I received a "Final Notice...." of action to validate issuance of bonds by DWR, today. The notice advises of a lawsuit filed to have the court validate the action (required by state law). The edited text of the notice follows:

"Dear Interested Party:

This communication is for informational purposes and does not mandate any action on your part....

Following is a summary of the subject and purpose of the Department’s validation action:

The Department operates facilities which store, transport and deliver water to urban and agricultural water agencies throughout the State. Since 1960, the Department has approved, planned and constructed a system of water storage and transportation and power generation facilities (the Project). Currently, Project water is conveyed across the Sacramento - San Joaquin Delta (the Delta) through the natural channels of the Delta formed by the confluence of the Sacramento and San Joaquin Rivers, as those channels have been modified by 150 years of the construction of levees, ship and other canals, flood protection channels, salinity gates and other facilities. From the Harvey O. Banks Pumping Plant at the southern edge of the Delta to points further south, Project water is conveyed by the Project aqueduct system, which includes a number of additional pumping plants and several pipelines.

A validation action is a judicial proceeding in which a governmental agency, like the Department, can confirm the validity of a proposed financial transaction before it commits to or undertakes the transaction. The most common use of a validation action is to confirm the validity of an agency’s bonds, and the official actions authorizing those bonds, before the bonds are issued. Through the validation process, the agency and those who will be involved in the financial transaction, such as underwriters and bond investors, can obtain conclusive certainty that the proposed financing of a project is valid. The legal effect of a validation action is limited to the bonds and bond authorizations at issue. Matters such as compliance with environmental and other regulatory requirements that may be applicable to a physical project are generally not determined in a validation action.

The Department has initiated a validation action in Sacramento County Superior Court in connection with the proposed financing for the CWF (Case No. 34-2017-00215965). The Department seeks a judgment confirming the validity of revenue bonds the Department would issue to pay for the CWF facilities, the resolutions the Department adopted authorizing those revenue bonds, and the Department’s pledge of
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CWF revenues to the repayment of the bonds, all pursuant to the terms of the bond resolutions. This validation proceeding is limited to confirming the validity of the financing the Department proposes to utilize to pay for the CWF facilities; implementation of the CWF is not involved in the validation action. In particular, the Department is not seeking in the validation proceeding a determination that it has complied with all legal prerequisites that may applicable prior to implementation of CWF construction. No individual person is sued in a validation action. Any interested person may appear and contest a validation action, subject to specific time limits and procedural requirements. In the Department’s validation proceeding, interested persons must appear, in conformance with applicable legal and procedural requirements, not later than September 15, 2017.
If you are interested in obtaining a copy of the Department’s validation complaint related to the CWF financing, and the legal summons that corresponds to the complaint, use this link: https://www.californiawaterfix.com/resources/planning-process/validation/."

Altho this is a preliminary step in the ability of DWR to issue revenue bonds, it is an important one for us. The part that is not included is the part to be agreed to by water contractors. The only guarantee, so far, is the DWR belief that water contractors will repay DWR as they will raise rates on their ratepayers. If past history is any indicator, that belief is not on solid ground. Westlands owed a large amount of money to the federal government over a dispute over Kesterson drainage that lasted since the 70's and that was only resolved by the Obama Administration, recently. The money owed was forgiven and the rights to water in San Luis Reservoir was given to Westlands to settle the matter. The point is that when disputes arise (as they undoubtedly will), will Westlands or other water contractors refuges to pay and, if they do, how will DWR enforce payment??? In my brief discussions with DWR staff, I was told there is no contract involved to enforce payment.... Doesn't sound prudent to me....