FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TEHAMA-COLUSA CANAL

AUTHORITY,

Plaintiff-Appellant,

v.

UNITED STATES DEPARTMENT OF

THE INTERIOR; KENNETH LEE

SALAZAR, in his official capacity as

Secretary of the Interior; UNITED

STATES BUREAU OF RECLAMATION;

MICHAEL L. CONNOR, in his official

capacity as the Commissioner of

Reclamation; DONALD R. GLASER,

in his official capacity as Regional

Director of the Bureau of

Reclamation for the Mid-Pacific

Region,

Defendants-Appellees,

SAN LUIS & DELTA MENDOTA

WATER AUTHORITY; WESTLANDS

WATER DISTRICT,

Intervenor-Defendants-Appellees.

No. 11-17199

D.C. No.

1:10-cv-00712-

OWW-DLB

OPINION

Appeal from the United States District Court

for the Eastern District of California

Oliver W. Wanger, Senior District Judge, Presiding
2 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

 The Honorable Frederic Block, Senior United States District Judge for *

the Eastern District of New York, sitting by designation.

 This summary constitutes no part of the opinion of the court. It has

**

been prepared by court staff for the convenience of the reader.

Argued and Submitted

December 5, 2012—San Francisco, California

Filed July 1, 2013

Before: Stephen S. Trott and Johnnie B. Rawlinson, Circuit

Judges, and Frederic Block, Senior District Judge.*

Opinion by Judge Rawlinson

SUMMARY

**

Water Rights

In this action seeking to establish priority water rights

under Central Valley Project water service contracts in the

Sacramento Valley, the panel affirmed the district court’s

summary judgment on the alternate basis that California

Water Code § 11460 does not require the Bureau of

Reclamation to provide Central Valley Project contractors

priority water rights, because contracts between the plaintiff

Tehama-Colusa Canal Authority (Canal Authority) and the

Bureau contained provisions that specifically addressed

allocation of water during shortage periods. 
TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR 3

The Canal Authority, a joint powers authority comprised

of sixteen water agency members, asserted that the Bureau’s

water shortage allocations failed to adhere to area of origin

protections as provided in California Water Code (CWC)

§§ 11460, 11463, and 11128; Reclamation Law; the Fifth

Amendment; and state law water rights. The panel held that

the renewal contracts entered into by the Canal Authority and

its members included terms and provisions outlining the

procedures to be followed in allocating water resources

during shortage periods. The panel held that the Canal

Authority and its members assented to these terms and

provisions in the renewal contracts, and brought actions in

state court to validate the renewal contracts pursuant to

California law. The Bureau’s exercise of discretion therefore

when apportioning water during shortage years in accordance

with these renewal contracts was not arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with the

law.

COUNSEL

Steven P. Saxton (argued), Downey Brand LLP, Sacramento,

California; Ellen Lee Trescott (argued), Adams Broadwell

Joseph & Cardozo, Sacramento, California; J. Mark Atlas,

Willows, California, for Plaintiff-Appellant.

Ignacia S. Moreno, Assistant Attorney General, Vivian H.W.

Wang (argued), David W. Gehlert, Charles R. Shockey, and

E. Ann Peterson, Assistant United States Attorneys, United

States Department of Justice, Environment & Natural

Resources Division; Amy Aufdemberge and Shelly Randel,

Of Counsel, United States Department of the Interior, Office

of the Solicitor, Washington, D.C., for Defendants-Appellees.
4 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

Daniel J. O’Hanlon (argued), Hanspeter Walter, and Rebecca

R. Akroyd, Kronick, Moskovitz, Tiedemann & Girard,

Sacramento, California, for Intervenor Defendant-Appellees

San Luis & Delta-Mendota Water Authority and Westlands

Water District.

H. Craig Manson, General Counsel, Westlands Water

District, Fresno, California, for Intervenor DefendantAppellee Westlands Water District.

Jennifer L. Spaletta, Jeanne M. Zolezzi, and Natalie M.

Weber, Herum Crabtree, Stockton, California, for Amici

Curiae Stockton East Water District and Solano County

Water Agency.

Alan B. Lilly and Katrina C. Gonzales, Bartkiewicz, Kronick

& Shanahan, Sacramento, California, for Amicus Curiae

Northern California Water Association.

Robert E. Donlan and Elizabeth P. Ewens, Ellison, Schneider

& Harris L.L.P., Sacramento, California, for Amici Curiae

Alameda County Water District, Castaic Lake Water Agency,

Coachella Valley Water District, Kern County Water Agency,

Metropolitan Water District of Southern California, Mojave

Water Agency and Palmdale Water District.

Kamala D. Harris, Attorney General of California, Kathleen

A. Kenealy, Senior Assistant Deputy Attorney General,

Robert W. Byrne, Supervising Deputy Attorney General,

William Jenkins, Deputy Attorney General, San Francisco,

California, for Amici Curiae California Water Resources

Control Board and Department of Water Resources.
TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR 5

 The facts are derived largely from the district court’s thorough opinion. 1

See Tehama-Colusa Canal Auth. v. U.S. Dep’t of Interior, 819 F. Supp. 2d

956 (E.D. Cal. 2011).

OPINION

RAWLINSON, Circuit Judge:

The Tehama-Colusa Canal Authority (Canal Authority)

appeals the district court’s decision to grant summary

judgment to the Department of Interior (Interior), Bureau of

Reclamation (Bureau), San Luis & Delta-Mendota Water

Authority (San Luis), and Westlands Water Authority

(Westlands).

We have jurisdiction pursuant to 28 U.S.C. § 1291. We

affirm the district court’s decision on the alternate basis that

California Water Code § 11460 does not require the Bureau

to provide Central Valley Project contractors priority water

rights, because contracts between the Canal Authority and the

Bureau contain provisions that specifically address allocation

of water during shortage periods.

I. BACKGROUND

A. Procedural History1

Canal Authority is a joint powers authority comprised of

sixteen water agency members. Canal Authority initiated this

action against Interior; the Secretary of Interior (Secretary);

the Bureau; the Bureau’s regional director of the Mid-Pacific

Region; and intervenors, San Luis and Westlands, to establish

priority water rights under Central Valley Project (CVP)

water service contracts in the Sacramento Valley.
6 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

Specifically, Canal Authority requested a ruling limiting the

export of water south of the Sacramento-San Joaquin Delta

(Delta) until Canal Authority and its members received 100%

of the water supply referenced in their CVP contracts. Canal

Authority sought injunctive and declaratory relief.

Canal Authority maintained that the Bureau’s water

shortage allocations failed to adhere to area of origin

protections as provided in California Water Code (CWC)

§§ 11460, 11463, and 11128; Reclamation Law; the Fifth

Amendment; and state law water rights articulated by the

United States Supreme Court in California v. United States,

438 U.S. 645 (1978).

The defendants sought summary judgment on the bases

that Canal Authority’s APA claims were subject to the sixyear statute of limitations, and that the Canal Authority’s

interpretation of § 11460 did not grant water allocation

priority to the Canal Authority or its members. The district

court granted summary judgment for the defendants, holding

that all claims arising before February 11, 2004 were timebarred, and that Canal Authority was not entitled to priority

water allocation under the CVP contracts. Canal Authority

filed this timely appeal.

B. CVP Operations and Allocation of Water

The CVP operates under a Coordinated Operating

Agreement between the Bureau and the California State

Department of Water Resources (DWR) as an integrated unit.

Contractors receiving water from the CVP do not apply for

appropriative water rights from the State Water Resources

Control Board (SWRCB), as would be required to perfect a

water right from a California water source. Rather, water
TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR 7

users contract directly with the Bureau for water allocations.

Indeed, not one of the Canal Authority’s members has ever

applied for or received a water rights permit from the

SWRCB.

The Bureau normally allocates CVP water on a pro rata

basis, except when operational constraints or contract

provisions dictate priority allocation. In dry water years, all

CVP contractors have received less than their full contractual

complement of water. When water shortages occur,

contractors south of the Delta usually bear an increased

burden of the shortages.

The two drought years at issue in this case are 2008 and

2009. In 2008, Canal Authority and other north-of-Delta

water service contractors received 100% of their contractual

water allocations from the Bureau. South-of-Delta

contractors only received 50% of their allocations. In 2009,

the Governor of California declared a state of emergency

because of the drought. During that year, Canal Authority

and other north-of-Delta contractors received 40% of their

allocations, while south-of-Delta contractors received 10%.

C. State Law Area of Origin Statutes

The area of origin statutes, CWC §§ 11460-11465, were

enacted to alleviate the concern that construction of the CVP

would result in inadequate water supplies for local users. It

is undisputed that the Bureau’s appropriation of water for the

CVP is subject to the area of origin statutes. However, an

important distinction is that while the area of origin statutes

help to determine the total quantity of water available to the

Bureau for allocation, those statutes in no way control how

the water is allocated by the Bureau once acquired.
8 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

 Term 22 provides in pertinent part: 2

Direct diversion and storage of water under permits

issued . . . for use beyond the Sacramento-San Joaquin

Delta or outside the watershed of Sacramento River

Basin shall be subject to rights initiated by applications

for use within said watershed and Delta regardless of

the date of filing said applications.

(Emphasis added and footnote references omitted).

D. The Bureau’s Permits for CVP Water Supply

In 1961, the SWRCB approved the United States’

application to appropriate Sacramento River water for the

CVP. This approval, known as Decision 990 (D-990),

recognized that one of the CVP’s principal functions was to

export water from the Sacramento River watershed into the

San Joaquin Valley.

D-990 incorporated the SWRCB’s interpretation of the

area of origin statutes by acknowledging that the public

interest required that water originating in the Sacramento

Valley Basin be made available for use within the Basin and

the Delta before it was exported to more distant areas.

Protection of the articulated public interest was manifested by

the condition set forth in Term 22, which conditioned the 2

Bureau’s water rights permits. Term 22 established that the

Bureau’s water permits were “subject to rights initiated by

applications for use within said watershed and Delta

regardless of the date of filing said applications.” Term 22

was designed to protect appropriators of water with permits,

not contractors who obtained water through CVP contracts.
TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR 9

 Term 23 provides in pertinent part: 3

The export of stored water under permits issued

pursuant to [a]pplications outside the watershed of

Sacramento River Basin or beyond the Sacramento-San

Joaquin Delta shall be subject to the reasonable

beneficial use of said stored water within said

watershed and Delta, both present and prospective,

provided, however, that agreements for the use of said

stored water are entered into with the United States

prior to March 1, 1964, by parties currently diverting

water from Sacramento River and/or Sacramento-San

Joaquin Delta and prior to March 1, 1971, by parties

not currently using water from Sacramento River and/or

Sacramento-San Joaquin Delta.

The condition reflected in Term 23 addressed the use of 3

CVP water by water users within an area of origin. Rather

than requiring CVP water to be allocated for the benefit of

areas of origin, Term 23 granted then-current water users a

three-year window to request water service contracts from the

Bureau, which contracts would be preferred over requests

from users outside the watershed. Also included in Term 23

was a ten-year preference for then-water users to obtain a

water service contract.

In 1978, the SWRCB modified theBureau’s CVP permits

to require the Bureau to meet water quality standards in the

Delta and Suisun Marsh by either releasing water from

storage or curtailing diversions, so that outflow from the

Delta would be sufficient to prevent sea water from intruding

into the Delta. The California Court of Appeal affirmed the

SWRCB decision (Decision 1485), and recognized the

SWRCB’s authority to modify the Bureau’s water right

permits.
10 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

 Neither Canal Authority nor its members hold such permits. 4

E. Application of the Area of Origin Statutes by

SWRCB

Two Canal Authority member agencies filed a complaint

with the SWRCB in 1991 claiming preferential access to

CVP water supply under the area of origin statutes. The

SWRCB rejected the claim, finding that Canal Authority

members had no preferential access to CVP water supply

under area of origin statutes. The SWRCB interpreted CWC

§ 11460 as protecting areas of origin, but with no guarantee

that the water supply needs of the entire area of origin, or any

particular water users within the area of origin, would be met.

Rather, CWC § 11460 protected water users within the area

of origin against export appropriations. In other words, CWC

provided a guarantee that the SWRCB would not reject new

applications in the area of origin due to unavailability of

water for appropriation. Area of origin protection was

secured by filing an application with the SWRCB and

receiving a water rights permit with seniority vis à vis the 4

state Department of Resources and the Federal Bureau of

Reclamation as exporters.

 “The SWRCB rejected [Canal Authority’s] arguments

that the CVP is required under [CWC] §§ 11460, et seq. to

supply water to meet the needs of users in the Sacramento

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

Interior (Tehama), 819 F. Supp. 2d 956, 970 (E. D. Cal.

2011) (citation and internal quotation marks omitted). “On

reconsideration, the Board explained: [Canal Authority] has

been advised in the past that the appropriate way to obtain

additional service water supplies under the Watershed

Protection Act is to file applications to appropriate the
TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR 11

additional water. . . .” Id. (citation and internal quotation

marks omitted).

F. The Disputed CVP Water Service Contracts

CVP water is available only through a water service

contract between the water user and the Bureau. There are

three categories of contracts for the provision of CVP federal

water supply. The first category is comprised of “Exchange

Contracts” that give express contractual priority to designated

“Exchange Contractors” on the basis of their pre-1914

riparian and appropriative rights to the San Joaquin River. Id.

at 970–71. These Exchange Contractors “traded” their

preexisting water rights to the Bureau. Id. at 971. The

Bureau obtained water permits from the SWRCB that were

co-extensive with the exchanged water rights. The Bureau in

turn entered into water service contracts with the Exchange

Contractors for CVP federal water supply on a priority access

basis.

The second category of CVP contracts encompasses

“Settlement Contracts” that grant a contractual priority to

CVP water supply through the inclusion of provisions

limiting the extent of shortage amounts. These contracts

typically arose from pre-existing water rights.

The third category contains contracts held by CVP

contractors north-of-Delta, in-Delta, and south-of-Delta. This

category of CVP contractors, which includes Canal Authority

and most of its members, held no pre-existing water rights to

offer as consideration, and therefore receives no priority

access to CVP water supply.
12 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

1. Canal Authority Members’ Right to CVP

Water under Their Water Service Contracts

Canal Authority members executed their original CVP

water service contracts in the 1960 and 1970. All the original

Canal Authority contracts contained shortage provisions that

permitted the Bureau to apportion and reduce available water

supply in years of shortage. Before these original contracts

expired in 1995, the Bureau delivered less than 100% of

contract amounts to Canal Authoritymembers and Westlands

in water shortage years 1977, 1990, 1991, 1992, and 1994.

In 1992, Congress enacted the Central Valley Project

Improvement Act (CVPIA), Pub. L. No. 102-575, 106 Stat.

4706 (1992), which reallocated priorities for use of CVP

water. Among other things, the CVPIA precluded the

Secretary from entering into new CVP contracts for delivery

of CVP water for any purpose other than fish and wildlife

until certain environmental requirements were met. The

CVPIA also directed that 800,000 acre-feet of “project yield”

be immediately dedicated to the implementation of fish,

wildlife and habitat restoration purposes established by the

Act. Tehama, 819 F. Supp. at 972. The passage of the

CVPIA occurred when many CVP contracts were just about

to expire.

2. The CVP Interim Contracts

In 1995, Canal Authority members entered into “interim”

renewal contracts pending review and assessment of

long-term renewal contracts. Id. Interim renewal contracts

commenced in 1995 and were subsequently renewed for

periods up to two years until 2005. These interim contracts

included water shortage provisions authorizing the Bureau to
TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR 13

determine conditions of shortage and apportion the reduced

available water supply among CVP contractors. The interim

contracts did not provide for preferential water allocations

based on area of origin considerations. During the span of the

interim contracts, the Bureau reduced available water supply

among all CVP water service contractors in shortage years

1995, 1997, 1999, and 2001. The Canal Authority CVP water

service contracts included a shortage provision through 2005.

3. The Bureau’s Interpretation and Performance

of Canal Authority’s Current Contracts

In the process of discussing the renewal of long-term

contract provisions, the Bureau and Canal Authority members

debated at length the applicability of area of origin laws to the

CVP contracts and the extent of the Bureau’s authority to

reduce water deliveries in times of shortage.

The Bureau took the position that CWC § 11460 did not

apply to the allocation and delivery of CVP water under CVP

contracts. As early as 1994, the Bureau issued an Area of

Origin Issue Paper articulating the Bureau’s position that

§ 11460 is “directed toward obtaining prior water rights, not

obtaining deliveries of water under the Project’s rights.” Id.

(citation omitted). In 1996, another Bureau draft report

confirmed that area of origin statutes in California water law

“do not guarantee that the water supply needs of an entire

area of origin, will or can be met.” Id. (citation omitted).

The Bureau explained that area of origin statutory

provisions are not a part of the water delivery contract

between the water user and the Bureau. Instead, the area of

origin provisions are part of the water rights in the region. In

sum: “[a]rea of origin statutes do not establish any priority to
14 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

the allocation of CVP contract water or . . . CVP water used

for implementation of the CVPIA. . . .” Id. (citation and

alterations omitted). In 2000, the Bureau reiterated: “Area of

origin/county of origin statutes do not give any CVP user a

priority over any other CVP user regarding water service

provided by CVP contracts . . . this is also the position of the

State Water Resources Control Board.” Id. at 973 (citation

and second alteration omitted). In keeping with its stated

position, the Bureau consistently rejected requests that an

area of origin provision be included in north-of-Delta CVP

contracts. Canal Authority acknowledged that “the Bureau’s

conclusions come as no surprise, as this is a restatement of

positions they [sic] have articulated on numerous occasions

in the past. . . .” Id. (citation omitted).

4. Long-term Renewal Contracts with Shortage

Provisions and No Priority Allocation Terms

All Canal Authority members executed long-term CVP

water service contracts in 2005 (renewal contracts). Each

renewal contract contains shortage provisions that are

substantively identical to the shortage provision in the prior

long-term contracts under which the Bureau declared

conditions of shortage, and allocated less than full contractual

amounts to Canal Authority and its members. The renewal

contracts ensured operation of the CVP “for diversion,

storage, carriage, distribution and beneficial use, for flood

control, irrigation, municipal, domestic, industrial, fish and

wildlife mitigation, protection and restoration, generation and

distribution of electric energy, salinity control, navigation and

other beneficial uses.” Id.

Article 12 of the renewal contracts authorized the Bureau

to determine shortages and apportion waters in times of
TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR 15

shortage without regard to area of origin. In the sixty-plus

years of the CVP’s existence and the almost forty years of

disputes with Canal Authority regarding area of origin

priority, the CVP’s practice and position have remained

constant.

5. Validation of Renewal Contracts in State

Court

Article 38 of the renewal contracts provides that Canal

Authority members must each obtain a state court judgment

validating its water services contract with the Bureau. This

validation process was completed by each Canal Authority

member. The effect of the validation process was to establish

the enforceability of the renewal contracts under state law.

Following execution and validation of the renewal

contracts, the Bureau continued to make water deliveries and

to reduce water allocations in years when shortages were

declared, as it had done under the original and interim

contracts. Invoking Article 12, the Bureau declared

conditions of shortage in 2007, 2008, and 2009. The Bureau

delivered less than full contract amounts to all CVP water

service contractors, including Canal Authority members, in

2008 and 2009. This action followed.

II. STANDARDS OF REVIEW

We review de novo the district court’s grant of summary

judgment and the district court’s interpretation and

application of federal statutes. See San Luis & DeltaMendota Water Auth. v. United States, 672 F.3d 676, 699 (9th

Cir. 2012).
16 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

Contract interpretation is a mixed question of law and fact

that we also review de novo. See Smith v. Cent. Ariz. Water

Conservation Dist., 418 F.3d 1028, 1034 (9th Cir. 2005).

When the United States is a party to an agreement “entered

into pursuant to federal law,” that law governs interpretation

of the contract. Id. “[F]ederally-funded water reclamation

products are by nature necessarily federal, and we have

therefore consistently applied federal law to interpret

reclamation contracts . . . .” Id. (citation and internal

quotation marks omitted).

“A written contract must be read as a whole and every

part interpreted with reference to the whole, with preference

given to reasonable interpretations . . . .” Klamath Water

User Protective Ass’n v. Patterson, 204 F.3d 1206, 1210 (9th

Cir. 2000), as amended (citation omitted). When the contract

terms are clear, the parties’ intent must be ascertained from

the contract, and the contract terms connote their ordinary

meaning. See id.

When there is no provision for judicial review in

legislation, as with the CVPIA, we review the challenged

agency action pursuant to the Administrative Procedure Act

(APA). See San Luis & Delta-Mendota Water Auth.,

672 F.3d at 699. Pursuant to the APA, we will only set aside

an agency’s action when it is “arbitrary, capricious, an abuse

of discretion, or otherwise not in accordance with law . . . .”

Id. at 699–700 (citation omitted). When the agency has

articulated a rational connection between the facts and the

decision made, we will uphold the agency’s action. See id. at

700.
TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR 17

III. DISCUSSION

A. CWC § 11460 Does Not Compel the Bureau to

Prioritize Allocation of Federally Appropriated

Water to Canal Authority Members

The renewal contracts to which Canal Authority and its

members mutually assented did not include area of origin

language or priority distribution. During negotiations, the

Bureau steadfastly rebuffed efforts to include terms that

would provide priority in shortage periods. When Canal

Authority and its members signed the renewal contracts, there

was absolutely no misunderstanding of the Bureau’s position

regarding area of origin protection, priority rights, or shortage

protection. Indeed, Canal Authority acknowledged the

Bureau’s consistent and persistent negotiating stance that area

of origin law did not afford Canal Authority and its members

priority to CVP water supply. Considering the plain language

and terms of the contracts, the Bureau did not act arbitrarily

when it rejected Canal Authority’s demand to prioritize

federally appropriated water to Canal Authority and its

members. See San Luis & Delta-Mendota Water Auth.,

672 F.3d at 700 (noting that agency action should be upheld

when the agency articulates a rational connection between its

decision and the facts).

Of course, as with any other contract, the Bureau could

not flout the law in declining to include area of origin

provisions in the renewal contracts. See Peterson v. United

States Dep’t of Interior, 899 F.2d 799, 812 (9th Cir. 1990)

(explaining that water district contracts must conform to

governing law). Indeed, the renewal contracts contained just

such provisions.
18 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

However, as discussed above, CWC § 11460 has not been

interpreted so as to provide priority for Canal Authority and

its members in the realm of federally protected water. See

Tehama, 819 F. Supp. 2d at 970. Because Canal Authority

and its members hold no water permitsissued by the SWCRB

that would establish priority under CWC § 11460, the

Bureau’s continued rejection of priority provisions in the

water service contracts flouted no applicable law.

B. Canal Authority’s Water Service Contracts

Temper Their Rights to a Full Complement of

Contracted Water and any Claims to Priority

Delivery of Water

In 1993, we held that the Bureau was not bound to first

satisfy the needs of water district contractors when the San

Luis Act does not mandate it. See Westlands Water Dist. v.

Firebaugh Canal, 10 F.3d 667, 671 (9th Cir. 1993). Nothing

has changed.

The Bureau has adhered to this interpretation of the San

Luis Act, up to and including the most recent 2005 renewal

contracts. Article 12 of those contracts provides in no

uncertain terms that Canal Authority and its members are not

entitled to the full complement of water contracted for, and

may have to endure pro rata reduction in times of shortage,

along with other CVP contractors. Article 12 expressly and

explicitly provides that in times of shortage, the Bureau may

divert water to other contractors to meet the Bureau’s overall

goal to provide water to the maximum number of users for

the greatest potential benefit. Article 12 forecloses any

persuasive argument that Canal Authority and its members

are entitled, during times of shortage, to receive the full

complement of contracted water supply. See id. at 671.
TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR 19

We agree with the district court that Canal Authority’s

belated challenge to the shortage provisions in the renewal

contracts is unavailing. Canal Authority’s contention that no

condition of shortage can exist under the renewal contracts to

the extent water is shipped to south-of-Delta contractors is

belied by the definition of condition of shortage in the

renewal contracts themselves. The contracts define shortage

in the context of “the Project.” In turn, “the Project refers to

the entire Central Valley Project,” north and south of the

Delta. Tehama, 819 F. Supp. 2d at 991 (emphasis added).

This clear contract language controls. See Klamath Water

User Protective Ass’n, 204 F.3d at 1210. Similarly, Canal

Authority’s continued reliance on the provisions of CWC

§ 11460 is unwarranted in view of the Bureau’s and

SWCRB’s unvarying interpretations to the contrary. As the

district court noted, there is a “total absence of any language

[in the renewal contracts] granting an area of origin

preference, or that limits or abrogates the Article 12

allocation mandate . . .” Tehama, 819 F. Supp. 2d at 995.

C. Canal Authority Is Foreclosed from Asserting

Statutory Rights Under Area of Origin and Water

Priority Theories

Once the renewal contracts were finalized among the

parties, Canal Authority and its members invoked the

provisions of California Code of Civil Procedure (Cal. CCP)

§ 870 to obtain judgments validating each of the renewal

contracts under California law. See Tehama, 819 F. Supp. 2d

at 996. Each validation judgment ensured the enforceability

and validity of the renewal contracts. Each validation

judgment certified that all provisions of the renewal contract

“are lawful, valid, enforceable, and binding upon the

respective parties thereto . . . .”). Id. (citations omitted).
20 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

 CCP § 870 provides in pertinent part: 5

(a) The judgment, if no appeal is taken, or if taken and

the judgment is affirmed, shall, notwithstanding any

other provision of law . . . , thereupon become and

thereafter be forever binding and conclusive, as to all

matters therein adjudicated or which at that time could

have been adjudicated, against the agency and against

all other persons, and the judgment shall permanently

enjoin the institution by any person of any action or

proceeding raising any issue as to which the judgment

is binding and conclusive.

(b) Notwithstanding any other provision of law . . . , no

appeal shall be allowed from any judgment entered

pursuant to this chapter unless a notice of appeal is filed

within 30 days after the notice of entry of the judgment,

or, within 30 days after the entry of the judgment if

there is no answering party. . . .

Because the validation judgments became final in 2005,

Canal Authority and its members are now foreclosed from

challenging any provision of the renewal contracts. See id. at

996–97; see also Cal. CCP § 870 ; Embarcadero Mun. 5

Improvement Dist. v. Cnty. of Santa Barbara, 88 Cal. App.

4th 781, 792 (2001) (recognizing that challenges to validated

contracts are precluded after expiration of the applicable

statute of limitations for appeal).

The cases cited by Canal Authority to support its

argument that its challenge to Article 12 is alive and well

involved agreements or contracts that were not initially valid.

See Fontana Redev. Agency v. Torres, 153 Cal. App. 4th 902,

913 (2007) (“[T]he courts cannot validate ongoing illegality

. . . .”) (citation omitted); see also Embarcadero Mun.

Improvement Dist., 88 Cal. App. 4th at 792 (describing

challenge to expenditure not authorized by the validated
TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR 21

agreement); Redev. Agency of Fresno, Inc. v. Herrold, 86 Cal.

App. 3d 1024, 1029–30 (1978) (same). In contrast, the

contract provisions at issue in this case are and were at all

times valid. Canal Authority and its members voluntarily

consented to the validated contracts, and with full knowledge

of the Bureau’s interpretation and implementation of the area

of origin statutes and the shortage provisions. Canal

Authority and its members had a full and fair opportunity to

challenge any contract provision during the validation

proceeding, including whether any contract provision ran

afoul of California law. Once the contracts were validated,

the state court determination became binding upon any

subsequent action involving the same parties and the same

issue, determination of which was necessary for final

resolution of the initial action. See Cent. Ariz. Irrigation &

Drainage Dist. v. Lujan, 764 F. Supp. 582, 594–95 (D. Ariz.

1991). Because Canal Authority and its members were

parties to the validation action and because the validation

action resolved the validity of the renewal contract

provisions, they are now foreclosed from seeking to

circuitously undo the contract provisions to which they

previously acceded. See id.

Canal Authority and its members rely on SWRCB Cases,

136 Cal. App. 4th 674 (2006), to support their argument that

area of origin statutes provide priority water appropriation

rights. Canal Authority quotes the following language from

Justice Robie’s opinion:

To the extent section 11460 reserves an

inchoate priority for the beneficial use of

water within its area of origin, we see no

reason why that priority cannot be asserted by

someone who has (or seeks) a contract with
22 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

the Bureau for the use of that water. (See

Robie & Kletzing, Area of Origin

Statutes—the California Experience (1979) 15

Idaho L. Rev. 419, 436–438 [discussing right

of area of origin users to contract with

Department for SWP water].) This does not

mean a user within the area of origin can

compel the Bureau to deliver a greater

quantity of water than the user is otherwise

entitled [to] under the contract. It simply

means the Bureau cannot reduce that user’s

contractual allotment of water to supply water

for uses outside the area of origin, absent

some other legal basis for doing so that

trumps section 11460.

Id. at 758 (brackets in the original).

We agree with the district court that Canal Authority’s

reliance on the quoted language is misplaced. See Tehama,

819 F. Supp. 2d at 984. The rationale espoused in SWRCB

Cases was tempered by the reasoning in El Dorado Irrigation

District v. SWRCB, 142 Cal. App. 4th 937 (2006). Only a

few months after penning the SWRCB Cases decision, Justice

Robie opined in El Dorado Irrigation District that, although

a plaintiff may be entitled to assert priority rights, the plaintiff

had no rights regarding water that was previously diverted

and properly stored for future use. See id. at 976; see also

Tehama, 819 F. Supp. 2d at 983. Justice Robie clarified that

§ 11460 does not purport to limit in any way the Bureau’s

authority to allocate water that was previously diverted and

stored in accordance with approved CVP procedures. See El

Dorado Irrigation District, 142 Cal. App. 4th at 974–75.

Water users simply cannot assert any superior right to that
TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR 23

stored water under area of origin principles. Rather, water

rights to previously diverted and stored water are governed by

water permits and water contracts. See id. at 975–76. In any

event, as the district court noted, the decision in SWRCB

Cases lacks persuasive power because: (1) CVP contracts

were not at issue in that proceeding; (2) there was no

comprehensive discussion of the CVP project; and (3) the

proposed interpretation of § 11460 byCanal Authority and its

members would nullify explicit provisions of the renewal

contracts. See Tehama, 819 F. Supp. 2d at 984–85. The

Bureau clearly and consistently articulated the rationale for

its stated position regarding allocation of CVP water during

shortage periods. Its subsequent allocation of water during

shortage periods in accordance with its stated position was

not an abuse of discretion, unreasonable, or contrary to

applicable law. See San Luis & Delta-Mendota Water Auth.,

672 F.3d at 699–700 (setting standard of review).

IV. CONCLUSION

The district court properly determined that CWC § 11460

does not bestow priority water rights upon Canal Authority

and its members. The renewal contracts entered into by the

Canal Authority and its members included terms and

provisions outlining the procedures to be followed in

allocating water resources during shortage periods. The

Canal Authority and its members assented to these terms and

provisions in the renewal contracts, and brought actions in

state court to validate the renewal contracts pursuant to

California law. The Bureau’s exercise of discretion when

apportioning water during shortage years in accordance with

these renewal contracts was not “arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with the

law.” 5 U.S.C. § 706(2)(A); see also San Luis & Delta-
24 TEHAM A-COLUSA CANAL AUTH. V. U.S. DEP’T OF INTERIOR

Mendota Water Auth., 672 F.3d at 715 (upholding Bureau’s

discretionary decision against a similar challenge).

AFFIRMED.