California appeals court blocks bonds for Delta tunnel project

The California Court of Appealsupheld a lower court ruling preventing the state's Department of Water Resources from issuing bonds to fund the Delta Conveyance Project, a 45-mile tunnel that would divert water from the Sacramento River to Central and Southern California.

The three-judge panel in the appeal court's Third District in Sacramento ruled unanimously on Wednesday that DWR failed to prove the $20 billion project qualifies as a modification of the State Water Project, a complex network of dams, reservoirs and power stations built in the 1950s.

Legislation dating back to the 1950s grants authorization to issue bonds for modifications to the system.

DWR approved the issuance of $16 billion of bonds in 2020, but a court challenge ensued and the bonds have not been issued.

"The contours of the Delta Program are so ill-defined that it is impossible to ascertain whether any future Delta Program facilities will serve the objectives, purposes and effects of the Feather River Project, or instead constitute a new and different 'unit' of the State Water Project," Associate Justice Peter Krause said in the ruling.

"The trial court concluded the definition renders the bond resolutions too vague and uncertain to support a validation judgment because it 'leaves the door open' for DWR to approve water conveyance facilities wholly unrelated to the Feather River Project," Krause said. "We agree."

The delta project would modernize the State Water Project, the aging system of transporting water north to south by constructing a canal to route water around the Sacramento-San Joaquin Delta. The system provides water to 27 million residents of the Bay Area, southern California and about 750,000 acres of farmland.

The decades-old plan is crucial for safeguarding the water transport system against climate change, seismic activity and failures from aging infrastructure, according to proponents. But opponents say recycling, desalination and water storage are better methods of increasing water supply.

Legislation championed by Gov. Gavin Newsom in May to fast-track the projectstalled.

DWR's validation lawsuit seeking authority to issue bonds to support the project was denied by Sacramento County Superior Court Judge Kenneth C. Mennemeier in January 2025.

DWR and several supporting state water contractors (Metropolitan Water District of Southern California, Coachella Valley Water District, Mojave Water Agency, San Bernardino Valley Municipal Water District, and Santa Clarita Valley Water Agency) appealed the trial court's ruling, arguing the decision was based on an erroneous interpretation of the bond resolutions.