Posted by: Deirdre Des Jardins | May 2, 2018

WaterFix: JPA agreement attempts to indemnify water agencies from construction liability

At 5:00 pm on May 1, 2018, the Clerk of the Board for the Santa Clara Valley District published the Delta Conveyance Design and Construction Joint Powers Agreement  for the construction of the WaterFix project facilities. The Delta Conveyance Joint Powers Agreement states that the Board shall consist of “up to five (5) Directors and five (5) Alternative Directors, with each pair appointed by and representing the following Members or class of Members:”

i. Metropolitan Water District of Southern California (State Water Project)

ii. Kern County Water Agency

iii. Santa Clara Valley Water District

iv. State Water Project contractor, selected by otherwise non-represented State Water Project contractors.

v. Metropolitan Water District of Southern California (Non State Water Project capacity)

The Joint Powers Agreement specifies that “the number of Directors may be expanded to seven (7) Directors and seven (7) Alternative Directors if, at any point after the execution of this Agreement, there are three or more CVP contractors, other than Santa Clara Valley Water District, that desire to become Members. The Delta Conveyance Joint Powers Agreement provides that for the first two years, the Construction JPA president will be the Director appointed by Santa Clara Valley Water District, and the Construction JPA vice president shall be the Director appointed by Metropolitan Water District.

The Joint Powers Agreement attempts to indemnify the member agencies, and the JPA officers, agents, and employees, from liability for any activities conducted under the Joint Powers agreement. The Joint Powers Agreement further provides that the JPA will defend the member agencies against “any claim, cause of action, liability, or damage resulting therefrom.”

The Joint Powers Agreement states that the JPA “may purchase such insurance as the Board may deem appropriate,” but does not require the JPA to do so. It is unclear if the current WaterFix tunnel design is even insurable, because the WaterFix design process has not met tunneling industry standards for risk management. The second edition of the International Code of Practice for Tunneling was drafted by the International Tunnelling Insurance Group in 2012, and adapted for the United States as the Guidelines for Improved Risk Management on Tunnel and Underground Construction Projects in the United States Of America. The Guidelines were drafted by the Underground Construction Association of the Society of Mining, Metallurgy, and Exploration. According to a description in Tunneling Business Magazine, “The Guidelines recommend a detailed process for doing a risk assessment, and for developing a list of mitigations… The Guidelines reflects the consensus of a wide variety of industry experts and other professionals involved in the tunnel and underground construction industry in the United States.”

The UCA-SME Guidelines state:

The importance of any risk depends not only on the likelihood that something may go wrong, but, if it does occur, how severe the consequence may be. The process of risk management—including risk assessment, characterization, and response, as well as elimination, mitigation, avoidance, transference, or acceptance—is required to identify and clarify ownership of risks and should detail clearly and concisely how the risks are to be allocated, controlled, mitigated, and managed. (underlining added.)

But the Delta Conveyance Joint Powers Agreement denies any ownership of risks by the water agencies constructing the project.  The WaterFix 2015 Final Draft Conceptual Engineering Report also does not clearly identify project risks, and defers risk mitigation to future engineering design.

1 Jones tract levee breach, 2004

As reported by California Water Research, in addition to the risks of tunneling under Delta levees, the seismic design criteria for the WaterFix tunnel lining has yet to be set, and there is no assessment of the performance of the tunnel lining in a maximum considered earthquake. An examination of the 2015 WaterFix Final Draft Conceptual Engineering Report shows that a majority of the tunnel contractors did not want to design the tunnel lining segments, because they did not want the liability.

As also reported by California Water Research, neither Metropolitan Water District nor the Department of Water Resources have made efforts to determine the exact location of abandoned gas wells in the tunnel alignment, although this was recommended in 2010 by an independent review panel. Although the International Code of Practice for Tunneling requires a design checking procedure, no such procedure has been specified for the WaterFix tunnel design process, and it is unclear if the preliminary or final design will have independent review.

The indemnification language in the JPA agreement may not actually indemnify Metropolitan Water District, Santa Clara Valley Water District, Kern County Water Agency, or the State Water Contractors from liability for any claims arising from the WaterFix tunnel design and construction. In Tucker Land Co. v. State of California 2001)1114 Cal. App. 4th 1191, the 2nd District appellate court reviewed Chapter 21 of the Government Code,Tort Liability Under Agreements Between Public Entities, and associated Law Revision Commission opinions. The court concluded “these sections make clear that the Legislature intended that member entities of a JPA be liable for the torts of the JPA.”


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