In a decision that may be difficult to push Gov. Gavin Newsom to build a huge water tunnel and reshape California’s water system, a federal appeals court rejected the state’s plan to finance the project.
The 3rd Circuit Court of Appeals has ruled against the state Water Department’s plan to issue billions of dollars in bonds to build a 45-mile tunnel under the Sacramento-San Joaquin River Delta.
The decision is a win for California taxpayers and ratepayers, said Roger Moore, an attorney representing six counties in Northern California and two water agencies in the Delta region.
He said it emphasizes that government agencies “must take real steps to ensure transparency and accountability.”
Upholding a 2024 decision by a Sacramento Superior Court judge, the court ruled the water agency has no authority under the 1959 law to issue bonds for the new “unit” of the State Water Project, which carries water from the Delta to farms and cities, and has “exceeded its delegated authority” in planning to finance the tunnel with bonds.
Kirsten Macintyre, spokeswoman for the department, said the court did not say that the Department of Water does not have the authority to build the project or borrow money to pay for it, but rather that the definition of the state presented in the case is “too broad.”
“While DWR respectfully disagrees with that conclusion, we have taken additional steps to resolve this issue,” he said in an email.
Last year, the agency filed a second lawsuit in an effort to assert its authority to issue the bonds, a move MacIntyre said was taken “to deal with the court’s problems.”
If the appeals court’s decision stands and the ongoing trial does not yield a different conclusion, it could lead the Newsom administration to revise its plan to fund the project. Officials may also appeal to the California Supreme Court to hear the case.
The country it is estimated that in 2024 the tunnel could cost $20.1 billion, while opponents say it could three to five times more instead.
State officials said the tunnel, called the Delta Conveyance Project, will be paid for by participating water utilities that agree to pay the bonds.
The tunnel will create a second route to transport water from new uses on the Sacramento River to the south side of the Delta, where pumps send water to State Water Project canals.
A system of canals and pipelines transports water from the Delta to 27 million people in cities from the Bay Area to San Diego, and 750,000 acres of farmland.
In 1960, California voters approved bonds for the construction of the State Water Project. Legislation in 1959 authorized DWR to build the Feather River Project, the first part of the State Water Project.
But in a ruling last week, the court said DWR officials were wrong to rely on that provision. The three judges said they did not allow the agency to issue bonds “under the guise of ‘further maintenance'” for that original water system.
Newsom said the project is important to the state’s future and has made it a priority for his administration.
State officials and supporters of the project say the tunnel will improve the state’s water system to withstand extreme droughts and floods from climate change, and will withstand sea level rise and the dangers of major earthquakes in the region.
Opponents, including environmental activists, fishing groups and tribal leaders, say the project will harm Delta communities and the ecosystem, and beyond. threaten native fish which are already decreasing.
