The Sacramento River Division, which Congress authorized in 1950, includes the Corning Canal Unit and the Tehama-Colusa Canal Unit. The Black Butte Unit was incorporated in 1963. The Sacramento River Division contains 18 water contractors served primarily by the Tehama-Colusa Canal (TCC) and the Corning Canal, in Tehama, Glenn, Colusa and Yolo Counties. Five additional water users west of the TCC receive Central Valley Project (CVP) water from Black Butte Reservoir. In other CVP service areas in the Sacramento Valley, there are 10 additional contractors in the Shasta and Trinity River Divisions (mostly municipal and industrial contractors), and the Feather Water District has an exchange contract for water diverted from the Feather River.

The previous long-term CVP water service and repayment contracts in the Corning Canal and the Tehama-Colusa Canal Units were signed between 1964 and 1977, and would have expired in 1995. These contracts were issued as part of the program of the United States to induce farmers in the Sacramento Valley to join in the CVP, and modify their farm operations to make use of the Project water. Since 1995, the contractors have continued to receive CVP water under a series of interim renewal contracts. The interim renewals ranged in term from 3 years to as little as 9 months, causing significant uncertainty and expense for the United States and the contractors, as each contract approached expiration. As of March 1, 2005, the contractors finally have long-term renewal contracts, as authorized under the Central Valley Project Improvement Act of 1992. The contract renewals authorize Reclamation to continue delivering a maximum of 322,000 acre-feet of CVP water for the next 25 years to agricultural contractors and 40 years to municipal and industrial contractors.

The contracts allow for the continued beneficial use of water, and include numerous provisions to promote efficient water use, including water measurement guidelines and tiered pricing. Most of the contractors in the service area deliver water through highly-efficient, fully metered underground pipelines to decrease losses due to evaporation and seepage. All contractors are required to implement a water conservation and efficiency program that contains definite water conservation objectives, appropriate economically feasible water conservation measures and time schedules for meeting those objectives. The contracts also include incentives for contractors to promote farming activities that provide habitat for waterfowl.

All the TCC and Corning Canal contractors receive water through the Red Bluff Diversion Dam (RBDD). Over the last several years, they have been the proponents of a study to improve fish passage at RBDD. Currently the dam is only operational from May 15th through September 15th, allowing water to be gravity diverted into the TCC. At other times, the contractors must juggle extremely limited water supplies delivered through a series of temporary and experimental pumps. To alleviate concerns about anadromous fish migration past RBDD, and improve the certainty of water service, the contractors are supporting an alternative to using the RBDD that would require them to install a large fish screen and pump water from the river into the canals, eliminating the need to operate the RBDD for diversion purposes. This alternative is supported by the U.S. Fish and Wildlife Service, California Department of Fish and Game, and NOAA Fisheries.

The Sacramento River Division is one of the few areas in the Sacramento Valley that is chronically short of water. Most of the contractors must rely entirely on the CVP for their supplies, and their contract quantities in most cases are inadequate to meet their identified long-term needs. As a result, they are constantly seeking additional water outside of their contract supplies. Often this entails entering into transfer arrangements with other water users in the Sacramento Valley, including Sacramento River Settlement Contractors.