This case involved a dispute over water rights to California’s two largest rivers. An association of 16 water contracting agencies from north of the San Joaquin-Sacramento River Delta sought to establish superior water rights under water service contracts that would limit and exclude the export of water south of the Delta until its members received 100 percent of their contractually-allocated water supply. The plaintiff, Tehama-Colusa Canal Authority (TCCA) filed suit against the U.S. Department of the Interior and it’s Bureau of Reclamation, among others, asking the U.S. District Court for the Eastern District of California to provide injunctive and declaratory relief.

The water system involved in this dispute - the Central Valley Project (CVP) – is a federally-funded project established to pump water from the San Joaquin and Sacramento rivers into canals that carry it to the southern San Joaquin River Valley. In the 1930’s, California recognized the need to set-up a canal system to carry water into important farming regions, but couldn’t afford to fund the entire project. Thus, Congress passed federal legislation to authorize the creation of the Sacramento Valley Irrigation Canals, Central Valley Project. The federal legislation was intended to “supplement” California’s Central Valley Project Act- state legislation passed to protect water use within the area. The Congressional legislation specified that the CVP should be operated “in such a manner as will effectuate the fullest and most economic utilization of the land and water resources” of the area. In other words, Congress wanted to ensure that resources were allocated for “the widest public benefit.”  Presently, the CVP encompasses more than 20 reservoirs and 500 canals.

California’s “area of origin” statute (CWC §§11460-11465) was enacted to ensure adequate water supply for all users. However, the statute does not dictate how the Bureau of Reclamation allocates water. It only dictates the amount of water available to the Bureau for allocation. Normally, the Bureau allocates CVP water on a “pro rata” basis, except when there are “operational constraints” or contracts with agencies dictate priority of allocation. Thus, in dry years, all of the CVP users receive less water than they are contractually entitled to receive. In 2008 and 2009, the area experienced two dry-water years. In 2008, the plaintiffs received 100 percent of their allocation and users south of the Delta only received 50 percent. The next year, the governor declared a state of emergency and users north of the Delta received 40 percent of their allocation while the southern users received 10 percent.     

The plaintiff, through its member agencies, supplies water to agricultural, municipal and industrial water users. In their complaint, the plaintiff claimed that the Bureau of Reclamation reduced the water allocations of their water service contracts during times of water shortage, disregarding their “priority right” under state and federal law. The plaintiff further claimed that the Bureau improperly declared a water shortage while exporting water outside of the Sacramento River watershed. Additionally, the plaintiffs accused the defendants of arbitrarily allocating pro rata water allocations in disregard of priority rights and assumed the legal authority to allocate the water supply without complying with state and federal law.

So, the question, in this case, was the extent of authority and responsibility of the Bureau of Reclamation for allocating water and determining priority.  What action does the Bureau need to take to protect the prior rights of those in the CVP to “water reasonably required to adequately supply the beneficial needs of the watershed?” The governing statute does not address whether the Bureau is limited in their ability to divert water for export into areas south of the Delta and whether the Bureau has the discretion to provide certain CVP contractors with water at the expense of other contractors.  Thus, this became a dispute between users of water north of the Sacramento Valley, where water is plentiful, and users south of the Delta.

Water allocations

Did Bureau improperly disregard contractual water allocations?

The Federal District Court for the Eastern District of California first addressed the plaintiff’s assertion that the Bureau disregarded the water allocations specified under the agencies’ water service contracts. Originally, the TCCA members executed CVP water service contracts in the 1960’s and 1970’s. The contracts were set to expire in 1995. Prior to that time, plaintiffs received less than 100 percent of contract amounts during five water shortage years (1977, 1990, 1991, 1992, and 1994). In 1992, Congress stepped in and enacted the Central Valley Project Improvement Act (CVPIA) which “reallocated” the use priorities for CVP water. After enactment of the CVPIA, the CVP began negotiating new water contracts with its users.

During negotiations, the Bureau continued to assert their responsibility for allocation of CVP water and consistently rejected requests by TCCA members to preclude water reduction unless and until reductions were made south of the Delta. Ultimately, the plaintiffs accepted long-term renewal contracts in 2005 with priority allocation terms. The current TCCA contracts contain a “shortage provision” allowing the Bureau to determine shortages and reduce allocations in times of shortage.

Despite the plaintiff’s arguments to the contrary, the federal court held that federal and state law (CVP statutes and CWC §11460) did not contain provisions supporting the priority allocation right the TCCA claimed. According to the court, the purpose of the CVP was to provide the “widest possible public benefit.”  The statutes expressly and plainly provided that Congress and the State of California did not intend to provide preference to users north of the Delta. The project was intended to provide water to the entire CVP, not just those areas where the water originated. Because the statutes were clear, there was no need for the court to examine the legislative history behind the statutes.  The court cited a 1955 California Attorney General Opinion explaining the state’s position. The opinion specified that “no inhabitant of a watershed of origin becomes possessed of any presently vested title or right to any specific quantity of water…”.

Bureau’s interpretation of Reclamation Law

The court next addressed the plaintiff’s argument that the Bureau improperly interpreted Reclamation Law by declaring water shortages. According to the court, the Bureau consistently stated its position of authority to allocate water in the CVP. This is evidenced by the Bureau’s repeated rejection that an “area of origin” provision be included in the plaintiff’s contracts. The Bureau never agreed to provide 100 percent contractual water supply and even included shortage provisions in each contract. Federal Reclamation Law specifically directs that Bureau not to agree to priority allocations. The Bureau is tasked with providing allocations which ensure the “widest public benefit.” Since the Bureau is a party to the contract, federal law governs the interpretation of the TCCA contracts. The plain language “within the four corners” of the 2005 TCCA contracts clearly indicates that the parties did not intent priority allocations and the Bureau was perfectly within its rights to declare a water shortage and take subsequent action. Under the long-term contracts, a “condition of shortage” may occur “because of errors in physical operations of the Project, drought or other physical causes beyond the control of the contracting officer…”.

Since the inception of the CVP, the Bureau has never recognized a legal obligation to observe “area of origin” water rights. According to the court, “fatal to the plaintiff’s interpretation of its CVP contracts is the total absence of any language granting an area of origin preference. In order for the CVP to happen, California had to accept help from the federal government. Along with that came federal guidelines and laws that trumped state law. Tehama-Colusa Canal Authority v. U.S. Dept. of the Interior, et al, No. 1:10-cv-0712 OWW DLB, 2011 U.S. Dist. LEXIS 83497 (E.D. Cal. Jul. 29, 2011).

For original article, see: Long-standing Dispute over California Water Rights Rages On: Court Determines “Widest Public Benefit?”