## Facts

- Stockton East Water District and Central San Joaquin Water Conservation District are California public water agencies supplying municipal, industrial, and agricultural users.
- The United States, acting through the Bureau of Reclamation, operates the Central Valley Project (CVP), including the New Melones Unit.
- In the early 1980s, the districts entered long-term CVP water-delivery contracts entitling them to specified quantities from New Melones.
- In later years (including the mid-1990s and early 2000s), the United States delivered substantially less water than the contract quantities.
- The United States attributed reduced deliveries to competing project demands and legal requirements, including environmental and water-quality obligations and later legislation such as the Central Valley Project Improvement Act (CVPIA).
- The districts sued in the Court of Federal Claims, alleging breach of contract for failure to deliver the promised quantities.
- The Court of Federal Claims entered judgment for the United States on liability, concluding no compensable breach occurred in the years at issue.
- The districts appealed the adverse liability judgment to the Federal Circuit.

## Issues

1. Whether the United States breached the CVP water-delivery contracts by failing to deliver the contract quantities in specified years.
2. Whether contract shortage provisions excused reduced deliveries as resulting from causes “beyond the control of the United States.”
3. Whether later legislation and related regulatory measures barred or excused liability under the sovereign-acts doctrine or an implied authority to reallocate contract water.
4. Whether plaintiffs in a contract action against the United States may plead alternative, even inconsistent, theories of recovery.

## Decision

- The Federal Circuit reversed the liability judgment in part, holding the United States breached the contracts in certain years by failing to deliver the required quantities.
- The court rejected the government’s position that changed statutory or policy priorities created a broad implied authority to reallocate contract water without liability, absent express contractual authorization.
- The court held the shortage/“beyond the control” clause did not excuse shortfalls attributable to discretionary allocation decisions rather than uncontrollable circumstances.
- The court declined to treat the sovereign-acts doctrine as a categorical bar to liability for the shortfalls at issue.
- The case was remanded to the Court of Federal Claims for determination of damages resulting from the breaches.

## Legal Principles

- The United States is bound by its contractual commitments and remains liable in damages for nonperformance unless the contract or applicable law clearly allocates the risk of changed legal or policy conditions to the counterparty.
- Shortage or force-majeure-type clauses excusing performance for causes “beyond the control of the United States” are construed to require proof that the shortfall was due to genuinely uncontrollable conditions, not policy-driven reallocations.
- The sovereign-acts doctrine does not automatically relieve the government of contractual liability; the government must show a public and general sovereign act that actually prevents performance under the contract.
- A plaintiff may plead alternative and even inconsistent theories of recovery in contract litigation.

## Conclusion

The Federal Circuit held that reduced CVP deliveries from the New Melones Unit amounted to contract breaches in certain years and that neither the contracts’ shortage provisions nor the sovereign-acts doctrine categorically excused the United States’ nonperformance; the case was remanded for a damages determination.


Stockton E. Water Dist. v. United States, 583 F.3d 1344 (Fed. Cir. 2009)