Delta News

April 22, 2013

Delta pipeline pact could 'get project done, then go away'

Southern California water agencies have been quietly negotiating with state officials to take a major role in designing and building the giant Sacramento River diversion tunnels at the core of Gov. Jerry Brown's water policy for the state, according to documents obtained by The Bee.

Southern California water agencies have been quietly negotiating with state officials to take a major role in designing and building the giant Sacramento River diversion tunnels at the core of Gov. Jerry Brown's water policy for the state, according to documents obtained by The Bee.

The tunnels are the centerpiece of the Bay Delta Conservation Plan, an ambitious project to restore the imperiled Sacramento-San Joaquin Delta. State Department of Water Resources officials expect to approve the project by the end of this year.

With an estimated cost of $14 billion and a construction period of a decade or more, it would be one of the largest waterworks of its kind ever built. The plan proposes to alter water flows and restore 100,000 acres of habitat in the Delta, a sensitive estuary and freshwater supply for 25 million Californians and 3 million acres of farmland.

Three enormous water intakes would be built on the Sacramento River near Courtland, where diversions are presumed to be less harmful to endangered fish and safer from floods, earthquakes and a rising sea level.

The Department of Water Resources has led the planning effort over the past seven years. It has long experience with massive waterworks, including the State Water Project and its 444-mile California Aqueduct, completed in 1968, one of the world's largest water conveyance facilities.

But documents obtained by The Bee reveal that DWR is considering a different approach for the tunnels project: a "joint exercise of powers agreement" that would give outside water agencies a direct role in design and construction.

That would include the leading water contractors that depend on Delta water purchased from DWR and the U.S. Bureau of Reclamation: The Westlands Water District and the Kern County Water Agency, which primarily serve farms in the San Joaquin Valley; and the Metropolitan Water District of Southern California, which serves two dozen cities from Los Angeles to San Diego.

The Santa Clara Valley Water District, which serves 1.8 million people in the Bay Area, also would have a role.

DWR Director Mark Cowin confirmed that the parties are looking at collaborating to build the facilities under a joint-exercise-of-powers agreement.

Such agreements are common when local governments, for example, share law-enforcement resources, but would be unusual in a public works project of this magnitude.

"The (water) contractors are very concerned, and so are we, that we build this with world-class-type management," Cowin said. "They are naturally concerned, as stakeholders, that if they are going to step up and pay these costs, that they have a significant voice."

A key difference

The Bay Delta Conservation Plan, still in draft form, calls for two giant tunnels, 40 feet in diameter and 35 miles long, to divert a portion of the Sacramento River's flow.

The goal is to reduce reliance on current diversion pumps in the south Delta near Tracy, which kill millions of fish every year and also reverse natural water flows in the estuary, altering aquatic habitat.

The water contractors have sought a larger hand in controlling the Bay Delta Conservation Plan since it began seven years ago. They have spent $200 million on the planning so far, and over time would pay for the $14 billion construction cost.

The proposed agreement differs from a more common joint powers authority in that it would not create a new government agency. Rather, it is a tool to combine the powers of existing agencies temporarily.

Cowin told The Bee that there are two main motives for such an agreement: assuring that the water contractors have "transparency" during construction and sharing expertise on a waterworks project that is sure to test every participant's skills.

But he said no decision has been made yet to proceed.

"I can't emphasize how preliminary all of this is," he said. "In fact, our legal staff is just beginning to explore this in earnest."

Roger Patterson, assistant general manager of the Metropolitan Water District of Southern California, said that if a joint-exercise-of-powers agreement is carried out, it would have a single overriding mission: "get the project done and then go away."

DWR would then own and operate the facilities as part of the State Water Project, which manages Lake Oroville and the California Aqueduct.

"This is more a matter of finding the best way to actually get the infrastructure in the ground so it can come online," Patterson said. "I know people don't want us to call the shots on operating the facility. We're not trying to put ourselves in those shoes at all."

Delta residents have little faith in such assurances.

They already worry the project will prove disastrous for farming, the region's primary economic force, because the new diversions may make the estuary saltier. The idea that the water diverters themselves could end up buying out their farms, and controlling many aspects of tunnel construction, only prompts additional alarm.

"That's the old fox-guarding-the-henhouse thing," said Melinda Terry, manager of the North Delta Water Agency, which represents a number of Delta farmers and property owners. "They have financial motivation and gains involved, and for them to be making decisions about other people's lands. Wow, that doesn't seem right."

Osha Meserve, a Sacramento attorney who represents environmental groups and residents who oppose the tunnels, said the proposed arrangement runs counter to the way statewide water projects are usually built.

Traditionally, the state or federal government obtains a water right, which allows it to impound or divert water. The water itself, under state law, is "owned" by the public at large. It then builds the project and sells the water to farm or urban water distributors, who repay the construction cost under long-term contracts by charging their ratepayers.

In that way, the state or federal agency serves as a buffer: At least in principle, it builds the project not just for downstream diverters, but also to protect upstream concerns.

"We really feel this area is being sacrificed for the good of other parts of the state. So the way they carry out the construction is crucial," Meserve said. "The state at least has (its) process in place to protect people's rights. The more it gets removed from that, the more lack of control there is on the issue."

Major power for the DWR

Documents indicate that planning for the agreement has been under way for months.

In October, the DWR hired a consultant, McKinsey & Co., to help analyze organizational models for building the tunnels. The consultant was hired under a no-bid subcontracting agreement at a cost of $2.6 million.

McKinsey prepared numerous PowerPoint presentations for the DWR committee overseeing the tunnel project, which includes representatives of the Bureau of Reclamation, Westlands and Metropolitan.

Those presentations, provided to The Bee by a source close to the project, describe in detail how a joint-exercise-of-powers agreement would work. By December, the consultant had produced a draft memorandum of understanding to implement the agreement, complete with signature lines for key players.

According to the McKinsey presentations, the proposed agreement would create a nine-member board of directors that includes the DWR director and the regional director of the Bureau of Reclamation. The remaining seven members would represent the water contractors.

The DWR director would be chairman of the board. But on most matters related directly to construction activities, decisions would be made by majority vote.

In other words, the water contractors could be in a position to control many key decisions, including project design, facility location, land acquisition, budget and scheduling.

The Metropolitan Water District's Patterson emphasized that no decisions have been made about how power would be shared under the proposal.

"DWR clearly has the lead and the authority, and whatever is put together would need to be respectful of that," he said. "But are there ways to collectively provide resources that can improve efficiency to get the project done at the lowest cost and in the best timeframe possible? That's part of what you have to figure out."

Metropolitan, for instance, has more experience than DWR with massive tunneling projects after completing its "inland feeder tunnel" in 2009. The tunnel conveys Delta water diversions through the San Bernardino Mountains to Diamond Valley Reservoir near Hemet.

But the inland feeder tunnel is much smaller than the proposed Delta tunnels. It also cost more than expected and was repeatedly delayed, which is not unusual in tunneling projects.

Chris Beale is an attorney at the Resources Law Group in Sacramento who assists clients with joint-exercise-of-powers agreements. The agreements are common, he said, when building public infrastructure because they allow the signatories to jointly acquire land, share liability and even issue bonds without burdening any one participant.

"If there's a concern about creating this entity because it would give the water contractors greater say in everything," Beale said, "it's just because, right now, that authority may rest with DWR or some other entity that the public might be more confident in."

Contact The Bee's Matt Weiser at (916) 321-1264. Follow him on Twitter @matt_weiser.

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