Friant Water Auth. v. Jewell

• Decision Date: 01 December 2014
• Docket Number: Case No. 1:14-CV-000765-LJO-BAM
• Court: U.S. District Court — Eastern District of California
• Parties: FRIANT WATER AUTHORITY, et al., Plaintiffs, v. SALLY JEWELL, as Secretary of the UNITED STATES DEPARTMENT OF THE INTERIOR, et al., Defendants, SAN JOAQUIN RIVER EXCHANGE CONTRACTORS WATER AUTHORITY, et al., Intervenors, SAN LUIS & DELTA-MENDOTA WATER AUTHORITY, et al., Defendant-Intervenors.

FRIANT WATER AUTHORITY, et al., Plaintiffs, v. SALLY JEWELL, as Secretary of the UNITED STATESDEPARTMENT OF THE INTERIOR, et al., Defendants,SAN JOAQUIN RIVER EXCHANGE CONTRACTORSWATER AUTHORITY, et al., Intervenors,SAN LUIS & DELTA-MENDOTA WATERAUTHORITY, et al., Defendant-Intervenors.

Case No. 1:14-CV-000765-LJO-BAM

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

December 1, 2014

MEMORANDUM DECISION AND ORDER RE PLAINTIFFS' MOTION TO TRANSFER TO COURT OF FEDERAL CLAIMS (Doc. 71)

I. INTRODUCTION

Plaintiff Friant Water Authority ("Friant"), a California joint powers authority that consists of twenty-one member water, water conservation, water storage and irrigation districts, as well as the City of Fresno, all located on the east side of the southern San Joaquin Valley, in Central California. Friant and its member agencies¹ (collectively, "Plaintiffs") bring this lawsuit against the United States Department of the Interior ("Interior"), Interior's member agency, the United States Bureau ofReclamation ("Reclamation" or "the Bureau"), as well as various federal officers² (collectively, "Federal Defendants"). See generally Doc. 64, Corrected First Amended Complaint ("FAC").

Friant's members contract with Reclamation for the delivery of water from the Friant Unit of the Central Valley Project ("CVP"). One of the principal features of the Friant Unit is Friant Dam, located in the foothills northeast of the City of Fresno, which impounds the waters of the upper San Joaquin River in Millerton Lake. The FAC challenges Federal Defendants' decision to release water from Millerton to satisfy the demands of downstream "Exchange Contractors." The Exchange Contractors hold priority "Exchange Contracts" with Reclamation, reflecting the fact that the Exchange Contractors held rights to the waters of the San Joaquin River that pre-date Reclamation's construction of the Friant Unit. See FAC ¶ 51.

Reclamation normally satisfies the demands of the Exchange Contractors by providing them with "substitute water" transported from Northern California through facilities in the Sacramento-San Joaquin Delta, thereby freeing up much of the water stored at Millerton for use by Friant's members. See id. at ¶¶ 7, 54. In the spring of 2014, however, Reclamation began releasing water from Millerton to satisfy the Exchange Contractors' demands. Id. at ¶ 8. According to Plaintiffs, Reclamation did so because it decided to allocate some of the water that normally would serve as "substitute water" to wildlife refuges, including those refuges administered by Grassland Resource Conservation District and Grassland Water District ("Grasslands"). See id. at ¶ 95. As a result, Reclamation allocated no water to Plaintiffs in 2014. Id. at ¶ 9. The FAC alleges generally that Reclamation' s actions constitute a breach of the United States' contracts with Friant's member agencies, which contracts prohibit Reclamation from voluntarily declaring itself unable to supply the Exchange Contractors with substitute water. Id. at ¶¶ 99-107. The FAC also alleges that Federal Defendants' actions constituted a taking without just compensation in violation of the Fifth Amendment to the U.S. Constitution. Id. at ¶¶ 108-112.

Before the Court for decision is Plaintiffs' motion to change venue by way of transfer to the Court of Federal Claims. Doc. 71. Federal Defendants³; San Luis & Delta Mendota Water Authority ("San Luis")⁴; and Grasslands⁵ filed oppositions. Docs. 89, 90 & 92. Plaintiffs replied. Doc. 95. The matter was taken under submission on the papers pursuant to Local Rule 230(g). Doc. 96.

II. BACKGROUND

A. The CVP.

In Westlands Water District v. United States, 337 F.3d 1092 (Westlands VII)⁶, the Ninth Circuit succinctly summarized the history of relevant aspects of the CVP:

A. Central Valley Project

The Central Valley Project ("CVP") is "the largest federal water management project in the United States." Central Delta Water Agency v. United States, 306 F.3d 938, 943 (9th Cir. 2002). "[L]ocated in the Central Valley Basin of California, which is roughly 400 miles long by 120 miles wide, [it] includes the major watersheds of the Sacramento and San Joaquin river systems." Id. These two river valleys merge at the Sacramento San Joaquin Delta, where the waters mix and then flow through the Carquinez Strait into the San Francisco Bay, continuing to the Pacific Ocean. Id.; United States v. Gerlach Live Stock Co., 339 U.S. 725, 728 (1950). The Sacramento River has almost twice as much water as the San Joaquin River but the Sacramento Valley has very little tillable soil, while about "three-fifths of the [San Joaquin] valley lies in the domain of the less affluent San Joaquin." Gerlach Live Stock, 339 U.S. at 728; see also Dugan v. Rank, 372 U.S. 609, 612 (1963). To alter this imbalance and to make water available to the San Joaquin Valley, the state of California embarked on re-engineering its natural water distribution through the authorization of the Central Valley Project ("CVP"). [The] United States took over administration of this project in 1935. Gerlach Live Stock, 339 U.S. at 728.

The CVP's purpose is to "improv[e] navigation, regulat[e] the flow of the San Joaquin River and the Sacramento River, control[ ] floods, provid[e] for storage and for the delivery of the stored waters thereof, for the reclamation of arid and semiarid lands and lands of Indian reservations, and other beneficial uses, and for the generation and sale of electric energy." Act of August 26, 1937, Pub. L. No. 75 392, 50 Stat. 844, 850. To accomplish the project's purposes, CVP's construction includes a series of many dams, reservoirs, hydropower generating stations, canals, electrical transmission lines, and other infrastructure. Gerlach Live Stock, 339 U.S. at 733.

The [Bureau] operates the CVP. The California State Water Resources Control Board grants permits for water appropriation from the CVP. The Bureau appropriates water from various sources and delivers it to permit holders for beneficial uses. Central Delta Water, 306 F.3d at 943.

1. San Luis Unit of the CVP

The San Luis Unit, one of the many water management units of the CVP, was authorized by the San Luis Act of 1960. Pub. L. No. 86-488, 74 Stat. 156 (June 3, 1960). The San Luis Unit, an integral part of the CVP, consists of the San Luis Dam and the San Luis Reservoir. The San Luis Reservoir was constructed to provide water to Merced, Fresno and King Counties, and is used to store surplus water from the Sacramento-San Joaquin Delta, for delivery to contractors such as Westlands and San Benito. The Tracy Pumping Plant pumps water from the Sacramento-San Joaquin Delta into the Delta-Mendota Canal. The Delta-Mendota Canal, located south of the Sacramento-San Joaquin Delta, channels water along the west side of the San Joaquin Valley for use in the San Luis Unit and Reservoir. Westlands Water Dist. v. Patterson, 864 F. Supp. 1536, 1539 (E.D. Cal. 1994) (Westlands III).

2. Friant Unit of the CVP

Around 1939, the Bureau took over construction of a dam on the San Joaquin River that eventually created Lake Millerton and the Friant Unit of the Central Valley Project. See Gerlach Live Stock Co., 339 U.S. at 728-29; Westlands III, 864 F. Supp. at 1539. The Friant Unit impounds the waters of the San Joaquin River at a dam constructed at Friant, California, approximately sixty miles upstream from Mendota, diverting a major portion of the flow of the San Joaquin River both to storage in Millerton Lake and into the Friant-Kern and Madera Canals for deliveryto local water users. Dugan, 372 U.S. at 612-13. The CVP also diverts water from the Sacramento River into the San Joaquin Valley to make additional water available for use in the San Joaquin Valley.

B. Exchange Contractors

To fulfill the purposes of the Rivers and Harbors Act of 1937, the Secretary of the Interior was given the right to acquire water rights for the development of the CVP. Act of August 26, 1937, Pub. L. No. 75-392, 50 Stat. 844, 850. The Exchange Contractors hold both pre-1914 riparian and appropriative rights to the San Joaquin River. Cal. State Water Rights Bd. Dec. D-935, 80 (1959). [T]he cooperation of the Exchange Contractors made possible the expansion of the CVP and the San Luis Unit. Westlands Water Dist. v. United States, 153 F. Supp.2d 1133, 1146-47 (E.D. Cal. 2001) (Westlands VI). To provide a reliable source of water for its proposed canals, the Bureau had to assure that the Exchange Contractors' pre-existing rights would be satisfied. Westlands III, 864 F. Supp. at 1539.

In 1939, the Exchange Contractors entered into two contracts with the United States: a Purchase Contract and an Exchange Contract. "Under the Purchase Contract, the Exchange Contractors sold all [of] their San Joaquin River water rights to the United States, except for 'reserved water,' water to which the Exchange Contractors [hold ] vested rights. Simultaneously, under the Exchange Contract, the Exchange Contractors agreed not to exercise their [reserved water] rights" to the San Joaquin River, so long as they receive certain volumes of substitute water. Id.

Pursuant to the Exchange Contract, the exchange of water is a conditional permanent substitution of water supply. The United States has a right to use the Exchange Contractors' water rights "so long as, and only so long as, the United States does deliver to the Contracting Entities by means of the Project or otherwise substitute water in conformity with this contract." The Exchange Contract defines "substitute water" as "all water delivered ... regardless of source." The contract further provides that "[i]t is anticipated that most if not all of the substitute water provided the [Exchange Contractors ] hereunder will be delivered to them via the [ ] Delta-Mendota Canal."

Water allocation in any year is designated as a full year supply of 100 percent. In critical years, the water supply can be reduced by approximately twenty-five

...