Ninth Circuit sides with Reclamation in fight over California water contract conversions

A lower court previously ruled conversion of contracts between water users and the Bureau of Reclamation did not have to undergo environmental review.SAN FRANCISCO (CN) — A Ninth Circuit panel granted a win to the U.S. Bureau of Reclamation Monday, confirming a lower court’s finding the conversion of water service contracts from the California Central Valley Project doesn’t require a new environmental review.A three-judge panel unanimously held the Water Infrastructure Improvements for the Nation Act required the bureau to change a contract if requested by a water user, and does not necessitate the agency undertake environmental review under the National Environmental Policy Act or Endangered Species Act before converting each water service contract.“Reclamation was not required to conduct contract-specific environmental review or initiate consultation before converting those contracts because § 4011(a) creates a mandatory duty to convert water service contracts upon request and prohibits Reclamation from considering the environmental effects of the contract conversion or exercising discretion to benefit protected species when converting contracts,” U.S. Circuit Judge Gabriel Sanchez, a Joe Biden appointee, wrote for the court.The panel focused on two subsections of the water infrastructure act, the first directing the bureau to convert contracts upon request, and the second placing conditions on converted contracts.Sanchez wrote that, read together, the sections require the bureau to convert water service contracts upon request and bar the bureau from altering the terms of the contracts except with respect to payment.“Because Reclamation lacks discretion to alleviate environmental harms as part of WIIN Act conversion, NEPA and the ESA do not require that Reclamation undertake contract-specific environmental review and consultation with the services in the course of WIIN Act conversions,” the judge said.Sanchez noted the ruling is limited and does not advocate that water deliveries under the converted contracts are no longer subject to environmental review.The panel was rounded out by U.S. Circuit Judges Kim Wardlaw, a Bill Clinton appointee, and Daniel Bress, a Donald Trump appointee.Representatives for both parties did not immediately respond to a request for comment.The WIIN Act was signed into law by President Barack Obama in 2106 to, among other things, help address the historic drought in California at the time. The statute allowed water service contractors to convert their contracts into repayment contracts, prepaying on a contract for a set amount of time for an agreed-upon amount of water.By converting contracts with prepayment for construction costs, the law would finance several water projects to promote storage and supply, flood control, desalination and water recycling to make the state better able to cope with droughts.Between 2020 and 2021, the bureau converted 67 water service contracts into repayment contracts, with another 16 contracts proposed for conversion, Sanchez noted in his ruling.The Center for Biological Diversity and others sued in 2020, arguing the converted water contracts lock in federal water deliveries to large agricultural water users with no consideration of the environmental consequences.According to the environmental organizations, the Central Valley Project, which includes 20 reservoirs, about 500 miles of canals and aqueducts and two pumping plants, has caused widespread environmental damage by reducing freshwater flows in the San Francisco Bay Delta, blocking salmon migration and killing wildlife with toxic runoff from irrigated farmland.Last June, U.S. District Judge Jennifer Thurston, a Joe Biden appointee, adopted the bureau’s interpretation the statute requires contract conversion upon request by farmers and other water users that obtain water from the Central Valley Project and the bureau is stripped of discretion to modify any contractual right other than those related to the financial terms specifically addressed in the statute.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads