In a victory for the owners of senior water rights, the Ninth U.S. Circuit Court of Appeals has ruled that the operators of the Central Valley Project (CVP), in times of water shortage, could reduce a larger proportion of water from the two districts than from other entities with older water rights and separate contracts.

The decision was the seventh district or appellate court ruling in litigation filed by Westlands Water District over the operation of the federal water system. This specific controversy involved water allocations during the 1994 water year (March 1, 1994 to February 28, 1995).

Because of a water shortage at the time, the Bureau of Reclamation granted Westlands — a 600,000-acre farming district along Interstate 5 in western Fresno and Kings counties — and the much smaller San Benito Water District 35% of their contractual entitlements. At the same time, the Bureau granted 75% of contractual entitlements to five other entities called the “exchange contractors” — the San Joaquin River Exchange Contractors Water Authority, Friant Power Authority, Friant Water Users Authority, Chowchilla Water District and Madera Irrigation District. The final allocations ended up being 42.5% and 100%.

Westlands and San Benito filed a lawsuit seeking “equal apportionment” of water. The district court, though, ruled that the contracts Westlands and San Benito had with the CVP did not prevent the Bureau from satisfying its obligations to holders of senior water rights.

Westlands and San Benito appealed, and a unanimous three-judge panel of the Ninth Circuit upheld the lower court.

At issue were state water law and three contracts for CVP water: The 1939 exchange contractors agreement, the 1963 Westlands contract and the 1978 San Benito contract. Under the 1939 contract, the exchange contractors gave San Joaquin River water rights to the Bureau in exchange for substitute water from the CVP. The 1963 and 1978 contracts permitted Westlands and San Benito to purchase water from the CVP’s San Luis Unit, subject to reductions during times of water shortage.

Westlands argued that California water law’s principle of “first in time, first in right” did not give the exchange contractors priority to CVP water. But the court, noting that the exchange contractors had both riparian and appropriative water rights, called that argument “illogical and unsupportable.” The court pointed to Westlands’ own 1963 application to the CVP, in which the district said it intended “to take only that water which is in excess of the water needed to supply the valid vested rights under reasonable means of diversion and use.”

As for the CVP’s contractual obligations, Westlands and San Benito argued that all the water in the CVP should be considered “available supply.” But the district court and the appellate court ruled that Westlands and San Benito were limited to the available supply from the San Luis Unit, while the exchange contractors had access to the entire system.

“Exchange contract water cannot be included as ‘available supply’ under the Westlands contract since (1) the ‘substitute’ water provided to the exchange contractors is not a ‘contractual commitment;’ and (2) the exchange contractors’ water allocation has priority over the Westlands water service contract,” Judge Betty Fletcher wrote for the court.

The court also rejected the pro-rata allocation argument because the exchange contractors’ water rights were independent of the Westlands and San Benito contracts, and “neither the Westlands nor the San Benito service contract support a finding of pro-rata distribution that includes the exchange contractors water allocation.”

The Case:
Westlands Water District v. United States, No. 01-16987, 03 C.D.O.S. 6769, 2003 DJDAR 8533. Filed July 31, 2003.
The Lawyers:
For Westlands: William Chisum, Kronick, Moskovitz, Tiedemann & Girard, (916) 321-4500.
For the U.S.: Maria Iizuka, Department of Justice, (916) 930-2202.