Free Notice (Other) - District Court of Federal Claims - federal

OCT. 3,2006 2:13PM
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Case 1:01-cv-00591-FMA

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Filed 10/05/2006

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FILED
OCT
2 2006

No. 05y168L

Filed: October 2, 2006

U.S. COURT OF FEDERAL CLAIMS,

) Contract: (1) Costs associated with the

) constrction of a fish passage facilty
) that was built to remedy the injurious
) effects resulting from the operation of

CASITAS MU1CIP AL WATER
D1STRICT,

) the water reclamation proj ect constitute

) operation and maintenance expenses.

) (2) The provision in the pares'

Plaintiff,
v.

) contract entitling plaintiff to "the
) perpetual right to use all water that

) becomes available though the cony
) strction and operation of the project"
) merely recites a condition of the

THE UNED STATES,

pares'

Defendat.

) exchange and imposes no afffrmative

) obligation on the governent to
) guarantee plaintiffs water supply.
) Sovereign Acts Defense: (1) Where an

) agency action has no effect on the

) goverent's economic interests as a

) contractor, the governent may
) successfully invoke the sovereig acts

) defense. (2) The fact that a govem-

) ment agency had available to it
) alternatives to the action it ultimately

) took in the implementatiQn of a statute

) does not preclude the governent,
) acting in its role of contractor, from
) raising an impossibilty defense.

Roger J. Marzla and Nancie G. Mamilla, Marlla & Marlla,
Wasmngton, DC, counsel for plaintiff.

Kathleen L. Doster and James D. Gette. with whom was Assistant Attorney
General Sue Ellen Wooldrdge. U. S. Deparent ofJustice, EnviionnJ,ent and Natual

Resources Division, Natual Resources Section, Washington, DC, counsel for
defendant.

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OPINON
WISE, Judge.
Plaintiff, Casitas Muncipal Water Distrct (fonnerly the Ventua River
Muncipal Water Distrct), entered into a contract wiil the United States Bureau of Reclamation for the constrction and operation of a water reclamation proj ect on the Ventura River in Ventua County, California ("the Ventua River Project"). The
contract, commonly refered to as the "repayment contract," contemplated the

expenditue by the United States of an agreed-upon ceilig amount of $30.9 millon in constrction costs, which was to be repaid by plaintiff over a period of 40 years. The contract additionally specified that plaintiff would assume all operation and the project £rom the time of its completion. maiiitenance costs of
Plaitiffnow alleges ilat the United States breached ile contract by plaintiff

requirg

to (i) constrct a fish passage facilty at a cost over and above the explicit

ceilig amount on constnction costs contained in the contract, and (ii) provide 3,200 acre-feet of water anually from the Ventura River Project to protect the West Coast
steclhead trout in contravention of

plaitiffs aleged contract right to the use of all

of the river flow for irgation. i The pares have crossed-moved for summar
judgment and the cour heard oral arguent on August 30, 2006. For the reasons set fort below, we grant defendant's motion for summar judgment and denyplaintift s cross-motion.
FACTS
On March 1, 1956, Congress authoried the constrction of

the VeeituraRRver

Project, a facilty designed to supply Veutura County, Californa, with water for the
irgation of fammlaad as well as for other muncipal, domestic, and industral uses.
Pub. L. No. 423,70 Stat. 32 (1956). Pursuat to that grant of

authority, the Secretary

of the Deparent of the Interor, actig though the Bureau of Reclamation
("B OR")

, entered into a contract with pJaintiff ("Casitas" or the "Distrct") on
the

March 7, 1956, providig for the constrction ofthe project. Under the tem1S of

contract, Casitas agreed to "repay to the United States the actual reimbursable

(construction) cost, but not in excess of . . . $27,500,000" (later amended to $30,900,000), and upon completion of the project, to "take over and at its own
expense operate and maintain the project works:' In addition, the contract provided

1 In its complaint, plaitiff also asserts that the requirement thát it divert a porton of the Ventura River Project water supply for fish preservation purposes constitutes a Fift Amendment tag for which just coinpensation is due. Pursuant
to the agreement of the paries) however, resolution of

ths issue has been defeITed

pending a ruling on plaintiff s contract clai.

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that "the District shall have a prior right in peeetuity to the use of

the water made

available by the project works, subject only to existing vested rights," Title to the

project works, however, remained with the United States.
Before constrction of

the proj ect began, aquestion arose concerng the need

for the intallation of a fish passage facilty to accommodate the migration of the West Coast steeThead trout Intially, the Calforna Deparent of Fish and Game maitaied that such a facility should be included as par of the proposed

constrction. The Deparment later changed its position, however, accepting
plaintiff s wrttel1 assurance that "if and when (the) need develops our Distrct will cooperate fully with your Deparent toward the installation of an adequate fish ladder." The project, as completed, thus contaied no such fish passage facilty.
Fort years afer the constrction of

the project, the issue offish protection

agai emerged. On May 27, 1994, the National Marine Fisheries Service ("NMFS")

proposed listing the West Coast steelhead trout as an endangered species, 59 Fed. Reg. 102 (May 27, 1994), a step NMS in fact took on August 18, 1997,62 Fed.
Reg, 159 (Aug. 18, 1997). As a result of under Section 9 of

ths determination, it became unawfu

the Endangered Species Act ("ESA") "for any person subject to the jurisdiction ofthe United States to . . . take any such (endagered) species withi
the United States." 16 U.S.C. § l538(a)(l) (2000).2

the steelhead trout as au endanered species, CasItas itselfwas concerned about the adverse effects of the proj ect s operation on the steelhead population in the watershed and began planning
While NMS was contemplating the classification of

for impending fedèral ESA requirements. Casitas ultimately joined with a number of its local water users to create a Habitat Conseration Plan to nninimi 7.e the water

supply impacts of listing the steelhead trout as an endangered species. This effort

was cut short in December 1998, however, when Casitas received notice that
Californa Trout) Inc.) a

nonprofit envionmental group, intended to file suit chargig

both Casitas and BOR with violatig the ESA by operating the project without a fish

ladder or other means of ensurig the passage of migratig fish and without fish
screen to prevent their capture and entrapment.

To address the concerns raised by Calforna Trout, Casitas requested BOR to seek an informal consultation with NMS pursuant to Section 7 of the ESA to
enlst that agency's techncal assistance in the design, construction, operation. and

2 To "tae" an endangered species as that tenn is used in the ESA mean to
''harass, har, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in such conduct." 16 D.S.C. § 1532(19).
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maitenance of a fish ladder and screen for the project.:: Additionally, Casitas

engaged the servces of consulting engieers to develop a biological assessment of
the stee1head trout in the VentuaRRver watershed, the measures necessar to mitigate the adverse effects of the project on the steellead population in the watershe~ and the design of a fish ladder and screen.
the project addressing, inter alia, the statu of

Over the next several years, Casitas, BOR, and NMS held regular meetigs to develop the design of a fish passage facilty and new operations criteria for the project that would meet the needs of the steelhead trout. The results oftbs process were reflected in a fiàl Biological Opinion issued by NMS on March 31, 2003. That opinion concluded that constrction of the fish passage facilty as designed,
together with a :üew set of operating criteria to facilitate upstream and downstream passage of the fish, were necessar to avoid jeopardy to the steelhead trout.

Thereafter, Casitas adopted a resolutiQn agreeing to implement the

requiements set forth in the Biological Opinon. That resolution, however, was conditioned upon Casitas' s requesting and receivig from BOR a directive orderig the fish passage facilty and to implement the
it to proceed with the constrction of

related operational requírements set forth in the Biological Opinon. BOR provided

such a directive on May 2, 2003, sayig in par as follows:

In order to be exempt from the Take Provisions of the ESA, nondiscretiol1ary terms and conditions have been established in the Opinion) and must be implemented. (Biological

The Casitas Muncipal Water Distrct operátes the Ventura Project on
Reclamation's behalf, pursuant to Contract 14-06-200-5257 as

amended, and as such must also comply with the Teims and
Conditions of

the (Biological Opinon).

In compliance with BOR's directive, Casitas constrcted the fish passage
facilty for a total cost of approximately $9.1 nùllOll and I:plemented the revised

operational criteria contaied in the Biological Opinon, thus incurng an alleged
water loss of

up to 3,200 acre-feet per year. Casita in tu filed suit in ths cour on
damages and/or just compensation pursuant

Januar26, 2005, seeking contract

to the

J Pursuat to Section 7 of the ESA, a "consultation with and with the

the Sectetar" is the fist step in the process of determg whether any action that is authorized, funded, or carried out by a federal agency is "likely to
assistace of

jeopardize the continued existence of any endagered species or theatened species
or resut in the destruction or adverse modification of habitat of such species,"

16 U.S.C. § 1536(a)(2).

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Fift Amendment. As noted above, we lit the discussion below to plaintiffs
breach of contract claim.
DISCUSSION
Plaitiff contends that defendal1t breached the contract in 2003 when it

required Casitas to build a $9.1 millon fish passage facilty and to relinquish a
the project water supply to assist the migratory passage oftlie steeIhead trout in the Ventua River. Defendant counters that the costs at issue here were not work deemed necessary for completion of incured in the perfommance of the project
porton of

and therefore do not fall with the cost reimbursement liitations oftle contract.
Rather, defendart maintains, these costs are more appropriately

regarded as operation

and maintenance expenditues and as such are costs for which plaitiff is
contractually responsible. Defendant additonally argues that the contract imposed
no duty on the goverment to guaantee Casitas' s water supply and that any reduction
in that supply was the result of compliance with the ESA-a sovereign act for

which

the governent in its role as a contrctor is not responsible. We address these
arguents in tu below.

A.
Arcle 7 of the pares' contract (titled "Transfer of Operation and

the project works by the United States, "( t Jhe District agrees to accept, upon the effective date of the
Maitenace to Distrct") provides that upon notice of trsfer of

transfer notice, the care, operation, and maintenance of the tTansferred works and thereaferj without expéuse to the United States, to care for, operate, and maitai the

tranferred works. . . ." Defendant maitains that the costs of constmct'ig the fish passage facility are thus plaintiffs contractual responsibilty since those costs are
properly regarded as operation and maintenance expenditues.

relies on Nampa & Meridian Irgation Distrct v. Bond. 268 U.S. 50 (1925), a case in which, as here, the cour was called upon to address the classification of constrction costs under a repayment contract
In support of this arguent, defendant

between an irgation district and BOR. Therein the Supreme Cour detenned that

costs associated with the constrCtiOl1 of a drainage system built to relieve the
injurous effects of a rise in groiindwater levels caused by th~ irrgation project

constituted operation and maintenance expenditures that were chargeable to the

irrigation district, rather than additional charges for constrction for which the irrigation distrct was not contractualy responsible. In reaching its conclusion, the
Cour drew a distinction between expenditues necessar to constrct an irrgation system and those necessary ''to remedy conditions brought about by the use of the system." rd. at 53. The latter, the Court declared, constituted operating charges. The Cour explaied its reasonig as follows:

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Section 4 of

the Reclamation Extension Act. . . prevents an Î1crease
them after the amount thereofhas

in the constrction charges to be imposed upon the water users
without the consent of a maj ority of

been fixed. But this is far ftom saying that, after the completion of the ingation system in accordance with the original plan in respect ofwhîch the constrction charges were fied, should the need arise to remedy conditions brought about by the use of the system, the governent must bear the expense if a majority of the water users withhold their consent. Expenditues necessar to constrct an ingation system and put it in condition to funish and properly to distribute a supply of water are chargeable to constrction: but, when
the irgatíon system is completed, expenditures made to maintain it

as an effcient going concern, and to operate it effectively to the end

for which it was designed are, at least generally, maitenance and operating expenses. The expenditue in question was not for extensions to new lands, or for changes in or additional to the system

made necessar by faulty origial constrction in violation of
contractul or statutory obligations, but was for the purose of overcoming injurious consequences arising from the nommal and ordinary operation of the completed plant which, so far as appears, was itselfwell constrcted. The fact that the need of draiage for the
distrct lands, already existig or foreseen, had been supplied, and the

cost thereof charged to all the water users as a par of the origial

constrction, by no means compels the conclusion that an
expenditure of the same character, the necessity for which
s11bsequently developed as an incident of operation, is not a proper

opef'ating charge. The same kid of work under one set of facts may be chargeable to constrction and under a different set of facts may
be chargèable to maitenance and operation.

rd. at 53~54 (citations omitted).

As in Nampa. we are concerned here with consction costs that were
Incured afer the irigation proj ect was satisfactorily completed to remedy injurious

effects encountered as a consequence of the project's operation. Except for
differences in the natue of the injuries involved-in Namp~ rising groimdwater levels that impaired the agricultural usefulness of the land, and in the instant case,
impedients to fish passage that theatened the surivabilty of the stee1head

trout-the cases are identicaL. According to Nampa, then the expenditues incured

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by Casjtas in the cOiistrction of the fish passage facilty must be regarded as
operation and maintenance expenses.4

Plaintiff attempts to distinguish Nampa by assering tht the addition of a
strctue that was origially contemplated as par of a reclamation project but neVer

buit (i.e., the fish ladder and screen) is a constrction cost, not an expense of
ordinar maitenance and operation. In support of ths proposition, plaintiff

refers

us to United States v. Fort Belknap Irgation DistrIct, 197 F. Supp. 812, 821

(D. Mont. 1961), in which the court held that the constrction of a new spilway
could not be charged to operation and maitenance but was instead a constrction

charge because the spilway as origial1y plauned and paid for by the in-igation distrcts was never completed and for more than 40 years the system had been operated without a spilway.
We do not believe, however, that Fort Belknap supports plaintiffs position.

The spilway constrction at issue in that case was intended to achieve what had
origiy been planed and paid for but never satisfactorily accomplished in the first
instace-the constrction of a fictionig spilway. Fort Belknap! in other words,

was not about adding a capabilty that may have been discussed but never

constrcted; it was, intead, about remedyig a deficiency in the origial
constmctIon. In simplest ter, Fort Belknap expresses the idea that an irrigation distrct should not have to pay twce for the same constrction.
We do not encounter that situation in the intant case. As the facts reveal,

the intalation of a fish ladder and screen, though discussed, was never planed as
par of the origial constrction and no fuds to S11pport such facilties were ever
expended. At the time of

its transfer to Casitas, then) the project was deemed to be

complete without the addition of a fish ladder and screen, With the passage of tie,

the project proved to be injurious to the steelhead trout. The decision in N ampa declares that such construction costs undertaken to correct the injurious effects of system operation are chargeable as operation and maintenance expenditures.
however, operation of

4 Even if our resolution of

this issue were not dictated by Nampa. we would

be unable to accept plaitis contention that defendant breached the contract by
requirig Casitas to expend $9.1 millon in excess ofits obligation under

the contract to reimburse the United States for constrction costs iip to the maxmum amount of $30.9 millon. The contract provision upon which plaintiff relies (Arcle 5, titled

"Payment By Distrct') does not extend to all constrction costs but rather is
confed to the actual reimbursable costs incured by the United States 'Iin providig the proj ect works." The reimbursement obligation, in other words, extends only to the construction costs incurred in the completion of the project and not to constrction costs that may arse after completion. As to the latter, the contract is silent.

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Plaitiff also cites Central Arizona Water Conservation Distrct v. United States, 32 F. Supp. 2d 11 17 (D. Ar. 1998), to support the proposition that the intallation of a fish ladder and screen qualfies as a constrction cost rather than an
operating and maintenance expendjtu.re- In Central Arzona. the cour held that a

water distrct was not responsible for constrcton costs in excess of the contract's

repayment ceilig amount, notig that the "cost estimates. , , did not take into
cOTisideration the full impact of new envionmental legislation, including the

Endangered Species Act." Id. at 1123. Plaitiff maintais that the quoted text
af its position that construction costs made necessar by the ESA are properly

chargeable to construction rather than maitenance and operation.
We caaot accept plaitiffs arguent. Notably, the cour's obseration

regarding the ESA was not central to its holdig and as such may be disregarded as
dicta. More llport311tly, however, the case does not address the question we nöw

have before us-whether constrction costs incuITed afer project completion to
remedy later -recogiiized opertiona.l hazards are properly chargeable as operation and

maintenance expenditues. The decision in Nampa tells us the answer is yes.

Despite the weight of the case law in the governent's favor, however, plaitiff contends that defendant should be estopped from arguing that the costs in
question are not chargeable to contract constrction because defendant successfully

argued in an earlier suit involvig the same contract that all constrction~related
expendtures were chargeable as contract constrction costs. United States v. Casitas

M1I. Water Dist., 735 F.2d 1373 (9th Cir 1984) (unpublished table decision).
Plaintiff

thus argues that defendant, having prevailed on its origial arguent, should

not now be peetted to do an about-face and argue in favor of a diffent contract
interpretation.

Plaintiff is of course correct that defendaait ffaynot asser a litigatigposition
contrar to a positio11 on which it had prevailed in an earlier litigation between the
same paries involvig the same subject matter. Data Gen. Corp. v. Johnson. 78 F.3 d
l556, 1565 (Fed. Cir, 1996) (precludIng a par

who "successf'Ullyurges a parcular

position in a legal proceeding. . . from tag a contrry position in a subsequent
proceedig where its il1terests have cllanged"). The instat case, however, is not one

in which defendant is takng up a position contrar to the one on which it had earlier prevailed.

In the 1984 litigation, the United States sought a declaratory judgment to
resolve 1le question of whether the costs of relocatig a water main, initially placed

by the United States alongside a state highway pursuant to a state-granted
encroachment pemrt and later moved to accommodate highway

reconstrction work,

were chargeable, as the United States contended, as construction costs for which
Casitas would be liab ie (up to the contractual

limt of$30.9 millon). Casitas argued

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that the costs should not be classified as construction costs under the contract since they were incurred afer Casitas had received notice of the contract's final reimburable cost. 5 Holding that such costs were indeed chargeable to Casitas, the Ninth Circuit stated:
Regardless of

how one characteres the relocation costs, the

enablig legislation and the contract indicate that both Congress and the parties intended that CasItas pay al of the costs connected with the project. Arcle 9 of the contract clearly states, ''te District's constrction obHgations shall embrace all expenditues ofwhatsoever kind in connection with. growwng out of. or resulting from work perfol1ned in connection with the project."

Casitas, No. 83-6053, slip op. at 5 (9th Cir. May 4, 1984). The court additionally
noted that "(b)oth partes knew that the cost(s) would be incUIed before project

completion" and that those costs ''were not inUled to remedy conditions brought
about by the use of

the system." Id. at 4-5.

Given tbe basis for the cour's conclusion-that the costs were constrction
costs because they were not incured to remedy conditions resulting. from the

project's operation-we discern no inconsistency between the position defendat advanced in the earlier litigation and the argument it presents here. Although both
situations involve constrction costs, the critical distiction is that the intant costs
were incured to remedy problems arsing ftom the operation of the project. Under the rule laid down in Namua. 268 U.S. at 53-54, these costs must he regarded as

operatiDg costs chargeable to Casita.

B.

Plaintiffs second principal argument focuses on Aricle 4 of the contract
(titled "Permanent Right to the Use of

Water') which provides that "the Distrct shall

have the perpetual right to use all water that becomes available though the
constrction and operation of the Project." Plaintiff maintains that defendant

breached ths contract provision by requirg Casitas to dedicate a portion of the irigation system's water supply-up to 3,200 acre-feet per year-to the water
passage needs of migratory fish in accordance with the requiements ofthe.Biological

Opinon. Ths forced reIinqiiishment of use, plaintiff maitain, violated its
5 Arcle 2 of the contract provided that the proj ect would be deemed to be

complete upon the contracting officer's wrtten notification to Casita either that
"total expenditues have been made to the limt (specified in the contract), or so much thereof as the contracting offcer considers necessar and useful for toe constrction of the project works."
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unambiguous contract right to the exclusive use of "all water" made available by constrction of the Ventura River Project.
In defendant's view, the diversion ofproject water to ensure the surival of

the steelhead trout states no enforceable contract claim agaist the United States. il
support öfthis position, defendant argues fÍst that Aricle 4 is not a promise by BOR to supply water to Casitas, but is intead simply an acknowledgment of Casitas's existing right to the use of the project water as granted under a pemmt issued by the

State Water Resources Control Board. Aricle 4, in other words, merely recites a the parties' exchange and as such places no affnnative obligation on BOR to act as the guantor ofCasitas's water supply.6 In addition, defendat argues tht any implied obligation tht BOR may have had under Arcle 4 to reftain from
condition of intererig witli Casitas' s water rights was not breached by the issuance of

the May 2,

2003, directive advising Casita that it was obligated to comply with the
requirements of the Biological Opinon. Those requirements, defendant maitai,

the Biological Opinon under the ESA-that was as much bindig on BOR as owner of the project as it was on Casitas as operator of the project. Given these circumstances, defendant contends that any intrsion by BOR upon Casitas's water rights origiated in the need for compliance with the requiements of the Biological Opinion and not in the independent actions ofBOR actig as a contracting par.
origiated in a sovereign act-NMS' s issuace of

Plaitiff for its par, maitain tht the proper application of the sovereign

acts doctrie requires a focus not on the ESA itself, but on the individual goverent actions taken pursuant to the ESA. Plaintiff thus argues that defendant may hot invoke the sovereign acts defense to shield itself from liabilty for the loss of water caused by the change in the project's operational critera because (i) the Biological
Opinon, aüd ultimately BOR's letter of

May 2,2003, directing its implementation,

do not quaJify, as application of the sovereign acts defense would require, as
governental actions that are pub lie and general in their reach but are inste~d actions
specifically tageted at the project and its operation, and (ü) BOR's perfonnance of

the contract (titled "United States Not Liable for Water Shortge") which provides in
relevant par as follows:

6 Defendant's interpretation of Aricle 4 is confed by Aricle 25 of

(a) There may occur at times a shortage in the amount of
water available for furshig to the District through and by means of

the Project, but in no event shall any liabilty accrue against the United States or any of its offcers, agents, or employees for any damage diect or indirect to the Distrct or the water users, arsÏhg
from a shortge on account of eITOrs in operation, drought, or unavoidable cause.
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the requiremee1ts of a discretionar remedy imposed by NMFS (the constrction of a fish ladder and screen in lieu of a fiancially more modest measure of relief, e.g., fish
its contract responsibilties was not rendered impossible by the ESA but rather by trapping and truckig). Based on these circumstances, plaintiff

maitais that the

sovereign acts defense is unavailable as a matter oflaw.

The sovereign acts doctre is a defense to a breach of contract clai that may be invoked by the gover.ent, acting as a contracting party) where its pedonnance
of a contract duty is rendered impossible because of an interveng act of the

governent, acting in its sovereign capacity, that was not anticipated at the time the

contract was entered into and the risk ofwbbch was not otherwise assumed. United States v. Winstar Corp., 518 U.S. 839, 891-92, 907-08 (1996). In essee1ce, the sovereign acts doctrne extends to the governent in its role as contractor the same on grounds of principle of discharge of duty impossibility ofpetfotmance that applies
in contracts between private paries, Restatement (Second) of

Contracts §§ 261, 264

(1981).

An important limitation on the goverent's use of the sovereign acts
defense, however, is tht the sovereign act must be public and general in its reach; the goverment may not use its power as a sovereign to target contrcts to wbbch it

is a par to bar perfonnance of what it had contractuly commtted itself to do.

Winstar, 518 U.s. at 895-98. Where that form of governental self-help has
occurred, the governm.ent as contractor may not avail itself of the sovereign acts
defense to seek discharge on grounds of impossibilty. Id. at 900-03. hhstead, the

failure to perfonn wil be deemed a breach of contract. Id.
This last point takes us back to plaitif s several arguents against the
applicabilty here of the sovereign acts defense. Plaitiff maitai, fist of all, that

where governenta action afecting the performance of a co:ttract is nQt specifically
spelled out in the words of a statute but rests instead on the requiements prescribed

the statute's more broadly stated an executive agency actig in implementation of policy objectives, then it is those requirements that are to provide the baselie for detenining whether the governent may rely on the sovereign acts defense. And, therefore, the argument contiues, when, as here, those requiements, even though prescribed in fuerance of broad public policy objectives, specifically target a parcular contractto which the govemment is a pary, then the sovereign acts defense is not available.
by

applicabilty of

We agree with the proposition that for puroses of deteimnig the the sovereign acts defense, the actions ofan admnistrative agency
policy objectives declared in a statute must be examined in the Congress itselfhad directed those actions. This is the case because,
recognied in aastrative law, "(w)hen Congress enacts a statute

taen in fulfillent of same light as if as is generay

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to be adstered by an agency, it has delegated to the agency resolution of all policy disputes that arise under that statute that Congress did not itself resolve," Richard J. Pierce, Jr" Administrative Law Treatise § 3.3, at 144 (4th ed. 2002).7

Fundamentally, then, the actions of the agency are to be seen as the action
of Congress. It is therefore appropriate to proceed, as plaiti contends, by

examining the applicabilty of the sovereign acts defense in light ofNMFS' s actions the ESA itself That said, however, we do not under the ESA rather than in light of

agree with plaitiffs contention that because NMS's Biological Opinion is
specifically focused upon the Ventua River Proj ect and its mode of opertion, such

targetig renders the sovereign acts defense unavailable to the governent.
The tatgeting of a particular contract is not itself an action that would foreclose reliance on the sovereign acts doctrine. Rather, the defense is unavailable

where the govermnent s action also seres to relieve the government of its own contractual responsibilties. The Supreme Cour explained this priciple as follows:
(G)overnmental action wil not be held against the Government for the impossibilty defense so long as the action's impact upon public contrts is . . . merely incidental to the accomplishment of a broader goverental objective. See O'Neil v. United States,
pwposes of

231 Ct. CL 823, 826 (1982) (noting that the sovereign acts doctrne

recognzes that "the Goverent's actions, otherwise legal, will incidentally impai the performance of contracts"). The occasionally greater the Governent's self-interest, however, the more suspect
7 In Chevron U.S.A.. Inc. v. Natural Resources Defense Council, Inc., 467

U.S. 837, 843-44 (1984) (citation and footnotes omitted), the Supreme Court
explaied the role of an administrative agency actig in furthentfice of a statutory purpose as follows:
''Te power of an adstrative agency to admster a
congressionally created. . . program necessarily tion of policy and the makig of

requires the formularules to fill any gap left, implicitly

or explicitly, by C011gress. " If Congress has explicity left a gap for

the agency to fill, there is an express delegation of authority to the
agency to elucidate a specific provision of the statute by reguation.

Such legislative regulations are given controllng weight uness they

are arbitrar, capricious, or manfestly contrar to the statute.
Someties the legislative delegatiol1 to an agency on a paricular

question is implicit rather tha explicit. In such a case, a cour may not substitute its own constrction of a statutoiy provision for a
reasonable interpretation made by the administrator of an agency.

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becomes the claim that its private contracting parers ought to bear

the financial burden of the Governent's own improvidence, and where a siibstantial par of the impact of the Governent's action
rendering performance impossible falls on its own contrtual
obligatons, the defene wil be unavailable.

Winstar, 518 U.S. at 898 (footnote omitted). The Court went on to identify as governental self-interest those "instances in which the Government seeks to smft meetig its legitiate public responsibilties to private paries." Id. at
the costs of

896.

il the intant case, however, neither the Biological Opinion no! BOR's
May 2, 2003, letter Impleenenting it, effected the shiftg of anticipated contract costs

from BOR to Casitasa circumtance that wholly undermines plaitiff s obj ection
to defendant's sovereigt acts defene. BOR, as we have said, had no obligation to

supply water to Casitas, but only to respect the water rights that Casitas held under the that obligation affected by the issuace of law. Nor was BOR's obserance of
Biological Opinon. In short no econonúc advantage accrued to the United States,

as a contractig par, as a result of the issuance and implementation of the

Biological Opinon so as to invaldate defendat's sovereign acts defense.

Even if the United States received no economic advantage from the
Biological Opinion or from BOR's May 2,2003, lêtter itplêmentig it, however,

plaintiff argues that the sovereign acts defense is nonetheless inapplicable because
defendant canot clai impossibilty of performance when it had other options

available to it. Specifically, plaitiff contends that its anual loss of3.200 acre-feet of water was neither required by the ESA nor essential for the successful migratory passage of the steelhead trout, but was intead a discretionar remedy chosen by NMS. A far less elaborate and less costly system ~, fish trapping and trckig),
plaitiff maitai, would have accomplished NMS' s goals and, at the same tie,
permitted Casitas to retai a badly needed water supply. Given, then, both the

absence of any specifc directive in the ESA regardig the mean of ensuring fish
preservation and the availabilty of an alterative approach to accomplismngthat goal

without accompanyig water loss, plaitiff contends that defendat's contractu
obligation to honor Casitas' s water

rights was not rendered impossible by a sovereign

act but rather was abridged by a wholly discretionar detennination i::stigated by NMS. Under such circumstances, pJaintiffrnaitai, the defense ofimpossibilty
based on a sovereign act must faiL.

Ths argument too is unavailing. The premse implicit in plaitiff s
position-that BOR may not invoke the sovereign acts defense because it was respondig to a discretionar directive on the par of NMS-is not analytically

sound. As noted above, for puroses of deteng the applicabilty of the
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sovereign acts defense, no meangful distiction may be drawn betWeen statutes
whosè implementig details have been spelled out by Congress and statutes whose
implementation Congress has left for adnistrtive detemation. hi either case,

the goveimental action is sovereign in character and where its effect is to render contràct peformance impossible (even though the action is otherise public and general in its reach), the sovereign acts defense may be invoked. Thus, the fact that NMS could have addressed the issue of ensurg fish passage by a means other than
requiing the dedication of a cer water supply does not alter the sovereign
character of its action anymore than if

that tequiemeìt had origiated with Congress

itself
CONCLUSION

For the reasons set fort above, defendant's motion for sumar judgment
is granted and plaintiffs cross-motion is denied.

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