After years of planning and escalating costs, Valley Water has decided to suspend its controversial Pacheco Dam expansion project indefinitely. The decision came after the board of directors unanimously voted to halt the project during a Tuesday meeting, citing financial concerns and regulatory setbacks.

Story Highlights

• Valley Water halts Pacheco Dam expansion project after 8 years.

• Estimated cost surged from $970 million in 2017 to $3.2 billion in 2024.

• Construction would not begin until 2029 at the earliest.

• U.S. Bureau of Reclamation denied request to import CVP water.

• Environmental groups, tribes celebrate the decision.

• Valley Water to explore water recycling and desalination alternatives.

Project Shelved Over Soaring Costs and Delays

The Pacheco Dam expansion, which aimed to increase storage from 5,500 acre-feet to 140,000 acre-feet, has been under consideration for eight years. Initially introduced in 2017 to boost local water supply amid persistent drought, the project faced multiple financial hurdles.

Cost projections have ballooned dramatically—from $970 million in 2017 to $1.2 billion in 2019, reaching $2.5 billion in 2021, and now standing at $3.2 billion. Despite these escalating figures, construction would not have begun before 2029. Valley Water has already spent $100 million on the effort, including $24.4 million from a $504 million state grant. The district plans to withdraw from the grant and return remaining funds.

Federal Rejection Limits Feasibility

The U.S. Bureau of Reclamation dealt a major blow by denying Valley Water’s request to import Central Valley Project (CVP) water into the expanded reservoir. Federal officials concluded that the project’s primary benefits were environmental, not water supply-related, and would favor Valley Water exclusively.

Aaron Baker, Valley Water’s chief operating officer, said this restriction severely reduces the project’s viability. To proceed, the district would need a Warren Act contract, a complex agreement involving water rights exchanges, which could add more time and limitations.

Environmental Advocates and Tribes Applaud Decision

Opposition to the Pacheco Dam expansion has been strong from environmental organizations, local Indigenous tribes, and landowners. Groups argued the project threatened more than 28,000 acres of critical habitat, including rare Sycamore woodlands and species like the California red-legged frog and California tiger salamander.

“This is a relief for the environment,” said Katja Irvin, Sierra Club’s Loma Prieta Chapter conservation chair. “The scale of environmental impact was enormous, so this decision is a positive step.”

The Stop Pacheco Dam coalition, which sued Valley Water in 2022, praised the move. “We applaud Valley Water’s decision to finally stop pursuing this unsustainable project,” said representative Osha Meserve. “We hope the district now works on smarter water solutions with broad community support.”

Next Steps for Water Supply Solutions

Valley Water directors instructed staff to identify alternative water storage and supply strategies and report back within months. Director Rebecca Eisenberg emphasized investments in water recycling and desalination to improve supply reliability.

“This is a long time coming, but we can look forward,” Eisenberg said. “I’m thrilled for the future.”

The suspension of the Pacheco Dam expansion marks a pivotal moment for California’s water future. With soaring costs, regulatory challenges, and significant environmental concerns, Valley Water’s decision reflects the growing need for sustainable and cost-effective solutions. As the agency shifts focus to water recycling, desalination, and alternative storage methods, the move could set a new precedent for balancing water security, environmental protection, and financial responsibility in Santa Clara County and beyond.

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