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Report Number: 2016-132


Department of Water Resources
The Unexpected Complexity of the California WaterFix Project Has Resulted in Significant Cost Increases and Delays



The Department of Water Resources (DWR) and other entities are developing the California WaterFix Project (WaterFix) in response to concerns about the impact of exporting water through pumps in the southern part of the Sacramento‑San Joaquin Delta (the Delta). The pumping causes reverse flows in that it essentially pulls water upstream, adversely affecting endangered fish species by pulling them toward the pumps. To reduce these adverse effects, regulators have reduced water exports, which has in turn created a negative economic impact on communities and farms that depend on water from the Delta. The water from the Delta is mainly transported by two systems of water infrastructure: the State Water Project and the Central Valley Project. DWR is responsible for the construction, maintenance, and operation of State Water Project facilities while the U.S. Bureau of Reclamation (Reclamation) is generally responsible for Central Valley Project facilities. Local water agencies (water contractors) contract for water deliveries from these two systems. Figure 1 presents the locations of certain State Water Project and Central Valley Project facilities, and of their respective water contractors that have participated in funding the planning phase that has culminated in WaterFix.

Development of the Bay Delta Conservation Plan

Planning efforts to address these environmental and economic concerns about the Delta began in 2006. We refer to all of the planning efforts from 2006 to the present as the planning phase. This phase would eventually include two overlapping efforts: development of the Bay Delta Conservation Plan (BDCP) and evaluation of how to implement it and other alternatives, including the environmental impacts and preliminary engineering. This evaluation effort was called the Delta Habitat Conservation and Conveyance Program (conservation and conveyance program). Figure 2 describes the two planning efforts and the participants. The BDCP consisted of several conservation measures or activities that were intended to accomplish two goals: helping conserve native fish and wildlife species in the Delta and improving water reliability and quality. The BDCP was also expected to reduce future risks to water supplies conveyed through the Delta from earthquakes, levee failure, and climate change. The first conservation measure was the construction of a new conveyance (or water transportation) facility with new intakes on the Sacramento River in the north Delta to reduce the use of the pumps in the south Delta so as to minimize the reverse flows.

Figure 1
Water Contractors That Contributed to the Conservation and Conveyance Program and Their Key Facilities

Figure 1, a map of California presenting various water infrastructure facilities, such as reservoirs, aqueducts, and canals that make up both the State Water Project and the Central Valley Project. The map also shows the location of the public water agencies that contract for water deliveries from these two systems of infrastructure and that have contributed to the delta habitat conservation and conveyance program.

Sources: California State Auditor’s analysis of DWR and Reclamation documents.

* Santa Clara Valley Water District contracts with both the State Water Project and Central Valley Project.

The BDCP was intended to be the basis for obtaining 50‑year permits under the federal Endangered Species Act and California Endangered Species Act that would create a stable regulatory framework for operations of the State Water Project and Central Valley Project. Specifically, the permits would provide long‑term assurance that regulators would not require additional commitments of or place additional restrictions on the use of land, water, or other natural resources, nor would they require financial compensation—without the consent of the parties to the BDCP—as long as the BDCP was being implemented appropriately. The permits would also allow state and federal entities to engage in the activities included in the BDCP, which fell into the following categories:

• New water facilities construction, operation, and maintenance.

• Operation and maintenance of State Water Project facilities.

• Nonproject diversions of water.

• Habitat restoration, enhancement, and management.

• Monitoring activities.

• Research.

Multiple entities have voluntarily participated in the planning phase. These parties entered into a planning agreement that defined goals and objectives for the planning phase. The planning agreement also established a steering committee as the principal forum for discussing policy and strategy issues pertaining to the BDCP. The California Natural Resources Agency (Resources Agency) facilitated the steering committee and Figure 2 shows the other entities that constituted the committee. The steering committee, through a finance subcommittee, also developed the funding structure and budget for developing the BDCP.

Figure 2
WaterFix Planning Efforts and Participants

Figure 2, a graphic describing the progression of the WaterFix planning efforts and listing the participants that made up the BDCP steering committee.

Sources: 2009 BDCP Planning Agreement, Conservation and Conveyance Program Memorandum of Agreement (MOA), Amended MOA, and

Transition From the BDCP to a New Approach Called WaterFix

The next planning effort began in 2008 when the Governor directed the Resources Agency to expedite completion of the BDCP and directed DWR to proceed with the environmental analysis of four Delta conveyance alternatives. To provide the means for evaluating and planning for the possible construction and implementation of these alternative conveyance facilities and habitat restoration projects, DWR initiated the conservation and conveyance program. This program was responsible for evaluating the BDCP and many other alternatives, which eventually included WaterFix. The conservation and conveyance program was composed of a team responsible for the following activities:

• Examining conveyance alternatives.

• Performing cost analyses.

• Formulating schedules.

• Selecting preferred alternatives.

• Obtaining the required environmental permitting and documentation.

• Obtaining property rights.

• Completing preliminary design.

• Completing final design and construction.

DWR initially contracted with an engineering firm to provide program management services and engineering support services for the conservation and conveyance program. Figure 3 shows a timeline of the key developments in the planning phase.

However, DWR and Reclamation revised their approach to improving reliability of water deliveries and protecting the Delta based on comments they received from the public and regulatory agencies during the environmental review process. In December 2013, DWR and Reclamation published a draft environmental impact document for the BDCP. The California Environmental Quality Act requires lead agencies to create an EIR to provide public disclosure of the environmental impacts of a proposed project. The report must identify all significant environmental effects, the mitigation measures proposed to minimize those effects, and alternatives to the project. The NEPA has similar requirements for an EIS. As the lead agencies, DWR, Reclamation, U.S. Fish & Wildlife Service, and the National Marine Fisheries Service developed the joint environmental impact report/environmental impact statement (environmental report) presenting the environmental impacts of the BDCP and alternatives to it.

Figure 3
Timeline of Key Developments in the BDCP and WaterFix Planning Process

Figure 3, a timeline of key developments in the BDCP and WaterFix planning process lasting from 2006 through 2017.

Sources: DWR planning documents, state law, Governor’s letter to the Senate in February 2008.

Following its publication of the draft environmental report in December 2013, DWR reported receiving numerous comments. These comments suggested that because of the uncertainty of the effects of climate change and the long‑term effectiveness of habitat restoration in recovering fish populations, DWR should pursue a shorter permit term than the 50‑year term the BDCP sought. Other comments suggested that the proposed conveyance facilities should be separated from the habitat restoration components of the BDCP. To address these concerns, DWR and Reclamation subsequently analyzed additional alternatives that would seek shorter‑term permits and include only limited amounts of habitat restoration. They identified one of these alternatives, WaterFix, as the preferred alternative to the BDCP. WaterFix essentially separates the water conveyance effort from the large‑scale Delta conservation effort.

As shown in Figure 4, WaterFix consists of three new intakes north of the Delta and other water conveyance facilities to address the reverse flow problem. However, WaterFix limits habitat restoration only to mitigating the construction‑and operations‑related impacts of the new facilities. A separate program, California EcoRestore, would provide restoration efforts for species conservation independent of the facility upgrades. Unlike the BDCP, WaterFix does not seek a permit like the 50‑year permit discussed previously, and it does not provide the assurance that regulators will not restrict water and land use.

To give the public an opportunity to comment on the additional alternatives, DWR and Reclamation published in July 2015 a revised draft environmental report that presents WaterFix as the preferred alternative. Again, the public provided numerous comments. In December 2016, DWR and Reclamation published the final environmental report, which incorporates changes from the additional public comments. DWR initially estimated that in spring 2017, Reclamation would issue its Record of Decision stating which alternative it had chosen to pursue, the alternatives it had considered, and whether all practicable means to avoid or minimize environmental harm had been adopted. However, Reclamation has not issued the Record of Decision. The director of DWR nevertheless stated that in the meantime DWR will continue moving forward with WaterFix planning efforts, including permitting and regulatory efforts. On July 21, 2017, DWR issued a Notice of Determination that identified WaterFix as the approved project and indicated that the project will have a significant effect on the environment, an EIR was prepared, and a mitigation monitoring plan was adopted. In addition to these approvals, several regulatory and permitting processes are ongoing and must be completed before construction of WaterFix can move forward, including hearings by the State Water Resources Control Board regarding water rights and water quality that are expected to last until sometime in 2018. We refer to the overall activities that span the BDCP and WaterFix as the project.

Figure 4
WaterFix Proposed Project Location

Figure 4, a map depicting the location of the proposed WaterFix project in the statutory delta south of Sacramento.

Sources: DWR’s final EIR, figures 1‑1, 3‑9, and 3‑10.

Funding for the Planning Phase Has Come From a Number of Sources

Generally, the State Water Project’s water contractors pay the costs for its construction, replacement, and maintenance and operations. However, because the planning phase for the BDCP and WaterFix has been a voluntary collaboration among several state and federal entities to improve water supply reliability and to restore ecosystem health in the Delta, Reclamation and some Central Valley Project water contractors also contributed funding. As we stated in the Summary, DWR did not use any General Fund money to fund the planning of the project. DWR did not fully track the various contributions made toward the costs of preparing the BDCP, as we explain more fully later. These costs consisted of two categories—the costs attributable to fishery agencies1 for their work related to the development and review of the BDCP, and other costs related to preparing the BDCP, including contracted consultant costs. The $6 million cost for the first category was split evenly between DWR and Reclamation over two years. For the second category, three entities agreed to share the consultant costs and other related costs: DWR; San Luis & Delta Mendota Water Authority (the Authority)—a joint‑powers authority that represents certain Central Valley Project water contractors; and Mirant—a corporation that owns and operates power generation plants on the Delta.2 The costs for the second category have reached approximately $54 million. Although documentation is limited, DWR explained that it included charges for its share of the BDCP costs in the State Water Project water contractors’ annual statements. The Authority collected funds for its portion of the costs from its member agencies.

Participating State Water Project and Central Valley Project water contractors agreed to share the planning costs for the conservation and conveyance program equally between the two groups. DWR established a specific account to track these contributions. As noted previously, participation in the funding was voluntary, and any participating water contractor could withdraw upon 30‑days notice; however, doing so would require the remaining participating water contractors to make up for the lost contributions. Figure 5 shows the amounts and proportional share each entity contributed. Figure 5 also shows that Reclamation, Metropolitan Water District of Southern California (Metropolitan), the Authority, and Kern County Water Agency (Kern) together contributed roughly 82 percent of the total planning funds through June 2017.

To collect the State Water Project share, DWR entered individual funding agreements with the 20 State Water Project contractors that decided to participate. Contributions were proportionate to each participating contractor’s water allocation from the State Water Project. For example, Metropolitan and Kern receive the two largest allocations of water from the State Water Project; therefore, they contributed the largest portions of the State Water Project’s share of costs. Their contributions generally came from their revenues, which are largely composed of proceeds from water sales, user charges, and property taxes.

Figure 5
Four Entities Contributed Most of the Funding for the Conservation and Conveyance Program
January 2008 Through June 2017

Figure 5, a chart showing funding amounts contributed for the conservation and conveyance program from January 2008 through June 2017.

Sources: California State Auditor’s analysis of DWR accounting data.

* The Authority contributed a total of $47.1 million in funds from debt financing and direct contributions from participating member agencies toward the planning phase, $2.1 million of which was used to meet its BDCP funding obligations. In June 2017, it contributed another approximately $400,000.

The Authority and Reclamation contributed the Central Valley Project share of costs for the conservation and conveyance program. The Authority contributed $45.4 million and used debt financing for 95 percent of its contribution, with the principal and interest required to be paid from water system revenues generated by 17 Central Valley Project water contractors that decided to participate.3 The remaining 5 percent, or roughly $2.3 million, was contributed directly by another five water contractors. Reclamation contributed $81.2 million in federal funds and in‑kind services, such as program management, legal services, and preliminary engineering.


1 Fishery agencies refers to the California Department of Fish and Game, the U.S. Fish & Wildlife Service, and the National Marine Fisheries Service. Go back to text

2 Initially in January 2007, Mirant Corporation agreed to contribute 10 percent of the approved consultant costs and DWR and the Authority agreed to split the remainder equally. Two years later, the parties agreed to cap Mirant Corporation’s contributions at the lesser of 10 percent or $300,000 per 12‑month period.Go back to text

3 Westlands Water District agreed to pay 100 percent of the principal and interest on the debt. The Authority reimburses Westlands Water District for a portion of such debt service payments from amounts the Authority receives from the 16 other participating Central Valley Project water contractors. Go back to text

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