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Watchdogs Sue Metropolitan Water District Over Delta Tunnel Financing

MWD's planned rate hikes to pay for WaterFix Project violate Propositions 26 and 13

Los Angeles, CA â?? Food & Water Watch and Center for Food Safety served a lawsuit today to challenge the Metropolitan Water District (MWD) of Southern California's approval of $11 billion to fund the twin Delta Tunnels. The groups claim MWD's financing violates the taxpayer protection provisions of California's Constitution, enacted by voters in Propositions 26 and 13. MWD's decision to pay for most of the massive tunnels project, while receiving only part of the project's water, would result in its ratepayers and taxpayers unconstitutionally subsidizing out-of-district water users, including corporate agribusiness in Kern County.

"Big Ag played MWD for fools and now MWD is doing the same to its ratepayers," said Adam Keats, senior attorney at Center for Food Safety. "Southern California families and businesses are doing more than their share to conserve waterâ??there's no reason for them to have to subsidize the mega-rich almond and pistachio empires of Kern County, too."

The lawsuit alleges that MWD's $11 billion commitment towards the $17 billion total cost violates Proposition 26 because it allocates a disproportionate burden on Southern California ratepayers who would finance 64 percent of the project's costs. After agricultural water districts refused to invest in the project, MWD's board of directors voted to force Southern California families to pay double their initial projected share of the tunnels and to finance the entire $5.6 billion cost of constructing the second tunnel, event though MWD's estimates show they will receive no additional water supplies from the second tunnel.

"Not only is Metropolitan's plan to spend $11 billion on the Delta tunnels a colossal waste of public money, it is also illegal," said Brenna Norton, senior organizer with Food & Water Watch. "Metropolitan's financing blatantly violates Proposition 26 by sticking southern Californians with the majority of the costs, while the most of the water water would go to corporate agribusinesses."

The two biggest agencies on the MWD board, Los Angeles City and the San Diego County Water Authority, voted against the financing plan, citing potential violations of Proposition 26 and violations of the Brown Act by several MWD board members.

The lawsuit also alleges MWD's authorization violates Proposition 13, as it authorizes a property tax in excess of 1 percent that does not qualify as the payment of interest and redemption charges on any indebtedness approved by the voters prior to July 1, 1978, and was enacted without the approval of a two-thirds vote of the voters. If successful, MWD's financing authorization will be invalidated, posing a significant challenge to the financial viability of the entire WaterFix project.

The lawsuit comes amidst a larger battle over the financing of the tunnels. Governor Brown is working to secure more financing for the tunnels by extending the State Water Project contracts to 2085. Governor Brown has been pushing Senate President Toni Atkins and Senator Holly Mitchell to schedule a hearing by the Joint Legislative Budget Committee that would effectively approve the issuance of $11 billion in bonds by the Department of Water Resources to finance California WaterFix, with no public oversight or assurances of how SWP contractors will repay the costs.

Download the lawsuit >>