Water Service Contracts in Central Valley Survive Endangered Species Act Challenges

August 7th, 2012

By: Thomas Law Group



In Natural Resources Defense Council v. Salazar, (2012) 2012 U.S. App. Lexis 14614, the 9th District Court of Appeals affirmed a grant of summary judgment, concluding plaintiffs did not have standing to challenge the renewal of certain water service contracts under the Endangered Species Act and that renewal of other water service contracts was exempt from the Endangered Species Act.

In 2005, the United States Bureau of Reclamation (Bureau) renewed 41 water service contracts to provide water from the San Joaquin and Sacramento Rivers to users. Some of those contracts (settlement contracts) were initially entered in 1964 to settle the claims pertaining to the priority of water rights established before the Central Valley Project (CVP). The CVP is a project operated by the Bureau which began in the 1930’s to regulate the flow of water in the San Joaquin and Sacramento Rivers. The remaining contracts (DMC contracts) were initially entered with a coalition of users who obtained service from the Delta-Mendota Canal.

Plaintiffs, environmental organizations and the Metropolitan Water District of Southern California, filed a lawsuit challenging the renewal of the contracts on the basis such renewal violated section 7(a)(2) of the Endangered Species Act. Specifically, they claimed the Bureau had not met its requirements under section 7(a)(2), which requires federal agencies to insure that their actions are not likely to jeopardize the continued existence of any endangered species, to protect the Delta Smelt, a small fish added to the endangered species list in 1993. The trial court granted summary judgment to defendants on the grounds that plaintiffs did not have standing to challenge the renewal of the DMC contracts and renewal of the settlement contracts was exempted from section 7(a)(2).

Plaintiffs appealed, claiming they had standing and the renewal of the contracts was not exempt from the requirements of section 7(a)(2). First, the court rejected the defendants’ assertion that the case was mooted by the US Fish and Wildlife Service 2008 opinion. That opinion concluded the renewal of the contracts would not likely adversely affect the Delta Smelt and defendants argued it effectively eliminated any case or controversy. This assertion did not hold because a California District Court concluded the 2008 opinion was partially unlawful and because it was also unclear whether it considered the contracts at issue.

On the standing issue, the Court affirmed that the plaintiffs did not have standing to challenge the renewal of the DMC contracts. Standing did not exist here because the relevant contracts contained a shortage provision which expressly allowed the bureau to take any action to meet its legal obligations, including not delivering water to DMC contractors to satisfy section 7(a)(2) requirements. That provision prevented any causal connection from the renewal of the contracts to the threatened injury (i.e., jeopardy of the Delta Smelt) because the contracts expressly allowed for section 7(a)(2) compliance. That being the case, plaintiffs failed to meet the standing requirement of tracing injury to defendant’s conduct.

Last, the court affirmed that the renewal of the settlement contracts was exempt from section 7(a)(2). Section 7(a)(2) only applies to federal agency action where such actions are discretionary. Renewing the settlement contracts was not a discretionary action because the Bureau was required, pursuant to the Central Valley Project Improvement Act, to comply with all California Water Resources Control Board decisions, including the decision requiring the Bureau to address the issue of those claiming senior water rights under California law. The Bureau recognized such rights when it entered into the settlement contracts, the terms of which require renewal for the same quantity and allocation of water to be delivered to the contractors. Thus, “[t]he Bureau’s hands are tied historically by those asserting senior water rights in the CVP.”

Key Points:

An agency’s opinion cannot moot an issue when a court subsequently holds the opinion to be unlawful. A plaintiff cannot establish a link between renewing a contract and injury under the Endangered Species Act for standing purposes where the contract specifically provides for compliance with the Endangered Species Act. Renewal of water service contracts which grant water rights based on pre-CVP water rights seniority is exempt from section 7(a)(2) of the Endangered Species Act.

Written By: Tina Thomas, Ashle Crocker and Grant Taylor (law clerk)
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