Westlands Drainage Settlement: A Primer

June 25, 2015

Westlands Drainage Settlement: A Primer

Background

The Westlands Water District provides water to users in the

Western San Joaquin Valley. It is located within the San

Luis Unit of the U.S. Bureau of Reclamation’s

(“Reclamation”) Central Valley Project. In its initial

feasibility report for the San Luis Unit, Reclamation

indicated that drainage facilities would be required to carry

away waste irrigation water in order to prevent salt

accumulations that would render the soil unfit for irrigation.

For that reason, the San Luis Act, P.L. 86-488, 74 Stat. 156

(1960), which authorized the creation of the San Luis Unit,

prohibited Reclamation from commencing construction of

the San Luis Unit until it either received assurances from

the state of California that it would provide a master

drainage outlet for the San Joaquin Valley or Reclamation

had provided for the construction of an “interceptor drain”

(as described in Reclamation’s feasibility study) that would

meet the drainage requirements of the San Luis Unit. After

the state of California notified Reclamation that it would

not provide a master drain for the San Joaquin Valley,

Reclamation informed Congress that it would make

provision for the construction of the San Luis interceptor

drain.

Reclamation began delivering water to Westlands Water

District (“Westlands”) in 1967, but construction of the

interceptor drain did not begin until 1968. Between 1968

and 1975, Reclamation constructed over 80 miles of the

planned 207 miles of the interceptor drain before halting

construction of the interceptor drain, citing public concerns.

Firebaugh Canal Co. v. United States, 203 F.3d 568, 571

(9th Cir. 2000). The interceptor drain originally was

intended to end at the confluence of the Sacramento and

San Joaquin Rivers Delta with San Francisco Bay (“BayDelta”) near Contra Costa, but in 1975 it reached only to

the Kesterson Reservoir, which originally was meant to

serve as a regulating reservoir. However, beginning in

1964, riders to appropriations legislation prohibited

Reclamation from selecting a terminus for the interceptor

drain until it and the state of California had established

water quality standards for discharge of the drainage water.

As of 1975, no such standards had been established. Thus,

when Reclamation halted construction, Kesterson Reservoir

served as a temporary terminus for the drain.

In 1983, studies revealed embryo deformity and mortality

among waterfowl nesting at Kesterson Reservoir. It was

suspected that these problems were caused by selenium

from soils in Westlands that had been carried to Kesterson

Reservoir through the drain. For that reason, in 1985,

Reclamation announced that it would close Kesterson

Reservoir, and by June 1986 it had plugged the drains in

Westlands and closed the interceptor drain. Since then,

Reclamation has not provided any drainage in Westlands.

Firebaugh Canal/Sumner Peck Ranch

Litigation

After Reclamation closed Kesterson Reservoir and the

interceptor drain, in Firebaugh Canal Co. v. United States,

No. CV-F-88-634 (E.D. Cal.), and Sumner Peck Ranch, Inc.

v. Bureau of Reclamation, No. CV-F-91-048, landowners,

from both within and without the San Luis Unit, filed suit

against Reclamation (Westlands is both a co-defendant and

a cross-claimant against Reclamation) to force Reclamation

to complete a master drain to the Bay-Delta, as envisioned

in Reclamation’s original feasibility study, among other

reasons. In 1995, the United States District Court for the

Eastern District of California found that the San Luis Act

required Reclamation to provide drainage to the San Luis

Unit, and that the appropriations riders had not relieved it of

this duty. The district court therefore ordered Reclamation

to obtain a discharge permit from the California Water

Resources Control Board in order to complete the

interceptor.

In 2000, the United States Court of Appeals for the Ninth

Circuit affirmed the district court’s finding that the San

Luis Act required Reclamation to provide drainage within

the San Luis Unit, and that it had failed to comply with this

duty since it plugged and closed the interceptor drain in

1986. However, the Ninth Circuit concluded that

subsequent acts of Congress had granted Reclamation

discretion in how it would comply with this duty other than

through the interceptor drain envisioned in the original

feasibility study. For that reason, the court concluded, the

district court had overstepped its authority when it required

Reclamation to apply for a discharge permit to complete the

interceptor drain.

The Westlands Settlement Agreement

Following the Ninth Circuit’s decision, the district court

ordered Reclamation to develop a detailed plan of action for

complying with the San Luis Act. In April 2001,

Reclamation submitted its initial plan of action, which

called for an analysis of feasible alternatives for providing

drainage within the San Luis Unit. From these analyses,

Reclamation developed three categories of drainage service

methods: (1) in-valley alternatives; (2) out-of-valley

alternatives; and (3) beneficial use alternatives. Although

Reclamation identified several variations within each of

these alternatives, generally the in-valley alternatives

focused on options that would dispose of the drainage water

within the San Joaquin Valley, the out-of-valley alternatives

involved disposal of drainage water in the Pacific Ocean

and/or the Bay-Delta, and the beneficial use alternatives

would employ reverse osmosis technology to clean the

drainage water, after which the clean water and possibly the

salts removed from the drainage would be put to beneficial

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Westlands Drainage Settlement: A Primer

use. Following several years of planning reports and

environmental analyses, in March 2007 Reclamation issued

a Record of Decision (ROD), in which it selected an option

that would involve a combination of in-valley disposal and

land retirement (i.e., removal of certain land from

agricultural use). In a March 2008 feasibility study,

Reclamation estimated that the total cost of construction of

the drainage plan selected in the ROD would come to $2.69

billion. The feasibility study also identified several

legislative changes that would be necessary to construct the

drainage plan selected by the ROD. These changes included

an increase in appropriations authority, which at that time

was limited to $429 million for construction of the drainage

system. Additionally, the feasibility study determined that

Reclamation would need to seek legislative authorization to

charge water districts less than the full capital, operation,

and maintenance costs associated with the ROD drainage

plan, which otherwise would be required by law, as the

feasibility study found that the districts would not be able to

pay these costs in full. Reclamation submitted the

feasibility study to Congress in July 2008.

Although no legislation has been passed to increase

Reclamation’s construction authorization or to relieve the

water districts of their full payment obligations under

existing law, Reclamation has proceeded with some

portions of the ROD drainage plan. For instance, according

to an April 2015 status report filed with the district court,

Reclamation has constructed a demonstration treatment

plant in the northern portion of the San Luis Unit, which

began test operations in 2014 (although testing later was

suspended due to problems with certain parts of the

bioreactor at the plant).

In April 2015, Reclamation informed the district court that

it and Westlands had completed a draft settlement

agreement, which had been submitted to the Department of

Justice for review. Reclamation did not provide the court

with any specifics; however, a document dated December 6,

2013, titled “Principles of Agreement for a Proposed

Settlement between the United States and Westlands Water

District Regarding Drainage” (“Principles of Agreement”),

purports to lay out several provisions that Reclamation may

intend to include in the draft agreement currently under

review (it appears that Reclamation was involved in

drafting the Principles of Agreement). Among other things,

the Principles of Agreement provide the following:

1. Congress would amend the San Luis Act to

relieve Reclamation of its obligations to provide

drainage in the San Luis Unit;

2. Westlands would assume legal responsibility for

management of drainage water for lands in its

boundaries;

3. Reclamation would relieve Westlands of its

existing capital repayment obligations;

4. Landowners within the Westlands Water District

would be exempt from the Reclamation Reform

Act’s (P.L. 97-293, 96 Stat. 1263 (1982)) acreage

restrictions and full-cost pricing provisions;

5. Reclamation would convert Westlands’ water

service contract to a repayment contract;

6. Reclamation would be allowed to enter into a

water service contract for delivery of water to

Lemoore Naval Air Station;

7. Westlands’ water deliveries would be capped at

75% of the amount allowed under existing

contracts;

8. Westlands would permanently retire 100,000

acres of lands in its service area, including land

that it had acquired through prior settlements, and

that these lands would be used for management of

drain water, renewable energy projects, habitat

restoration projects, or other purposes approved

by Reclamation;

9. Westlands would indemnify Reclamation against

any takings claims by individual landowners

based on Reclamation’s alleged failure to provide

drainage; and

10. Westlands would intervene in Etchegoinberry v.

United States, No. 11-564-L (Fed. Cl.), for

purposes of settlement, and Westlands would be

responsible for any compensation due to

landowners within its service area (this litigation

involves takings claims based on alleged damage

to property caused by the lack of drainage in the

San Luis Unit).

The Principles of Agreement provide that points 1-6 listed

above would be included in enabling legislation (upon

which, presumably, any settlement would be contingent).

However, it is unclear which, if any, of the points listed

above are in the draft settlement agreement under review by

the Department of Justice.

Issues for Congress

As outlined in the Principles of Agreement, it is possible

that some of the identified actions may require

congressional authorization. Additionally, the $2.69 billion

cost for the drainage plan selected in the 2008 ROD was of

concern to many observers at the time and, in part, has led

to the ongoing negotiations. If a settlement agreement is

not reached, Congress may be faced with the decision of

whether to appropriate significant funding for a drainage

solution.

Contrariwise, Congress could relieve Reclamation of its

obligation under the San Luis Act to provide drainage by

amending the act itself. However, if Congress were to do

so, additional questions would remain regarding

Reclamation’s obligations under existing contracts, as well

as its liability to landowners for possible takings.

Travis H. Mallen, tmallen@crs.loc.gov, 7-0796

www.crs.gov | 7-5700

IF10245