Department of Water Resources reduces loan for Delta Tunnel after discovering 'accounting error'

By Dan Bacher | 

A Delta organization, the Delta Legacy Communities, Inc., is alleging that the California Department of Water Resources (DWR) illegally used state money set aside for other purposes for a loan to support engineering design and field work for the Delta Tunnel project. 

The group’s chair, Dan Whaley, also described as “hogwash” DWR’s claims that the agency discovered an “accounting error” — and are now planning to sign an agreement to reduce the loan to the Delta Design and Construction Authority (DCA) from $15 million to $9.4 million.  

The Delta Tunnel is a controversial public works project designed to divert Sacramento River water under the Delta before it reaches the estuary to benefit agribusiness interests in the San Joaquin Valley and Southern California water agencies. 

A coalition of recreational and commercial fishermen, Tribal leaders, conservationists, family farmers, environmental justice advocates, Delta residents and elected officials opposes the tunnel. They say it would destroy the largest estuary on the West Coast of the Americans, cause enormous harm to West Coast fisheries and hasten the extinction of Delta and longfin smelt, Sacramento River winter and spring Chinook salmon, Central Valley steelhead, green sturgeon and other fish species.

“In September 2020, the Department of Water Resources (DWR) signed an agreement to provide an additional $15 million to the Delta Conveyance Design and Construction Authority (DCA) for engineering design and field work in support of the Delta Tunnel project,” according to a press release and blog post from the Delta Legacy Communities, Inc. “DWR had previously loaned the DCA $33.8 million, bringing the total to $48.8 million. “

On September 17, 2020, the organization sent a formal objection to the $15 million loan to DWR and the Department of Finance. Delta Legacy Communities, Inc. stated that DWR did not have “sufficient legally available revenues” in the State Water Resources Development System (SWRDS) accounts to pay for the loan.  

For each statute governing a SWRDS fund, Delta Legacy Communities explained how the statute restricted DWR’s use of the fund.

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“DWR cannot take money dedicated to maintenance and repair of the existing State Water Project facilities and use it to pay for the Delta tunnel engineering,” said Dan Whaley, Delta Legacy Communities, Inc.’s Chair.

Whaley says DWR is now planning to sign an agreement to reduce the loan to the DCA to $9.4 million, calling it an “accounting error. “  

“Hogwash,” says Whaley.  “DWR was using State Water Resources Development System funds illegally.”

This sure sounds like hogwash to me also. So DWR really wants us to believe that they made a A $5.6 million “accounting error”?

I remind folks that DWR is the same agency that wants to convince Californians that diverting massive quantities of water from the Sacramento River before it flows through the estuary will somehow “restore” the Delta and its imperiled fisheries. I’m not aware of any project in the U.S. or world history where a project that diverts more water out of a river or estuary has restored that river or estuary.

Whaley said DWR and the DCA are now proposing to execute a revised Amendment #4 to the Amended and Restated Joint Exercise of Powers Agreement between the Department of Water Resources and the Delta Conveyance Design and Construction Authority(“revised Amendment #4 to the JEPA.”)  

However, the group objects to what they describe as the “complete lack of transparency” by DWR and DOF with respect to the accounting error,” and the failure to respond to the questions or requests for inspection of records in DLCs September 17, 2020 letter.

“Based on information and belief, that DWR does not have sufficient legally available funds for a $9.4 million loan to the DCA,” DlC asserts.

Whaley notes that DWR has also reportedly told the State Water Contractors that DWR will not fund the Delta tunnel planning and environmental review past December 31, 2020.

On October 15, 2020 Delta Legacy Communities, Inc. made additional objections to DWR’s $9.4 million loan to the DCA.  

The $9.4 million loan appears to come from funds “appropriated by the legislature to pay for recreation and fish and wildlife enhancement costs for the existing State Water Project facilities,” the organization stated.

“Under the 1961 Davis-Dolwig Act, DWR cannot charge the State Water Project contractors for costs allocated to recreation or fish and wildlife enhancement,” according to Whaley. “DWR has allocated about 6% of State Water Project capital costs, and about 3% of operations costs to Davis-Dolwig purposes. In December 2005, 27 State Water Contractors contested charges for Davis-Dolwig costs. The claims are tolled until December 202.  Because of the claims, DWR could not issue more revenue bonds until the ongoing Davis-Dolwig costs for the SWP facilities were covered.”

The bottom line? “DWR still doesn’t have a legal source of funds for the $9.4 million loan,” said Whaley.

Why is the Newsom Administration so intent on fast-tracking the Delta Tunnel? It could be a classic case of “Follow the Money.”

Financial data from reveals that Governor Gavin Newsom received a total of $755,198 in donations from agribusiness, key proponents of the Delta Tunnel, in the 2018 election cycle.

That figure includes $116,800 from Beverly Hills agribusiness tycoons Stewart and Lynda Resnick, the largest orchard fruit growers in the world. The Resnicks are the sponsors of the Coalition for a Sustainable Delta, a corporate agribusiness Astroturf group that seeks to obtain more water from the Delta for corporate growers like the Resnicks and to blame salmon population crashes on the striped bass — even though the two species successfully coexisted for over 100 years.

By fast-tracking the Delta Tunnel plan, promoting the voluntary water agreements, overseeing the issuing of a new draft EIR that increases water exports for the state and federal projects rather than reducing them, and backing Sites Reservoir, Newsom appears to bending to the wishes of his agribusiness donors.

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