A federal appeals court has refused to nullify water supply contracts between the U.S. Bureau of Reclamation and irrigators in California.

The 9th U.S. Circuit Court of Appeals has rejected a legal challenge by environmental groups seeking to invalidate the contracts.

The case was critical for thousands of irrigators, whose water supplies would have been seriously destabilized if the contracts were canceled, said Stuart Somach, an attorney for some of the water users.

"The uncertainty imposed by the litigation has been lifted," he said. "This is big to us. A loss would have been a terrible thing."

There are still two other lawsuits pending before the 9th Circuit related to the compliance of California water projects with the Endangered Species Act, Dan O'Hanlon, attorney for other irrigators involved in the case.

Irrigators still face the consequences of those cases, as well as recurring questions about water availability, he said. "At least the uncertainty about whether they have a contract has been removed."

With the most recent ruling, the Natural Resources Defense Council and other environmental groups claimed the federal government adversely affected the endangered delta smelt by renewing contracts with irrigators several years ago.

The 9th Circuit judges found the plaintiffs lacked standing to challenge some of those contracts because the agreements allow for reductions in water deliveries. That means the environmentalists weren't injured by the contracts and thus didn't have a reason to sue.

As for the remaining contracts, the 9th Circuit found that the Bureau of Reclamation was obligated under California law to renew the contracts with senior water rights owners.

The 9th Circuit said the lawsuit should be dismissed in a 2-1 majority opinion, upholding a lower court's ruling. Circuit Judge Richard Paez filed a dissent in which he said the lawsuit should be revived.