## Facts

- The United States (through the Bureau of Reclamation) and the Westlands Water District entered a 1963 long-term water service contract for the San Luis Unit of the Central Valley Project, providing up to 900,000 acre-feet annually, subject to a shortage clause.
- Article 11(a) limited federal liability for shortages caused by “errors in operation, drought, or any other causes.”
- In 1978, the United States challenged the contract’s validity and required interim contracts that allowed diversions for environmental and other purposes, triggering litigation.
- The litigation ended in a stipulated judgment requiring the United States to “perform the [1963] contract” with Westlands.
- Later, to comply with the Endangered Species Act and the Central Valley Project Improvement Act, Reclamation reduced water allocations to Westlands, resulting in deliveries below the contract’s maximum.
- Landowners and water users within “Area I” of the District moved in federal district court to enforce the stipulated judgment, arguing the government had to deliver the full contractual amount despite ESA/CVPIA constraints.
- The district court denied enforcement, concluding the contract did not require deliveries that would conflict with ESA/CVPIA, and ruled that challenges to particular allocation decisions had to be brought in a separate action.

## Issues

1. Whether the 1963 water service contract, as incorporated into a stipulated judgment requiring performance, obligated the United States to furnish the full contractual quantity when full delivery would conflict with ESA and CVPIA requirements.
2. Whether landowners could contest Reclamation’s specific allocation reductions through a motion to enforce the stipulated judgment, or instead had to pursue review in a separate lawsuit.

## Decision

- The Ninth Circuit affirmed the denial of the motion to enforce the stipulated judgment.
- The court held the contract did not obligate the United States to deliver the full contractual amount when delivery could not be made consistently with ESA and CVPIA requirements.
- The court affirmed that landowners could seek judicial review of the agency actions leading to the contested allocation, but only through a separate suit rather than enforcement proceedings under the prior judgment.

## Legal Principles

- Broad shortage clauses in federal reclamation water service contracts (including language such as “any other causes”) can encompass shortages attributable to lawful compliance with federal statutory duties, including later-enacted environmental legislation.
- A stipulated judgment requiring a party to “perform the contract” generally enforces the contract as written, including its limitations and defenses, and does not create an absolute delivery obligation that overrides federal statutory requirements.
- Challenges to discrete agency allocation decisions affecting contract performance generally must be brought in a separate action (typically under administrative review procedures), not by using a motion to enforce an earlier contract judgment as a substitute for review of agency decisionmaking.

## Conclusion

The Ninth Circuit ruled that the government’s obligation to perform a Central Valley Project water service contract, even as reinforced by a stipulated judgment, did not require full deliveries when reduced allocations were necessary to comply with ESA and CVPIA, and it required challenges to specific allocation decisions to be pursued in a separate lawsuit.


O’Neill v. United States, 50 F.3d 677 (9th Cir. 1995)