Metropolitan Water District of Southern California leadership increases the possibility of much-needed relief for California’s aging water-supply infrastructure.

The California WaterFix is the most expensive, important, and controversial water infrastructure project in California, and perhaps the country, in decades. At a price tag of US$16.3 billion, WaterFix

is designed to restore reliability to an aging water-supply infrastructure that serves 25 million Californians and more than three million acres of California farmland. WaterFix can be thought of as an insurance policy for the California economy, and indeed society at large, against possible — and potentially catastrophic — further loss of this critical water supply. An historic July 10 vote by the Metropolitan Water District of Southern California (Metropolitan) was a major step forward, and vote of confidence, for WaterFix, increasing the likelihood that the promise of WaterFix will be realized.

The Evolution of California WaterFix

Together, the State Water Project (SWP) and the Central Valley Project (CVP) form the largest water supply system in the country. This system diverts water from the Sacramento/San Joaquin Delta (Delta) and conveys it hundreds of miles to places like Silicon Valley, Southern California, and otherwise parched farmland that cannot survive on local supplies alone. The Delta is the lynchpin of this system, the gateway through which virtually all water conveyed from the Northern California rivers to the rest of the state must pass. The Delta is used this way because the SWP/CVP system was never completed. Original planning decades ago proposed to run fresh river water around the Delta. Instead the water enters the Delta where it mixes with brackish Delta water before it is diverted.This reliance on the Delta subjects the SWP/CVP to the uncertainties associated with various stressors — including declining fisheries, vulnerable levees, salinity issues, and sea level rise — that impact the Delta. These stressors present significant challenges to maintaining water supply diversions from the existing SWP/CVP intakes and pumps located along the southern edge of the Delta. For example, massive failure of Delta levees, which could occur with a major earthquake, could cause the current SWP/CVP intakes to be overwhelmed with salt water from the ocean, perhaps for years.

WaterFix proposes to mitigate these problems by constructing a new intake on the Sacramento River itself, upstream and north of the Delta, and then connecting that intake to the existing in-Delta pumps via twin, 35-mile long, 40-foot diameter tunnels, running 150 feet beneath the Delta. These tunnels would have the capacity to convey up to 9,000 cubic feet of water per second (cfs) — an amount just under the average flow of the Potomac River. The new intake could operate even if the Delta is inundated with salt water, thus maintaining the functionality of the SWP/CVP system. The proposed WaterFix intake also is intended to protect sensitive fish species by using the WaterFix intake when sensitive fish species are down by the existing in-Delta pumps.

The first major attempt to complete the SWP/CVP system failed in 1982 when California voters rejected a plan to build a canal rather than tunnels — the Peripheral Canal — that would have served purposes similar to WaterFix. When Delta problems became more obvious during the last decade, infrastructure solutions again became a matter of great focus and study. An ambitious plan to couple massive ecosystem restoration with a 15,000 cfs conveyance system ultimately was tabled in late 2014 due to a variety of factors. In 2015, the Governor Brown Administration elected to segregate and scale down the ecosystem-restoration component from the basic infrastructure plan, naming the infrastructure plan WaterFix. WaterFix proponents maintain that the project offers a more reliable and resilient conveyance method through the Delta that can deal with the uncertainties and vulnerabilities that affect the Delta. They further maintain that WaterFix facilitates the capture and storage of water in reservoirs outside Northern California. This would allow the state to better manage peak storm flows, which are predicted to occur earlier in the late winter and early spring at greater volumes due to a changing climate and associated changing hydrology.

Metropolitan Water District and the Funding of California WaterFix

Metropolitan, which serves 19 million people in Southern California and is the largest water wholesaler in the world, is providing leadership for WaterFix. In October 2017, Metropolitan voted to contribute 26% — or US$4.3 billion — towards WaterFix. In contrast, several major water districts serving largely agricultural areas have voted against funding their share of WaterFix.

The incomplete financial support has raised the distinct possibility that WaterFix would be scaled down to a one-tunnel plan or abandoned altogether. Against that backdrop, Metropolitan voted again in April 2018, with three options presented to the Metropolitan board: pledge US$10.8 billion to the two-tunnel, 9,000 cfs design; pledge US$5.2 billion to a scaled down one-tunnel plan; or vote entirely against funding the project. Metropolitan voted 61% in favor to support the two-tunnel plan, in essence proposing to cover a substantial portion of what other water agencies had left unfunded.

In July 2018, Metropolitan again revisited the issue of funding WaterFix, acting out of an abundance of caution in light of certain third-party concerns alleging Brown Act irregularities. While these allegations were never proven, the Metropolitan board again voted nearly 60%, a strong indicator as to the integrity of the earlier vote, and reaffirming Metropolitan’s US$10.8 billion commitment to fund the two-tunnel plan. With this vote, Metropolitan has committed to fund 66% of California WaterFix’s estimated capital cost of $16.3 billion, even though the proportionate share to serve its own service area would have been 25.9% and US$4.3 billion.

Implications of Metropolitan’s Historic WaterFix Votes

Metropolitan’s commitment to WaterFix represents a bold and historic statement about the urgent need to finally complete the SWP/CVP system, and to secure the state’s principal water supply against multiple threats that could become acute in the absence of major infrastructure improvements. Metropolitan’s position could bring WaterFix to fruition, even in the absence of uniform support across the water agency spectrum and with the coming change in the Governor’s office. While the US$10.8 billion pledge appears substantial in an absolute sense, Metropolitan estimates that this translates to a monthly increase in the water bill for the average Southern California household of $US4.80 per month. Metropolitan is investing in water supply reliability not only for its service area, but for other regions that might experience water supply shortfalls in the years to come. Out-of-service area sales present the opportunity to further reduce the monthly impact on the average household.

Metropolitan’s determination to fund a majority share of WaterFix comes as drought conditions are on the rise. The latest U.S. Drought Monitor shows that nearly half of California has slipped back into moderate to severe drought, with much of the balance also experiencing abnormal dryness. Although the winter of 2017 was an especially wet year and offered a welcome respite from the deep drought of the preceding five years, drier years are predicted to be more frequent in the decades ahead. Drought readiness, as well as securing and diversifying water supplies, remain a pressing priority for California water agencies and the state’s political leadership, and are at the forefront of public discourse in California.

The Road Ahead

WaterFix faces challenges in multiple lawsuits brought by dozens of parties, including:

  • A validation action on the authority of the California Department of Water Resources (DWR) to finance the WaterFix capital costs
  • A breach of contract claim connected with a water supply agreement between DWR and a city
  • Two cases under the California Endangered Species Act and its Incidental Take Permit
  • Two cases under the Federal Endangered Species Act and related Biological Opinions for the Delta
  • Four cases under the Delta Plan Amendments and Program EIR
  • Seventeen cases under the California Environmental Quality Act

On July 17, 2018, DWR released a Draft Supplemental Environmental Impact Report (EIR)/Environmental Impact Statement (EIS) for WaterFix. This updated EIR/EIS analyzes proposed physical changes to the project that reduce the project’s on-the-ground footprint, without changing its overall capacity and basic design, thereby reducing environmental impact and helping to control costs. The changes considered in the supplemental report, which will likely also be the subject of litigation when finalized, do not affect the environmental impact conclusions for any resource areas.

Concurrently, reports suggest that the newly formed Delta Conveyance Finance Authority, of which several water agencies — including Metropolitan — are members, is submitting an application for a US$1.6 billion federal loan through the Water Infrastructure Finance and Innovation Act (WIFIA) program, administered by the U.S. Environmental Protection Agency. This loan is intended to cover the next four years of WaterFix work. The Delta Conveyance Finance Authority has indicated its interest in pursuing up to nearly half of the total WaterFix cost through WIFIA.

These legal challenges are not likely to be cleared out any time soon. Notwithstanding the legal challenges, Metropolitan’s historic funding commitment brings California closer to finishing the SWP/CVP system and securing a reliable, environmentally responsible water supply for future generations.

This post was prepared with the assistance of Julie Gantz in the Orange County office of Latham & Watkins.