In 1994, after negotiating for several months in secret at a resort in Monterey, the California Department of Water Resources and five State Water Project contractors executed the Monterey Agreement, which significantly modified the contracts of the State Water Project. Subsequently, the Department transferred public ownership of the Kern Water Bank, a 1-million acre-foot underground storage facility, to the agribusiness-dominated Kern County Water Agency, which in turn deeded the water bank to the Kern Water Bank Authority, a privately controlled joint powers authority.

(Pictured left: the Delta Pumps In 2009, 3.5 million acre-feet of water were pumped from the Delta to San Joaquin Valley farms and urban users in the Bay Area and Southern California. The draw of the pumps, including the State Water Project's Harvey Banks Pumping Plant near Tracy, is powerful enough to trap fish and alter the currents through the Delta.
In 1951, 220,000 acre-feet of water went south from the Delta. (The acre-foot, enough to cover one acre one foot deep, is the basic coin of the water economy.) In 1985, the total of both projects passed five million acre-feet, approximately the volume of San Francisco Bay. In 2000, the six-million acre-foot mark was reached. Combined with other withdrawals from the Delta watershed, this pumping reduced the outflow from the Delta by something between one quarter and two thirds, depending mainly on the wetness of the year.)

After years of litigation and delay, the California Department of Water Resources has recently given final approval to the agreement, now called the Monterey Plus Amendments. These amendments fundamentally alter the State Water Project by:

• Eliminating the “urban preference,” which prioritized water deliveries to municipal customers during drought. This change results in widespread urban water shortages and higher utility rates for Southern California ratepayers.

• Illegally transferring state property in the Kern Water Bank to private entities and undermining the California Water Code by masking the purpose and place of water use.

• Increasing water exports from the Sacramento-San Joaquin Delta, thus worsening water-quality problems and triggering the collapse of the Delta’s ecosystem and fisheries.

• Authorizing a new, deregulated market for buying and selling “paper water” — water promised by contract that can never realistically be delivered.

• Opening the door to privatizing the publicly financed State Water Project.

For the first time in State Water Project history, publicly owned water rights and facilities are in essence privatized and placed under the control of for-profit corporations. A number of privately financed “water banks” have come into existence, allowing, in some cases, more money to be made by selling water than by farming.

The Monterey Plus Amendments are the California Department of Water Resources’ second attempt at amending the long term water contracts. In 1995, three organizations successfully sued the Department and the Central Coast Water Authority over the inadequacy of the environmental impact report for the first attempt, called the Monterey Amendments. The courts agreed that, given the statewide implications of the first Monterey Amendments, environmental documents should have been prepared by the Department — not a local agency, the Central Coast Water Authority.

The Department issued a draft environmental impact report on the Monterey Plus Amendments in 2007 and released a final document in 2010. In June 2010, the Center for Biological Diversity, the California Water Impact Network, the California Sportfishing Protection Alliance, and the South and Central Delta Water Agencies filed suit to overturn the Monterey Plus Amendments and force the return of the Kern Water Bank to state ownership and the return of all illegally secured profits.

The lawsuit, filed under the California Environmental Quality Act, alleges that the environmental impact report was deficient and failed to provide (1) an adequate project description, (2) adequate disclosure of project impacts, (3) an accurate description of the environmental baseline without the Monterey Plus Amendments, (4) evaluation of feasible alternatives, (5) meaningful mitigation to lessen project impacts on the environment, (6) an acceptable response to comments, and (7) substantial evidence to support conclusions of no significant environmental or ratepayer impacts.   

The lawsuit asks the court to vacate and set aside approval of the Monterey Plus Amendments and the environmental impact report and suspend all activities pursuant to the project until the Department has complied with all requirements of the California Environmental Quality Act and other applicable laws. It further asks the court to void the Kern Water Bank Exchange Agreement as an unconstitutional gift of a public asset and seeks a return to state ownership of the Kern Water Bank, a return of all of the ill-gotten gains from private use of the Kern Water Bank, and a prohibition of the Kern Water Bank Authority’s use of the Kern Water Bank.

Specifically, the Center's lawsuit seeks to vacate:

1. Article 18(a) of the Monterey Plus Amendments.

The original Article 18(a) required that, in times of drought, deliveries to agricultural users would be reduced before deliveries to urban users would be cut. This was known as the “urban preference.” As a matter of state policy and the California Water Code, during shortages, drinking water for people and water supplies for most of California’s industrial economy was superior to water used to grow surplus nonfood crops in the desert. The Monterey Plus Amendments change that to ensure that agricultural contractors, representing a small fraction of the California economy, would receive as much water during droughts as the South Coast, which comprises more than half of the state’s population and economy.

For urban Southern California, this change results in serious water shortages and increased water rates. Our lawsuit seeks to vacate the revised Article 18(a) and to reestablish the urban preference to protect people and California’s economy during our recurring droughts.

2. Article 18(b) of the Monterey Plus Amendments.

The State Water Project was planned to deliver supplies of as many as 4.23 million acre-feet of water, much of it imported from North Coast streams (the Eel, Van Duzen, Klamath, and Smith rivers). These rivers were declared wild and scenic in the 1970s and off limits to the State Water Project. As a result, the State Water Project was only partially built and has only been able to reliably deliver less than half the originally promised, contracted amounts of water. The original Article 18(b) provided for a permanent reduction in water deliveries in the event the entire State Water Project was not fully built out. Even though the Project has never been completed, the Monterey Plus Amendments eliminate this provision, thus allowing water contractors to continue to include and rely upon “paper water” in their contracts.

This change results in a reliance on interruptible paper water for permanent crops and urban expansion. Our suit seeks to reverse the modified Article 18(b) in order to preserve the state’s ability to bring unrealistic promises of water into balance with reliable water yields.

3. Article 21 of the Monterey Plus Amendments.

The original Article 21 addressed the sale of “surplus” water and prohibited the delivery of such water for purposes that would require a reliable and sustained delivery of water such as to homes, factories, businesses, and permanent crops. The Monterey Plus Amendments eliminate these restrictions and have made available the delivery of “interruptible water” to permanent development whenever the normal supplies had been made. This not only eliminates the safeguard against establishing economies based on unreliable water supplies — it also allows the massive increase in State Water Project Delta export pumping after 2000, triggering the collapse of Delta fisheries. For example, State Water Project exports increased from an average of 993,686 acre-feet in the 1970s to 1,925,758 acre-feet in the 1980s to 2,011,369 acre-feet in the 1990s to a whopping 3,078,838 between 2000 and 2006.

The Metropolitan Water District of Southern California, the water supplier to agencies throughout the South Coast, gambled when it gave up its “urban preference” in hopes of securing even larger amounts of “surplus” water. In wetter years, the District was successful, but it never received more than 200,000 acre-feet from Article 21 in a single year, whereas in 2005, agricultural contractors received 531,000 acre-feet through Article 21. These deliveries of “surplus” water triggered Delta fisheries declines. Subsequent federal biological opinions under the Endangered Species Act to protect salmon, steelhead and Delta smelt, as well as court rulings on those biological opinions slammed the door on this gambit. Consequently, during the last drought, the District and its customer agencies were faced with water shortages and had to increase rates for water it delivered, which were in turn passed on to consumers and rate payers.

These increased exports from the Delta estuary during critical periods wreaked havoc on endangered fish species and California’s commercially valuable fall Chinook salmon runs. They also increased dependence upon interruptible water supplies. The lawsuit seeks to void the revised Article 21 and limit the use of interruptible sources of water to purposes that can withstand inevitable water shortages.

4. Transfer of the Kern Water Bank.

In 1987, the District established the Kern Water Bank as a “State Water Project conservation facility” that was integrated into the overall State Water Project operations as part of the State Water Resource Development System. In 1995, the California Department of Water Resources transferred ownership — on an interim basis, pending final approval of the first Monterey Amendments — of the Kern Water Bank to agricultural contractors, including the Kern County Water Agency, in exchange for 45,000 acre-feet of paper water — i.e., water that the Kern County Water Agency had never received and for which the agency was required to pay as part of State Water Project construction. In other words, the Kern County Water Agency received property worth many millions of dollars in exchange for something it had never received and which reduced the agency’s payments to the State Water Project at the same time. The very next day, The Kern County Water Agency transferred ownership in the water bank to the Kern Water Bank Authority, a privately controlled joint powers authority. Although still operated by the Kern Water Bank Authority, this transfer is subject to final approval of the Monterey Plus Amendments.