California Governor Gavin Newsom found himself simultaneously celebrating and absorbing a major legal blow on Thursday, as the state’s controversial $20 billion Delta tunnel project passed a key regulatory review while the California Supreme Court delivered a separate ruling declining to hear an appeal that would have revived Newsom’s preferred bond financing mechanism for the same infrastructure programme.
The Delta Stewardship Council, a state oversight body created in 2009, voted to uphold the California Department of Water Resources’ finding that the Delta Conveyance Project complies with the Delta Plan, clearing a significant regulatory milestone for the 45-mile underground tunnel that would carry Sacramento River water beneath the Sacramento-San Joaquin Delta to farms and cities in the south of the state.
The approval came with two substantive caveats that will require DWR to address before construction can proceed: state officials must review whether the project could worsen the golden mussel invasion that is already threatening the Delta’s ecosystem, and they must resolve concerns about potential conflicts with Sacramento-area recycled water systems that could be disrupted by the tunnel’s operation.
Newsom responded to the regulatory advance by issuing a statement saying: “California must quickly complete the Delta Conveyance Project in order to meet our water needs in the future. With this project meeting this milestone, we are closer than ever to seeing this important piece of infrastructure completed and benefiting all Californians. Let’s get this built.”
The optimism was immediately tempered by the Supreme Court’s parallel decision to refuse review of an appellate ruling that had blocked Newsom’s bond financing plan, finding that DWR lacked the legal authority to issue revenue bonds to pay for the project, a determination that strips the state of its primary proposed funding mechanism and hands opponents a significant legal victory.
State officials estimate the project will cost approximately $20 billion, though a coalition of opponents including seven northern California counties, environmental groups, fishing associations, and the Winnemem Wintu Tribe argue the true cost could reach $60 billion once all construction, financing, and environmental remediation costs are properly accounted for.
Gary Mulcahy, a government liaison at the Winnemem Wintu Tribe, stated in a news release that “the Delta Stewardship Council does not know the legality of what they ruled on because DWR’s documents do not support the consistency of the project for Tribes, environmental justice communities and fisheries,” framing the day’s regulatory approval as legally vulnerable from the outset.
The Sacramento River, from which the tunnel would divert water, is already under unusual stress in 2026, with the state approaching a record-low snowpack following an unusually hot March that reduced flows severely enough to endanger more than six million juvenile salmon released from Coleman Hatchery, prompting conservation groups to demand additional reservoir releases to protect the fish.
The financing question now falls back to the legislature, which must either explicitly authorise DWR to issue project-specific bonds through statute or approve an alternative financing structure, a path that legal analysts described as politically difficult given the entrenched opposition from northern California lawmakers who represent the communities most directly affected by the water diversions the tunnel would enable.
The simultaneous victory and defeat leaves the Delta Conveyance Project in a position its supporters have occupied for most of its multi-decade history: regulatorily plausible but financially and legally contested in ways that make a clear path to construction elusive, a status Newsom’s forthcoming gubernatorial exit at the end of his term will make even more complicated to resolve before a successor inherits the project.
