I think this approach, suing to re-consider the project water contracts is exactly the right approach for people who want to limit north-south water transfers. I haven’t been sympathetic to claims that “plumbing is destiny,” that if you build a huge canal, it will inevitably be used to divert huge amounts of waters. My unsympathetic reaction has been, ‘but that ship has sailed.’ Project contractors are allowed to take huge amounts of water under their contracts and the time to fight that was whenever the contract re-negotiations were. Don’t prevent that big gulp of water by making 20 million people depend on extremely vulnerable infrastructure for their drinking water. Fight that by going after the contracts themselves. Looks like some groups are, so I’m glad*.
All this hinges on my (perhaps naive) belief that if the water contractors have smaller contracts, other interests will be able to monitor and limit the water deliveries through a Peripheral Canal to the lower legal amount. That’s what pro-Canal interests are asking you to believe, that the deliveries through the canal can be governed by law. I do understand why that is a hard sell. But I like this step, of challenging the contracts themselves. It does no good to say “The Peripheral Canal will be governed by law!” if the law is that contractors can take monstrous amounts of water. I hope that bringing those contract amounts down, to match new hydrology from climate change and ecosystem needs, is a first step in getting us to a governable system that includes working plumbing.
*I haven’t read the complaint, and I don’t entirely understand the press release. So I’m not endorsing the specific terms of this suit, which I don’t know. But I like the overall concept.
On the public record 
Presumably the contracts in question are with Bureau of Wreck for CVP water. If they are, in fact, up for renewal might this not be a good time to look carefully at the question of whether a modest price increase might not be in order?
Properly implemented, a PC should allow more carefully timed pumping from the Delta. It does not necessarily mean more water being diverted in toto.
Holding up contract renewal is a bargaining tool, but has some bad secondary effects. Nobody will invest in re-leveling, drip systems, and so forth if they have no assurance they will be in business in two years.