California Supreme Court Decision Boosts Hopes To Block Controversial Delta Tunnel Project
California’s controversial Delta Tunnel project, which opponents believe would further hamper the Central Valley’s long-suffering salmon numbers, had been blocked from proceeding by California’s State Legislature, a big blow to outgoing Governor and possible 2028 Presidential party frontrunner Gavin Newsom’s (D) water diversion plans for the Sacramento-San Joaquin River Delta. Now California’s Supreme Court has also weighed in on the state’s California Department of Water Resources’ legal claims to overturn any previous rulings.
Here’s a press release from Maven’s Notebook:
PRESS RELEASE: California Supreme Court denies review of major appellate decision rejecting DWR’s attempt to validate bond financing for Delta tunnel project
Guest Contributor April 20, 2026
In a major milestone that prevailing attorneys described as a victory for common sense, the Delta region, the environment, and ratepayers throughout California, the California Supreme Court has denied review of a landmark opinion issued by the Court of Appeal in the Sacramento-based Third Appellate District late last year. That Court’s opinion, first issued on December 31, 2025 and finalized with minor modifications when rehearing was denied the next month, unanimously affirmed a trial court decision holding that the State Department of Water Resources (DWR) exceeded its authority when it approved bond resolutions to finance DWR’s proposed Delta tunnel.
The appellate decision was certified for publication except for a short section involving issues the Court of Appeal did not need to reach after invalidating DWR’s resolutions and revenue pledges. That final decision is reported as Department of Water Resources v. Metropolitan Water District of So. Calif., et al. (2025) 117 Cal.App.5th 751 (Opinion). Despite the title, Metropolitan Water District of Southern California was one of several water contractors unsuccessfully siding with DWR. The diverse array of agencies and groups that succeeded in opposing DWR included multiple counties, environmental, taxpayer, fisheries, and tribal organizations, and water contractors concerned about saddling ratepayers with escalating tunnel costs. When the California Supreme Court denied DWR’s petition for review on April 15, 2026, it also rejected DWR’s request to depublish the Third District’s comprehensive opinion, preserving it as precedent.
The culmination of a legal battle spanning nearly six years, the decision of the state’s highest court to deny review is the third consecutive loss for DWR in this bond validation action for its conveyance-based “Delta Program” first brought in August 2020. The state Supreme Court’s denial of review marks yet another major setback for DWR’s beleaguered multibillion dollar Delta Tunnel megaproject, known in its most recent version as the Delta Conveyance Project (DCP). The DCP still lacks an approved funding mechanism or any firm commitment of funding from the State Water Contractors.
In 2020, DWR unsuccessfully sought to validate detailed bond resolutions and pledges to collect revenue from water contractors, which would charge ratepayers for an uncapped amount of additional debt to meant to finance DWR’s proposed Delta tunnel. The DCP is the latest in decades of unsuccessful attempts by DWR to build and finance a massive conveyance project to remove more freshwater from the water-scarce Sacramento-San Joaquin Delta, which California’s Legislature has described as “in crisis.” (Wat. Code, § 85001, subd. (a).) Although California’s voters approved the original State Water Project in 1960, relying in part on state assurances of Delta protection, voters overwhelmingly rejected a predecessor Delta conveyance proposal, the Peripheral Canal, via statewide referendum in 1982. Other tunnel proposals also subsequently failed.
After two decades of disruptive construction, the DCP, if built, would divert up to half of the average flow of freshwater from the Sacramento River with massive new intakes near the town of Hood in the Sacramento-San Joaquin Delta, for export chiefly to portions of the South San Joaquin Valley and Southern California. DWR’s preliminary estimate of DCP costs was over $20 billion in 2023 dollars. Other expert testimony and reports, cited by tunnel critics in related proceedings, have warned that the DCP’s total costs could be far higher, with some estimates ranging up to $60 to 100 billion when predictable cost overruns and financing are included.
In late 2020, the Counties of San Joaquin, Contra Costa, Solano, Yolo, Butte, Plumas, and Sacramento, and related water agencies, answered DWR’s validation action and challenged DWR’s claimed authority to issue uncapped bonds to cover revenue bond debt for water conveyance facilities proposed for DWR’s amorphous “Delta Program.” Public agencies and public interest groups from throughout California, including the Howard Jarvis Taxpayers Association and prominent environmental organizations, also opposed DWR’s validation action, warning of major economic and environmental risks.
In January 2024, following a four-day trial and extensive briefing, the Sacramento County Superior Court entered judgment against DWR, rejecting DWR’s claim to almost unlimited authority in such matters. Finding DWR exceeded its delegated authority, the court ruled that the Water Code “does not give DWR carte blanche to do as it wishes.” Because DWR’s case failed on this foundational defect, the court denied validation without even needing to reach more than ten other objections to validity.
In its published opinion finalized in January 2026, the Court of Appeal rejected the appeal of DWR and several State Water Contractors supporting its positions, affirming the trial court’s judgment against DWR’s attempt to validate its bond resolutions and pledges of revenue for the Delta Tunnel. The California Supreme Court’s denial of review renders the Court of Appeal’s construction of California law final and binding, including its conclusion that even when DWR’s cited statutory powers are liberally construed, “DWR lacks the authority to approve a new State Water Project ‘unit’ under the guise of a ‘further modification’ of the Feather River Project.” (Opinion, p. 781.)
Attorneys for many of the Counties and agencies challenging DWR, Roger Moore and Thomas Keeling, drew on decades of experience addressing the interface between fiscal and environmental issues in state and federal water projects, including several prior unsuccessful isolated Delta conveyance proposals. DWR “pulled out all the stops” in its gambit to pressure the state Supreme Court to take up its validation action, including the enlistment of high-profile outside counsel, said Mr. Keeling as he praised the appellate opinion as “clear, cogent and compelling” and described the state Supreme Court’s denial of review as a “wise rejection of a misguided attempt by DWR and other Delta tunnel proponents to acquire unchecked power exceeding the scope of DWR’s delegated authority.”
Noting that “the pivotal roles of the Delta and the watersheds supplying the State Water Project cannot be finessed away with clever nomenclature,” such as the vague “Delta Program” construct used in DWR’s failed bond resolutions, Mr. Moore described the outcome of DWR’s validation action as a “victory for transparency and accountability, which are needed now more than ever.” In the end “the state’s highest court was not swayed by DWR’s misleading attempts in its Petition for Review to conflate the specific dangers posed by DWR’s bond resolutions with a virtual laundry list of other distinct issues surrounding the State Water Project.”
Mr. Moore also noted that the Opinion anticipated and debunked key claims later reworked unsuccessfully in DWR’s Petition for Review. Although DWR strained to portray the Opinion as an affront to its statutory role as manager of the State Water Project, the Opinion cited established precedent on that subject without revision. Instead, the Court of Appeal properly focused on DWR’s self-inflicted errors which made its bond resolutions and revenue pledges incapable of validation. These included defining the “Delta Program” in its bond resolutions in a manner “so opaque and ill-defined as to afford DWR nearly unlimited discretion to specify the facilities for which the bonds will be issued.” (Opinion, p. 782.)
The Opinion left intact by the state Supreme Court identified several key problems with DWR’s assertion of virtually unlimited power to impose debt for new Delta conveyance facilities under the guise of a “modification” of the existing State Water Project. First, the Opinion rejected DWR’s argument that it merely needed to demonstrate that its proposed Delta conveyance would serve a “primary” purpose of moving surplus water from north to south, regardless of whether it met other project objectives, such as those protecting the Delta. Rather, “the evidence shows that the project additionally was designed with the secondary objective of preserving and increasing water flows through the Delta to control salinity, protect fish and wildlife, and ‘firm’ the supply of surplus water available for export.” (Opinion, p. 782.)
Second, applying standard principles of statutory construction to Water Code 11260—the key provision from California’s Central Valley Project Act (CVPA) through which DWR claimed eligibility of its Delta conveyance for revenue bonds—the Opinion found that DWR’s amorphous, conveyance-based “Delta Program” failed as a “further modification” of the Feather River Project, the precursor to the current State Water Project which the Legislature had designated decades ago as a covered unit of the CVPA. The Court of Appeal agreed with the trial court that DWR’s “program” was “untethered” to that project’s “objectives, purposes, and effects.” (Opinion, pp. 783-785.)
Finally, the Opinion noted DWR’s avoidance of whether it even has authority to charge contractors “for the cost of the Delta program,” an ambiguity which left the primary method identified in its bond resolutions for repaying debt for a new conveyance mired in doubt. (Opinion, p. 786.) Because that authority was an “integral component” of DWR’s proposed bond financing, relegating it to separate and subsequent consideration would be at odds with central objectives of validation law. (Id.)
In sum, the California Supreme Court’s denial of review of the Court of Appeal’s well-reasoned Opinion moves DWR even farther away from establishing a lawful means of financing its multi-billion dollar Delta Tunnel project than when it commenced its validation action nearly six years ago.
The Golden State Salmon Association weighed in on the latest news with this Facebook post:
Big news for the Delta—and for salmon.
The California Supreme Court just declined to revive the state’s plan to fast-track funding for the Delta Tunnel. That means a major court ruling blocking that approach now stands in place.
This is huge!
As we all know, the Delta Tunnel would take more water out of the system that salmon depend on to survive—reducing flows, raising temperatures, and making an already tough situation even worse.
This decision doesn’t stop the project—but it slows it down big time. And that’s a step in the right direction.
California doesn’t need bigger pipes that move water away from ecosystems—we need solutions that keep rivers flowing and salmon alive.
