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Stockton E. Water Dist. v. United States

ELR Citation: 39 ELR 20228
Nos. No. 2007-5142, (Fed. Cir., 09/30/2009)

The Federal Circuit affirmed in part and reversed in part a lower court decision in favor of the U.S. government on claims that it breached certain contracts between the U.S. Bureau of Reclamation and California water districts concerning Central Valley Project water resources. The lower court concluded that, though the Bureau's obligations for water delivery were indeed breached, certain contract provisions gave the government the affirmative defenses it claimed. The first defense raised by the government—that the Bureau had implicit authority to reallocate certain water resources in response to a change in law and policy—is not a valid defense under the facts of this case. The government failed to prove that changes in state law and policy caused the water shortages rather than federal management choices. In addition, with the exception of 1994 and 1995, the government failed to prove its second defense--that the shortages were the result of causes "beyond the control of the United States" such as to absolve it under the contract provisions. The lower court's contrary determinations regarding these defenses were therefore reversed. The lower court, however, properly rejected the government's sovereign acts defense. In addition, the court vacated the lower court's dismissal of the districts' takings claim. The lower court erred in dismissing without trial the takings claim on the ground that the contract claim precluded the takings claim. The water districts are free to pursue their takings claim if they so choose with regard to the years for which the government has been found not liable as a matter of contract law. The court, however, offered no opinion on the validity or propriety of such a claim. As for the contract claims, the case was remanded for a determination of damages for the years for which the government is liable.