In 1979, the U.S. Army Corps of Engineers tested and unveiled New Melones, the last unit to be added to the Central Valley Project (CVP), which had just finished construction at the end of 1978. New Melones Dam inundated a section of the Stanislaus River in the Sierra Nevada foothills to create a 2.4 million acre-feet reservoir upstream of the confluence with the San Joaquin River, located about 50 miles east of Stockton. It also inundated the former mining town of Melones, as well as the original (and much smaller) Melones Dam that was built in 1926 by the Oakdale and South San Joaquin irrigation districts. Although originally authorized in 1944 for flood control purposes, its scope was later expanded in 1962 to include municipal and industrial, irrigation, and environmental uses, as well as power generation.
New Melones was a highly controversial project, generating over one decade of protest. It confronted substantial resistance from environmentalists right to the bitter end, who valiantly tried to save this free-flowing section of the Stanislaus, so that the natural, historical, and recreational resources of this corner of the Mother Lode could be preserved. The most famous story of the Stanislaus is no doubt that of Mark Dubois, who became something of an environmental martyr when he chained himself in protest to a boulder near to the edge of the river — right in the path of the reservoir that was flooding upstream. His objective was to limit the reservoir’s capacity, so that it would extend no further than an elevation of 808 feet. This would have saved the river past Parrott’s Ferry Bridge, preserving a nine-mile segment of whitewater rapids between Parrott’s Ferry and Camp Nine Gorge.
The whole affair was symbolic of the fact that the few decades of fast and furious water development in California were drawing to a close. But the environmentalists and rafters who cared for the river really had no chance against the force of political will that stood behind New Melones. The dam’s opponents had also suffered two notable setbacks: the defeat of Proposition 17 in 1974, and the failure of Senate Bill 1482, which aimed to protect the Stanislaus with a Wild and Scenic designation. And so, despite the controversy aroused by this latecomer water project, New Melones was completed by 1979. By 1983, the reservoir was filled to full capacity, in spite of the efforts of Dubois and allies. In addition to decimating Class III whitewater rapids, Native American sites, and old mining settlements, the reservoir also inundated what was once one of the most significant limestone canyons in the western United States.
The State Water Resources Control Board granted the initial permit for New Melones in 1973, but the Board subjected it to a whole slew of conditions. One of those conditions limited the water only to a narrow list of uses. Another condition was to demonstrate that there were parties who were committed to using the water. In other words, there had to be a specific plan demonstrating that the yield would be put to beneficial use. There was not, shall we say, a storm of would-be contractors breaking down the door. In order to convince the SWRCB that there were such committed parties, Reclamation negotiated delivery deals with the Stockton East and Central San Joaquin water districts and entered into contracts in late 1983 to deliver to the districts a total of 155,000 acre-feet of New Melones water per year.
But New Melones has not generated an impressive yield. The districts were notified that water would be available starting in 1989, but at that point they had not even built a conveyance system to transport the water to their users. The districts did not actually request any water until 1993, a full two decades after the SWRCB’s initial permit. By 1993, though, Congress had just passed the Central Valley Project Improvement Act (CVPIA). We will certainly return to the CVPIA in future posts. For our purposes here, it is enough to say that the CVPIA generally recognized that the CVP has had a detrimental effect on the natural environment, and it provided for future operation of the project that was more sensitive to environmental needs. In particular, it required that a substantial amount of water — 800,000 acre-feet each year — be dedicated to environmental purposes. It also placed the environment as a priority to be considered when allocating water.
There are several reasons why New Melones, in particular, was a natural choice for environmental use. Not only is New Melones the most recently added component to the federal project, but also, it is well-positioned to provide freshwater releases because the Stanislaus River is the last tributary of the San Joaquin before the San Joaquin enters the Delta. In any event, the CVPIA — as well as other developments that aimed at protecting declining fish populations and maintaining water quality in the lower San Joaquin — had a profound effect on how Reclamation has operated this unit.
In the end, Stockton East and Central San Joaquin did not get the vast majority of the water that Reclamation had agreed to set aside for them, because Reclamation had to release more water than anticipated for other purposes. Looking at the ramped up schedule provided for in the contracts, there is a big gap most years between what Reclamation should have allocated and what it actually delivered:
||District Request (af)
(i) The Interim Plan of Operations allocated 50,000 af to the districts during 1997-1998.
(ii) No requests from Central San Joaquin.
(iii) No request from Stockton East.
It is not hard to see why the districts would be upset with the way things have turned out, and there has been years of litigation ongoing over this issue. But in October 2009, the case finally reached a resolution that has stirred interest. The Federal Circuit decided that in light of Reclamation’s dismal track record for delivery, the United States had actually breached the contracts and owed the districts compensation. Even though the breach was carried out to comply with the CVPIA and other obligations to the environment, the court still found that Reclamation was liable — in part because there were years where it appeared there was indeed sufficient supply to fulfill all obligations (including delivery to Stockton East and Central San Joaquin), while still maintaining a reserve of 300,000 acre-feet for power generation.
The United States pointed in vain to a section of the contract that would exempt the government from liability in certain circumstances:
Article 9(a): Nevertheless, if a shortage does occur during any year because of drought, or other causes which, in the opinion of the Contracting Officer, are beyond the control of the United States, no liability shall accrue against the United States …
The United States argued that the CVPIA was an example of something beyond the control of the government, and that under Article 9(a) quoted above, the government should not be required to compensate the districts. But the argument was unsuccessful, and rightly so: the CVPIA may have been beyond the control of the Bureau, but it was within the control of the United States. The CVPIA is, after all, legislation that was enacted by Congress.
There are a number of interesting principles that arise from the analysis that may be relevant in future disputes, but we will not get into them here. And Reclamation has since changed its standard contract language — so Stockton East may not tell us all that much, after all, about how future disputes will be resolved. But the bottom line here is that Reclamation was pretty careless. Admittedly, the contracts were entered into a decade before Congress passed the CVPIA, without the benefit of hindsight that we now enjoy. Still, Reclamation should not have disclaimed risk only for events beyond government control — droughts and natural disasters would be legitimate examples of events that fall into this category — and then turn around and try to make the rather absurd claim that the passage of a new law was an event beyond the control of the very government that passed the law.