California Water Law and Related Legal Authority Affecting the Sacramento-San Joaquin Delta

Congressional research reportMar 9, 2009

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Prepared for Members and Committees of Congress

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The Sacramento-San Joaquin River Delta (the Delta) is formed by the confluence of the northflowing San Joaquin River, the south-flowing Sacramento River, and the San Francisco Bay, to

which the delta of the two rivers is linked. The 1,153-square-mile estuary is the hub of

California’s extensive water supply system. The Delta provides water to more than 25 million

people and habitat for various species, including the threatened delta smelt and endangered

chinook salmon. As such, the Delta has endured decades of competing water demands. During

this time, the Delta ecosystem has experienced environmental degradation, increasing regional

water demands, and a decrease in reliable water supplies for urban, agricultural, and natural areas.

The numerous stakeholders associated with the Delta include agricultural, urban, industrial,

environmental, and recreational interests. In order to provide water to the various users, two

major water projects were created: the federal Central Valley Project and the State Water Project.

Concerns have been raised about the effectiveness of the regulation of these projects and the

Delta waters generally, both to meet the needs of water users and to avoid environmental impacts

to water quality and species. Specifically, in late 2007, a federal judge ordered a reduction in the

amount of water pumped out of the Delta in order to preserve the habitat of endangered fish in the

Delta, meaning less water would be available for areas that depend on the water projects for their

water supply. In 2008, those restrictions were continued under a newly issued biological opinion,

and another judicial decision was issued that indicates similar restrictions may be required for

other species. Furthermore, Governor Schwarzenegger declared a state of drought for the entire

State of California in June 2008 and declared a state of emergency in California due to drought in

February 2009. These events pose significant impacts on California’s water supply. As a matter of

overseeing the impacts of water flow and water management in the Delta, the House Natural

Resources Committee held a subcommittee hearing on the effect conditions in the Delta have on

the endangered species there in 2008.

This report provides a summary of California’s dual system of water rights, which includes

riparian and prior appropriation doctrines, and regulation of those rights by the state. In particular,

the report discusses considerations used in the process of regulating water usage, including the

public trust doctrine, the rule of beneficial use, and the no injury rule. The report discusses the

California water projects, the projects’ rights, and access to water by other users. Significant court

decisions and relevant statutes that affect the Delta are explained as well.

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Introduction ..................................................................................................................................... 1

California Water Rights ................................................................................................................... 1

Acquiring Water Rights............................................................................................................. 1

Priority of Water Rights ............................................................................................................ 2

Modification of Water Rights and the No Injury Rule .............................................................. 2

Rule of Reasonable Use and the Public Trust Doctrine ............................................................ 2

The Water Projects and Water Rights .............................................................................................. 3

Settlement Contracts ................................................................................................................. 3

Exchange Contracts................................................................................................................... 4

Contractual Rights to Water ...................................................................................................... 4

Regulation of Water Rights and Water Quality in the Delta............................................................ 5

Water Rights Regulation ........................................................................................................... 5

Water Quality Oversight............................................................................................................ 5

Litigation of Water Rights and Management in the Delta ............................................................... 6

The Racanelli Decision ............................................................................................................. 6

The State Water Resources Control Board Cases...................................................................... 8

Selected Litigation Regarding Flow Reductions in the Delta ................................................... 8

Congressional Authority to Act and Current Interest ...................................................................... 9

Author Contact Information .......................................................................................................... 10

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The Sacramento-San Joaquin River Delta (the Delta) is formed by the confluence of the northflowing San Joaquin River, the south-flowing Sacramento River, and the San Francisco Bay, to

which the delta of the two rivers is linked. The 1,153-square-mile estuary is the hub of

California’s extensive water supply system.1 The Delta provides water to more than 25 million

people and habitat for various species, including the threatened delta smelt and endangered

chinook salmon. As such, the Delta has endured decades of competing water demands. During

this time, the Delta ecosystem has experienced environmental degradation, increasing regional

water demands, and a decrease in reliable water supplies for urban, agricultural, and natural areas.

Numerous categories of stakeholders have an interest in water flowing through the Delta,

including agricultural, urban, industrial, environmental, and recreational interests. In 2007, a

federal court ordered flow restrictions on the Delta water projects to prevent the negative effect

water diversions were having on species in the Delta ecosystem until the U.S. Fish and Wildlife

Service completed consultations and issued a new biological opinion in late 2008.2 This decision

required federal and state entities to reduce pumping water in two large water projects and

therefore has had significant effects on the water supply of California. In a July 2008 decision,

the same judge indicated that restrictive measures may also be necessary for another species.3

In 1959, the state enacted the Delta Protection Act, which provided a specific law to govern Delta

waters based on the unique problems posed by the Delta.4 The Delta Protection Act provides for

protections against the two major problems—salinity control and adequate supply.5 These

problems stem from an “uneven distribution of water resources.”6 Quantitatively, the areas in

California in which demand for water is highest are also the areas in which the supply is lowest,

causing shortages for users—largely south of the Delta. Qualitatively, the Delta is affected by

saltwater intrusion, caused by the inflow of saline tidal waters and the diversion of fresh water

that would normally counterbalance the inflow. The Delta and its ecosystem are also affected by

contaminants from urban and agricultural runoff.

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California law provides for several limits on the use of the state’s waters. Because the waters of

California are considered to be “the property of the people of the State,” anyone wishing to use

those waters must acquire a right to do so.7 California follows a dual system of water rights,

General information about the Delta can be found at http://baydeltaoffice.water.ca.gov/.

Natural Resources Defense Council v. Kempthorne, No. 1:05-cv-01207-OWW-GSA (E.D. Cal. 2007). This decision

is often referred to as the Wanger decision.

See Pacific Coast Federation of Fisherman’s Associations v. Gutierrez, No. 06-0245 (E.D. Cal. July 18, 2008).

Cal. Water Code § 12200 et seq.

Cal. Water Code § 12202.

United States v. State Water Resources Control Board (Racanelli), 182 Cal. App. 3d 82, 98 (Cal. Ct. App. 1986).

Cal. Water Code § 102. See National Audubon Society v. Superior Court, 33 Cal. 3d 419, 441 (Cal. 1983).

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recognizing both the riparian and prior appropriation doctrines.8 Under the riparian doctrine, a

person who owns land that borders a watercourse has the right to make reasonable use of the

water on that land. Under the prior appropriation doctrine, a person who diverts water from a

watercourse (regardless of his location relative thereto) and makes reasonable and beneficial use

of the water acquires a right to that use of the water. Before exercising the right to use the water,

appropriative users must obtain permission from the state through a permit system run by the

State Water Resources Control Board (the Board).

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California law provides for a hierarchy of these rights for users sharing water that may not meet

all users’ needs.9 Because riparian users share the rights to the water with other riparians, no one

riparian user’s right is considered superior to another’s riparian right. Therefore, riparian rights

are reduced proportionally in times of shortage. With regard to appropriative rights, the person’s

right that was appropriated first is considered superior to later appropriators’ rights to the water.

Between the two types of rights, users with riparian rights generally have superior claims to those

who have appropriative rights.10 That is, riparians generally may fill their needs before

appropriators, and appropriators fill their needs according to the order in which they secured the

right to the water.11

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Water rights may be modified under certain circumstances. If a right is acquired by appropriation,

it is approved for a specific place and purpose of use, which can be changed only with the

Board’s permission.12 Under what is known as the no injury rule, the Board cannot approve

changes to water permits unless “the change will not operate to the injury of any legal user of the

water involved.”13

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Under its constitutional and statutory rules, the state requires that water users, regardless of the

manner by which they acquired their rights, are all limited to uses that are reasonable and for a

beneficial purpose.14 Courts have upheld this limitation, known as the rule of reasonable use, as a

valid exercise of the state’s police power to regulate water for public benefit.15 The California

See In re Determination of Rights to Water of Hallett Creek Stream System, 44 Cal. 3d 448, 455 (Cal. 1988); National

Audubon Society v. Superior Court, 33 Cal. 3d 419, 441 (Cal. 1983); People v. Shirokow, 26 Cal. 3d 301, 307 (Cal.

1980).

These rules are specific to California. Rules in other western states may differ.

While users acquire appropriative rights through a permit system, riparian users are required to file a statement with

the Board that declares their right. With regard to later riparians, the California Supreme Court has noted that an

appropriator may have a superior right to a riparian if the appropriator acquires his right before the riparian secures his

right in the land. See Lux v. Haggin, 69 Cal. 255, 344-49 (Cal. 1844).

See Meridian, Ltd. v. San Francisco, 13 Cal. 2d 424, 445-47 (Cal. 1939).

Cal. Water Code § 1701.

Cal. Water Code § 1702. See also Kidd v. Laird, 15 Cal. 161 (Cal. 1860); Hill v. Smith, 27 Cal. 476 (Cal. 1865).

Cal. Const. Art. X, § 2; Cal. Water Code § 100.

See People ex rel. State Water Resources Control Board v. Forni, 54 Cal. App. 3d 743, 753 (Cal. Ct. App. 1976);

(continued...)

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Supreme Court recognized the public trust doctrine as a further limitation on water rights. The

court held that the state acts as a trustee for the people of the state with a duty to protect the

waters, which are held in a public trust, from harmful diversions by water rights users.16

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Two major water projects transfer water throughout the state. The Central Valley Project (CVP) is

a federal project run by the U.S. Bureau of Reclamation (Reclamation). The State Water Project

(SWP) is run by the California Department of Water Resources (DWR). The projects “divert

water from the rivers that flow into the Delta and store the water in reservoirs. Quantities of this

stored water are periodically released into the Delta. Pumps situated at the southern edge of the

Delta eventually lift the water into canals for transport south.... ”17

Both projects acquired appropriative rights, receiving several permits at various points between

1927 and 1967.18 Section 8 of the Reclamation Act of 190219 requires Reclamation to comply

with state law, including requiring Reclamation to acquire water rights for the CVP.20 If

Reclamation found it necessary to take the water rights of other users, those users would be

entitled to just compensation.21 In some cases, Reclamation found it necessary to enter into

“settlement” or “exchange” contracts with water users who had rights pre-dating the CVP.

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In 1964, in order to avoid legal problems that might arise if the CVP could not operate without

interfering with other users’ water rights claims to the Sacramento River, Reclamation negotiated

settlement contracts with users who held water rights predating the CVP (often referred to as

Settlement Contractors). The settlement contracts provided an agreed upon allocation of water

(...continued)

Chow v. City of Santa Barbara, 217 Cal. 673, 701-03 (Cal. 1933).

National Audubon Society, 33 Cal. 3d 419, 445-48 (Cal. 1983). The public trust doctrine continues to be invoked in

the dispute over Delta water regulation. In March 2008, two environmental groups filed a petition with the Board

alleging that the Board is violating the public trust doctrine and state and federal laws “by allowing clearly excessive

export of ... water.” Press Release, California Water Impact Network, Public Trust, Unreasonable Use Complaint Filed

With State Board (March 19, 2008).

Racanelli, 182 Cal. App. 3d at 97.

For a discussion of the projects’ permit process, see Racanelli, 182 Cal. App. 3d at 106.

43 U.S.C. § 383.

The U.S. Supreme Court has held that Section 8 “requires the Secretary to comply with state law in the ‘control,

appropriation, use or distribution of water’” by a federal project. See California v. United States, 438 U.S. 645, 674-75

(1978). This requirement to comply with state law applied so long as the conditions imposed by state law were “not

inconsistent with clear congressional directives respecting the project.” See id. at 670-73; see also Ivanhoe Irrig. Dist.

v. McCracken, 357 U.S. 275 (1958); City of Fresno v. California, 372 U.S. 627 (1963). In the context of the CVP, a

court has held that the permit conditions were consistent with the project purpose of river regulation. Racanelli, 182

Cal. App. 3d at 135. See also United States v. State Water Resources Control Board, 694 F.2d 1171 (9th Cir. 1982).

See Int’l Paper Co. v. United States, 282 U.S. 399, 407 (1931); United States v. Gerlach Live Stock Co., 339 U.S.

725, 736-39 (1950).

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rights to the river. These contracts’ initial term was 40 years and the contracts are currently in the

process of renewal.22

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Exchange contracts provide assurance that the needs of these users whose rights predated the

CVP (often referred to as Exchange Contractors) would be satisfied. In entering these contracts,

the Exchange Contractors sold their water rights on the San Joaquin River to the government,

except for reserved water (water to which the Exchange Contractors held vested rights), and

agreed not to exercise the reserved water rights in exchange for the government delivering

specified amounts of substitute water.23 The terms of the contract are for “a conditional permanent

substitution of water supply. The United States has a right to use the Exchange Contractors’ water

rights ‘so long as, and only so long as, the United States does deliver ... substitute water in

conformity with this contract.’”24 To date, Reclamation has met this obligation by delivering CVP

water. The water is pumped from the Delta and delivered south via the Delta-Mendota Canal.

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Reclamation, therefore, holds legal water rights to the water in the CVP and enters contracts with

other users for water supply.25 The water supplied to users under these contracts is determined by

the terms of the contract, rather than the legal doctrines of water rights. These contracts

incorporate the requirements of federal legislation and are made subject to federal Reclamation

law.26 Specifically, the contracts typically include provisions that address the possibility of water

shortages that may affect users’ access to water provided under their contract.27 Generally, courts

have allowed the government to reduce water allocations provided by contract if the reduction is

made necessary by federal law, but the extent of liability depends on the terms of the specific

contract used in each case.28

For more information on Sacramento River Settlement Contract renewal, see http://www.usbr.gov/mp/cvpia/3404c/

srsc/index.html.

See Westlands Water Dist. v. Patterson, 337 F.3d 1092, 1096-97 (9th Cir. 2003).

Id. at 1097.

For a CVP-wide form of contract (CVP Contract) that Reclamation uses, see http://www.usbr.gov/mp/cvpia/3404c/

lt_contracts/cvpwide_final_form_contract_04-19-04.pdf.

CVP Contract preamble.

See CVP Contract art. 3(b) (“Because the capacity of the Central Valley Project to deliver Project Water has been

constrained in recent years and may be constrained in the future due to many factors including hydrologic conditions

and implementation of Federal and State laws, the likelihood of the Contractor actually receiving the amount of Project

Water set out [in this contract] in any given Year is uncertain.”).

See Stockton E. Water Dist. v. United States, 76 Fed. Cl. 321, 358-59 (Fed. Cl. 2007) (Bureau not liable where

reductions “occurred due to implementation of amendments to federal Reclamation law”); O’Neill v. United States, 50

F.3d 677, 682-83 (9th Cir. 1995) (contract provision relieving government of liability “for any damage ... arising from a

shortage on account of errors in operation, drought, or any other causes” included protection for shortages caused by

“the effects of subsequent Congressional mandates”). But see Tulare Lake Basin Water Storage Dist. v. United States,

49 Fed. Cl. 313 (Fed. Cl. 2001) (holding that the federal government was liable when federal legislation forced

reductions under state contract to which the federal government was not a party). Six years later, the same judge that

wrote the Tulare decision repudiated the physical taking characterization, citing intervening caselaw and noting the

absence of a physical diversion. See Casitas Municipal Water Dist. v. United States, 76 Fed. Cl. 100 (Fed. Cl. 2007).

On appeal, the U.S. Court of Appeals for the Federal Circuit reversed the district court’s holding in Casitas, noting that

the intervening caselaw did not bear on the case. Casitas Municipal Water Dist. v. United States, 543 F.3d 1276 (Fed.

(continued...)

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The State Water Resources Control Board (the Board) is the state agency charged with water

supply and water quality issues. It is authorized to regulate water rights permits and to regulate

water pollution and quality control.29

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Although riparian rights are not a part of the state’s permit system, the Board has the authority to

regulate these rights to ensure beneficial use of the water through adjudications.30 The Board has

two duties when issuing appropriation permits: to determine the availability of surplus water, and

to protect the public interest. A person who seeks to appropriate water must apply to the Board for

a permit.31 The Board’s review of that application “must first determine whether surplus water is

available, a decision requiring an examination of prior riparian and appropriative rights.”32

Appropriation then may be made “for beneficial purposes of unappropriated water under such

terms and conditions as in [the Board’s] judgment will best develop, conserve, and utilize in the

public interest the water sought to be appropriated.”33 To determine whether an appropriation

would be in the public interest, the Board must consider “any general or coordinated plan ...

toward the control, protection, development, utilization, and conservation of the water resources

of the State” and the relative benefit of “all beneficial uses of the water concerned.”34

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The Board also has responsibility to regulate water quality. Under the federal Clean Water Act

(CWA), the states must adhere to certain federal standards regarding water quality.35 Although the

federal law may not apply to salinity intrusion as a discharged pollutant, the law provides

protections under water quality provisions.36 Specifically, the CWA recognizes saltwater intrusion

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Cir. 2008).

Cal. Water Code § 179.

See Cal. Water Code § 2501; see, e.g., In re Waters of Long Valley Creek Stream System, 25 Cal. 3d 339 (Cal.

1979).

See Cal. Water Code § 1375; People v. Shirokow, 26 Cal. 3d 301, 308 (Cal. 1980).

Racanelli, 182 Cal. App. 3d at 102-03 (citing Temescal Water Co. v. Dept. Public Works, 44 Cal. 2d 90 (Cal. 1955)).