Court Rejects Condemnation of Private Property under Salmon Recovery Act

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SandBar 7:1, Regulatory Takings Issue, April, 2008 Restriction on Water Use Not a Per Se Taking Casitas Mun. Water Dist. v. United States, 76 Fed. Cl. 100 (2007). *Terra Bowling, J.D.* The U.S. Court of Federal Claims ruled that a taking claim regarding a regulatory restriction on water use is subject to the Penn Central taking analysis, and not the per se physical occupation taking theory. Background The Casitas Municipal Water District operates a water project on behalf of the U.S. Bureau of Reclamation (BOR) that supplies water to Ventura County, California, for irrigation and other uses. The district’s use of the water is subject to a license from the State Water Control Board. In 1997, the National Marine Fisheries Service (NMFS) listed the West Coast steelhead trout as an endangered species. Because the trout are in the Ventura River, Casitas and the BOR worked with NMFS to determine how the habitat could be preserved and improved. NMFS eventually issued a Biological Opinion that included revised project operating criteria, which resulted in a decrease in the amount of water Casitas was allowed to divert. Although Casitas implemented the criteria, the district sued the United States. The district claimed contract damages, as well as a Fifth Amendment taking. The court rejected the contract damages claim, and the United States sought summary judgment on the taking claim. *Tulare* The Fifth Amendment provides, “nor shall private property be taken for public use, without just compensation.” The court noted that there is an unconditional right to compensation when the government 1) directly appropriates private property; 2) physically occupies private property; and 3) imposes a regulatory constraint on the use of property so severe as to deprive an owner of all economically beneficial use. Aside from these categories of per se takings, a court must use a multi-factor balancing test outlined in Penn Central Transportation Co. v. New York City.1 The factors include: 1) the extent to which the regulation interferes with investment-backed expectations; 2) the economic impact of the regulation on the claimant; and 3) the character of the government’s interest. In a recent case, Tulare Lake Basin Water Storage District v. United States,2 the court of federal claims ruled that a regulatory restriction on the use of water should be treated as a per se physical taking. In the Casitas case, the United States argued that Tulare was decided incorrectly, because the court focused on the finality of the plaintiffs’ loss, instead of the character of the government’s action. The United States also argued that in a taking action that involves regulatory restrictions on the use of property, the court should use the Penn Central analysis. Relying on another Supreme Court case, Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency,3 the United States argued that a per se taking should be recognized only when the government has physically invaded property or appropriated property for its own or another’s use. In Tahoe-Sierra, the court stated, “This longstanding distinction between acquisitions of property for public use, on the one hand, and regulations prohibiting private uses, on the other, makes it inappropriate to treat cases involving physical takings as controlling precedents for the evaluation of a claim that there has been a ‘regulatory taking,’ and vice versa.”4 The court agreed that Tahoe-Sierra was instructive. The court recognized that the government’s action in this case resulted in the diminishment of the district’s right of use, which is “85 the functional equivalent of a physical taking,”5 However, the court found that Tahoe-Sierra “compels us to respect the distinction between a government takeover of property (either by physical invasion or by directing the property’s use to its own needs) and government restraints on an owner’s use of that property.”6 The court granted the United States’ motion for partial summary judgment. Endnotes 1. 438 U.S. 104 (U.S. 1978). 2. 49 Fed. Cl. 313 ( 2001). 3. 535 U.S. 302 (U.S. 2002). 4. Id. at 323-25. 5. Casitas Mun. Water Dist. v. United States, 76 Fed. Cl. 100, 105 (2007). 6. Id. at 106.
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SandBar 7:1, Regulatory Takings Issue, April, 2008

Restriction on Water Use Not a Per Se Taking

Casitas Mun. Water Dist. v. United States, 76 Fed. Cl. 100 (2007).

Terra Bowling, J.D.

The U.S. Court of Federal Claims ruled that a taking claim regarding a regulatory restriction on water use is subject to the Penn Central taking analysis, and not the per se physical occupation taking theory.

Background
The Casitas Municipal Water District operates a water project on behalf of the U.S. Bureau of Reclamation (BOR) that supplies water to Ventura County, California, for irrigation and other uses. The district’s use of the water is subject to a license from the State Water Control Board.
In 1997, the National Marine Fisheries Service (NMFS) listed the West Coast steelhead trout as an endangered species. Because the trout are in the Ventura River, Casitas and the BOR worked with NMFS to determine how the habitat could be preserved and improved. NMFS eventually issued a Biological Opinion that included revised project operating criteria, which resulted in a decrease in the amount of water Casitas was allowed to divert. Although Casitas implemented the criteria, the district sued the United States. The district claimed contract damages, as well as a Fifth Amendment taking. The court rejected the contract damages claim, and the United States sought summary judgment on the taking claim.

Tulare
The Fifth Amendment provides, “nor shall private property be taken for public use, without just compensation.” The court noted that there is an unconditional right to compensation when the government 1) directly appropriates private property; 2) physically occupies private property; and 3) imposes a regulatory constraint on the use of property so severe as to deprive an owner of all economically beneficial use. Aside from these categories of per se takings, a court must use a multi-factor balancing test outlined in Penn Central Transportation Co. v. New York City.1 The factors include: 1) the extent to which the regulation interferes with investment-backed expectations; 2) the economic impact of the regulation on the claimant; and 3) the character of the government’s interest.
In a recent case, Tulare Lake Basin Water Storage District v. United States,2 the court of federal claims ruled that a regulatory restriction on the use of water should be treated as a per se physical taking. In the Casitas case, the United States argued that Tulare was decided incorrectly, because the court focused on the finality of the plaintiffs’ loss, instead of the character of the government’s action. The United States also argued that in a taking action that involves regulatory restrictions on the use of property, the court should use the Penn Central analysis. Relying on another Supreme Court case, Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency,3 the United States argued that a per se taking should be recognized only when the government has physically invaded property or appropriated property for its own or another’s use. In Tahoe-Sierra, the court stated, “This longstanding distinction between acquisitions of property for public use, on the one hand, and regulations prohibiting private uses, on the other, makes it inappropriate to treat cases involving physical takings as controlling precedents for the evaluation of a claim that there has been a ‘regulatory taking,’ and vice versa.”4
The court agreed that Tahoe-Sierra was instructive. The court recognized that the government’s action in this case resulted in the diminishment of the district’s right of use, which is “85 the functional equivalent of a physical taking,”5 However, the court found that Tahoe-Sierra “compels us to respect the distinction between a government takeover of property (either by physical invasion or by directing the property’s use to its own needs) and government restraints on an owner’s use of that property.”6 The court granted the United States’ motion for partial summary judgment.

Endnotes
1. 438 U.S. 104 (U.S. 1978).
2. 49 Fed. Cl. 313 ( 2001).
3. 535 U.S. 302 (U.S. 2002).
4. Id. at 323-25.
5. Casitas Mun. Water Dist. v. United States, 76 Fed. Cl. 100, 105 (2007).
6. Id. at 106.