Key Points

  • The Ninth Circuit held that Section 4011(a) of the WIIN Act creates a mandatory duty for the Bureau of Reclamation to convert Central Valley Project water service contracts into repayment contracts when a contractor requests it.
  • The court held that the act bars the bureau from modifying non-payment terms during conversion, so it has no discretion to address environmental harms.
  • Because conversion is nondiscretionary, the bureau was not required to conduct contract-specific NEPA review or ESA Section 7 consultation before converting 67 contracts.
  • The panel distinguished NRDC v. Houston and held its reading consistent with the WIIN Act's savings clauses, while stressing that water deliveries remain subject to systemwide environmental review.
  • The panel amended its August 2026 opinion and unanimously denied rehearing en banc; no judge requested a vote.

The U.S. Bureau of Reclamation did not have to conduct contract-specific environmental reviews before converting 67 Central Valley Project water contracts into repayment agreements that run indefinitely, a federal appeals court has ruled, because a 2016 water law requires the agency to make the conversions whenever a water district asks.

A unanimous Ninth Circuit panel affirmed a ruling for the bureau and dozens of California water districts, rejecting claims by the Center for Biological Diversity, Restore the Delta and the Planning and Conservation League. Judge Gabriel P. Sanchez wrote the opinion, joined by Judges Kim McLane Wardlaw and Daniel A. Bress. On Oct. 28, 2026, the panel issued an amended opinion and denied rehearing en banc, or review by the full court, after no judge requested a vote.

The decision allows the bureau to convert contracts under the Water Infrastructure Improvements for the Nation Act, known as the WIIN Act, without a contract-by-contract analysis under the National Environmental Policy Act or consultation with federal wildlife agencies under the Endangered Species Act. The 67 converted contracts provide for delivery of almost three million acre-feet of water a year, and the opinion notes that another 16 contracts have been proposed for conversion.

The Central Valley Project is a federally owned network of dams, canals and power plants that carries water from Northern California to water districts in Central and Southern California. Water service contracts run for a fixed term and expire, while repayment contracts require a district to repay the project's construction costs. Quoting a Federal Circuit decision, the opinion explained that "[t]he repayment contract is analogous to a mortgage, while a water service contract is more like a lease."

The WIIN Act, passed during a prolonged California drought, let districts convert to repayment contracts and prepay construction costs in a lump sum or within three years, with the money funding water storage. Converted contracts last indefinitely as long as the district keeps paying. Between 2020 and 2021 the bureau converted 67 contracts, leaving delivery terms unchanged, without preparing an environmental impact statement or consulting the wildlife agencies.

The environmental groups sued, arguing that the water secured by the contracts would harm the Bay-Delta ecosystem and four species of protected fish. U.S. District Judge Jennifer L. Thurston of the Eastern District of California ordered the converting districts joined to the case and then granted summary judgment, a ruling without trial, for the government and the districts. She reasoned that the statute "strips" the bureau of "discretion to modify any water contractual rights other than those related to the financial terms specifically addressed by the WIIN Act."

On appeal, the outcome turned on whether the bureau had any choice in the matter. Under the precedents the panel applied, NEPA requires review only when an agency has "some control over preventing the environmental effects" of its actions, and the ESA requires consultation only when an agency has "'some discretion' to take action for the benefit of a protected species."

The panel read two provisions of the WIIN Act together. One says the Interior secretary "shall convert any water service contract" on request, and the other says converted contracts shall "not modify other water service . . . contractual rights." That second phrase, Sanchez wrote, bars the bureau from changing existing rights "such as the amount of water to be delivered and the manner of delivery."

"Under this reading, Reclamation must convert contracts upon request and cannot consider environmental effects or take actions to benefit protected species when doing so," Sanchez wrote. The environmental groups had not contended that changing payment terms alone could help the environment, the court noted. It added that Congress wanted to reward prepayment, and that "its decision to shield contractors' water rights from agency modification encourages contractors to choose prepayment without fear of risking previously held water service rights and arrangements."

The groups relied on Natural Resources Defense Council v. Houston, a 1998 Ninth Circuit decision holding that the ESA applied to renewals of long-term water service contracts, which the older Reclamation Act directed be made on "mutually agreeable" terms. The WIIN Act uses similar language, but the panel found Houston inapplicable. "While this phrase empowers Reclamation to negotiate some terms and conditions, unlike the Reclamation Act provision at issue in Houston, the WIIN Act expressly limits the scope of those negotiations," Sanchez wrote.

The court also rejected the groups' reading that the bar on modifying "other" rights referred only to rights in separate contracts, holding that the word modifies "contractual rights." The bureau's deletion of renewal and review language from a representative Westlands Water District contract, the court held, was "simply part of the ordinary transformation of a water service contract to a repayment contract."

Nor did the panel's reading conflict with the WIIN Act's savings clauses, which preserve obligations under the ESA and the Central Valley Project Improvement Act, a 1992 law that requires environmental review for contract renewals. The court held that the 1992 law speaks only to renewals, not conversions, and that no ESA consultation duty attaches to conversions in the first place. The WIIN Act "did not impliedly repeal the ESA, NEPA or CVPIA," the court wrote, because it addressed a subject those statutes do not touch.

Sanchez stressed that the ruling has limits. "Our holding is limited and is not meant to suggest that the water deliveries secured by the converted repayment contracts are no longer subject to environmental review," he wrote. Those deliveries, he wrote, "remain subject to the environmental impact statements and biological opinions that Reclamation must prepare and follow as part of its operation of the Central Valley Project." If that systemwide review reveals harm, the bureau may cut deliveries, though it "may not modify any contractual right" through the conversion process itself.

E. Robert Wright of the Law Office of E. Robert Wright argued for the environmental groups. Angela N. Ellis of the Justice Department's Environment and Natural Resources Division argued for the federal government. Thane D. Somerville of Morisset Schlosser Jozwiak & Somerville represented the Hoopa Valley Tribe as a friend of the court.

The amended opinion amends the panel's original decision of Aug. 17, 2026. The order denying rehearing states that "no further petitions for rehearing or rehearing en banc will be entertained." Another 16 contracts have been proposed for conversion, according to the opinion.