the south-of-Delta customers. Brown’s administration says the tunnels, by diverting a portion of the Sacramento River’s flow at Courtland and piping it underground to the Tracy pumps, would improve how water courses through the estuary and help protect fish.


Dale Kasler: 916-321-1066, @dakasler,