Appendix C

Laws Governing Project Operations

The U.S. Bureau of Reclamation (USBR) and the California Department of Water Resources (CDWR) operate the Central Valley Project (CVP) and State Water Project (SWP) within a complex legal environment. Both projects are subject to both federal and state laws, and the relevant laws include generally applicable laws that cover but are not limited to the reclamation program, laws specific to the reclamation program, and laws specific to the Projects (Benson, 2012). This appendix summarizes the Projects’ legal environment, beginning with general and foundational principles and then describing specific applicable laws. It augments the Chapter 1 discussion of the laws and regulations that affect project operation.

On the whole, this legal system is designed to achieve what the Sacramento–San Joaquin Delta Reform Act of 2009, a California statute, describes as the “coequal goals” of water supply and environmental protection. However, it is not a simple balancing system, and in some circumstances, particular goals—often environmental protection requirements—theoretically hold primacy over water-supply commitments.

RECLAMATION LAW

USBR is a federal agency, and like all federal agencies, it was created, and its authority is defined and bounded, by federal statutes (CDWR has the same status under state law). The Reclamation Act of 1902 authorized the creation of what was then called the “Reclamation Service,” and the agency initially was a subagency within the U.S. Geological Survey. In 1907, it became a separate agency within the Department of the Interior.¹

Because the CVP involves many different units and was constructed over a multi-decade period, it owes its existence to many different pieces of legislation. USBR’s website provides a concise summary of this legislation,² part of which is below:

The state legislature passed the Interior Region 10 California-Great Basin California Central Valley Project Act in 1933. The Act authorized the sale of revenue bonds to construct the project, but during the Great Depression, bonds didn’t sell.

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¹For additional information on this history, see The Bureau of Reclamation: A Very Brief History, https://www.usbr.gov/history/borhist.html.

²About the Central Valley Project, U.S. Bureau of Reclamation, https://www.usbr.gov/mp/cvp/about-cvp.html.

With the Rivers and Harbors Act of 1935, the federal government assumed control of the project and its initial features were authorized for construction by the U.S. Army Corps of Engineers. Funds for construction of the initial features of the Central Valley Project were provided by the Emergency Relief Appropriation Act of 1935 (49 Stat. 115). The project was authorized by a finding of feasibility by the Secretary of the Interior and approved by the President on December 2, 1935, for construction by Reclamation.

When the Rivers and Harbors Act was reauthorized in 1937 (50 Stat. 844, 850), Reclamation took over CVP construction and operation, and the project became subject to Reclamation law.

. . . Additional authorizations were made under the Rivers and Harbors Act of October 17, 1940 (54 Stat. 1198, 1199) and:

• American River features were authorized under the act of October 14, 1949 (63 Stat. 852).
• The Sacramento Valley Canals were authorized under the act of September 26, 1950 (64 Stat. 1036).
• The Trinity River Division was authorized by Public Law 386, 84th Congress, 1st session, and approved August 12, 1955.
• The San Luis Unit, West San Joaquin Division, was authorized as a part of the Central Valley Project on June 3, 1960, Public Law 86-488 (74 Stat. 156).
• The Auburn-Folsom South Unit of the American River Division was authorized by Public Law 89-161 (79 Stat. 615) on September 2, 1965.
• The Tehama-Colusa Canal enlargement, under the Sacramento River Division, was authorized in Public Law 90-65 (81 Stat. 167), August 19, 1967.
• San Felipe Division features were authorized by Public Law 90-72 (81 Stat. 173), signed on August 27, 1967.
• The Allen Camp Unit, Pit River Division, was authorized on September 28, 1976, by Public Law 94-423 (90 Stat. 1324).
• The New Melones Unit, East Side Division, was officially transferred to Reclamation from the Corps by Public Law 87-874 in November 1979.

In addition to the legislation that created the agency and adding units, USBR is governed by many legal provisions affecting its contracting arrangements, rate-setting, and payment policies—as is CDWR. For the most part, those laws are not relevant to the Committee’s work and are not described here. Readers can obtain more information about those laws from USBR’s website for the CVP.³

Project Purposes

USBR projects, including the CVP, generally operate to serve legislatively defined purposes. As USBR explains, “Under the 1937 Act, the CVP’s dams, powerplants, canals, and other facilities had three purposes: (1) regulate rivers and improve flood control and navigation, (2) provide water for irrigation and domestic use, and (3) generate power. Under later reauthorizations and legislation for specific project additions, additional project purposes were added—recreation, fish and wildlife enhancement, and water quality improvements.”⁴ Because these purposes sometimes conflict, much of USBR’s work involves balancing different goals.

CDWR’s management of the SWP is also subject to sometimes-conflicting obligations. The project’s primary purpose is water supply, but governing laws also prioritize hydropower generation, recreation, and environmental protection.

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³Laws, Regulations, and References, U.S. Bureau of Reclamation, https://www.usbr.gov/mp/cvp/laws-regs-ref.html.

⁴About the Central Valley Project, U.S. Bureau of Reclamation, https://www.usbr.gov/mp/cvp/about-cvp.html.

STATE WATER-RIGHTS LAW AND THE PROJECTS

Both projects are governed by California water-rights law and by associated regulatory provisions. State laws clearly apply to the SWP because it is a state project and CDWR is a state agency. However, those laws also apply to federal project operations. Section 8 of the Reclamation Act of 1902 directs USBR to obtain and exercise its water rights “in conformity” with state law.⁵ In multiple cases, courts have held that this provision requires USBR to comply not only with state law defining water rights but also with state laws regulating the exercise of water rights.⁶ Somewhat similarly, section 101(b) of Public Law 99-546 requires that CVP operations be consistent with California water quality standards unless such operational constraints are “not consistent with the congressional directives applicable to the project.”⁷

Because both agencies obtain their water rights under state law, they participate in California’s system of appropriative water rights. In a prior appropriation system, water users generally obtain rights by diverting water from a waterway and putting that water to beneficial and continual use. Prior appropriation prioritizes more senior water rights, meaning those rights must be satisfied before more junior users can obtain water.⁸ Since 1914—well before construction of the CVP and SWP—an applicant for a water right needed that right to be approved by the California State Water Resources Control Board (SWRCB), which exercises continuing supervisory authority over rights.⁹

This seniority system has important implications for the Projects. By the time CVP and SWP construction began, other water users already had obtained water rights in the Central Valley. Many of these rights predate 1914. California also recognizes riparian rights, which entitle riparian landowners to divert directly from waterways.¹⁰ California law prioritizes riparian rights over appropriative rights, except when the water that riparian-right holders would like to divert would not be present at all unless an appropriator had stored it in an upstream reservoir.¹¹ This means that the Projects share the Central Valley with many water users whose rights take priority over those of USBR and CDWR. Many of those pre-1914 and riparian users’ rights are only minimally documented, and California’s system of water-use reporting is a work in progress, which means that state regulators, USBR, and CDWR cannot always know how much water should be available to the projects.¹²

California statutory law bolsters these protections for other water users. California has enacted a series of “area of origin” laws, which prioritize in-basin uses over exports. While these laws have rarely been litigated, they do establish additional boundaries on the projects’ ability to export water.¹³ Similarly, a series of federal and state laws—in addition to the Clean Water Act and the Porter-Cologne Water Quality Control Act, both of which we discuss below—seeks to protect other in-Delta water users from the salinity impacts water exports could create.¹⁴

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⁵See 43 U.S.C. § 383. Section 383 states,

Nothing in this Act shall be construed as affecting or intended to affect or to in any way interfere with the laws of any State or Territory relating to the control, appropriation, use, or distribution of water used in irrigation, or any vested right acquired thereunder, and the Secretary of the Interior, in carrying out the provisions of this Act, shall proceed in conformity with such laws, and nothing herein shall in any way affect any right of any State or of the Federal Government or of any landowner, appropriator, or user of water in, to, or from any interstate stream or the waters thereof.

⁶See, e.g., California v. United States, 438 U.S. 645, 650, 678 (1978); Natural Resources Defense Council v. Patterson, 333 F.Supp.2d 906, 913-14 (E.D. Cal. 2004).

⁷Pub. L. 99-546, 100 Stat. 3050 (1986).

⁸In practice, gaps in monitoring and enforcement sometimes mean that junior appropriators can take water to which their entitlement is questionable.

⁹See California Farm Bureau Federation v. State Water Resources Control Bd., 274 P.3d 112, 117-18 (Cal. 2011).

¹⁰See Water Rights: Frequently Asked Questions, California State Water Resources Control Board, https://www.waterboards.ca.gov/waterrights/board_info/faqs.html#toc178761088.

¹¹See In re Waters of Long Valley Creek Stream System, 559 P.2d 656, 660 (1979) (holding that even “a dormant riparian right is paramount to active appropriate rights.”).

¹²See Michael Kiparsky et al., 2021, Piloting a Water Rights Information System for California (describing inadequacies in existing water rights information).

¹³See Craig M. Wilson, 2013, California’s Area of Origin Laws, https://www.waterboards.ca.gov/board_info/agendas/2013/oct/100813_7origin.pdf.

¹⁴E.g., Delta Protection Act of 1959, Stats. 1959, Ch. 1766 (codified at Cal. Water Code §§ 12200 – 12204).

Contracts

USBR distributes water to end users through contracts. Those contracts generally specify quantities of water that USBR will try to deliver and prices that recipients will pay. They also typically contain shortage provisions, which allow USBR to deliver less than the full contractual amount if conditions—including environmental restrictions—prevent USBR from doing so.¹⁵ Some of the contractors, those known as “Settlement” and “Exchange” Contractors, are entities that gave up their senior water rights in return for promises of service by the CVP.¹⁶ When USBR allocates water, the Settlement and Exchange Contractors hold seniority over USBR’s other contracts, which means their needs must be satisfied first.¹⁷

USBR’s water rights describe fixed quantities of diversions, and its contracts with the entities it supplies specify delivery amounts. However, neither of these amounts is a guarantee. USBR cannot divert water unless that water is available after more senior users and riparians have taken their shares. In addition, USBR’s rights and contractual obligations are limited by state and federal environmental laws and by California’s requirements that water use be reasonable and consistent with the state’s public trust doctrine.¹⁸

Similar constraints apply to SWP projects. The contracts specify maximum entitlements, but they do not obligate CDWR to deliver the full contract amount, and, as discussed above, CDWR rarely does so. Beyond limitations on the physical availability of water, CDWR’s deliveries also can be limited by environmental laws, the public trust doctrine, and reasonable use requirements.¹⁹

ENVIRONMENTAL LAWS

Project operations are constrained by a variety of environmental laws, the most important of which address water quality and endangered species protection.

Water Quality Laws

The most important constraints on project operations come from federal and state water quality laws. The federal Clean Water Act establishes a national regime for water quality protection, and it allows states to take the lead in implementing many elements of the regulatory scheme.²⁰ Through the Porter-Cologne Water Quality Control Act²¹ and associated administrative programs, California has taken on Clean Water Act primacy, and in some ways, Porter-Cologne establishes more extensive requirements than federal law.²² Because of this substantial overlap and intertwinement, the discussion below addresses both laws simultaneously.

For the CVP and SWP, the most important water quality requirements come from water quality standards. Both the Clean Water Act and Porter-Cologne direct the state to establish water quality standards.²³ Those standards identify desired beneficial uses of waterways and set protective criteria, some qualitative and some quantitative,

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¹⁵See O’Neill v. United States, 50 F.3d 677, 684 (9th Cir. 1995). (“We conclude that the contract’s liability limitation is unambiguous and that an unavailability of water resulting from the mandates of valid legislation constitutes a shortage by reason of ‘any other causes.’”)

¹⁶See History of SJRECWA, San Joaquin River Exchange Contractors Water Authority, https://www.sjrecwa.net/about/history/; Sacramento River Settlement Contractors, https://sacriversc.org/.

¹⁷See, e.g., Reclamation Increases 2024 Central Valley Project Water Supply Allocations, Bureau of Reclamation, https://www.usbr.gov/newsroom/news-release/4782.

¹⁸See Northern Cal. Water Ass’n v. State Water Resources Control Bd., 230 Cal. Rptr. 3d 142, 166 (Cal. Ct. App. 2018). As the court explained, “[T]he USBR operates the CVP and allocates CVP water subject to a comprehensive scheme of environmental statutes and regulations, and various state and federal regulations. . . . Moreover, the CVP contractors take their interest in the USBR’s water rights subject to these legal obligations… and the USBR cannot give away more than it has.”

¹⁹See State Water Resource Control Bd. Cases, 39 Cal. Rptr. 3d 189, 294 (2006). (“[B]ecause the rights of an appropriator are always subject to the public trust doctrine …the same is true of the rights of a person who contracts with an appropriator for the use of the water appropriated.”)

²⁰See 33 U.S.C. §§ 1251 – 1389.

²¹Cal. Water Code §§ 13000 – 16104.

²²The most notable differences pertain to regulation of nonpoint source pollution, which is not a central focus of this Committee. See Cal. Water Code § 13369.

²³33 U.S.C. § 1313; Cal. Water Code 13241.

California Fish and Game Code Section 5937

California Fish and Game Code section 5937 requires operators of dams to maintain below-dam fish populations “in good condition.” In a series of cases, some involving the CVP, California and federal courts have interpreted that requirement to mean that fisheries must be maintained at historic levels.⁴² Federal courts also have determined that this requirement applies to USBR’s operation of the CVP.⁴³

To date, Fish and Game Code section 5937 has only been directly applied to CVP flows in the San Joaquin River, where lengthy litigation and subsequent settlement led to a restoration program that included requirements for increased instream flows, and to other streams outside the Central Valley. By its terms, however, it applies to all below-dam fisheries, which means it could affect USBR or CDWR operations anywhere in California where either agency operates a dam.

Central Valley Project Improvement Act

Congress enacted the Central Valley Project Improvement Act (CVPIA) in 1992. The Act’s primary goal was to rebalance water delivery and environmental protection, and it sought to do this by providing more secure water supplies for wildlife refuges, establishing restoration goals for salmon populations, and dedicating more water to environmental flows.⁴⁴ The statute also seeks to promote increased operational flexibility and to facilitate voluntary water transfers. Much of the legal controversy about implementing the Act has pertained to its environmental flow requirements, with consumptive water users arguing that flow releases should count against the CVPIA’s environmental-flow budget.⁴⁵

Voluntary Agreements

The preceding discussion might convey the impression that management of the Bay-Delta is constrained by laws that, while complicated, provide clear marching orders once they are clearly understood. The reality, however, is different. Determining how laws apply to specific circumstances can be quite difficult and is often contested, particularly if the effects of management actions on species are not fully understood. In addition, different stakeholders have different views about the appropriate roles of regulatory controls and enforcement mechanisms, and those disagreements often become intertwined with debates about the legal requirements. Those disagreements have been ongoing for decades, and sometimes stakeholders resolve them through some sort of negotiated arrangement rather than through regulatory enforcement or litigation.

A good example of these debates, and of the potential for different ways to resolve challenges, is the long-running debate over “voluntary agreements” or, more recently, “Agreements to Support Healthy Rivers and Landscapes.” The proposed voluntary agreements are somewhat like detailed settlement agreements reached in the shadow of regulatory constraints. They would specify sets of actions and regulatory requirements that would serve as an alternative to the regulatory constraints that the SWRCB would otherwise impose on water right holders. Without a voluntary agreement, the SWRCB typically would impose these constraints by updating water quality standards and then using those standards to change water right permits and licenses, most likely by limiting diversions and thus preserving higher levels of flow. A voluntary agreement, if done well, could substitute other protective mechanisms, such as habitat restoration, that the SWRCB might not be able to order directly but that might provide greater benefits for fish at a lower cost to diverters.

For several reasons, voluntary agreements are controversial. Many environmental advocates disagree that the currently proposed voluntary agreements are protective enough and worry that while voluntary agreement development has been underway—a process that has been ongoing for over a decade—water quality standards

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⁴²See Natural Resources Defense Council v. Patterson, 333 F. Supp. 2d 906, 916. 924 (E.D. Cal. 2004); California Trout, Inc. v. Superior Ct., 266 Cal. Rptr. 788, 802 (Cal. Ct. App. 1990).

⁴³Patterson, 333 F. Supp. 2d at 913-14.

⁴⁴See San Luis & Delta Mendota Water Auth. v. U.S., 672 F.3d 676, 684-85 (9th Cir. 2012) (summarizing the act’s requirements).

⁴⁵Id.