Quinn, Sarah A.

English

University of Denver

Water Law Review Volume 10 Issue 2 Article 29 1-1-2007 Stockton East Water Dist. v. United States, No. 0451L, 2007 WL 548819 (Fed. Cl. Feb. 20, 2007) Sarah A. Quinn Follow this and additional works at: https://digitalcommons.du.edu/wlr Custom Citation Sarah A. Quinn, Court Report, Stockton East Water Dist. v. United States, No. 0451L, 2007 WL 548819 (Fed. Cl. Feb. 20, 2007), 10 U. Denv. Water L. Rev. 496 (2007). This Court Report is brought to you for free and open access by the University of Denver Sturm College of Law at Digital Commons @ DU. It has been accepted for inclusion in Water Law Review by an authorized editor of Digital Commons @ DU. For more information, please contact jennifer.cox@du.edu,dig-commons@du.edu. WATER LAWREVIEWhave arose from considerable rainfall. The court held that non-pointdischarges were not subject to antidegradation review as they were notsubject to federal regulation but were a matter for the states. In addi-tion, the infrequency of precipitation in connection with the fact thatthe regulation prohibited all other discharges demonstrated thatCAFO sources would have no more than a de minimis effect on waterquality.The court examined the EPA's approval of Kentucky's choice notto include impaired waters in its Tier II classification. The court heldthat case law recognized the use of a water body-specific approach, asover ninety percent of Kentucky waters received Tier II or III protec-tion using this approach. The court also held that the EPA correctlyexamined the impact of a water body-specific approach and found it tobe consistent with EPA requirements supporting water levels necessaryto sustain fish, shellfish, and wildlife.Waterways asked the court to assess the EPA's determination thatthe Kentucky regulations contained adequate implementation proce-dures. The court held that the EPA was correct in arguing that antide-gradation regulations applied to discharges involving KPDES permitreview and they provided permit applicant guidelines for the state tofollow.The court then considered the EPA's approval of Kentucky'sKPDES permit implementation procedures, even though the proce-dures did not address CWA Section 401 water quality certifications.The EPA answered, and the court agreed, that this claim had no meritbecause a procedure to issue 401 certifications already existed in Ken-tucky.The court held that the EPA did not act arbitrarily or capriciouslywhen it approved the procedures providing administrative and judicialreview under Kentucky's permitting process.Kathleen BradyUNITED STATES CLAIMS COURTStockton East Water Dist. v. United States, No. 04541L, 2007 WL548819 (Fed. Cl. Feb. 20, 2007) (holding that (1) individual water us-ers were not third-party beneficiaries of water allocation contracts be-tween the Bureau of Reclamation and the irrigation districts; (2) theshortage provision in the contracts excused non-performance of waterallocations; (3) conservative operation of the New Melones Dam wasnot unreasonable and did not breach the contract; (4) the alteration ofthe contractual obligations due to recent legislation was not a taking).This case arose from a water allocation and distribution dispute inthe Central Valley Basin ("Basin") of California regarding water fromthe New Melones Dam. The dam is part of a federal water conserva-Volume 10COURT REPORTStion project serving the Basin called the Central Valley Project("CVP"). The United States Bureau of Reclamation ("Reclamation") isthe designated federal administrative agency that manages the CVP.Reclamation answers to the governing State Water Control Board("Water Board"), which posses the power to issue appropriative waterpermits in California.The history of the CVP is especially significant to this case. Territo-rial expansion into the western desert lands resulted in an unprece-dented need for reclamation and irrigation. As a result, the FloodControl Acts of 1944 and 1962 granted the federal government theauthority to form the CVP in order to improve management of waterresources in the Basin. In 1962, Reclamation applied for permits fromthe California state government to construct the New Melones Dam,and later sought to expand the project in 1978. At that time, Califor-nia imposed a number of requirements on Reclamation for the expan-sion, including: allocation of water for fish, wildlife, and habitat uses;the use of "firm commitments" regarding its domestic and agriculturalwater allocations; and priority of both seniority water rights and in-Basin usage. The "firm commitment" requirement lead Reclamationto sign separate water allocation contracts in 1983 ("1983 Contracts")with the Stockton East Water District ("Stockton East") and the CentralSan Joaquin Water Conservation District ("Central"). Both StocktonEast and Central function as irrigation districts to serve municipal, in-dustrial and agricultural water needs in their respective areas, and areresponsible for managing water facility operations.Even before the 1983 Contracts, the Basin experienced increasingconflicts between the growing domestic and agricultural water needs ofsurrounding communities and the stability of river habitat. In addi-tion, following the 1983 Contracts a number of federal and state legis-lative decisions substantially increased the over-commitment of theCVP. In 1993, the congressional Central Valley Project ImprovementAct ("CVPIA") went into effect. The CVPIA increased the amount ofwater releases for environmental purposes, and furthermore alteredallocation priorities to give more weight to fishery, wildlife, and habitatneeds. Then in 1987, the California Department of Fish and Gamesigned an agreement with Reclamation, which the Water Board ap-proved, to implement in-stream flow schedules in order to protect thechinook salmon; the agreement in effect doubled the original com-mitment goals of the CVPIA. Finally, the 1998 Vernalis Adaptive Man-agement Plan developed salinity standards for the section of the Ver-nalis River below the New Melones Dam. The Water Board subse-quently approved the San Joaquin River Agreement, which requiredthe CVP managing authorities to implement the salinity standards out-lined in the Vernalis Adaptive Management Plan; this Agreement fur-ther increased the water commitments of the New Melones Reservoir.Issue 2WATER LAWREVIEWUltimately, Reclamation reduced the water allocations delineatedin the 1983 Contracts to meet other increasing demands on the systemand a lawsuit ensued. Multiple parties joined in the suit against Rec-lamation, including signatories Stockton East and Central. While theCity of Stockton, the County of San Joaquin and California Water Ser-vices ("United Contractors") were originally parties in the claim, thecourt later limited the suit to only the Stockton East and Central irriga-tion districts. Since the United Contractors merely benefited from the1983 Contracts incidentally or indirectly, they did not have sufficientthird-party beneficiary status to support a claim. The court found thatthe contractual benefits outlined in the 1983 Contracts could only ex-tend to parties organized under state law, such as the irrigation dis-tricts, and not individual water users.Stockton East and Central ("Contracting Parties") originally filedthe lawsuit in United States District Court in the Eastern District ofCalifornia alleging a breach of contract and regulatory taking for fail-ure to provide water in accordance with the 1983 Contracts. The dis-trict court transferred the case to the United States Court of FederalClaims, which denied Reclamation's motion to dismiss but grantedpartial summary judgment in favor of the Reclamation. At trial, thecourt conducted a review of 16 different lawsuits and regulations re-lated to the suit filed by the Contracting Parties. The net findings es-tablished that the CVP contracts were not immune from subsequentlyenacted statutes, and furthermore, that Reclamation had broad discre-tion to determine allocation of water rights in the valley. Ultimately,three main issues developed. Since the court found that the UnitedContractors were not third-party beneficiaries under the 1983 Con-tracts, the remaining relevant issues were limited to whether Reclama-tion breached the contracts and whether the re-allocation of waterconstituted a taking.The court first addressed the controlling law for the 1983 Contractsand found that state law controlled the claim. The Reclamation Act of1902 explicitly states that the Act shall not interfere with state laws re-lating the control, appropriation, use or distribution of water. In addi-tion, the 1983 Contracts expressly acknowledged the authority of statelaw regarding water use. Since no Congressional mandate had dis-placed the state's power to make decisions, the court determined thatReclamation must comply with all state-imposed requirements as de-termined by the Water Board.A number of questions emerged with regards to the breach of con-tract claim, including whether Reclamation: 1) could make reductionsfrom the water schedule; 2) could distribute less water than the mini-mum requirements outlined in the Build-Up Schedule; 3) made un-reasonable operational decisions regarding allocation. First, the courtruled that Reclamation was not liable for reductions to the waterschedule as long as its finding of a water shortage was reasonable. TheVolume 10COURT REPORTSContracting Parties claimed that between 1993 and 2004 they did notreceive all of the water that they needed and had scheduled. The 1983Contracts provided that the Contracting Parties must submit a sched-ule of water needs for the upcoming year, and that Reclamation had acontractual duty to fulfill the scheduled amount of water. In addition,even in years when the Contracting Parties failed to submit a timelyschedule, they were still entitled to receive their water allocations be-cause they substantially complied with the contract by paying for thewater and by constructing multi-million dollar water facilities. On re-view of the record, the court found that the 1983 Contracts obligatedReclamation to make deliveries to Stockton East from 1994-96 and in1998, and to Central in 1995, and therefore it violated the contract onits face for non-performance.However, the 1983 Contracts also included a clause that protectedReclamation from liability in the case of reductions, such as the eventof a drought or other shortage beyond Reclamation's control. Thecourt determined that Reclamation had reduced allocations in 1994due to drought and in the years following due to a continued dry fore-cast and diminished supply in the New Melones Reservoir. Further-more, the reduction of water designated for irrigation was necessary inorder to balance the environmental use needs dictated by the CVPIA.Had Reclamation been unreasonable, arbitrary or capricious in reduc-ing water to the Contracting Parties, the contract would not have ex-cused it from liability. Because the court did not find any evidencethat Reclamation was unreasonable in reducing these water allocations,the court excused its non-performance under Article 12(d).Second, the court decided that Reclamation was not liable for fail-ing to allocate the minimum amount of water in the Build-Up Sched-ule. The Build-Up Schedule created an annual minimum purchaseand supply schedule that Reclamation was to use in the event it couldnot provide the scheduled amount of water requested by the irrigationdistricts. Reclamation violated Article 3 of the 1983 Contracts when itfailed to meet even these minimum standards during drought years.However, since the court found that Article 12(d) also applied to theBuild-Up Schedule, this likewise excused Reclamation from non-performance.Third, the court held that Reclamation was reasonable in its opera-tional decision-making regarding the allocations, and therefore did notviolate the contract. While Article 9(a) required Reclamation to "useall reasonable means to guard against a condition of shortage in thequantity of water available," Congress also granted the CVP consider-able discretion in determining how to meet its obligations because itrecognized the difficulty of meeting water demands in an over-committed region. The Contracting Parties made a number of argu-ments to show that Reclamation's operations were unreasonable, butthe court rejected all of these arguments. Even though computer mod-Issue 2WATER LAW REVIEWeling maintained the argument that Reclamation could have deliveredthe full allocations and still avoided shortfalls, the model did not takeinto account other real-time considerations such as seasonal waterneeds. Furthermore, Reclamation had developed a carry-over storagepolicy for the New Melones Reservoir so that the CVP would have suffi-cient water in the event of a catastrophe or severe drought, and thiscarry-over was also not included in the model. While Reclamation'sconservative approach to operating the Reservoir may have resulted inreduced allocations to the Contracting Parties, the court did not findthat its decisions were unreasonable.The court also rejected the Contracting Parties' argument that Rec-lamation unreasonably failed to develop water release alternatives un-der Article 9(a) in light of the CVP's over-commitment. The CVPIAand various mandates following the 1983 Contracts required Reclama-tion to release water into the Vernalis River in order to meet salinitygoals and to protect fishery habitat. Reclamation allocated this waterexclusively from the New Melones Reservoir instead of other CVP wa-ter resources, even though it knew these releases would result in regu-lar shortages for Stockton East and Central. Nonetheless, Reclamationsuccessfully argued that the proximity of the Reservoir to the VernalisRiver made it the most logical and cost-effective choice for water re-leases into the Vernalis. The Contracting Parties also argued that Rec-lamation should have implemented a water recirculation process inorder to reduce salinity, instead of relying solely on water releases.Conversely, Reclamation presented evidence that a recirculation proc-ess would have resulted in higher operating costs to all users, and mayhave resulted in adverse environmental impacts on the system such aseffects on salmon spawning and the release of additional contaminantsinto the waterway. Consequently, the court found that Reclamation'sdecisions to use water from the New Melones Reservoir for environ-mental water releases and to not implement a water recirculationprocess did not violate Article 9(a).Finally, as none of Reclamation's activities effectively breached the1983 Contract, the court considered whether the reduction of waterconstituted a taking under the Fifth Amendment. The ContractingParties asserted that the CVPIA's impact on water allocation consti-tuted a regulatory taking because of its impact on the 1983 Contracts,but the court rejected this argument. First, claims based on contrac-tual rights or obligations usually give rise to a breach claim, which theContracting Parties had already asserted, and not a takings claim. Inaddition, the court found that Reclamation was merely acting in acommercial capacity by implementing the 1983 Contracts, rather thanin the sovereign capacity necessary to give rise to a taking.In conclusion, the court found that Reclamation did not breach1983 Contracts according to their terms, and that the water reductionsdid not constitute a taking. For the reasons above, the court grantedVolume 10COURT REPORTSsummary judgment in favor of Reclamation because the ContractingParties failed to meet their burden of proof.Sarah A. QuinnSTATE COURTSCALIFORNIAVineyard Area Citizens for Responsible Growth, Inc. v. City of Ran-cho Cordova, 150 P.3d 709 (Cal. 2007) (holding that an environmentalimpact report for a large development project need not show that theproject has definite long term water supplies, but that while the reportadequately analyzed the near-term groundwater supply, it failed to doso in regard to the long-term surface water supply and the potentialimpact on salmon migration).Vineyard Area Citizens for Responsible Growth, Inc. ("Group")filed a petition for a writ of mandate challenging the County of Sacra-mento's ("County") approval of a community development plan.Group claimed that the approval violated the California EnvironmentalQuality Act ("CEQA"). The Superior Court, Sacramento County, de-nied the petition after a bench trial. On appeal, the California Courtof Appeal affirmed, finding that the discussion of water supply in theenvironmental impact report ("EIR") met the requirements of CEQA,because its conclusions did not rely on "speculative or illusory sources"and substantial evidence illustrated that the effect of the proposedgroundwater extraction would be insignificant. The Supreme Court ofCalifornia granted Group's petition for review, reversed and re-manded. The court reviewed the administrative record for legal errorand the County's factual findings using the substantial evidence stan-dard. On review the court addressed two issues. First, the court ad-dressed the adequacy of the final EIR in regard to its identification andevaluation of future water sources for the development project. Sec-ond, the court determined whether the County's findings regardingthe potential impacts on migratory salmon, which the County first dis-closed in the final EIR, should have been open to public comment.Group contended that the final EIR was deficient because it failedto assure that the actual water sources would meet the project's de-mand. Therefore, the final EIR failed to disclose all the possible envi-ronmental impacts that would result from the project. Further, whensuch a failure occurs, it is impossible to evaluate all available mitigationmeasures. The question presented to the court concerned how muchuncertainty is allowable in an EIR under CEQA in regard to water sup-plies for a land use plan. The court first acknowledged that neitherCEQA nor its guidelines address this issue specifically. On a generallevel, the court notes that CEQA guidelines assert that an agency mustuse its best efforts to find all available information and "disclose all thatIssue 2

Stockton East Water Dist. v. United States, No. 0451L, 2007 WL 548819 (Fed. Cl. Feb. 20, 2007)

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Stockton East Water Dist. v. United States, No. 0451L, 2007 WL 548819 (Fed. Cl. Feb. 20, 2007)

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