Article from Daily Democrat.
http://www.dailydemocrat.com/article/NI/20170923/NEWS/170929921
By Steve Schoonover
Posted: 09/23/17, 6:00 AM PDT
The decision Tuesday by the largest irrigation district in the state to not participate in the project to put two tunnels underneath the Sacramento-San Joaquin River Delta has been hailed by opponents of the project as a sign the project is dead.
But the financing of the project has been so fluid it may not be a fatal blow.
The pullout of the Westlands Water District seems to put a $3 billion hole in the $16 billion funding necessary for the “twin tunnels.”
But the project funding was always a bit “vague,” according to Butte County Counsel Bruce Alpert, with the state and federal partners pursuing separate tacks to pay for their part.
And the route the state is trying take legally obligates Butte County to pay a share of the tunnel project — against the county’s wishes — although the state Department of Water Resources has promised that will not be the case.
The Project
The twin tunnels project, called the California WaterFix, would put two 60-mile tunnels from the Sacramento River north of the delta, directly to the state and federal canals from the south end of the delta that carry water to the San Joaquin Valley, South Bay Area and Southern California.
They would have the capacity to move 9,000 cubic feet of water per second.
Proponents argue the tunnels would provide a more reliable water supply south of the delta and allow natural flows in the delta’s waterways. Some of those flows are reversed these days to get water to the pumps at the south end of the delta. That situation is believed to confuse migrating fish.
Opponents say the pumps could suck the Sacramento River dry — 9,000 cfs is more water than is flowing in the Sacramento River at Hamilton City as of Friday afternoon — and reduce the amount of water needed for fish and to keep salt water out of the delta.
While DWR has been taking the lead on the tunnel project, the federal Central Valley Project would get about 45 percent of the water and was expected to pay that percentage of the cost.
The Federal Part
The Central Valley Project consists of 20 dams and more than 500 miles of major canals that provide agricultural and urban water from Shasta County to Kern County.
It’s a complicated system, but as a generalization it has two parts.
One is a series of dams on Sierra Nevada rivers from Folsom south that provide water to farms and cities on the east side of the Central Valley, from Sacramento south.
The other part is the dams on the Sacramento and Trinity rivers creating Shasta Lake, Trinity Lake and Whiskeytown Reservoir, which provide primarily agricultural water to the west side of the Sacramento and San Joaquin valleys.
That’s the federal water that would move through the twin tunnels.
For the federal part of the project, the primary beneficiaries of the twin tunnels would be the irrigation districts on the west side of the San Joaquin Valley — including Westlands — and wildlife refuges that get about 20 percent of the water.
The Bureau of Reclamation, which runs the federal project, decided only the beneficiaries would pay for the federal share of the tunnel projects cost, and exempted the wildlife refuges.
That would have meant a cost increase for Westlands of almost $500 per acre-foot of water, with the total cost in excess of $600 an acre-foot.
There aren’t any crops that are profitable with irrigation water at $600 an acre-foot, so Westlands asked to have the cost spread around.
It proposed adding $173 per acre-foot for both it and the districts on the east side of the San Joaquin, according to a Sept. 18 article in the Sacramento Bee.
Westlands also sought to have the districts north of the delta pay a share of the cost of water going to the refuges.
Thad Bettner, general manager of the Glenn-Colusa Irrigation District, said the increase would have been about 40 cents an acre-foot in his district. The Bee article said agencies in Sacramento, Placer and El Dorado counties were being asked for about $15 an acre-foot.
Westlands’ alternative didn’t get any support, which led to the vote to pull out of the project.
The State Part
The State Water Project is a little simpler than its federal counterpart. It’s basically Lake Oroville and a few other smaller reservoirs that primarily provide water to cities in Southern California and the Bay Area, although a few small San Joaquin Valley agricultural districts are also served.
How the state planned to finance its part of the project was unclear until July 21 when it filed legal papers asking the Sacramento Superior Court to “validate” a $8.8 billion bond sale.
The filing came the same day DWR certified the state and federal environmental impact documents on the tunnel project, which County Counsel Alpert does not think was a coincidence.
“I think they were hoping we wouldn’t notice” the validation move, he said in August.
The validation request structured the bond sale for the tunnels as paying for an upgrade to the existing system rather than a new project, according to a Sept. 18 report by the Associated Press.
If approved, that would allow the costs of the twin tunnels to be “embedded” in the regular maintenance and operating charges billed to the State Water Contractors, according to Paul Gosselin, director of the Butte County Water and Natural Resources Department.
Each contractor could refuse to pay the addition to its bill, but that would put it in violation of the contract and thereby jeopardize its water supply. That was the gist of memos sent to water districts by DWR, as reported Sept. 18 by the Associated Press.
The approach poses a problem for Butte County, as it is one of the 29 state water contractors.
The county has annual rights to 27,500 acre-feet of water from the lake, although only a couple of thousand acre-feet are used here by the Del Oro Water Co. and the California Water Service Co. The rest is leased to Palmdale in Southern California, although the water is still owned by the county.
Although Butte County — and Plumas County, another State Water Project contractor — have been told verbally they will not be required to contribute to the cost of the twin tunnels, there has been no commitment in writing.
A DWR spokeswoman reaffirmed the verbal pledge Friday afternoon.
“DWR has no plans to charge contractors north of the delta for any construction costs or (operations and maintenance) costs associated with WaterFix,” wrote Lisa Lien-Mager, deputy secretary for communications for the California Natural Resources Agency in an email. “Details are still being worked out as to the exact mechanism, but as stated previously DWR doesn’t intend to ask north-of-delta contractors to pay for the project.”
“I’m not sure how that mechanism would work,” said Alpert. “Everyone would have to agree and I’m not sure the other contractors would agree.”
There’s evidence that’s the case.
Gosselin points to renegotiation of the State Water Project contracts in 2012-2014. DWR was seeking to extend the term of the contracts, which expire in 2035-2037.
At the time, Butte and Plumas counties sought assurances written into their contracts that they would not be billed for costs of the WaterFix. Other contractors objected, and DWR refused, according to Gosselin.
As a result, neither Butte nor Plumas signed.
Despite repeated efforts by the county, “We haven’t heard one word from DWR on this since then,” Gosselin said.
What’s Next
While the Westlands action seems to mess up the federal part of the financing for the twin tunnels, many of the other aspects of the project are also uncertain.
The federal and state environmental impact documents have been challenged by lawsuits by Butte County and a number of other entities, as reported on Aug. 10.
Butte County is also challenging the state’s request for validation of the bond sale. On Sept. 15, a response to DWR’s plan was filed by the county, in concert with Plumas, Yolo, Solano and Contra Costa counties and several other public agencies.
They contend that seeking the bonds is premature as the environmental documents are being contested, the rest of the financing is unclear and construction plans for the tunnels are not complete.
They also challenge DWR’s contention that the tunnels are an upgrade of the “delta unit” of the system.
There is no delta unit. There was for a time, after the Legislature in 1980 approved the Peripheral Canal around the delta, during Jerry Brown’s first stint at governor.
That unit was eliminated when voters approved a referendum killing the canal by a 63-37 percent margin.
The validation is also being challenged by Chico-based AquAlliance, along with the California Water Impact Network, the California Sportfishing Protection Alliance, and California Indian Water Commission, which held a press conference Monday in Chico to announce their opposition.
Alpert said the bond case would take a “long, long time” to resolve, as a number of separate challenges to the state’s position are expected and will have to be consolidated into a single case.
“It could take more along the line of years, not months,” Alpert said.
In light of that, the federal financing issue is one of the least uncertain matters surrounding the twin tunnels.
Alpert doesn’t think the Westlands vote is a final no, but rather a public challenge from the district to those who want to see the project move forward to make some changes.
He suspects more is happening than is visible from outside.
“What you see above the table is not what’s going on,” he said.