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26 ELR 20471 | Environmental Law Reporter | copyright © 1996 | All rights reserved Westlands Water District v. PattersonNo. CV-F-94-5217 OWW (900 F. Supp. 1304) (E.D. Cal. August 9, 1995)The court holds that the rights of two California county water districts to water allocations from the Central Valley Project (CVP) are inferior to the preexisting water allocation rights of parties who agreed not to exercise certain vested rights in exchange for substitute water. The districts challenge the Bureau of Reclamation's allocation of water to water users in the CVP area during 1994, a short-water year, alleging that the Bureau breached its contractual obligations with the districts. The court first holds that the districts' request for voluntary dismissal of their action without prejudice pursuant to Fed. R. Civ. P. 41 is unwarranted. Continued uncertainty for all CVP water users constitutes the type of prejudice that weighs against dismissal without prejudice. The districts have not been diligent in prosecuting the case, and offer no other reason for dismissal than that they have decided not to proceed. The "exchange contractors" and other water users have incurred substantial expense in defending the case. The lawsuit follows prior litigation, and similar legal actions can be anticipated in every short-water year until the disputed water rights are adjudicated. Also, motions for summary judgment by the Bureau, the exchange contractors, and other water users are pending. The court next holds that the districts' claims regarding water allocations in 1994 are not moot because they are capable of repetition yet evading review. The court further holds that it is inappropriate to continue the summary judgment motions based on the districts being unable to complete discovery. The court finds no factual dispute about the exchange contractors' priority to CVP water. The districts argue that the court should defer to the Ninth Circuit and reject the contention that the exchange contractors have priority to CVP water. In a prior case, however, the court found that the Ninth Circuit did not have before it the CVP contract history, nor did it analyze or resolve all of the contractual interpretation issues involved. The court rejects the districts' argument that a factual dispute precluding summary judgment exists whether the exchange contractors' use of the water has been reasonable. This issue is not part of any claim the districts alleged in the complaint, nor was it raised until the motions for summary judgment. Even assuming, arguendo, that such a claim can be asserted, it is unreasonable, premature, and not ripe for decision. Further, this argument has been waived by the districts' failure to exhaust appropriate administrative remedies and to assert the claim in the complaint, for which no motion to amend has been filed. The court also holds that there is no disputed issue of fact whether pro rata allocation would violate the contracts at issue. There is also no genuine issue as to any material fact concerning the interpretation of the relevant sections of the districts' contracts, and the court finds that the districts' contracts do not expressly forbid the Bureau from subordinating the districts' water rights to the rights of the exchange contractors. The court further holds that in light of the express policies underlying the controlling legislation, the only reasonable interpretation of the term "available water supply" in the apportionment formula in the districts' service contracts is that amount of CVP water determined to be available after satisfying the superior claims of the exchange contractors and other holders of prior rights to CVP water. The exchange contractors portion of water must also be excluded from the meaning of the term "contracts" in one of the district's contracts. Further, the court holds, for purposes of the other district's contracts, that the contractors are "suppliers of water" to, not "customers of the United States." In addition, subjecting the exchange contractors to a pro rata water allocation ignores the exchange contractors historical priority to CVP water and would violate the contracts of other water users. Also, the districts' contracts do not unambiguously require that the exchange contractors receive pro rata allocation along with the districts; to the contrary, the contracts unambiguously respect the exchange contractors' priority to CVP water. A decision in a related case is published at 24 ELR 20530. Counsel for Plaintiffs Counsel for Defendants MEMORANDUM OPINION AND ORDER RE: PLAINTIFFS' MOTION FOR VOLUNTARY DISMISSAL WITHOUT PREJUDICE, DEFENDANTS' AND INTERVENORS' MOTIONS FOR SUMMARY JUDGMENT Plaintiffs Westlands Water District ("Westlands") and San Benito County Water District ("San Benito, collectively "the Districts") move to dismiss their Complaint without prejudice, pursuant to Fed.R.Civ.P. 41(a)(2). The motion is opposed by the Federal Defendants, the Exchange Contractors,1 and the Friant Intervenors.2 The Federal Defendants, the Exchange Contractors, and the Friant Intervenors move for summary judgment. The Exchange Contractors, the Madera Irrigation District, and the Chow-chilla Water District join in the motions of the Federal Defendants and of the Friant Intervenors. The Districts oppose the summary judgment motions. At the hearing on the motions, all parties were granted the opportunity to submit additional legal argument in support of or in opposition to the motions for summary judgment. The additional briefing has been received and considered. In 1992, the Districts sued the same defendants seeking injunctive and declaratory relief, challenging Central Valley Project ("CVP") water allocations made by the Bureau of Reclamation ("Bureau") for 1992, a short3 water year. The same intervenors in this case intervened in the 1992 action. Defendants' motion to dismiss the complaint and for judgment on the pleadings was granted on the ground that the Bureau has authority to divert water from the San Luis Reservoir for the use of the Exchange Contractors, even to the detriment of the plaintiffs, and the Bureau's 1992 water allocation to the Districts was not arbitrary or capricious. Westlands Water District v. United States Dep't of Interior ("Westlands I"), 805 F. Supp. 1503, 1513 (E.D.Cal.1992). The Ninth Circuit affirmed the decision, although the appellate court did not agree with the analysis of underlying water-law issues. Westlands Water Dist. v. Firebaugh Canal ("Westlands I—Appeal"), 10 F.3d 667, 677 (9th Cir.1993). This case was filed after the Bureau announced CVP water allocations for the 1994 water year, another short water year.4 Plaintiffs were granted 35% of their contractual entitlement, and the Exchange Contractors were granted 75% of their entitlement.5 Plaintiffs allege that the Federal Defendants breached contractual obligations in apportioning water in shortage years. Plaintiffs complaint seeks the following relief: First: Injunctive relief, based on the allegation that the Bureau's 1994 allocations are contrary to the provisions of the Westlands and San Benito water service contracts, and plaintiffs have no plain, speedy and adequate remedy at law; Second: Declaratory relief, based on Article 11 of the Westlands contract, which obligates the Bureau to apportion water among those entitled to receive water from the San Luis Unit; Third: Declaratory relief, based on Article 7(b) of the San Benito contract, which obligates the Bureau to apportion available water among water users, subject to prohibitions in existing contracts, CVP authorizations or a determination that some other method of apportionment is required to prevent undue hardship. Plaintiffs moved to preliminarily enjoin the Federal Defendants from implementing the 1994 water allocation plan and to require the Bureau to reduce water deliveries by the same percentage among the Exchange Contractors and other agricultural water contractors capable of receiving water from the facilities of the Delta Division, the West San Joaquin Division, and the San Felipe Division of the Central Valley Project. That motion was denied, because plaintiffs did not demonstrate a likelihood of success on the merits of their Complaint; the balance of hardships favored defendants and intervenors, rather than plaintiffs; and the public interest did not favor a preliminary injunction. Westlands Water Dist. v. Patterson ("Westlands III"), 864 F. Supp. 1536, 1551 (E.D.Cal.1994). The Scheduling Conference Order, filed September 2, 1994, established a final discovery cut-off date of March 3, 1995, and a dispositive motion deadline of April 3, 1995. All parties participated through the appearance of counsel at the scheduling conference and expressed positions in their scheduling conference statements, which afforded the basis for the Case Management Order adopted for the case. after reviewing the court's written decision [on the motion for preliminary injunction], which was served by United States mail six days before the Scheduling Conference, the Districts determined that they did not wish to pursue this matter and therefore did not proceed with discovery. (Districts' Consolidated Opposition 17:12-15.) The Federal Defendants and defendants-in-intervention agree that no discovery has been conducted by the Districts. Although plaintiffs' decision not to pursue this case was apparently made in early September, 1994, the Court was not notified. It was not until December 23, 1994, that the Districts voluntarily moved to dismiss the case without prejudice. The only explanation given for this three-and-a-half-month delay is that plaintiffs sought to proceed by stipulation under Fed.R.Civ.P. 41(a)(1), but the Federal Defendants and defendants-in-intervention would not agree to a dismissal without prejudice. The historical background has been summarized in the published decisions concerning these parties and the disputed contracts. See O'Neill v. United States, 50 F.3d 677, 680-82 (9th Cir.1995) (affirming in part district court's denial of plaintiffs' motion to enforce a stipulated judgment on the 1963 water service contract with Westlands); Westlands I, 805 F. Supp. at 1504-05; Westlands I—Appeal, 10 F.3d at 669-70; Westlands III, 864 F. Supp. at 1538-39. In the mid-1930's, the Bureau sought to [26 ELR 20473] expand the CVP into the Kern County area of the southern San Joaquin Valley. The Friant Dam was constructed to divert the upper reaches of the San Joaquin River into the Friant-Kern Canal and the Madera Canal. The Exchange Contractors, or their predecessors-in-interest, held vested rights to water in the upper San Joaquin River. The Bureau could not implement the CVP expansion unless it acquired these water rights. To acquire the water rights, the United States and the Exchange Contractors entered into two contracts in July of 1939: the Purchase Contract and the Exchange Contract. Under the Purchase Contract, the Exchange Contractors sold all of their rights to water from the upper San Joaquin River to the United States, except for "reserved water," water to which the Exchange Contractors held vested rights. Simultaneously, under the Exchange Contract, the Exchange Contractors agreed not to exercise their rights to reserved water, as long as they received substitute water from the Federal Delta-Mendota Canal, or other sources that delivered to the Mendota Pool. An amended contract, dated September 15, 1967, is based on these 1939 Purchase and Exchange Contracts. As amended, the Exchange Contract guarantees the Exchange Contractors the delivery of a minimum of 75% of their full allotment.6 By these contracts, the Bureau obtained the water rights necessary to implement the southern expansion of the CVP, and the Exchange Contractors transferred their water rights to protect their interest in a reliable water supply. The water obtained from the Exchange Contractors through the Purchase and Exchange Contracts flows into Millerton Lake. Millerton Lake was formed when the Friant Dam was completed in 1942. It provides water to both the Madera Canal and the Friant-Kern Canal. In the 1940's, the Bureau entered into contracts with the water districts within the Friant Division. Friant Division agricultural water contractors—including the Friant Intervenors—receive water from both the Madera and Friant-Kern Canals. The San Luis Unit of the CVP was authorized by the San Luis Act in 1960.7 It consists of the San Luis Dam, the San Luis Reservoir, and a number of smaller facilities. The Bureau constructed the San Luis Reservoir to provide water to Merced, Fresno, and Kings Counties, and to store surplus water from the Sacramento-San Joaquin Delta. The excess capacity of the Delta-Mendota Canal is used to carry water along the west side of the San Joaquin Valley for use in the San Luis Unit and the San Luis Reservoir.8 To implement the San Luis Act, the Bureau entered into water service contracts, to provide water to agricultural contractors in the area of the San Luis Unit, including Westlands and San Benito. The Westlands water service contract was executed in 1963. The San Benito water service contract was executed in 1978. III. The Districts' Motion to Dismiss Rule 41 allows a plaintiff, with the approval of the court, to dismiss an action without prejudice at any time: Except as provided in paragraph (1) of this rule, an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper. Fed.R.Civ.P. 41(a)(2). The decision to grant a motion for voluntary dismissal is discretionary. Stevedoring Servs. of Am. v. Armilla Int'l, 889 F.2d 919, 921 (9th Cir.1989). A motion for voluntary dismissal should be granted unless the defendant can show that it will suffer some plain legal prejudice as a result. Waller v. Financial Corp. of Am., 828 F.2d 579, 583 (9th Cir.1987); Hamilton v. Firestone Tire & Rubber Co., 679 F.2d 143, 145 (9th Cir.1982). Plain legal prejudice may be shown where actual legal rights are threatened or where monetary or other burdens appear to be extreme or unreasonable. Watson v. Clark, 716 F. Supp. 1354, 1356 (D.Nev.1989), aff'd, 909 F.2d 1490 (9th Cir.1990). Factors to consider in determining legal prejudice are: (1) The defendant's effort and expense involved in preparing for trial; (2) Excessive delay and lack of diligence on the part of the plaintiff in prosecuting the action; (3) Insufficient explanation of the need to take a dismissal; and (4) The fact that defendant has moved for summary judgment. Paulucci v. City of Duluth, 826 F.2d 780, 783 (8th Cir.1987); see also, Grover v. Eli Lilly & Co., 33 F.3d 716, 718 (6th Cir.1994); United States v. Outboard Marine Corp., 789 F.2d 497, 502 (7th Cir.), cert. denied, 479 U.S. 961, 107 S. Ct. 457, 93 L. Ed. 2d 403 (1986). The prejudice resulting from uncertainty over title to land is also a valid consideration. Ferguson v. Eakle, 492 F.2d 26, 29 (3d Cir.1974). Plain legal prejudice does not occur where the defendant merely faces the threat of a second lawsuit or a tactical disadvantage. Hamilton, 679 F.2d at 145. A suit may be dismissed with or without prejudice, and the dismissal may be conditioned on terms that are proper or necessary to avoid prejudice to the defendant. See Koch v. Hankins, 8 F.3d 650, 652 (9th Cir.1993). Plaintiffs assert voluntary dismissal will not result in legal prejudice to defendants beyond the threat of a second lawsuit or the inconvenience of a lack of a legal ruling. Defendants respond that the legal prejudice they will suffer from a dismissal without prejudice is the uncertainty of their water rights. Defendants in Paulucci v. City of Duluth presented a similar argument of uncertainty over land title. In Paulucci, the City of Duluth condemned plaintiff's property so Lake Superior Paper Industries ("LSPI") could erect a paper mill. Paulucci, 826 F.2d at 781. The plaintiffs brought simultaneous state and federal actions against the City and LSPI based on an improper taking. Id. After the state action was decided in favor of the defendants, the plaintiffs sought to voluntarily dismiss the federal action under Rule 41(a)(2). Id. The district court denied plaintiff's motion for dismissal and granted defendant's motion for summary judgment. Id. at 782. The plaintiffs appealed and the Eighth Circuit affirmed. Id. The Eighth Circuit noted that millions of dollars had been invested in the plant, and found "future litigation asserting this claim would generate uncertainty about the title to the land and possibly jeopardize the development of the project." Id. at 783. Uncertainty over water rights creates a similar risk for the defendants-in-intervention. John E. Boudreau, Manager of the Friant Power Authority, avers that uncertainty over water rights could jeopardize the ongoing negotiations to refinance the Friant Power Project and put the financial viability of the Project at risk. This uncertainty also affects short and long-term investment used by defendants in operating their businesses. The Declaration of Stephen W. Kritscher (Exchange Contractors' Opposition, Exh. A), an investment banker, describes the deterrent for long-term agricultural investment created by this uncertainty. The Declaration of Michael Porter (Exchange Contractors' Opposition, Exh. B), Engineer/Manager of Central California Irrigation District, asserts [26 ELR 20474] local investors and lenders are already balking at the uncertainty of water allocations. This continued uncertainty for all CVP water users constitutes the type of prejudice that weighs against dismissal without prejudice. Other factors also support denial of dismissal without prejudice. After a preliminary injunction hearing at which extensive evidence and legal briefing was submitted, the Districts have failed to conduct any discovery in this matter, suggesting that the case is ripe for judicial determination. This delay is excessive, in light of opposing parties' contentions that no discovery was necessary. Plaintiffs have not been diligent in prosecuting the case. They did not notify the Court of their alleged loss of interest in the case until over half way through the time reserved for pretrial discovery. The defendants-in-intervention have incurred substantial expense in defense of this suit. (See, e.g., Declaration of Richard M. Moss (engineer's fees in the amount of $8,078.50); Declaration of Scott K. Kuney (attorney's fees in the amount of $8,473.95); Declaration of Gregory K. Wilkinson (attorney's fees in the amount of $68,147.50); Declaration of Denslow Green (attorney's fees in the amount of $27,410.00)). The Federal Defendants' legal efforts were equal or greater. Moreover, this lawsuit follows prior litigation brought by the Districts asserting substantially the same claims. The Districts offer no other reason for dismissal than that they have decided not to proceed with the case. This is the second suit filed by the Districts to claim entitlement to larger CVP water allocations at the expense of intervenors. Similar legal actions can be anticipated in every short-water year until the disputed water rights are adjudicated. The Districts' explanation is insufficient. Although filed after the motion for dismissal, summary judgment motions by the Federal Defendants and the defendants-in-intervention are pending. The Court deferred hearing the motion to dismiss to enable complete briefing of the motions for summary judgment. The Districts request for voluntary dismissal without prejudice is DENIED. IV. Motions for Summary Judgment A. Requests for Judicial Notice The Districts request judicial notice of the following: (1) California Water Rights Board Decision 990 ("D-990"); (2) California Water Rights Board Notice of Hearing, dated March 22, 1961; (3) California Water Rights Board Decision 1020 ("D-1020"); (4) Report to the San Joaquin Valley Drainage Program, Legal and Institutional Structures for Managing Agricultural Drainage in the San Joaquin Valley: Designing a Future; (5) Declaration of Franklin E. Dimick in Support of Federal Defendants-Appellants' Application for Emergency Relief, filed in Westlands Water Dist. v. United States ("Westlands II—Appeal"), 43 F.3d 457 (9th Cir.1994); (6) Declaration of John Burke in Support of Opposition to Exchange Contractors' Memorandum in Support of Expedited Hearing on Legal and APA Issues, filed in Westlands Water Dist. v. United States ("Westlands II"), 850 F. Supp. 1388 (E.D.Cal.1995). The Friant Intervenors request judicial notice of the following: (1) Framework Agreement Between the Governor's Water Policy Council of the State of California and the Federal Ecosystem Directorate; (2) Principles for Agreement on Bay-Delta Standards Between the State of California and the Federal Government ("the Bay-Delta Accord"); (3) D-990; (4) D-1020. Federal Rule of Evidence Rule 201 provides in pertinent part, "A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. A court shall take judicial notice if requested by a party and supplied with the necessary information." Federal courts may "take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to the matters at issue." U.S. ex rel Robinson Rancheria Citizens Council v. Borneo, 971 F.2d 244, 248 (9th Cir.1992). The California Water Rights Board decisions and notice, the San Joaquin Valley Drainage Program Report, and the federal agreements satisfy Rule 201(b)(2). No party has objected to the Burke or Dimick Declaration. The requests for judicial notice of the existence of these documents and of their contents are GRANTED. Plaintiffs seek injunctive and declaratory relief with respect to the Bureau's 1994 water allocations. The 1994 water year has now ended, raising the question of mootness. See Western Oil & Gas Ass'n v. Sonoma County, 905 F.2d 1287, 1290 (9th Cir.1990) ("An action is moot when the issues presented are no longer 'live' or the parties lack a legally cognizable interest in the outcome."), cert. denied, 498 U.S. 1067, 111 S. Ct. 784, 112 L. Ed. 2d 846 (1991). An issue that is "capable of repetition yet evading review" will not be dismissed as moot. Weinstein v. Bradford, 423 U.S. 147, 149, 96 S. Ct. 347, 349, 46 L. Ed. 2d 350 (1975) (per curiam). In order to be "capable of repetition yet evading review," two requirements must be met: (1) the challenged action must be too short in duration to be fully litigated prior to its cessation or expiration, and (2) there must be a reasonable expectation that the same plaintiffs will be subjected to the same action again. Id. The Federal Defendants argue that this case is not moot. No other parties have addressed this argument. Water allocations occur annually. They are first announced on February 15 and may be modified later in the year, depending upon available CVP water. The water allocation for one year applies only to that year. Since 1992, a single year's allocation has proved too short in duration to be fully litigated prior to its expiration. From 1992 through 1994, the plaintiffs received reduced water allocations. The Bureau did not apportion water equally among all CVP water users but granted the Exchange Contractors priority, based on the Bureau's interpretation of different water users' respective rights, and the Districts filed suit challenging the Bureau's interpretation of those rights. Considering the reallocation of water effected by the Central Valley Project Improvement Act ("CVPIA"), Pub.L. No. 102-575, 106 Stat. 4706 (1992), and the frequency of drought in California, there is a reasonable expectation that in future years the Bureau will again reduce the Districts' CVP water allocation but not the Exchange Contractors' allocation. There is a reasonable certainty the Districts will challenge future allocations, unless the parties' respective CVP water rights are finally adjudicated. They have filed three lawsuits challenging CVP water allocations since 1992. The Districts claims are capable of repetition yet evading review. The case is not moot. C. The Districts' Rule 56(f) Request The Districts argue that summary judgment is inappropriate, because they have not been permitted to complete discovery. Rule 56(f) provides: Should it appear from the affidavits of a party opposing the [summary judgment] motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just. As the United States Supreme Court has stated, "[Rule 56(f) ] allows a summary judgment motion to be denied, or the hearing on the motion to be continued, if the nonmoving party has not had an opportunity to make full discovery." Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S. Ct. 2548, 2554, 91 [26 ELR 20475] L.Ed.2d 265 (1986) (emphasis added). The permissive language of the rule and of the Supreme Court's clarification demonstrate that the decision to continue or deny a summary judgment motion on Rule 56(f) grounds is within the district court's discretion. The dispute between the parties over their respective rights to federal water has been actively litigated since 1992. The Scheduling Conference Order issued September 2, 1994, was fashioned with the direct participation and input of all parties. The amount of discovery and the amount of time to complete discovery were specifically addressed. Extra time was expressly requested by and provided for the Districts to conduct discovery, over the informal protests of the defendants and intervenors, who maintained there was no need for further discovery. The discovery cut-off date set by that Order is March 3, 1995. By their own admissions, the Districts elected not to pursue discovery, see Districts' Consolidated Opposition at 17:14-15, although they were afforded extra time and have had every opportunity to conduct discovery for ten months before the motions for summary judgment were filed.9 Nor can plaintiffs suggest they were "lulled" into not undertaking discovery. They have been on notice long before filing of this case that the federal defendants and intervenors considered plaintiffs' claims insufficient as a matter of law. See Westlands I, 805 F. Supp. at 1505. The Chisum Declaration asserts that a number of issues require discovery. These are issues on which extensive evidence has already been received at the hearing on the motion for preliminary injunction,10 or issues that are questions of law rather than questions of fact.11 The Districts have been permitted a fair opportunity for discovery. They elected not to conduct discovery. The Districts have not shown there are key issues upon which additional discovery is necessary. The Districts did not timely move to amend the Case Management Order to alter the final discovery cutoff. The Districts' repeated claims prejudice the intervenors' efforts to refinance the Friant Power Project and jeopardize the financial viability of that project. Any one of these reasons is sufficient to support the denial of the Districts' request to continue the summary judgment motions. The request is DENIED. D. Standards for Summary Judgment Summary judgment is appropriate only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986). A genuine issue of fact exists when the non-moving party produces evidence on which a reasonable trier of fact could find in its favor viewing the record as a whole in light of the evidentiary burden the law places on that party. Anderson v. Liberty Lobby, 477 U.S. 242, 252-56, 106 S. Ct. 2505, 2512-14, 91 L. Ed. 2d 202 (1986). The non-moving party cannot simply rest on its allegation without any significant probative evidence tending to support the complaint. Id. at 249, 106 S. Ct. at 2510-11. The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial. Celotex, 477 U.S. at 322-23, 106 S. Ct. at 2552. The more implausible the claim or defense asserted by the opposing party, the more persuasive its evidence must be to avoid summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986). Nevertheless, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in its favor." Liberty Lobby, 477 U.S. at 255, 106 S. Ct. at 2513. Even where the basic facts are undisputed, if reasonable minds could differ as to the inferences to be drawn from those facts, summary judgment should be denied. Hopkins v. Andaya, 958 F.2d 881, 888 (9th Cir.1992). The Court's role on summary judgment, however, is not to weigh the evidence, but only to identify disputed issues. Id. Evidence submitted in support of or in opposition to a motion for summary judgment must be admissible under the standard articulated in 56(e). Hal Roach Studios Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir.1989). Properly authenticated documents, including discovery documents, although not admissible in that form at trial, can be used in a motion for summary judgment if appropriately authenticated by affidavit or declaration. United States v. One Parcel of Real Property, 904 F.2d 487, 491-92 (9th Cir.1990); Zoslaw v. MCA Distributing Corp., 693 F.2d 870, 883 (9th Cir.1982), cert. denied, 460 U.S. 1085, 103 S. Ct. 1777, 76 L. Ed. 2d 349 (1983). Supporting and opposing affidavits must be made on personal knowledge, must set forth such facts as would be admissible in evidence, and must show affirmatively that the affiant is competent to testify to the matters stated therein. Fed.R.Civ.P. 56(e); see also, Taylor v. List, 880 F.2d 1040, 1045 n. 3 (9th Cir.1989). "Questions of statutory construction and legislative history present legal questions which are properly resolved by summary judgment." Coyote Valley Band of Pomo Indians v. United States, 639 F. Supp. 165, 167 (E.D.Cal.1986); see also Asuncion v. District Director, 427 F.2d 523, 524 (9th Cir.1970). The water service contracts between the Districts and the Bureau are the bases for the Districts' Complaint. The Districts seek injunctive and declaratory relief requiring the Bureau to apportion water equally among all recipients of water from the San Luis Unit. The intended result is to reduce the allocation to the Exchange Contractors from 75% while raising the allocation to the Districts from 35%, until all recipients receive the same percentage of their full contractual supplies. The Exchange Contractors assert that a reduction of their allotment below 75% would be a breach of the Exchange Contract, as amended. If the Exchange Contract is breached, the Exchange Contractors have the right to the "reserved water" that currently flows into Millerton Lake. The Friant Intervenors, who receive water from Millerton Lake, argue that they will receive less water if the Districts are granted relief and the Exchange Contractors assert their rights to reserved water.12 The Districts argue that three categories of dispute preclude summary judgment: (1) There is a factual dispute about the Exchange Contractors' priority to CVP water; (2) There is a factual dispute whether pro rata allocation would violate the Friant contracts; and (3) The terms of the Districts' water supply contracts unambiguously give the Exchange Contractors no priority; or, alternatively, the contracts are ambiguous and cannot be interpreted on a motion for summary judgment. 1. The Exchange Contractors' Priority to CVP Water The Districts argue that the Ninth Circuit has already rejected the contention that the Exchange Contractors have a priority to CVP water, relying on Westlands I—Appeal, 10 F.3d at 675. The meaning of the Ninth Circuit's opinion is a question of law appropriately resolved on summary judgment, see Coyote Valley, 639 F. Supp. at 167, not an issue of fact. The Ninth Circuit stated, "Unlike the district court, we are not convinced that the Exchange Contractors, prior appropriators of water from one river, have superior water rights . . . to water from a different source." Westlands I—Appeal, 10 F.3d at 675. This issue has now been fully briefed and considered at the evidentiary hearing on the motion for preliminary injunction: The Ninth Circuit did not have before it the CVP contract history giving rise to the rights claimed by the parties before the Court. . . . The Ninth Circuit neither analyzed, nor resolved, all contractual interpretation issues involved. Unlike the earlier motion decided solely on the pleadings, evidence has now been presented both in support and opposition to the motion. Westlands III, 864 F. Supp. at 1542. Evidence of the complete CVP contracting history among all the parties has now been analyzed. The 1902 Reclamation Act requires deference to the substance and form of state water law. California v. United States, 438 U.S. 645, 675, 98 S. Ct. 2985, 3001, 57 L. Ed. 2d 1018 (1978); 43 U.S.C. § 383. The California legislature intended that "no right to the use of water shall be gained or lost by reason of any exchange thereof," and the United States Congress has confirmed the United States' obligation under the exchange contracts "to replace the waters of the San Joaquin River with waters from the Sacramento River." Wolfsen v. United States, 162 F. Supp. 403, 407-08 (Cl.Ct.), cert. denied, 358 U.S. 907, 79 S. Ct. 233, 3 L. Ed. 2d 228 (1958). The apportionment sought by the Districts "ignores the substance of the Exchange Contractors' riparian rights, and could result in periodic takings under the just compensation clause." Westlands III, 864 F. Supp. at 1548 (citing United States v. Gerlach Live Stock Co., 339 U.S. 725, 734, 70 S. Ct. 955, 960, 94 L.Ed. 1231 (1950)). The Districts argue that a factual dispute exists whether the Exchange Contractors' use of water has been reasonable. A party has water rights only to the reasonable use of water. Cal. Const.Art. 10, § 2. The reasonableness of the use of water is a question of fact. Rank v. Krug, 142 F. Supp. 1, 111 (S.D.Cal.1956), aff'd in part, 293 F.2d 340 (9th Cir.1961), aff'd in part, 372 U.S. 627, 83 S. Ct. 996, 10 L. Ed. 2d 28 (1963). The focus of this case is whether the Bureau acted arbitrarily, capriciously, or unreasonably in allocating federal CVP water and in refusing to apportion San Luis Unit water among the Exchange Contractors equally with the Districts. The reasonableness of the Exchange Contractors' use of substitute water received pursuant to the Exchange Contract is not part of any claim alleged in the Complaint by the Districts, nor was it raised until the time of these motions for summary judgment. The Bureau has a contractual obligation to honor the Exchange Contractors' historical water rights to CVP water. That obligation takes precedence over the Districts' contractual water rights, which are to surplus CVP water. The Districts' argument is disingenuous: that the Bureau should have challenged the Exchange Contractors' reserved water rights based on alleged misuse before the appropriate state agency, when neither the Districts nor anyone else has ever done so. Moreover, in challenging the reasonableness of the Exchange Contractors' water usage, the Bureau would be acting to deprive the Exchange Contractors of the very water supply the Bureau covenanted in good faith to provide the Exchange Contractors. Assuming arguendo that such a claim can be asserted, the claim that the Exchange Contractors' water usage is unreasonable is premature and not ripe for decision here. The parties have not briefed this question of California law. Independent research shows that a challenge to the Exchange Contractors' reasonable use of water must be made by applying to the State Water Resources Control Board for unappropriated water, if the Districts in good faith contend the Exchange Contractors unreasonably use water, pursuant to article 10, section 2. See Cal. Water Code § 179 (State Water Resources Control Board "is vested with all of the powers, duties, purposes, responsibilities, and jurisdiction" of laws "under which permits or licenses to appropriate water are issued, denied, or revoked"). If the water is not being applied reasonably, it is available for appropriation. Id. §§ 1201 (water, not "being applied to useful and beneficial purposes" or "reasonably needed for useful and beneficial purposes" on riparian lands, is available for appropriation), 1202 (water previously appropriated but no longer "being put . . . to the useful or beneficial purpose for which it was appropriated, with due diligence in proportion to the magnitude of the work necessary properly to utilize it for the purpose of the appropriation" is available for appropriation). Federal courts lack jurisdiction to decide state water permit applications. United States v. Fallbrook Pub. Util. Dist., 165 F. Supp. 806, 857 (S.D.Cal.1958). The Districts' argument that the Exchange Contractors do not make reasonable use of their water allocation has been waived by the Districts' failure to exhaust the appropriate administrative remedies and the failure to assert the claim in the Complaint. No motion to amend the Complaint has been filed by the Districts. Nonetheless, this issue does not bear on the legal interpretation of the parties' contracts and historical water rights. 2. Pro Rata Allocation and the Friant Contracts The opinion denying the preliminary injunction decided the question whether pro rata allocation as argued by the Districts was precluded by the Friant contracts. The Exchange Contract provides in the event of shortage, "the United States shall make up such quantities by releases of available storage from Millerton Lake" to minimum storage capacity. Exchange Contract Art. 4(b). The twenty-seven Friant water districts receive San Joaquin River water from Millerton Lake. All twenty-seven contracts between the Friant water districts and the United States acknowledge that the rights of the contracting district are subject to the terms of the Exchange Contract. In 1959, the Bureau applied to the California State Water Resources Control Board for a place-of-use application for the proposed San Luis Unit (the D-990 Decision). In consideration of the Friant water districts' non-opposition to the application, the Bureau agreed to amend the contracts to protect the Exchange Contractors' priority.13 Evidence of this agreement includes a letter from Robert E. Moock, dated October 31, 1959;14 a letter from Adolf Moskovitz, dated November 19, 1959;15 and a Memorandum of Understanding [26 ELR 20477] drafted by the Bureau on December 29, 1959.16 Under the amended contracts, the United States agrees (1) it will not deliver water from the San Joaquin River to the Exchange Contractors "unless and until required by the terms of [the Exchange Contract] so to do"; and (2) "it will not voluntarily and knowingly render itself unable to deliver" water to the Exchange Contractors from the Sacramento River sufficient to meet the obligations of the United States under the Exchange Contract. Westlands III, 864 F. Supp. at 1546-47. The Districts argue that because the amendments relied upon in the previous opinion related to D-990, there remains a disputed issue of fact whether they relate to the expanded service area provided in D-1020, because the Friant Intervenors did not seek to again amend their contracts. This argument is meritless. As the analysis shows, the amendments were sought to protect the Friant Intervenors' rights to water deliveries when the Bureau was expanding its service area. Having obtained that contractual protection from the Bureau during the D-990 proceedings, there was no need for the Friant Intervenors to seek a further amendment during the D-1020 proceedings, which did not address or affect the contractual priorities previously obtained and confirmed during the D-990 proceedings. 3. Ambiguity of the Districts' Contracts The Districts argue summary judgment must be denied because (1) their contracts with the Bureau unambiguously prohibit the Bureau from subordinating the Districts' water claims to the claims of the Exchange Contractors; or alternatively (2) their contracts are ambiguous on this issue, and differing views of intent preclude summary judgment.17 Districts' Supplemental Memorandum at 2:4-24. The fundamental difficulty with the Districts' position is that they seek to view their contracts with the Bureau in a vacuum, as if all water rights are to be determined only by reference to the Westlands and San Benito Contracts. This approach ignores reclamation law and CVP contracting history. Article 11(a) of the Westlands contract provides for apportionment of water if a shortage occurs: There may occur at times during any year a shortage in the quantity of water available for furnishing to the District through and by means of the Project. . . . In any year in which there may occur a shortage from any cause, the United States reserves the right to apportion the available water supply among the District and others entitled under the then existing contracts to receive water from the San Luis Unit in accordance with conclusive determinations of the Contracting Officer as follows: (i) A determination shall be made of the total quantity of water agreed to be accepted during the respective year under all contracts then in force for the delivery of Central Valley Project water by the United States from the San Luis Unit, the quantity so determined being hereinafter referred to as the contractual commitments; (ii) A determination shall be made of the total quantity of water from the Central Valley Project which is available for meeting the contractual commitments, the quantity so determined being hereinafter referred to as the available supply; (iii) The total quantity of water agreed to be accepted by the District during the respective year, under Article 3 hereof, shall be divided by the contractual commitments, the quotient thus obtained being hereinafter referred to as the District's contractual entitlements; and (iv) The available supply shall be multiplied by the District's contractual entitlement and the result shall be the quantity of water required to be delivered by the United States to the District for the respective year. . . . No party argues that Article 11(a) is not the final expression of the agreement between Westlands and the Bureau on the apportionment of water during a shortage. No evidence of any other agreement on water apportionment between Westlands and the Bureau has been submitted by any party. Article 11(a) is the final agreement between Westlands and the Bureau on the apportionment of water during a shortage. No offer of proof of any extrinsic evidence relevant to the contractual language has been made by Westlands. Article 7(b) of the San Benito Contract provides a similar apportionment formula: In any year that the Contracting Officer determines there is a shortage in the quantity of water available to customers of the United States from the Project, the Contracting Officer will apportion available water among the water users capable of receiving water from the same Project facilities by reducing deliveries to all such water users by the same percentage, unless he is prohibited by existing contracts, Project authorizations, or he determines that some other method of apportionment is required to prevent undue hardship. No party argues that Article 7(b) of the San Benito Contract is not the final agreement between San Benito and the Bureau on water apportionment. No evidence of any other agreement on water apportionment between San Benito and the Bureau has been submitted by any party. Article 7(b) is the final agreement between San Benito and the Bureau on the apportionment of water during a shortage. No offer of proof of any extrinsic evidence relevant to the contractual language has been made by San Benito. Federal law controls the interpretation of a contract where the United States is a party. United States v. Seckinger, 397 U.S. 203, 209, 90 S. Ct. 880, 884, 25 L. Ed. 2d 224 (1970); Kennewick Irrigation District v. United States, 880 F.2d 1018, 1032 (9th Cir.1989). "The Uniform Commercial Code is a source of federal common law and may be relied upon in interpreting a contract to which the federal government is a party." O'Neill, 50 F.3d at 684 (applying the UCC to interpret article 11 of the Westlands contract). Whether a contract is ambiguous is a question of law. United States v. Sacramento Mun. Util. Dist., 652 F.2d 1341, 1343-44 (9th Cir.1981); United States ex rel. Union Bldg. Materials Corp. v. Haas & Haynie Corp., 577 F.2d 568, 572 (9th Cir.1978). Ambiguity exists when a contract is subject to more than one reasonable interpretation. Kennewick Irrigation Dist. v. United States, 880 F.2d 1018, 1032 (9th Cir.1989). "The fact that the parties dispute a contract's meaning does not establish that the contract is ambiguous." Id. (quotation omitted); see also International Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1406 (9th Cir.1985). "[G]overnmental contracts should be interpreted against the backdrop of the legislative scheme that authorized them, and [the] interpretation of ambiguous terms or implied covenants can only be made in light of the policies underlying the controlling legislation." [26 ELR 20478] Peterson v. United States Dept. of the Interior, 899 F.2d 799, 807 (9th Cir.) (citing Federal Hous. Admin. v. Darlington, Inc., 358 U.S. 84, 87-88, 79 S. Ct. 141, 144, 3 L. Ed. 2d 132 (1958)), cert. denied, 498 U.S. 1003, 111 S. Ct. 567, 112 L. Ed. 2d 574 (1990). The Westlands and San Benito contracts were authorized by reclamation law. See 43 U.S.C. § 485h(d), (e). Although traditionally, an implementing agency is granted deference in its interpretation of statutes and regulations, where the rights at issue arise under contract, the rule of agency deference is inapplicable. Clay Tower Apartments v. Kemp, 978 F.2d 478, 480 (9th Cir.1992). However, the parties' conduct subsequent to the formation of the contract is entitled to "great weight" in determining the meaning of that contract. Arizona Laborers, Teamsters and Cement Masons v. Conquer Cartage Co., 753 F.2d 1512, 1518 (9th Cir.1985). Extrinsic evidence of trade usage, course of dealing, and course of performance between the parties may be considered to determine whether a contract is ambiguous. O'Neill, 50 F.3d at 684. This extrinsic evidence cannot contradict a clear contract term in a final expression of agreement, but it may explain or supplement the agreement. Id. at 684-85. The Districts have not identified any trade usage, course of dealing, or course of performance that supports the interpretation of the Westlands and San Benito Contracts they advance: that the Bureau must pro rata apportion San Luis Unit water among all parties entitled to receive water from the Unit, when there is a shortage of CVP water. No term in the Westlands Contract or the San Benito Contract expressly forbids the Bureau from subordinating the Districts' rights to water to the prior rights of the Exchange Contractors. The Districts infer such an agreement in their contracts by the Districts' proposed "reasonably objective meaning" (Districts' Supplemental Memorandum at 3:8) of the terms "available water supply"18 and "contracts" in the Westlands Contract and "available water" and "customers of the United States" in the San Benito Contract. Alternatively, the Districts argue that these terms are ambiguous, and the ambiguity precludes summary judgment. it is necessary to consider that a longstanding definition of contract, in existence when both the Westlands and San Benito contracts were drafted, states: "a contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty." Districts' Consolidated Opposition at 29:24-30:1 (quoting Restatement of Contracts § 1 (1932)). The Districts argument that the classic definition of "contract" from the Restatement should be considered ignores the indisputable fact that these contracts were made under reclamation law. a. The Term "Available Water Supply" The Westlands Contract defines "available water" as, the total quantity of water from the Central Valley Project which is available for meeting contractual commitments. . . . Westlands Contract p 11(a)(ii). As the opinion deciding the motion for preliminary injunction discussed at length, the San Luis Unit was constructed to utilize "surplus" water not required to satisfy the rights of existing water-rights holders, including the Exchange Contractors: The operation of the federal San Luis Unit would conserve and regulate surplus wintertime water new wasting into the Pacific Ocean through the Golden Gate and make it usable, along with additional Central Valley Project Water from storage, in the water-deficient San Joaquin Valley to the south. H.R.Rep. No. 399, 86th Cong., 2d Sess. 2 (1960) (emphasis added). The Bureau's 1949 "Comprehensive Departmental Report on the Development of the Water and Related Resources of the Central Valley Basin" ("Feasibility Report"), transmitted to Congress before the passage of the San Luis Act noted that the San Luis Project would receive surplus water. See, e.g., Feasibility Report at 129-30 ("Pumping to the [San Luis] reservoir under initial development or in dry periods under ultimate development would be chiefly from surplus winter and spring flows from the Sacramento River."); id. at 220 ("[San Luis Reservoir water will be] secured almost entirely by pumping through the Delta-Mendota canal at such times as the full capacity of the canal is not required for initial Central Valley project needs."). The Feasibility Report also noted, "Water rights for existing irrigation developments are superior to any which may accrue to new developments." Id. at 104 (emphasis added). Congressional discussion prior to enactment of the CVPIA acknowledges the superior rights of the Exchange Contractors: A very significant change is how dry year shortages are dealt with. The House had suggested that the 800,000 acre-feet and the wildlife refuge water be subject to reduction only when shortages are imposed on prior right and exchange right holders. Aside from the implicit taking, since those rights are secured under State law and are superior to any CVP right, that provision would have never worked in practice. During the current drought, prior right and exchange right holders agreed to forgo certain deliveries in order to permit the Secretary to make deliveries to the wildlife refuges and to urban users. No reductions were imposed on them since no reductions could be imposed so long as there was any water. 138 Cong.Rec. S17658, 17660 (Sept. 30, 1992) (statement of Sen. Wallop) (emphasis added). The CVPIA preserves the distinction in reclamation law between surplus water obtained by the construction of the CVP and water that belongs as a matter of right to prior appropriators: [T]he term "Central Valley Project yield" means the delivery capability of the Central Valley Project during the 1928-1934 drought period after fishery, water quality, and other flow and operational requirements imposed by terms and conditions existing in licenses, permits, and other agreements pertaining to the Central Valley Project under applicable State or Federal law existing at the time of enactment of this title have been met. CVPIA § 3406(b)(2) (emphasis added). The commitment of water to the Exchange Contractors is one of the "other flow and operational requirements imposed by terms and conditions existing in . . . agreements pertaining to the Central Valley Project" that must be satisfied before the calculation of CVP yield is made. The foregoing analysis demonstrates that reclamation law prioritizes appropriative state water rights over rights that were created under contracts for federal CVP water after the construction of the CVP. This distinction in law existed at the time the San Luis Act was passed, and it continues in the most recent 1994 passage of the CVPIA. In light of the express policies underlying the controlling legislation, the only reasonable interpretation of the term "available water supply" in a repayment or a water service contract such as the Westlands and San Benito Contracts is: that amount of CVP water determined to be available after satisfying the superior claims of the Exchange Contractors and other holders of prior rights to CVP water. The prior entitlements of the Exchange Contractors to Sacramento River water are not part of the "available water supply" as that term is used in the Westlands Contract. The preamble of the Westlands Contract demonstrates that the contracting parties understood Westlands would receive water surplus to the requirements of prior appropriators, such as the Exchange Contractors: [I]nvestigations of the stream flow in the Sacramento River, the Trinity River, the American River, the San Joaquin River, and their tributaries indicate that there will be available for furnishing to the District from the San Luis Unit an additional water supply for surface diversion and direct [26 ELR 20479] application for irrigation and directly or indirectly to replenish depleted ground water underlying the District. . . . Westlands Contract at 3:1-7 (emphasis added). The foregoing analysis also applies to the term "available water" in the San Benito Contract. The San Benito Contract is a water service contract. Reclamation law dictates that the only reasonable definition of the term "available water" in the context of p 7(b) is the water available after satisfying the superior rights of the Exchange Contractors. The language of p 7(b) expressly recognizes that rights to apportionment are subject to "existing contracts [and] Project authorizations." The Exchange Contract, the Friant contracts, and congressional reclamation legislation, such as the CVPIA, are "existing contracts [and] Project authorizations" to which the San Benito Contract is subject. No evidence of trade usage, course of dealing, or course of performance has been offered by the Districts to alter the conclusion that the term "available water supply" in the Westlands and San Benito Contracts excludes the allocation of CVP water due the Exchange Contractors. The CVPIA, the most recent substantive enactment of reclamation law, identifies four types of water-delivery contracts: "repayment contracts," "water service contracts," "water rights settlement contracts," and "exchange contracts." CVPIA §§ 3403(k), 3405(a). The definition of "repayment contract," since at least the Reclamation Project Act of 1939, Pub.L. No. 76-260, 53 Stat. 1187 (1939), is "any contract providing for repayment of construction charges [of a reclamation project] to the United States." 43 U.S.C. § 485a(e) (codifying section 2(e) of the 1939 Act). "Water service contracts" are not defined by statute. When the CVPIA refers to water service contracts, it cites section 9(e) of the 1939 Reclamation Act, which discusses "short- or long-term contracts to furnish water for irrigation." See Reclamation Project Act of 1939, ch. 418, § 9(e), 53 Stat. 1187, 1196 (codified at 43 U.S.C. § 485h(e)).19 For purposes of this case, water service contracts are practically identical to repayment contracts. "Water rights settlement contracts" and "exchange contracts" are not defined by statute. "Exchange contracts" are the type held here by the Exchange Contractors, in which a holder of water rights in one river exchanges those rights for water rights from another source, as the Exchange Contractors exchanged their historical rights to water from the San Joaquin River for water from the Sacramento River and its tributaries. Exchange contracts are a subset of water rights settlement contracts. See Westlands I, 805 F. Supp. at 1504. The opinion deciding the motion for preliminary injunction notes that the term "contract" in the Westlands Contract is defined by federal reclamation law: any repayment or water service contract between the United States and a district providing for the payment of construction charges to the United States including normal operation, maintenance, and replacement costs pursuant to Federal Reclamation law. 43 U.S.C. § 390bb(1). Closer scrutiny reveals this definition is applicable only to the term "contract" as used in the Reclamation Reform Act of 1982, which amended the procedures and requirements for new and amended water service contracts and repayment contracts. The Reclamation Reform Act of 1982 does not appear to have any impact on water rights settlement contracts or exchange contracts. The term "contracts" must be interpreted in conjunction with the term "available water supply." Analysis of the term "available water supply" excludes a fortiori the Exchange Contractors' prior contractual water entitlement, which must be satisfied before calculation of the available water supply under p 11(a) of the Westlands Contract or p 7(b) of the San Benito Contract. If the Exchange Contractors' entitlement to water is excluded from the calculation of the available water supply, then the Exchange Contract must also be excluded from the meaning of the term "contracts" in p 11(a) of the Westlands Contract. Any other conclusion would give p 11(a) a novel meaning that no party proposes. The only reasonable definition of "contracts" in the context of p 11(a) is repayment or water service contracts, not prior water-rights settlement contracts or exchange contracts that concern pre-CVP water rights. Placement of the term "contracts" in p 11(a) of the Westlands Contract following the term "available water supply," all prior to the phrase "among the District [Westlands] and others entitled under the then existing contracts to receive water from the San Luis Unit" is language that expressly limits the apportionment formula to Westlands and other contractors who have existing contracts to receive water from the San Luis Unit. The Districts seek to apply the apportionment formula to the Exchange Contractors, to place them in the same category as Westlands, San Benito, and other San Luis Unit water service contractors. The Exchange Contractors have no direct (express) contract to receive water from the San Luis Unit. By a contract entered over two decades before the creation of the San Luis Unit, the Exchange Contractors are entitled to CVP water from the Sacramento River and its tributaries to be provided by the Bureau according to the terms of the Exchange Contract. Since the creation of the San Luis Unit, water to satisfy this obligation has been furnished from the San Luis Unit, but it has never been part of the "available water supply" of the San Luis Unit. This language is not susceptible to another meaning. In light of the definition of "available water supply" and "contract" in p 11(a) of the Westlands Contract, Westlands has no contractual entitlement to equal apportionment of San Luis Unit water with the Exchange Contractors, to the contrary: the Westlands Contract recognizes the superior right of the Exchange Contractors to receive their contracted-for CVP water before any CVP water is available to the San Luis Unit. Westlands has produced no evidence of trade usage, course of performance, or course of dealing to "clarify" that the term "contracts" has any other meaning in the context of p 11(a). Paragraph 11(a) provides that the Bureau may apportion water among San Luis Unit recipients when a shortage occurs "from any cause." Fulfilling the pre-existing right of the Exchange Contractors to water from the Sacramento River and its tributaries is one such cause. c. The Term "Customers of the United States" in the San Benito Contract "Customer of the United States" is not defined in the San Benito Contract. The common definition of "customer" has been applied: Generally, a "customer" is a "buyer, purchaser, consumer or patron," or "one that purchases usually systematically or frequently a commodity or service." Westlands III, 864 F. Supp. at 1545-46 (quoting Black's Law Dictionary at 386 (6th ed. 1990), and Webster's New Collegiate Dictionary at 278 (1981)). While contractors with repayment contracts or water service contracts purchase CVP water from the Bureau on a yearly basis, the Exchange Contractors pay no money for CVP water. Districts with repayment or water service contracts are "customers of the United States." The Exchange Contractors are "'suppliers' of water [to], rather than 'customers of the United States."' Id. at 1546. The Districts argue that the Exchange Contractors might still be considered "customers," because they have used their riparian water rights to "purchase" substitute water. This argument ignores the substance of that transaction. It was not the Exchange Contractors who sought CVP water. The [26 ELR 20480] exchange agreement was essential to enable the government to acquire San Joaquin River water to implement expansion of the CVP long before the creation of the San Luis Unit. The Exchange Contractors' benefit from that agreement, by which they surrendered their San Joaquin River water rights, was to obtain an assured supply of substitute water (or, in a worst case scenario, "reserved" water from the San Joaquin River, stored in Millerton Lake). They are still, very much, "suppliers" rather than "customers," a designation that is borne out by the difference in their contractual relation with the Bureau compared with the relations of the Districts. No District offered evidence of any trade usage, course of dealing, or course of performance to alter this conclusion as to the meaning of the term "customers of the United States" as used in p 7(b). In the motion for preliminary injunction, the Districts' burden was to show that "the law and the facts clearly favor their contention that the Bureau acted arbitrarily, capriciously or unreasonably . . . in failing to apportion water with the Exchange Contractors." Westlands III, 864 F. Supp. at 1548. A different standard applies to the Federal Defendants' and the intervenors' motions for summary judgment, but the conclusion is the same. The Federal Defendants and the defendants-in-intervention have shown that there is no genuine issue as to any material fact concerning interpretation of the relevant sections of the Westlands and San Benito contracts. Subjecting the Exchange Contractors to a pro rata water allocation along with the Districts ignores the Exchange Contractors' historical priority to CVP water. It would also violate the Friant contracts. Finally, the Westlands and San Benito Contracts do not unambiguously require that the Exchange Contractors receive a pro rata allocation along with the Districts; to the contrary, the contracts unambiguously respect the Exchange Contractors' priority to CVP water. The Districts appeal to general equitable principles, suggesting that all they seek is equal apportionment of CVP water among all recipients of San Luis Unit water, so they are on an "equal footing" with the Exchange Contractors. In doing so, they imply that CVP water history commenced with the San Luis Unit. There is nothing equitable about the Districts' position. Among water appropriators, "the one first in time is the first in right." Cal.Civil Code § 1414. The Exchange Contractors' rights to CVP Sacramento River water delivered through the Delta-Mendota Canal were perfected long before the existence of the San Luis Unit and the Westlands and San Benito Water Service Contracts. The Memorandum Opinion and Order denying Plaintiffs' Motion for Preliminary Injunction, attached as Appendix "A," and to the extent not inconsistent, is by this reference incorporated in this Memorandum Opinion and Order. For the reasons stated in that opinion and above, the motions for summary judgment of the Federal Defendants and the defendants-in-intervention are GRANTED. (1) The Districts' Motion for Voluntary Dismissal without prejudice is DENIED; (2) The Federal Defendants' Motion for Summary Judgment is GRANTED; (3) The Exchange Contractors' Motion for Summary Judgment is GRANTED; (4) The Friant Intervenors' Motion for Summary Judgment is GRANTED; (5) Judgment shall be entered accordingly. The Federal Defendants shall lodge a proposed Judgment in accordance with this Memorandum Opinion & Order within five (5) days following the date of service of this opinion. 1. The San Joaquin River Exchange Centractors are the Columbia Canal Company, San Luis Canal Company, Central California Irrigation District, and Firebaugh Canal Water District. For ease of reference, the Friant Power Authority is also included in this group, because they are represented by the same counsel. The Friant Power Authority is formed by the Chowchilla Water District, Madera Irrigation District, Orange Cove Irrigation District, Lindsay-Strathmore Irrigation District, Lindmore Irrigation District, Terra Bella Irrigation District, Delano-Earlimart Irrigation District, and Southern San Joaquin Municipal Utility District. 2. The Friant Users Authority is a joint powers agency consisting of 25 irrigation and water districts organized under California law, and is responsible for maintaining the Friant-Kern Canal. The "Friant Intervenors" are three intervening districts: (1) Orange Cove Irrigation District; (2) Shafter-Wasco Irrigation District; and (3) Terra Bella Irrigation District. 3. Not in time, but in the amount of available federal water to meet the Bureau's contractual commitments to CVP water contractors. 4. The Districts also filed suit in 1993, a short water year, challenging the Bureau's 1993 CVP water allocations and implementation of the CVPIA. See Westlands Water District v. United States ("Westlands II"), 850 F. Supp. 1388 (E.D.Cal.1994). 5. On March 14, 1994, the Bureau announced that it could provide the Exchange Contracts with 100% of their contractual supply. 6. When inflow to the Shasta Reservoir is greater than 3,200,000 acre-feet, the Exchange Contractors receive their full allotment: 840,000 acre-feet. When inflow is less than this amount, the Exchange Contractors receive 650,000 acre-feet, approximately 75% of their full allotment. 7. Pub.L. No. 86-488, 74 Stat. 156 (1960). 8. The Delta-Mendota Canal pre-dates the San Luis Unit and is the canal from which the Exchange Contractors have received their substitute water since before the creation of the San Luis Unit. The Comprehensive Plan for the San Luis Unit stated, "The water supply for [the San Luis R]eservoir would be secured almost entirely by pumping through the Delta Mendota [C]anal at such times as the full capacity of that canal is not required for initial Central Valley Project Needs." Friant Intervenors' Statement of Undisputed Facts p 10 (emphasis added); Districts' Separate Statement of Facts p 10 (uncontested that this accurately quotes the Comprehensive Plan). 9. The Complaint and Motion for Preliminary Injunction were filed March 4, 1994. The first motion for summary judgment was filed January 9, 1995. 10. For example, that the Friant contracts foresaw and were designed to prevent the conditions sought to be imposed by plaintiffs was analyzed at some length. See Westlands, 864 F. Supp. at 1546-48. 11. For example, whether apportioning water ignores the substance of the Exchange Contractors' riparian rights, or whether the Districts' asserted interpretations are unreasonable and violate fifty years of water contracting history. (Examples mentioned in the Chisum Declaration.) That Declaration incorporates by reference the Districts' Separate Statement of Facts, suggesting additional issues that require discovery. However, these facts have either been previously determined or present issues of law. 12. The Friant Intervenors do not contest the Exchange Contractors' rights to reserved water and join with the Exchange Contractors and the Bureau in opposing the Districts' claims. 13. None of the Friant water districts are Exchange Contractors. Their interest in protecting the priority of the Exchange Contractors requires explanation: if the Exchange Contractors' priority to water from the Sacramento River is not protected, the Bureau may fail to deliver sufficient water to meets its obligations under the Exchange Contract; in that case, the Exchange Contractors could exercise their reserved water rights in the San Joaquin River. The Friant water districts would be deprived of water to the extent the Exchange Contractors exercised their reserved water rights. 14. The letter states, in part: I told the group [in a conference with the Bureau of Reclamation] that the Friant-Kern area would not go for this expansion of place of use unless the United States recognized a preference for the exchange contract and that water necessary to serve the present service areas of the Contra Costa Canal. . . .To my surprise, my suggestion was somewhat favorably received, and it appears to me that the time is ripe for the procurement of a commitment from the Bureau of Reclamation for the preferential treatment of the exchange contract which we have been seeking. 15. Reading, in part, "I believe this is an excellent opportunity for the Friant water users to obtain binding contractual assurances of the preferential status of the exchange contract." 16. Reading, in part: I confirm to you that it has been, is and will continue to be the policy and practice of the United States to utilize the water available . . . from the Sacramento River . . . to first satisfy the requirements of the Exchange Contract . . . so long as it is legally and reasonably physically possible to satisfy these requirements; provided that the United States has not, and will not voluntarily impair the delivery of water required to satisfy those requirements. 17. The Districts argue, [The] Districts have submitted evidence from which it can be inferred that the contracting parties (Westlands, San Benito, and the United States) did not intend to subordinate the contractual rights of the Districts to those of the Exchange Contractors. The most persuasive evidence from which this intent can be inferred is water service contracts between the United States and other contractors, which specifically subordinate the rights of those other contractors to the rights of the Exchange Contractors. Districts' Supplemental Memorandum at 9:1-6. As the analysis shows, although the Westlands and San Benito Contracts do not use the same language as other water service contracts, they also unambiguously subordinate the rights of the Districts to the rights of the Exchange Contractors. 18. Or "available supply." 19. The CVPIA cites 53 Stat. 1195, while 1 Bureau of Reclamation, U.S. Dep't of Interior, Federal Reclamation and Related Laws Annotated 656 (Richard K. Pelz ed., 1972), cites 53 Stat. 1196. Federal Reclamation and Related Laws Annotated, the source available to the Court, has been followed in this Memorandum Opinion. 26 ELR 20471 | Environmental Law Reporter | copyright © 1996 | All rights reserved |