San Luis & Delta-Mendota Water Authority v. United States, 672 F.3d 676

Background

CVP and SWP Delta region water conflicts culminate in 9,000 AF contested 2004 releases from Nimbus and New Melones; water agencies challenge Interior’s CVPIA §3406(b)(2) accounting.
Dispute centers on whether 1995 WQCP/ESA obligations water should count against the 800,000 AF primary-b(2) yield, and whether later June 2004 releases were properly categorized.
District court had held Interior discretionary in counting b(2) water but that water used for WQCP/ESA could be charged against 800,000 AF; Ninth Circuit earlier decisions shaped interpretation.
Record includes multiple internal memoranda (2003 Guidance Memo, 2004 Joint Letter) and declarations about purposes of late June 2004 releases.
Water agencies have standing under Article III and APA to challenge Interior’s 2004 accounting decisions; the suit seeks declaratory and injunctive relief.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Interior’s 2004 accounting decision was arbitrary or an abuse of discretion	Water Agencies argue CVPIA prioritizes primary b(2) purposes and that 1995 WQCP/ESA costs must count against 800,000 AF	Interior contends discretion to refrain from counting such water when it furthers WQCP/ESA but not predominantly a primary purpose	No abuse; accounting within statutory discretion; affirmed
Whether the 800,000 AF cap is a hard limit and how to apply the 'predominantly contributes' test	Water Agencies contend any WQCP/ESA water must count against cap unless not serving any primary purpose	Interior may exclude secondary actions if necessary to give hierarchy of CVPIA purposes effect	Hard cap respected; district court’s predominate-contributes standard affirmed; 800,000 AF is binding, but discretion to count depends on primary-purposes contribution
Whether late June 2004 Nimbus/New Melones releases were predominantly for primary purpose	Releases were to meet Delta outflow and Vernalis flow standards; should count toward b(2) if predominantly for primary purposes	Releases were primarily to meet WQCP/ESA obligations or Delta standards with multi-purpose effects; not predominantly primary	Not counted against b(2) in late June 2004; within agency discretion given lack of predominant primary-purpose driver
Whether post-hoc declarations can support agency decision making	Post-hoc rationalizations cannot sustain agency action; record should reflect contemporaneous reasoning	Declarations supplement the record and explain agency's path; not mere post hoc	Record expansion allowed; agency reasoning supported by contemporaneous and supplemental explanations; not an abuse

Key Cases Cited

Westlands Water Dist. v. U.S. Dep't of Interior, 337 F.3d 1092 (9th Cir. 2003) (reaffirmed CVPIA 800,000 AF hierarchy and agency discretion in b(2) accounting)
Central Delta Water Agency v. United States, 306 F.3d 938 (9th Cir. 2002) (established hierarchical interpretation of CVPIA b(2) primary vs secondary uses)
Central Delta Water Agency v. United States, 452 F.3d 1021 (9th Cir. 2006) (clarified agency discretion in balancing 800,000 AF with other obligations)
O'Neill v. United States, 50 F.3d 677 (9th Cir. 1995) (cited for CVPIA context and allocation discretion)