Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-22-01994/USCOURTS-ca13-22-01994-0/pdf.json

Parties Involved:
Arvin-Edison Water Storage District
Appellant
Byron Bethany Irrigation District
Appellee
Central California Irrigation District
Appellee
Chowchilla Water District
Appellant
City of Fresno
Appellant
Columbia Canal Company
Appellee
Del Puerto Water District
Appellee
Delano-Earlimart Irrigation District
Appellant
Exeter Irrigation District
Appellant
Firebaugh Canal Water District
Appellee
Julia K. Fisher
Appellant
Matthew J. Fisher
Appellant
Grassland Water District
Appellee
Hronis Inc.
Appellant
Ivanhoe Irrigation District
Appellant
James Irrigation District
Appellee
Lindmore Irrigation District
Appellant
Lindsay-Strathmore Irrigation District
Appellant
Clifford R. Loeffler
Appellant
Maureen Loeffler
Appellant
Loren Booth LLC
Appellant
Lower Tule River Irrigation District
Appellant
Orange Cove Irrigation District
Appellant
Caralee Phillips
Appellant
Douglas Phillips
Appellant
Porterville Irrigation District
Appellant
San Joaquin River Exchange Contractors Water Authority
Appellee
San Luis & Delta-Mendota Water Authority
Appellee
San Luis Canal Company
Appellee
San Luis Water District
Appellee
Santa Clara Valley Water District
Appellee
Saucelito Irrigation District
Appellant
Shafter-Wasco Irrigation District
Appellant
Southern San Joaquin Municipal Utility District
Appellant
Stone Corral Irrigation District
Appellant
Tea Pot Dome Water District
Appellant
Terra Bella Irrigation District
Appellant
Tulare Irrigation District
Appellant
United States
Appellee
Westlands Water District
Appellee

Document Text:

United States Court of Appeals 

for the Federal Circuit

______________________

CITY OF FRESNO, ARVIN-EDISON WATER 

STORAGE DISTRICT, CHOWCHILLA WATER 

DISTRICT, DELANO-EARLIMART IRRIGATION 

DISTRICT, EXETER IRRIGATION DISTRICT, 

IVANHOE IRRIGATION DISTRICT, LINDMORE 

IRRIGATION DISTRICT, LINDSAY-STRATHMORE 

IRRIGATION DISTRICT, LOWER TULE RIVER 

IRRIGATION DISTRICT, ORANGE COVE 

IRRIGATION DISTRICT, PORTERVILLE 

IRRIGATION DISTRICT, SAUCELITO IRRIGATION 

DISTRICT, SHAFTER-WASCO IRRIGATION 

DISTRICT, SOUTHERN SAN JOAQUIN 

MUNICIPAL UTILITY DISTRICT, STONE CORRAL 

IRRIGATION DISTRICT, TEA POT DOME WATER 

DISTRICT, TERRA BELLA IRRIGATION 

DISTRICT, TULARE IRRIGATION DISTRICT, 

LOREN BOOTH LLC, MATTHEW J. FISHER, JULIA 

K. FISHER, HRONIS INC., CLIFFORD R. 

LOEFFLER, MAUREEN LOEFFLER, DOUGLAS 

PHILLIPS, CARALEE PHILLIPS,

Plaintiffs-Appellants

v.

UNITED STATES, SAN LUIS & DELTA-MENDOTA 

WATER AUTHORITY, SANTA CLARA VALLEY 

WATER DISTRICT, SAN LUIS WATER DISTRICT, 

WESTLANDS WATER DISTRICT, GRASSLAND 

WATER DISTRICT, JAMES IRRIGATION 

DISTRICT, BYRON BETHANY IRRIGATION 

DISTRICT, DEL PUERTO WATER DISTRICT, SAN 

JOAQUIN RIVER EXCHANGE CONTRACTORS 

WATER AUTHORITY, CENTRAL CALIFORNIA 

IRRIGATION DISTRICT, FIREBAUGH CANAL 

Case: 22-1994 Document: 124 Page: 1 Filed: 12/17/2024
2 CITY OF FRESNO v. US

WATER DISTRICT, SAN LUIS CANAL COMPANY, 

COLUMBIA CANAL COMPANY,

Defendants-Appellees

______________________

2022-1994

______________________

Appeal from the United States Court of Federal Claims 

in No. 1:16-cv-01276-AOB, Judge Armando O. Bonilla.

______________________

Decided: December 17, 2024

______________________

ROGER J. MARZULLA, Marzulla Law, LLC, Washington, 

DC, argued for plaintiffs-appellants. Also represented by 

NANCIE GAIL MARZULLA; TIMOTHY E. METZINGER, CRAIG A.

PARTON, Price, Postel & Parma LLP, Santa Barbara, CA.

 MATTHEW JUDE CARHART, Commercial Litigation 

Branch, Civil Division, United States Department of 

Justice, Washington, DC, argued for defendant-appellee 

United States. Also represented by MICHAEL D. GRANTSON,

ELIZABETH MARIE HOSFORD, PATRICIA M. MCCARTHY,

VINCENT DE PAUL PHILLIPS, JR.

 DANIEL O’HANLON, Kronick Moskovitz Tiedemann & 

Girard, Sacramento, CA, argued for defendants-appellees

Byron Bethany Irrigation District, Central California 

Irrigation District, Columbia Canal Company, Del Puerto 

Water District, Firebaugh Canal Water District, Grassland 

Water District, James Irrigation District, San Joaquin 

River Exchange Contractors Water Authority, San Luis 

Canal Company, San Luis & Delta-Mendota Water 

Authority, San Luis Water District, Santa Clara Valley 

Water District, Westlands Water District. San Luis & 

Delta-Mendota Water Authority also represented by 

REBECCA AKROYD, San Luis & Delta-Mendota Water 

Authority, Sacramento, CA.

Case: 22-1994 Document: 124 Page: 2 Filed: 12/17/2024
CITY OF FRESNO v. US 3

 DAVID THOMAS RALSTON, JR., Foley & Lardner LLP, 

Washington, DC, for defendants-appellees Byron Bethany 

Irrigation District, Del Puerto Water District, James 

Irrigation District. Also represented by JULIA DI VITO,

FRANK S. MURRAY.

 PAUL MINASIAN, Minasian, Meith, Soares, Sexton & 

Cooper, LLP, Oroville, CA, for defendants-appellees 

Central California Irrigation District, Columbia Canal 

Company, Firebaugh Canal Water District, San Joaquin 

River Exchange Contractors Water Authority, San Luis 

Canal Company. Also represented by ANDREW J.

MCCLURE, JACKSON A. MINASIAN.

 ELLEN WEHR, Wehr Water Law & Policy, Sacramento, 

CA, for defendant-appellee Grassland Water District. 

 THOMAS M. BERLINER, Duane Morris LLP, San 

Francisco, CA, for defendant-appellee San Luis Water 

District. Also represented by ROBERT M. PALUMBOS, 

Philadelphia, PA.

 ANDREW GSCHWIND, Santa Clara Valley Water District, 

San Jose, CA, for defendant-appellee Santa Clara Valley 

Water District. Also represented by ANTHONY TOMMY 

FULCHER.

 ANDREW SHIPLEY, Wilmer Cutler Pickering Hale and 

Dorr LLP, Washington, DC, for defendant-appellee 

Westlands Water District. Also represented by DANIEL 

VOLCHOK.

 ALEX M. PELTZER, Peltzer & Richardson, Visalia, CA, 

for amici curiae Eastern Tule Groundwater Sustainability 

Agency, Greater Kaweah Groundwater Sustainability 

Agency, Mid-Kaweah Groundwater Sustainability Agency, 

Pixley Irrigation District Groundwater Sustainability 

Agency. Also represented by JOSH TODD FOX, Ruddell, 

Stanton, Bixler, Mauritson & Evans, LLP, Visalia, CA.

Case: 22-1994 Document: 124 Page: 3 Filed: 12/17/2024
4 CITY OF FRESNO v. US

 MATTHEW GORDON ADAMS, Kaplan Kirsch & Rockwell 

LLP, San Francisco, CA, for amicus curiae Friant Water 

Authority. Also represented by WILLIAM CADE MUMBY; 

SAMANTHA RACHEL CARAVELLO, Denver, CO.

______________________

Before MOORE, Chief Judge, CLEVENGER and STARK,

Circuit Judges.

STARK, Circuit Judge.

In this case, we are called upon to review how the 

federal government resolved a particular dispute over 

water distribution during the drought-ridden year of 2014. 

As we explain in more detail below, individual growers, 

irrigation districts (which provide water to farms), water 

districts (which provide water to municipalities), and the 

City of Fresno, all located within the area served by the 

Central Valley Project (“CVP” or “Project”), sued the 

United States (“government”) over its failure to deliver 

water they contend they were entitled to under a series of 

contracts. The government defended its water allocation 

decisions by pointing to obligations it had under other 

contracts, to deliver water to another set of entities. 

Through adjudication of a series of motions, the Court of 

Federal Claims dismissed several of the plaintiffs’ claims 

and granted summary judgment to the government on all 

remaining claims.

Because we agree with the disposition of the Court of 

Federal Claims, we affirm.

I

A

The Central Valley of California lies in the center of the 

state, to the west of the Sierra Nevada mountains and to 

the east of the Coastal Ranges. The Central Valley, 

through which the Sacramento River and the San Joaquin 

River flow, is home to the largest federal water 

management project in the United States: the CVP. The 

Case: 22-1994 Document: 124 Page: 4 Filed: 12/17/2024
CITY OF FRESNO v. US 5

CVP consists of dams, reservoirs, hydropower stations, 

canals, and other infrastructure operated by the United 

States Bureau of Reclamation (“Reclamation”). Through 

its operation of the CVP, Reclamation controls water from 

the Sacramento and San Joaquin Rivers and allocates 

those waters throughout California. 

The Sacramento River has substantial water 

resources, but the land abutting it is not generally suitable 

for agriculture. By contrast, the San Joaquin River lacks 

sufficient water to meet all the agricultural and other 

needs of the San Joaquin Valley. The CVP aims to “reengineer its natural water distribution,” United States v. 

Gerlach Live Stock Co., 339 U.S. 725, 728 (1950), 

addressing the mismatch between where water is 

abundant, but arguably less needed, and where it is scarce, 

yet could – if diverted – be put to more efficient agricultural 

benefit. See generally Gustine Land & Cattle Co. v. United 

States, 174 Ct. Cl. 556, 560-61 (1966).

The CVP consists of multiple “divisions.” Most 

pertinent to this case is the Friant Division, which includes 

the Friant Dam, where Reclamation collects water

originating in the San Joaquin River and stores that water

in Millerton Lake. From Millerton Lake, the water is

distributed to water and irrigation districts through the 

Madera and Friant-Kern Canals.

1

Key features of the CVP that are pertinent to the 

background and analysis of the issues presented in this 

appeal are shown in Figure 1, an annotated map, below.

2

1 For simplicity, and because it does not impact the 

analysis, we use “water district” throughout the remainder 

of this opinion to refer to both water districts and irrigation 

districts.

2 See Friant Water Authority Amicus Curiae Br., 

ECF No. 52 at 2 (further annotations added by court).

Case: 22-1994 Document: 124 Page: 5 Filed: 12/17/2024
6 CITY OF FRESNO v. US

Figure 1. Map of Central Valley

Case: 22-1994 Document: 124 Page: 6 Filed: 12/17/2024
CITY OF FRESNO v. US 7

B

Reclamation’s role in the CVP includes obtaining rights 

to water resources in the Central Valley and undertaking 

commitments to deliver those waters. Prior to the 

inception of the CVP, various private entities owned rights 

to San Joaquin River water. These entities, which we (like 

the parties) refer to as the “Exchange Contractors,”3 are 

successors to parties that entered into various agreements

with the government. In one such agreement, which we 

will call the “Purchase Contract,” the predecessors of the 

Exchange Contractors sold the bulk of their rights to San 

Joaquin River water to the government while at the same 

time reserving their rights to San Joaquin River water “in 

excess of specified rates of flow” identified in Schedule 1 of 

the Purchase Contract (“reserved waters”). J.A. 232-83, 

314. The same parties then executed a “Contract for the 

Exchange of Waters” (the “Exchange Contract”), which 

granted Reclamation authority to “store, divert, dispose of 

and otherwise use” even these “reserved waters” – that is, 

the Exchange Contractors’ predecessors’ Schedule 1 

“reserved waters” from the San Joaquin River.4 J.A. 315-

16.

3 We use “Exchange Contractors” to refer to, 

collectively, the parties that intervened in this litigation to 

join the government’s defense: San Luis & Delta-Mendota 

Water Authority, Westlands Water District, Santa Clara 

Valley Water District, San Luis Water District, Grassland 

Water District, James Irrigation District, Byron Bethany 

Irrigation District, Del Puerto Water District, San Joaquin 

River Exchange Contractors Water Authority, Central 

California Irrigation District, Firebaugh Canal Water 

District, San Luis Canal Company, and Columbia Canal 

Company.

4 The Exchange Contract has been amended several 

times. The version in effect at the pertinent time, 2014, is 

Case: 22-1994 Document: 124 Page: 7 Filed: 12/17/2024
8 CITY OF FRESNO v. US

Because all the rights of the Exchange Contractors’ 

predecessors now indisputably are held by the Exchange 

Contractors, we will at this point dispense with referring 

to the predecessors, except where relevant.

As consideration to the Exchange Contractors, the 

government agreed in the Exchange Contract to provide 

them with “substitute water.” J.A. 315-16. Specifically, 

Reclamation’s rights to the Exchange Contractors’ 

“reserved waters” of the San Joaquin River exist “so long 

as, and only so long as, the United States does deliver to 

the [Exchange Contractors] by means of the Project or 

otherwise substitute waters in conformity with this 

contract.” J.A. 316. Article 8 of the Exchange Contract 

requires that a specified “Quantity of Substitute Water” be 

delivered to the Exchange Contractors:

During all calendar years, other than those defined 

as critical, the United States shall deliver to the 

[Exchange Contractors] for use hereunder an 

annual substitute water supply of not to exceed 

840,000 acre-feet in accordance with the [specified] 

maximum monthly entitlements.

J.A. 326. During critical years, which are those in which 

water is less abundant (according to specific measures set 

out in the Exchange Contract), the government is required 

to provide a lesser amount to the Exchange Contractors, a 

maximum of 650,000 acre-feet. Other provisions, most 

pertinently Article 4, describe Reclamation’s obligations 

when there are certain interruptions to its ability to supply 

substitute waters to the Exchange Contractors. J.A. 315-

17.

C

Having obtained from the Exchange Contractors rights 

to San Joaquin River water, Reclamation then contracted

the 1968 version. J.A. 25, 309-44. All references to the 

“Exchange Contract” are to this 1968 version.

Case: 22-1994 Document: 124 Page: 8 Filed: 12/17/2024
CITY OF FRESNO v. US 9

to deliver water to municipal and private entities within 

the Friant Division. Specifically, the government entered 

into the “Friant Contract” with certain water districts and 

the City of Fresno (“Friant Contractors”);

5 the Friant 

Contractors, in turn, deliver water to, among others,

individual growers (“Friant Growers”).6 The Friant 

Contract requires Reclamation to deliver water, including 

water from the San Joaquin River, to the Friant 

Contractors. As consideration, the Friant Contractors 

agreed to pay the government for delivered water and paid 

part of the costs of constructing the infrastructure of the 

CVP.

The Friant Contract obligates the government to 

deliver specified amounts of water to the Friant 

Contractors each year, although this duty is “subject to the 

terms of” the pre-existing Exchange Contract. J.A. 368. In 

5 We use “Friant Contractors” to refer to, collectively: 

City of Fresno, Arvin-Edison Water Storage District, 

Chowchilla Water District, Delano-Earlimart Irrigation 

District, Exeter Irrigation District, Ivanhoe Irrigation 

District, Lindmore Irrigation District, Lindsay-Strathmore 

Irrigation District, Lower Tule River Irrigation District, 

Orange Cove Irrigation District, Porterville Irrigation 

District, Saucelito Irrigation District, Shafter-Wasco 

Irrigation District, Southern San Joaquin Municipal 

Utility District, Stone Corral Irrigation District, Tea Pot 

Dome Water District, Terra Bella Irrigation District, and 

Tulare Irrigation District. We use “Friant Growers” to 

refer to, collectively: Loren Booth LLC, Matthew J. Fisher, 

Julia K. Fisher, Hronis Inc., Clifford R. Loeffler, Maureen 

Loeffler, Douglas Phillips, and Caralee Phillips.

6 All citations to the “Friant Contract” are to the 

2010 version, which was in effect in 2014. The parties are 

in agreement that this version is representative of the 

governing agreements between the Friant Contractors and 

the United States.

Case: 22-1994 Document: 124 Page: 9 Filed: 12/17/2024
10 CITY OF FRESNO v. US

particular, Article 3(n) of the Friant Contract states that 

“[t]he rights of the [Friant] Contractor[s] under this 

Contract are subject to the terms of the contract for 

exchange waters,” that is, the Exchange Contract. Id.

(emphasis added). But crucially to Appellants’ case here, 

the government also agreed in Article 3(n) that it “will not 

deliver to the Exchange Contractors [under the Exchange 

Contract] waters of the San Joaquin River unless and until 

required by the terms of [the Exchange Contract].” Id.

Other provisions of the Friant Contract relate to other 

aspects of potential conflicts between the government’s 

water delivery obligations to the Friant Contractors and 

those it owes to other parties, such as the Exchange 

Contractors. Most pertinent to this appeal are Articles

13(b) and 19(a), which provide the government some

measure of immunity from liability for some of its 

allocation decisions. J.A. 394, 402. The extent of this 

immunity is disputed among the parties.

In sum, then, under the Friant Contract, the Friant 

Contractors are entitled to delivery of amounts of water 

from Reclamation, including water from the San Joaquin 

River. However, because the government only obtained 

rights to control San Joaquin River water by virtue of 

entering into the Exchange Contract – thereupon 

undertaking duties owed to the Exchange Contractors –

the Friant Contract also addresses how Reclamation must 

navigate conflicts between its obligations to the Exchange 

Contractors and those it owes to the Friant Contractors.

D

As the Court of Federal Claims explained, and the 

parties do not dispute:

Since 1951, Reclamation has stored and 

diverted the Exchange Contractors’ 

reserved San Joaquin River water at the 

Friant Dam and supplied [the Exchange 

Contractors] with substitute water [from 

the Sacramento-San Joaquin River Delta] 

Case: 22-1994 Document: 124 Page: 10 Filed: 12/17/2024
CITY OF FRESNO v. US 11

through the Delta-Mendota Canal. . . . 

Since 1962, . . . Reclamation has supplied 

the Friant Contractors with San Joaquin 

River water impounded at the Friant Dam 

and stored in Millerton Lake.

J.A. 25, 27. In all years until 2014, Reclamation was able 

to meet its contractual obligation to supply the Exchange 

Contractors with substitute water by delivering water 

sourced solely from the Sacramento-San Joaquin River 

Delta, without drawing on water from the San Joaquin 

River. 

In early 2014, due to drought conditions, the Governor 

of California declared a state of emergency, which 

eventually lasted until 2017. Reclamation recognized it 

was not going to be able to meet its combined waterdelivery obligations for 2014 to the Exchange Contractors

and the Friant Contractors. Thus, on February 15, 2014, 

Reclamation informed the Exchange Contractors that 2014 

would be a “critical year,” as that term is defined in the 

Exchange Contract. Reclamation predicted it would only 

be able to allocate to the Exchange Contractors “336,000 

acre-feet rather than the maximum 650,000 acre-feet 

critical year entitlement.” J.A. 1859-60. Several months 

later, on May 13, 2014, Reclamation updated its forecasts 

and advised the Exchange Contractors that “[d]ue to the 

continued drought and unique hydrology, Reclamation 

[would] for the first time provide water [to the Exchange 

Contractors] from both Delta [i.e., Sacramento River water 

through the Delta-Mendota Canal] and San Joaquin River 

sources.” J.A. 1660 (emphasis added). By drawing from 

these multiple sources, including San Joaquin River water, 

Reclamation “anticipate[d] being able to meet [the] critical 

year demands for the months of April through October[,]

which totals 529,000” acre-feet. Id.

Reclamation did, in fact, supply significant amounts of 

water to the Exchange Contractors between May 15 and 

September 27, 2014, although it thereafter released no San 

Joaquin River water to these entities in October, 

Case: 22-1994 Document: 124 Page: 11 Filed: 12/17/2024
12 CITY OF FRESNO v. US

November, or December of that year. During 2014,

Reclamation delivered approximately 540,000 acre-feet of 

water to the Exchange Contractors, of which roughly 

209,000 acre-feet had originated in the San Joaquin River 

(before being sent to the Friant Dam and stored in 

Millerton Lake), and the other approximately 331,000 acrefeet having originated in the Sacramento River, released 

from the Delta-Mendota Canal. 

In the meantime, in March 2014, Reclamation notified 

the Friant Contractors that it would not be supplying them 

with any water that year, other than the minimum needed 

for public health and safety considerations. Ultimately, 

while Reclamation delivered these “health and safety” 

waters to the Friant Contractors (as well as carryover 

water from the previous year’s allocation), what the Friant 

Contractors received in 2014 was essentially a “zero 

allocation.” J.A. 1888-89.

E

In October 2016, the Friant Contractors and Friant 

Growers (collectively, “Friant Parties” or “Appellants”) filed 

suit against the United States in the Court of Federal 

Claims.7 The Friant Parties alleged that Reclamation’s 

actions in 2014, and particularly Reclamation’s diversion 

of San Joaquin River water to the Exchange Contractors 

instead of to them, constituted a breach of the Friant 

Contract. The alleged breach caused Appellants to “suffer[]

huge losses of annual and permanent crops, loss of

groundwater reserves, water shortages and rationing, and 

[to] incur[] millions of dollars [of losses] to purchase 

emergency water supplies.” J.A. 198. The Friant Parties 

further claimed that “[t]he water and water rights of the 

7 On January 8, 2021, the Friant Parties filed a 

substantially identical case challenging the Bureau’s 2015 

water allocations. See City of Fresno v. United States, No. 

21-375 (Fed. Cl. Jan. 8, 2021). That matter is currently 

stayed. See id., ECF No. 9. (Feb. 11, 2021).

Case: 22-1994 Document: 124 Page: 12 Filed: 12/17/2024
CITY OF FRESNO v. US 13

Friant Division appropriated by the United States in 2014 

were the property of Plaintiffs, and their landowners and 

water users, each of which are the beneficial owners of the 

water rights.” J.A. 222. Thus, the Friant Parties alleged 

that the government’s actions constituted takings without 

just compensation in violation of the Fifth Amendment.

The United States, joined by the Exchange 

Contractors, who intervened in the litigation, responded by 

arguing that Reclamation had been required under the 

Exchange Contract to deliver water from the San Joaquin 

River to the Exchange Contractors due to the drought 

conditions experienced in 2014, which left no other water 

available for Reclamation to use to meet its contractual 

obligations. Therefore, they contended, there had been no 

breach of the Friant Contract. Further, the government 

and Exchange Contractors (collectively, hereinafter, 

“Appellees”) asserted that even if there had been a breach, 

the Friant Contract immunized the government from 

liability, because Reclamation’s water allocation decisions 

had not been arbitrary, capricious, or unreasonable. 

Finally, Appellees insisted that the Friant Contractors and 

Friant Growers could not maintain a takings claim because 

none of these entities had a property interest in the water 

they expected Reclamation to deliver to them under the 

Friant Contract and lacked standing.

The Court of Federal Claims dismissed the Friant 

Growers’ breach of contract claim because these entities 

were neither parties to nor third-party beneficiaries of the 

Friant Contract and, therefore, lacked standing.8 The 

court also dismissed the Friant Growers’ and the Friant 

Contractors’ takings claims for lack of standing, as none of 

these parties possesses a property interest in water 

supplied to them directly (or through third parties) by 

Reclamation. The Friant Contractors’ breach of contract 

claims proceeded and, after discovery, the trial court 

8 This aspect of the trial court’s ruling is not on 

appeal. 

Case: 22-1994 Document: 124 Page: 13 Filed: 12/17/2024
14 CITY OF FRESNO v. US

granted Appellees’ motion for summary judgment and 

denied the Friant Contractors’ cross-motions for summary 

judgment. These rulings were based on the court’s 

conclusions that (a) the Friant Contractors’ rights under 

the Friant Contract were subordinate to the rights of the 

Exchange Parties under the Exchange Contract; (b) the 

conditions in 2014 required Reclamation, under the 

Exchange Contract, to deliver San Joaquin River water to 

the Exchange Contractors, because San Joaquin River 

water may be treated as “substitute water;” and (c) the 

government was, regardless, immunized under the Friant 

Contract for its water allocation decisions because no 

reasonable factfinder could find its decisions to have been 

arbitrary, capricious, or unreasonable.

The Friant Parties timely appealed. We have 

jurisdiction under 28 U.S.C. § 1295(a)(3).

II

The Friant Parties’ appeal presents solely issues of law. 

We review de novo a determination by the Court of Federal 

Claims to dismiss a claim for lack of subject matter 

jurisdiction or failure to state a claim, as well as that 

court’s interpretation of a contract. See Ute Indian Tribe of 

the Uintah & Ouray Indian Rsrv. v. United States, 99 F.4th 

1353, 1364 (Fed. Cir. 2024); Gould, Inc. v. United States, 

935 F.2d 1271, 1273 (Fed. Cir. 1991). Likewise, “[w]e 

review the Court of Federal Claims’[] grant of summary 

judgment under a de novo standard of review, with 

justifiable factual inferences being drawn in favor of the 

party opposing summary judgment.” Russian Recovery 

Fund Ltd. v. United States, 851 F.3d 1253, 1259 (Fed. Cir. 

2017). “For Fifth Amendment takings claims, we review de 

novo the existence of a compensable property interest.” 

Fishermen’s Finest, Inc. v. United States, 59 F.4th 1269, 

1274 (Fed. Cir. 2023) (internal quotation marks omitted).

III

On appeal, the Friant Contractors contend that the 

Court of Federal Claims misinterpreted both the Exchange 

Case: 22-1994 Document: 124 Page: 14 Filed: 12/17/2024
CITY OF FRESNO v. US 15

Contract and the Friant Contract. In particular, they 

argue that the Exchange Contract did not require the 

United States to provide San Joaquin River water to the 

Exchange Contractors and, thus, Reclamation breached its 

obligations under Articles 3(a) and 3(n) of the Friant 

Contract by doing so. In the Friant Contractors’ view, San 

Joaquin River water cannot constitute “substitute water” 

under the Exchange Contract because Articles 4(b) and 4(c) 

of that contract set out the only circumstances under which 

San Joaquin River water can be provided to the Exchange 

Contractors, and the conditions of those provisions were 

not met in 2014. The Friant Contractors alternatively 

contend that, even if Reclamation was required by the 

Exchange Contract to deliver San Joaquin River water to 

the Exchange Contractors, it nonetheless breached the 

Friant Contract by delivering an amount of such water that 

exceeded what was required. They also dispute the Court 

of Federal Claims’ conclusion that the government is 

immune from liability for its breach of the Friant Contract. 

Finally, the Friant Parties challenge the trial court’s 

dismissal of their takings claim.

The government and Exchange Contractors ask us, 

instead, to endorse the analysis of the Court of Federal 

Claims. They argue that the critical year circumstances 

Reclamation confronted in 2014, and the government’s 

competing obligations to the Exchange Contractors and 

Friant Contractors, required Reclamation to source 

“substitute water” from the San Joaquin River for delivery 

to the Exchange Contractors, and required it to do so in the 

amounts that Reclamation actually delivered. They 

further contend that, in any event, the government is 

immunized from any breach of the Friant Contract as long 

as the government’s determinations were not arbitrary, 

capricious, or unreasonable, and here they were not. 

Finally, the government and Exchange Contractors urge us 

to affirm the trial court’s conclusion that none of the Friant 

Parties has a property interest in Reclamation water under 

state or federal law and, accordingly, there was no Fifth 

Amendment taking.

Case: 22-1994 Document: 124 Page: 15 Filed: 12/17/2024
16 CITY OF FRESNO v. US

Our analysis of these various contentions proceeds as 

follows. First, we explain that the Exchange Contract 

broadly defines “substitute water” and expressly 

contemplates that Reclamation may be required, under 

certain circumstances, to deliver water originating in the 

San Joaquin River to the Exchange Contractors as 

“substitute water.” Second, nothing about this 

interpretation of the Exchange Contractors’ rights and 

Reclamation’s obligations contradicts or renders 

meaningless Article 4 of the Exchange Contract. Third, 

Reclamation did not breach the Friant Contract by 

delivering the amounts of San Joaquin River water it 

supplied to the Exchange Contractors. Fourth, even if any 

of the actions undertaken by Reclamation were a breach of

the Friant Contract, Reclamation enjoyed immunity from 

liability because its actions could not be found to be 

arbitrary, capricious, or unreasonable. Fifth, and finally, 

we affirm the Court of Federal Claims’ dismissal of the 

takings claims.

A

The Friant Contractors allege that the government 

breached Articles 3(a) and 3(n) of the Friant Contract. 

Article 3(a) provides that, subject to certain conditions and 

limitations (which are not at issue in this appeal), the 

government “shall make available for delivery to the 

[Friant] Contractor[s] from the Project” specified amounts 

of water. J.A. 362. Article 3(n) then states:

The rights of the [Friant] Contractor[s] under this 

Contract are subject to the terms of the contract for 

exchange waters [i.e., the Exchange Contract] . . . . 

The United States agrees that it will not deliver to 

the Exchange Contractors thereunder waters of the 

San Joaquin River unless and until required by the 

terms of [the Exchange Contract], and the United 

States further agrees that it will not voluntarily 

and knowingly determine itself unable to deliver to 

the Exchange Contractors entitled thereto from 

water that is available or that may become 

Case: 22-1994 Document: 124 Page: 16 Filed: 12/17/2024
CITY OF FRESNO v. US 17

available to it from the Sacramento River and its 

tributaries or the Sacramento-San Joaquin Delta 

those quantities required to satisfy the obligations 

of the United States under said Exchange Contract 

and under [the Purchase Contract].

J.A. 368 (emphasis added). The Friant Contractors allege 

that the government breached these provisions by 

delivering San Joaquin River water to the Exchange 

Contractors in 2014 despite not being required to do so by 

the Exchange Contract.9 We disagree.

To determine whether the government breached its 

contractual obligations, we start with the text of the 

relevant contracts, “the ‘plain and unambiguous’ meaning 

of which control[].” Aspen Consulting, LLC v. Sec’y of 

Army, 25 F.4th 1012, 1016 (Fed. Cir. 2022). An 

“[a]greement must be considered as a whole and 

interpreted so as to harmonize and give reasonable 

meaning to all of its parts.” Coast Fed. Bank, FSB 

v. United States, 323 F.3d 1035, 1038 (Fed. Cir. 2003).

Because the issue of whether the government breached 

the Friant Contract turns on whether the government 

acted in a way that it was not required to act by the 

Exchange Contract, our analysis begins with the text of the 

Exchange Contract. We start with “substitute water,”

which Article 3 of the Exchange Contract defines:

The term “substitute water” as used herein 

means all water delivered hereunder at the 

points of delivery hereinafter specified to the 

Contracting Entities [i.e., the Exchange 

Parties], regardless of source.

J.A. 315 (emphasis added). By stating that “all water” may 

be “substitute water” “regardless of source,” this definition 

9 It is undisputed that in 2014 “Reclamation 

delivered San Joaquin River-sourced water to the 

Exchange Contractors at Mendota Pool.” Gov’t Br. at 26.

Case: 22-1994 Document: 124 Page: 17 Filed: 12/17/2024
18 CITY OF FRESNO v. US

does not exclude any source from potentially providing 

substitute water. Thus, the Exchange Contract’s definition 

of “substitute water” plainly does not exclude San Joaquin 

River water. 

Other provisions of the Exchange Contract confirm 

that the contracting parties contemplated that San 

Joaquin River water might be required to be used as 

substitute water and delivered to the Exchange 

Contractors. See, e.g., J.A. 321 (Article 5(d)(5)(e):

“Whenever sufficient water is available from the San 

Joaquin River and/or Fresno Slough[10] to meet the needs 

of the [Exchange Contractors] at Mendota Pool, 

[Reclamation] reserves the right to make all deliveries to 

the [Exchange Contractors] at that point.”) (emphasis 

added); J.A. 333 (Article 9(f): describing certain conditions 

applying “[w]hen less than 90 percent of the total water 

being delivered to the [Exchange Contractors] is coming 

from the San Joaquin River and/or the Fresno Slough”) 

(emphasis added). Additionally, as the Court of Federal 

Claims correctly observed, these and other provisions of the 

Exchange Contract anticipate that water will be provided 

to the Exchange Contractors from the Mendota Pool, even 

though the parties understood the Mendota Pool could 

contain San Joaquin River-sourced water. J.A. 42 (citing

Articles 5(d), 9(f), and 11). 

None of this is to say that the United States is always 

entitled to supply San Joaquin River water as substitute 

water to the Exchange Contractors. The Friant Contract 

restricts the government’s authority to do so to only those 

circumstances in which the government is required to use 

San Joaquin River water to meet its obligations under the 

Exchange Contract. J.A. 445. In other words, only when 

Reclamation does not have sufficient water from other 

sources – including the Sacramento River, Sacramento-San 

Joaquin Delta, and Delta-Mendota Canal – to fulfill its 

10 The Fresno Slough is “at times a tributary of” the 

San Joaquin River. J.A. 234.

Case: 22-1994 Document: 124 Page: 18 Filed: 12/17/2024
CITY OF FRESNO v. US 19

contractual duty to supply the specified quantities of 

substitute water to the Exchange Contractors is 

Reclamation permitted to deliver San Joaquin River water 

to the Exchange Contractors, because it is only in those

circumstances that Reclamation is required, under the 

Exchange Contract, to do so.

Our conclusion is based on the contractual language we 

have discussed above, and it is also supported by two 

realities, which are reflected in the contracts. First, the 

rights to San Joaquin River water initially belonged to the 

predecessors of the Exchange Contractors, and they only 

relinquished those rights subject to the government’s

commitment to provide them (and their successors) with 

substitute water, with no limitation on the location from 

which that water may be sourced. As the government 

accurately explains:

The context for the 1939 Exchange Contract was 

that the Exchange Contractors’ predecessors-ininterest held senior water rights that Reclamation 

needed to obtain to make possible the Central 

Valley Project. . . . Possessing that leverage, the 

Exchange Contractors’ predecessors-in-interest 

were able to protect themselves by obtaining broad 

“substitute water” rights in the Exchange Contract 

that were not limited to Delta-sourced [or 

Sacramento River] water.

Gov’t Br. at 32.

Second, as we noted earlier and now emphasize, Article 

3(n) of the Friant Contract expressly makes “[t]he rights of 

the [Friant] Contractor[s],” including the Friant 

Contractors’ rights to government delivery of water, 

“subject to the terms” of the Exchange Contract. J.A. 368

(emphasis added). Thus, we agree with the Court of 

Federal Claims:

[T]he Exchange Contractors are entitled to San 

Joaquin River water over . . . the Friant 

Contractors, even though it is relegated to a last 

Case: 22-1994 Document: 124 Page: 19 Filed: 12/17/2024
20 CITY OF FRESNO v. US

resort source [for the Exchange Contractors] under 

the Friant Contract. A contrary interpretation 

would prioritize the clearly subordinated 

contractual rights of the Friant Contractors over 

the superior rights of the Exchange Contractors.

J.A. 42.

Therefore, we conclude that San Joaquin River water 

may be used by Reclamation as “substitute water” when 

such water is required by the Exchange Contract to be used 

as “substitute water,” such as when the government cannot 

otherwise meet its obligations to the Exchange 

Contractors. Here, it is undisputed that during 2014, 

Reclamation was only able to deliver approximately 

331,000 acre-feet of non-San Joaquin River water to the 

Exchange Contractors, thereby requiring the remaining 

substitute water to be sourced from the San Joaquin River 

to fulfill its obligations under Article 8 of the Exchange 

Contract. J.A. 33-34.

B

The Friant Contractors object that our conclusion as 

just described cannot be squared with Article 4 of the 

Exchange Contract. More particularly, they contend that

the Court of Federal Claims’ interpretation of Article 4(a) 

improperly renders Articles 4(b) and 4(c) of the Exchange 

Contract nullities – because those are the only sections 

that require Reclamation to provide the Exchange 

Contractors with San Joaquin River water. We are not 

persuaded.

Article 4(a), entitled “Conditional Permanent 

Substitution of Water Supply,” provides that the 

government may

store, divert, dispose of and otherwise use, within 

and without the watershed of the aforementioned 

San Joaquin River, the aforesaid reserved waters 

of said river for beneficial use by others than [the 

Exchange Contractors] so long as, and only so long 

as, the United States does deliver to [the Exchange 

Case: 22-1994 Document: 124 Page: 20 Filed: 12/17/2024
CITY OF FRESNO v. US 21

Contractors] by means of the Project or otherwise 

substitute water in conformity with this contract.

J.A. 315-16 (emphasis added). In this way, Article 4(a) 

makes the government’s ability to provide San Joaquin 

River water to “others,” including the Friant Contractors,

dependent on the government’s simultaneous ability (“so 

long as, and only so long as”) to provide substitute water to 

the Exchange Contractors.

Article 4(b), “Temporary Interruption of Delivery,” then 

provides:

Whenever the United States is temporarily unable 

for any reason or for any cause to deliver to the 

[Exchange Contractors] substitute water from [the 

Sacramento River through] the Delta-Mendota 

Canal or other sources, water will be delivered from 

the San Joaquin River.

J.A. 316 (emphasis added). The San Joaquin River water 

to be provided during such a temporary interruption in the 

government’s ability to deliver non-San Joaquin River 

substitute water to the Exchange Contractors must be (1) 

in the same quantities as required under Article 8 for the 

first seven days, and (2) for the rest of the temporary 

interruption, “in quantities and rates as reserved in the 

Purchase Contract,” which (as we discuss further below)

are quantities significantly less than the quantities owed 

to the Exchange Contractors under Article 8. J.A. 316. 

Article 4(c) goes on to address “Permanent Failure of 

Delivery,” providing that “[w]henever the United States is 

permanently unable for any reason or for any cause to 

deliver” the Exchange Contractors the required substitute 

water, the Exchange Contractors “shall receive the said 

reserved waters of the San Joaquin River as specified in 

said Purchase Contract.” J.A. 316-17 (emphasis added).

Nothing about our interpretation of the Exchange 

Contract, including Article 4(a), renders Articles 4(b) or 

4(c) meaningless. The Friant Contractors’ contrary view 

rests on their incorrect assumption that Articles 4(b) and 

Case: 22-1994 Document: 124 Page: 21 Filed: 12/17/2024
22 CITY OF FRESNO v. US

4(c) set out the sole circumstances under which San 

Joaquin River water is required to be delivered to the 

Exchange Contractors. To adopt the Friant Parties’ 

reading – that Articles 4(b) and 4(c) are triggered on each 

occasion Reclamation is unable (temporarily or 

permanently) to meet even a small portion of its substitute 

water obligations to the Exchange Contractors from nonSan Joaquin River sources – would materially reduce the 

rights the Exchange Contractors bargained for in their 

contract.

Reclamation may, for instance, be unable to deliver

substitute water to the Exchange Contractors from the 

Sacramento River through the Delta-Mendota Canal 

because certain facilities necessary to do so may, at some 

point, be inoperative or under repair. Consistent with 

these foreseeable possibilities, the Friant Contract 

references “errors in physical operations of the Project, 

drought, [and] other physical causes beyond the control of 

the Contracting Officer,” J.A. 394, which likewise could 

result in the government – temporarily or permanently –

being unable to supply the Exchange Contractors with any 

non-San Joaquin River-sourced substitute water. Articles 

4(b) and 4(c) address these specific circumstances. They do 

not more generally govern in all circumstances under 

which the government is able to provide some non-San 

Joaquin River water to the Exchange Contractors, but is 

not able to provide all of the required water from non-San 

Joaquin River sources.

Our conclusion is consistent with a common-sense 

understanding of the parties’ intent in entering into the 

Exchange Contract. The amount of water to which the 

Exchange Contractors are entitled under Article 8 of the 

Exchange Contract is 840,000 acre-feet in non-critical 

years and 650,000 in critical years. This significantly 

exceeds the amounts to which they are entitled when 

Articles 4(b) and 4(c) are triggered. For instance, during a 

temporary interruption in the government’s ability to 

supply any substitute water from non-San Joaquin River 

sources, the Exchange Contractors are entitled to the 

Case: 22-1994 Document: 124 Page: 22 Filed: 12/17/2024
CITY OF FRESNO v. US 23

amounts “as specified in Article 8” only “for the first 7 

consecutive days.” J.A. 316. Thereafter, the quantities 

they are entitled to are reduced to “quantities and rates as 

reserved in the Purchase Contract.” Id.

Appellants’ position, then, that Article 4(b) applies 

whenever Reclamation is unable to deliver the full amount

of substitute water (from non-San Joaquin River sources) 

to which the Exchange Contractors are entitled under 

Article 8, would, as the Exchange Contractors write in 

their brief, “convert a shortfall of even a single acre-foot

into the Exchange Contractors’ loss of entitlement to the 

remaining 649,999 acre-feet of water” in a critical year, 

“senselessly punish[ing] [them] for the government’s 

inability to meet its obligations.” Intervenors’ Br. at 17. 

Nothing in the contractual language warrants such a

result, which would contradict the history and intent of the 

Exchange Contract: to provide the Exchange Contractors’ 

reserved water rights in the San Joaquin River to the 

government to use in the CVP but conditioned upon the 

government’s obligation to deliver the Exchange 

Contractors the specified amounts of substitute water, 

preferably from non-San Joaquin River sources but, if 

necessary, from the San Joaquin River.

Importantly, when the government acts pursuant to 

Article 4(b), instead of Article 8, it is relieved of other 

obligations as well. In addition to being permitted to 

deliver lesser amounts of substitute water (after the first 

seven days) to the Exchange Contractors, invoking Article 

4(b) also eliminates the government’s responsibility to 

ensure the quality of substitute water (Article 9(f)), waives 

limits on the methods by which substitute water is to be 

delivered (Article 10), and changes the location where the 

substitute water is delivered (Article 5). There is no 

indication in the Exchange Contract that the Exchange 

Contractors would have absolved the government of all of 

these duties in circumstances in which the government was 

still able to deliver a substantial proportion of substitute 

water from non-San Joaquin River water – as opposed to 

the narrow circumstances in which, temporarily or 

Case: 22-1994 Document: 124 Page: 23 Filed: 12/17/2024
24 CITY OF FRESNO v. US

permanently, the government is unable to deliver any 

water from non-San Joaquin River sources.

In short, Article 4(b) addresses specific circumstances 

in which the government is wholly unable to provide the 

Exchange Contractors with substitute water from 

anywhere other than the San Joaquin River. It is 

undisputed that in 2014 this never occurred. While the 

drought limited how much non-San Joaquin River water 

the government delivered to the Exchange Contractors, the 

government was able to – and did – deliver non-San 

Joaquin River water to the Exchange Contractors 

throughout that year; eventually, more than 300,000 acrefeet of such water. J.A. 2114 (Appellants’ expert 

acknowledging “there was never a day [in 2014] in which 

Reclamation was unable to deliver water from the DeltaMendota Canal to the Exchange Contractors”). 

Accordingly, the situation here was not governed by Article 

4(b) of the Exchange Contract. Instead, as the government 

has repeatedly maintained, it acted in 2014 pursuant to 

its authority – and obligation – under Article 8 of that 

contract. Hence, again, we agree with the Court of Federal 

Claims that the government was entitled to summary 

judgment on the Friant Contractors’ breach of contract 

claims.

C

The Friant Contractors argue that even if we 

determine, as we have, that San Joaquin River water may 

be “substitute water,” and that Article 4(a) – and, therefore, 

the quantities of Article 8, rather than the lower quantities 

of Article 4(b) – applied in 2014, as we have also concluded, 

the government nonetheless breached the Friant Contract 

due to specific features of the deliveries it made that year. 

We again disagree.

First, the Friant Contractors contend that during 

certain months in 2014 the government “over-delivered” 

San Joaquin River water to the Exchange Contractors, 

thereby breaching the government’s duty under the Friant 

Contract not to supply any more water to the Exchange 

Case: 22-1994 Document: 124 Page: 24 Filed: 12/17/2024
CITY OF FRESNO v. US 25

Contractors than was prescribed by the Exchange 

Contract. The Friant Contractors did not make this 

argument in their opening brief and, as such, it is forfeited. 

See United States v. Ford Motor Co., 463 F.3d 1267, 1276 

(Fed. Cir. 2006). (“Arguments raised for the first time in a 

reply brief are not properly before this court.”). Even if the 

argument had been preserved, it lacks merit. As the Court 

of Federal Claims explained, the “maximum monthly 

entitlements” of the Exchange Contract are non-binding 

guidelines, so long as Reclamation does not exceed the 

“annual substitute water supply” limit of that same 

contract. J.A. 38-39 (emphasis added). It is undisputed 

that the government delivered only approximately 540,000 

acre-feet of water to the Exchange Contractors over the 

whole of 2014. Thus, regardless of how much water the 

government delivered the Exchange Contractors during 

any particular month that year, it did not exceed the 

binding annual cap – so it did not deliver more water than 

was required under the Exchange Contract and, hence, did 

not breach duties owed to the Friant Contractors under the 

Friant Contract.

Second, the government also did not breach the Friant 

Contract by including among the substitute water it 

provided to the Exchange Contractors water it had stored 

in Millerton Lake. The Friant Contractors argue that “over 

100,000 acre-feet of water delivered to the Exchange 

Contractors (largely from storage in Millerton Lake [and 

originating in the San Joaquin River]) . . . should have 

been delivered to the Friant Contractors.” Reply Br. at 1. 

As we explained above, see supra III.A, including this 

water among what it delivered to the Exchange 

Contractors was entirely consistent with the Exchange 

Contract. To the extent the Friant Contractors are also 

contending that Reclamation committed a breach by 

storing San Joaquin River water at Millerton Lake in 

anticipation of needing it to supply to the Exchange 

Contractors, they fail to point to any specific duty in the 

Friant or Exchange Contract that the government violated. 

At most, the Friant Contractors contend that because 

Case: 22-1994 Document: 124 Page: 25 Filed: 12/17/2024
26 CITY OF FRESNO v. US

Article 4(b) doesn’t require the use of water from Millerton 

Lake, the Friant Contract does not permit it. But they fail 

to identify any section of the Friant Contract prohibiting 

the use of water from Millerton Lake. Even if no provision 

of the Exchange Contract explicitly authorizes this action,

neither does any provision in it (or in the Friant Contract) 

prohibit it. 

Again, then, there was no breach of contract.

D

Even if the Friant Contractors could, contrary to our 

analysis above, demonstrate that delivery of San Joaquin 

River-sourced water to the Exchange Contractors in 2014 

was not required by the Exchange Contract and, therefore, 

such delivery constituted a breach of the government’s 

obligations to the Friant Contractors, we would still affirm 

the Court of Federal Claims on the alternative grounds of 

the government’s contractual immunity from liability. As 

the Ninth Circuit has recognized, operation of the CVP

assigns to Reclamation “an extremely difficult task: to 

operate the country’s largest federal water management 

project in a manner so as to meet the Bureau’s many 

obligations.” Cent. Delta Water Agency v. Bureau of 

Reclamation, 452 F.3d 1021, 1027 (9th Cir. 2006). 

Unsurprisingly, then, when the government undertook 

these obligations it did so while also obtaining a measure 

of immunity from liability.

Specifically, Article 13(b) of the Friant Contract 

provides:

If there is a Condition of Shortage because 

of . . . drought . . . or actions taken by the 

Contracting Officer to meet legal 

obligations . . . then, except as provided in 

subdivision (a) of Article 19 of this Contract, no 

liability shall accrue against the United 

States . . . for any damage, direct or indirect, 

arising therefrom.

J.A. 394. Article 19(a), in turn, states: 

Case: 22-1994 Document: 124 Page: 26 Filed: 12/17/2024
CITY OF FRESNO v. US 27

Where the terms of this Contract provide for 

actions to be based upon the opinion or 

determination of either party to this Contract, said 

terms shall not be construed as permitting such 

action to be predicated upon arbitrary, capricious, 

or unreasonable opinions or determinations.

J.A. 402. We agree with the government that “[r]ead

together, Articles 13 and 19 prevent liability from accruing 

against the United States during periods of drought so long 

as the contracting officer does not take actions that are 

predicated upon arbitrary, capricious, or unreasonable 

opinions or determinations.” Gov’t Br. at 13 (internal 

quotation marks omitted).

Taking the evidence in the light most favorable to the 

Friant Contractors, no reasonable factfinder could find 

that the Contracting Officer’s actions here were of this 

nature. During the “critical year” of 2014, Reclamation, 

confronted with insufficient water from non-San Joaquin 

River sources to meet its full contractual obligation to 

supply “substitute water” to the Exchange Contractors, 

determined that it was required under the Exchange 

Contract to supply San Joaquin River water to the 

Exchange Contractors. The record is devoid of evidence 

that the government’s actions were anything other than a 

good faith, reasonable effort to address a challenging 

circumstance in a manner that officials believed was 

compliant with the government’s contractual obligations.

Accordingly, the Court of Federal Claims was right to 

grant summary judgment to the government on the Friant 

Contractors’ breach of contract claim, as the government 

could not be found liable based on its actions, which cannot 

reasonably be found to be arbitrary, capricious, or 

unreasonable.

Case: 22-1994 Document: 124 Page: 27 Filed: 12/17/2024
28 CITY OF FRESNO v. US

E

Finally, we address Appellants’ takings claims.11 

Appellants allege that the 2014 actions of Reclamation 

constituted a taking of their property without justification, 

in violation of the Fifth Amendment. Here, again, we reach 

the same conclusion as the Court of Federal Claims, which 

dismissed these claims based on the lack of a protected 

property interest.

While the Court of Federal Claims based its dismissal 

decision on the Friant Parties’ lack of standing, pursuant 

to Rule 12(b)(1) of the Rules of the Court of Federal Claims 

(“RCFC”), J.A. 19, we have determined that the issue 

before us is instead whether Appellants stated a takings 

claim upon which relief may be granted, an inquiry 

governed by RCFC 12(b)(6).12 The Friant Parties 

adequately alleged they were injured by Reclamation’s 

water allocation decisions and that the Court of Federal 

11 The takings claim was brought by the Friant 

Contractors (on behalf of non-party individuals to whom 

they deliver water), the Friant Growers, and Fresno. J.A. 

222-23 (Complaint); see also J.A. 15. The Court of Federal 

Claims dismissed as to each of these Appellants, as none 

had shown it had a property right to water, and the Friant 

Growers additionally lacked any contractual rights

whatsoever. On appeal, the Friant Parties challenge only 

the dismissals as to the Friant Contractors (in their 

representative capacity) and as to the Friant Growers. 

Because, as a matter of law, none of the Appellants has a 

protected property interest in the water supplied to them 

by Reclamation, we need not make distinctions among 

them in our analysis.

12 Appellees moved to dismiss the takings claims 

based on both RCFC 12(b)(1) and 12(b)(6). See City of 

Fresno v. United States, No. 16-1276C (Fed. Cl. May 15, 

2019), ECF No. 136 at 3, 22-23; ECF No. 137 at 15-19, 26, 

34-36; ECF No. 138 at 6-7, 9.

Case: 22-1994 Document: 124 Page: 28 Filed: 12/17/2024
CITY OF FRESNO v. US 29

Claims could redress their injuries. Hence, they 

established standing and that the Court of Federal Claims 

had subject matter jurisdiction. See Lujan v. National 

Wildlife Federation, 504 U.S. 555, 560-61 (1992) (“[T]he 

irreducible constitutional minimum of standing contains 

three elements. First, the plaintiff must have suffered an 

injury in fact – an invasion of a legally protected interest 

which is (a) concrete and particularized, and (b) actual or 

imminent, not conjectural or hypothetical. Second, there 

must be a causal connection between the injury and the 

conduct complained of – the injury has to be 

fairly . . . trace[able] to the challenged action of the 

defendant, and not . . . th[e] result [of] the independent 

action of some third party not before the court. Third, it 

must be likely, as opposed to merely speculative, that the 

injury will be redressed by a favorable decision.”) 

(alterations in original; internal citations, quotation 

marks, and footnotes omitted). Because Appellants’ 

allegation of a protected property interest is not “wholly 

insubstantial and frivolous,” nor “patently without merit,” 

they have standing and the trial court had jurisdiction to 

determine whether they stated a claim. Bell v. Hood, 327 

U.S. 678, 682-83 (1946).

We turn, then, to whether Appellants stated a takings 

claim upon which relief may be granted. See Columbus 

Reg’l Hosp. v. United States, 990 F.3d 1330, 1342 (Fed. Cir. 

2021) (“If we conclude that [the plaintiff’s] allegations fail 

to state a cognizable claim, we can convert the [Court of 

Federal Claims’] Rule 12(b)(1) dismissal into a Rule 

12(b)(6) dismissal.”). They did not.

In the context of water rights, state law, not federal law, 

“define[s] the dimensions of the requisite property rights 

for purposes of establishing a cognizable taking.” Klamath 

Irr. Dist. v. United States, 635 F.3d 505, 511 (Fed. Cir. 2011)

(internal quotation marks omitted); see also id. at 512-17

(applying Oregon law). As the Supreme Court has stated 

on several occasions, “the [Reclamation] Act clearly 

provided that state water law would control in the 

appropriation and later distribution of the water.” Nevada 

Case: 22-1994 Document: 124 Page: 29 Filed: 12/17/2024
30 CITY OF FRESNO v. US

v. United States, 463 U.S. 110, 122 (1983) (internal 

emphasis omitted); see also California v. United States, 438 

U.S. 645, 664 (1978) (same).

Thus, we must assess whether the Friant Contractors 

or the Friant Growers possess property rights under 

California law. J.A. 199-215 (complaint alleging 18 times 

that Appellants have property rights “under California 

law”). They do not.

Appellants argue they have “appurtenant” rights to 

CVP water because it is delivered to their customers or to

their lands. Open. Br. at 48 (“[T]he Government’s 

allocation of water acquired for the Reclamation Act project 

is constrained by the appurtenant right of the landowners 

within that project who beneficially use the [P]roject’s 

water to irrigate their crops.”). Like the trial court, we 

understand their argument to be that California law gives 

them “appropriative” rights, i.e., a right that “‘confers upon 

one who actually diverts and uses water the right to do so 

provided that water is used for reasonable and beneficial 

uses and is surplus to that used by riparians or earlier 

appropriators.’” J.A. 16 (quoting United States v. State 

Water Res. Control Bd., 227 Cal. Rptr. 161, 168 (Cal. Ct. 

App. 1986)). Appellants are wrong.

First, Appellants do not have any water rights under 

California law because, instead, as the California State 

Water Resource Control Board (“SWRCB”) has held, it is 

Reclamation that “has appropriative water rights in the 

Central Valley Project.” Cnty. of San Joaquin v. State 

Water Res. Control Bd., 63 Cal. Rptr. 2d 277, 285 n.12 (Ct. 

App. 1997); see also J.A. 2399-2403 (SWRCB Decision D1641 (Mar. 15, 2000) (“Title to the water rights under the 

permits is held by [Reclamation].”), aff’d sub nom. State 

Water Res. Control Bd. Cases, 39 Cal. Rptr. 3d 189 (Cal. Ct. 

App. 2006)); J.A. 221 (complaint acknowledging “[t]he 

United States holds legal title to such water and water 

rights”).

Second, as the government points out, “[t]he purpose of 

the appropriation doctrine is to reward initiative that 

Case: 22-1994 Document: 124 Page: 30 Filed: 12/17/2024
CITY OF FRESNO v. US 31

allows water that would have otherwise sat worthless to be 

put to beneficial use, thus contributing to the state’s 

development.” Gov’t Br. at 56 (citing Irwin v. Phillips, 5 

Cal. 140, 146 (Cal. 1855)). This is exactly the type of action 

that Reclamation undertook pursuant to the Reclamation 

Act, 43 U.S.C. § 372. While Appellants put the water 

provided to them by Reclamation to beneficial use, that 

supply of water would not exist without the creation and 

operation of the Project, i.e., the efforts of Reclamation. In 

this context, California law does not assign property rights 

in water based on the uses put to it by end users. See

Ivanhoe Irr. Dist. v. All Parties and Persons, 350 P.2d 69, 

75 (Cal. 1960) (holding that Project water “belongs to or by 

appropriate action may be secured by the United States” 

and “[i]n a very real sense it is or will become the property

of the United States”), abrogated on other grounds by

California v. United States, 438 U.S. 645, 672 (1978).

Appellants point to no California precedent 

persuasively supporting the proposition that the water 

delivered by Reclamation creates in the Friant Growers, or 

in the end users whose interests the Friant Contractors 

seek to represent, appropriative property rights. 

Appellants cite to a decision of the SWRCB, Cal. SWRCB 

Decision No. D-935. This SWRCB decision, in the course 

of granting permits to the United States to control certain 

water rights, discussed the rights of recipients of such 

water. J.A. 975-1086. It observed: “[u]nder our permit and 

license system the right to the use of water by 

appropriation does not vest by virtue of application, permit 

or license, [but] by application of the water to beneficial use 

upon the land.” J.A. 1074. This statement does not

constitute a holding that putting received Project water to 

“beneficial use upon the land” is sufficient to create a 

property right in receipt of that water. Other California 

authorities, including those we have already cited above, 

further clarify this point. See J.A. 2402 (SWRCB Decision 

D-1641) (rejecting argument that water users have 

property rights in Project water and stating “[the]

argument that the end users of water are the water right 

Case: 22-1994 Document: 124 Page: 31 Filed: 12/17/2024
32 CITY OF FRESNO v. US

holders would mean that instead of having a relatively few 

water purveyors subject to statewide regulatory authority 

of the SWRCB, there would be millions of water right 

holders”); Israel v. Morton, 549 F.2d 128, 132 (9th Cir. 1977)

(holding that appurtenance doctrine does not apply to 

water delivered by Reclamation).

Because Appellants have failed to establish that they 

possess any property rights in water delivery from the 

government, they cannot maintain a takings claim. See 

Fishermen’s Finest, 59 F.4th at 1275 (explaining that only 

“if the court concludes that a cognizable property interest 

exists” do we determine whether that property interest was 

“taken”). Therefore, we affirm the Court of Federal Claims’ 

dismissal of these claims.

IV

We have considered Appellants’ remaining arguments 

and find them unpersuasive. For the reasons stated, we 

affirm the judgment of the Court of Federal Claims.

AFFIRMED

COSTS

No costs.

Case: 22-1994 Document: 124 Page: 32 Filed: 12/17/2024