ELR Citation: ELR 20530
No(s). 93-15295 (9th Cir. Nov 30, 1993)

The court holds that the Act authorizing the San Luis Unit of the Central Valley Project in California, and the U.S. Bureau of Reclamation's (the Bureau) contracts with irrigation water providers to implement terms of the Act, do not prohibit the Bureau from diverting water from the San Luis Reservoir to satisfy contractual obligations to holders of downstream water rights before satisfying the providers' water requirements. The court first holds that a preference for the providers cannot be found in the plain language of the Act and would be inconsistent with the mandate that the San Luis Unit be operated as an integral part of the whole Central Valley Project. The court holds that deference to the Bureau's interpretation of the Act is appropriate. The Bureau's position that the Act allows occasional diversions of water from the reservoir to serve contractors outside of the San Luis Unit's primary service area, so as to serve the overall needs of the Central Valley Project, is a reasonable construction of the Act. Also, Congress has vested broad discretion in the Bureau to interpret the statute. The court notes that the Act's legislative history does not compel a result in favor of the Bureau or the distributors. Evidence exists in the legislative history, however, that the Department of the Interior intended to use the reservoir water to serve customers outside the San Luis Unit service area in times of drought, and that Congress was on notice of such an intent. Evidence of this intent demonstrates that Congress was on notice of the Bureau's interpretation of its authority under the statute to use reservoir waters outside the primary service area. If Congress had wanted to give preferential treatment to contractors in the primary service area, it could have clarified that intent. Moreover, deference to an agency's construction of a statute is especially warranted in the case of a contemporaneous construction by an agency responsible for implementing the legislation.

Turning to the providers' contract claims against the United States, the court holds that §221 of the Reclamation Reform Act of 1982 waives the federal government's sovereign immunity where the providers are seeking injunctive and declaratory relief under the government's water distribution contracts. The court holds that the government did not violate its contract with downstream water rights holders by not releasing water from Millerton Lake when it was unable to deliver a substitute supply, because the contract defines "substitute water" as all water delivered under the contract at the points of delivery specified to the contracting parties regardless of source. The court notes that downstream water rights holders may not have superior water rights and that an apportionment provision in the contract of one of the providers may not be inapplicable as a matter of law. The court holds, however, that the district court did not err in dismissing the contract claims. The providers' contracts contain no requirement that they receive preferential treatment and do not prohibit the Bureau from using reservoir water to meet its contractual obligations to the downstream water rights holders.

The court holds that the district court did not err by not reviewing the full administrative record, because the case can be resolved by reviewing the pleadings and the relevant statutes, legislative history, and contracts in issue. Also, the providers never complained prior to the district court's decision that the administrative record before the court was inadequate to determine the motions then pending. The court also holds that the district court did not abuse its discretion by denying the providers leave to amend their complaint to assert contractual violations other than those originally asserted in the complaint. The providers filed no motion to amend their complaint and gave no indication of a desire to do so until after the district court rendered its decision.

Counsel for Appellants
Thomas W. Birmingham
Kronick, Moskovitz, Tiedemann & Girard
400 Capitol Mall, 27th Fl., Sacramento CA 95814
(916) 321-4500

Counsel for Appellees
Robert L. Klarquist
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Gregory K. Wilkinson
Best, Best & Krieger
400 Mission Dr., 3750 University Ave.,
P.O. Box 1028, Riverside CA 92502
(909) 686-1450