Casitas Scores Victory In Appeals Court

Ruling could be worth millions, set precedent for other federal ‘takings’

By Daryl Kelley
After a series of setbacks in a costly 2005 lawsuit, the Casitas Municipal Water District scored a legal victory potentially worth tens of millions of dollars last week when an appeals court panel agreed that the federal government had seized district property by forcing it to provide water for a fish ladder built for the endangered steelhead trout.
In a split decision, the three-justice panel also ruled that Casitas was not entitled to reimbursement for $9 million the U.S. Bureau of Reclamation forced it to spend to build the fish ladder on the Ventura River.
But property rights lawyers said that the 2-to-1 ruling could still carry nationwide significance if it remains in place after an expected request by state and federal lawyers that the case be reconsidered by the full 11-justice federal appeals court in Washington.
“Casitas’ position has been vindicated,” said Washington attorney Roger Marzulla, a property rights specialist who represents the water district. “This ruling says that when the government takes water from private use that’s a property taking.”
And J. David Breemer, a principal attorney for the Pacific Legal Foundation, a property rights group in Sacramento, said the Casitas decision “is very important because it says your water can’t be taken without you being paid for it.”
Before last week’s ruling, Breemer said, the presumption was that the government had a right to take water being used by a private party without compensation to satisfy federal environmental law, such as the Endangered Species Act.
“Now the presumption is that they’ve got to pay for that water,” he said. “The (legal) burden’s on them to make sure they’re not taking water without compensation.”
If the Bureau of Reclamation is forced to pay for water to operate the fish ladder, the bill could total $1 million to $2 million a year, officials said. That compares with Casitas’ annual budget of $15 million.
Casitas estimates that it takes at least 3,200 acre-feet of water a year to guarantee that the steelhead migration can occur. The district charges farmers $371 an acre-foot for water and residential customers $444. It also estimates that it would cost at least $600 an acre-foot to import water for the fish ladder during a prolonged drought.
That means that the value of the 3,200 acre-feet is at least $1.12 million and as much as $1.92 million, said Casitas representatives. (An acre-foot of water meets the needs of two typical households for a year.)
Lawyer Marzulla said that a water appraiser and broker hired by the district has placed the total value of the water the district could lose for the fish ladder over decades as at least “tens of millions of dollars, and it could go as high as $80 million.”
But Casitas is not counting its money yet.
Indeed, the five elected directors of the water district are split 3-to-2 on whether it’s a good idea to continue with the suit.
Last year, the board majority voted to press the litigation for a third year despite a steep $500,000 cost and repeated setbacks, while the board minority said the suit was a waste of money and would undercut the Endangered Species Act if Casitas won.
That split persisted this week.
“We’re not doing this because we’re opposed to the Endangered Species Act,” said board President Jim Word. “We’re doing it because the cost of this water should be borne nationally and not just by people in our district.”
Director Bill Hicks said the appeals decision shows Casitas was right to persist with the suit.
“It’s vindication,” Hicks said. “This decision says you can’t just come in and take somebody’s water without paying for it. I don’t want to hurt the federal government or the Endangered Species Act, but I think our ratepayers should be made whole.”
Pete Kaiser was the third in support of continuing the suit.
But Director Russ Baggerly, who along with Richard Handley, voted to end the suit last year, said the district’s case is far from decided.
Although siding with Casitas, the appeals panel sent the case back to the claims court for more argument by both sides, he noted. And Baggerly said he expects lawyers for the state of California and the federal government to appeal the panel’s decision because the bulk of state and federal law does not support it.
“I don’t think anyone should get too excited about this decision,” Baggerly said. “This is the first time Casitas has won anything in all of these decisions by the court. And this case is certainly not over yet.”
State and federal lawyers maintain that the water Casitas gathers in its reservoir is owned by all of the people of California and not by the water district, and that it can be used by government agencies for the common good without compensation. It fact, that procedure is common when enforcing the Endangered Species Act.
Last year, a federal claims court judge agreed with that argument, ruling that a constitutional property right was not involved when the federal government required Casitas to provide water without compensation.
The claims court judge ruled that the Casitas case had to be considered under federal law that deals with the government’s simple regulatory constraint of water use, and not as a “physical taking” of private property. Water agencies have rarely, if ever, won compensation in a case argued under such rules, officials have said.
But now, after the appeals panel decision that Casitas water was constitutionally protected property, the case appears wide open again.
The panel’s majority ruled: “We have reversed … based solely upon our determination that the governmental actions at issue are properly analyzed under a physical takings rubric.”
But a third justice, in dissent, found that a physical taking had not occurred, citing California state water law and the legal doctrine that water rights are held as a public trust by all people and not as individual property.
Attorney Breemer, the property rights advocate, said he expects government lawyers to ask for a review of the panel’s decision by the full 11-justice federal appeals court in Washington. They have 10 days to make that request, Marzulla said, but that motion must be based on the argument that the appeals panel “overlooked a critical issue of fact or law.”
For now, the water district’s lawyer said, “Casitas’ position has been vindicated.”
The Casitas district provides water for about 65,000 people and nearly 5,700 acres of farmland in the Ojai Valley and Ventura.