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<br />the United States. In 1963, Westlands entered a con-
<br />tract with the United States to build the San Luis Unit of
<br />the Central Valley Project (CVP), the largest feder..,1
<br />water reclamation project. The contract provided that
<br />Westlands would receive 900;000 acre-feet annually,
<br />subject to an exemption limiting the United States'
<br />liability for shortages caused by "errors in operation,
<br />drought, or any other causes." (Article 11) In 1978, the
<br />government maintained the contract was invalid. From
<br />1978 until 1986, the U.S. required Westlands to enter
<br />interim contracts permitting the U.S. to divert water from
<br />Westland's Area I for. various reasons. In 1986, the
<br />parties stipulated that the U.S. would perform in
<br />accordance with the 1963 contract terms.
<br />
<br />In 1990, the Sacramento River winter-run chinook
<br />salmon was listed as a threatened species under the
<br />Endangered Species Act (ESA). The National Marine
<br />Fisheries Service issued a biologicai opinion concluding
<br />that continued operation of the CVP in 1992-93 would
<br />likely jeopardize the species. The opinion noted that
<br />jeopardy could be avoided If certain prescribed
<br />alternatives were adopted for CVP operations.
<br />Subsequently, the delta smelt, indigenous to the
<br />Sacramento-San Joaquin Delta, was listed as
<br />threatened. In 1992, Congress enacted the Central
<br />Valley Project Improvement Act (CVPIA) to establish "a
<br />reasonable balance among competing demands for use
<br />of CVP water, including the requirements of fish and
<br />wildlife, agricultural, municipal and industrial and power
<br />contractors." It dedicated 800,000 acre-feet of CVP
<br />annual yield to meet obligations for fish, wildlife and
<br />habitat restoration under state and federal law.
<br />
<br />In 1993, the Bureau of Reclamation announced its
<br />initial allocation of CVP water for 1993. Westlands and
<br />other agricuitural contractors south of the Sacramento-
<br />San Joaquin Delta were to receive only 50% of their
<br />contractual water supply. Area I then filed a motion to
<br />enforce the 1986 stipulated judgment.
<br />
<br />On appeal, the Ninth Circuit found that "any other
<br />causes" of shortage under Article 11 of the contract
<br />excusing U.S. nonperformance include situations "where
<br />a reduction is mandated by statute." The court deciined
<br />to find an overriding warranty of availability in extrinsic
<br />evidence of expectations of water users or verbal
<br />assurances of delivery by "high government officials." A
<br />concurring opinion stressed that the contract was "the
<br />product of bargaining by sophisticated parties who
<br />O'Neill v. United States foresaw that circumstances might limit the government's
<br />ability to deliver the contracted quantity of water in the
<br />The Ninth Circuit Court of Appeals has rejected future." The decision also upheld the propriety of the
<br />Westlands Water District's attempt to enforce full challenge to federal agencies' compliance with the
<br />contractual deliveries under its long-term contract with CVPIA and ESA being brought in a separate suit.
<br />"!'-
<br />The WESTERN STATES WATER COUNCIL Is an organization of representatives appointed by the Governors
<br />of l1)ember states. Arizona, California, Colorado, HawaII, Idaho, Nevada, New Mexico, North Dakota, Oregon,
<br />South Dakota, Texas, Utah, and Wyoming - and associate member states Alaska, Montana and Washington.
<br />
<br />with the spending resolution recommendations, resulting
<br />in the budget reconciliation. Assuming the budget
<br />reconciliation is approved, a conference committee
<br />would again have to address differences between House
<br />and Senate reconciliation measures, and then a floor
<br />vote on the conference committee product would be
<br />necessary. The final hurdle would be the distinct
<br />possibility of a presidentiai veto.
<br />
<br />ENERGYIWATER RESOURCES
<br />
<br />Power Marketing Administrations
<br />
<br />In a May 10 letter to Senator Pete Domenici (R-NM),
<br />Chairman of the Senate Budget Committee, twenty-five
<br />organizations representing a wide array of interests
<br />expressed opposition to the sale of federal power
<br />marketing administrations (PMAs). Among those signing
<br />the letter were representatives of the National Water
<br />Resources Association, National Rural Electric
<br />Cooperative Association, American Public Power
<br />Association, National Farmers Union, National
<br />. Consumers League, United States Conference of
<br />Mayors, Water Resources Congress, National
<br />Waterways Conference, Environmental Action and the
<br />Economic Policy Institute.
<br />
<br />The letter states, "Power sales by these PMA's cover
<br />all their operating costs and repay the facilities'
<br />construction cOsts, with interest." Further, "...a March
<br />. 1995. Congressional Research Service Report (CRS)
<br />shows that the PMAs provide a long-term source of
<br />revenue to the U.S. Treasury. This revenue is financed
<br />by the customers of over 1,100 not-for-profit, rural and
<br />municipal consumer-owned utilities that pay their own
<br />way by purchasing power from the PMAs. These
<br />consumers cannot afford a government that raises their
<br />electric rates in what amounts to nothing more than a
<br />hidden tax increase."
<br />
<br />The letter continues, "We are aiso concerned about
<br />the...multi-purpose nature of the dams from which the
<br />PMAs market their power. These dams... provide flood
<br />control, water and power supply and environmental
<br />benefits. They also safeguard recreation and navigation
<br />activities. We do not believe that a private, profit-driven
<br />entity can become a full partner in these interests at an
<br />almost certain 1055 of revenue".
<br />
<br />LITIGATION
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