"SAN FRANCISCO -- As California faces a historic drought, a U.S. appeals court on Thursday sided with federal wildlife regulators who had recommended that the state reduce exports of water from north to south California in order to protect a finger-sized fish, the threatened Delta smelt.

The 9th U.S. Circuit Court of Appeals ruled against growers and California water districts in the case and said a lower court had erred in describing the regulators' determination as arbitrary and capricious.

Reaction from growers was swift. In a blog post, Damien Schiff, an attorney for growers, said the ruling "is terribly disappointing and bodes ill for farmers, farm laborers and millions of other Californians dependent on a reliable water supply.""

Dan Levine reports for Reuters March 13, 2014. [2]