Water and Takings John D. Echeverria Vermont Law School 60 th Annual Rocky Mountain Mineral Law Institute Vail, Colorado July 17-19, 2014

and Takings “Nor shall private property be taken for public use, without just compensation” -U.S. Constitution, 5 th Amendment No person's property shall be taken, damaged, or destroyed for or applied to public use without adequate compensation being made... -TX Constitution, Art. I, Sec. 17

Outline of presentation: 1.Primer on Takings 2.The Nature of the Property Interests at Stake in Water Takings Cases 3.The Applicable Takings Tests in Water Takings Cases

Two Basic Types of Takings Claims

My focus today is on inverse condemnation claims involving water, mostly arising from regulatory restrictions on the use of water

Four Issues in Every Takings Case 1. Does the plaintiff possess “property”? 2.Has the property been “taken”? 3.If there was a taking of property, was it for a “public use?” 4.Finally, if there was a taking of private property for a public use, how much financial “compensation” is due?

Four Issues in Every Takings Case 1. Does the plaintiff possess “property”? 2.Has the property been “taken”? 3.If there was a taking of property, was it for a “public use?” 4.Finally, if there was a taking of private property for a public use, how much financial “compensation” is due?

Four Issues in Every Takings Case 1. Does the plaintiff possess “property”? 2.Has the property been “taken”? 3.If there was a taking of property, was it for a “public use?” 4.Finally, if there was a taking of private property for a public use, how much financial “compensation” is due?

Takeaway: Inverse Condemnation Claims Involving Water are Different Property interests in water are more limited than other types of property interests, making it harder for claimants to prevail in water takings cases than in other types of takings cases. But the traditional takings tests apply (or should apply) in water takings cases in the same fashion that they apply in any other takings case.

NB: The Marzullas Have Advocated the Opposite Position According to the Marzullas: -- property interests in water are at least as robust as any other type of private property interest, including interests in land, and -- the applicable takings tests should be applied more generously in favor of water takings claimants than for other types of takings claimants.

“Inverse” Takings Tests “Inverse” Takings Tests  Direct appropriations  and Permanent Physical Occupations = per se takings.

“Inverse” Takings Tests  Regulatory takings claims: -- Total denials of all value = Lucas per se takings.

“Inverse” Takings Tests  Regulatory takings claims: -- Total denials of all value = Lucas per se takings. -- Lesser but still substantial regulatory restrictions on property use = potential Penn Central takings claims, which turn on (a) the level of economic impact, (b) the degree of interference with investment-backed expectations, (c) and the character of the government action.

“Inverse” Takings Tests  The Nollan/Dolan “essential nexus” and “rough proportionality” tests for regulatory “exactions.”  And now Koontz has expanded Nollan and Dolan to apply to: -- monetary exactions, and -- permit denials based on a landowner’s refusal to accede to a “demand” for an exaction.

“Inverse” Takings Test  The alleged failure of a government action to “substantially advance” a legitimate governmental interest cannot support a claim under the Takings Clause.  Instead, such allegations can only state a potential claim under the Due Process Clause  Lingle v. Chevron, USA (2005)  But query whether Koontz has undermined Lingle?

A Typology of Takings Cases Seven categories of water takings cases See the paper

A Typology of Takings Cases Flooding Restrictions on water use Restrictions to prevent water pollution Releases of polluted water Government-caused erosion Government-restrictions on filling Transformation of state water allocation systems Land use restrictions to prevent harm from flooding Land use restriction to avoid creation of floods Others?

A Typology of Takings Cases Flooding Restrictions on water use Restrictions to prevent water pollution Releases of polluted water Government-caused erosion Government-restrictions on filling Transformation of state water allocation systems Land use restrictions to prevent harm from flooding Land use restriction to avoid creation of floods Others?

The Property Interest in Water

The Special Nature of Water Resources and Water Use Variable in quantity on a daily, seasonal and yearly basis Value of resource dependent on shared use - e.g., navigation Uses highly interdependent -e.g. return flows groundwater pumping Water is often both very scarce and very valuable – especially out West!

The Special Nature of the Property Interest in Water Special, Limited Character of Legal Rights in Water -- Use or lose it principle -- Doctrine of waste -- Doctrine of reasonable riparian use -- Navigational servitude -- Public trust doctrine – National Audubon

The Special Nature of the Property Interest in Water The Special Nature of Property Interests in Water is Too Often Overlooked: -- Arkansas Game & Fish Commission v. United States -- Defense based on special character of riparian right to the use of water recognized – and deemed waived – by the U.S. Supreme Court.

What Takings Tests Apply in Water Takings Cases? Answer: the Usual Ones Most courts seem to agree. See the paper

What Takings Tests Apply in Water Takings Cases? Answer: The Usual Ones -- Sometimes government management of water will give rise to physical occupation claims – such as in the case of permanent flooding -- Takings claims based on regulatory restrictions on the use of water – restrictions on surface water diversion or on groundwater pumping – should be analyzed just like any other regulatory takings claim, based on Penn Central or possibly Lucas.

What Takings Tests Apply in Water Takings Cases? Tulare Lake Basin Water Storage Dist. v. United States : -- “by preventing plaintiffs from using the water to which they would otherwise have been entitled,” the government has “rendered the usufructuary right to that water valueless,” and “thus effected a physical taking.” -- WRONG! Maybe a viable Penn Central claim or possibly even a Lucas claim – but no viable “physical taking” claim

What Takings Tests Apply in Water Takings Cases? Casitas Mun Water Dist. v. United States -- Judge Wiese repudiated his decision in Tulare Lake -- On appeal, the Federal Circuit did not question the correctness of Judge Wiese’s repudiation of his Tulare Lake decision -- In my view, the holding in Tulare Lake (which was never binding precedent) is essentially a dead letter

What Takings Tests Apply in Water Takings Cases? Casitas Mun Water Dist. v. United States -- Federal Circuit held, based on the special, assumed facts on appeal, that regulatory mandate to pass water through a fish ladder was a physical taking -- Wrong! -- In any event, assumed facts were incorrect and unlikely to be repeated -- Also, ultimate dismissal on ripeness grounds undermines value as precedent

Thank you! Questions?