Ag Today September 19, 2017

San Joaquin Valley farmers think Sacramento water agencies should help pay for Delta tunnels

By Dale Kasler and Ryan Sabalow, Sacramento Bee

Some Sacramento-area water agencies would end up paying for a small share of the Delta tunnels under a last-minute alternative funding plan pitched by one of the state’s largest farming groups.

Westlands Water District, whose board of directors is scheduled to vote Tuesday on whether to help pay for the tunnels, says it needs to spread the costs among a greater number of water districts, both north and south of the Delta, to make the project affordable to the Fresno and Kings county farmers who get water from Westlands.

As it stands, Westlands officials have suggested that they can’t afford to pay for their share of the tunnels – roughly a quarter of the $17.1 billion project – unless there’s money from everyone who gets water from the federal government’s Central Valley Project.

Westland’s proposal would require participation from additional San Joaquin Valley farmers who are currently exempted from paying for the tunnels. In addition, north-of-Delta agencies that get Central Valley Project water, including the Placer and Sacramento county water agencies and the El Dorado Irrigation District, would have to chip in an additional $15 for every acre-foot of CVP water they receive. The money would go toward the costs of delivering water through the tunnels to a group of wildlife refuges in the San Joaquin Valley.

Westlands’ reasoning: Federal law already requires all CVP contractors, including those north of the Delta, to pay the costs of delivering water to the refuges. So they should have to pay for a portion of the tunnels, too, said Westlands general manager Tom Birmingham.

Westlands’ proposal didn’t sit well Monday with some of the Sacramento-area water agencies, which are already suing to block the tunnels project on environmental grounds.

“Our expectation is we’re not paying for anything unless we get a benefit,” said Einar Maisch, general manager of the Placer County Water Agency.

Water districts further up the Sacramento Valley weren’t eager to contribute, either. “We haven’t seen any financial justification to go along with that proposal,” said Thad Bettner of the Glenn-Colusa Irrigation District, which delivers Central Valley Project water to rice farmers.

The Westlands proposal is a last-minute attempt to restructure the financing for Gov. Jerry Brown’s controversial project. The project is intended to improve the reliability of water deliveries to Westlands and other south-of-Delta districts, while improving the environment for Delta fish species. Throughout the decadelong planning process, state and federal officials have said the costs of the project would be borne exclusively by those districts south of the Delta.

Because of its size, Westlands’ participation in California WaterFix is vital, maybe essential, to having the entire project remain on track.

The Westlands funding proposal could be a long shot. Just last Friday the regional director of the U.S. Bureau of Reclamation, which is helping plan the tunnels, reaffirmed that his agency doesn’t plan to alter the formula for allocating costs to customers of the Central Valley Project. The formula says certain CVP contractors are exempt from having to pay. The bureau’s formula was spelled out earlier this summer.

Westlands’ funding proposal comes at a crucial moment; Westlands is about to become the first water district to decide whether to participate in the project, known formally as California WaterFix. Its board could vote as early as Tuesday, although Birmingham said the directors could delay their decision.

In a memo to its board last week, the Westlands staff said it can’t endorse “a business case” for the tunnels, based on the current cost allocation, unless the cost allocation changes. Westlands is also seeking assurances that the State Water Resources Control Board, which governs how water flows through the Delta, doesn’t do anything that “unreasonably reduces the delivery capability” of the tunnels.

If the funding formula isn’t changed, Birmingham said in an interview Monday that Westlands farmers would see their water costs jump by as much as $475 an acre-foot, to a total of more than $600. If the Westlands formula were adopted, the farmers’ costs would grow by just $173 an acre-foot.

“There aren’t any crops that can be grown in Westlands that would support a cost of $600 an acre-foot or $650 an acre-foot,” Birmingham said.

Westlands’ objections are rooted in the complexities of water deliveries in California. The federal Central Valley Project and a parallel, state-run system called the State Water Project both deliver water through pumping stations near Tracy into a network of canals that bring supplies to the San Joaquin Valley and Southern California.

On the federal side, not all customers are treated the same. A group of Central Valley Project customers called the Exchange Contractors, who hold some of California’s oldest water rights, have special CVP status. They get their Delta deliveries ahead of many other contractors – and their costs are borne by a neighboring group of customers who belong to the Friant Water Authority.

What’s more, if the Exchange Contractors don’t get their full allotment of water, they get to take water that Friant’s supplies from a reservoir off the San Joaquin River. It happened twice during the drought.

This complex relationship affects WaterFix cost allocations. Here’s why: The Bureau of Reclamation has indicated it thinks it can meet its water delivery obligations to the Exchange Contractors even if the tunnels don’t get built. If the Exchange Contractors get all the water they’re owed, then Friant supplies would be safe, too – and Friant customers could decide there’s no reason to contribute to the tunnels.

Westlands officials, however, say the Friant water users should have to participate in WaterFix. Birmingham said he thinks Friant bears a “contractual obligation” to pitch in for the tunnels.

A lot of money is at stake. Friant’s contribution would add more than $2 billion to the pot and significantly reduce Westlands’ financial burden, Birmingham said. He said Friant users would have to spend an extra $173 an acre-foot on water to pay for the tunnels – the same increase that Westlands’ customers would bear, if the bureau agreed to Westlands’ argument.

But so far the Bureau of Reclamation’s plan doesn’t require Friant to pitch in, he said.

Jason Phillips, the chief executive of Friant, said his board could be swayed to pay a share of the tunnels project if “we think that having the tunnels in place ultimately would provide some benefit for Friant worth paying for.”

But he said it would be “nowhere near” what Westlands wants Friant to pay.

“Not even close,” Phillips said.

The State Water Project is taking a different tack. It expects all of its south-of-Delta contractors to pay for the tunnels or find another contractor to take their place. State contractors north of the Delta aren’t expected to pay, said Lisa Lien-Mager, spokeswoman for the California Natural Resources Agency.