Jerry Brown’s Delta Tunnels in Trouble Over Tripling Water Rates and Fed Probe

Gov. Jerry Brown’s $17 billion California Delta WaterFix tunnels are in trouble over a threat to triple water costs and a federal probe of $84.8 million in illegal payments.

The board of the Fresno-based Westlands Water District, America’s largest water supplier, voted 7 to 1 on September 19 to pull out their $4.5 billion, 26 percent participation in the $17 billion WaterFix, which planned to build two 40-foot wide tunnels stretching for 35 miles to protect fish and divert water from the Sacramento River to the California aqueducts that service the San Joaquin Valley farmers and Southern California cities.

The move followed a July 17 presentation by Goldman Sachs to the Westlands Water District titled, “California WaterFix Financing Strategies.” Goldman apparently estimated that to finance the project, the average cost of water exports from the Delta could rise by $260 per acre foot by 2033. That is two to three times the price paid to the Bureau of Reclamation this year.

The U.S. Department of Interior Inspector General also issued an audit that found that during the Obama administration, federal Bureau of Reclamation financial assistance agreements with the State of California’s Bay Delta Conservation Plan (BDCP) did not “fully disclose to Congress and other stakeholders the $84.8 million cost of its participation in the BDCP efforts, including its subsidizing of the Federal Central Valley Project (CVP) water contractors’ share of BDCP costs.”

The Inspector General also found the Bureau of Reclamation was never reimbursed for $50 million of advanced payments and improperly paid $34.8 million of the contractors’ costs through June 30, 2016. The IG stated that the Bureau of Reclamation submitted “inaccurate annual Calfed Bay-Delta certified financial reports” and “the actions it took to fund BDCP planning costs were neither transparent nor consistent with the ‘beneficiaries pay’ principle underlying Reclamation Law.”

The IG referred the matter to the “Assistant Secretary for Policy, Management and Budget for resolution,” a step that may lead to a U.S. Justice Department civil or criminal referral.

The Associated Press obtained documents on September 18 that reveal that the legal language governing California’s biggest water project in half a century has been tweaked so that the tunnels are now just an “update,” rather than a new project. That way every one of the 29 water districts that receive water from the existing California State Water Project will be jointly responsible to pay for the tunnels.

A Harris Farms’ Executive Vice President and Westlands board member told AP that there is no guarantee that the project will consistently increase future water supplies and that “obligating hundreds of family farms” to pay for the tunnels doesn’t make economic sense.

The Los Angeles Metropolitan Water District will vote on continuing as a $4 billion WaterFix investor, and the Santa Clara Valley Water District will also vote on its $2 billion participation. It is estimated that the project will cost residential water users about $3 to $4 a month. But that assumes an on-time completion, and that the project performs as advertised.