Federal Circuit Rules in Favor of

Casitas Water Users

Lake Casitas with a view of Santa Ynez Mountains.

Last November 2010, Casitas Municipal Water District was in trial in the U.S. Court of Federal Claims in Washington, D.C., seeking damages for the taking of its water, following a dramatic reversal of the takings issue in the U.S. Court of Appeals for the Federal Circuit----in Casitas' favor.

Early in the case, the Government took the position that the taking of any water right was to be analyzed as a regulatory taking----which is an almost impossible standard for the plaintiff to win under----and not as a physical taking----which is the standard that has been historically used in water rights takings case.

Originally, the Court of Federal Claims agreed with the Government, holding that the taking of Casitas' water rights would be determined using the regulatory takings test. But Casitas appealed, and the Federal Circuit agreed with Casitas, entirely reversing the trial court's ruling as to which taking test applied. The Federal Circuit also held that Casitas' operation of the fish ladder----which the National Marine Fisheries Service required Casitas build for the endangered West Coast steelhead trout----requires that Casitas provide a portion of its water----its property:

The biological opinion describes diverting water to create flow through the fish ladder.  Of course, the fish ladder cannot become operational as required by the biological opinion unless it is provided with water.  That water, as the government admitted in oral argument, comes out of the Casitas-Robles Canal.  In other words, the water for the fish ladder comes out of Casitas' allotment of 107,800 acre-feet per year.  That is so because, once the water is in the canal, it is water that Casitas has diverted pursuant to its allotment.  It thus has become the property of Casitas.  The operation of the fish ladder diversion works thus takes property of Casitas.

The court then held that this taking is a physical taking, explaining:

This is no different than the government piping the water to a different  location.  It is no less a physical appropriation. ...When the government diverted the water to the fish ladder, it took Casitas' water.  The water, and Casitas' right to use that water, is forever gone.

Background

In 1956 Congress authorized the construction of the Ventura River Project to provide a stable water supply for farmland irrigation and municipal, domestic, and industrial use in Ventura County, California.  The Ventura area has a Mediterranean-type climate, meaning that it receives most of its precipitation during the winter and is generally dry during the summer months.  Rainfall in the area can vary widely from year to year.  Rainfall amounts have been as little as 9 inches in some years and as much as 40 inches in others.  

The purpose of the Ventura Project therefore was to provide a stable drinking and irrigation water supply for the Ventura area even through critical drought periods and to augment groundwater supplies during droughts. In fact, Congress authorized construction of the Ventura River Project in 1956 during a period of critical drought conditions in the Ventura River Basin that had existed since 1944.  Historical records report the then-existing wide-spread alarm in Ventura County over the seriously depleted water supplies caused by the long-term drought.

In a 1954 feasibility study sent to Congress, the Secretary of Interior and the U.S. Bureau of Reclamation explained why the Ventura Project was urgently needed: "Development of an additional firm water supply is urgently needed in the Ventura River Project area for stabilization of present agricultural and other economic activities, for new irrigated lands, for new industries, a rapidly expanding population, and for new economic opportunities. ...[B]ecause of the precarious supplemental supply that the beach wells provide, and the wide range in the quantity obtainable from the river, the city of Ventura has an immediate need for a firm supplemental water supply."

Today, the Ventura Project provides a dependable water supply for roughly 6,500 acres of highly productive citrus and avocado groves and other crops, drinking water to residents of Ventura County, and emergency back-up water to well-water users and to the city of Ventura during droughts.

Listing of the Steelhead Trout as a Federally Endangered Species

In 1997, nearly forty years after the Ventura Project was built, the National Marine Fisheries Service (NMFS) listed the West Coast steelhead trout as an endangered species in the Project watershed. This set into motion a series of events which led Casitas to file a takings suit in 2005 against the United States.

In 2003, NMFS issued a Biological Opinion as required by the federal Endangered Species Act. That Opinion first required Casitas to construct a fish ladder at its Diversion Dam to allow steelhead trout to travel upstream to habitat above the dam.  That ladder alone cost Casitas $9 million to build. In addition, NMFS required Casitas to provide on average approximately 3,500 acre-feet of flows from the Ventura River to operate the fish ladder. This is water that Casitas otherwise would have diverted and stored in Lake Casitas for delivery to its water users. 

The mandatory diversion of Casitas' water for fish protection purposes results in a permanent loss to Casitas of its valuable water supply, worth many millions of dollars, and puts at risk the drinking and irrigation water for many thousands of water users in Ventura County.  And ironically, as it turns out, the steelhead trout were gone from the portion of the Ventura River where the Ventura River Project is located before the Project was even built.  As a result, although Casitas now has a fish ladder and provides its water to make the ladder operational as required in the Biological Opinion, since 2005----fewer than 20 steelhead trout have been documented as having used the ladder!

The Case

In 2005 Casitas filed a takings lawsuit with the U.S. Court of Federal Claims asserting that it should not have to bear the cost of the loss to its water supply. Casitas argued that the Fifth Amendment requires that the cost of the loss to its water supply be borne by the federal government, which took Casitas' water for a public use.

In 2007 the Court of Federal Claims ruled in the government's favor, holding that the deprivation of water from Casitas was regulatory not physical.

But in 2008 the U.S. Court of Appeals for the Federal Circuit reversed the decision of the Court of Federal Claims, holding that the taking of Casitas' water to protect endangered fish is to be analyzed as a physical, not a regulatory, taking: "[T]he water from the Robles-Diverson Canal is permanently gone. Casitas will never, at the end of any period of time, be able to get that water back ... The government requirement that Casitas build the fish ladder and divert water to it should be analyzed under the physical takings rubric."

Significance of the Federal Circuit decision

"The Federal Circuit's decision on the takings test was profoundly important," said Casitas' attorney, Nancie Marzulla.  Marzulla further stated that "had the Federal Circuit held that the regulatory takings test applied, it would have been virtually impossible for a water user to prevail in a takings case.  In other words, the federal government would have been able to take anyone's water without paying just compensation for the water taken.  Thankfully, however, the Federal Circuit agreed with Casitas, recognizing that the unique nature of water means that the only takings test that makes sense is a physical takings test."