MEMORANDUM AMICUS CURIAE OF NATURAL RESOURCES
DEFENSE COUNCIL
IN SUPPORT OF THE UNITED STATES’ OPPOSITION TO
PLAINTIFFS’
MOTION FOR PARTIAL SUMMARY JUDGMENT
John D. Echeverria
(202) 662-9850
Counsel for Amicus Curiae Natural Resources
Defense Council
Of Counsel:
Michael E. Wall
Natural Resources Defense Council
71Stevenson Street,
(415) 777-0220October 3, 2003.
-i-
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES
ii
INTRODUCTION
AND SUMMARY OF ARGUMENT
1
ARGUMENT
3
TAKINGS CLAUSE IS DEFINED BY LAW INDEPENDENT OF
THE FIFTH AMENDMENT.
II.
SECTION 8 OF THE FEDERAL RECLAMATION ACT PROVIDES
4
THAT STATE LAW DEFINES THE CHARACTER AND SCOPE OF
THE APPROPRIATIVE WATER RIGHTS IN BUREAU WATER
PROJECTS.
III.
UNDER
KLAMATH PROJECT WATER IS THE UNITED STATES, NOT
THE IRRIGATORS.
IV.
PLAINTIFFS’ TAKINGS CLAIMS SHOULD ULTIMATELY FAIL
14
ON THE MERITS.
CONCLUSION
29
-ii-
TABLE OF AUTHORITIES
CASES
A&S
Council Oil
Barcellos
& Wolfson, Inc. v.
Block
v. Hirsh, 256
Bd.
of regents of State Colls. v. roth, 408
Bowen
v. Public Agencies Opposed to
Social
Security Entrapment, 477 U.S. 41 (1986) . . . . .
17
Castle
v.
City
of
Concrete
Pipe & Products of
Construction
Laborers Pension Trust, 508
State
Water Resources Control Board, 54
Dugan
v. Rank, 372
Fremont-Madison
Irrigation District v.
Ickes
v. Fox, 300
International
Paper Co v.
Ivanhoe
Irrigation District v. McCracken, 357
Kandra
v.
-iii-
Keystone
Bituminous Coal Assn. v. DeBenedictis, 480
Klamath
Water Users Protective Association v.
Patterson,
204 F.3d 1206, 1209 (9th Cir.
2000) . . . . . passim
Kandra
v.
Loretto
v. Teleprompter Manhattan CATV Corp., 458
Lucas
v.
Merrion
v. Jicarilla Apache Tribe, 455
O’Neill
v. United States, 50 F3d 677 (9th Cir.
1995) . . . . .
passim
Orff
v, United States, No. 00-16922 (9th Cir., filed
Penn
Central Transp. Co. v.
Pennsylvania
Coal Co. v.
Phillips
v.
Smejkal
v. Empire Lite-Rock, 547 P.2d 1363 (O.1976) . . . .
n.19
Stearn v. Department of the Navy, 280 F.3d 1376,1380 (Fed. Cir. 2002) . . 15
Sun
Oil Co. v.
Tahoe-Sierra
Preservation Council v.
Tahoe
Regional Planning Agency, 535
-iv-
State
Water Resources Control Board, 182 Cal.App.3d 82, 104 (1986)
. .
9,22
In
re Waters of the
Westlands
Water Dist. v.
Natural
Resources Defense Council, 43 F.3d 457(9th
Cir. 1994) . . .
9
Wickard
v. Filburn, 317
Wimer v. Simmons, 39 P.6 (1895) . . . . . . . 22
LAW
REVIEW ARTICLES
Melinda
Harm Benson, “The
the
Endangered Species Act, and the Fifth Amendment,” 32 Envtl. L. 551 (2002)
.
25
Brian
Gray, “The Property Right in Water,“ 9
Envtl.
L., Policy & Thought 1, 26 (2002) . . . . . .
15,17
Joseph
Sax, “The Constitution, Property Rights, and the Future
of
Water Law,” 61 U.Colo.L.Rev. 257 (1990) . . . . .
23
Roderick
Walston, “Federal-State Water Relations in
From
Conflict to Cooperation,” 19
OTHER
AUTHORITIES
43
U.S.C 372 . . . . . . . . . .
6
43
U.S.C. 383 . . . . . . . . . .
5
-v-
Memorandum
from Walter Perry and Meg Reeves,
Assistant
Attorney Generals, to Richard Bailey Adjudicator, dated
(available
at http://www.wrd.state.or.us/programs/klamath/index.shtml)
. .
12
Oregon
Attorney General Opinion No. 1583, 25 Op.Atty.Gen. 62 (
-v-
Natural Resources Defense Council (“NRDC”)
respectfully submits this memorandum
amicus
curiae in support of the
judgment.
INTRODUCTION
AND SUMMARY OF ARGUMENT
This memorandum seeks to assist the Court in
evaluating the several fundamental questions
of
western water and takings law raised by plaintiffs’ motion for partial summary
judgment.
In
a nutshell, plaintiffs contend it is clear they are the owners of all of the
Klamath project water
they
require for irrigation purposes and it is unnecessary for the Court to stay this
case in order to
permit
the ongoing Klamath basin adjudication to resolve the water ownership issue.
NRDC
agrees
that a stay is not warranted to permit resolution of the ownership issue, but
for a
completely
different reason: NRDC believes it is clear the irrigators lack a vested
property right
to
deliveries of specific quantities of water from the Klamath project. NRDC takes
no position
on
whether or not the Court should grant the motion for a stay on other grounds.
In their motion for summary judgment, plaintiffs make
several sweeping arguments about
how
property rights, including rights to the use of water, should be defined for the
purpose of the
Takings
Clause. NRDC submits that plaintiffs’ description of the applicable law, both
in general
and
as it applies to the Klamath project, is mistaken in several respects. As NRDC
explains
below,
(1) “property” within the meaning of the Takings Clause of the Fifth
Amendment is not
defined
by the Constitution, but instead is defined by federal or state law which is
independent of
the
Fifth Amendment; (2) the Reclamation Act of 1902 provides that title to
appropriative water
rights
in Bureau of Reclamation projects should be determined under state law; and (3)
under
applicable
appropriative
water rights in the Klamath project; the plaintiffs’ project water rights, if
any, are
based
on, and defined by, their contracts with the Bureau.
This memorandum also addresses why, once it is recognized that the irrigators’ water
-1-
rights
are rooted in contract, the plaintiffs’ takings claims will certainly fail.
Specifically, (1) the
irrigators’
contracts with the Bureau bar them from claiming property rights in Klamath
project
water;
(2) any contract-based claims the irrigators might have must be pursued as a
breach of
contract
claim, rather than under the Takings Clause; and (3) even if the plaintiffs
could
overcome
these two threshold hurdles, their takings claims, in particular the per se
physical
occupation
theory, fail as a matter of law.
Finally, NRDC explains why, even if plaintiffs could
claim a property right in Klamath
project
water independent from their alleged contract rights, the terms of the
irrigators’ contracts
with
the Bureau still bar plaintiffs’ claims. The terms of the contracts
unambiguously absolve
the
and
the water restriction imposed in this case was plainly the combined result of
drought and
another
cause, i.e., the mandates of the Endangered Species Act. The irrigators are
bound by the
terms
of their contract with the
water.1
NRDC submits that at least brief consideration of the
ultimate merits of the case is
appropriate
and potentially useful at this stage to assist the Court in resolving the stay
motion.
Resolution
of the stay motion (especially the issue of the potential overlap between tribal
water
claims
and irrigators’ water claims) might require extended proceedings, possibly
including a
mini-trial.
On the other hand, several of the merits issues could be expeditiously resolved
based
on
summary judgment, if the court were to request briefing on these issues. Thus,
the public
interest
in efficient administration of justice might be better served by addressing the
merits of
the
claims at an early stage instead of staying this action. An examination of the
merits of the
case
is warranted to permit consideration of this possible course of action.
It bears emphasis that this litigation represents the
third lawsuit by Klamath irrigators
attempting
to demonstrate that application of the Endangered Species Act in the Klamath
basin
violated
their asserted rights in Klamath project water. In Klamath Water Users
Protective
Association
v. Patterson, 204 F.3d 1206, 1213 (9th Cir. 2000), the court, addressing what NRDC
_____________________________________________________________
1
This
memorandum does not address plaintiffs’ contract claims, but many of the
reasons
the
takings claims should fail also explain why the contract claims should fail.
-2-
believes
to be the central issue in this case, ruled that ESA requirements “override
the water
rights
of the irrigators” under their contracts with the Bureau. Second, in Kandra
v. United
States,
145 F. Supp.2d 1192 (D.Or. 2002), the court again rejected the claim that the
ESA
requirements
violated the irrigators’ water rights, concluding once more that
“plaintiffs’ contract
rights
to irrigation water are subservient to ESA... requirements.”
this
lawsuit raises the same basic issue as these two earlier lawsuits, and it, too,
should ultimately
be rejected on the same basis.2
ARGUMENT
CLAUSE IS
DEFINED BY LAW INDEPENDENT OF THE FIFTH
AMENDMENT.
Plaintiffs assert that “[t]he determination of
whether a right is ‘property’ within the
meaning
of the Fifth Amendment is an issue of federal, not state law.” Plaintiffs’
Memorandum,
at
18. It is unclear from their Memorandum whether, in referring to “federal
law,” plaintiffs are
referring
solely to federal constitutional law (the Takings Clause, apparently), see
Plaintiffs’
Memorandum
at 18-19, or to federal statutory law (the Reclamation Act), see
Plaintiffs’
Memorandum,
at 19-20, or perhaps to a combination of both. In any case, plaintiffs’
position is
mistaken.
In this section we address why property rights are not defined by the
Constitution
itself,
but instead are defined by federal or state law which is independent of the
Constitution. In
the
next section we explain why the independent source for defining the relevant
property interest
in
this case is state law.
The first contention can be disposed of quickly. As
the Federal Circuit has very recently
explained:
“The Constitution neither creates nor defines the scope of property interests
compensable
under the Fifth Amendment” Maritrans Inc. v.
2003),
citing Bd. of Regents of State Colls. v. Roth, 408
_____________________________
2
Indeed,
so far as NRDC is aware, every other litigation in the country brought by
irrigators
served by Bureau of Reclamation projects seeking financial recovery for economic
injuries
allegedly incurred as a result of the mandates of the Endangered Species Act has
failed.
-3-
‘existing
rules and understandings’ and ‘background principles’ derived from an
independent
source,
such as state, federal, or common law, define the dimensions of the requisite
property
rights
for purposes of establishing a cognizable taking.”
Coastal
Council, 505
The Supreme Court’s decision in Phillips v.
Washington Legal Foundation, 524
(1998),
specifically dealt with the issue of what law governs the question of who
owns the
property
in a takings case. The claim in that case was that
requiring
that the earnings on client funds in lawyer trust accounts be used to support
legal
services
for the poor. The issue before the Supreme Court was whether or not these
earnings
represented
the property of the client. Following the established Supreme Court precedent
cited
above,
the Court resolved this issue, not by reference to the Takings Clause, but by
referring to
Based
on Phillips, the issue of whether the
project
water must be decided based on law which is independent of the Fifth Amendment.
As
discussed
below,
at
stake in this case.
This is not to say, as a general proposition, that
there is no constitutional dimension to the
definition
of private property interests for the purpose of the Takings Clause. In Lucas
v. South
Carolina
Coastal Council, for example, the Court said that state-law
definitions of the scope of
private
property rights must be based on an “objectively reasonable application of
relevant
precedents.”
505
adopted
an entirely novel, unprincipled interpretation of state property law in order to
defeat an
otherwise
viable taking claim. However, this exception to the general rule has no bearing
on this
case.
As discussed below, the relevant state law rule in this case has a long and
consistent
history.
II.
SECTION 8 OF THE FEDERAL RECLAMATION ACT PROVIDES THAT
STATE LAW
DEFINES THE CHARACTER AND SCOPE OF THE
APPROPRIATIVE
WATER RIGHTS IN BUREAU WATER PROJECTS.
The plaintiffs also are incorrect insofar as they
contend that the issue of water ownership
-4-
should
be decided as a matter of federal law because the Reclamation Act itself defines
who is
the
owner of water at Bureau projects. Far from prescribing a federal rule for the
resolution of
this
issue, the Reclamation Act, instead, states that the issue should be resolved
under state law.
Section 8 of the federal Reclamation Act states, in
relevant part:
Nothing in this Act shall be construed as affecting
or intended to affect or to in any way
interfere with the laws of any State or Territory
relating to the control, appropriation, use,
or distribution of water used in irrigation, or any
vested right acquired thereunder, and the
Secretary of the Interior, in carrying out the
provisions of this Act, shall proceed in
conformity with such laws.
43
U.S.C. §383 (emphases added). The language of this section demonstrates that
Congress
intended
for title to appropriative water rights at Bureau projects to be determined in
accord with
state
law.
This reading of the act was confirmed by the Supreme
Court’s decision in
decisions,
starting with Ivanhoe Irrigation District v. McCracken, 357 U.S. 275
(1958),
suggesting
that state authorities could be prevented “from imposing conditions on the
permit
granted
to the
the
project in question.”
with
a supervening federal legislative mandate, section 8 of the Reclamation Act
provides that
state
law controls the ownership and management of water at Bureau projects.
With respect to water ownership specifically, the
Court said: “From the legislative
history
of the Reclamation Act of 1902, it is clear that state law was expected to
control” and that
“the
Secretary [of the Interior] would have to appropriate, purchase, or condemn
necessary water
rights
in strict conformity with state law.”
over
appropriation of water was more than a technicality, rejecting the argument that
Ҥ 8 merely
require[s]
the Secretary of the Interior to file a notice with the State of his intent to
appropriate
but
to thereafter ignore the substantive provisions of state law. The legislative
history of the
Reclamation
Act of 1902 makes it abundantly clear that Congress intended to defer to the
substance,
as well as the form, of state water law.”
-5-
argument
as an attempt to “trivialize the broad language and purpose of §8.”
In this case, plaintiffs do not – and cannot –
point to any project-specific congressional
directive
that would override state water law.3 Rather,
notwithstanding the language of section 8
and
the decision in California v. United States, plaintiffs contend that the
issue of the ownership
of
appropriative water rights associated with Bureau projects should be decided
based on a
uniform
federal rule derived from the Reclamation Act itself. According to plaintiffs,
this
supposed
rule dictates that the irrigators, rather than the
“owner”
of project water. For the reasons explained below, this argument is wrong and
should
be
rejected.
Plaintiffs rely, first, on certain other language in
section 8 indicating that “[t]he right to
the
use of water acquired under the provisions of this Act shall be appurtenant to
the land
irrigated,
and beneficial use shall be the basis, the measure, and the limit of the
right.” 43 U.S.C
§372.
Plaintiffs suggest that, because the right to use water is “appurtenant” to
the land, then the
owners
of land served by a project are necessarily owners of the water delivered by the
Bureau.
The
language does not support this reading. First, since the quoted language
addresses “water
acquired
under the provisions of this Act,” this provision plainly does not itself
create water
rights.
Rights in Bureau project water are created by contracts negotiated pursuant to
other
provisions
of the Reclamation Act, and the extent of those rights are defined by those
contracts.
In
any event, this language reflects, at most, that, in authorizing a water
project, Congress
intended
that specific lands (as opposed to any other irrigated lands) should generally
be served
with
the irrigation water supplied by the project. The language cannot be stretched
to support the
further
point that the owners of the lands served by a project are the owners of the
rights in water
serving
these lands vis-a-vis the
explicitly
said that questions relating to ownership of water rights are to be determined
under
state
law.
Plaintiffs also cite a series of decisions, starting
with Ickes v. Fox, 300 U.S. 82 (1937), for
________________________________________________
3 The authorizing statute for the
Klamath project simply directs the Secretary of the
Interior
to construct the Klamath project “under the terms of the national reclamation
act.” Act
of
-6-
the
proposition that the Supreme Court has embraced, as a matter of federal law, a
uniform rule
that
irrigators are the owners of project waters. Admittedly, several of these
decisions contain
dicta
that is arguably in tension with the subsequent decision in California v.
United States. As
discussed,
however, that decision represented an important shift in the Supreme Court’s
interpretation
of the Reclamation Act, strengthening the primacy of state law with respect to
the
management
of Bureau project water. To the extent some earlier Supreme Court
pronouncements
are in tension with the Court’s later decision, the later ruling obviously
controls.
See
generally Roderick Walston, “Federal-State Water Relations in
Cooperation,”
19
had
in mind in enacting the basic reclamation law in 1902,” California v.
United States “has
ushered
in a new era of cooperation in federal-state water relations”).
Furthermore, as NRDC explains below, a careful
analysis of these decisions shows that
they
do not recognize federal law as determinative on the question of water
ownership. The
Court
in these cases concluded that the irrigators were the owners of the water at
issue primarily
by
applying the law of the state in which the controversies arose. Thus, these
decisions, insofar
as
they defer to state law, are in accord with section 8 and California v.
United States. Rather
than
supporting the conclusion that the Reclamation Act establishes an invariable
federal-law
rule
that irrigators are the owners of Bureau project water, these decisions confirm
that the
ownership
issue is governed by state law.
Ickes v. Fox, 300 U.S. 82
(1937), involved the question of whether the Bureau could
impose
a surcharge on irrigators served by one Bureau project in order to help finance
the
development
of a second project. The issue before the Court was whether the
an
“indispensable party” to the suit brought by irrigators challenging the
surcharge. The Court
ruled
that the
irrigators,
not the
in
part based on its conclusion that, “by the contract with the government, it
was the land owners
who
were ‘to initiate rights in the use of water,’” id. at 94,
apparently meaning that the irrigators
themselves,
not
acquire
the water rights. As we explain below, this case is very different from Ickes,
both on the
-7-
law
and the facts.
In Nebraska v. Wyoming, 325 U.S. 589 (1945),
an equitable apportionment case within
the
Supreme Court’s original jurisdiction, the Court determined that individual
irrigators, not the
United
States, were the owners of the water rights. But, again, this outcome depended,
not on a
blanket
federal rule, but on state water law which defined the irrigators as the holders
of the
water
rights. Referring to section 8, the Court said: “We have... a direction by
Congress to the
Secretary
of the Interior to proceed in conformity with state laws in appropriating water
for
irrigation
purposes. We have a compliance with that direction. Pursuant to the [
procedures, individual landowners have become the appropriators of the water rights, the United
States
being the storer and carrier.”
districts
submitted proof of beneficial use to the state authorities on behalf of the
project water
users.
The state authorities accepted that proof and issued decrees and certificates in
favor of the
individual
water users. The certificates named as appropriators the individual land
owners.”
at
613. Again, this case is quite different.
The final decision upon which plaintiffs rely, Nevada
v. United States, 463
(1983),
dealt with the issue of whether the
the
water from long-established irrigators to a new user. The decision confirms that
the issue of
water
ownership must be determined, not by federal law, but by state law. The Court
said, “[a]s
in
Ickes v. Fox and Nebraska v. Wyoming, the law of [the] relevant
State” decides the water
ownership
issue. 463
law
granted ownership in the water to the irrigators. Again, this is a different
case.
The fallaciousness of the argument that a federal
rule prescribes that irrigators always
hold
the appropriative water rights at Bureau projects is confirmed by the
established understanding
in
ownership
of appropriative water rights is governed by
in
a brief recently filed in a pending case before the U.S. Court of Appeals for
the Ninth Circuit,
the
project
water at the Bureau’s
The plaintiffs’ claims under
-8-
and not the Area I plaintiffs [the irrigators], holds
the permitted rights to the water. The
the water to beneficial use. Central Valley Project
water is therefore not available for
appropriation by end users of
the water. The end users of federal reclamation water law
have only a contractual right to water, not a
state property right.
Brief
for the Federal Appellees, Orff v. United States, No. 00-16922 (9th Cir.,
numerous
federal and state court decisions. See, e.g., Westlands Water
Dist. v. Natural
Resources
Defense Council, 43 F.3d 457, 461 (9th
Cir. 1994); County of
Water
Resources Control Board, 54
States
v. State Water Resources Control Board, 182
the
plainly
there cannot be an invariable federal rule that the
water.
The issue is to be resolved, on a state-by-state basis, as a matter of state
law.
The Court of Federal Claims basically adopted this
position in its decision on liability in
that
case are somewhat similar to the issues in this case. The Court ruled that,
under
law,
the project operator (in that case the Department of Water Resources) held the
appropriative
water
right, not the irrigators. The court said that we “acknowledge that plaintiffs
[i.e. the
irrigators]
possess rights not as direct appropriators of water, but as parties to a
contract with an
entity
– DWR – entitled to appropriate.”
theory
that water ownership is determined by a one-size-fits-all federal rule
invariably assigning
the
ownership interest in project water to the irrigators served by the project.
III.
UNDER
PROJECT WATER
IS THE UNITED STATES, NOT THE IRRIGATORS.
Under
this
issue, the
Furthermore,
to the extent
-9-
Klamath
project water.
The claim of the
legislature
of
"Whenever the proper officers of the
for the utilization of water within this state, shall
file in the office of the state engineer a
written notice that the
described in such notice and unappropriated at the
date of the filing thereof shall not be
subject to further appropriation under the laws of
this state, but shall be deemed to have
been appropriated by the
the date of filing such notice the proper officer of
the
of the proposed works in the office of the state
engineer for his information: And
provided, further, that within four years from the
date of such notice the
shall authorize the construction of such proposed
work. No adverse claims to the use of
the water required in connection with such plans
shall be acquired under the laws of this
state except as for such amount of said waters
described in such notice as may be
formally released in writing by an officer of the
which release shall also be filed in the office of
the state engineer.
In
re. Waters of Umatilla River, 168 P. 922, 925 (Or. 1917)
(quoting the full text of the act)
(emphases
added).
A few months after the enactment of this state
legislation, on
States
filed a notice of intention to appropriate
substantive
part:
Notice is hereby given that the
wit:
All of the waters of
the
thereto or receiving water therefrom, including the
following and all their tributaries;
[listing tributaries]
-10-
It is the intention of the
marshes and all other available waters lying or
flowing therein.
That the
for the utilization of water in the state of
Congress approved
This notice is given under the provisions of section
two (2) of an act passed by the
legislature of the state of
1905, and constituting chapter 288, of the General
Laws of
the Secretary of State.
Opinions
of the Oregon Attorney General, No. 1583, 25 Op.Atty.Gen. 62 (
(quoting
in full the notice of intention filed by the
The unmistakable meaning of the 1905 legislation is
that, when the
constructed
a Bureau project in the state of
formalities
of the statute, the
right
in the project under
filed
in conformity with the
that
the
water.
The view that the
project
is supported by numerous relevant authorities. For example, in In re Waters
of the
the
Oregon Supreme Court said that the
“vested
the
compliance
with the 1905 legislation was sufficient to grant the
Umatilla
water, then compliance with the 1905 legislation also was sufficient to grant
the United
States
vested title to Klamath water.
This understanding is also confirmed by several
opinions published by the
Attorney
General’s office. In Oregon Attorney General Opinion No. 1583, 25 Op.Atty.Gen.
62
-11-
(
its
1905 claim, had acquired all of the available waters in the Klamath or only the
amount
necessary
to carry out the planned project. The Attorney General adopted the latter
interpretation.
The key point for present purposes is that the Attorney General, in addressing
this
specific
issue, took it as given that the federal government (and no one else) was the
owner of the
water
appropriated for the Bureau project. See also Memorandum from
Walter Perry and Meg
Reeves,
Assistant Attorney Generals, to Richard Bailey Adjudicator,
at
http://www.wrd.state.or.us/programs/klamath/index.shtml) (concluding “that the
is
entitled to the amount of water that is necessary to develop the project
described by the United
States
when it filed its 1905 notice and plan, and that was subsequently developed
within a
reasonable
period of time, with a priority date of
The several federal court decisions arising from
implementation of the ESA in the
Klamath
basin have been litigated based on the understanding that the
of
the appropriative water rights in the Klamath project. See, e.g., Klamath
Water Users
Protective
Association v. Patterson, 204 F.3d 1206, 1209 (9th Cir. 2000) (“In 1905, in accordance
with
state water law and the Reclamation Act, the
rights
in the
a
series of water diversion projects.”);
U.S.
Bureau of Reclamation, 138 F. Supp.2d 1228 (N.D. Cal.
2001) (same).
As indicated above, the language of the 1905
the
was
authorized to transfer ownership of the water by assignment, so long as the
assignment was
(1)
in writing, (2) signed by a duly authorized official, and (3) filed with the
State Engineer. So
far
as NRDC has been able to determine, no assignment conforming to the requirements
of the
1905
act has ever been made with respect to the Klamath project. Thus, the
and
remains, the owner of Klamath project water.
The conclusion that the
by
the law, but it is supported by basic fairness. While the irrigators make much
of their
payments
to the
-12-
have
come at a very heavy cost to
357
at
no cost,.... the irrigators will... be chargeable with but small fraction of the
total cost of the
project”).
Given the significant subsidy of the Klamath project by the national government,
it is
entirely
appropriate for the
Morton,
549 F.2d 128, 132 (9th Cir. 1977) ( “Project water... would not exist but for
the fact that
it
has been developed by the
In the foregoing, we have assumed that
issue
of water ownership. However,
most
of the water for the Klamath project is apparently initially diverted in
and
appropriation
in the Klamath basin. But the Klamath River Compact, P.L. 85-222 (approved
originating
in the Upper Klamath basin validly established and subsisting as of the
effective date
of
this compact under the laws of the state in which the use or diversion is
made, including rights
to
the use of waters for domestic and irrigation uses within the Klamath
project.” (Emphasis
added.)
Because much of the Klamath project water is used in
appears
to indicate that the law of appropriation of
project
water.
Fortunately, it is unnecessary for the Court to
resolve this thorny choice of law issue. As
described
above in our discussion of whether water rights in Bureau projects are
determined
under
federal or state law, see pp. 8-9, supra, the rule under
the
project water is the
Klamath
project water, the laws of
Given that the
water,
whatever rights the irrigators can assert to Klamath project waters must rest on
their
contracts
with the
pending
Orff litigation, once it is recognized that
right
at Bureau projects, it is clear that “[t]he end users of federal reclamation
water [i.e., the
-13-
irrigators]
have only a contractual right to water, not a state property right.” Brief for
the Federal
Appellees,
Orff v,
added).
This also has been the consistent understanding in the Klamath River ESA
litigation.
See
Klamath Water Users Protective Association v. Patterson, 15 F.Supp.2d
990, 995 (D. Or.
1998),
aff’d, 204 F.3d 1206, 1209 (9th Cir.
2000) (distinguishing between “the rights held by the
repayment
contracts”). See also Tulare Lake v. United States, 49
Fed. Cl. 313, 318 & n. 6 (2001)
(distinguishing
between the appropriative claim of the Department of Water Resources and the
irrigators’
contract-based rights based on their contracts with the Department).4
IV.
PLAINTIFFS’ TAKINGS CLAIMS SHOULD ULTIMATELY FAIL ON THE
MERITS.
Contrary to plaintiffs’ repeated suggestion that it
has a strong position in the merits of its
claims,
see Plaintiffs’ Memorandum at 3 n.3, these taking claims should
ultimately be rejected on
the
merits. As discussed in the introduction, the weakness of plaintiffs’ claims
on the merits is
pertinent
in considering whether to grant, or even to proceed with consideration of, the
United
States’
motion for a stay.
A.
The Contracts Between the Irrigators and the Bureau Do not Create a
Right to the Delivery of Any Specific Quantity of
Water.
1.
The Contracts Expressly
Contradict Plaintiffs’ Claim of Rights.
By their express terms, the contracts between the
Bureau and the irrigators bar the
irrigators
from claiming a “property” right to water deliveries from the Bureau. For
this reason
_________________________________________________________________________
4 As plaintiffs point out, the
irrigation
water from the Klamath Project have a beneficial interest in the Klamath project
water.”
Plaintiffs’ Memorandum, at 2. NRDC understands this statement to simply
reflect that
the
irrigators have interests in Klamath project water pursuant to their contracts,
subject to all of
the
limitations expressed in the contracts.
-14-
alone,
all or most of the takings claims in this case must be rejected.5
The key provision in the Klamath Project contracts
reads as follows:
“On account of drought or other causes,
there may occur at times a shortage in the
quantity of water available in Project reservoirs,
and while the
reasonable means to guard against such shortage, in
no event shall any liability accrue
against the
On
its face, this language means that, insofar as the plaintiffs base their takings
claims on rights
allegedly
conferred by their contracts with the Bureau, they are barred from recovering
compensation
under the Taking Clause. The Bureau is immune from liability for water
shortages
“[o]n account of drought or other causes,” and this case clearly falls
within the broad
scope
of this provision. The Bureau’s restrictions on deliveries in 2001 were the
combined result
of
drought conditions and “other causes,” i.e., the mandates of the
Endangered Species Act.
As Professor Brian Gray has succinctly summarized the
point: “The Klamath Project
water
contracts... expressly absolve the
hydrologic,
regulatory, or hybrid - that may occur within the system. As such, the
contractors
and
beneficiaries have no ‘property’ right to receive project water in violation
of the directives of
the
Endangered Species Act or other laws that govern project operations. The
therefore
has not breached its contract obligations, nor has it taken property without
just
compensation.”
“The Property Right in Water,“ 9
Thought
1, 26 (2002).
Apart from the compelling logic of this argument, the
precise issue of whether the
Klamath
contracts create an enforceable right to a specific quantity of water has
already been
litigated
– and resolved – with respect to some of the very same plaintiffs who are
pursuing this
litigation.
See Klamath Water Users Association v. Patterson, 15 F.Supp.2d 990
(D. Or. 1998),
aff’d,
204 F.3d 1206 (9th Cir.
2000). The resolution of this issue in the earlier litigation should
preclude
relitigation of the issue in this case, at least as to these plaintiffs, under
the doctrine of
_____________________________________
5 Federal law governs the
interpretation of these contracts. See O’Neill v.
50
F.3d 677, 682 (9th Cir),
cert. denied, 516
interpretation
of contracts entered into pursuant to federal law where the government is a
party.”)
-15-
res
judicata. See Stearn v. Department of the Navy, 280 F.3d
1376,1380 (Fed. Cir. 2002)
(“Under
the doctrine of res judicata, a final judgment on the merits of an action
precludes the
parties
from relitigating issues that were or could have been raised in that
action.”).
In the Patterson case, the irrigators
challenged requirements imposed by the Bureau under
the
ESA on the operations of Link Dam, which is managed by a private firm pursuant
to a
contract
with the Bureau. The irrigators claimed standing on the theory that they were
third
party
beneficiaries under a contract between the Bureau and the dam operator. To
resolve the
issue,
the court examined the irrigators’ direct contracts with the Bureau, treating
these
contractual
relationships as “relevant evidence” for interpreting the meaning of the
Bureau’s
contract
with the operator of Link Dam and for deciding whether the plaintiffs could
claim third party beneficiary status. 15 F.Supp.2d at 996. The court concluded,
based on the shortage
provision
in the irrigators’ contracts with the Bureau, that the irrigators lacked an
enforceable
right
under the contracts to the delivery of water without regard to the threat to
endangered
species.
Based in part on this conclusion, the court determined that the plaintiffs also
were not
third
party beneficiaries under the Link Dam contract. The court reasoned that it
would be
anomalous
to grant irrigators the right to challenge ESA requirements as beneficiaries of
a
contract
to which they were not a party if they lacked the right to challenge ESA
requirements
directly
under contracts with the Bureau to which they were parties. See
On appeal, the United States Court of Appeals for the
Ninth Circuit affirmed the trial
court
judgment. While the Ninth Circuit did not discuss the irrigators’ contracts
with the Bureau
in
the same detail as the trial court, the Ninth Circuit specifically affirmed the
trial court’s ruling
that
ESA requirements “override the water rights of the irrigators.” See
204 F.3d at 1213. The
Patterson
case plainly represents an adjudication of the rights of the irrigators under
their
contracts
with the Bureau and there is no just reason these plaintiffs should be permitted
to
relitigate
this issue in this Court.
In addition, the conclusion that the irrigators’
contracts with the Bureau preclude a
finding
that the irrigators have vested rights to project water has been affirmed in the
subsequent
Klamath
basin litigations. In
Bureau
of Reclamation, 138 F.Supp.2d 1228 (N.D.Cal. 2001), the court ruled
that the Bureau’s
-16-
year
2000 operating plan violated the ESA and issued an injunction restricting
project water
deliveries
to irrigators. The court rejected the argument advanced by the irrigator-intervenors
(again,
many of the same parties in this case) that the curtailed deliveries violated
the irrigators’
rights
to project water. The court, again relying on the shortage provision in the
contracts, said
the
requirements of the ESA “override the water rights of the irrigators.”
quoting
Patterson. Also, in Kandra v.
district
court rejected a preliminary injunction motion filed by the irrigators based on
the year
2001
Klamath plan, ruling that the plaintiffs failed to demonstrate a likelihood of
success on the
merits.
The court rejected the plaintiffs’ claim of breach of contract-based water
rights, again on
the
ground that the “plaintiffs’ contract rights to irrigation water are
subservient to ESA ...
requirements.”
These rulings in the Klamath cases are entirely
consistent with other precedent addressing
this
issue. In particular, in O’Neill v. United States, 50 F3d 677 (9th Cir.), cert. denied, 516
1028
(1995), the Ninth Circuit ruled that, in view of a contract clause absolving the
of
liability in the event of water shortages due to “any other causes,” the
liable
for Bureau reductions in water deliveries to land owners and water users in the
Water
District. Just as in this case, the reductions in deliveries
in O’Neill resulted from the
agency’s
“mandatory compliance” with the Endangered Species Act. See Brian
Gray, “The
Property
Right in Water, “ supra (explaining in detail the significance of the decision
in O’Neill
for
the resolution this litigation). See also Bowen v. Public
Agencies Opposed to Social
Security
Entrapment, 477 U.S. 41 (1986) (because federal government had
reserved the right to
modify
the program creating the alleged contract right,
not
rise the level of ‘property’”).6
__________________________________
6
This case is the exact opposite
of a Winstar-type case. See
Corp.,
518
held
financially liable for breach of contract as a result of legislative action
which abrogates a
contract
containing an express promise by the
treatment,
as a result of which the
in
legal policy. These contracts, by contrast, expressly absolve the
due
to changes in legal policy.
-17-
2.
The Unmistakability Doctrine
Governs This Case.
Even if the repayment contracts were completely
silent about the potential liability of the
Under
the unmistakability doctrine, contracts, including contracts between a private
party and the
sovereign,
are not immune from subsequently enacted legislation. As the Supreme Court has
explained
“Sovereign power... governs all contracts subject to the sovereign’s
jurisdiction, and
will
remain intact unless surrendered in unmistakable terms.” Merrion v.
Jicarilla Apache Tribe,
455
surrender
of Congress’ legislative power (indeed they contain an express reservation of
power),
they
cannot be construed as creating an immunity from future legislative changes. As
a result,
plaintiffs
can claim no “property” right based on their contracts to avoid compliance
with the
ESA.
This precise point has been upheld in another case
involving enforcement of the ESA
against
a
Association
v. Patterson, the irrigators challenged the decision of the
Bureau to require that Link
Dam
be managed in accordance with the ESA. The Ninth Circuit rejected the claim in
part based
on
the unmistakability doctrine.
“It is well settled that contractual arrangements
can be altered by subsequent
Congressional legislation.... Even in circumstances
where the ESA was passed well after
the agreement, the legislation still applies as long
as the federal agency retains some
measure of control over the activity. Therefore, when
an agency, such as Reclamation,
decides to take action, the ESA generally applies to
the contract.”
204
F.3d. at 1213. See also O’Neill v. United States, supra
(ruling that, even if the contracts had
not
contained clauses absolving the
contract
rights in the Westlands project were “not immune from subsequently enacted
statutes”).7
_________________________________________________
7
Because
the contracts and the unmistakability doctrine so plainly bar plaintiffs from
claiming
any right to the delivery of a specific quantity of project water, the Court may
have no
need
to reach the issue of whether plaintiffs’ alleged property rights in project
water are limited
by
background principles of state property and/or nuisance law. In
49
Fed.Cl. 313, 321 (2001), the Court of Federal Claims acknowledged the importance
of the
Court
concluded these background principles could not defeat the takings claims in
that case
because
the California Water Resources Control Board had previously determined that
these
doctrines
did not support further restrictions on irrigation deliveries. This reasoning
(whether or
not
correct) has no bearing on this case, because no state agency (or state court)
has determined
how
these doctrines limit private water rights in the Klamath basin. Thus, in
NRDC’s view, in
the
event it is necessary to reach the issue, the Court should reject the takings
claims in this case,
to
the extent
doctrines.
To the extent
claims
are barred under background principles of state law. The invasion of “a right
common to
the
members of the public generally” has been defined as a public nuisance under
See
Smejkal v. Empire Lite-Rock, 547 P.2d 1363 (Or. 1976). Actions destroying
the public’s
fishery
resources certainly invade rights common to the public. See
Protective
Union v. City of St. Helen’s, 87 P.2d 195 (Or.1939)
(enjoining as a public nuisance
private
actions which injured fish owned by the State as trustee for the public and
interfered with
“the
common right of the citizens of the state to fish”).
-18-
B.
The Irrigators’ Only Remedy
for a Violation of Their Alleged Contract Rights
Would Lie in a Suit for Breach of Contract, Not a
Takings Claim.
For the reasons set forth above, the plaintiffs have
no enforceable contract rights to
delivery
of specific quantities of water. Therefore, they cannot assert a viable taking
claim based
on
the alleged taking of any contract rights. However, if the plaintiffs had
enforceable contract
rights,
they would be required to vindicate those rights through a breach of contract
suit, rather
than
as claims under the Takings Clause. For this second, independent reason,
plaintiffs’ takings
claims
should fail.
In general, “the concept of a taking as a
compensable claim theory has limited application
to
the relative rights of party litigants when those rights have been voluntarily
created by
contract.”
Sun Oil Co. v.
is
due to and measured in reference to plaintiffs’ performance of a contract, and
is exclusively
money
damages,” plaintiffs’ claim that the wrong originated in a constitutional
violation “does
not
strip the case of its contractual nature.” A&S Council Oil
Cir.
1995). In other words, the remedy for alleged infringement of rights rooted in
contract lie in
contract,
not under the Fifth Amendment, because it is the contract which governs the
parties’
rights
and obligations.
-19-
Recently, in Castle v.
ruled
that plaintiffs were not entitled to pursue both contract and takings claims
based on the
enactment
of the Financial Institutions Reform, Recovery, and Enforcement Act. The mere
assertion
that a contract-based right has been violated is not sufficient to support a
taking claim,
the
Court declared, because “the plaintiffs retained the full range of remedies
associated with any
contractual
right they possessed.”
In this case, because the plaintiffs’ rights to
Klamath project water, if any, are based on
their
contracts, they are not entitled to seek recovery under both a contract and a
takings theory.
Of
course, in NRDC’s view, the plaintiffs’ direct contract claims should
ultimately fail as well
based
on the contract language absolving the
water
shortages. However, the fact that the plaintiffs may lack a winning contract
claim does
not
alter the fact that they cannot proceed with a duplicative taking claim. There
can be no
taking
here because the plaintiffs retain the full range of remedies for any contract
right they
actually
possess.
C.
The Contract Language Bars the Plaintiffs From Claiming a Violation
of Property Rights Even If They Could Otherwise Claim
a Property
Right in Klamath Project Water Under Either Federal
or State Law.
For the reasons discussed in sections II and III, the
issue of ownership of Klamath project
is
governed by state law which, in the circumstances of this case, dictates that
the
not
the irrigators, is the owner of Klamath project water. Accordingly, the project
irrigators are
limited
to asserting rights under their contracts with the Bureau. These contracts, as
explained
above,
would not support a taking claim against the
recovery
from the
plaintiffs
could claim a property interest in Klamath project water independent of their
contracts
with
the Bureau – either under federal or state law – they still would be barred
from claiming an
infringement
of any protected property interest in the circumstances of this case.
The reason is that the Klamath project contracts
expressly absolve the
liability
for shortages in deliveries by the Bureau from the project. The shortage at
issue in this
case
arose from the Bureau’s operation of the project, and the provision absolving
the United
-20-
States
applies, but its terms, in the circumstances of this case. This language must be
given
effect,
and the irrigators should be held to the terms of their bargain, regardless of
whether they
possess
only contract rights or can claim, in addition, some independent property
interest in the
water
under either federal or state law.
Two decisions are particularly instructive on this
point. In Barcellos & Wolfson, Inc v.
677
(9th Cir.), cert. denied, 516
contending
in this case, that they possessed rights to water under the Reclamation Act.
Like the
plaintiffs
in this case, they specifically relied on the language in section 8 stating that
the right to
use
water “shall be appurtenant to the land served,” and again like the
plaintiffs in this case, cited
Ickes
v. Fox and its progeny to support their position. Without
specifically passing on the
validity
of these arguments, the court ruled that the contract language absolving the
of
liability for water shortages trumped any right the irrigators might otherwise
have possessed
under
the Reclamation Act: “Ickes does not stand for the proposition that these
property rights
require
the government to continue to deliver water in contravention of the water
delivery
contract,
which defines the extent of the water right... [The] argument that [section 8]
unilaterally
abrogates
the shortage provision of the present contract is meritless.”
Likewise, in
F.2d
1084 (9th Cir.
1985), employing precisely the same reasoning, the Ninth Circuit ruled that,
where
a contract between irrigators and the
in
the event of a shortage, the Bureau could not be held to have violated
plaintiffs’ water rights
under
is
unclear just how the rights and interests claimed by the appellant would be
protected by law.
Absent
such protection, they cannot rise to the level of ‘property” under the law
of
1088.
See Water and Water Rights (R.Beck, ed.) §41.05(a) at 411 n.214 (1991)
(stating that
“[t[he
Fremont-Madison
Irrigation District).
D.
Plaintiffs’ Per Se Takings Theory Should Fail
-21-
Finally, even if plaintiffs had a protected right to
water deliveries which they could seek
to
vindicate through a takings claim, this takings suit should fail because there
is no merit to
plaintiffs’
argument that this case involves a physical occupation supporting a finding of a
per se
taking.
1.
General Considerations Weigh Against a Per Se Claim.
Plaintiffs’ per se takings claim
rests on an extreme, even radical, legal theory. Under this
theory,
once a claimant identifies a protected property interest in water, every
restriction on the
diversion
or delivery of water, no matter how modest in scope or short in duration, could
be
challenged
as a taking. That outcome would be inconsistent with the quest for balance which
is
at
the heart of the Supreme Court’s takings jurisprudence. See Pennsylvania
Coal Co. v.
260
property
could not be diminished without paying for every such change in the general
law.”). It
also
would fly in the face of the Supreme Court’s recent mandate to avoid the use
of per se rules.
See
Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency, 535
n.23
(2002) ("The temptation to adopt what amount to per se rules ... must be
resisted. The
Takings
Clause requires careful examination and weighing of all the relevant
circumstances”).
In addition, the notion that water rights should be
evaluated under an automatic, per se
test
is inconsistent with the fact that, “[u]nlike real property rights, ... water
rights are limited and
uncertain.”
(1986).
In the first place, all water in the states of
See
ORS 537. 110; Cal Water Code §102. Thus, the only type of right which a project
operator
or
a water user can acquire is a right to “use” the water.
addition,
maintenance of rights in water traditionally has depended on their continued
exercise;
thus,
in contrast with rights in land, rights in water can be completely lost through
non-use over a
period
of time. See Wimer v. Simmons, 39 P. 6,10 (1895). Moreover, all
rights in water have
always
been subject to the condition that the water be put to beneficial use. See
matter
of basic hydrology, all water rights are subject to the condition that Nature
might not make
the
water available.
-22-
In view of the limited and contingent nature of
rights in water, it would be surprising
indeed
if private property rights in water had greater protection under the Takings
Clause than
any
other kinds of property rights. But that is exactly what plaintiffs are claiming
by advancing a
per
se takings theory in this case. Property rights in water, at a minimum,
should have no greater
protection
that rights in other types of property. See generally Joseph Sax,
“The Constitution,
Property
Rights, and the Future of Water Law,”61 U.Colo.L.Rev. 257, 260 (1990)
(stating that
claimed
private property rights in water “have no higher or protected status than any
other sort of
property”).
2.
Regulation
of a Usufructuary Right in Water Is Not a Physical Occupation.
For several reasons, the theory that a restriction on
the exercise of a water right represents
a
physical occupation supporting a finding of a per se taking must
be rejected. First, this theory
is
illogical and incoherent in light of the limited nature of private rights in
water. As discussed, a
water
right is only a right to the “use” of a certain quantity of water during a
certain period of
time.
A water right holder does not hold a property right in the corpus of the water
itself, and
therefore
cannot exercise any type of dominion over any identifiable pool or area of
water.
Because
a water right is simply a right to the use of a certain quantity of water, it
makes no sense
to
speak of government physically occupying a water right by restricting the
exercise of the right.
In
this respect, rights in water are different from rights in land, where the
concept of physical
occupation
does logically apply. See generally Loretto v. Teleprompter
Corp.,
458
Second, under the Supreme Court’s general standards
for distinguishing between regulatory
restrictions
and physical occupations, ESA restrictions on the exercise of water rights
represent
regulatory restrictions rather than physical occupations. In Tahoe-Sierra,
the Supreme
Court
emphasized that the physical occupation category must be tightly cabined to
avoid
“transform[ing]
government regulation into a luxury few governments could afford.” 535
1479.
Accordingly, the Court said, the physical occupation category must be reserved
for
“relatively
rare” cases in which the physical occupation can be “easily identified.”
The Court
also
stressed that regulatory takings and physical occupations must be kept
analytically distinct.
It
is “inappropriate to treat cases involving physical occupations as controlling
precedents for the
-23-
evaluation
of a claim that there has been a ‘regulatory taking,’ and vice versa.”
The Court described the distinction between physical
occupations and regulatory
restrictions
by way of illustration. Thus, the Court said compensation is due under a
physical
occupation
theory “when a leasehold is taken and the government occupies it for its own
purposes.”
(1945)).
“Similarly,” the Court said, “when the government appropriates part of a
rooftop in
order
to provide cable TV access for apartment tenants, Loretto v. Teleprompter
CATV
Corp., 458 U.S. 419 (1982), or when its planes use private
airspace to approach a
government
airport, United States v. Causby, 328 U.S. 256 (1946),”
physical-occupation theory
applies.
government
regulation that merely prohibits landlords from evicting tenants unwilling to
pay a
higher
rent, Block v. Hirsh, 256 U.S. 135 (1921); that bans certain private uses
of a portion of an
owner's
property, Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926); Keystone
Bituminous
Coal Assn. v. DeBenedictis, 480 U.S. 470 (1987); or that
forbids the private use of
certain
airspace, Penn Central Transp. Co. v.
Under these standards and based on these examples,
ESA restrictions on the exercise of
water
rights do not qualify as physical occupations. Certainly these types of
restrictions are not
“easily
identified” as physical occupations. Indeed, as discussed, it is logically
incoherent to
view
restrictions on the exercise of water rights as a physical invasion because a
water right
includes
no interest capable of being invaded or occupied in a physical sense. In terms
of the
type
of restraint they impose, the ESA restrictions in this case are akin to the land
use regulations
in
Keystone or the air space restrictions in Penn Central. On the
other hand, they are unlike the
actual
physical invasions of real property in Loretto and Causby.
The significance of the distinction between
regulation and physical occupation, for the
purpose
of this litigation, lies in the fact that characterizing the government action
as one or the
other
determines whether or not the claim must be evaluated using the parcel as a
whole rule. As
the
Supreme Court explained in Tahoe -Sierra, “[w]hen the government
physically takes
possession
of an interest in property for some public purpose, it has a categorical duty to
compensate
the former owner, regardless of whether the interest that is taken
constitutes an entire
-24-
parcel
or merely a part thereof.” 535
of
regulatory takings claims.... we must focus on the ‘parcel as a whole.’”
added).
In this case, the question of whether the claims
involve a regulation or a physical
occupation,
and hence whether the parcel as a whole rule applies or not, is potentially
decisive.
The
takings claims are based on reductions in deliveries in a single year, the year
2001. If the
alleged
takings were treated as physical occupations, the evaluation of the effect of
the alleged
takings
would properly focus on the impact during that single year. Under this approach,
the
government’s
action could potentially be viewed as eliminating all economically viable use of
the
alleged property interests. But if the claims are treated as being regulatory
takings claims,
then
the analysis must consider the plaintiffs’ ability to use the water in other
years. See Tahoe-
Sierra,
535
terms,
but in the temporal dimension as well). Under that approach, the effect of the
government
action
on the value and/or use of the alleged property interests is plainly very
modest.
The Supreme Court’s rejection of the per se
regulatory takings claim in Tahoe-Sierra
compels
rejection of claimant’s per se takings claims in this case. The
Supreme Court refused to
apply
a per se rule to a regulation that prohibited use of the property
for a period of 32 months,
rejecting
the argument that the claim should be evaluated by focusing solely on that
period
without
considering that the owners could still use their properties after the
restriction was lifted.
Likewise,
the takings claims in this case cannot properly be evaluated by focusing on the
single
year
in which water deliveries were curtailed, disregarding the plaintiffs’ ability
to use water in
other
years. See also Maritrans Inc. v. U.S., 342 F.3d 1344 (Fed.Cir.,
2003) (applying the parcel
rule
in the temporal dimension).
3.
Plaintiffs apparently intend to rely heavily on the
Court of Federal Claims decision in
irrigators
challenged restrictions on water deliveries imposed under the ESA. The
restrictions
reportedly
were relatively modest in their effects. See Melinda Harm Benson, “The
-25-
Water
Rights, the Endangered Species Act, and the Fifth Amendment,” 32 Envtl. L.
551, 560
(“[t]he
restrictions resulted in an overall reduction in water availability of
approximately
0.11%and
2.92%” for the two irrigation district plaintiffs). Nonetheless, applying the per
se
physical-
occupation theory, the court found a taking.
This ruling in
reasoning
of the Court in
extinction
of all value” of plaintiffs’ water rights, and for that reason “amount[ed]
to a physical
occupation”
of the property.
the
benefit of the guidance provided by the Supreme Court’s subsequent decision in
Tahoe-
Sierra.
Under the standards articulated in Tahoe-Sierra, the per se
rule for physical occupations
does
not apply in that case. Indeed, Tahoe-Sierra directly contradicts the
reasoning in
The Court erred in Tulare Lake, first, by
concluding that because the regulation ostensibly
“deprived
[plaintiffs] of the entire value of their contract right,” 49 Fed.Cl. at 318,
it effected a
physical
occupation of the plaintiffs’ asserted water rights. Contrary to the court’s
reasoning, a
regulatory
restriction that destroys all economically viable use is not the same
thing as a physical
occupation
of private property. For example, Lucas v. South Carolina Coastal Council
involved
a
regulation that had been found to make the property valueless. But the Supreme
Court did not
conclude
from this finding that the claim in Lucas involved a physical occupation. To the
contrary,
the
purpose
of the Takings Clause, 505
regulatory
use restrictions. The Court treated the “total taking” claim in Lucas
as being a
regulatory
taking claim, not a physical occupation claim.
The Court in
by
the decision in United States v. Causby, 328 U.S. 256 (1946), but that
belief was
mistaken.
Causby addressed a taking claim based on the government’s frequent
operation of
low-
flying aircraft through plaintiffs’ privately owned airspace. Causby
clearly is a physical
occupation
case, not a regulatory takings case. See Tahoe-Sierra, 535
Causby
on the physical-occupation side of the divide between regulatory restrictions
and physical
-26-
occupations).
Because Causby involved an actual physical occupation, it does not
support the
theory
that a regulation eliminating all economically viable use can be equated with a
physical
occupation.
The Court in
the
ESA restrictions rendered the plaintiffs’ water rights valueless. The Court
implicitly
recognized
that under the parcel as a whole rule it could not have found the property
valueless,
“because
the economic loss asserted here - a fraction of the master contract’s overall
value – was
de
minimis.” 49 Fed.Cl. at 318-19. However, the Court declined to apply the
parcel rule; the
Court’s
conclusion that the regulation destroyed all value obviously was based on the
premise
that
the relevant portion for the purpose of takings analysis was the specific water
plaintiffs had
been
barred from exploiting.
The problem with this analysis is that, as explained
in Tahoe-Sierra, the parcel rule can be
disregarded
only if the case involves a physical occupation. The Court in
characterized
the regulation as a physical occupation, but its only basis for doing so was
that the
regulation
ostensibly rendered the property valueless. However, as discussed above, that
conclusion
rested on an implicit assumption that the parcel rule did not apply, an
assumption that
would
have been appropriate only if the case actually involved a physical invasion. In
other
words,
the Court thought that the case involved a physical occupation because it
assumed the
case
involved a physical occupation. This reasoning is perfectly, and fatally,
circular.
Instead of simply assuming the answer to its
question, the Court in
have
addressed directly, at the outset of its analysis, whether the case involved a
regulatory restriction or a physical occupation. As the Supreme Court said in Concrete
Pipe & Products of
Cal.,
Inc. v. Construction Laborers Pension Trust, 508
portion
of property is taken, that portion is always taken in its entirety; the relevant
question,
however,
is whether the property taken is all, or only a portion of, the parcel in
question.” If the
Court
in
of
the guidance provided in Tahoe-Sierra, it would have recognized that the
case involved a
regulatory
restriction, not a physical occupation. Based on that conclusion it would been
required
to apply the parcel as a whole rule. Because, under the parcel rule, the
economic impact
-27-
of
the ESA regulations on plaintiffs was “de minimis,” the basis for the