Casitas Municipal Water District v. United States
Court rules that water district’s compliance with Endangered Species Act by directing water through a fish ladder must be analyzed as a potential “physical” taking of property in violation of the Fifth Amendment
Status: Federal government petition for rehearing pending in the Federal Circuit Court of Appeals (No. 2007-5153).
Discussion & Analysis: Casitas Municipal Water District (Casitas) maintains and operates the Ventura River Project, a water supply system in Southern California that diverts water from the Ventura River into the Lake Casitas Reservoir via a system of dams and canals. Casitas provides the water supply for irrigation, municipal, domestic, and industrial uses. Under a 1956 contract between Casitas and the U.S. government, Casitas agreed to pay the initial construction costs of the Project in exchange for “the perpetual right to use all water” made available through the project. Casitas also assumed responsibility for the Project’s future operation and maintenance. Casitas does not own the water that flows through the system; California state law governs the water’s use.
In 1997, the National Marine Fisheries Service (NMFS) listed the West Coast steelhead trout, which lives in the Ventura River, as an endangered species. After seeking a Biological Opinion from NMFS as required by the Endangered Species Act, the Bureau of Reclamation in 2003 directed Casitas to construct a “fish ladder” around the dam where water is diverted from the Ventura River and to provide an adequate flow of water through the ladder. Successful operation of the ladder results in an annual loss of no more than 3,200 acre-feet of water from Lake Casitas, out of up to 107,800 acre-feet per year that the State of California permits Casitas to divert into the lake.
In 2005, Casitas sued the federal government in the U.S. Court of Federal Claims, alleging a breach of the 1956 contract and a taking of its private property (i.e., Casitas’ interest in the water now being diverted back to the river to protect the fish) in violation of the Fifth Amendment. The trial court found for the government on all claims. The Federal Circuit Court of Appeals, in a 2-1 decision, reversed the trial court on the takings claim, ruling that the water loss caused by the fish ladder should be analyzed as a possible physical taking if Casitas in fact holds a “cognizable property interest” in the water (a question under California law the court did not fully address).
The court’s reasoning hinged on the physical transfer of water from Casitas’ canal to the fish ladder, which the court characterized as triggering a physical rather than regulatory takings analysis. This ruling is difficult to square with the law of takings. The Supreme Court defines physical takings as “direct government appropriation[s] or physical invasion[s] of private property.” In contrast, regulatory takings occur only when broadly applicable government regulations intrude too deeply into a private property interest in a particular case. These are more difficult to prove than physical takings—indeed, Casitas conceded that it could not prevail under a regulatory takings analysis. To keep this case in the physical takings category, the court focused narrowly on the form of the government action—while appearing to ignore the purely regulatory origin of the government action. “The government,” wrote the court, “took physical possession of the water. . . . This is no different than the government piping the water to a different location. It is no less a physical appropriation.” One judge on the three-judge panel dissented. He wrote that the court should never have reached the takings analysis without first determining Casitas’ water rights under California law. Second, he argued, the majority ignored the “careful” line drawn by the Supreme Court between physical and regulatory takings. “For this to be a physical taking,” he said, “requires expanding the definition to the point of erasing the line between physical and regulatory takings.”
This Federal Circuit decision runs counter to the Supreme Court’s 2002 decision in Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency. There, the Court declined to apply a physical takings analysis because the government action at issue was not a proprietary or consumptive use of private property. By holding that the regulatory act of diverting water through a fish ladder may be a physical taking, the Federal Circuit opens the door to litigants who do not want to comply with environmental laws—or want to be paid for doing so. This decision could have a chilling effect on the willingness of agencies to regulate and, as the dissent points out, creates a perverse incentive for private parties to seek regulatory compliance options that most resemble physical appropriations by the government in order to set up a takings claim later on.
Key Opinion: Casitas Municipal Water District v.