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Small Fish Causes Big Splash in California as State Ponders Water Rationing to Protect Endangered Species

September 26, 2007

A federal district court judge in California has held that water managers in California must protect the Delta Smelt, a fish listed as a threatened species under the federal Endangered Species Act (“ESA”), even if it means reducing water promised to irrigators and municipalities. The decision in Natural Resources Defense Council v. Kempthorne[1] (“NRDC decision”) is an important example of how the ESA may trump state-based water rights.

Decisions earlier this year in Klamath Irrigation District v. United States[2] and other similar cases[3] demonstrate that it is very difficult to recover damages for a “taking” when the restriction involves the ESA and water rights. A more likely recourse for the affected water users in this case may be legislation, or engineering solutions to move water with less impact on the Delta Smelt, increase water use efficiency, and reduce demand.

Background

The Delta Smelt is a small, slender-bodied fish (typical adult size of 2-3 inches) found only in the Sacramento-San Joaquin Estuary where the Sacramento and San Joaquin Rivers flow into San Francisco Bay.[4] The Delta Smelt historically was one of the most common fish in the Estuary.[5] Over the last three decades, however, its population has suffered a dramatic decline, and it was federally listed as a threatened species under the ESA in March 1993 and also listed as threatened under the California Endangered Species Act that same year.[6]

Delta Smelt are found in brackish water with a very narrow salinity range. During the late winter to early summer, the fish migrate to freshwater to spawn.[7] Females only produce a relatively small number of eggs which sink and attach to the bottom. Larvae hatch between 10-14 days, float with the water currents, and are washed downstream until they reach areas where salt and fresh water mix. Delta Smelt are fast growing and short-lived. Most die after spawning in the early spring although a few survive to a second year. Delta Smelt feed entirely on small crustaceans called zooplankton. The threats to the population are multiple and synergistic, including:

  • reductions in outflow from the Estuary,
  • entrainment to water diversions,
  • extremely high outflow,
  • changes in food organisms,
  • toxic substances,
  • disease, competition, and predation, and
  • loss of genetic integrity by hybridization.[8]

The Delta is a critical component of the federally-managed Central Valley Project (“CVP”) and the State of California’s State Water Project (“SWP”), which are among the world’s largest water diversion projects.[9] The Delta provides drinking water for 25 million Californians and irrigation for about 5 million acres of cropland.[10] Eighty percent of the water in California moves via pumps from sources north of the Delta to farms and communities in the south.[11] Water diversions by the State Water Project, the federal Central Valley Project and private diversions in the Delta and its Sacramento and San Joaquin River watersheds export millions of acre-feet of water and take as much as 65 percent of the Delta’s total freshwater inflow during periods when the Delta Smelt population is distributed in the Delta.[12] “Overused and under maintained for years, the delta and its water are at the heart of the state’s economic vitality, its wildlife habitat, shipping, transportation, drinking water, and recreation.”[13]

Western Water Rights – Prior Appropriation

Water law is a creature of state law. California water law, like most western water law, operates on the “prior appropriation” system. Prior appropriation is based on a “first in time, first in right” policy which means that the first party to put a water quantity to beneficial use has exclusive senior rights to that water and later junior users can only make additional water withdrawals on the condition that the senior user’s right are met first. The prior appropriation system recognizes a right to use water but actual water ownership is reserved to the public, through the state.

Endangered Species Act (ESA)

The ESA mandates that the Secretary of the Interior determine species whose survival is threatened or endangered through all or a significant part of their range and, based on the best available science, lists such species and designates their critical habitat. After a species is listed, federal agencies must ensure that any federal and non-federal action they authorize, fund, or carry out is not likely to jeopardize any listed species or harm critical habitat.[14] The ESA also prohibits any person from “tak[ing]” listed species, which includes disturbing habitat.[15] Although Congress amended the ESA in 1982 to expressly provide that state water rights will be given special deference in enforcing the ESA’s mandates, the provision has not routinely been enforced.[16]

Prior Decisions Involving ESA and Water

The ESA can potentially require state and federal government agencies to restrict water rights, regardless of their priority date, in order to protect ESA-listed species. Most courts that have addressed the legal interactions between the ESA and state water rights have held that the ESA provisions trump both federal water contracts and state water rights when they conflict with the Act. For example, in United States v. Glenn-Colusa Irrig. Dist.,[17] the court held that although the ESA requires federal agencies to cooperate with states to resolve water resource issues in concert with endangered species protection, Congress did not intend to suggest that state water rights survive where they conflict with the ESA.[18]

The NRDC Decision

The NRDC case began in 2005 when a coalition of environmental groups and sportfishing organizations (collectively “NRDC”) filed suit against the United States. At issue in the case is a 2005 biological opinion (“BiOp”) issued by the United States Fish and Wildlife Service which concludes that current Central Valley Project and State Water Project (“the Projects”) operations and certain planned future actions will not jeopardize the Delta Smelt’s continued existence or adversely modify its critical habitat.[19] The NRDC suit challenged the 2005 BiOp’s no jeopardy and no adverse modification findings as arbitrary, capricious, and contrary to law under the United States Administrative Procedures Act (“APA”)[20].

In May 2007, Judge Oliver Wanger granted summary judgment finding that the BiOp was legally insufficient and that the Fish and Wildlife Service’s insistence that it would nonetheless operate the Projects under the BiOp was unreasonable.[21] Judge Wagner found that the Delta Smelt is “undisputedly in jeopardy as to its survival and recovery” and, therefore, held that the “2005 BiOp’s no jeopardy finding is arbitrary, capricious, and contrary to law.”[22] The judge scheduled a separate hearing to address an appropriate interim remedy.

At the conclusion of an eight-day remedy hearing, Judge Wanger issued an oral ruling and directed the parties to reduce it to a written order by October 22, 2007.[23] He issued a preliminary injunction requiring the Project operators to substantially reduce water withdrawals from the Delta but not directing how they achieve those reductions. Thus, the Project operators are left to decide whether to reduce pumping, release more water upstream, or alter seasonal pumping to achieve overall water withdrawal reductions at times critical to Delta Smelt survival. Pumping reductions would reduce water exports out of the Delta to irrigators and municipalities such as Sacramento and Los Angeles. Increased upstream water releases or altered seasonal pumping would reduce water storage and would be particularly challenging to achieve during the low flow summer months. Any course of action will result in less water available for existing agricultural, industrial, and municipal uses throughout large portions of California.

Options for Relief

With significant limits on California water use looming in the Sacramento-San Joaquin Delta, water users will likely be looking for either financial relief from the decision’s impairment of their water rights or alternative means of obtaining sufficient water to prevent such impairment. Affected parties will almost certainly explore technical options for reducing the Delta Smelt decision’s impact. Such options could include engineering California’s water conveyance systems to move water independent of the Delta eco-system by creating separate water conveyances which move the water around, or even under, the Delta.

Certain areas of the Delta are already moving toward increasing efficient agricultural water use. The Delta Smelt decision is likely to accelerate interest in water use efficiency and encourage collaboration between environmental, agricultural, urban development, local, and other interests. A recent study of the Delta concluded that “[o]ne of the biggest hurdles for policymakers will be to correct some basic misconceptions about how the Delta operates. If that can be done, it will help lift the political and institutional barriers that have made newer, more sustainable management strategies unattainable.”[24]

Parties affected by the Delta Smelt decision will also be looking for financial relief. The Fifth Amendment of the United States Constitution provides that the government shall not take private property for a “public use, without just compensation.”[25] However, water rights are rights to use, not absolutely own, water.[26] As a result, the courts have almost uniformly rejected water rights takings claims. Earlier this year, in Klamath Irrigation District v. United States, the U.S. Court of Federal Claims rejected breach of contract claims filed by irrigators for water lost due to court-ordered flow limitations for fish listed under the ESA.[27] Similarly, in March 2007, the Court of Federal Claims held in Casitas Municipal Water Dist. v. United States[28], that it is compelled to respect the distinction between a government takeover of property (either by physical invasion or by directing the property's use to its own needs) and government restraints on an owner's use of that property and that ESA triggered restrictions on water diversions are not sufficient to support a takings claim. Thus takings claims do not present a likely avenue to financial recovery.

However, financial assistance may be available from the California legislature which is now in a special session considering possible financial assistance and planning packages for those impacted by water shortages in the Delta. On September 19, 2007, an emergency spending bill to enact the “Water Supply Reliability Bond Act of 2008” was introduced in the state Senate.[29] If enacted and approved by voters, the pending legislation would authorize $5.8 billion in bonds to finance a water supply and environmental restoration program directed at a “comprehensive delta sustainability program, including both water conveyance and ecosystem improvements.”[30]

Conclusion

Government officials and regulators warn that the Delta Smelt decision could cause water rationing in California by cutting off up to one-third of the drinking water normally drawn from the Delta.[31] Environmental groups involved in the suit say that their plan for protecting the Smelt would require reducing water available for export out of the Delta by less than one-tenth.[32] Although the decision’s full impact remains uncertain, it will be substantial whichever figure is correct. The Metropolitan Water District of Southern California, which provides drinking water to nearly 17 million people, obtains sixty percent of its water from the Delta and has already instructed local farmers to expect a thirty percent water delivery reduction by January 1, 2008.

The Delta Smelt decision will have significant impact on California water use and likely presages issues beyond California. Many other western states have conflicts between endangered species and water use that parallel California’s in nature and scope. For example, in Washington, Oregon, Idaho, the signature endangered species is salmon. Those states have been struggling for decades to address competing water demands in the Columbia River Basin. Increasing concerns about climate change impacts on water availability are heightening existing conflicts between in-stream environmental uses and out-of-stream agricultural, industrial, and municipal uses of the Columbia River. These conflicts are most intense in the summertime when the greatest need to keep the river flowing and cool for endangered salmon coincides with the highest seasonal demand for agricultural irrigation water.[33]

In February 2006, Washington State enacted a “Columbia River Basin – Water Supply Act” which seeks, for the first time, to provide the Basin with an overall management plan.[34] The statute directs the Washington Department of Ecology (Ecology) to “aggressively pursue the development of water supplies to benefit both instream and out-of-stream uses,” which include adequate water for endangered fish, particularly salmon. As Ecology works to balance these competing interests in water it will almost certainly seek to avoid the challenges California now faces in providing adequate water to supply both people and endangered fish.

For more information on Marten Law Group’s water resource practice, contact Jeff Kray.

[1] United States District Court for the Eastern District of California, 1:05-CV-01207 OWW. Defendant Dirk Kempthorne is a party in his official capacity as Secretary of the Interior. The other defendants include the California Department of Water Resources, State Water Contractors, and San Luis & Delta-Mendota Water Authority.

[2] 75 Fed.Cl. 677 (Mar 16, 2007).

[3] Casitas Municipal Water Dist. v. United States, 76 Fed. Cl. 100, 106 (2007); Stockton East Water Dist. v. United States, 75 Fed. Cl. 321 (2007).

[4] California Department of Fish and Game at http://www.delta.dfg.ca.gov/gallery/dsmelt.asp (accessed on September 12, 2007).

[5] Id.

[6] Id.

[7] California Department of Fish and Game at http://www.delta.dfg.ca.gov/gallery/dsmelt.asp (accessed on September 12, 2007).

[8] Id.

[9] Order Granting In Part and Denying In Part Plaintiff’s Motion for Summary Judgment (May 25, 2007) at pp. 1-2, NRDC v. Kempthorne, U.S. Dist. Ct. for the Eastern District of California, 1:05-CV-01207 OWW.

[10] Daniel B. Wood, Water Crises Squeezes California’s Economy, Christian Science Monitor (September 12, 2007). Peter Fimrite, Ruling to protect delta smelt may force water rationing in Bay Area, San Francisco Chronicle (September 1, 2007).

[11] Id.

[12] http://www.biologicaldiversity.org/swcbd/SPECIES/deltasmelt/index.html.

[13] Daniel B. Wood, Water Crises Squeezes California’s Economy, Christian Science Monitor (September 12, 2007).

[14] ESA § 7, 16 U.S.C § 1536(a).

[15] See ESA § 9(a)(1)(B); 16 U.S.C. § 1538(a)(1)(B).

[16] ESA § (c)2; 16 U.S.C § 153(c)2; see United States v. Glenn-Colusa Irr. Dist., 788 F.Supp. 1126, 1134 (E.D. Cal. 1992).

[17] 788 F. Supp. 1126, 1334 (E.D. Cal. 1992).

[18] Id.; Of Farmers’ Takes and Fishes’ Takings: Fifth Amendment Compensation Claims When the Endangered Species Act and Western Water Rights Collide, 27 Harv. Envtl. L. Rev. 177, 198 (2003).

[19] Id.

[20] 5 U.S.C. §§ 702 et seq.

[21] Order Granting In Part and Denying In Part Plaintiff’s Motion for Summary Judgment (May 25, 2007) at p. 118, NRDC v. Kempthorne, U.S. Dist. Ct. for the Eastern District of California, 1:05-CV-01207 OWW.

[22] Id. at p. 119.

[23] Transcript of Hearing Re: Interim Remedies Ruling (August 31, 2007) at pp. 4-5, NRDC v. Kempthorne, U.S. Dist. Ct. for the Eastern District of California, 1:05-CV-01207 OWW.

[24] Deteriorating And Deadlocked… The Sacramento-San Joaquin Delta Is A California Disaster-In-Waiting (2007).

[25] U.S. Const. amend V.

[26] See Braving the Waters of Supreme Court Takings Jurisprudence: Will the Fifth Amendment Protect Western Water Rights from Federal Environmental Regulation?, 4 U. Denv. Water L. Rev. 76 (2000) (“According to the United States Supreme Court, absolute rights—are rare, ‘and water rights are not among them.’” Citing United States v. Willow River Power Co., 324 U.S. 499 (1945).

[27] See Jess Ferrell, Klamath Basin Decisions Leave Irrigators High and Dry.

[28] 76 Fed. Cl. 100, 106 (2007); see also, Stockton East Water Dist. v. United States, 75 Fed. Cl. 321 (2007).

[29] California SBX2 2 Senate Bill, 2nd Ext. Session (2007).

[30] Id. at § 79730(c).

[31] Court ruling on delta smelt to cause rationing in Calif., officials say, Greenwire (September 4, 2007) (subscription required).

[32] Id.

[33] See Paul Schlienz, Columbia Basin hunts for new water storage, Washington Business (September/October 2007).

[34] See Jeff Kray, Historic Washington Act Seeks to Manage Water in the Columbia River Basin.

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