SAN FRANCISCO (AP) — An appeals court said Wednesday that federal officials should have consulted wildlife agencies about potential harm to a tiny, threatened fish before issuing contracts for water from the Sacramento-San Joaquin Delta.

An 11-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco ruled that the U.S. Bureau of Reclamation violated the Endangered Species Act when it failed to consult with the U.S. Fish and Wildlife Service or the National Marine Fisheries Service in renewing 41 contracts a decade ago. The appeals court sent the case back to a trial judge for further proceedings.

The ruling arises from one of several lawsuits filed by the National Resources Defense Council and other environmentalists seeking to protect the Delta smelt. The ruling won’t affect water flows because protections for the smelt were kept in place during the lawsuit.

“This about how we are going to manage the water in the future,” said Douglas Obegi, a lawyer with the National Resources Defense Council.

Water-rights holders and government lawyers argued that consultation wasn’t necessary because the U.S. Bureau of Reclamation was required to renew the contracts and had no discretion over terms of the agreement that would control water levels in the Delta.

But the 9th Circuit disagreed, saying the bureau had discretion over price and delivery times of the water, which impact water flow. Therefore, it has to consult with one of the other two agencies. The court also said that the bureau wasn’t required to renew the contracts.

Stuart Somach, a lawyer representing water-rights holders who intervened to fight the lawsuit, said the ruling “destabilizes” the state’s water-allocation system because it raises uncertainty over the contracts and water delivery.

Somach said he and his clients are still mulling their options, which include petitioning the U.S. Supreme Court to review the decision.

 Somach said they could also try to convince the trial judge to keep the contracts in place. Somach said his clients own water rights with or without contracts, which ensure predictable water allocation. Predictability is lost if the contracts are invalidated, Somach said.

“The big loser in all of this is the state of California,” Somach said.