Prospects for California’s threatened delta smelt brightened thanks to a unanimous opinion by all 11 members of the U.S. Court of Appeals for the 9th Circuit in NRDC v. Jewell.  The opinion will likely require the U.S. Bureau of Reclamation to renegotiate contracts with scores of parties that receive water through the Bureau’s Central Valley Project, a series of dams, reservoirs, canals, and pumps that divert water from the California River Delta. 

The delta smelt is a small fish that lives in the California River Delta.  In 1993, the U.S. Fish and Wildlife Service (FWS) found that that fish’s population had declined by 90 percent over the previous 20 years and listed it as a threatened species under the Endangered Species Act (ESA).  The FWS also found that the Delta water diversions are the most significant cause of the decline of the delta smelt. 

Two contract types

The Bureau’s 40-year water supply contracts with the water users expired in 2004 and were renewed in 2004 and 2005.  Two types of contracts are involved.  Sacramento River Settlement Contracts are 40-year agreements between the Bureau and holders of certain senior water rights. These contracts grant the Bureau some rights to the encumbered water while also providing senior rights holders a stable supply of water. The Delta-Mendota Canal Unit Water Service (DMC) Contracts are water supply agreements that allow water users who do not claim rights as senior users to draw water from the Delta-Mendota Canal.

The core of the case is whether the Bureau met its obligation under ESA Section 7(a)(2) to consult with the FWS before renewing the contracts.  A district court ruled in favor of the Bureau, and the plaintiffs appealed to the 9th Circuit.

Renewals

The 9th Circuit notes that the Bureau renewed the water contracts in 2004 and 2005 after the FWS issued a biological opinion (BO) that offered no objection to the contracts.  However, in 2008, the FWS issued a revised BO, stating that the Bureau’s plan would jeopardize the delta smelt and adversely modify its critical habitat.  In district court, the Natural Resources Defense Council (NRDC) and other groups challenged the validity of the 41 renewed contracts they deemed most harmful to the delta smelt. 

The district court held that the plaintiffs lacked standing to challenge the DMC contracts because they could not establish that their injuries are fairly traceable to the Bureau’s alleged procedural violation.  The district court further held that, while the plaintiffs have standing to challenge the Settlement contracts, the claims failed law because the Section 7(a)(2) consultation requirement does not apply to these particular contracts.

DMC contracts

Specifically regarding the DMC contracts, the district court ruled that the plaintiffs had no standing to bring a claim because the contracts contain a “shortage provision” that absolves the Bureau of liability when water shortages occur.  Because of this provision, the district court concluded that ESA consultation with the FWS would have made no difference and that the Bureau could not have negotiated DMC contracts that would provide the delta smelt with any greater protection.  The 9th Circuit looked at the issue differently. 

“There are various other ways in which the Bureau could have contracted to benefit the delta smelt, including, for example, revising the contracts’ pricing scheme or changing the timing of water deliveries,” stated the 9th Circuit. “Because adequate consultation and renegotiation could lead to such revisions, Plaintiffs have standing to assert a procedural challenge to the DMC Contracts.”

Settlement contracts

The district court also held that a provision (Article 9[a]) in the settlement contracts, which addressed water allocation, “substantially constrained” the Bureau’s discretion to renegotiate new terms in renewing the contracts.  However, in reviewing the contracts, the 9th Circuit found that the Bureau retained “some discretion” to take action to benefit the delta smelt, again regarding the water pricing scheme or the timing of water distribution. 

“We conclude that, in renewing the Settlement Contracts, the Bureau retained ‘some discretion” to act in a manner that would benefit the delta smelt,” said the 9th Circuit.  “The Bureau was therefore required to engage in Section 7(a)(2) consultation prior to renewing the Settlement Contracts.” 

Accordingly, the 9th Circuit reversed the district court’s judgment and remanded for further consideration.

NRDC v. Jewell