Tehama-Colusa Canal Auth. v. U.S. Dep’t of Interior

California Water Code § 11460 does not require providing priority water rights if contracts contain provisions specifically addressing allocation of water during shortage periods and if the parties to the contracts have received validation judgments foreclosing either party from challenging the validity of the contract terms.

The Tehama-Colusa Canal Authority (“Canal Authority”), comprised of sixteen water agency members, initiated this action seeking injunctive and declaratory relief and requesting a ruling limiting the export of water until Canal Authority received all of the water supply referenced in their Central Valley Project (“CVP”) contracts. Canal Authority argued that the Bureau of Reclamation’s (“Bureau”) water shortage allocations did not adhere to "California Water Code (“CWC”) §§ 11460, 11463, and 11128; Reclamation Law; the Fifth Amendment; and state law water rights" governed by California v. United States. The U.S. Department of Interior sought summary judgment based on Administrative Procedure Act claims being subject to a six year statute of limitations and because CWC § 11460 did not grant water allocation priority to the Canal Authority. Historically, in dry water years, all CVP contractors received less than their full contractual amount of water. CWC §§ 11460-11465 are used to determine the total quantity of water available to the Bureau, but do not control how the water is allocated or priority. Canal Authority’s contracts contained shortage provisions allowing the Bureau to reduce water supply in years of shortage and divert water to other contractors. Canal Authority entered into long-term CVP contracts in 2005 that contained similar shortage provisions. Those contracts received validation judgments, ensuring all provisions “are lawful, valid, enforceable, and binding upon the respective parties thereto….” After the judgments became final in 2005, Canal Authority was foreclosed from challenging contract provisions. The Ninth Circuit noted that Canal Authority had an opportunity to challenge their lawfulness during the validation proceeding, but failed to do so. Further, the panel held that the Bureau’s allocation of water during shortage periods was in accordance with contract provisions and was not an abuse of discretion, unreasonable, or contrary to applicable law. AFFIRMED.