Full opinion text
MEMORANDUM DECISION AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT WANGER, District Judge. Before the court are the parties’ cross-motions for summary judgment, which seek to determine the relative rights to water from a federal reclamation project, under three separate contracts with the United States, executed: (1) with plaintiff Westlands Water District (“Westlands”) in 1963 (“1963 Contract”); (2) with plaintiff San Benito County Water District (“San Benito”) in 1978 (“1978 Contract”); and (3) with defendants-in-intervention San Joaquin River Exchange Contractors Water Authority and Friant Power Authority (“Exchange Contractors”) in 1939, and amended in 1967 (“Exchange Contract”). See Doc. 243 (Exchange Contractors); Doc. 248 (defendants-in-intervention Fri-ant water-users); Doc 255 (plaintiffs); Doc. 259 (federal defendants). Oral argument was held, see Doc. 291, and all issues have been fully briefed and considered. INTRODUCTION The Central Valley Project (“CVP”) delivers water throughout the Central Valley of California that helps make it the most agriculturally-productive region in the world. It is the nation’s largest federal reclamation project, with nine separate divisions. This dispute centers on CVP water delivered through the San Luis Unit, a subset unit within the West San Joaquin Division of the CVP. Westlands and San Benito (collectively “plaintiffs”) contract for water service with the United States. Westlands has a 1963 water-service contract with the United States and San Benito has a 1978 water-service contract with the United States. Both are to be supplied water from the San Luis Unit, although San Benito is in a different division, the San Felipe. This case arises from the United States Bureau of Reclamation’s (“Bureau”) mid-February 1994 announcement of CVP water allocations for the 1994-1995 water year (“WY94”) (March 1, 1994, to February 28, 1995). See Doc. 1 ex. C at 1. Because a water shortage was forecasted, the Bureau reduced most CVP contractors’ contractual water allocations. Plaintiffs were allocated thirty-five percent (35%) of their contracted water supply. Others who receive water from the CVP did not suffer similar reductions. The Exchange Contractors’ 1939 agreement with the United States is for substitute water. They receive water from the San Luis Unit. In WY94, they were allocated seventy-five percent (75%) of their contracted water supply. See id. The Bureau justified the disparity in percentage water allocations based on its interpretation of the parties’ contracts. See id. (“Agricultural contractor’s forecasted amounts are less than others due to contract provisions which allow for larger reductions.”). Plaintiffs claim their contracts do not permit them to be subject to larger reductions in their CVP water allocations over any others who receive CVP water. See Doc. 1 at ¶ 16. They further suggest that in times of water shortage, the Bureau must allocate all CVP water supplies on a pro-rata basis among “all CVP contractors,” including the Exchange Contractors. See Doc. 256 at 2:10-15. Alternatively, in times of shortage, they say at least all San Luis Unit water should be apportioned on a pro-rata basis among any who receive such water, including the Exchange Contractors. In either event, the Exchange Contractors’ contractual water supply from the CVP would be reduced to the same quantity plaintiffs receive, e.g., thirty-five percent (35%) of the annual allotment. The federal defendants and all interve-nors oppose these contract interpretations. Each party seeks summary judgment on interpretation of plaintiffs’ and the Exchange Contractors’ relative rights to San Luis Unit water. I. LEGAL STANDARD “Summary judgment ‘shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ ” 7-Up Bottling Co. of Jasper Inc. v. Varni Bros. Corp. (In re Citric Acid Litig.), 191 F.3d 1090, 1093 (9th Cir.1999) (quoting FED. R. CIV. P. 56(e) and citing Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). A genuine issue of fact exists when the non-moving party produces evidence on which a reasonable trier of fact could find in its favor, viewing the record as a whole in light of the evidentiary burden the law places on that party. See Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir.1995) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252-56, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)) (“The mere existence of a scintilla of evidence in support of the non-moving party’s position is not sufficient.”). The non-moving party cannot simply rest on its allegation(s) without any significant probative evidence that supports the complaint. See U.A. Local 343 v. Nor-Cal Plumbing, Inc., 48 F.3d 1465, 1471 (9th Cir.1994) (“As the Supreme Court has explained, £[i]f the evidence is merely colorable or is not significantly probative summary judgment may be granted.’ ”) (citing Liberty Lobby, Inc., 477 U.S. at 249-50, 106 S.Ct. 2505). [T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial. In such a situation, there can be “no genuine issue as to any material fact,” since a complete failure of proof concerning an essential element of the nonmoving party’s case necessarily renders all other facts immaterial. Celotex Corp., 477 U.S. at 322-23, 106 S.Ct. 2548. The more implausible the claim or defense asserted by the opposing party, the more persuasive its evidence must be to avoid summary judgment. See United States ex rel. Anderson v. N. Telecom, Inc., 52 F.3d 810, 815 (9th Cir.1995); see also Van Westrienen v. Americontinental Collection Corp., 94 F.Supp.2d 1087, 1094 (D.Or.2000) (“when the non-moving party’s claims are factually implausible, that party must come forward with more persuasive evidence than would otherwise be required.”) (citing Cal. Architectural Bldg. Prods., Inc. v. Franciscan Ceramics Inc., 818 F.2d 1466, 1470 (9th Cir.1987)). Nevertheless, “the evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in its favor.” Murphy Exploration & Prod. Co. v. Oryx Energy Co., 101 F.3d 670, 673 (Fed.Cir.1996) (quoting Liberty Lobby, Inc., 477 U.S. at 255, 106 S.Ct. 2505; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). At the summary judgment stage, a court may not weigh the evidence, i.e., issue resolution, but rather simply searches for genuine factual issues. See Abdul-Jabbar v. Gen. Motors Corp., 85 F.3d 407, 410 (9th Cir.1996). II. PROCEDURAL HISTORY Plaintiffs filed this case March 4, 1994, to enjoin the Bureau’s WY94 allocation of CVP water and to obtain “a declaration that the Bureau may not satisfy its obligations to the Exchange Contractors by providing preferential allocations to the Exchange Contractors over the allocations received by Westlands and San Benito.” Doc. 1 at 11:27-12:2 (complaint). Between March 18, and March 23, 1994, the Exchange Contractors, see Doc. 13, the Friant Power Authority (“FPA”), see Doc. 14, Friant water-users, see Doc. 16, and two irrigation districts, Madera Irrigation District and Chowchilla Water District, see Doc. 17, intervened. These intervenors receive water from different CVP areas. All will be adversely impacted if plaintiffs prevail, and the Exchange Contractors are forced to exercise their pre-CVP rights to that water. Plaintiffs’ motion for preliminary injunction (Doc. 3) was denied. See Westlands Water Dist. v. Patterson, 864 F.Supp. 1536, 1551-52 (E.D.Cal.1994) (“Westlands III”). On December 23, 1994, plaintiffs moved to voluntarily dismiss this complaint without prejudice. See Doc. 93. On January 9, 1995, the federal defendants, Friant water-user intervenors, and the Exchange Contractors moved for summary judgment. See Doc. 99; Doc. 102; Doc. 110. On August 9, 1995, the motion for voluntary dismissal was denied and the motions for summary judgment granted. See Westlands Water Dist. v. Patterson, 900 F.Supp. 1304, 1312, 1324 (E.D.Cal.1995) (“Westlands IV”) (Doc. 157). Plaintiffs appealed. See Doc. 160. The Ninth Circuit reversed the denial of plaintiffs’ motion to dismiss without prejudice; vacated the summary judgment decision; and remanded the case “for a determination whether costs and attorney[’s] fees should be imposed as a condition of the dismissal without prejudice and, if so, in what amount.” Westlands Water Dist. v. United States, 100 F.3d 94, 98 (9th Cir.1996) (“Westlands V”). A July 31, 1997, district court order conditioned voluntary dismissal on plaintiffs’ paying $100,446.08 attorney’s fees and costs to the intervenors. See Doc. 199 at 20-21 (citing Lau v. Glendora Unified Sch. Dist., 792 F.2d 929, 931 (9th Cir.1986)). On August 21, 1997, plaintiffs qlected to: not pay the attorney’s fees and costs; not dismiss; and instead, proceed on the merits. See Doc. 200. The pro-rata apportionment claim raises three issues: (1) whether the 1963 West-lands and 1978 San Benito Contracts require water delivered to the Exchange Contractors from the CVP to be included within supplies to which the contractual formulas are applied to calculate plaintiffs’ pro-rata shares; (2) whether any such pro-rata calculation, if required, violates the Bureau’s statutory duty to operate the CVP as an integrated unit; and (3) what rights under California water law, if any, the parties have to CVP water, and whether the pro-rata distribution plaintiffs seek violates any such rights. III. FACTUAL BACKGROUND “[WJater can be either a liability or an asset.” Cent. Green Co. v. United States, 531 U.S. 425, 121 S.Ct. 1005, 1009, 148 L.Ed.2d 919 (2001). “California has a serious water problem particularly in the Central Valley.” Ivanhoe Irrigation Dist. v. All Parties & Persons, 53 Cal.2d 692, 3 Cal.Rptr. 317, 350 P.2d 69, 76 (1960). “California’s Central Valley is an immense elongated bowl approximately four hundred miles in length and at its widest point approximately one hundred miles in width. It is bounded on the north by the Siskiyou Mountains, on the south by the Tehachapi Range, on the east by the Sierra Nevada and on the west by the Coast Range.” California v. Rank, 293 F.2d 340, 342 (9th Cir.1961). The history of California water development and distribution is a story of supply and demand. California’s critical water problem is not a lack of water but uneven distribution of water resources. The state is endowed with flowing rivers, countless lakes and streams and abundant winter rains and snowfall. But while over 70 percent of the stream flow lies north of Sacramento, nearly 80 percent of the demand for water supplies originates in the southern regions of the state. And because of the semiarid climate, rainfall is at a seasonal low during the summer and fall when the demand for water is greatest; conversely, rainfall and runoff from the northern snowpacks occur in late winter and early spring when user demand is lower. United States v. State Water Res. Control Bd., 182 Cal.App.3d 82, 227 Cal.Rptr. 161, 166 (1986) (citing 1 Rogers & Nichols, WATER FOR CALIFORNIA 20, 26-33, 43-46 (1967)). The Central Valley Project was created to attempt to solve this problem. See id. A. The Central Valley Project (“CVP”) “The CVP is the nation’s largest federal reclamation project, spanning ‘the length of California’s Central Valley, from Shasta Dam, in the north, to the Frianh-Kern Canal, in the south.’ ” United States v. Westlands Water Dist., 134 F.Supp.2d 1111, 1116 (E.D.Cal.2001) (“Westlands 2001”) (quoting Firebaugh Canal Co. v. United States, 203 F.3d 568, 570 (9th Cir.2000)). The California Legislature conceived the CVP in 1933. See State Water Res. Control Bd., 227 Cal.Rptr. at 166. “The Central Valley Project ([Cal.] Wat. Code, §§ 11100-11925) was approved by the [California] Legislature and state voters in the early ’30’s. As originally proposed it was to be financed with revenue bonds, with revenues to be generated by the sale of water and power.” Goodman v. County of Riverside, 140 Cal.App.3d 900, 190 Cal.Rptr. 7, 14 n. 6 (1983). “Efforts in the 1930’s to sell bonds to finance the central valley project had been unsuccessful, partly because the state’s general credit did not guarantee payment.” Antelope Valley-E. Kern Water Agency v. Local Agency Formation Comm’n of Los Angeles County, 204 Cal.App.3d 990, 251 Cal.Rptr. 593, 594 n. 4 (1988) (citing id.). As a result of these pervasive unfavorable economic conditions during the Great Depression, California turned to the federal government for assistance to finance and construct the CVP. See S. Delta Water Agency v. United States, 767 F.2d 531, 534 (9th Cir.1985). The federal government assumed the role of building and operating the CVP. Congress initially authorized funds for the CVP under Section 4 of Chapter 48 of the Emergency Relief Appropriations Act of 1935 (Work Relief Act). See id. Congress re-authorized the CVP under the Rivers and Harbors Act of 1937, see id., and the Bureau was assigned the task of undertaking the construction and operation of the CVP, see Dugan v. Rank, 372 U.S. 609, 611, 83 S.Ct. 999, 10 L.Ed.2d 15 (1963). “The grand design of the [Central Valley] Project was to conserve and put to maximum beneficial use the waters of the Central Valley of California,” id. at 612, 83 S.Ct. 999 (footnote omitted), which comprises approximately one-third of California’s territory. The Central Valley basin development envisions, in. one sense, an integrated undertaking, but also an aggregate of many subsidiary projects, each of which is of first magnitude. It consists of thirty-eight major dams and reservoirs bordering the valley floor and scores of smaller ones in head waters. It contemplates twenty-eight hydropower generating stations. It includes hundreds of miles of main canals, thousands of miles of laterals and drains, electric transmission and feeder lines and substations, and a vast network of structures for the control and use of water on two million acres of land already irrigated, three million acres of land to be newly irrigated, 360,000 acres in the delta needing protection from intrusions of salt water, and for municipal and miscellaneous purposes including cities, towns, duck clubs and game refuges. These projects are not only widely separated geographically, many of them physically independent in operation, but they are authorized in separate acts from year to year and are to be constructed at different times over a considerable span of years. Cent. Green Co., 531 U.S. at -, 121 S.Ct. at 1009 (quoting United States v. Gerlach Live Stock Co., 339 U.S. 725, 733, 70 S.Ct. 955, 94 L.Ed. 1231 (1950) (“Gerlach”)). The contemporary CVP consists of nine distinct geographic areas, known as “divisions.” See Doc. 292 at 5-7 (Central Valley Project: Operating Criteria and Plan, dated October, 1992) (“CVP-OCAP”). These are the: (1) Trinity; (2) Shasta; (3) Sacramento; (4) American River; (5) Delta; (6) Eastside; (7) San Felipe; (8) West San Joaquin; and (9) Friant Divisions. See id. at 1-25. Each division has various facilities, including dams, lakes, canals, powerplants, and reservoirs. See id. at 5-7. This case involves water from three of the CVP Divisions: the West San Joaquin; the Friant; and the San Felipe Divisions. The West San Joaquin Division primarily consists of the San Luis Unit, discussed infra. See id. at 7; Appendix E. The Friant Division consists of the Friant Dam, Millerton Lake, the Friant-Kern Canal, the Madera Canal, and the John A. Franchi Diversion Dam. See Doc. 292 at 7; Central Valley Projecb-Friant Division, at http://dataweb.usbr.gov/html/friant.html (last modified May 05, 2001) (last visited May 09, 2001); Appendix D. “The San Felipe Division includes Pacheco Tunnel and Santa Clara Tunnel, conveyance facilities, pumping plants, power transmission facilities, a regulating reservoir, and distribution facilities in Santa Clara and San Benito Counties. Deliveries to the San Felipe Division are made through the San Luis Reservoir.” Doc. 292 at 9; see also Central Valley Project-San Felipe Division, at http://dataweb.usbr.gov/html/san-felipe.html (last modified June 02, 2001) (last visited June 05, 2001); Appendix A. B. Ownership of CVP Water Rights The original CVP plan called for the United States to obtain, by purchase or otherwise, rights (both appropriative and riparian) from water-rights holders in strategic areas to facilitate CVP water distribution, to provide a reliable and stable water supply. See Gerlach, 339 U.S. at 725, 70 S.Ct. 955. Purchases began in 1939. See Dugan, 372 U.S. at 613-14, 83 S.Ct. 999. From 1938 through 1949, each of Interior’s annual Bureau budgets, except three (fiscal years 1941, 1945, and 1946), contained a line-item for the purchase of water rights in every federal appropriations request. See Gerlach, 339 U.S. at 735 n. 9, 70 S.Ct. 955. Not all CVP water rights were purchased. Interior obtained some water rights for the CVP through formal exchanges. “Prior to the construction of the [Friant] dam it was necessary for the Bureau to enter into water rights settlement contracts with downstream riparian water rights holders on the San Joaquin River.” Westlands Water Dist. v. United States, 805 F.Supp. 1503, 1504 (E.D.Cal.1992) ("Westlands I”). For example, in 1939, the Exchange Contractors executed a contract with Interior (the “Exchange Contract”) that conditionally allows Interior to exercise “their rights to San Joaquin [River] waters in exchange for the agreement of the Bureau to provide ‘substitute water [to them].’ ” Westlands Water Dist. v. Firebaugh Canal, 10 F.3d 667, 669 (9th Cir.1993) (“Westlands II”). The Exchange Contract grants the United States the right, “either in whole or in part, [to] store, divert, dispose of and otherwise use, within and without the watershed of the aforementioned San Joaquin River,” the waters of that river, over which the Exchange Contractors hold rights under California law. Doc. 246 ex. 21 at 387-88. The reserved right to exercise their San Joaquin River water rights is conditional: it lasts “so long as, and only so long as, the United States does deliver to the [Exchange Contractors] by means of the [Central Valley] Project or otherwise substitute water in conformity with this contract.” Id. at 388 (emphasis added). An examination of the government’s CVP water rights as of 1939 and later is instructive: [T]he fact the Bureau does not consume water is not synonymous with having no substantial interest in the water. The Bureau has appropriative water rights in the Central Valley Project. The Bureau owns the CVP facilities, has operational control and responsibilities relating to flood control, water supply, power generation, and fish and wildlife mitigation. The Bureau has substantial property rights in its water rights permits, whereby the Bureau diverts, transports, and stores water. County of San Joaquin v. State Water Res. Control Bd., 54 Cal.App.4th 1144, 63 Cal.Rptr.2d 277, 285 n. 12 (1997) (citing State Water Res. Control Bd., 227 Cal.Rptr. at 161) (internal citation omitted) (emphasis added). “The Bureau operates the Central Valley Project under water rights permits from the California State Water Resources Control Board.” Id. at 279. Once the Bureau assumed control of construction of the CVP, “the DWR [Department of Water Resources] assigned its applications to the ... Bureau. The CVP was actually completed and in operation before [water] permits were issued: the first permits were issued to the U.S. Bureau in 1958 (Decision 893), and the principal permits were issued in 1961 (Decision 990).” State Water Res. Control Bd., 227 Cal.Rptr. at 172. “For their initial operations in the Sacramento Valley and the Delta, federal authorities acquired appro-priative rights.” Id. “The U.S. Bureau and the DWR hold a combined total of 34 permits for various units of the CVP and SWP to authorize diversion and use of the Delta’s waters. These permits were issued by the Board and its predecessors over a period of years extending through 1970.” Id. at 165. “The United States ... by virtue of the Reclamation Act, stands in the position of an upstream appropriator for a beneficial use.” Gerlach, 339 U.S. at 743-44, 70 S.Ct. 955. “For the most part, the CVP applications preceded those of the SWP, so that most appropriative water rights of the CVP have a higher priority than the rights of the SWP.” State Water Res. Control Bd., 227 Cal.Rptr. at 188 n. 25. The Bureau obtained rights to all water within the CVP Divisions implicated in this case by California Water Rights Decisions D-893 (American River, dated March 18, 1958), see 1958 WL 5645; D-935 (San Joaquin River rights, dated June 2, 1959), see Doc. 21 ex. 10; D-990 (Sacramento River, Rock Slough, Old River, and Channels of the Sacramento-San Joaquin Delta, dated February 9, 1961), see Doc. 273 ex. 3; and D-1020 (Old River, dated June 30, 1961), see id. at ex. 5. The United States has acquired, by exchange, purchase, exercise of eminent domain, and appropriation, riparian and ap-propriative rights to all the water within the CVP for administration as part of an integrated federal reclamation project. Access to CVP water is only by contract with the United States. See, e.g., 43 U.S.C. § 511 (2001). As the owner of CVP water rights, the United States has contractual authority and administrative discretion over how it provides water service among the CVP’s water and power-users, and how it fixes priorities among them. C. The San Luis Unit and the Plaintiffs’ Water Contracts Each of the CVP’s nine divisions has at least one subset “unit,” which itself is comprised of various facilities, e.g., a dam and a power plant. This dispute centers on one unit of the West San Joaquin Division, the San Luis Unit, authorized by the San Luis Act of I960, to be built and operated jointly between the United States and the State of California. See Doc. 292 at 8 (CVP-OCAP). The San Luis Act “contemplated additional construction projects to provide CVP water to Santa Clara, San Benito, Santa Cruz and Monterey Counties.” Westlands II, 10 F.Sd at 669 (citing § 6 of the San Luis Act of 1960). The San Luis Unit consists of: “the San Luis Dam and the San Luis Reservoir, together with a number of smaller facilities.” Westlands II, 10 F.3d at 669 (footnote added); see also Appendix B. The San Luis Reservoir has very little natural inflow. See Doc. 292 at 64 (CVP-OCAP). The water supply for the San Luis Reservoir is secured almost entirely by pumping surplus water from elsewhere through the Delta-Mendota Canal. See Doc. 245 ex. 1 at 12 (page 200) (“Comprehensive Report ”). “The water supply for this project [is] largely obtained from winter and early spring flows into the Sacramento-San Joaquin Delta,” id. at 11 (page 219), which is supplied with water from the Sacramento River, see Dugan, 372 U.S. at 612, 83 S.Ct. 999. “The ‘principal purpose’ of the San Luis Unit is to furnish irrigation to land in Merced, Fresno, and Kings counties, California.” Westlands 2001, 134 F.Supp.2d at 1116 (citing Firebaugh Canal Co., 203 F.3d at 570). Plaintiff Westlands is the largest contractor for water from the San Luis Unit. See id. (citing Firebaugh Canal Co., 203 F.3d at 570); Appendix F. Westlands’ June 5, 1963, amended contract with the United States for water service runs through 2007. See O’Neill v. United States, 50 F.3d 677, 680 (9th Cir.1995); Doc. 246 ex. 20 (1963 Contract: contract no. 14-06-200-495-A). Plaintiff San Benito’s April 15, 1978, water-service contract is for forty years, through 2018, from the San Felipe Division. See O’Neill, 50 F.3d at 680; Doc. 246 ex. 19 at 1 (1978 Contract: contract no. 8-07-20-W0130). This division was created after the San Luis Unit, to serve Santa Clara, San Benito, Santa Cruz, and Monterey counties. See O’Neill, 50 F.3d at 680. All water for the San Felipe Division is delivered through the San Luis Reservoir. See Doe. 292 at 9; Appendices A-B. D. Operational History of the CVP The Exchange Contractors hold riparian and pre-1914 appropriative rights to waters from the San Joaquin River. See Doc. 28 at ¶ 1. The San Joaquin is one of the “two great rivers” around which the CVP is built; the other is the Sacramento. See Ivanhoe Irrigation Dist. v. McCracken, 357 U.S. 275, 281, 78 S.Ct. 1174, 2 L.Ed.2d 1313 (1958), abrogated on other grounds, California v. United States, 438 U.S. 645, 98 S.Ct. 2985, 57 L.Ed.2d 1018 (1978). These rivers naturally meet in the Sacramento-San Joaquin Delta, where the water would flow into the Pacific Ocean. “The Sacramento Valley, containing the Sacramento River, lies in the northern portion of the Central Valley, and the San Joaquin Valley, containing the San Joaquin River, lies in the southern portion.” County of San Joaquin, 63 Cal.Rptr.2d at 279 (quoting S. Delta Water Agency, 767 F.2d at 534). The San Joaquin River “rises in the Sierra Nevada northeast of Fresno, runs westerly to Mendota and then northwesterly to the Sacramento-San Joaquin Delta where it joins the Sacramento River,” Dugan, 372 U.S. at 612, 83 S.Ct. 999, and eventually flows into the Pacific Ocean. “The Sacramento River rises in the extreme north, runs southerly to the City of Sacramento and then on into San Francisco Bay and the Pacific Ocean.” Id. If left to run their natural courses, these two rivers form a water paradox: “The Sacramento River has a surplus of water because of heavier rainfall in the northern region [but has little available tillable soil.] The San Joaquin River, in contrast, does not supply sufficient water for the extensive amount of tillable soil in its valley.” County of San Joaquin, 63 Cal.Rptr.2d at 279 (quoting S. Delta Water Agency, 767 F.2d at 534) (citing id.) (alteration added). To accomplish the reclamation goals of the CVP, the courses of both rivers were changed through an “imaginative engineering feat.” Dugan, 372 U.S. at 612, 83 S.Ct. 999. The waters of the San Joaquin River are diverted completely from their natural course. See id. This is accomplished by impounding San Joaquin River waters by a dam constructed at Friant, California (Friant Dam), approximately 60 miles upstream from Mendota. See id. Once San Joaquin River water reaches Friant Dam, it “is controlled by the United States government as part of the federal Central Valley Project and is not within the State Water Resources Development System.” People v. Shirokow, 26 Cal.3d 301, 162 Cal.Rptr. 30, 605 P.2d 859, 862-63 (1980) (in bank). The Friant Dam “forces the entire flow of the San Joaquin into Millerton Lake.” Ivanhoe Irrigation Dist., 357 U.S. at 282, 78 S.Ct. 1174. Absent the cooperation of the Exchange Contractors, this diversion would not be possible, because they hold riparian and pre-1914 appropriative rights to the San Joaquin River water south of Friant, that allowed the Bureau to convey water from Millerton Lake to flow north into the Ma-dera Canal, which “extends about 37 miles in length and services the Madera [Irrigation] District,” id. at 282-83, 78 S.Ct. 1174, and south into the Friant-Kern Canal, which supplies water to “the vicinity of Bakersfield for use in those areas for irrigation and other public purposes,” Dugan, 372 U.S. at 612, 83 S.Ct. 999. In return for the conditional non-exercise of their San Joaquin River water rights, the Exchange Contractors have received substitute water from the Sacramento River and Delta since 1951. The waters of the Sacramento River are diverted into the San Joaquin Valley to replenish the San Joaquin River bed “for the entire length of the San Joaquin below Friant Dam.” Id. This is accomplished by pumping water (at the Tracy Pumping Plant) from the Sacramento-San Joaquin Delta into the Delta-Mendota Canal. See id. Water flows by gravity along this canal, located on the west side of the San Joaquin Valley, see id., to the Mendota Pool approximately 120 miles south of the Delta, see Ivanhoe Irrigation Dist., 357 U.S. at 282, 78 S.Ct. 1174, where it is discharged into the San Joaquin River bed, see Dugan, 372 U.S. at 612, 83 S.Ct. 999, “replacing] that diverted from the San Joaquin by the dam at Friant,” Ivanhoe Irrigation Dist., 357 U.S. at 282, 78 S.Ct. 1174. Even with the dual diversion, the Sacramento River water does not replace all the water taken from the San Joaquin River: “This impoundment and diversion leaves a dry stretch of San Joaquin riverbed.” Natural Res. Def. Council v. Houston, 146 F.3d 1118, 1123 (9th Cir.1998). Because the river bed at the Friant Dam is approximately 240 feet higher than the river bed at Mendota, the Sacramento River water cannot replenish the dry San Joaquin River bed in the 60-mile area between Mendota and Friant Dam. See Dugan, 372 U.S. at 613, 83 S.Ct. 999. The Friant Dam currently diverts all of the San Joaquin River water north of the location where the Exchange Contractors hold their water rights, and stores that water at Millerton Lake, located at the northern point of the Friant Division of the CVP. The water is distributed for use either to the north (into Madera Canal), or to the south (into FrianMKern Canal). This diversion has altered the natural river flows formerly used by the Exchange Contractors. Figure 1 shows that plaintiffs and the Exchange Contractors receive water that primarily originates in the Sacramento River, which is delivered through the San Luis Unit of the West San Joaquin Division of the CVP. See also Appendix B. Westlands disputes the Exchange Contractors’ priority to CVP-delivered water from the Sacramento River, claiming that any riparian and pre-1914 appropriative rights to San Joaquin River water, conditionally exchanged by the Exchange Contractors, have been extinguished and can have no effect in allocation of water, especially CVP water from the San Luis Unit, because it is from a different source, the Sacramento River. IV. THE PARTIES’ARGUMENTS To support their contention that the Bureau must allocate all CVP (or at the minimum, all San Luis Unit) water on a pro-rata basis in times of water shortage, the plaintiffs advance three contentions: (1) the 1963 Contract applies to any party who receives CVP water (or at least CVP water from the San Luis Unit); (2) the 1963 Contract’s pro-rata calculation includes any water delivered to the Exchange Contractors through the San Luis Unit, under the subsections defining “contractual commitments” and “available supply;” and (3) the Exchange Contractors are “customers” who are subject to the 1978 Contract’s shortage provisions. All defendants oppose these interpretations. The federal defendants argue that the Exchange Contractors are not CVP water-service contractors, “because they hold senior water rights which the United States has agreed [it] is required to honor pursuant to California water law” in the Bureau’s management of the CVP. Doc. 266 at 3:22-4:2; see also Doc. 244 at 11:14-17 (“Neither the history of the San Luis Unit, the language of Plaintiffs’ contracts nor the course of dealing since the Unit was built establish any right to pro[-]rata apportionment of all CVP water on the part of the Plaintiffs.”) (capitalization omitted); Doc. 249 at 10:23-25 (“Neither the Bureau’s course of dealing with regard to the San Luis Unit nor the Districts’ water supply contracts establish any right to a pro[-]rata apportionment of all water pumped by the CVP from the Sacramento-San Joaquin Delta.”). V. ANALYSIS The United States holds all water rights to CVP water. To access CVP water, water-users such as plaintiffs must enter into water-service contracts with the United States. See 43 U.S.C. § 611 (2001). Four independent, alternative, and sev-erable grounds defeat plaintiffs’ pro-rata allocation interpretations. First, under federal contract law, plaintiffs’ interpretation ignores the plain language of, and applicable extrinsic evidence that aids interpretation of, the amended 1939, 1963, and 1978 Contracts. See infra Part VI. Second, assuming, arguendo, plaintiffs’ contractual interpretation is correct, such pro-rata allocation frustrates the necessary balancing of water rights Interior undertakes each year to discharge its statutory duty to properly operate the CVP as an integrated unit. See infra Part VILA. It also violates basic principles of equity that would elevate plaintiffs, later-in-time water contractors, who have contributed very little to the creation or operation of the CVP, to an equal priority with the Exchange Contractors, senior water rights holders, who own conditionally-reserved senior and pre-existing riparian and pre-1914 appro-priative water rights on the San Joaquin River, which have been utilized to create and operate the CVP. See infra Part VII.B. Third, even if plaintiffs’ contractual interpretation is correct, and the statutory mandate to operate the CVP as an integrated unit “would not be frustrated,” “pro-rata distribution” applied to the Exchange Contractors violates the California priority water-right principle, first-in-time, first-in-right, in derogation of the Exchange Contractors’ senior and vested federal contract rights to receive water from the Bureau. See infra Part VIII.B. Fourth, plaintiffs have no independent state-law water rights that entitled them to any priority over Interior or the Exchange Contractors. See infra Part VIII.C. VI. DISCUSSION: LEGAL (CONTRACTUAL) Plaintiffs contend that Article 11(a) of the 1963 Contract and Article 7(b) of the 1978 Contract unambiguously require that in times of water shortage, the Bureau must allocate all CVP water pro-rata among all CVP contractors, or at least, must allocate all San Luis Unit water pro-rata among all who receive water from the San Luis Unit. A. Federal Contract Law Analysis Federal law governs the interpretation of a contract if the United States is a party, especially federal reclamation contracts. See Mohave Valley Irrigation & Drainage Dist. v. Norton, 244 F.3d 1164, 1165 (9th Cir.2001) (citing cases); see also Westlands 2001, 134 F.Supp.2d at 1135 (applying federal law to interpret Westlands’ 1963 water-service contract) (citing Klamath Water Users Protective Ass’n v. Patterson, 204 F.3d 1206, 1210 (9th Cir.1999) (citing O’Neill, 50 F.3d at 682)). For guidance, federal courts also follow general principles of contract interpretation. See Westlands 2001, 134 F.Supp.2d at 1135 (citing Saavedra v. Donovan, 700 F.2d 496, 498 (9th Cir.1983) (citing United States v. Seckinger, 397 U.S. 203, 209-11, 90 S.Ct. 880, 25 L.Ed.2d 224 (1970))). “When interpreting contract language, courts start with the assumption that the parties have used the language in the way that reasonable persons ordinarily do.” E. Allan FaRnswoRth, Contracts § 7.11 (1990). “[C]ourts should attempt to construe contracts to avoid absurdity, and must reject interpretations which would make the contract unusual, extraordinary, harsh, unjust, or inequitable.” Blecher & Collins, P.C. v. N.W. Airlines, Inc., 858 F.Supp. 1442, 1459 (C.D.Cal.1994) (citing sources). The Uniform Commercial Code (“U.C.C.”) is one source of federal common law used to interpret any contract to which the federal government is a party. See O’Neill, 50 F.3d at 684 (applying the U.C.C. to the disputed contracts). “[T]he backdrop of the legislative scheme that authorized” a government contract may also be examined to interpret that contract. Peterson, 899 F.2d at 807 (citing Fed. Hous. Admin. v. Darlington, Inc., 358 U.S. 84, 87-88, 79 S.Ct. 141, 3 L.Ed.2d 132 (1958)). Additional contract interpretation rules apply: (1) the four corners of the contract must be read as a whole; (2) preference is given to reasonable interpretations, favoring those that avoid internal conflict; (3) under the U.C.C., extrinsic evidence, including usage of trade; course of dealing; and course of performance, is admissible to determine whether the contract is ambiguous; (4) if the contract is ambiguous, ie., whether “reasonable people could find its terms susceptible to more than one interpretation,” extrinsic evidence may be considered to interpret the parties’ intent in light of earlier negotiations, later conduct, related agreements, and industry-wide custom; (5) whether a contract (or any term) is ambiguous is a question of law. See Westlands 2001, 134 F.Supp.2d at 1134-38 (quoting and citing cases). B. The 19S9 (as amended) Exchange Contract “The transfer of water between contractors of the Bureau of Reclamation’s Central Valley Project has been an integral part of CVP operations since its inception. The vast network of storage, pumping, and conveyance facilities has been used to transfer surface and ground water to increase CVP supplies, reduce costs, and to improve the timing and efficiency of deliveries to CVP contractors.” Morris Israel & Jay R. Lund, Recent California Water Transfers: Implications for Water Management, 35 Nat. Res. J. 1, 23 (1995) (emphasis added). No party disputes that the Exchange Contractors are “holders of pre-1914 and riparian water rights on the San Joaquin River.” Doc. 28 at ¶ 1. This dispute is over what rights they hold, if any, with respect to CVP water the Bureau delivers to them from another source, such as from the San Luis Unit, supplied not by San Joaquin River water, where the Exchange Contractors own senior water rights, but from “surplus” Sacramento River water. The Exchange Contract has language that impacts plaintiffs. The original Exchange Contract was executed July 27, 1939, and most recently was amended December 6, 1967. See Westlands I, 805 F.Supp. at 1504; Doc. 246 ex. 21 at 1 (1967 Second Amended Exchange Contract, no. Ur-1144). The Exchange Contractors conditionally promise not to, and to allow Interior to, exercise their vested state-law riparian and pre-1914 ap-propriative rights to San Joaquin River water, in return for a promise they would be provided a permanent, substitute water supply. Article 4 of the Exchange Contract, “Conditional Permanent Substitution of Water Supply,” authorizes the United States to annually exercise the Exchange Contractors’ San Joaquin River water rights, conditioned on a return supply of substitute water: The United States may hereafter, either in whole or in part, store, divert, dispose of and otherwise use, within and without the water-shed of the aforementioned San Joaquin River, the aforesaid reserved waters of said river for beneficial use by others than the [Exchange Contractors] so long as, and only so long as, the United States does deliver to the [Exchange Contractors] by means of the [Central Valley] Project or otherwise substitute water in conformity with this contract. Doc. 246 ex. 21 at art. 4a (emphasis added). The Exchange Contract was executed in 1939, but the government did not begin to store and divert the San Joaquin River waters or to supply the Exchange Contractors with substitute Sacramento River or Delta waters until approximately July 16, 1951. See id. at 3; see also Wolfsen, 162 F.Supp. at 405. Article 4a’s express language does not extinguish, but instead, expressly reserves, the Exchange Contractors’ riparian and pre-1914 appropriative rights to San Joaquin River water, subject to the express condition that the government may exercise the Exchange Contractors’ rights only if substitute water is provided them. See Doc. 246 ex. 21 at art. 4a (“so long as, and only so long as”). Article 4b grants the Exchange Contractors a federal contractual right to receive San Joaquin River water during temporary interruptions of delivery of the substitute waters: Whenever the United States is temporarily unable for any reason or for any cause to deliver to the [Exchange Contractors] substitute water from the Delta-Mendota Canal or other sources, water will be delivered from the San Joaquin River as follows: (1) During this period, for the first 7 consecutive days, in the quantities and rates as specified in Article 8 of this contract; (2) For the balance of this period, in quantities and rates as reserved in the Purchase Contract, except that the United States further agrees that if the resulting delivery of water would be less than seventy-two per centum (72%) of Schedule One in said Purchase Contract then the United States shall make up such quantities by releases of available storage from Mil-lerton Lake, provided, however, that the United States shall in no event be required to draw the storage in Mil-lerton Lake below Elevation 464.00 U.S.G.S. datum or to retain water in storage for such releases. Id. at art. 4b (emphasis added). The Exchange Contractors’ right to receive water from the San Joaquin River if delivery of substitute water is temporarily interrupted, does not impair their reserved state-law right to exercise their riparian and pre-1914 appropriative rights to San Joaquin River water. If the government 'permanently fails to provide the Exchange Contractors with substitute water, Exchange Contract Article 4c requires the government to release the “reserved” San Joaquin River water (they continue to own) held at Friant Dam: Whenever the United States is permanently unable for any reason or for any cause to deliver to the [Exchange Contractors] substitute water in conformity with this contract, the [Exchange Contractors] shall receive the said reserved waters of the San Joaquin River as specified in said Purchase Contract and the United States hereby agrees to release at all such times said reserved waters at Friant Dam. Id. at art. 4c (emphasis added). Article 16 mandates that the Exchange Contract: shall never be construed as a conveyance, abandonment or waiver of any water right, or right to the use of water of the [Exchange Contractors], or as conferring any right whatsoever upon any person, firm or corporation not a party to this contract, or to affect or interfere in any manner with any right of the [Exchange Contractors] to the use of the waters of the San Joaquin River, its channels, sloughs and tributaries, except to and in favor of the United States to the extent herein specifically provided. Id. at art. 16 (emphasis added). Article 16 confirms the mutual intent of the Exchange Contractors and the United States that the Exchange Contractors never gave up their pre-1939 state water rights, and the Exchange Contract “shall never” be construed as conferring any right on any non-contracting party (here plaintiffs) to “affect or interfere in any manner” with the Exchange Contractors’ rights to use San Joaquin River water. The government has expressed its intent to assure the Exchange Contractors’ priority to San Joaquin River water to prevent the type of challenge here; i. e., that plaintiffs can impair the Exchange Contractors’ federal contract priority to substitute water from the Bureau or their senior state San Joaquin River water rights. This unambiguous language preserves the Exchange Contractors’ pre-1939 priority of San Joaquin River water rights. This conditional subordination of senior water rights is different from a conveyance, abandonment, or waiver of water rights, because the Exchange Contractors have an absolute right to exercise their pre-1939 riparian and appropriative rights to San Joaquin River water, which they still own and have reserved the right to exercise, if substitute water is not provided. Article 16 also establishes that plaintiffs have no basis to claim any San Joaquin River water, in derogation of the Exchange Contractors’ riparian and pre-1914 appropriative water rights. The Ninth Circuit considered an exchange contract in Madera Irrigation District v. Hancock, 985 F.2d 1397 (9th Cir.1993), addressing the Madera Irrigation District’s (“MID”) 1939 contract for sale of land and San Joaquin River water rights to the United States and a later 1951 contract by which MID exchanged its lands and water rights “for a ‘permanent’ supply of water,” id. at 1401. The Ninth Circuit held MID had a “vested ‘property right to a permanent water supply based on express provisions of its contracts.” Id. at 1402 (citing Alpine Ridge Group v. Kemp, 955 F.2d 1382, 1385-86 (9th Cir.1992), rev’d on other grounds, Cisneros v. Alpine Ridge Group, 508 U.S. 10, 113 S.Ct. 1898, 123 L.Ed.2d 572 (1993)) (emphasis added). Article 4a of the 1939 Exchange Contract contains an analogous term: “Conditional Permanent Substitution of Water Supply.” Doc. 246 ex. 21 at art. 4a (emphasis added). By analogy to Madera Irrigation District, the Exchange Contractors hold a vested property right to a conditional permanent water supply provided by the United States, see 985 F.2d at 1402, from the CVP or other source chosen by the Bureau in its discretion. Although the source of substitute water is not exclusive, the Exchange Contract expressly reserves discretion to the United States to provide substitute water from “the Sacramento River, the Sacramento-San Joaquin Delta and other sources through the Delta-Mendota Canal of [the CVP] and by other means.” Doc. 246 ex. 21 at 3. The Exchange Contract “anticipated that most if not all of the substitute water provided the [Exchange Contractors] will be delivered to them via the aforementioned Delta-Mendota Canal.” Id. at art. 5a. This language provides notice that the Bureau contractually selected the Sacramento River, Delta, and Delta-Mendota Canal as the primary source of substitute water. This source is consistent with the reality that the Delta-Men-dota Canal is the only conveyance facility to transport substitute water from the CVP to the Exchange Contractors that does not originate in the San Joaquin River. The California Supreme Court interpreted the 1939 MID exchange contract in Madera Irrigation District v. All Persons, 47 Cal.2d 681, 306 P.2d 886 (1957): In May, 1939, the District entered into a contract with the United States whereby it transferred its dam site, gravel lands and applications to the United States for use in connection with the Central Valley Project. In exchange the District received $300,000 and a ‘permanent priority right to contract for an annual supply of water from the project. Part A of the contract now under consideration is in partial recognition of that right. The contract in Part A provides for a designated water supply for the District from the Friant Dam and the Madera Canal for a period of forty years, commencing with the year in which the initial delivery date occurs. The United States agrees to furnish to the District, and the District agrees to accept and pay for the water supplied at rates whose maximum limits are fixed by the contract. Part B of the contract provides that, to the extent that funds may be available by appropriation, the United States will construct a distribution system to cost not exceeding $8,320,000. Id. at 889 (emphasis added). The California Supreme Court characterized the MID’s exchange contract as creating “permanent priority” water rights in the CVP. By the 1939 Exchange Contract, the Exchange Contractors grant Interior a de-feasible right to exercise their retained, senior San Joaquin River water rights in exchange for a conditional permanent supply of substitute water that can come from any source (including from outside the CVP) that the Bureau, in exercise of its reasonable discretion, selects; subject to Article 4a’s and c’s conditions that if substitute water is not provided by the United States, the Exchange Contractors have reserved the right to exercise and enforce their extant riparian and pre-1914 appro-priative rights to San Joaquin River water. As the appropriator under state permits, Interior had authority to establish a vested federal contractual priority to Sacramento River and Delta water as the primary source of substitute water for the Exchange Contractors. C. Extrinsic Evidence It is appropriate to consider extrinsic evidence of course of dealing to interpret underlying rights arising from federal contracts. See O’Neill, 50 F.3d at 684-85. In a December 29, 1959, letter, H.P. Dugan, Director of Region 2 of the Bureau of Reclamation, wrote: I confirm to you that it has been, is, and will continue to be the policy and practice of the United States to utilize the water available to it or made available to it [from] ... the Sacramento River and its tributaries and the Saeramento-San Joaquin Delta to first satisfy the requirements of the Exchange Contract and Schedule 2 of the Purchase Contract so long as it is legally and reasonably physically possible for it to satisfy these requirements .... Doc. 245 ex. 7 at 3 (emphasis and alterations added). The water-districts, e.g., MID, that received water from the Friant Division were concerned that addition of the San Luis Unit to the CVP, to provide water to Westlands and others, could reduce availability of Sacramento River and Delta water, which would require the Exchange Contractors to exercise their San Joaquin River water rights in future times of shortage, which in turn would reduce MID’s available water: This letter is written on behalf of the Madera Irrigation District, and is in response to your letter of December 29, 1959. That letter reiterated the long standing policy and practice of the United States to utilize the water available to it or made available to it under its applications to appropriate from the Sacramento River and the Sacramento-San Joaquin Delta to first satisfy the requirements of the Exchange Contract ... so long as it is legally and reasonably physically possible for it to satisfy these requirements; provided that the United States has met and will not voluntarily impair the delivery of water required to satisfy these requirements. This letter is in response also to the letter ... from the Regional Solicitor of the Department of the Interior respecting the proposal of the United States to enlarge and consolidate the service areas under all applications and permits of the United States for the [CVP]. The Madera Irrigation District agrees generally that the proposal to enlarge and consolidate all [CVP] service areas will permit a more flexible distribution of water to the areas of need, with a consequent even better benefit in most instances to the State of California from the [CVP]. However, as we have pointed out in various meetings and discussions in the past few months with you and representatives of your office and the Regional Solicitor’s office, we are concerned that in times of water shortage the proposal could result in less Sacramento River and Delta water being available for the [Exchange Contractors], which is the foundation of our Friant water supply, than under the present service area arrangements. Id. ex. 8 at 1-2 (letter dated February 1, 1960) (emphasis added). To address this risk, the water-districts requested their existing contracts be amended to cause the United States to do everything to ensure that the Exchange Contractors receive their full allocation of substitute water, to prevent them from exercising their San Joaquin River water rights to the detriment of those water-districts: The statement of policy in your letter of December 29, 1959, greatly clarifies this matter. But, as we stated in the meetings referred to above, we believe it is essential that this policy be made firm by incorporating it into amendments to our present water service contracts. Inasmuch as the policy is of long standing and has been expressed publicly on a number of occasions, it has been our assumption that the United States could have no objection to such amendments. Your assurance that our assumption is correct, and that such amendments will be prepared and submitted for adoption as soon as it can conveniently be done, will enable us to give the United States wholehearted and active support in any and all proceedings for the establishment of the consolidated and enlarged [CVP] service area. Id. at 2. In response, several water-service contracts were amended. For example, On August 7, 1962, the Terra Bella Irrigation District’s contract was amended to include the following section: the United States further agrees that it will not voluntarily and knowingly render itself unable to deliver to the parties entitled thereto from water that is available or that may become available to it from the Sacramento River and its tributaries or the Sacramento-San Joaquin Delta those quantities required to satisfy the obligations of the United States under said Exchange Contract. Id. ex. 10 at 3 (contract no. I75r-2446); see also Doc. 273 ex. 14 at 25-26 (Exeter Irrigation Contract, no. I75r-2508R); Doc. 273 ex. 22 at 3 (Kern Canon Water District Contract, no. 14-06-200-924). Most of these confirmatory amendments to protect the Exchange Contractors’ priority to Sacramento River and Delta water as the source of their substitute water preceded formation of plaintiffs’ 1963 and 1978 Contracts. Plaintiffs’ attorney, Mr. Mos-kovitz and his law firm, which continues to represent plaintiffs, effectuated these amendments with Interior. Plaintiffs knew that Interior by contract and performance vested the Exchange Contractors with a prior right to the Bureau’s appropriated CVP water. The 1961 California Water Rights Decision 990 (“D-990”) approved some of the Bureau’s CVP water rights under California law. See Doc. 273 ex. 3. It expressly included a section entitled “Protection of Existing Rights.” See id. at 75. D-990 confirms that “the Bureau’s representatives have consistently affirmed their policy to recognize and protect all water rights on the Sacramento River and in the Delta existing under State law at the time these applications were filed, including riparian, appropriative, and others.” Id. This language applies to the Bureau’s right, practiced for ten preceding years, to use such water rights to provide substitute water to the Exchange Contractors. When discussing the rights of the Exchange Contractors during the debate over the 1992 CVPIA, United States Senator Malcolm Wallop of Wyoming stated “those rights are secured under State law and are superior to any CVP right.” 138 Cong. Rec. S17658, S17660; 1992 WL 279403 (statement of Sen. Wallop) (Oct. 8, 1992) (emphasis added). (Plaintiffs hold only a water-service contract for CVP water). He further emphasized the priority of the Exchange Contractors’ rights to CVP water: “[d]uring the current drought, prior right and exchange right holders agreed to forgo certain deliveries in order to permit the Secretary to make deliveries to the wildlife refuges and to urban users. No reductions were imposed on them since no reductions could be imposed so long as there was any water.” Id. at S17661 (emphasis added). The 1949 Comprehensive Report on future development of the CVP also addressed the impact of the proposed San Luis Unit on prior, existing water rights: Water rights for existing irrigation developments are superior to any which may accrue to new developments. Doc. 245 ex. 1 at 104 (emphasis added). The Exchange Contractors claim that: [i]ncluded in the definition of “course of dealing” under U.C.C. § 1-205(1) is Westlands’ letter of September 5, 1957, answering the Bureau’s protest to West-lands’ application with the State Water Rights Board (now the State Water Resources Control Board) for the appropriation of unappropriated water. In response to the Bureau’s objection to Westlands’ 1954 application, number 15764, to the California State Water Rights Board to appropriate unappropriated water from a tributary of the San Joaquin River, Westlands wrote: The Applicant, Westlands Water District, does not intend by the permit ... to cause injury to those having valid vested rights in and to the waters of Old River. The Applicant intends to take only that water which is in excess of the water needed to supply the valid vested rights under reasonable means of diversion and use. Doc. 246 ex. 32 at 1 (letter dated Sept. 5, 1957) (emphasis added). “Old River” refers to a channel of the Sacramento-San Joaquin Delta, flowing from the San Joaquin River. See Doc. 273 ex. 5 at 1. West-lands, to induce the State to grant it a water appropriation permit, represented it would not claim water rights in derogation of the water needed to supply “valid vested rights,” such as those held by the Exchange Contractors. Interior’s discretion to manage the CVP as an integrated whole makes reasonable the diversion and use of Sacramento River and Delta water through the San Luis Unit to satisfy vested, senior, contractual water rights held by the Exchange Contractors. The plaintiffs had full knowledge that the Bureau had, since the inception of the CVP, utilized Sacramento River and Delta water to provide substitute water to the Exchange Contractors. Plaintiffs are equitably estopped by their knowledge and conduct to claim otherwise in derogation of a long-standing course of dealing by which Interior has recognized the contractual priority of the Exchange Contractors’ vested water rights to substitute water, which it has supplied from Sacramento River and Delta water. See, e.g., Lehman v. United States, 154 F.3d 1010, 1016-17 (9th Cir.1998) (listing elements of estoppel); Omega Indus., Inc. v. Raffaele, 894 F.Supp. 1425, 1433 (D.Nev.1995) (stating that equitable estoppel “stands for the basic precepts of common honesty, clear fairness and good conscience.”) (quoting Aetna Cas. & Sur. Co. v. Jeppesen & Co., 440 F.Supp. 394, 403 (D.Nev.1977) (quoting cases)). This substantial extrinsic evidence proves that the parties (the water-districts and the Bureau), by their conduct, recognized the priority of the Exchange Contractors’ pre-CVP, vested, reserved water rights under the Exchange Contract, and the Bureau has operated the CVP accordingly for over forty years to supply substitute water to the Exchange Contractors from Sacramento River and Delta water, until water shortages forced this litigation. On the other hand, plaintiffs point to no extrinsic evidence concerning usage of trade, course of dealing, or performance that supports an interpretation of this clause to ignore the Exchange Contractors’ vested senior water rights and relegate them to co-equal status with plaintiffs to receive CVP water. Westlands’ Article 11(a) does not direct how Interior should distribute water to others with whom Interior has contractual commitments to provide CVP water, particularly holders of senior vested rights. The plain language of the 1963 Contract only requires that, in times of shortage, Westlands receive its pro-rata share of San Luis Unit water, inter sese, with other water-service contractors who have specifically contracted for San Luis Unit water. Not for thirty years, until 1994, did West-lands attack the Exchange Contractors’ CVP water rights and the Bureau’s long-established course-of-dealing and operational practice in management of the CVP, to first supply Sacramento River and Delta CVP water to the Exchange Contractors as substitute water. Plaintiffs submit no evidence that they received any different share of San Luis Unit water in WY 1994 from other San Luis Unit contractors. D. The Shortage Provisions of West-lands’ 1963 Contract: Article 11(a) “Interpretation begins with the contract’s language which ‘is to govern if the language is clear and explicit.’ ” Thompson v. Enomoto, 915 F.2d 1383, 1388 (9th Cir.1990) (quoting sources) (ellipsis omitted). Article 11(a) of Westlands’ 1963 Contract provides: There may occur at times during any year a shortage in the quantity of water available for fu