Reported / Citable
Background
The Department of Water Resources (DWR) operates California’s State Water Project, including the Feather River Project unit codified in Water Code section 11260. Section 11260 expressly includes the original Feather River Project plus ‘further modifications’ that DWR may adopt. For decades, DWR has explored facilities to convey water through the Sacramento-San Joaquin Delta from north to south — proposals like the Peripheral Canal, California WaterFix, and now the Delta Conveyance Project.
To finance planning, environmental review, and possible construction of what it calls the ‘Delta Program,’ DWR adopted Bond Resolutions and brought a validation action under Water Code section 11700. Sierra Club and other environmental groups sued challenging the bonds; numerous defendants (including the Metropolitan Water District of Southern California, a major beneficiary) appeared. After consolidated proceedings, the trial court denied validation, finding the Delta Program as defined in the bond resolutions was ‘untethered’ to the Feather River Project’s objectives. DWR and the bond defendants appealed.
The Court’s Holding
The Court of Appeal affirmed. Working through the legislative history of the Central Valley Project Act, the Water Code, and the Feather River Project unit, the court held that section 11260’s ‘further modifications’ authority is real but limited. DWR can modify the Feather River Project unit, but it cannot use that authority to add or construct entirely new ‘units’ of the State Water Project — section 11290 governs new units, and DWR did not rely on it (because new-unit revenues cannot be pledged to repay these particular bonds).
The court found the ‘Delta Program,’ as defined in the Bond Resolutions, did not satisfy the modification framework. The definition — facilities that convey water ‘in, about and through’ the Delta — was so general that it could encompass any number of facilities serving any number of purposes. Without specific tethering to the existing Feather River Project’s objectives, scope, and effects, the court could not determine whether the Delta Program would be a permissible modification or instead an unauthorized new unit. The vagueness of the definition meant validation could not lie.
The court denied DWR’s petition for rehearing and modified the opinion in minor citation respects without changing the judgment.
Key Takeaways
- Water Code section 11260’s ‘further modifications’ authority is limited to changes tethered to the Feather River Project’s objectives, purposes, and effects.
- DWR cannot use section 11260 to authorize entirely new project ‘units’ of the State Water Project; section 11290 governs new units, with different revenue-pledge rules.
- Bond Resolutions defining a project at a high level of generality may fail validation review for vagueness, even when DWR has a long history of similar facilities.
- Validation actions under the Water Code require concrete project definitions; courts will not validate financing for placeholder programs.
- The Delta Conveyance Project’s financing path remains uncertain following this decision; DWR may need to either redesign the bond resolutions or pursue authority under section 11290.
Why It Matters
This is one of the most consequential California water-law and public-finance decisions in recent years. The Delta Conveyance Project is a multibillion-dollar effort to ensure long-term reliability of water deliveries from the Delta to Southern California, the Bay Area, and the Central Valley. By denying validation of DWR’s Bond Resolutions, the Third District has paused — not killed — DWR’s preferred financing path. DWR will now need to either redefine the Delta Program with much greater specificity tying it to the Feather River Project, or pursue alternative authority under section 11290 for a new project unit.
For California water districts, environmental groups, and Delta-region landowners, the decision is a major procedural development in the long-running Delta-conveyance controversy. State water contractors that depend on Southern California Water Project deliveries should expect financing-path delays. Environmental and Delta-protection groups will likely treat the case as significant precedent for challenging future bond authorizations that lack tight project definitions.