United States Court of Appeals for the Federal Circuit 

2007-5153 

CASITAS MUNICIPAL WATER DISTRICT, 

 

 Plaintiff-Appellant, 

v. 

UNITED STATES, 

Defendant-Appellee. 

Roger J. Marzulla, Marzulla Law, of Washington, DC, argued for plaintiffappellant. With him on the brief were Nancie G. Marzulla and Gregory T. Jaeger. 

Katherine J. Barton, Attorney, Appellate Section, Environment & Natural 

Resources Division, United States Department of Justice, of Washington, DC, argued 

for defendant-appellee. With her on the brief were Ronald J. Tenpas, Assistant 

Attorney General, and Kathryn E. Kovacs, Kathleen L. Doster, and James D. Gette, 

Attorneys. 

Lisabeth D. Rothman, Hatch & Parent, A Law Corporation, of Los Angeles, 

California, for amici curiae California Building Industry Association, et al. 

Tara L. Mueller, Deputy Attorney General, California Office of the Attorney 

General, of Oakland, California, for amicus curiae California State Water Resources 

Control Board. With her on the brief was Clifford T. Lee, Deputy Attorney General, of 

San Francisco, California. 

Hertha L. Lund, Wittich Law Firm, P.C., of Bozeman, Montana, for amici curiae 

Idaho Farm Bureau Federation, et al. 

Jeffrey B. Clark, Kirkland & Ellis LLP, of Washington, DC, for amici curiae Tulare 

Lake Basin Water Storage District, et al. With him on the brief was Scott M. Abeles. Of 

counsel on the brief was William C. Kuhs, Kuhs & Parker, of Bakersfield, California. 

William P. Pendley, Mountain States Legal Foundation, of Lakewood, Colorado, 

for amicus curiae Mountain States Legal Foundation. With him on the brief was J. Scott 

Detamore. 

John D. Echeverria, Environmental Law & Policy Institute, Georgetown University 

Law Center, of Washington, DC, for amicus curiae Natural Resources Defense Council. 

Of counsel on the brief was Katherine S. Poole, Natural Resources Defense Council, of 

San Francisco, California. 
J. David Breemer, Pacific Legal Foundation, of Sacramento, California, for 

amicus curiae Pacific Legal Foundation. 

Jennifer L. Spaletta, Herum Crabtree Brown, of Stockton, California, for amicus 

curiae Stockton East Water District. 

Appealed from: United States Court of Federal Claims 

Senior Judge John P. Wiese 
United States Court of Appeals for the Federal Circuit 

 

2007-5153 

CASITAS MUNICIPAL WATER DISTRICT, 

Plaintiff-Appellant, 

v. 

UNITED STATES, 

Defendant-Appellee. 

Appeal from the United States Court of Federal Claims in 05-CV-168, Senior Judge 

John P. Wiese. 

 ___________________________ 

 DECIDED: September 25, 2008 

 ___________________________ 

Before MAYER, SCHALL, and MOORE, Circuit Judges. 

Opinion for the court filed by Circuit Judge MOORE. Opinion dissenting-in-part filed by 

Circuit Judge MAYER. 

MOORE, Circuit Judge. 

 Casitas Municipal Water District (Casitas) appeals the judgment of the United 

States Court of Federal Claims granting summary judgment in favor of the government 

holding that there was no governmental breach of contract and no compensable taking 

under the Fifth Amendment. We affirm-in-part, reverse-in-part, and remand. 
BACKGROUND 

Congress authorized the construction of the Ventura River Project (Project) on 

March 1, 1956. Pub. L. No. 423, 70 Stat. 32 (1956). The Project provides the water 

supply for farmland irrigation and municipal, domestic, and industrial uses in Ventura 

County, California. The Project comprises, among other things, the Casitas Dam, 

Casitas Reservoir, Robles Diversion Dam, and the Robles-Casitas Canal. More 

specifically, the Project combines water of Coyote Creek and Ventura River in its 

principal feature, the Casitas Reservoir, generally called Lake Casitas. Lake Casitas 

itself is located on Coyote Creek and is formed by Casitas Dam. Approximately sixty 

percent of the Project’s water comes from Coyote Creek. The remaining forty percent 

of the Project’s water comes from the nearby Ventura River. Ventura River water is 

diverted via the Robles Diversion Dam into a four and a half mile long canal (the 

Robles-Casitas Canal), which carries the water to Lake Casitas. Water from Lake 

Casitas is distributed for use via a conveyance system comprising thirty-four miles of 

pipeline, five pumping stations, and six balancing reservoirs. The project is shown in 

Figure 1. 

2007-5153 2
Figure 1: Ventura River Project 

On March 7, 1956, the United States and Casitas entered into a contract 

providing for the construction of the Project by the United States in exchange for a 

commitment by Casitas to repay the construction costs over a forty-year period,1 as well 

 1

 Article 2 of the contract provided that the United States would spend no 

more than $27.669 million, later increased to $31 million, to construct the Project. 

Article 5 provided that Casitas would repay to the United States the actual reimbursable 

cost, but not in excess of $27.5 million, later increased to $30.9 million, plus certain 

interest. 

2007-5153 3
as all operation and maintenance costs.2

 Additionally, the contract provided in Article 4 

that Casitas “shall have the perpetual right to use all water that becomes available 

through the construction and operation of the Project.” The contract also required 

Casitas to apply to the State of California to appropriate the water for the Project. State 

water permits were issued to Casitas on May 10, 1956, and the Project was completed 

and transferred to Casitas for operation in 1959. 

In August, 1997, almost forty years after the construction of the project, the 

National Marine Fisheries Service (NMFS) listed the West Coast steelhead trout as an 

endangered species in the Project watershed. Section 9 of the Endangered Species 

Act (ESA) makes it illegal to “take” any species listed as endangered under the Act.3

 16 

U.S.C. § 1538. To avoid ESA section 9 liability, the Bureau of Reclamation (BOR) 

sought a biological opinion by the NMFS (BiOp) pursuant to section 7 of the ESA. Id. § 

1536(a)(2). For the purposes of this appeal, the government concedes that the BOR’s 

May 2, 2003 directive advising Casitas that it was obligated to comply with the 

requirement of the BiOp compelled Casitas to: (1) construct a fish ladder facility, which 

is located at the intersection of the Ventura River, Robles Diversion Dam, and the 

Robles-Casitas Canal; and (2) divert water from the Project to the fish ladder, resulting 

in a permanent loss to Casitas of a certain amount of water per year.4

 Under protest 

 2

 Article 7 of the contract provided for the transfer to Casitas of the Project’s 

operation, at which time Casitas agreed to “take over and at its own expense operate 

and maintain the project works,” and “without expense to the United States, to care for, 

operate and maintain the transferred works.” 

3

 “Take” is defined as “harass, harm, pursue, hunt, shoot, wound, kill, trap, 

capture, or collect, or to attempt to engage in any such conduct.” 16 U.S.C. § 1532(19). 

4

 Appellee’s Br. at 2-3 n.1 (“Although the parties dispute the factual question 

whether Reclamation required Casitas to install the fish ladder and comply with the 

operational criteria [i.e. divert water], we assume it was required to do so for the 

2007-5153 4
Casitas complied, but on January 26, 2005, Casitas filed suit against the government 

alleging that these actions constituted a breach of contract and a compensable Fifth 

Amendment taking of its water.

After filing its answer, the government filed a motion for summary judgment 

seeking to resolve the breach of contract claim, and a motion for partial summary 

judgment regarding the takings claim. In this latter motion, the government requested 

the trial court to determine the appropriate takings standard to be applied to Casitas’ 

claim that the government’s appropriation of water to operate the fish ladder constituted 

a compensable taking. 

With respect to the breach of contract claim, Casitas contended that the United 

States breached the 1956 repayment contract by ordering Casitas to pay the costs of 

installing the fish ladder, which allegedly brought the total reimbursable project 

construction costs to more than the contract’s $30.9 million limit. Casitas also argued 

that the BiOp’s provision for changes to the Project’s operating criteria breached Article 

4 of the contract. 

On October 2, 2006, the trial court granted summary judgment on the contract 

claims in favor of the United States. See Casitas Mun. Water Dist. v. United States, 72 

Fed. Cl. 746 (2006) (Casitas I). Relying principally upon the Supreme Court’s decision 

in Nampa & Meridian Irrigation District v. Bond, 268 U.S. 50 (1925), the trial court ruled 

 

purposes of this appeal from the [Court of Federal Claim’s] ruling on summary 

judgment.”); Appellee’s Br. at 14 n.4 (“[U]nder the revised operating criteria Casitas 

sometimes will be able to divert less water than it could have without the fish ladder.”). 

The parties dispute the amount of actual water Casitas has lost due to the diversion to 

the fish ladder. Casitas argues that the amount of loss is up to 3,200 acre-feet per year. 

The government argues the amount of loss of water in Lake Casitas due to the 

operation of the fish ladder was 1,349 acre-feet as of May 2006, but that this amount 

may decrease in the future. Appellee’s Br. at 14. 

2007-5153 5
that the costs associated with the construction of the fish ladder facility, more than forty 

years after the Project’s initiation, were in the nature of operation and maintenance 

costs and, thus, not reimbursable under the repayment contract. Casitas I, 72 Fed. Cl. 

at 751. The trial court held that even if Article 4 of the contract was breached by the 

government, the sovereign acts doctrine applied, shielding the government from liability. 

Id. at 755. 

On March 29, 2007, the trial court granted the government’s partial summary 

judgment motion and held that the regulatory takings standard applied to Casitas’ claim 

rather than the physical takings standard. Casitas Mun. Water Dist. v. United States, 76 

Fed. Cl. 100, 105-06 (2007) (Casitas II). While the court recognized that a prior trial 

court decision—Tulare Lake Basin Water Storage District v. United States, 49 Fed. Cl. 

313 (2001), rendered by Judge Wiese who also presided in this case—held that a 

deprivation of water amounts to a physical taking under somewhat similar 

circumstances, the court concluded that the Supreme Court’s intervening decision 

Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 

302 (2002), clarified takings law so as to require a different result. Casitas II, 49 Fed. 

Cl. at 106. On August 2, 2007, in response to Casitas’ concession that it could not 

prevail under the regulatory takings framework laid out in Penn Central Transportation 

Co. v. New York City, 438 U.S. 104 (1978), the trial court dismissed the complaint and 

entered final judgment for the United States. Casitas appealed. 

DISCUSSION 

 This court reviews a grant of summary judgment de novo. Anderson v. United 

States, 344 F.3d 1343, 1349 (Fed. Cir. 2003). Summary judgment is only appropriate if 

2007-5153 6
the record shows that there is no genuine issue as to any material fact and that the 

moving party is entitled to a judgment as a matter of law. Ct. Fed. Cl. R. 56(c); see also

Fed. R. Civ. P. 56(c). In reviewing the record, the appellate court must draw all 

justifiable inferences in favor of the party opposing summary judgment. Turner v. 

United States, 901 F.2d 1093, 1095 (Fed. Cir. 1990). Contract interpretation is a 

question of law, which this court reviews de novo. Greenbrier v. United States, 193 

F.3d 1348, 1354 (Fed. Cir. 1999). The issue of whether a taking has occurred also is a 

question of law, reviewed de novo, based on factual underpinnings. Stearns Co. v. 

United States, 396 F.3d 1354, 1357 (Fed. Cir. 2005). 

I. CONTRACT CLAIMS 

 Casitas argues that the United States’ enforcement of the ESA breached the 

repayment contract by requiring Casitas to install a fish ladder and to change its 

operational criteria, resulting in a loss of water to Casitas. The government argues that 

the contract’s terms neither indemnify Casitas for installing and paying for the fish 

ladder, nor guarantee it a water supply. The government also argues that, even 

assuming the contract imposed on the United States the contractual duties alleged by 

Casitas, Casitas’ breach of contract claims are barred by the sovereign acts doctrine. 

A. Operational & Maintenance Costs 

Casitas contends that the fish ladder is part of the United States’ construction 

obligation under Article 2 of the contract, and that Casitas is indemnified from paying its 

costs by the contract’s $30.9 million cap on Casitas’ responsibility to reimburse those 

construction costs. The government argues that the fish ladder is part of an operation 

and maintenance cost allocated to Casitas under Article 7 of the contract, which 

2007-5153 7
provides that upon notice of transfer of the Project to Casitas by the United States, 

Casitas “agrees to accept . . . the care, operation, and maintenance of the transferred 

works and thereafter, without expense to the United States, to care for, operate and 

maintain the transferred works.” The government argues that the trial court correctly 

relied on the Supreme Court’s decision in Nampa to conclude that the costs of 

constructing the fish ladder were operation and maintenance costs allocated to Casitas 

under the contract, because these costs were incurred to “‘remedy conditions brought 

about by the use of the system.’” Casitas I, 72 Fed. Cl. at 750 (quoting Nampa, 268 U.S. 

at 53) (emphasis in original). 

We agree with the government. Similar to the instant case, Nampa involved the 

classification of construction costs under a repayment contract between an irrigation 

district and the BOR. The Supreme Court opined that costs associated with the 

construction of a drainage system built to relieve the injurious effects of a rise in 

groundwater levels caused by the irrigation project constituted operation and 

maintenance costs and not construction costs. Nampa, 268 U.S. at 53-54. The 

Supreme Court explained: 

Expenditures necessary to construct an irrigation system and put it in 

condition to furnish and properly to distribute a supply of water are 

chargeable to construction; but when the irrigation system is completed, 

expenditures made to maintain it as an efficient going concern and to 

operate it effectively to the end for which it was designed, are, at least 

generally, maintenance and operating expenses. The expenditure in 

question was not for extensions to new lands or for changes in or 

additions to the system, . . . but was for the purpose of overcoming 

injurious consequences arising from the normal and ordinary operation of 

the completed plant which, so far as appears, was itself well constructed. 

Id. 53-54. The trial court correctly reasoned that this case, like Nampa, involved costs 

that were incurred after the project was completed to remedy injurious effects resulting 

2007-5153 8
from the project’s subsequent operation. Here, the Project’s operation without a fish 

ladder threatened the survivability of the West Coast steelhead trout, and in Nampa the 

water project’s operation threatened rising groundwater levels that would harm the 

arability of the land. See id. If the remedial work required in Nampa was an operational 

cost rather than a construction cost, so too is the installation of the fish ladder. 

Casitas’ attempts to distinguish Nampa are unpersuasive. First, Casitas argues 

that the trial court erred by ignoring the definition of construction charges in Article 95

 of 

the contract, which it asserts is distinguishable from the definition of construction 

charges used in Nampa.

6

 However, Casitas fails to explain how the language of Article 

9 materially differs from the definition of construction charges in Nampa. See

SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1320 (Fed. Cir. 2006) 

(“[M]ere statements of disagreement with the district court . . . do not amount to a 

developed argument.”). Moreover, Article 9 does not describe the scope of the United 

 5

 Article 9 provides: 

The actual cost of the project works which will constitute the 

District's construction obligation shall embrace all expenditures of 

whatsoever kind in connection with, growing out of, or resulting 

from work performed in connection with the project works, including 

but not limited to the cost of labor, material, equipment, 

engineering, and legal work, superintendence, administration and 

overhead, right-of-way, property and damage of all kinds, and shall 

include all sums expended by the Bureau of Reclamation in 

surveys and investigations in connection with the project works, 

both prior to and after the execution of this contract, the expense of 

all soil investigations and other preliminary work, and the cost of 

moveable property which may be transferred to the District . . . . 

6

 The Supreme Court in Nampa relied on “Section 4 of the Reclamation 

Extension Act of August 13, 1914, c. 247, 38 Stat. 686, 687, which provides that no 

increase in construction charges shall be made after the same have been fixed except 

by agreement between the Secretary of the Interior and a majority of the water right 

applicants and entrymen to be affected thereby.” 268 U.S. at 52. 

2007-5153 9
States’ construction obligation, which is defined in Articles 2 and 5.7

 Article 9 merely 

provides that whatever project works are considered part of the construction obligation, 

the cost of those works will include all associated expenditures, such as labor, material, 

overhead, etc. Thus, if the fish ladder were deemed part of the construction obligation, 

Article 9 would require that the United States pay all costs associated with the fish 

ladder. 

Second, Casitas argues that Nampa dictates that operation and maintenance 

costs are only those that have to do with the water supply functions of a reclamation 

project and that the fish ladder is not related to the water supply functions of the 

Project.8 However, Casitas constructed the fish ladder for purposes of ensuring that the 

Project could continue to operate without violating ESA. Casitas recognized that once 

the West Coast steelhead trout was listed as endangered, Casitas and its officers could 

be subject to civil and criminal liability for continuing to operate the Project in the 

absence of an incidental take permit. See 16 U.S.C. §§ 1539 (a)(1)(b)-(2)(A) (noting an 

 7

 Article 5, entitled “Payment by District,” provides that construction costs 

comprise all costs incurred by the United States “in providing the project works,” and 

thus extends only to costs incurred in the completion of the project and not to 

construction costs that may arise after completion. That reading of the contract is 

supported by Article 2, entitled “Construction of Works and Limit of Expenditures 

Therefore,” which provides, in subsection (a), that the United States will spend no more 

than $31 million or so much thereof as the contracting officer deems necessary “for the 

completion of the project works,” and further provides, in subsection (b), that when the 

government notifies Casitas that construction expenditures have been determined, “the 

project works system shall be deemed to have been completed within the meaning of 

this contract.” The United States notified Casitas that construction was complete in 

1968. Thus, the construction of the project works is deemed completed under the 

contract and any obligation of the United States discharged. 

8

 Specifically, Casitas relies on the Nampa Court’s description of operation 

and maintenance costs as “expenditures made to maintain [an irrigation system] as an 

efficient going concern and to operate it effectively to the end for which it was designed . 

. . .” 268 U.S. at 53. 

2007-5153 10
incidental take permit is granted if the taking will be incidental to otherwise lawful activity 

by the party, as long as the party has devised an appropriate conservation plan that 

minimizes the impact of the taking on the endangered species). Casitas’ construction of 

the fish ladder enabled it to obtain incidental take protection and continue the Project’s 

operation. 

Finally, Casitas argues that there was no support for the trial court’s factual 

finding that the operation of the Project caused harm to the West Coast steelhead trout, 

making the construction of the fish ladder necessary. Casitas I, 72 Fed. Cl. at 751. We 

disagree. The record is replete with evidence, including from Casitas’ own consultants, 

that the Project has blocked the West Coast steelhead trout’s access to miles of prime 

spawning and rearing habitat for nearly fifty years, and that such water development is a 

contributor to the trout’s endangerment. 

In sum, we hold that the installation of the fish ladder is a maintenance and 

operational cost chargeable to Casitas. 

B. Use Right of Water 

Casitas’ second principal argument with respect to the breach of contract claim 

involves the use right of water. Specifically, Casitas argues that BOR’s requirement that 

Casitas devote a portion of its water to the operation of the fish ladder constitutes a 

breach of Article 4 of the contract. Article 4 provides that “the District shall have the 

perpetual right to use all water that becomes available through the construction and 

operation of the Project . . . .” The government argues that this provision of the contract 

does not constitute a promise by the United States that Casitas may divert all available 

water not needed for vested rights from the Ventura River. The government argues that 

2007-5153 11
the language of Article 4 pertains only to Casitas’ right to “water that becomes available

through the construction and operation of the Project” (emphasis added), which the 

government contends refers to the water stored in Lake Casitas, not the water that flows 

in the Ventura River. The government contends that Article 4 is “simply an 

acknowledgment of Casitas’ existing right to the use of the project water as granted 

under a permit issued by the State [of California] Water Resources Control Board”—that 

is, it “merely recites a condition of the parties’ exchange and as such places no 

affirmative obligation on BOR to act as the guarantor of Casitas’ water supply.” Id. at 

753. 

We disagree with the government’s construction of Article 4. First, the contract’s 

description of the Project, which specifically identifies Robles Diversion Dam as part of 

the Project, contradicts the government’s contention that Project water includes only 

water in Lake Casitas, and not Ventura River water impounded behind Robles Diversion 

Dam. The contract identifies: “[T]he Ventura River Project, comprising Casitas Dam 

and Reservoir, Robles Diversion Dam, Robles-Casitas Canal and a main conveyance 

system consisting of pipelines, pumping plants, balancing reservoirs, and necessary 

appurtenances . . . .” Therefore, we find the government’s argument that Article 4 refers 

to water stored only in Lake Casitas unpersuasive. 

Further, contrary to the government’s contention, Casitas never asserts that 

Article 4 provides a federal guarantee of unlimited access to the water of the Ventura 

River. Instead, Casitas contends that the government’s appropriation of water for the 

fish ladder is independent from any limits that the State of California place on Casitas’ 

water rights. Casitas recognizes that its water rights from the State of California places 

2007-5153 12
an upper limit on the quantity Casitas may appropriate from the Ventura River. 

Specifically, Casitas acknowledges that the California license governing its use of water 

for the Project permits Casitas to divert up to 107,800 acre-feet per year from the 

Ventura River and to put up to 28,500 acre-feet of water per year to beneficial use. 

Casitas argues that Article 4 constitutes a guarantee from the government that it will not 

appropriate any of the Project water for other uses. We agree with Casitas that Article 4 

constitutes a promise by the United States that Casitas shall have the perpetual right to 

water made available by construction and operation of the Project and that the United 

States will not appropriate any of the Project water for other uses (i.e., fish ladder or 

delivery under water contracts). However, this does not end our inquiry. 

C. Sovereign Acts Doctrine 

The government argues that the issuance of the NMFS BiOp and the adoption of 

the BiOp by the BOR are sovereign acts. As such, the government contends that it 

cannot be held liable for failure to perform its contractual duties under Article 4. We 

agree. 

Under the sovereign acts doctrine, “‘the United States when sued as a contractor 

cannot be held liable for an obstruction to the performance of the particular contract 

resulting from its public and general acts as sovereign.’” Yankee Atomic Elec. Co. v. 

United States, 112 F.3d 1569, 1574 (Fed. Cir. 1997) (quoting Horowitz v. United States,

267 U.S. 458, 461 (1925)). The doctrine is based on the theory that “[t]he two 

characters which the government possesses as a contractor and as a sovereign cannot 

be thus fused; nor can the United States while sued in the one character be made liable 

in damages for their acts done in the other.” Id. (quoting Jones v. United States, 1 Ct. 

2007-5153 13
Cl. 383, 384 (1865)). However, even if the sovereign acts defense applies, “it does not 

follow that discharge will always be available, for the common-law doctrine of 

impossibility imposes additional requirements before a party may avoid liability for 

breach.” Carabetta Enters. v. United States, 482 F.3d 1360, 1365 (Fed. Cir. 2007) 

(quoting Winstar v. United States, 518 U.S. 839, 895 (1996)). Specifically, performance 

by the government is excused under the sovereign acts defense only when the 

sovereign act renders the government’s performance impossible. See, e.g., Seaboard 

Lumber Co. v. United States, 308 F.3d 1283, 1294 (Fed. Cir. 2002). 

Casitas argues that the sovereign acts doctrine does not apply because the ESA 

did not make it impossible for the government to perform its contractual obligations. 

Casitas contends that alternative performance was available to the government—a 

more modest fish ladder or a system for fish passage other than the fish ladder (e.g., 

fish trapping and trucking) that would have met ESA requirements without requiring a 

loss of water to Casitas. Casitas asserts that the absence of a specific directive in the 

ESA regarding the means of ensuring fish preservation and the availability of an 

alternative approach to accomplish that goal without accompanying water loss defeats 

the sovereign acts doctrine. 

Casitas’ argument necessarily assumes that the sovereign act consists solely of 

the ESA and that NMFS’ issuance of the BiOp and the BOR decision to adopt the BiOp, 

which the parties concede required Casitas to construct the fish ladder, were not part of 

a sovereign act. Casitas’ interpretation of what constitutes a sovereign act is too 

narrow. The NMFS is an agency within the Commerce Department’s National Oceanic 

2007-5153 14
and Atmospheric Administration that implements the ESA for marine species.9

 The 

BOR is a federal agency within the Department of Interior. We see no difference 

between situations when Congress either delineates the implementing details within the 

statute or when Congress leaves these details to the discretion of an agency. Cf.

Bennett v. Spear, 520 U.S. 154, 170 (1997) (stressing the “powerful coercive” and 

“virtually determinative” effect of biological opinions). In either case, the governmental 

action is sovereign in character and the sovereign acts doctrine may be invoked. As 

such, the trial court correctly concluded that Casitas’ argument fails because it makes 

an impermissible distinction “between statutes whose implementing details have been 

spelled out by Congress and statutes whose implementation Congress has left for 

administrative determination.” Casitas I, 72 Fed. Cl. at 755. We hold that the BiOp 

opinion and the decision of the BOR to adopt the BiOp opinion are sovereign acts. As 

such, it was impossible for the government to perform its contractual requirements 

under Article 4. Therefore, the government is not liable for breaching Article 4 of the 

contract. 

II. TAKINGS 

 The Takings Clause of the Fifth Amendment provides that private property shall 

not “be taken for public use, without just compensation.” U.S. Const. amend. V. The 

Takings Clause “is designed not to limit the governmental interference with property 

rights per se, but rather to secure compensation in the event of otherwise proper 

interference amounting to a taking.” First English Evangelical Lutheran Church of 

Glendale v. County of L.A., 482 U.S. 304, 315 (1987) (emphasis in the original). The 

 9

 Casitas admits that it was within NMFS’ discretion to determine that a fish 

ladder was the appropriate remedy for the West Coast steelhead trout. 

2007-5153 15
Supreme Court has emphasized that the Takings Clause “was designed to bar 

Government from forcing some people alone to bear public burdens which, in all 

fairness and justice, should be borne by the public as a whole.” Armstrong v. United 

States, 364 U.S. 40, 49 (1960). 

To begin, we note that the government has conceded that Casitas has a valid 

property right in the water in question. Specifically, the government has conceded that 

Casitas has a right both to divert 107,800 acre-feet of water and to use 28,500 acre-feet 

of such diverted water. Def.’s Reply Supp. Mot. Partial Summ. J. at 3-4 (“Plaintiff 

[characterizes its property interest] in its opposition brief [as follows]: ‘In this case, 

Casitas claims the right to divert through the Ventura River Project 107,800 acre-feet of 

water from the Ventura River per year and the right to put 28,500 acre-feet of water to 

beneficial use each year . . . .’ [I]n order to streamline this summary judgment process, 

and to avoid any unnecessary confusion in the resolution of the nature or type of taking 

at issue in this case (i.e., physical or regulatory) defendant will assume for purposes of 

this motion that plaintiff’s characterization of the scope of its property interests is 

correct.”). However, before considering whether the diversion of Casitas’ water to the 

fish ladder is best analyzed under the rubric of a physical or regulatory taking, it is 

useful to review the distinctions traditionally made between the two doctrines. 

 A physical taking is the “paradigmatic taking” and occurs by “a direct government 

appropriation or [a] physical invasion of private property.” Lingle v. Chevron U.S.A., 

Inc., 544 U.S. 528, 537 (2005). The jurisprudence pertaining to physical takings 

“involves the straightforward application of per se rules.” Brown v. Legal Found. of 

Wash., 538 U.S. 216, 233 (2003) (emphasis in original). The size and scope of a 

2007-5153 16
physical invasion is immaterial to the analysis; even if the government only appropriates 

a tiny slice of a person’s holdings, a taking has occurred, and the owner must be 

provided just compensation. Tahoe-Sierra, 535 U.S. at 322. 

In addition, the Supreme Court precedents “stake out two categories of 

regulatory action that generally will be deemed per se takings.” Lingle, 544 U.S. at 538. 

Regulatory action will be deemed a per se taking when the government requires “an 

owner to suffer a permanent physical invasion of her property—however minor,” id.

(citing Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982)). Such 

action effects a physical invasion of the property and therefore qualifies as a physical 

taking. Additionally, regulatory action can qualify as a per se taking when the regulation 

“completely deprive[s] an owner of ‘all economically beneficial use’ of her property,” id.

(quoting Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1019 (1992)). 

 Regulatory takings analysis outside the context of a physical or other per se

taking is “more complex.” Tahoe-Sierra, 535 U.S. at 322 n.17. “[R]egulatory takings 

jurisprudence . . . is characterized by ‘essentially ad hoc, factual inquiries,’ designed to 

allow ‘careful examination and weighing of all the relevant circumstances.’” Id. at 321 

(citations omitted). While there is no “set formula” for evaluating regulatory takings 

claims, courts typically consider whether the restriction has risen to the level of a 

compensable taking under the multi-factor balancing test articulated in Penn Central, 

438 U.S. at 124. Lingle, 544 U.S. at 538-39 (citations omitted). 

 A trilogy of Supreme Court cases involving water rights provides guidance on 

the demarcation between regulatory and physical takings analysis with respect to these 

rights. In International Paper Co. v. United States, 282 U.S. 399 (1931), the United 

2007-5153 17
States, during World War I, issued a requisition order for all of the hydroelectric power 

of the Niagara Falls Power Company (Niagara Power). Id. at 405. At the time that the 

United States’ order was issued, Niagara Power leased a portion of its water to 

International Paper Company (International Paper), which diverted the water via a canal 

to its mill. Id. at 404-05. In response to the United States’ direction to “cut off the water 

being taken” by International Paper to increase power production, Niagara Power 

terminated the diversion of water to International Paper. Id. at 405-06. This termination 

resulted in International Paper being unable to operate its mill for nearly nine months. 

Id. The United States did not take over the operations of either Niagara Power or 

International Paper, nor did it physically direct the flow of the water. Instead, the United 

States caused Niagara Power to stop International Paper from diverting water to its mill 

so that the water would instead be available for third party use—“private companies for 

work deemed more useful [by the government] than the manufacture of paper.” Id. at 

404. This third party use served a public purpose of supplying power for the war effort. 

The Supreme Court found that the government directly appropriated water that 

International Paper had a right to use. 

In United States v. Gerlach Live Stock Co., 339 U.S. 725 (1950), the claimants 

held riparian water rights for irrigation of their grasslands by natural seasonal overflow 

of the San Joaquin River, id. at 729-30. The BOR built Friant Dam, a part of the Central 

Valley Project, upstream from the claimants’ land. Id. at 730, 734. The Friant Dam was 

built to store high stage river flows which then were “diverted . . . through a system of 

canals and sold to irrigate more than a million acres of land.” Id. at 729. As a result, “a 

dry river bed” was left downstream of the dam, and the overflow irrigation of the 

2007-5153 18
claimants’ lands virtually ceased. Id. at 729-30. Thus, the United States caused water 

to be physically diverted away from the claimants for third party use—delivery under 

water contracts. The Friant Dam served a public purpose of “mak[ing] water available 

where it would be of the greatest service.” Id. at 728. The Supreme Court analyzed the 

government’s action as a physical taking. 

Dugan v. Rank, 372 U.S. 609 (1963), similarly involved claims arising out of the 

United States’ physical diversion of water for third party use, by the Friant Dam. In 

Dugan, landowners along the San Joaquin River, owning riparian and other water rights 

in the river, alleged that the BOR’s storage of water upstream behind Friant Dam left 

insufficient water in the river to supply their water rights. Id. at 614, 616. The Supreme 

Court agreed, and analyzed the government’s physical appropriation of water as a 

physical taking. 

We agree with both parties that, in each of these cases, the United States 

physically diverted the water, or caused water to be diverted away from the plaintiffs’ 

property. We also agree that in each of these cases the diverted water was dedicated 

to government use or third party use which served a public purpose. Additionally, we 

agree that the Supreme Court analyzed the government action in each of these cases 

as a per se taking. Finally, we concur with the government that our focus should 

primarily be on the character of the government action when determining whether a 

physical or regulatory taking has occurred. 

The government contends that this trio of Supreme Court cases is 

distinguishable from the instant case because they involve direct appropriations of 

property as opposed to restrictions on use of natural resources. The government 

2007-5153 19
argues that it did not seize, appropriate, divert, or impound any water, but merely 

required water to be left in the stream. 

Here, the government admits for the purposes of summary judgment that it 

required Casitas to build the fish ladder facility, which is a man-made concrete structure 

that was not a portion of the existing Ventura River.10 Appellee’s Br. at 2-3 n.1 

(“Although the parties dispute the factual question whether Reclamation required 

Casitas to install the fish ladder and comply with the operational criteria, we assume it 

was required to do so for the purposes of this appeal from the [Court of Federal Claim’s] 

ruling on summary judgment.”), 22 n.6 (“Reclamation never required Casitas to install 

the fish ladder or comply with the operating criteria in the BiOp. For the purposes of this 

appeal from the [Court of Federal Claim’s] summary judgment rulings, however, the 

United States assumes . . . that Casitas’ factual allegation is correct . . . .”). 

Figure 2 is a depiction of the fish ladder facility, along with part of the Ventura 

River, Robles-Casitas Canal, and Robles Diversion Dam.11 The fish ladder facility 

allows both upstream and downstream fish migration. The arrows in Figure 2 show the 

direction of upstream fish migration. In upstream migration, fish enter the fish entrance, 

 10 During oral arguments, the government argued that neither the BOR nor 

the BiOp required Casitas to build the fish ladder, but rather the BiOp simply required 

Casitas to leave water in stream. Oral Arg. 18:18-19:45. We do not address whether 

the government required Casitas to build the fish ladder because the government 

conceded in its brief that it did. Appellee’s Br. at 2-3 n.1, 22 n.6. 

11 The Robles Diversion Dam operates any time of the year that adequate 

flows are available in the Ventura River. This occurs when there has been a large 

enough rainfall event to allow the forebay basin to fill while still meeting downstream 

release criteria for water rights. Once the forebay basin has filled, three radial gates 

(canal entrance gates) allow intake to the diversion flume, which serves as the entry to 

the Robles-Casitas Canal. Water reaching the Robles Diversion Dam that does not 

enter the diversion flume continues downstream in the Ventura River (either by passing 

through four radial gates (spillway gates) or by spilling over the cutoff wall). Curtis E. 

Spencer, Expert Report at 4. 

2007-5153 20
continue through the fish ladder, and swim through the diversion flume where they exit 

through the low flow or high flow exits. During downstream migration, fish enter the 

diversion flume, where the fish screens and brush system guide fish into the fish ladder 

(preventing the fish from entering Lake Casitas via the Robles-Casitas Canal). 

Figure 2: Fish Ladder Facility 

SPILL WAY GATES

ARROWS DIRECTION OF UPSTREAM FISH MIGRATION

FISH ENTRANCE

ROBLES-CASITAS CANAL

FISH LADDER

OVERSHOT GATE

FISH SCREENS & BRUSH SYSTEM

FISH GUIDANCE SYSTEM

HIGH FLOW FISH

EXIT

CANAL ENTRANCE

GATES

DIVERSION FLUME

FOREBAY BASIN

LOW FLOW FISH EXIT

VENTURA RIVER

VENTURA RIVER

(SPILLWAY CHANNEL) FLOW

FLOW

AUXILLARY PIPELINE

ROBLES-DIVERSION

DAM

CUTOFF WALL

SPILL WAY GATES

ARROWS DIRECTION OF UPSTREAM FISH MIGRATION

FISH ENTRANCE

ROBLES-CASITAS CANAL

FISH LADDER

OVERSHOT GATE

FISH SCREENS & BRUSH SYSTEM

FISH GUIDANCE SYSTEM

HIGH FLOW FISH

EXIT

CANAL ENTRANCE

GATES

DIVERSION FLUME

FOREBAY BASIN

LOW FLOW FISH EXIT

VENTURA RIVER

VENTURA RIVER

(SPILLWAY CHANNEL) FLOW

FLOW

AUXILLARY PIPELINE

ROBLES-DIVERSION

DAM

CUTOFF WALL

The government also admits that the operation of the fish ladder required water, 

which prior to the fish ladder’s construction flowed into the Casitas Reservoir via the 

Robles-Casitas Canal, to be physically diverted away from the Robles-Casitas Canal 

and into the fish ladder. Oral Arg. 26:12-26:32; 31:11-31:30. Specifically, the 

government admits that the operation of the fish ladder includes closing the overshot 

gate, see Figure 2, which is located in the Robles-Casitas Canal, and that the closure of 

this gate causes water that would have gone into the Casitas Reservoir via the Robles2007-5153 21
Casitas Canal to be diverted into the fish ladder.12 Id. at 30:15-30:38. These 

admissions make clear that the government did not merely require some water to 

remain in stream, but instead actively caused the physical diversion of water away from 

the Robles-Casitas Canal—after the water had left the Ventura River and was in the 

Robles-Casitas Canal—and towards the fish ladder, thus reducing Casitas’ water 

supply.13 

The active hand of the government was also at play in International Paper, where 

the Court remarked that “[t]he petitioner’s right was to the use of the water; and when all 

the water that it used was withdrawn from the petitioner’s mill and turned elsewhere by 

government requisition for the production of power it is hard to see what more the 

Government could do to take the use.” 282 U.S. at 407. Similar to the petitioner in 

International Paper, Casitas’ right was to the use of the water, and its water was 

withdrawn from the Robles-Casitas Canal and turned elsewhere (to the fish ladder) by 

the government.14 Although Casitas’ right was only partially impaired, in the physical 

taking jurisprudence any impairment is sufficient. See Tahoe-Sierra, 535 U.S. at 322. 

The Supreme Court in Dugan held that a partial impairment of the petitioner’s water 

rights was a taking, 

 12 The operation of the fish ladder facility was originally described by Casitas’ 

attorney. Oral Arg. 6:20-6:37 

13 Contrary to the government’s assertions, the appropriate reference point 

in time to determine whether the United States caused a physical diversion is not before 

the construction of the Project but instead the status quo before the fish ladder was 

operational. The Project was constructed almost forty years prior to the construction of 

the fish ladder facility. Water that is now being diverted to the fish ladder facility had 

been flowing down the Casitas-Robles Canal since the late 1950s. 

14 We note that a dispute in the amount of water lost by Casitas does not 

prevent a finding of a taking. See Dugan, 372 U.S. at 623 (finding “no uncertainty in the 

taking” even though the “Government did not announce that it was taking water rights to 

a specified number of ‘gallons’ or, for that matter, ‘inches’ of water”). 

2007-5153 22
Having plenary power to seize the whole of respondents’ rights in carrying 

out the congressional mandate, the federal officers a fortiori had authority 

to seize less. It follows that if any part of respondents’ claimed water 

rights were invaded it amounted to an interference therewith and a taking 

thereof . . . . 

372 U.S. at 623. Therefore, we conclude that the government physically appropriated 

water that Casitas held a usufructuary right in. 

The government also argues that, in contrast to the trilogy of Supreme Court 

cases, here, the United States did not appropriate the water for its own use or for use by 

a third party. We find this argument unpersuasive. The government, by passing the 

ESA, has recognized the importance of protecting endangered species. In fact, the 

purpose of the ESA is express in the statute itself. 16 U.S.C. § 1531(a)-(c). 

Specifically, Congress found that “species of fish . . . have been so depleted in numbers 

that they are in danger of or threatened with extinction” and that “these species of fish 

 . . . are of esthetic, ecological, educational, historical, recreational, and scientific value 

to the Nation and its people.” Id. § 1531(a)(2)-(3). Congress also found that 

“encouraging . . . interested parties . . . to develop and maintain conservation programs 

. . . is a key to meeting the Nation’s international commitments and to better 

safeguarding, for the benefit of all citizens, the Nation’s heritage in fish . . . .” Id. § 

1531(a)(5). In light of these findings, there is little doubt that the preservation of the 

habitat of an endangered species is for government and third party use—the public—

which serves a public purpose. Cf. Kelo v. City of New London, 545 U.S. 469, 485 

(2005) (upholding government use of eminent domain to acquire land for transfer to 

private parties when it serves a broadly defined public purpose like economic 

development). When the government forces Casitas to divert water away from the 

Robles-Casitas Canal to the fish ladder for the public purpose of protecting the West 

2007-5153 23
Coast Steelhead trout, this is a governmental use of the water. The fact that the 

government did not itself divert the water is of no import. The government admits that 

Casitas was forced by the BOR adoption of the BiOp to build the fish ladder and divert 

the water. If this water was not diverted for a public use, namely protection of the 

endangered fish, what use was it diverted for? 

Finally, the government attempts to distinguish this trio of Supreme Court cases 

on the basis that the physical diversion of water by the government in each of these 

cases was part of an undisputed exercise of the United States’ eminent domain powers. 

The government argues that physical takings are usually obvious and that the 

government’s exercise of eminent domain powers or alternatively the government’s 

offer to purchase the rights in advance is evidence of the obviousness of the physical 

taking in International Paper, Dugan, and Gerlach. Oral Arg. 34:00-34:23; see, e.g., 

Tahoe-Sierra, 535 U.S. at 322 n.17 (“When the government . . . physically appropriates 

the property, the fact of a taking is typically obvious and undisputed.”). However, at the 

time International Paper, Dugan, and Gerlach were litigated, the government did not 

appear to take the position that the takings of water rights in those cases were obvious. 

In International Paper, the government promised to pay “fair and just compensation” for 

all of the hydroelectric power of the Niagara Falls, but the Court noted the government 

exercised eminent domain power only up to “the time . . . to pay for what it has had.” 

282 U.S. at 405-06. In Gerlach, despite the fact that “[t]he original plan [for the Project] 

called for purchase of water rights” and a later Act authorized the Secretary to acquire 

rights by eminent domain, 339 U.S. at 734, 735 & n.8, the government argued that 

deprivation of water rights was not compensable because the “overall project . . . ha[d] 

2007-5153 24
been authorized by Congress, under the commerce power, as a measure for control of 

navigation,” Int’l Paper, 282 U.S. at 731. Finally, in Dugan, although the government 

sought to “purchase or pay for the infringement of [water] rights,” the government 

argued that no taking occurred. 372 U.S. at 613. Therefore, the “obviousness” of a 

physical taking is not always as apparent as the government contends. 

In addition, while it is true that each of these cases began with an action in which 

the government sought to acquire rights by purchase, it is certainly not a necessary 

precondition to finding a physical taking. See, e.g., United States v. Pewee Coal Co., 

341 U.S. 114, 115-16 (1951) (finding a physical taking without the government offering 

to acquire rights by purchase beforehand); United States v. Gen. Motors Corp., 323 

U.S. 373, 375 (1945) (same). To hold otherwise would allow the government to 

circumvent paying just compensation for taking private property by simply not offering to 

acquire the rights in advance. 

Further, the government argues that the installation and operation of the fish 

ladder was merely a use restriction on a natural resource, and therefore governed by 

the regulatory taking jurisprudence. Specifically, the government argues the instant 

case is similar to United States v. Central Eureka Mining Co., 357 U.S. 155 (1958), 

where the government issued an order requiring a gold mine to cease operations, and 

to Penn Central, where the government restricted a building owner’s private airspace. 

In both of these cases, the Supreme Court analyzed the government action as a 

regulatory taking. The government contrasts the instant case with Pewee Coal, where 

the government took actual possession and control of a coal mine, and United States v. 

Causby, 328 U.S. 256 (1946), where government planes utilized private airspace. In 

2007-5153 25
each of these cases the Supreme Court analyzed the government’s action as a physical 

taking. 

The government is correct that, similar to the regulatory takings cases involving 

restrictions on use, the owner of the property in this case also had an expectation that 

was later altered by government action. However, in contrast to the restriction of use 

cases cited by the government, this case involves physical appropriation by the 

government. The United States actively caused water to be physically diverted away 

from Casitas after the water had left the Ventura River and was in the Robles-Casitas 

Canal. Like Pewee Coal, the government, in this case, took physical possession of the 

water. By its own admission, the government required construction of the fish ladder 

and compelled the water to be rerouted to the fish ladder in order for the fish ladder to 

operate. This is no different than the government piping the water to a different 

location. It is no less a physical appropriation. This is not like Central Eureka Mining, 

where the government merely ordered the gold mine to cease operations. 357 U.S. at 

165-66. In Central Eureka Mining, the Court expressly distinguished the physical 

takings cases on the grounds that “[t]he Government had no need for the gold or the 

gold mines.” Id. at 166. The government simply halted mining; it did not commandeer 

the gold for a public use. At the end of the regulatory restriction, the gold mine still had 

all of its gold and machinery. In this case, in contrast, the government did commandeer 

the water for a public use—preservation of an endangered species. When the 

government diverted the water to the fish ladder, it took Casitas’ water. The water, and 

2007-5153 26
Casitas’ right to use that water, is forever gone.15 As such, this case is more closely 

analogous to Pewee Coal and Causby than Penn Central and Central Eureka Mining. 

Finally, the government argues that Hudson County Water Co. v. McCarter, 209 

U.S. 349 (1908), is applicable here. In Hudson, the Court held that a New Jersey 

statute that barred a water company, which held riparian water rights in the Passaic 

River, from diverting water to New York did not constitute an unconstitutional taking. 

The Court concluded that the State’s requirement that the river be maintained 

“substantially undiminished . . . justifies the cutting down by statute, without 

compensation, in the exercise of the police power, of what otherwise would be private 

rights of property.” Hudson County, 209 U.S. at 356. The government contends that 

the Court thus declined to apply a per se physical takings analysis to the regulatory 

requirement that water be left in the river. We do not find the government’s argument 

persuasive. First, the Supreme Court held there was no taking because the riparian 

water right granted to Hudson by the State of New Jersey did not include the right to 

transfer fresh, surface water out of state to New York pursuant to contract: 

The right to receive water from a river through pipes is subject to territorial 

limits by nature, and those limits may be fixed by the State within which 

the river flows, even if they are made to coincide with the state line. 

Id. at 357. Since Hudson did not hold this property right, the government’s restriction 

did not take anything that Hudson owned. In this case, the government admits Casitas 

holds a valid property right to the water; hence, unlike in Hudson, the government’s 

actions here are taking Casitas’ property right. 

 15 The California license governing Casitas’ use of water for the Project 

permits Casitas to divert up to 107,800 acre-feet per year from the Ventura River and to 

put to beneficial use each year 28,500 acre-feet of the diverted water. The water 

diverted to the fish ladder facility is gone forever, as the license does not allow Casitas 

to make up this amount in subsequent years. 

2007-5153 27
 Moreover, in the instant case, the government admissions make clear that the 

United States did not just require that water be left in the river, but instead physically 

caused Casitas to divert water away from the Robles-Casitas Canal and towards the 

fish ladder. Where the government plays an active role and physically appropriates 

property, the per se taking analysis applies. 

We conclude by noting that the Supreme Court’s decision in Tahoe-Sierra did not 

depart from the substantial body of precedent dictating that the government’s physical 

appropriation of a portion of a water right is compensable.16 In Tahoe-Sierra, the 

 16 We note that prior to Tahoe-Sierra, the Court of Federal Claims decided 

Tulare in favor of the plaintiffs holding that “the federal government, by preventing 

plaintiffs from using the water to which they would otherwise have been entitled, [has] 

rendered the usufructuary right to that water valueless, [and has] thus effected a 

physical taking.” Tulare, 49 Fed. Cl. at 318. The trial court concluded that in Tulare it 

improperly focused on “the finality of the plaintiffs’ loss rather than upon the character of 

the government’s action.” Casitas II, 76 Fed. Cl. at 104. We do not opine on whether 

Tulare was rightly decided, but note that the Tulare decision has been criticized. First, 

Tulare has been criticized for failing to engage in a thorough analysis of whether the 

plaintiff had a vested property right in the water in question. See Klamath Irrigation Dist. 

v. United States, 67 Fed. Cl. 504, 538 (2005) (criticizing Tulare for failing to adequately 

consider whether the contracts were limited in the event of water shortage by prior 

contracts, prior appropriations, or other state law principles); Allegretti & Co. v. County 

of Imperial, 42 Cal. Rptr. 3d, 131-32 (4th Cir. 2006) (same); Meeker v. Belridge Water 

Storage Dist., 2006 U.S. Dist. LEXIS 91774, at *36 (E.D. Cal. Jan. 17, 2006) (same); 

Melinda Harm Benson, The Tulare Case: Water Rights, the Endangered Species Act, 

and the Fifth Amendment, 32 Envtl. L. 551, 585 (2002) (arguing that if Tulare had 

examined state law, it would have concluded that the plaintiffs lacked a protected 

property interest). In the instant case, the government has conceded that Casitas has a 

valid property right in the water at issue. Second, Tulare has been criticized for 

focusing on the results of the government action rather than on the character of the 

government action. See Allegretti, 138 Cal. App. 4th at 1275 (criticizing Tulare for its 

conclusion “that the government’s imposition on pumping restrictions is no different than 

an actual physical diversion of water” because “the government’s passive restriction, 

which required the water users to leave water in the stream, did not constitute a 

physical invasion or appropriation”). In the instant case, the government’s admissions 

made clear that it did not merely require water to be left in stream, but instead actively 

caused the physical diversion of water away from the Robles-Casitas Canal and 

towards the fish ladder. 

2007-5153 28
Supreme Court considered a taking claim involving the application of a 32-month 

moratorium on land development. The Court held that such a temporary moratorium did 

not constitute a per se taking because at the end of the moratorium the owner regained 

use of the land: 

An interest in real property is defined by the metes and bounds that 

describe its geographic dimensions and the term of years that describes 

the temporal aspect of the owner’s interest . . . . Both dimensions must be 

considered if the interest is to be viewed in its entirety. Hence, a 

permanent deprivation of the owner’s use of the entire area is a taking of 

“the parcel as a whole,” whereas a temporary restriction that merely 

causes a diminution in value is not. Logically, a fee simple estate cannot 

be rendered valueless by a temporary prohibition on economic use, 

because the property will recover value as soon as the prohibition is lifted. 

Tahoe-Sierra, 535 U.S. at 331-32. In Tahoe-Sierra, the Court considered and rejected 

the claim of the petitioner that each day of a land use moratorium deprives the owner of 

all economic use of his land, and is thus a per se taking under the rule of Lucas. 

Petitioners seek to bring this case under the rule announced in Lucas by 

arguing that we can effectively sever a 32-month segment from the 

remainder of each landowner’s fee simple estate, and then ask whether 

that segment has been taken in its entirety by the moratoria. Of course, 

defining the property interest taken in terms of the very regulation being 

challenged is circular. With property so divided, every delay would 

become a total ban; the moratorium and the normal permit process alike 

would constitute categorical takings. 

Id. at 330-31. While Tahoe-Sierra emphasized the sharp distinction between physical 

and regulatory takings, it did not involve a claim of physical taking, nor did it involve 

water rights. Id. at 322-23. See Steven J. Eagle, Planning Moratoria and Regulatory 

Takings: The Supreme Court’s Fairness Mandate Benefits Landowners, 31 Fla. St. U. L. 

Rev. 429, 443-55 (2004) (arguing that Tahoe-Sierra decoupled physical and regulatory 

takings analysis). Tahoe-Sierra did not overrule, modify, or even mention the holdings 

 

 

2007-5153 29
of International Paper, Dugan, or Gerlach. As such, these cases remain good law. 

Tahoe-Sierra was a regulatory case—due to a moratorium the landowner was unable to 

develop his land for thirty-two months. The government in Tahoe-Sierra did not 

physically appropriate anything, but rather restricted the owner’s use of his land. The 

landowner was prohibited from developing the land during that time. The land itself was 

in no way changed or diminished due to this restriction, and, as the court held, “the 

property will recover value as soon as the prohibition is lifted.” Tahoe-Sierra, 535 U.S. 

at 332. The owner’s land was the same after the moratorium as it was before. The 

regulatory restriction merely maintained the status quo. 

In this case, in contrast, the water that is diverted away from the RoblesDiversion Canal is permanently gone. Casitas will never, at the end of any period of 

time, be able to get that water back. The character of the government action was a 

physical diversion for a public use—the protection of an endangered species. The 

government-caused diversion to the fish ladder has permanently taken that water away 

from Casitas. This is not temporary, and it does not leave the right in the same state it 

was before the government action. The water, and Casitas’ right to use that water, is 

forever gone. Unlike Tahoe-Sierra, the government, in this case, directly appropriated 

Casitas’ water for its own use—for the preservation of an endangered species. The 

government requirement that Casitas build the fish ladder and divert water to it should 

be analyzed under the physical takings rubric. 

CONCLUSION 

For the foregoing reasons, we affirm the district court’s grant of summary 

judgment in favor of the government with respect to Casitas’ breach of contract claim 

2007-5153 30
2007-5153 31

and reverse the district court’s grant of partial summary judgment in favor of the 

government with respect to a taking under the Fifth Amendment. We remand for further 

proceedings consistent with this opinion.17 

AFFIRMED-IN-PART, REVERSED-IN-PART, and REMANDED

 17 In the Court of Federal Claims, Casitas conceded that if the governmental 

actions at issue in this case were not analyzed under a physical taking rubric, it could 

not prevail. At the same time, the government made certain conditional concessions in 

order to put the case in a posture for summary judgment. (For example, the 

government conceded for the limited purpose of summary judgment that Casitas 

possessed a cognizable property interest.) The court thereafter granted summary 

judgment in favor of the government on the takings issue after determining that the 

governmental actions at issue did not effect a physical taking. We have reversed the 

grant of summary judgment in favor of the government based solely upon our 

determination that the governmental actions at issue in this case are properly analyzed 

under a physical taking rubric. On remand, after receiving the views of the parties and 

ruling on any matters left open during the summary judgment proceedings, the Court of 

Federal Claims will be in a position to determine the ultimate question of whether a 

taking occurred in this case. If the court determines that a taking occurred, it will be 

necessary for it to determine the amount of damages to which Casitas is entitled. The 

damages calculation may take into account the fact that Casitas’ license from the State 

of California allowed it to divert up to 107,800 acre-feet of water per year from the 

Ventura River and to put to beneficial use up to 28,500 acre-feet of the diverted water. 
United States Court of Appeals for the Federal Circuit 

 

2007-5153 

CASITAS MUNICIPAL WATER DISTRICT, 

Plaintiff-Appellant, 

v. 

UNITED STATES, 

Defendant-Appellee. 

Appeal from the United States Court of Federal Claims in 05-CV-168, Senior Judge 

John P. Wiese. 

MAYER, Circuit Judge, dissenting-in-part. 

 In my view, the trial court correctly decided that the water use requirements 

imposed by the federal government on Casitas do not constitute per se takings of 

property requiring compensation under the Takings Clause. Because Tahoe-Sierra 

Preservation Council v. Tahoe Regional Planning Activity, 535 U.S. 302 (2002), controls 

the question of whether the multi-factor inquiry set out in Penn Central Transportation 

Co. v. New York City, 438 U.S. 104 (1978), is the proper framework for analyzing 

whether a taking has occurred in this case, I dissent from the majority’s contrary 

decision. 

 Casitas does not own the water in question because all water sources within 

California belong to the public. Cal. Wat. Code §§ 102, 1001. Whether Casitas even 

has a vested property interest in the use of the water is a threshold issue to be 
determined under California law. California subjects appropriative water rights licenses 

to the public trust and reasonable use doctrines, so Casitas likely has no property 

interest in the water, and therefore no takings claim.1

 Assuming arguendo that there is 

a property interest in the water, however, the use restriction imposed is pursuant to the 

administration of the Endangered Species Act (ESA), and is plainly regulatory in nature. 

Casitas attempts to distinguish restrictions on water use from all other takings 

jurisprudence, arguing that a partial restriction imposed by law or regulation on an 

annual water use license triggers a per se rule that a physical taking has occurred. This 

novel formulation of a per se or categorical takings rule exclusive to water use rights is 

unsupported by law. 

In Tahoe-Sierra, the Supreme Court distinguished between physical takings, in 

which the government acquires private property for a public purpose, and regulatory 

takings, in which a law or regulation imposes restrictions on the use of private property 

“so severe that they are tantamount to a condemnation or appropriation.” 535 U.S. at 

321-22 & n.17. When the government physically appropriates or occupies private 

property, the fact that a taking has occurred “is typically obvious and undisputed.” Id. at 

322 n.17. In contrast, when a law or regulation imposes restrictions on use of the 

property, courts must engage in “ad hoc, factual inquiries,” focusing on the character of 

the action and the nature and extent of the intrusion to determine whether the law or 

regulation has effected a taking. Id. at 326-27. The Court has consistently explained 

that “while property may be regulated to a certain extent, if regulation goes too far it will 

 1

 The government confined any assumption to the contrary to its summary 

judgment motion, so the property interest issue would be subject to consideration on 

remand.

2007-5153 2
be recognized as a taking.” Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 

1014 (1992) (internal quotation omitted). To determine whether a regulation has gone 

too far for purposes of the Fifth Amendment, courts analyze the economic impact of the 

regulation on the claimant and the extent to which the regulation interferes with 

investment-backed expectations. Penn Central, 438 U.S. at 124. 

When a government statute like the ESA is facially constitutional, the relevant 

takings question for attendant administrative actions that restrict private property use 

ascertains the extent to which the government action interferes with the economic use 

of the property—a classic regulatory, not physical, takings problem. Stearns Co. v. 

U.S., 396 F.3d 1354, 1357 (Fed. Cir. 2005). Two discrete categories of regulatory 

action, however, are per se compensable under the takings clause without delving into 

a case-specific analysis: (1) where regulation has compelled an owner to endure a 

physical invasion of his property, and (2) where regulation deprives an owner of all 

economically beneficial or productive use of land, examining the parcel as a whole. 

Lucas, 505 U.S. at 1015. This case does not involve any sort of physical invasion, does 

not deprive Casitas of all economically beneficial use of its water license, and Casitas 

conceded that it can not prevail on the merits of a Penn Central regulatory takings 

claim. 

No physical taking has occurred. First, because Casitas possesses a 

usufructuary interest in the water and does not actually own the water molecules at 

issue, it is difficult to imagine how its property interest in the water could be physically 

invaded or occupied. Cf. United States v. Causby, 328 U.S. 256, 264-66 (1946) (finding 

a physical taking when the government literally and physically invaded private airspace 

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with its aircraft). Further, the government has not acquired Casitas’ water use license. 

The United States may not make proprietary use of the water denied to Casitas by the 

ESA, nor may it divert Casitas’ use rights to a third party. Rather, the limitation imposed 

on the total quantity of water available for Casitas’ use is directly correlated to the 

quantity of water needed to remain in the Ventura River’s hydrologic cycle to preserve 

the endangered Southern California steelhead under a public program to promote the 

common good. See Tahoe-Sierra, 535 U.S. at 322-23 (distinguishing between 

government invasion or acquisition of property, which constitutes a physical taking, and 

government interference with a private owner’s use of her property, which constitutes a 

regulatory taking if, after a complex factual assessment, a court determines it goes too 

far); Penn Central, 438 U.S. at 124 (“A ‘taking’ may more readily be found when the 

interference with property can be characterized as a physical invasion by government, 

than when interference arises from some public program adjusting the benefits and 

burdens of economic life to promote the common good.”) (internal citation omitted); see 

also Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S 419, 436 (1982) 

(concluding that a true physical “occupation is qualitatively more severe than a 

regulation of the use of property, even a regulation that imposes affirmative duties on 

the owner, since the owner may have no control over the timing, extent, or nature of the 

invasion”). 

Nor did the government appropriate the water when it restricted Casitas’ right to 

make use of it. An example of a physical taking by government appropriation is the 

seizure of possession and control of a privately owned coal mine. Compare United 

States v. Pewee Coal Co., 341 U.S. 114, 116 (1951) (finding a physical taking where 

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the government placed placards reading “United States Property!” on the premises and 

actually became engaged in the coal mining business), with United States v. Central 

Eureka Mining Co., 357 U.S. 155, 165-68 (1958) (analyzing a wartime Act prohibiting 

operation of gold mines as a regulatory taking, because “it is clear from the record that 

the Government did not occupy, use, or in any manner take physical possession of the 

gold mines or of the equipment connected with them.”). In Tahoe-Sierra, a moratorium 

on land development did not amount to a physical taking. 535 U.S. at 324-25 (“This 

case does not present the classi[c] taking in which the government directly appropriates 

private property for its own use; instead the interference with property rights arises from 

some public program adjusting the benefits and burdens of economic life to promote the 

common good.”) (internal citations and quotations omitted). Similarly, a moratorium on 

development of a portion of Casitas’ water use rights, imposed while the steelhead trout 

remains endangered, falls into the category of nonpossessory governmental activity. As 

long as regulatory restrictions do not require a private property owner to suffer the 

government’s physical occupation, they should be analyzed “under the multifactor 

inquiry generally applicable to nonpossessory governmental activity.” Id. at 323-24 & 

n.18; Loretto, 458 U.S at 440 (citing Penn Central, 438 U.S. 104 (1978)); see also

Goodrich v. United States, 434 F.3d 1329, 1333-34 (Fed. Cir. 2006) (affirming the trial 

court’s characterization of takings claim as regulatory, not physical, for statute of 

limitations purposes, when Forest Service restricted private rancher’s water rights on 

federally-owned grazing land). 

In distinguishing between physical and regulatory takings claims, Tahoe-Sierra

neither overruled nor contradicted the Dugan, Gerlach and International Paper line of 

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takings cases, all of which involved physical takings. In each of those cases, the 

government appropriated a private party’s water right by requisitioning the water for its 

own or a third party’s proprietary and consumptive use. Dugan v. Rank, 372 U.S. 609 

(1963) (finding a physical taking where the U.S. appropriated downstream riparian land 

owners’ water rights by damming a river upstream, storing the water and diverting it to 

irrigation and utility projects); United States v. Gerlach Live Stock Co., 339 U.S. 725 

(1950) (finding a physical taking where the U.S. appropriated downstream riparian land 

owners’ water rights by capturing, storing and diverting water from two California rivers 

for sale to private energy and irrigation interests); Int’l Paper Co. v. United States, 282 

U.S. 399 (1931) (finding a physical taking where the U.S. cut off International Paper’s 

water rights and conferred them on Niagara Power Company to use for the wartime 

production and sale of electrical power). 

Here, the government did not invade, seize, convey or convert Casitas’ property 

to consumptive or proprietary use. Rather, it imposed regulatory operating criteria on 

Casitas’ request to comply with the ESA through use of a fish passage facility that 

returns a specified amount of water diverted from the Ventura River by the Robles 

Diversion Dam back to its natural flow for the purpose of endangered species 

preservation. Mere deprivation of water from the owner of water rights without 

governmental invasion, appropriation or diversion of the water for consumptive or 

proprietary use does not amount to a physical taking under Tahoe-Sierra. The 

government’s action restricting Casitas’ right to make consumptive use of a portion of 

the water granted by its license is not possessory. See Loretto, 458 U.S. at 440 (stating 

that the multifactor Penn Central inquiry is generally applicable to nonpossessory 

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governmental activity). Rather, a classic regulatory restraint on natural resource 

development has occurred. See Stearns, 396 F.3d at 1357 (concluding that the Surface 

Mining Control and Reclamation Act’s restrictions on a mineral estate owner’s access to 

its mineral property and easement did not constitute a physical taking, that physical 

takings require physical possession or occupation, and that the property holder’s 

“argument to the contrary is little more than an incredible attempt to transform a 

regulatory taking claim into a per se physical taking”); Seiber v. United States, 364 F.3d 

1356, 1366 (Fed. Cir. 2004) (“regulatory restrictions on the use of property do not 

constitute physical takings”); Boise Cascade Corp. v. United States, 296 F.3d 1339, 

1347, 1354 (Fed. Cir. 2002) (logging restriction imposed and later lifted on privately 

owned land to protect threatened species under the ESA would be analyzed as a Penn 

Central regulatory takings claim if case not barred by ripeness doctrine) (citing TahoeSierra, 535 U.S. 302 (2002)). 

For this to be a physical taking requires expanding the definition to the point of 

erasing the line between physical and regulatory takings. Indeed, any property use 

restriction—whether on land, air, or water, and whether temporary or permanent—

deprives the owner of a pre-existing right to develop at least a portion of his property for 

certain economic uses. Yet in Tahoe-Sierra, the Supreme Court nevertheless 

reaffirmed the constitutional distinction between physical acquisitions and regulatory 

restrictions. 535 U.S. at 321-22. Here, compliance with Section 9 of the ESA ultimately 

requires Casitas to leave more water in the river, thus augmenting the downstream river 

flow essential for protection of the endangered steelhead trout. In cooperation with the 

Bureau of Reclamation, Casitas can presumably accomplish this in any number of 

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ways; for example, by closing the Robles-Casitas Canal entrance gates and allowing 

fish passage through openings in the Robles Diversion Dam, or by permitting some of 

the water diverted by the dam to return to the river through a fish passage facility. To 

differentiate between these two illustrative approaches on a deceptively simple theory of 

“diversion” creates a perverse system of incentives, whereby form is elevated over 

substance, because self-selected methods of regulatory compliance can be 

manipulated and negotiated to arrive at preferred Fifth Amendment results. According 

to this pretextual logic, in the first example, water never leaves the river’s flow, so there 

is no “diversion.” In the second example, Casitas allows some already diverted water to 

return to the river, creating a “re-diversion.” The result is the same, and should not lead 

to a difference in the characterization of the activity: a private property owner’s choice of 

prophylactic actions cannot dictate whether a future takings claim will be physical or 

regulatory. This is particularly salient because it was Casitas who initiated 

Reclamation’s Section 7 ESA consultations with the National Marine Fisheries Service 

and suggested use of the fish passage facility to ensure ESA compliance. Presumably, 

this approach represented the most economical way to comply with the ESA while still 

permitting Casitas to divert its maximum allowable allotment of water. 

In sum, governmental deprivation of some water use rights absent the 

government’s active or appropriative hand in diverting water for its own or a third party’s 

consumptive or proprietary use does not amount to a physical taking. The only case 

holding to the contrary is Tulare Lake Basin Water Storage District v. United States, 49 

Fed. Cl. 313 (2001), which its author expressly disclaimed in the present case in light of 

the intervening Tahoe-Sierra case. Casitas Mun. Water Dist. v. U.S., 76 Fed. Cl. 100, 

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2007-5153 9

106 (2007) (“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.”). Casitas has been restrained from making full use of its California water 

license under certain circumstances related to the endangerment of the steelhead trout. 

When the government requires a usufructuary holder of water rights to allow a specified 

amount of dam-diverted water to circle back to its natural flow by way of a fish ladder for 

the purpose of endangered species preservation, a classic regulatory restriction on 

private property rights to prevent a public harm has occurred. It is logically incongruent 

to analyze ESA-based land use restrictions as regulatory takings, and ESA-based water 

use restrictions as physical takings. The government is not appropriating or taking 

possession of Casitas’ property, but rather is prohibiting Casitas from making private 

use of a certain amount of the river’s natural flow under a public program to promote the 

common good. Labeling such an action a physical taking blurs the line Tahoe-Sierra

carefully draws between physical and regulatory takings.