Federal Court Upholds Bureau of Reclamation’s Conversion of Water Service Contracts in Central Valley of California

Last week, a judgment entered by the U.S. District Court for the Eastern District of California confirmed the ability of the Bureau of Reclamation to convert water service contracts to long term repayment contracts pursuant to the Water Infrastructure and Improvements for the Nation Act. The converted contracts eliminate the need for future renewals and associated costs and allow contractors to lower their overall costs by prepaying their share of project construction costs. The converted contracts also benefit the government by facilitating faster repayment of construction costs which can provide funding for future water storage projects.

The Court agreed with Reclamation’s interpretation of the WIIN Act, that

• the WIIN Act requires contract conversion upon request, and
• WIIN Act § 4011(a)(4)(c) strips Reclamation of discretion to modify any “water service … contractual rights” other than those related to the financial terms specifically addressed by the WIIN Act.

Because those provisions removed Reclamation’s discretion, Reclamation was not required to conduct an analysis under the National Environmental Policy Act, or consult under the Endangered Species Act, as part of the contract conversions.

Acting Assistant Attorney General Adam Gustafson of the Justice Department’s Environment and Natural Resources Division (ENRD) made the announcement.

Trial Attorneys David Gehlert and Jeff Candrian of ENRD’s Natural Resources Section handled the case.