Natural Resources Defense Council v. Kempthorne

621 F.Supp.2d 954

NATURAL RESOURCES DEFENSE COUNCIL, et al., Plaintiffs, v. Dirk KEMPTHORNE, Secretary, U.S. Department of the Interior, et al., Defendants San Luis & Delta-Mendota Water Authority, et al., Defendant-Intervenors Anderson-Cottonwood Irrigation District, et al., Joined Parties.

No. 1:05-CV-01207 OWW SMS.

United States District Court, E.D. California.

April 27, 2009.

COPYRIGHT MATERIAL OMITTED

Deborah S. Reames, George Matthew Torgun, Trent William Orr, Earthjustice, Michael Ramsey Sherwood, Earthjustice Legal Defense Fund Incorporated, Oakland, CA, Fred H. Altshuler, Jamie L. Crook, Hamilton Candee, Altshuler Berzon, LLP, Katherine Scott Poole, Natural Resources Defense Council, Anita Elisabet Ruud, Office of the Attorney General, San Francisco, CA, for Plaintiffs.

James A. Maysonett, Department of Justice, Wildlife and Marine Resources Section, Washington, DC, Andrew Morrow Hitchings, Sandra Kay Dunn, Somach, Simmons & Dunn, Kevin M. O'Brien, Steven Paul Saxton, Downey Brand LLP, Daniel Joseph O'Hanlon, Hanspeter Walter, Rebecca Dell Sheehan, Scott A. Morris, William Thomas Chisum, Kronick, Moskovitz, Tiedemann & Girard, John Robert Hewitt, California Farm Bureau Federation, Ronda Azevedo Lucas, Central Valley Law Group, LLP, Sacramento, CA, David James Steffenson, Minasian, Spruance, Meith, Soares and Sexton, Oroville, CA, Jeanne M. Zolezzi, Herum Crabtree, Stockton, CA, Scott Kendall Kuney, The Law Offices of Young Wooldridge, Bakersfield, CA, Mark A. Blum, Henry, Logoluso & Blum, Kerman, CA, Lynette Marie Frediani, City of Redding, Redding, CA, for Defendants.

Jon David Rubin, Diepenbrock Harrison, Brenda Washington Davis, The Brenda Davis Law Group, Christian Charles Scheuring, California Farm Bureau Federation, Clifford W. Schulz, Kronick, Moskovitz, Tiedemann & Girard, Linus Serafeim Masouredis, Metropolitan Water District of Southern California, Jacqueline Leigh McDonald, Somach, Simmons and Dunn, Stuart Leslie Somach, Sacramento, CA, Christopher H. Buckley, Jr., Gibson Dunn and Crutcher, LLP, Washington, DC, Gregory K. Wilkinson, Anthony Leon Beaumon, Mark Diaz Servino, Steven M. Anderson, Best, Best & Krieger, LLP, Riverside, CA, Stefanie D. Hedlund, Best, Best and Krieger, LLP, Irvine, CA, Clifford Thomas Lee, California Attorney General's Office, Department of Justice, San Francisco, CA, James Mark Atlas, J. Mark Atlas, Attorney at Law, Willows, CA, for Intervenor Defendants.

SUPPLEMENTAL MEMORANDUM DECISION RE CROSS MOTIONS FOR SUMMARY JUDGMENT NATIONAL ASSOCIATION OF HOME BUILDERS V. DEFENDERS OF WILDLIFE, 127 S.Ct. 2518 (2007), TO PLAINTIFFS' REQUEST FOR RESCISSION OF THE SACRAMENTO RIVER SETTLEMENT CONTRACTS

OLIVER W. WANGER, District Judge.

TABLE OF CONTENTS

  I. INTRODUCTION ..................................................................958
 II. FACTUAL BACKGROUND ............................................................959
     A. General History of The CVP and Relevant State Law Doctrines ................959
     B. The Bureau's Initiation of Permit Applications for the CVP Before the
          State Board ..............................................................962

     C. The 1956 Cooperative Studies and Related Analyses ..........................963
     D. Van Camp's Summary of the Evidence Underlying the 1956 Cooperative
          Study Program and Related Investigations .................................964
     E. D-990 ......................................................................965
     F. 1951 House Interior and Insular Affairs Committee Report ...................968
     G. Negotiation of the SRS Contracts ...........................................968
     H. The SRS Contracts ..........................................................968
     I. Decision 1641 ..............................................................969
     J. CVPIA ......................................................................969
III. ANALYSIS ......................................................................970
     A. Threshold Issues ...........................................................970
        1. Federal Defendants' Argument that Summary Judgment Should be
             Granted on Other Grounds Raised in Their Summary Judgment
             Briefs ................................................................970
        2. Proceedings Not Intended to Adjudicate Any Party's Water Rights .........970
        3. Preliminary Nature of Previous Discussions Regarding Home
             Builders ..............................................................970
        4. The ESA and CVPIA Apply to the SRS Contractors ..........................970
        5. Evidentiary Matters .....................................................971
     B. Does Section 7 of the ESA Apply to the Bureau's Implementation and/or
          Execution of the SRS Contracts? ..........................................971
        1. Legal Framework .........................................................971
        2. Do the SRS Contracts Significantly Constrain the Bureau's
             Discretion to Modify Deliveries Under the SRS Contracts? ..............976
           a. Article 3(g)(3) ......................................................977
           b. The Shasta Critical Year Shortage Provision ..........................978
        3. Do the Original SRS Contracts Significantly Constrain the Bureau's
             Discretion to Negotiate Upon Renewal for New or Modified Terms
             for the Benefit of the Smelt? .........................................979
           a. Basic Principles of Federal Contract Interpretation ..................979
           b. Application to Relevant SRS Contract Language ........................980
              (1) Article 9 ........................................................980
              (2) Article 2 ........................................................982
              (3) Alternative interpretations of Article 9(a) ......................983
           c. The Unmistakability Doctrine .........................................984
           d. Scope of Article 9(a) ................................................987
           e. Conclusion Regarding Article 9(a) ....................................988
           f. Anderson Cottonwood Irrigation District & Sutter Mutual
                Water Company Renewal Contracts Water Reductions ...................988
           g. Impact of the CVPIA and D-16M on SRS Contract Renewal ................988
        4. Effect of Reclamation Act Section 8 on the Bureau's Discretion ..........989
           a. Relevant Background Principles of California Water Law ...............992
              (1) California's Dual System of Water Rights .........................992
              (2) Area of Origin Protections .......................................993
              (3) Reasonable & Beneficial Use/Prohibition of Unreasonable
                    Use ............................................................993
              (4) Public Trust Doctrine ............................................994
           b. D-990 ................................................................995
           c. D-990's Reliance on the 1956 Study & Its Progeny Does Not
                Demonstrate the Exact Nature and Extent of the SRS
                Contractors' Underlying Water Rights ...............................995
           d. The Effect of Condition 23 ...........................................997
           e. D-990 Does Not Substantially Constrain the Bureau's
                Discretion to Negotiate Modifications to the Settlement
                Contracts ..........................................................999
           f. Preemption Analysis Unnecessary .....................................1000
 IV. CONCLUSION ...................................................................1000

I. INTRODUCTION

The November 19, 2008, Memorandum Decision Re: Cross Motions for Summary Judgment Re Contract Rescission ("Memorandum Decision"), 2008 WL 5054115, called for further briefing addressing the applicability of the recent Supreme Court case, National Association of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 127 S.Ct. 2518, 168 L.Ed.2d 467 (2007), to Plaintiffs' request for rescission of a number of Sacramento River Settlement Contracts ("SRS Contracts"):

To resolve the applicability of Home Builders ... it is necessary for the Federal Defendants and/or the Settlement Contractors to present evidence on the nature and extent of their claimed senior water rights. If, arguendo, this evidence establishes that the Settlement Contractors hold senior rights to a certain volume of water, it is appropriate to determine as a matter of law that the Bureau lacks any discretion under Home Builders over that volume of SRS Contract water.

Memorandum Decision, Doc. 761, at 70:8-16 (emphasis added).

A December 3, 2008 scheduling conference confirmed that these proceedings do not involve an actual adjudication of the water rights of any parties in this case. See Reporters' Transcript, Dec. 3, 2008, Doc. 764, at 7-8, 18, 28.

A January 14, 2009 Supplemental Scheduling Conference Order defined the remaining issues.

By January 30, 2009, the Sacramento River Settlement Contractor parties shall file further admissible evidence and supporting pleadings regarding the nature and extent of the Settlement Contractors' water rights in order to resolve the applicability of the Supreme Court's decision in [Home Builders], 127 S.Ct. 2518 (2007), and to further narrow the issues in this case.

See Doc. 769 at 2.

On January 28, 2009, Plaintiffs filed a motion for certification of interlocutory appeal or, in the alternative, for reconsideration of the district court's November 19, 2008 memorandum decision. Doc. 770. This motion was denied without prejudice as premature on the ground that the ...