California water providers clash with feds over breached contracts

McClatchy NewspapersJanuary 4, 2013 

— Attorneys for two Stockton, Calif.-area water districts urged a judge Friday to order the federal government to pay tens of millions of dollars for failing to deliver promised water from New Melones Lake.

The government says it owes nothing.

In a climactic moment for the high-stakes and long-running environmental case, water district and Justice Department lawyers clashed over what the government may owe for breaching a contract. The judge’s answer, which could come relatively soon, will be closely watched by farmers throughout the West who are periodically frustrated by sometimes unreliable federal water deliveries.

“Deliveries did not occur, and this threw a huge monkey wrench into the district’s plans,” declared Jennifer A. Spaletta, an attorney for the Stockton East Water District. “I don’t think there’s any question that the lack of (water) delivery caused Stockton East damages.”

Located in the Sierra Nevada foothills, New Melones Lake provides water to the region for drinking and irrigation.

Stockton East and the neighboring Central San Joaquin Water Conservation District argue they are owed a total of about $43 million because the federal Bureau of Reclamation breached the districts’ New Melones water delivery contracts. The districts say the breached contracts cost them money because they had to buy replacement water and built infrastructure, such as tunnels and pipelines, in the expectation of receiving irrigation supplies.

“There’s no question that Stockton East made a very considerable investment to take New Melones water,” said U.S. Court of Federal Claims Judge Christine Odell Cook Miller.

The claims court initially dismissed the water districts’ lawsuit in 2007, three years after it was filed. But in 2009, the U.S. Court of Appeals for the Federal Circuit reversed the trial judge and concluded that the Bureau of Reclamation had breached the water contracts between 1999 and 2004. The contracts called for the federal agency to deliver 155,000 acre-feet of New Melones water each year to these water districts.

A breached contract, though, does not necessarily mean the government is on the hook. Now, the judge must figure out what damages, if any, can be attributed to the breached contract and whether any of these damages might have been foreseeable, among other issues.

Justice Department attorneys, in a case that has occasionally taken a sharp-elbowed turn, argued Friday that farmers were never actually hurt by the lack of water deliveries.

“Stockton East did not need and would not have used more irrigation water between 1999 and 2004,” Justice Department attorney David A. Harrington stated.

Harrington called the Stockton East district’s model for calculating the extent of damages “unreliable” and “poorly supported,” and further argued that “we do not have any expert analysis” of what real water demand would have been had the water been available.

“The United States has attacked every aspect of Stockton East’s case, every witness,” Spaletta said.

The Stockton East Water District covers about 116,000 acres in eastern San Joaquin County, including the city of Stockton. The Central San Joaquin district, also based in Stockton, serves farmers in the county. The case being considered now has been confined only to potential agricultural damages, and does not cover urban water use.

Miller has said she expects to retire by the end of February, suggesting that her decision on damages should be finished by then. Her decision could still be appealed, by either party.

Email: mdoyle@mcclatchydc.com; Twitter: @MichaelDoyle10

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