Months of behind the scenes talks have failed to drum up enough money to pay the full costs of replumbing the center of California's sprawling waterworks with two giant water tunnels.
That has left the state with little choice but to scale down a roughly $17-billion water delivery project to fit a funding pot of less than $10 billion.
State officials are expected to soon announce exactly what form a revised California WaterFix would take.
While it is assumed the project will shrink from two tunnels to one constructed under the Sacramento-San Joaquin Delta, the capacity of the conveyance system hasn't been settled.
"We don't have a game plan from the state," Jeffrey Kightlinger, general manager of the Metropolitan Water District of Southern California, told an MWD board committee Tuesday.
Driven principally by big irrigation districts' reluctance to pay for a project they have long sought, the downsizing underscores the degree to which California agriculture is addicted to cheap water supplies. The changes could cause more delays in the decade-old proposal, which is designed to stem declines in water deliveries to San Joaquin Valley farms and Southern California cities.
MWD and other agencies that approved the two-tunnel proposal will have to decide if a smaller version is still to their liking. Opponents — primarily delta interests and environmental groups — will no doubt demand that an altered WaterFix undergo a new environmental review.
State officials hope to avoid that, arguing that any version of the project was evaluated in the form of alternatives outlined in thousands of pages of environmental documentation for the two-tunnel proposal.
"The odds are, almost anything within a project has been vetted in an alternative," state Natural Resources Secretary John Laird said last month.
As previously proposed, WaterFix would add a new diversion point on the Sacramento River in the north delta that would feed two 40-foot diameter tunnels connected to existing government pumping plants.
The replumbing is intended to reduce the harmful effects of the powerful pumping operations — and thus ease environmental restrictions that at times limit southbound water exports.
Critics complain that the big river diversions will simply create a different set of environmental problems.
The tunnels' funding was based on the premise that customers of the largely urban State Water Project and the largely agricultural Central Valley Project that receive supplies from the south delta would pick up the tab. Costs would be apportioned according to the size of an agency's water contract.
But that plan fell apart when Westlands Water District, the largest contractor in the federal CVP system, backed out. Accustomed to water deliveries subsidized by the federal taxpayer, the district's board said Westlands growers couldn't afford the tunnel supplies.
The federal government has also refused to cover WaterFix costs allocated to wildlife refuges and senior water rights holders that receive delta deliveries from the CVP.
WaterFix proponents, at least publicly, haven't given up hope that the federal position will change. Instead of saying the project is being scaled back, they say it can be built "in phases," with construction of a second tunnel dependent on future funding.
Though the Metropolitan Water District and other state contractors approved financing, their total WaterFix commitments fell somewhat short of the roughly $9 billion expected from them.
That has led to months of ongoing negotiations between state contractors in meetings convened by the state.
The major players have been MWD, which imports delta water to the Southland, and the Kern County Water Agency, which distributes delta supplies to farm irrigation districts in the southern San Joaquin Valley.
The MWD, the State Water Project's largest contractor, last year OKd a $4.3-billion WaterFix buy-in. But Kern, the state system's second-largest contractor, tentatively agreed to paying only about half its WaterFix share, or roughly $1 billion.
No deals have been announced. But the MWD staff has outlined various arrangements that boil down to MWD and other urban agencies shouldering a portion of Kern's unfunded WaterFix costs in exchange for a portion of Kern's tunnel deliveries.
Under one scenario, the Kern County Water Agency would gain more access to the cheapest water in the state system.
Called Article 21 deliveries after a section in state contracts, the supplies are available only when certain "excess" conditions exist in the state system.
WaterFix is expected to boost that availability by diverting water into the tunnels during high river flows.
As described in staff presentations, MWD could buy a portion of Kern's share of regular — and more expensive — tunnel deliveries. Kern, for its part, would pay for — and retain — other tunnel benefits, including more bargain Article 21 water.
"Hypothetically, that would certainly be attractive to the ag community," Curtis Creel, Kern's general manager, said last year.
Roger Patterson, MWD's assistant general manager, said it makes sense for his agency to acquire reliable tunnel deliveries from Kern, as opposed to the less frequent Article 21 supplies that "you can't count on."
But the prospect of such an arrangement has raised questions.
If the staff formally proposes that, "Why shouldn't the board be concerned about us buying only expensive water?," said Keith Lewinger, who represents the San Diego County Water Authority on the MWD board.
"Why shouldn't we get the advantage of some of that cheap water too?"