State Auditors Look Into 'Potentially Improper' Delta Tunnel Transactions

Commentary: Last week, Northern and Southern California state legislators had a rare breakthrough over one of the state’s most divisive issues — water.

The Joint Legislative Audit Committee voted to instruct the State Auditor to launch an audit of Governor Jerry Brown’s proposed Delta Tunnels. Recent revelations show the project has murky funding and even supporters know the tunnels cannot be built on a financial house of cards.

The Delta Tunnels would be 40-foot tall, 35-mile long tunnels dug beneath the San Francisco Bay-Delta estuary. They would deliver fresh Sacramento River water to state and federal projects that send water to agriculture in the San Joaquin Valley and Southern California cities. California voters rejected the Peripheral Canal proposal in 1982.

Now rebranded the “CA WaterFix,” the project would cost $17 billion, with interest and operational costs bringing the total payback amount to over $50 billion. “CA WaterFix” maintains the project will be paid for entirely by those water districts who would get the water, not state or federal taxpayers. To date, $248 million has been spent on the Delta Tunnels planning.

Documents recently released under the Public Records Act reveal potentially improper transactions involving public funds within the California Department of Water Resources, Westlands Water District, San Luis Delta-Mendota Water Authority, Metropolitan Water District of Southern California (MWD), and Santa Clara Valley Water District. Meanwhile, the Deputy Inspector for the U.S. Department of Interior is investigating whether the California Department of Water Resources siphoned off millions of Federal taxpayer dollars meant for improving fish habitat to instead pay for the Delta Tunnels’ environmental impact report.

The Howard Jarvis Taxpayers Association said the project’s funding had become “a shell game.”

Who Will Pay for the Delta Tunnels?

So far, none of the water districts have committed to paying their fair share of the $17 billion project.

MWD has said they won't pay for the project if their ag partners, Westlands Water District and the San Luis Delta-Mendota Water Authority, do not participate financially. The agricultural water districts announced they would not pay to complete the current preliminary work on the tunnels unless the project first won regulatory approval. The agricultural parties don’t seem entirely convinced the investment will bring enough water to be worth the expense. Meanwhile, the Fitch Credit rating services has issued a negative credit rating to San Luis and Westlands due to their outstanding debt load and “a little Enron accounting.”

If big agricultural users who will most benefit from the water cannot afford their 40 percent of a $17 billion project, who will subsidize these users?

Most likely state and federal taxpayers, in violation of the original funding agreement for the project. AP has reported that state officials told Metropolitan that “any additional funding needs to complete the planning phase will be provided by state or federal sources.”

No wonder legislators want an audit!

Who Would Benefit?

An estimated 70 percent of the water from the Delta Tunnels will flow to farms in the southern San Joaquin Valley. These farms represent just .3 percent of the state’s GDP.

Mother Jones recently reported Stewart and Lynda Resnick’s firm “The Wonderful Company” has cornered the market in pistachios, pomegranates, and even water sales. They hope to expand their holdings with Delta Tunnels water and are funding PR efforts supporting the Tunnels.

Metropolitan Water District officials (some of the highest paid public officials in California) would also benefit from a project that helps them continue selling imported water as Southern California’s water wholesaler.

Who Would Be Harmed?

The science is clear. Water exports from the San Francisco Bay-Delta are killing off endangered species and causing encroaching saltwater that harms Delta farms that have been producing food for more than a century. Native salmon and smelt are on the edge of extinction and water quality in the Bay-Delta has plummeted. Already 90 percent of the fisheries in the San Francisco Bay-Delta have vanished. Famed chef Alice Waters is the latest to speak up on behalf of the state’s salmon population and what we stand to lose.

The burden of proof that the Tunnels won’t further harm to the estuary, endangered fish, or Bay-Delta communities, now lies in the hands of the California Department of Water Resources and the U.S. Bureau of Reclamation. The EPA has rejected their plan twice already.

Are the Tunnels a Good Investment?

Climate scientists predict less Sierra snowpack and fewer rainstorm events in the future. There may be no reliable water source to fill the Tunnels.

Sea-level rise also presents a huge problem for the proposal. The lead engineer recently testified at State Water Board hearings that the Delta Tunnels have a lifespan of 100 years, while the lead operations officer testified a few days later that they have only planned for 18 inches of sea level rise based on the first year of impact – 2030. Actual sea level rise could give the project a lifespan of only 30 years.

KCET’s Chris Clarke described the Delta Tunnels as “teetering on the edge of obsolescence before the first shovel of earth is dug.”

Is There a Better Way to Spend $17B on Water Infrastructure?

Opponents warn that when interest and operation costs are included, the Tunnels could cost up to $60 billion. Ratepayers and taxpayers would then end up paying as much as $2 billion per year for a thirty-year project and no additional water.

We support major investments in California’s water infrastructure. But the Delta Tunnels are a 20th Century solution that will not “fix” anything and not create one new drop of water.

Let’s instead invest in water conservation, water recycling, groundwater recharge, urban water capture, and replacing lawns with drought-friendly landscapes. Investing in local projects like the ones outlined in the 2015 report by the Environmental Water Caucus, “A Sustainable Water Plan for California.” That's the best way forward for California’s environmental and economic future.

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