F OR P UB LIC AT ION 

### U N I TED STA TES C O U R T O F A PPEA LS F O R T H E N IN T H C IR C U IT

T E HA MA -C OL US A C ANAL A UT HO R I TY , Plaintif f-Appellant ,
v. U NI TED S T A T ES D EP AR TMENT OF TH E I NTER I OR ; KEN NE TH L EE S AL AZ AR , in his official ca pacity as Se c re tary of the Inte ri or ; U

NI TED S T A T ES B U RE A U O F R EC L AMATI ON ; M I CH A EL L. C ONNOR , in his official capa city as the Commissioner of Re c lamatio n; D ONAL D R. G L AS ER , in his official ca

pacity as Reg ional Direc tor of the B urea

u of Re c lamatio n f

or the Mid -P a c if

ic Reg ion, Defendants-A ppellees , S AN LU I S & D EL TA M E ND OT A W A T ER A UT HO R I TY ; W ES TL ANDS W A T ER D I STRI CT , Interve nor-Defe ndants-Appellee s . No. 11-17199 D.C. No. 1:10-cv-00712- O W W

- D LB

OPI NI ON

Appea l from the United States District Court fo r t he Ea ste rn

Di str ic t of

Ca lif or nia Oliver W. Wange r, Senior District Judge, Pre siding2 T E H A M A -C OL USA C A N A L A U TH
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T h e H on or abl e Fr ede r i c B l ock , Se n i or U n i t ed St at es D i s t r i ct J u dg e f or * t he E ast ern D i st ri ct of N ew Y o rk, s i t t i ng by desi gnat i o n.
T hi s s ummary cons t i t ut es no part o f the o pi ni on of

t he cour t

. I t ha s ** b een p repa red b y co urt s t af f f o r t he co nveni ence o f

t he read er. Argued and Submitted De c e mbe r 5 , 2 01 2— San F ra nc isc o, Ca lif

or nia Filed July 1, 2013 B e fo re : Ste ph e n S. Tr ott

and Johnnie B . Ra

wl ins on , Ci rc uit J udg es, and F rede ric B lock, Senior District Judge. *

Opinion by

J udg e Rawlinson

SUMMAR

Y **

WaterRights In th is a c tio n s e e kin g to e sta bli shpr ior ity wat er r ig hts under Central Valley Project water service contra cts i n t he Sacra mento Valley , the pane l affir med the dist ri ct cour

t’s su mma r y j u d g m e n to nth e a l t e r

n at e b a s i s th a tC a l i f

o r n ia Water Code § 11460 does not re quire the B ureau of Reclamation to provide Central Va lley Project contractors priority water rig hts, beca

use contracts between the pla intiff Tehama-Colusa Canal Author ity (Canal Author ity) and the Bur eau c ontained provisio n s that specific ally addre ssed allocation of w ater

duringshortag e per iods.3

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. S. D EP ’ T O F I NT E R I OR The Cana l Authority , a joint powers a uthority comprised of six teen water a g ency members, a sserted that the Bur eau’ s wate r s ho rt a g e a llo c atio ns fa ile d to ad her e to a re a of or ig in pr ote c tio ns a s p ro vid e d in Ca lif or nia Wat er Co de (C WC) §§ 11 46 0, 11 46 3, and

11 12 8; R e c lamatio n L aw; the F if th Amendment; and state law w ater rig hts. The pane l held that the re newa l contrac ts entere d into by the Canal Authority

and its members included ter ms and provisions outlini ng the proce dures to be f

ollowed in allocating w ater resourc es duringshortag e per iods. The pane l held that t he Cana l Authority and its members as s en t ed to these te rms and p r o v i s i o n s i n th e r e n e w a l c o n tr a c t s , an d b r o u g h t a c t i o ns in state c ourt

to v a lid ate th e rene wa l c on tr a c ts p ur su ant t o California law

. The Bure au’s ex erc ise of di scre tion therefor e when a pportioning w ater

duringshortag e y ear s in acc ordanc e with these renewa l contra cts was not arbitrary , capr icious, an abuse of discretion, or othe rwise not in ac corda n ce with the law.

CO UN SEL Steven P . Sax ton (argued), D owney Br and L L P, Sacrame nto, Ca lif or nia ; E lle n L e e Tr e sc ott

(a rgue d) , A dams B ro a dw ell J osep h & Card ozo , Sa c ra me nto , Ca lif

or nia ; J. Ma

rk At la s, Willo ws , Ca lif

or nia , f or Pla int if f- Ap pe lla nt. I g n a c ia S. M o r e n o , A s s is ta

n t A tt o r n e y G e n e r a l, V iv ia

nH

. W. Wang (argued), David W. Gehler t, Charles R. Shockey , and E. Ann Peterson, A ssistant U n i t ed States Attorney s, United States Depa

rtment of Just i ce , Environment & Natura l Re so ur c e s D ivi sio n; A my Au fd e mbe rg e and

She lly Rand e l, Of Counsel, United States Depa rtment of the Interior, Of

fice of the Sol i c i t o r , W a s h i n g ton , D .C. , f or De fe nd ants -A

pp e lle e s.4 T E H A M A -C OL USA C A N A L A U TH
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Daniel J. O’Hanlon (a

rgued), Hanspeter

Walter, and Rebe cca R. Akroyd, Kronick, Mosko v i tz, Ti edema nn & G irard, Sacra mento, California, for Interve nor De fenda nt-Appellee s San Luis & Delta- Mendota Water Authority an dW est lands Wat e r D istri c t. H. CraigManson, Gene ral Counsel, Wes t l ands W ater Di str ic t, F re sn o, Ca lif

or nia , f or I nte rv e no r D e fe nd antAp pe lle e Wes tla

nd s Wate r D istri c t. Je n n i f e r L

. S p a l e t t a , Je an n e M

. Z o l e z z i , an d N a t a lie M. Weber, He rum Crabtre e, Stockton, California, fo r Ami ci Cur ia e Sto c kto n Ea st Wat e r Di str ic t and Sol ano Co un ty W a t e r A g e n c y. Alan B . L illy

and Katrina C. Gonzales, Ba rtkiewicz, Kronick & Shana han, Sacr amento, Cali fo rnia, for Amicus Curiae Norther n California Water A ssociation. Robert E. Donlan and Eliz abeth P. Ew ens, Ellison, S chneide r & H arr is L .L .P., Sacrame nto, Cal i fo rnia, for Amici Curiae A l am e d a C o un ty W at e r

D i s tr i c t , C a s t a i c L ak e W a t e r A g e n c y, C o a c h e l l a V a l l e y W at e r

D i s t r i c t , K e r nC o un ty W a t e r

A g e n c y, Metropolitan Water District of Southern Califor nia, Mojave Wat e r A g e nc y

and Pa lmd a le Wat e r D istri c t. Kamala D. Har ris, Attorney Gene ral of California, K athleen A. Ke ne a ly , Se nio r A ss ist ant D e puty Attor ne y Ge ne ra l, Rob e rt W. B y rn e , Su pe rv isi ngDep uty

Attor ne y Ge ne ra l, Wil liam J enkins, Deputy Attorney Gene ral, San F ranc isco, California, for

Amici Curiae Califor

nia W ater

Resource s Contr ol B oa

rd and De pa rtme nt o f Wate r R e so ur c e s.5

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T he f act s are de ri ved l argel y f rom t he d i st ri ct co urt ’ s t ho rough o p i ni o n. 1 See Teham a- Col us a C anal A ut h. v. U

. S. D ep’ t of I nt er i or , 819 F. Su pp. 2d 9 5 6 (E

. D

. C al

. 20 1 1 ). OP IN ION RAWL I NSON, Circuit J udg e: T h e T e h am a - C o l u s a

C an a l A u th o r i ty ( C a n a l A u th o r i ty) app ea l s the district court’s de cision to gr ant summary judgme nt to the Depar

tment of Interior ( I n t erior), Bur eau of Reclamation (Bur eau) , San Luis & De lta -Mendota Water Autho ri ty (S an L uis ), and Wes tla nd s Water Auth or ity (Westlands). We h av e ju

r is d ic ti o np ur s u an t t o 2 8 U

. S. C. § 1 2 9 1

. We aff irm the district court’s de cision on the alter nate ba sis that California Water Code § 1 1 4 6 0 does not requir e the B urea u to pro v id e Ce n tr a l V a ll e y Pr o je c t c o n tr a c to r s p r io r it

y w a te r rig hts, beca

use contra cts betwe en the Cana l Authority and the Bur eau c ontain provisions that specifica lly addre ss allocation of wate r d ur ingsh or

ta g e pe ri od s. I. BACK GR OUND A. P roce dural Hi story 1 Canal Authority

is a joint powers authority comprised of sixte e n wate r a g e nc y

me mbe rs . Ca

na l Auth or ity

ini tiate d th is action ag ainst Interior; the Sec reta ry of Interior (S ec reta

ry ); the B ur e a u; t he B ur e a u’ s re g ion a l dir e c tor of

the Mid -P a c if

ic Re g ion ; and int e rv e no rs , San L uis and Wes tla nd s, to e sta

bli sh pr iority wate r r ig hts un de r C e ntr a l V a lle y Pr oje c t ( CV P) w a t e r s e r v i c e c o n tr a c t s i nth e S a c r a m e n t o V a l l e y.6 T E H A M A -C OL USA C A N A L A U TH
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Specifica lly , Canal Authority reque sted a rulinglimit ing the e xpor t of water so uth

of the Sa c ra

me nto -S an Joa qu in D e lta (De lta) until Canal Authority and it s members r ece ived 100% of the water supply ref

ere nced in the ir CVP contrac ts. Canal Authority soug ht injunctive and dec laratory relief

. Canal A u th o r it

y ma inta in e d

th at t h e B ur e a u ’ s w a te r sh or ta g e a llo c a tio ns fa ile d to a dh e re to a re a of or ig in pr ote c tio ns a s p ro vid e d in Ca lif or nia Wat e r C od e (C WC) §§ 11 46 0, 11 46 3, and

11 12 8; R e c lamatio n L aw; the F if th Amendmen t ; an d state law w ater rig hts articulated by

the United States Supreme Court in Calif ornia v. United States , 438 U.S. 645 (1978). The de fenda

nts s oug ht summary

judgme nt on the bases th a t C an a l Au th o r it

y ’ s A PAc la im s w e r e s u

b je c t t o th e s ixy ear statute of limitations, and that th e C an al Authorit y ’s interpre tation of § 11460 di d n ot gr ant wate r allocation priority to the Canal Authority

or its members. The district court g rante d summary judgme nt for the defe ndants, holding that all claims arisingbefor e F ebrua ry 11, 2004 wer e timeba rr e d, and that Ca na l Aut ho ri ty

wa s n ot e nti tle d to pr ior ity wate r a llo c a tio n und e r t

he CV P c on tr a c ts. Cana l Auth or ity fi le d th is t ime ly

a pp e a l. B. CVP Operations and Allocation of Water The CVP ope rate s under a Coordinated O perating Agre e me nt b e tw e e n th e B ur e a u and the Ca lif

or nia State De pa rtme nt o f Wate r R e so ur c e s ( DWR) a s an inte g ra te d unit

. Contractors r ece iving wa ter fr om the CVP d o n o t apply for appropr iative wate r rig hts from the State W at erResource s Contr ol B oa

rd (S WRCB ), a s w ou ld b e re qu ir e d to pe rf e c t a water rig ht from a C ali fornia w ater source . Rather, water7

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us e rs c on tr a c t dir e c tly

wi th t he B ur e a u f or wate r a llo c a tio ns . Indeed, not on e o f the Canal Authority ’s member s has eve r applied for

or re ceive d a water right s p ermit from the S W RC B. Th e B ur e a

u n or ma lly a llo c ate s CV P wat er on a pr o r a ta basis, ex ce p t when oper ational constra ints or contrac t pr ov isi on s d ic tate pr ior ity a ll ocatio n. In d

ry wate r ye ars , a ll CVP c ontrac tors have r ece ived less than their f ull contrac tual complement of water

. When w ater shortage s occur , contra ctors south of the De lta usually bear an incr ease d burd e n o f t

he sh or ta g e s. The two drought y ear s at issue in this case a re 2008 a nd 20 09 . In 2 00 8, Canal Auth or ity and oth e r n or

th- of -D e lta water service contra ctors re ceive d 100% of their contra ctual wa t e r a l l o c a t i o n s f

r o mth e B ur e a

u . S o u th

- o f

- D e l ta contra ctors only

rec eived 50% of their a llocations. I n 2009, the Gover

nor of Califor

nia dec lare d a state of

emer g ency be c a us e of the dr ou g ht. Duri ng that y e ar, Cana l Auth or ity and oth e r n or

th- of -D e lta c on tra c tor s r e c e ive d 4 0% of the ir allocations, while south-of- Delta c ontrac tors rec eived 10%

. C. State Law Area of Origin S tatute s The a rea of orig in statutes, CW C §§ 11460-11465, we re enac ted to alleviate the conce rn that construc tion of the CVP w o u l d r e s u l ti ni n a d e qu at e w at e r s u p p l i e s f o r l o c a l u s e r s . It is undisputed that the Bur eau’ s appropr iation of water for the C VP i s s ubject to the ar ea of orig in statutes. Howeve r, an importa n t d is ti n c ti o nis th at wh il e th e ar e a o f o r ig in s tatute s h elp to deter

mine the total quantity

of water available to the Bur eau f or allocation, those statutes in no way control how the wate r is allocate d by

the B urea

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T e rm 2 2 p ro v id e s in p e rtine n t p a rt: 2
D ire c t d ive rs io n a n d sto ra g e o f wa te r u n d e r p e rm its issu e d

. . . fo r use b e yo n d the S a c ra m e n to -S a n J o a q u in D el t a o r o ut s i de t he wat er s hed of Sacr ament o R i ver B as i n s h al l be s u bj ec t t o r i g h t s i n i t i at ed by appl i cat i ons f or use wi t h i n s ai d w at er s h ed an d D el t a r eg ar dl es s of t he d ate o f

f i l i ng said ap p l i ca t i o ns. (E m p hasi s ad d ed and f o o t no t e ref

erences om i t t ed ). D. The Bur e au’ s P e r m it s forCV P Wa te r Supply In 1 96 1, the SWRCB a pp ro ve d th e Un ite d St a te s’ application to a p p ro priate Sac rame nto River water for the CVP. This approval, known as D ecision 9 9 0 (D-990) , re c og nize d th at on e of

the CV P’ s p ri nc ipa l f

un c tio ns wa s to export water f

rom the Sacr amento River watershed into the S anJ o a qu i nV a l l e y. D-990 inc o rp orate d the SWR CB’s inter pretation of the are a of o ri g in s tatut e s b y

a c kn ow le dg ingthat th e pu bli c int e re st r e qu ir e d th at w ate r o ri g inatingin t he Sa c ra me nto Valley Ba sin be made a

vailable f or use within the B asin and the De lta be fo re it w a s e xpor

te d to mor e dis tant a

re a s. Protection of the articulated public inter est was manif ested by the condition set forth in Ter m 22, which conditione d the

2 Bur eau’ s water

rig hts permits. Term 22 establishe d that the Bur eau’ s water

permits wer e “subje ct t o ri g hts init iated by a ppli cat ion s f

or us e wi thi n s a id w ate rs he d a nd De lta reg ardle ss of the date of filingsaid ap p l i ca t ions.” Ter m 22 wa s d e signe d to pr ote c t a pp ro pr iator s of wate r wi th p e rm its , no t c on tr a c tor s w ho ob ta ine d w ate r t hr ou g h CV P c on tr a c ts.9

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T e rm 2 3 p ro v id e s in p e rtine n t p a rt: 3
T he export of s t ored wa t er un der permi t s i s s ued pu r s u an t t o [ a] ppl i ca t i on s ou t s i de t h e wa t er s h ed of Sacr ament o R i ver B as i n or bey ond t he Sacr ament o- San J o a q u in D e lt a s h a ll b e su b je c t t o the re a so n a b le b e n e ficia l us e o f said sto re d w a te r w ithin sa id wat er s hed a nd D el t a, bot h pr es ent an d pros pect i ve, p ro v id e d , ho w e v e r, tha t a g re e m e n ts fo r th e us e o f said s t ored wa t er ar e e nt er ed i nt o wi t h t he U ni t ed St at es p ri o r t o M arch 1, 19 6 4 , by part i e s current l y diver t i ng w at er f r om Sacr ament o R i ver an d/ or Sac r ament o- San Joaqui n D el t a and pri or t o M ar ch 1, 19 71 , by p arti es n ot c u r r en t l y u s i n g wa t er f r om Sa cr ame n t o Ri v er a n d/ or Sacr ament o- San J oaqui n D el t a. The c ondition reflec ted in T erm 23 addre ssed the use of 3 CVP water by

water users within an a

rea of orig i n . Rather than re quiring CVP water t o b e alloca ted for the benef

it of are a s o f o ri g in, Te rm

23 g ra nte d th e n- c ur

re nt w a te r u se rs a three -y ear window to reque st water service contra cts from the B ur e a u, wh ic h c on tr a c ts wo uld be pr e fe rr e d ov e r requests from user s outside the water shed. Also included in Term 23 was a ten-y ear pref ere nce f or then-w ater

u s er s t o obtain a wate r s e rv ic e c on tr a c t. In 197 8, the SWRCB mod if ie d the B ur e a

u’ s CV P pe rm its to require the Bu re au to meet wa ter qua lity

standards in the Delta and Suisun Mar sh by either rele asing wat erfrom storag e or c urtailing diversions, so that outflow from the Delta would be sufficie nt to prevent sea water from intruding into the Delta. The California Court of Appea l affir

med the SW RC B d e c is io n( D e c is io n1 4 8 5 ) , an d r e c o g n iz e d

the SW RCB’s authority

to modify

the B urea

u’s water rig ht pe rm its

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N eit he r C an al A utho rit y no r i t s m em b ers ho l d such p erm i t s. 4 E. App lic at ion of t he Ar e a o f Or igi n St at u tes by SWRCB Two Canal Authority member ag encie s filed a complaint wi th t he SWRCB in 1 99 1 c la imi ngpr e fe re nti a l a c c ess to CVP water supply

under the are a of or igin statute s . The SWRCB re

je c te d th e c la im, fi nd ingtha t Ca na l Auth or ity me mbe rs ha d n o prefere nti a l a c c e ss t o CV P wate r s up ply un d e r ar e a o f o r ig in s tatute s . T h e SW RC B inte r p r e te d CW C § 11460 as protec ting a

reas of orig in, but with no guar antee that the wate r supply

needs of the entire are a of orig in, or any pa rt ic ula r w a te r u se rs wi thi n the are a of or ig in, wo uld be me t. Rather, CWC § 11460 prot ec t ed water users within the ar ea o f o r ig in a g a in s t e xp o rt a

p p r o p r iati o n s . Ino th e r

w o r d s , CW C provided a g uara

ntee that the SW RCB would not rejec t new applications in the ar ea of orig in due to u navailability of water for a ppropriation. Are a of or igin pr otection was sec ured by

filing a n application with the SWR CB and re ceivi nga

wate r r ig hts pe rm it with seniority vis à vis the 4 state De partment of Re source s and the Fed er al Bur eau of Re c lamatio n a s e xpor

te rs . “ Th e SWRCB re

je c te d [Ca

na l Auth or ity ’s] argume nts that th e CV P is r e qu ir e d und e r [CWC] §§ 11 46 0, e t se q. to su pp ly wate r t o me e t th e ne e ds of users in t

he Sa c ra me nto Valley . . . .” Tehama-Colusa Canal Au t h

. v. U.S. Dep’t of Interior ( Tehama) , 8 19 F . Su

pp . 2 d 9 56 , 9 70 (E . D . Ca l. 2011) (citation and internal quotation marks omitted). “ On rec onsideration, the Boa

rd ex plained: [ Canal Authority ] has been adv ised

in t he pa st that th e a

pp ro pr iate wa

y to o bta in additional service water supplies under the Water s hed Protection Act is to file applications to a p p ro p riate the11

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. S. D EP ’ T O F I NT E R I OR additional water . . . .” Id. (c i t at i on and interna l quotation marks omitted). F . The Dispu ted CVP WaterService Contrac ts CVP wat e r

is av a il a b le o n ly thr o u g ha

w a te r s e r v ic e contra ct betwe en the water user and the B ure au . There are three cate g ories of contra cts for the provision of CVP feder al wa t er s u p p l y . T h e fi rs tca t ego ry

i s co mp ri s edo f “ E x ch an ge Contracts” that g ive ex press c ontrac tual priority to desig nated “Exchang e Contrac tors” on th e b asi s of their pre -1914 riparia n and appr opriative rig hts to the San J oaquin River. Id. a t 97 0– 71 . T he se Exc ha ng e Contr a c tor s “ tr a ded ” the ir pree x isting water rig hts t o the B urea u. Id. at 971. The Bur eau obtai n ed water

permits from the SWRC B that were c o- e xten siv e wi th t

he e xch ang e d wate r ri g hts

. Th e B ur e a u in turn en t er edi n t o wa t er

s erv i ce co n tra ct s wi thth e E x ch an ge Contr a c tor s f

or CV P f e de ra l w ate r su

pp ly on a pr ior ity

a c c e ss ba sis

. The se cond ca

teg ory of CVP contrac ts encompasse s
“ Se ttl e me nt C on tr a c ts” that gr ant a c on tr a c tua l pr iority

to CVP water supply

throug h the inclusion of provisi ons lim iti ngthe e xtent of

sh or ta g e amoun ts . The se c on tr a c ts ty pic a lly aro se fr om p re -e xistin g wate r r ig hts

. The third ca

teg ory contains contract s held by CVP c on tr a c tor s n or

th- of -D e lta , in

- D e l t a , a

n d s o ut h- of -D e lta . T his c a te g or y of CV P c on tr a c tor s, wh ic h in c lud e s Ca na l Auth or ity and mos t of its me mbe rs , he ld no pr e -e xistin g wate r r ig hts to of fe r a s c on sid e rati on , and the re fo re re c e ive s n o p ri or ity a c c e s s t o C V P w at e r

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1. Canal Authority Mem bers’ Right to C VP Waterund er Their Wat er Ser vice Contr acts Canal Authority

members e x ecute d their orig inal CVP water service contra cts in the 1960 and 1970. All the orig inal Canal Authority contra cts contained shortag e provisions that permitted the B urea

u to a pportion and re duce a

vailable wa

ter su pp ly in ye ars of

sh or ta g e . B e fo re the se or ig ina l c on tr a c ts expired in 1995, the Bur eau de livered less than 100% of contra ct amounts to Canal Authority members and Westlands in water shortag e y ear s 1977, 1990, 1991, 1992, and 1994. In 1992, Congr ess enac ted the Central Vall ey P rojec t I mpr ov e ment Act (C VPIA) , Pu b. L . N o. 10 2- 57 5, 10 6 St a t. 4706 (1992), whic h re all ocate d priorities for use of CVP water . Among other thing s, t h e CVPI A pre cluded the Secre tary from enter ing into new CVP contracts for

delivery of CVP water

for a ny purpose o t h erthan fish and wildlife until certain e nvironmental re quir ements were met. The CVPI A also di rec ted that 800,000 ac re- fee t of “proje ct y ield” be immediately

dedicated to the implementati o n o f fish, wildlife and ha

bitat rest o ration purposes established by the Act. Tehama , 8 19 F. Supp. at 972. The passag e of the CVPI A occ urre d when many CVP c ontrac ts were just about to expi re. 2. The CVP Interim Contrac ts In 1 99 5, Cana l Auth or ity

me mbe rs e nte re d into “ int e ri m” rene wal contr acts pe nding r eview a nd assessment of long- term re newa l contrac ts. Id. Inte ri m r e ne wa l c on tr a c ts commence d in 1995 and wer e subse quently rene wed f

or pe ri od s u p to tw o y e ars un til 20 05. T he se int e ri m c on tr a c ts inc lud e d w a te r s ho rt a g e pr ov isi on s a uth or izin g the B ur e a

u to13

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. S. D EP ’ T O F I NT E R I OR deter mine conditions of shortag e and apportion th e r educe d ava ila ble wate r s up ply amon g CV P c on tr a c tor s. Th e int e ri m contr a c ts d id

n o t p r o v id e f

o r p r e f e r e n ti a l w a te r

a ll o c a ti o ns based on a

rea of orig in c onsiderations. Duringthe span of the int e ri m c on tr a c ts, the B ur e a u re du c e d ava ila

ble wate r s up ply amongall CVP wat er service contra ctors in shortag e y ear s 1995, 1997, 1999, and 2001. The Canal Authority CVP water service contra cts included a shortag e provision throug h 2005. 3. The Bu reau’s In ter pretat ion and Per form ance of Can al Authority’s Curre nt Contract s In the proc ess of discussingthe re newa l of long -term contra ct provisions, the Bur eau a nd Canal Authori ty

me mbe rs debate d at leng th the applicability of ar ea of orig in laws to the CV P c on tr a c ts a

nd the e xtent o f t

he B ur e a u’ s a uth or ity to reduc e water de liveries in times of shortag e. The B urea

u took the position t hat CWC § 11460 did not apply to the allocation and delivery of CVP water

under CVP contra cts. As ea

rly as 1994, t h e Bu rea

u issued an Ar ea of Orig in I ssue Paper

articulat ing the Bur eau’ s position t hat § 11460 is “dire cted towa rd obtainingprior water rights, not obtaining de liveries of water under the Project’s rights.” Id. (citation omitted). In 1996, another Bur eau dr aft re port confirme d that are a of or igin statutes in California water law “do not guara

ntee that t h e water supply needs of an entire are a of or igin, will or c an be me t.” Id. (citation omitted). The B urea

u explained that are a of or igin stat utory provisions ar e not a par t of the water de livery

contra ct betwee n the wate r user

and the B ure au. I nstead, the a rea of o r i g i n p r o v i s i o n s ar e p art o f th e w at e r r i g h t s i nth e r e g i o n . In sum: “ [a]r e a

of or ig in s tatut e s do not es ta bli sh any pr ior ity to14 T E H A M A -C OL USA C A N A L A U TH
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the allocation of CVP contr act water or . . . CVP water use d for implementation of the C VP I A. . . .” Id . (citation and alterations omi tted). In 2000, the B urea u reiter ated: “Area

of orig in/county

of origi n s t at utes do not g ive any CVP user a priority over a ny other CVP user r eg ardingwater service provided by

CVP c ontrac ts .

. . this is also t he position of the State Water R esources Control Boa rd.” Id. at 973 (c itation and sec o n dalteration omit ted). In keepingwith its st ated posit i on, the B urea

u consistently

reje cted r equests that an are a of or igin pr ovision be included in north-of- Delta CVP contra cts. Canal Authority acknow ledg ed that “the B urea u’s conclusions com e as no surprise, a s this is a re statement of positions t hey

[si c] have a

rticulated on nume rous occ asi ons in the past. . . .” Id. (citation omitted). 4. Long-termRenewal Contr a cts with S hortage Pro v i s i o n s a n d No Pri o ri ty Al l o ca ti o n T er ms All Canal Authority

members ex ecute d long- term CVP water service contra cts in 200 5 (r enewal contra cts). Ea ch rene w a l c o n tr a c t c o n ta in s s h o rta g e p r o v is io n s th a t a re substantively

identical to t h e s h ortag e provision in the prior long- term contract s under which the B urea u decla red conditions of shortag e, and allocated less than full contrac tual amounts to Ca

nal Authority and its membe rs. The renewal contra cts ensure d operation of the C VP “for diversion, storag e, ca

rriag e, distribution and benef icial use, for flood control, irrig ation, municipal, domes tic, industrial, fish and wildlife mitigation , protec tion and restoration, ge neration and distribution of electric e nergy , salinity control, navig ation and other be nefic ial uses.” Id. Article 12 of the rene wal contra cts authorized the B urea u to det e r mi n e s h o rta g e s an d

a p p o rti o nw a te r s in

ti me s of15

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. S. D EP ’ T O F I NT E R I OR shortag e without r eg ard to a rea of orig in. In the s i x t y -p lus y ear s of the CVP’s exist ence and the a lmost fort y y ears of dis pute s w ithCana l Auth or ity re g ardi ngare a

of or ig in priority , the C VP ’s practice a nd position have rema ined c on sta nt. 5. Validation of Renew a l Contract s in S tate Court Article 38 of

the re newa l contrac ts provides that Canal Authority members must ea ch obtain a state cour t judgment va lid a tin g its wate r s e rv ic e s c on tra c t w iththe B ur e a u. Th is va lid a tio n p roc e ss w a s c omp le te d b y e a c h Ca na l Auth or ity me mbe r. Th e e ff

e c t of the va lid atio n p ro c e ss w a s to e sta bli sh the enf orce ability

of the re newa l contrac ts under state la w. Followingex ecution and validation of the re newa l contra cts, the B urea

u continued to ma

ke water deliverie s and to reduc e water a llocations in y ea rs when shortag es we re de c lare d, a s it

ha d d on e un de r t

he or igi na l and

int e ri m contra cts. Invoking Arti cl e 12, the B urea u decla red conditions of shortag e in 2007, 2008, and 2009. The B urea u delivere d less than full con t ra ct amounts to all CVP water se rv ic e c on tr a c tor s, inc ludi ng Cana l Auth or ity me mbe rs , in 2008 and 2009. This ac tion followed. II. STA ND AR

DS O F RE VI EW We review de novo the district c ourt’s g rant of summar y judgme nt and the dis t ri ct cour t’s interpre tation and application of f

eder al statutes. See Sa n L uis & DeltaMendota W

ater Auth. v. United States , 6 72 F .3 d 6 76 , 6 99 (9 th Cir. 2012).16 T E H A M A -C OL USA C A N A L A U TH
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Contract interpr etation is a mix ed question of law and fa ct that we a lso review de novo

. See Smith v. Cent. Ariz. W ater Con se rv ati on Di

st. , 418 F.3d 1028, 1034 (9 t h Cir. 2005). When the United States is a par ty to an ag ree m ent “entere d into pursuant to fede ral law,” that law g overns inter pretation of the c ontrac t. Id. “[F]edera lly -funde d wa t errec lamation products ar e by

nature nece ssarily

fede ral, a

nd we have there fore consistently

applied fe d er al l aw to interpr et rec lamation contra cts . . . .” Id. (citat i o n and interna l quotation marks omitted). “A wr itten contrac t must be read a s a wh o l e and e very part interpr eted with re fer ence to the whole, with pre fer ence g iven to rea sonable interpr etations . . . .” Kla ma t h W ater User Protective Ass’n v . Patterson , 20 4 F .3 d 1 20 6, 12 10 (9 th Cir. 2000), as amende d (citation om itted). When the contra ct terms ar e c le ar , th e p arti e s ’ inte n t m u s t b e a s c e rta in e d

f r om the contra ct, and the c ontrac t terms connote their ordinary meaning

. See id. Whe n th e re is n o p ro vis ion fo r ju di c ia l r e vie w i n leg islation, as with the CVPI A, we r eview the challeng ed ag ency action pursua

nt to t h e Administrative Procedur e Ac t (APA). See San Luis &Delta-Me n d o ta W ater Auth. , 672 F.3d at 699. Pursua

nt to the APA, we will only set aside an a g e nc y ’s a c tio n whe n it is “a rb itr ary , c a

pr ic iou s, an a

bu se of discre tion, or otherwise not in ac corda nce with la

w . . . .” Id. at 699–700 (c itation o m i tted). When the ag ency has artic u l ated a

rational c onnection betwe en the f acts a nd the decision made , we will uphold the ag ency ’s ac tion. See id. at 700.17

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. S. D EP ’ T O F I NT E R I OR III . DI SCU SSIO N A. CWC § 11460 Does NotCom pel the Bureau to P rioritiz e Allocat ion of Feder ally App ropriate d Waterto Canal Authority Me m bers Th e re ne wa l c on tr a c ts t o w hic h Ca na l Auth or ity

and its me mb e r s mu tu a l l y

a s s e n t e d d i d n o ti n c l u d e ar e a

o f o r i g in languag e or pr iority

distribu t i o n . Duringneg otiations, the Bur eau ste adfa stly

reb u ff ed ef forts to include ter

ms that w o u ld p r o v id e p r io r it

y in s h o rta g e p e r io d s . Wh e n Canal Authority and its members sig ned the r enew al contra cts, there was a bsolutely no misunderstandingof the B urea u’s position re gar d i n g ar ea o f o ri gi n p ro t ec t i o n , p ri o ri ty ri gh t s , o r s h o rt age protec tion. I ndeed, Ca nal Authority

acknow ledg ed the Bur eau’ s consistent and per sistent ne g otiating stanc e that ar ea of orig in law did not affor d Canal Authority and its members p ri o ri ty t o C VP wa t er

s u p p l y . C o n s i d er i n g th e p l ai nl an gu age an d t e r m s o f th e c o n tr a c t s , th e B ur e a

ud i d n o ta c tar b itr a ri ly w h e nit r e je c te d Ca n a l Au th o r it

y ’ s d e mand to p r io r it iz e fe de ra lly a pp ro pr iate d w ate r t o Ca na l Auth orit y

and its me mbers. See San Luis &Delta-Me ndota W ater Auth. , 67 2 F .3 d at 70 0 (n oti ng that a g e nc y a c tio n sh ou ld b e up he ld wh e n th e a g e nc y

art ic ulate s a

ratio na l c onne c tio n b e tw e e n it s decision and the fac ts). Of c ours e , a s w ith any othe r c on tr a c t, t he B ur e a u c ou ld no t f lout th e law i n d e c lin ingto i nc lud e are a of or ig in provisions in the renew al contra cts. See Peterson v. United S t a t es Dep’t of Interior , 899 F.2d 799, 812 ( 9th Cir. 1990) (e xpla ini ngtha

t w ate r d istri c t c on tr a c ts m ust c on fo rm to g ov e rn inglaw) . I nd e e d, the re ne wa l c on tr a c ts c on ta ine d ju st su c h p ro vis ion s.18 T E H A M A -C OL USA C A N A L A U TH
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Howeve r, as discusse d above, CWC § 11460 has not been interpre ted so as to provide pr iority for Ca n al Authority

and its members in the rea l m of fe dera lly protec ted wate r. See Tehama , 8 19 F . Su

pp . 2 d at 97 0. B e c a

us e Ca nal Autho ri ty and its me mbe rs ho ld no wate r pe rm its iss ue d by the SWCRB that would establ ish priority under CWC § 11460, the Bur eau’ s continued re

jection of prior ity

provisions in the water service contra cts flouted no applica ble law. B. Canal Authority’s WaterService Contrac ts Tem per Their Rights to a F ull Complement of Contrac ted Wate r and a n y Claim s to P riority Deliver y of Water In 1 99 3, we held th at th e B ur e a u w a s n ot b ound

to f ir st satisfy the nee ds of wate r district contra ctors whe n t he San Luis Act does not mandate it. See W estl a n ds W

ater Dist. v. Firebaugh Canal , 10 F.3d 667, 671 (9th Cir. 1993)

. Nothing has cha ng ed. The B urea

u has adhe red to this interpretation of the San Luis Act, up to and includin g the most rece nt 2005 rene wal contra cts. Article 12 of those contra cts p ro vides in no uncer tain terms that Canal Authority and its members are not entitled t o the full complement of w ater contra cted f

or, and may have to en du re pro rata

reduc tion in ti mes of shortag e, alongwith o ther CVP contra ctors. Ar ticle 12 expressly

and expli citly provides that in times of shortag e, the B urea u may div e rt wate r to oth e r c ontr a c tor s to me e t the B ur e a u’ s o ve ra ll g oal to p ro v i d e water

to the maxi mum number of user s for the g reatest potent i al benefit. Article 12 f orec loses any persua sive argum en t that Canal Authority and its members are e nti tle d, duri ngtim e s o f s ho rt a g e , to re c e ive the fu ll complement of c ontrac ted wate r supply

. Se e id . at 671.19

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hth e d is tr ic t c o urt t

h at C an a l Au th o r it

y ’s belated c halleng e to the sh o rt age pr ovisions in t he re newa l contra cts is unavailing

. Canal Authority ’s contention that no c on dit ion of sh or ta g e c an e xist und e r t

he re ne wa l c on tr a c ts t o the e xtent w a te r i s sh ipp e d to so uth -o f- De lta c on tr a c tor s is b e li e d b y th e d e f

in it io n o f c o n d it io n o f s h o rta g e in the re n ew al co n tra ct s th em s el v es . T h e c o n tra ct s d ef i n e s h o rt age in t he c on te xt of “ the Pr oje c t.” In tur n, “ the Pr oje c t r e fe rs to the e nti reCentral Va lley Project,” nor

th an d s o uth of the D e lta

. T eh ama , 819 F. Supp. 2d at 991 (e mphasis added)

. This clear

contra ct lan gu age controls. See Klamath W ater User Protec tive Ass’n , 204 F.3d at 121 0

. S imilarly , Canal A u thor it y ’ s c o n ti nu e d

r e li an c e o nth e p r o v is io n s o f CW C § 11 4 6 0 i s unwarr anted in view of the B urea

u’s and SW CRB’s unvar

ying inter pretations t o t he contr ary . As the d i s tri ctco urt n o t ed , th er e i s a “ t o t al ab s en ce o f a n y l an gu age [in the re ne wa l c on tr a c ts] g rantin g an a re a of or ig in pref ere nce, or

that limit s or abr o g ates the A rticle 12 allocation mandate . . .” Tehama , 819 F. Supp. 2d at 995. C. Ca nalAut hor it y I s F or e c los e d fro m As se r ti ng Statutory Rights Under Area of Origin an d Water P riority Theorie s Once the re newa l contrac ts were finalized am o n g the parties, Cana l Authority and its members invoked the pr ov isi on s o f C a lif

or nia Cod e of Civ il Pr oc e dure (C a l. C CP) § 8 7 0 to obtain judgments va lidating e ach of the re newa l contra cts under Ca lifornia law. See Teham a , 819 F. Supp. 2d a t 99 6. Ea c h v a lid atio n ju dg me nt en sure d the e nf or c e a bil ity and validit y o f t h e re newa l contrac ts. Each va lidation jud g me nt c e rt if

ie d th at all

provisions of the re newa l contrac t “ar e lawf

ul, valid, enfor cea

ble, and bindingupon the respe ctive par

ties thereto .

. . .”). Id. (citations omitted).20 T E H A M A -C OL USA C A N A L A U TH
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C C P § 8 7 0 p ro v id e s in p e rtine n t p a rt: 5 (a) T he judgm ent , i f no ap p eal i s t aken, or i f t aken and t h e j u dg men t i s a f

f i r med, s h al l , n ot wi t h s t an di n g any o t her pro vi si o n o f law .

. . , t hereup o n be co m e and the re a fter b e fo r e v e r b ind ing a n d c o n c lus ive , as to a ll m a tter s the re in a d

ju d ic a te d o r w h ic h a t tha t tim e c o u ld ha ve b ee n a d

jud i ca t ed , ag ainst t he ag en c y a nd ag ainst a ll o the r p e rs o n s, a n d the ju d g m e n t sha ll p e rm a n e n tly en j oi n t h e i n s t i t ut i o n by a n y pe r s on of a n y a ct i on or p roce ed i ng rai si ng any i ss ue as t o whi ch t he judgm ent i s bi ndi ng an d concl us i ve. (b) N o t wi t hst and i ng any other pro vi si o n of l aw . . . , no app ea l sh al l be al l owed f r om an y j udgment en t er ed pur s uan t t o t hi s ch apt er un l es s a not i ce of appeal i s f i l ed w ithin 3 0 d a ys a fter the no tice o f en try o f t h e ju d g m e n t, o r, w ithin 3 0 d a ys a fter the e n try o f t h e ju d g m e n t i f the re is no a n sw e rin g p a rty. . .

. Be cause the validation j u dg ments beca me final in 2005, Canal Authority

and its members a

re nowfore closed fr om challeng ing a

ny provision of the re newa l contrac ts. See id. at 996–97; see also Cal. CCP § 870 ; Embarcade r o Mun. 5 Im pr ov e me nt D ist. v. Cnty . o f Sa nta Ba rb ara , 88 Cal. App. 4th 781, 792 (2001) (recognizi ng that challeng es t o validated c on tr a c ts a

re pr e c lud e d a ft e r e xpir atio n o f the a pp lic a ble statute of limitations for appea l). Th e c a se s c ite d b y

Cana l Auth or ity

to supp ort its a rg ume n tth a ti t s c h a l l e n g e t o A rt i c l e 1 2 i s a l i v e an d w e ll involved ag ree ments or contra cts that wer e not initially valid. See Fontana Redev . Agenc y v. Torres , 153 Cal. App. 4th 902, 91 3 ( 20 07 ) (“ [T]he c ourt s cann ot va lid ate on g oin g ill e g a lity

. . . . ” ) ( c itat ion om itt e d) ; see also Embarc adero Mun. Im pr ov e me nt D ist

. , 8 8 C al. App. 4th at 792 (de scribing challeng e to expenditure n o t authorized by the validated21

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a g re e me nt) ; Re de v . Age nc yof F re sn o, In c . v . H

e rro ld , 8 6 Ca l. App. 3d 1024, 1029–30 (1978) (s am e) . In contra st, the c on tr a c t pr ov isi on s at is su e in t his c a se are and

we re at a ll tim e s v a lid . Cana l Auth or ity and its me mbe rs vo luntari ly co n s en t edt o th e v al i d at edco n tra ct s , an d wi thfu l l kn o wl ed ge of the B urea

u’s interpre tation and im plementation of the ar ea of orig in s t atut es and the shortag e provisions. Canal Autho ri ty and its me mbe rs ha d a

fu ll a nd fa ir op po rt un ity to challeng e any

contra ct provisi on duringthe validation proce ed ing, inc luding whe ther a ny contra ct provision ran afoul of Ca lifornia law. Once the contra cts wer e validate d, the state c ourt deter

mination became binding upon a ny su bs e qu e nt a c tio n invo lvingthe same pa rt ie s and the same issue, deter

mination of which wa s nece ssary for f inal resolution of the initial action. See Ce nt. Ar i z . Ir r i gation & Drainage Dist. v. Lujan , 7 6 4 F

. Su p p . 5 8 2 , 5 9 4

– 9 5 ( D

. A r iz

. 1991). B eca

use Canal Author ity

an d its members wer e parties to the va lidation action and b ec ause the validation acti o n resolved the validity of the re newa l contrac t pr ov isi on s, the y

are no w f

ore c los e d f

ro m se e kin g to circ uitously

undo the contra ct provisions to which they previously

acc eded. See id. Canal Authority and it s members rely on SW RCB Cases , 136 Cal. App. 4th 674 (2006), to support their ar g ument that are a of origin statutes pr ovide priority water appropr iation rig hts. Canal Authority

quotes the following languag e fr om J ustice Robie’s opinion: To the extent sectio n 11460 rese rves a n inchoate pr iority

for the be nefic ial use of water within its are a of or igin, we s ee no rea son why that priority

cannot be asser

ted by so me on e wh o ha s ( or

se e ks ) a c on tr a c t w ith22 T E H A M A -C OL USA C A N A L A U TH
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the Burea

u for the use of that water. ( See Rob ie & Kl e t z i n g , A r e a of Or ig in St at u t es

—th e C al i fo rn i a Experience(1979) 15 I daho L

. Rev. 419, 436–438 [di scussing rig ht of are a of or ig in u se rs to c on tr a c t w ith Depa rtment for SWP water]. ) This does not mean a user within the ar ea o f orig in can compel the B urea

u to deliver a

g rea t er qu anti ty of wate r t

ha n th e us e r i s o the rw ise e nti tle d [to ] und e r t

he c on tr a c t. I t si mpl y means the B ureau ca

nnot reduc e that user ’s contra ctual allotment of water to supply water for use s o u t s ide the ar ea of orig in, absent some o ther leg al basis for doingso that trumps section 11460. Id. at 758 (bra ckets in the orig inal). We ag ree with the district court t hat Canal Authority ’s relianc e on the quoted la

ng uage i s m i splace d. See Teham a , 819 F. Supp. 2d at 984. The rationale es poused in SW RCB Cases was tempe red by the reasoning in El Dorado Irrigation Di str ic t v . S W

RCB , 1 4 2 C a l

. Ap p . 4 th9 3 7 ( 2 0 0 6 )

. O n l y a few months after pe nning the SW RCB Cases decision, Jus tice Robie opined in El Dorado Irrigation Distr ict th at , al th o u gh a plainti ff may be entitled to asser t priority rig hts, the plaintiff had no rig hts reg arding w at er that was pre viously diverted and prope rly

stored for

future use

. See id. at 9 76 ; se e als o Tehama , 819 F. Supp. 2d at 983. J ustice Robie clar ified that § 11460 does not purport to limit i n any way the B urea

u’s authority to allocate w ater

that was prev i o u sly

diverted a

nd stored in ac corda

nce w ith approved CVP proc edure s. See E l Dorado Irrigation Di s t r ict , 142 Cal. App. 4th at 974–75. Water user s simply

cannot a ssert any

superior r i gh t t o that23

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. S. D EP ’ T O F I NT E R I OR stored wat er under ar ea of orig in principles. Rather, w ater rig hts to pre viously

diverted a

nd stored water a

re g overne d by water permits and water c ontrac ts. See id. at 975–76. In any e ve nt, a s th e di str ic t c ourt no te d, the de c isi on

inSW RCB Cases la c ks pe rs ua siv e po we r b e c a us e : ( 1) CV P c on tr a c ts wer e n o t at i ssue in that proce eding ; (2) ther e wa s no compre hensive discussion of the CVP proje ct; and (3) t he pr op os e d inte rp re tatio n of § 1146 0 by Cana l Auth or ity and its m embers would nullify

expli cit provisions of the re newa l contra cts. See Teham a , 819 F. Supp. 2d at 9 8 4

– 8 5

. T he Bur eau c lear ly

and consistently

articulat ed the r ationale f or its stated positi on reg ardingallocation of CVP wate r during shortag e p er iods. I ts subsequent allocation of water during shortag e per iods in accor dance with its st ated pos i t ion was no t an a bu se of dis c re tio n, unre a so na

ble , o r c on tr ary

to applicable law. See San Luis & Delta-Me ndota W ater Auth. , 672 F.3d at 699–700 (setting sta ndard of revie w). IV . CO NC LU SION The district cour

t properly deter mined that CW C § 11460 do e s n ot b e sto w p ri or ity

water ri g hts up on

Cana l Auth or ity and its members. The renewal c ontrac ts entere d into by the Canal Aut hority

and its members include d terms and pr ov isi on s o utl ini ngthe pr oc e dure s to be fo llowed in allocating water resour ces during shortag e periods. The Canal Authority

and its members a ssented to these te rms and pr ov ision s in th e re ne wa l c on tr a c ts, and br ou g ht a c tio ns in state c ourt

to v a lid ate the re ne wa l c on tr act s purs ua nt t o California law . The B urea u’s exercise of d i scre tion when a pp or tio nin g wate r d

ur ing sh or

ta g e y e ars in a c c or da

nc e wi th these re newa l cont ra ct s was not “a rbitrar y , capr icious, an abuse of discretion, or othe rw i s e not in acc ordanc e with the law .” 5 U. S.C. § 7 06 (2 )( A) ; s e e a ls o S a n Lu is &D e lt

a-24 T E H A M A -C OL USA C A N A L A U TH
. V
. U

. S. D EP ’ T O F I NT E R I OR

Mendota W

ater Auth. , 672 F.3d at 7 1 5 (u pholding B urea u’s discretionar

y decision ag ainst a similar cha lleng e). AF F IRMED.