What if water rules change?

By Cindy Snyder, Ag Weekly correspondent
Friday, November 21, 2008 1:58 PM CST

BOISE, Idaho - Water users who rely on federal projects to deliver water may think they know what their rights are, but they could be wrong.

Take the shareholders in the Stockton East Water District. The district is located in a part of California that has been heavily dependent on ground water since the Gold Rush days. The aquifer is in a state of critical overdraft, said Jennifer Spaletta, an attorney from California that is representing Stockton East in a court case that began when she was still in school.

In the 1970s, the Bureau of Reclamation built a dam on the Stanislaus River and created a reservoir that holds 2.4 million acre-feet of water to relieve the pressure on the aquifer. BuRec contracted with two entities to provide 155,000 acre-feet of water provided those entities built the infrastructure to get the water from the reservoir to their projects.

So Stockton East sold bonds and assessed everyone from irrigators to homeowners to raise the $65 million needed to build the 25 mile-long conveyance system that included tunneling through the mountains.

The BuRec contracts were signed in 1983, the canal system was completed in 1992, the same year Congress redirected BuRec to use 800,000 acre-feet of the yield of the reservoir for fish restoration. As soon as Stockton East finished building the canal system, it asked for 10,000 acre-feet of water and was denied.

And that raises a couple of questions: What does the law mean when contractors have contracts to receive water from a federal Bureau of Reclamation project but the federal government decides to use the water for a different purpose? If the government decides to use the water for fish restoration is that a takings, a breach of contract or a really bad deal?

“Unfortunately, many of you in this room may face this situation,” Spaletta told water managers and water-law attorneys during the Idaho Water Users Association’s annual fall water law seminar in Boise on Nov. 7.

Stockton East Water District has been trying to find answer since 1993 after the district was told that a minimum reservoir level of 1.4 million acre-feet was needed to provide the 800,000 acre-feet of water for fish and wildlife.

Essentially, Spaletta said, the federal government said, “We are never going to give you all your water.”

Even in wet years, when the dam is operating under flood-release guidelines, Stockton East has never received more than the 90,000 acre-feet cap established by the government. Because the district has never been able to put all of the water to beneficial use, there is now questions about whether it still has a valid claim to all of the water.

The other entity that entered into a contract with BuRec to receive water from the dam was a municipal water district that has been forced to mitigate, to buy water from other sources, to get the needed water.

So Stockton East filed a lawsuit claiming that BuRec was in a breach of contract by not supplying all the water specified in the contract and another claiming that the deficit represented a constitutional takings.

These are two separate issues, so the decision was made to try the breach of contract case first, and then the takings claim.

The district lost its initial breach of contract case and has filed an appeal. Spaletta expects to know the outcome of the appeal within six months. The central question, she believes, has ramifications for irrigation districts and canal companies that rely on federal projects.

“When the districts entered into those contracts, did they assume all the risk of the government changing their priorities or did the contract protect them?” she asked.

She also briefly mentioned the Klamath Irrigation District in Oregon and California. In that case, attorneys are trying the takings claim first and then will litigate the breach of contract case — the opposite of the strategy used by Stockton East. Because it is unclear who actually owns the water rights in that case, the case has been sent back to have the water rights resolved through an adjudication process before the takings claim will be considered.

So far, the courts seem to be finding the government is not in breach of contract if the government decides to use the water for another purpose.

However, Spaletta was quick to point out there are no consistencies between the three cases she discussed. The third involve a municipal water district that was told to build a fish ladder and then sued for a takings because it can no longer use all the water it is entitled to.

The best advice she can give to water districts and canal companies is to know their water rights.

“A lot of people don’t understand all the ways their water right is limited,” Spaletta said. “We have had success when you understand your limits and we can say, ‘Government, you’ve gone beyond this and you owe me money.’”

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