Fifth Amendment Takings & Transitions in Water Law: Compensation (Just) for the Environment

Ling – Yee Huan
2007 First Place Winner

I. Introduction

     The fundamental, life-sustaining properties of water rest at the intersection of two highly demanding and often competitive user groups: the human society, performing miracles against gravity to acquire water, and the natural environment, evolved and adapted to the natural hydrological cycle. Water law in the United States has developed along the dividing line drawn by the Mississippi River, with the eastern states generally adopting riparianism and the western states generally adopting prior appropriation. These systems reflect the patterns of rainfall and water abundance across the United States, but increased human demands and environmental protection concerns are forcing state governments and Congress to reevaluate and update the water and environmental protection laws in an attempt to satisfy the competing user groups.

Allocation of water for increased in-stream flows demonstrates current efforts to reevaluate traditional water laws. The focus on in-stream flows diminishes the importance of traditional out-of-stream consumption, diversion, and use. These flow allocations limit the amount of water that can be withdrawn from surface sources or mandate the release of greater quantities of water from artificial water infrastructure.[1] Although in-stream flow conflicts are often associated with western river systems, where decreased precipitation and drier climates result in dry downstream river beds, these conflicts also appear in the eastern United States. Amidst an ongoing drought in the northeastern United States in 2002, the normally over-flowing upstate reservoirs that provide New York City with water contained half the normal water levels. The lack of overflow caused in-stream water shortages for the Delaware River, where a lucrative fly-fishing industry had developed.[2] As a result of the low water volume and lack of circulation, the temperature of the river water increased. In addition to the additional stress of being caught, the increased water temperatures impaired the ability of the trout to otherwise cope in this condition, threatening both the survival of the trout and the fishing industry.[3]

Where endangered and threatened species populate these stream systems, the survival implications of low in-stream flows are even more severe. These conflicts between the human water users and the natural environment occur regularly in the Pacific Northwest, where irrigators and water districts clash with environmental and community groups working to protect the endangered species dependent on the water resources.[4] Western states such as Colorado, Montana, and Idaho have passed legislation and handed down judicial rulings in support of in-stream protection.[5]Pursuant to notable judicial decisions in City of Thornton and City of Golden[6] and subsequent revisions to Colorado’s water law, for example, the Colorado Water Conservation Board promulgated the Recreational In-Channel Diversion (RICD) rules, which became effective in 2002. In contrast with the traditional out-of-stream diversion, the rules define diversion as physical control of the water between two points, sufficient to create a “reasonable recreation experience in and on the water.”[7] However, these measures that are designed to augment or maintain the natural level of water courses directly conflict with the water rights of existing users. Restrictions on both future and present water rights, necessary to achieve environmental protection, implicate takings issues that require judicial resolution.

This essay for the 2007 Roscoe Hogan Environmental Law Essay Contest examines the intersection of water laws and the current Fifth Amendment Takings Doctrine as a means a protecting the environment. This essay argues that under the current Fifth Amendment Takings doctrine, states have generous latitude to enact and enforce conservation measures by imposing current and future restraints on individuals’ water rights. Restricting water rights is similar to zoning property and land use, which has been consistently upheld in courts as a constitutional exercise of the state police power that does not require just compensation under the Fifth Amendment. Part II examines preliminary issues regarding the contours of water as a property right and the application of the current Fifth Amendment takings doctrine to water rights. The extent to which water rights are framed as property rights is crucial to the takings inquiry, and Part II asserts that both future riparian and present prior appropriation water rights are far from concrete and inherently limited. Courts often do not recognize a vested property right in future uses of water or adjudicate the claim by other means. Thus, individuals seeking to recover just compensation under the Fifth Amendment face many significant obstacles to a successful takings claim, including establishing the dispositive property element.

Part III focuses on restricting water rights for conservation purposes as an analogy to zoning and land use law. Even if water rights holders are able to establish a compensable property right, this framework further weakens the ability of private individuals to assert successful Fifth Amendment claims. The takings issue arises in different temporal scales for common law riparian rights and prior appropriation rights. Restrictions on riparian rights are similar to the zoning of property, whereas restrictions on prior appropriation rights are similar to the amortization of non-conforming uses. The takings issues arise when these rights are in a transition process of incorporating some form of previously non-existing permit system or statutory overlay. Finally, Part IV concludes by discussing the implications of these takings issues and potential application to other areas of environmental protection and takings, as well as potential future transitions in water law.

Part II: Background

This Part will first discuss the contours of water rights as property rights and then discuss the current and relevant aspects of Fifth Amendment Takings Doctrine. The degree to which water rights are viewed as property is crucial for a takings claim under the Fifth Amendment, which states that “private property [shall not] be taken for public use, without just compensation.”[8] Thus, a water right holder must demonstrate that she has a constitutionally protected property interest and that the government has taken that property for public use. Government restrictions on water rights for environmental and conservation purposes necessarily fulfill the public purpose element, leaving the key question: to what degree is a water right a constitutionally protected and compensable property right?

 

A. Contours of the Property Right in Water Rights.

The traditional analogy of property as a bundle of sticks provides a relevant point of departure. In this analogy, the rights included as sticks include the right to exclude others, the right to possess, the right to use, and the right to alienate.[9] While these concrete rights readily apply to real property, application to water rights is more difficult because the property right in water is unique, stemming from water’s singular ability to sustain life and nature as a common resource.[10] Water supports entire ecosystems of natural flora and fauna, cycles through the earth and the atmosphere as the hydrological cycle, and provides the foundation for society and development at every level. Unlike stationary natural resources, and even other fugitive natural resources, water occupies time and space in such a way that attempts to measure or quantify are rife with uncertainty.[11] Natural uncertainties arise from meteorological conditions and the inability to accurately measure quantities of available surface or ground water.[12] Human-induced uncertainties arise from factors such as the diverse prioritization of values and numerous techniques to measure available water.[13]

Moreover, the necessary but often incoherent legal framework imposed on water resources creates tension between private property water rights and state ownership over water.[14] Overarching considerations such as the public trust doctrine, the federal navigational servitude, and limitations imposed by permits or contracts influence the private property nature of water rights, whether derived from the riparian system or the prior appropriation system.[15]These inherent limitations are reflected in cases such as Mono Lake and Rands.[16] In Mono Lake, the Supreme Court of California applied a broad interpretation of the public trust doctrine, holding that the public trust doctrine protects navigable waters from harm caused by diversion of non-navigable tributaries.[17] The state has a duty to “protect the people’s common heritage of streams, lakes, marshlands, and tidelands” and can only surrender that right of protection when consistent with the purposes of the public trust. The court thus imposed an affirmative duty on the state to protect public trust uses and to consider the public trust doctrine when planning and allocating water resources.[18]

The combination of these aspects of water and the limitations on a water right makes a plaintiff’s burden of establishing a compensable property right fairly difficult.[19] Not only do the federal and state governments have broad regulatory powers over water, but individual water right holders also have limited rights to appropriate or receive water in conflict with federal and state mandates to protect endangered species, water quality, and other natural resources.[20]

Common Law Riparian Rights. Riparian rights are acquired through the purchase of riparian land that abuts a natural water course. Such rights are generally incorporeal rights rather than corporeal rights because the right pertains to the right to use the water and not ownership of the water.[21] As an early exploration of this property right, the court in Tyler stated that “strictly speaking, [a riparian landowner] has no property in the water itself; but a simple use of it, while it passes along.”[22] Traditionally courts preferred the riparian landowner to use the water on her tract of riparian land. This on-tract preference is part of sound watershed management practices and environmental protection by retaining water in the same drainage basin. However, with population growth and water use far removed from water sources, the preference for on-tract use has withered accordingly.

Riparian water rights are bound by the doctrine of reasonable use, an elastic doctrine that creates uncertainty in defining the scope of this right as a property right. Although the definition of reasonable use varies, courts generally consider factors such as the size of the stream, the physical, chemical, and biological character of the stream, the purpose, extent, duration, and method of use, and the customary use and needs of other riparian landowners.[23]Thus, determination of reasonableness depends on a consideration of all relevant facts and circumstances.[24]

The elasticity of this doctrine both supports and undermines environmental protection goals. Thus, the definition of reasonable use should evolve to reflect increasing environmental values and priorities. Certain irrigation techniques, such as flooding fields or even watering during peak daylight hours, should be viewed with increasing skepticism of their effectiveness and utility. Incorporating these values into the determination of reasonable use represents a method by which environmental protection objectives can be achieved. However, the piecemeal litigation required to determine the scope of riparian rights and the flexible definition of reasonableness may ultimately undermine any benefits from the inclusion of broader environmental protection concepts.

Compared to real property, the property right in riparian water rights eludes concrete definition because of the contingent ability to enjoy the water right and the inability to quantify or measure volumes of water use.[25] The court in Hoover recognized that allocation of water among riparian users depends on future riparian users as well as current use, and thus the contours of the riparian right are bound change with the addition of users or the definition of reasonableness.[26] However, courts have found vested, constitutionally protected property rights in the existing use of water, decreed either by state legislatures or under state constitutions.[27] For example, South Dakota law defines vested rights as actual application of a riparian right to a beneficial use prior to the effective date of the prior appropriation system, domestic uses, certain rights granted by court decree, and water rights neither abandoned nor forfeited prior to the 1907 water law.[28]

The property right in future, unexercised riparian rights are even more tenuous, particularly where the exercise of such a right impairs the reasonable and beneficial of state waters.[29] In situations where the state is undergoing a transition from riparianism to prior appropriation, the inability to determine water rights along a stream system precludes appropriation of the remaining waters.

Because the doctrine of reasonableness leaves the property right in a riparian water right uncertain, individuals who claim a Fifth Amendment taking by the government in enacting water conservation or protection measures will face the challenge of establishing the first, fundamental step in a takings inquiry. Moreover, the property right often depends on whether the riparian right is vested.

Prior Appropriation Rights. The other pillar of water rights is the prior appropriation system, developed from customary mining practices in the western United States. The essence of prior appropriation rights reduces to the expression “first in time, first in right.” Unlike the riparian system that is attached to ownership of riparian land, prior appropriation rights are acquired by priority, independent of land ownership. The three elements of acquiring a prior appropriation right are an intent to appropriate the unappropriated waters of a natural water course, a diversion of those waters, and application of those waters to beneficial use without waste. The latter elements, diversion and the doctrine of beneficial use without waste, inject a greater sense of certainty and stability to the property right in prior appropriation water rights.

The element of diversion helped to stabilize property rights by giving notice to other potential users in the stream system and by enabling quantification of water use. However, western states have begun to expand the traditional concept of diversion, a move heralded by in-stream recreational industries and environmental groups.[30] In 1992, the Supreme Court of Colorado, a state with a traditional prior appropriation system of water rights, interpreted the “diversion” to mean not only the actual removal of water from the natural water course but also the actual control of water in the natural water course.[31]

Following this decision, the Colorado Water Conservation Board passed the Recreational In-Channel Diversion rules[32] and cities like Golden, Vail, and Breckenridge filed suit for in-stream water allocations to support whitewater rafting and kayaking courses in the Colorado River.[33] The benefit of in-stream water diversion for the environment and the aquatic ecosystems is incontrovertible, demonstrating the profitability of water-dependent industries that co-exist with, rather than destroy, the natural environment.

The doctrine of beneficial use without waste also sculpts the property right in prior appropriation systems by enabling courts to determine a party’s continuous application of water to a productive use. The doctrine also serves to protect the aquatic environment by expanding the list of the beneficial uses to which water may be applied. Traditional uses include domestic, agriculture, mining, and power purposes. Expansion of these uses has led to the inclusion of newer uses, such as fish, wildlife, and in-stream protection, groundwater recharge, wetland restoration and stream-flow augmentation, and other public interest uses.[34] The Idaho legislature has declared that the public interest requires protection and maintenance of in-stream flows to “preserve the minimum stream flows required for the protection of fish and wildlife habitat, aquatic life, recreation, aesthetic beauty, transportation and navigation values, and water quality.”[35]

The combination of diversion and the doctrine of beneficial use render water rights under the prior appropriation system more concrete than water rights under the riparian system.[36] The property contours of prior appropriation rights are more definite because the system operates by permits that specify place and quantity of diversion and other measurable factors.[37] Because the amount allocated to a water user under this system is measurable, it is simply easier to determine when that amount has been reduced as opposed to a riparian right, where the amount of water is measured not by quantity but by the malleable doctrine of reasonable use. In theory, the appropriation of water by priority also avoids piecemeal and hindsight litigation of rights along a water course because water users have a pre-determined, allocated amount. Thus, individuals who claim a Fifth Amendment taking of a prior appropriation water right have an arguably more concrete property right than those individuals claiming a taking of a riparian water right.

     Water Rights by Contract. Contractual water rights constitute a third source of water rights that are often tied to prior appropriation rights. These contracts formed between irrigators and the Federal Bureau of Reclamation to either provide water or water delivery service. Where the prior appropriation amount of water is reduced, the amount of water available for delivery is simultaneously reduced. These contracts are found primarily in the western part of the United States, where water infrastructure is often constructed with the assistance of the federal government. Cities and irrigators receive water from the federal reclamation system by direct contract or as beneficiaries of contracts with the Bureau.[38]

The property nature of water rights under these contracts tends to be clearer still than the property right in prior appropriation water rights.[39] The rights and violations of those rights are defined by the terms of the contract, and federal government violation of the contract requires the payment of damages, regardless of compensation under the Fifth Amendment takings law.[40] However, where a court finds that the government breach is outside the scope of the contract, the court is more likely to apply the Fifth Amendment takings law as in Tulare.[41]

B. The Current Fifth Amendment Takings Doctrine

The current Fifth Amendment takings doctrine is a product of continual judicial refinement.[42] Federal and state environmental protection regulations increasingly conflict with private property rights, and the success of individual takings claims may ultimately dictate the impact of many conservation efforts.

As the Court stated in Lucas, the two discrete categories of compensable takings claims are physical invasions of property and regulations that deny all economically beneficial or productive use of property.[43] A takings claim that does not fall into either of these categories is evaluated by Penn Central balancing test.[44] Where a regulation for the purpose of environmental protection affects individual water rights, those individuals will argue that the regulation denies all economically beneficial use of their water right and is therefore a per se taking. Individuals seldom argue, and rarely succeed on the argument, that the government has physically occupied their water right.[45] On the other hand, the government or environmental groups who support the regulation will tend to frame the regulation under the Penn Central balancing test, requiring a case-specific inquiry.[46] Case law suggests that regulatory restrictions fare better when characterized as takings using the Penn Central test.[47]

Physical takings are “regulations that cause the property owner to suffer a permanent physical invasion, regardless of the physical size of the intrusion and regardless of the public purpose behind the regulation.”[48] The Fifth Amendment requires just compensation for these permanent physical occupations.[49] However, the Court inTahoe Sierra described these per se physical takings as “relatively rare, easily identified, and usually represent[ing] a greater affront to individual property rights.”[50] Individuals claiming a Fifth Amendment taking have generally not succeeded in characterizing government action as either a physical occupation or effective ouster.[51] Moreover, this essay focuses on potential takings claim for water rights on a temporal scale. In these situations, the effect of government regulation is not a total elimination of the water right but instead is simply a restriction on future or present uses.

The second category of per se takings occurs “when the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle.”[52] The exception, however, provides that the government is not required to pay just compensation where the regulation “inhere[s] in the title itself, in the restrictions that background principles of the State’s law of property and nuisance” place on existing property ownership.[53] Despite the alarm in the environmental community and the sense of victory among private property proponents, the ruling in Lucas has not had quite the impacts first feared.[54] Again in Tahoe Sierra, the majority opinion emphasized the narrow scope of this category of per se takings, finding that categorical takings under Lucas are a narrow exception for “extraordinary circumstance[s]” of a permanent deprivation of all beneficial use.[55] Applied to situations where the property at issue is environmental property, such as a piece of land or water, it is difficult to imagine that the property is completely valueless in its natural state.

An important concept of this category of takings is illustrated in cases such as Lucas, where the property owner argued that a portion of his land, severed from the whole, had been deprived of all economically beneficial value.[56] However, Tahoe Sierra indicates that this approach is flawed because the “aggregate must be considered in its entirety,” and thus the destruction of one strand in the bundle of sticks is not a taking.[57]

Applied to the takings issues raised when water rights are in transition, the elimination of future rights or restrictions on present rights, when viewed holistically, should not be considered a taking. In both riparian and prior appropriation systems, the right is merely being curtailed, and individuals retain a right to present, if limited, use. The total elimination for the future, unexercised riparian right is more problematic if the court applies a temporal severance and views that right independently of the presently exercised right, but this judicial severance seems unlikely. A court would first be required to find that the future water right is a constitutionally protected right and then apply this concept of severance to that future right.

The remainder, and majority, of takings claims arise under the Penn Central balancing test. The Court emphasized three factors: (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action.[58] These actions range from physical invasions, such as those requiring compensation in Causby[59] and later in Loretto[60], to public programs “adjusting the benefits and burdens of economic life to promote the common good.”[61] In water rights cases, the individual right holder would have a stronger argument on the economic-impact factor, while the investment-backed-expectations factor and character of the governmental action would be the most contested and pivotal factors to determine the outcome of the takings claim.[62]

Under this framework of property rights and the Fifth Amendment, Part III of this essay will focus on the application of the property aspects of riparian and prior appropriation rights to transitions in water law systems, analogizing these transitions to zoning. Part III will focus on transitions from riparian law to a statutory overlay or to prior appropriation and prior appropriation to restrictions for efficiency and to a statutory overlay.

Part III: Transitions in Water Law Systems and the Zoning Analogy

     Under the Fifth Amendment takings doctrine, current interpretation and application indicate that the federal and state governments have wide latitude to incorporate in-stream water protection and other environmental protection measures into existing water law systems without the payment of just compensation. Recognizing, among other weaknesses, the feeble capacity of existing water law systems to protect water for environmental purposes, state legislatures have updated existing systems by transitioning traditional common law riparian rights and prior appropriation rights into systems with greater certainty, clarity, and ultimately greater protection for the environment. By enforcing federal legislation such as the Endangered Species Act, the federal government also furthers environmental and water protection goals.

Conservation measures enacted as restrictions on water rights affect individual users on different temporal scales. Holders of riparian rights are generally affected in their future use of water, while holders of prior appropriation rights are generally affected in their present use of water. These individuals are quick to allege a regulatory taking without just compensation, but under the current Fifth Amendment takings doctrine, courts are equally quick to find no compensable property right, no taking of an otherwise compensable property right, or simply no issue in takings jurisprudence.

 

A. Riparian Rights, Transitions, and Future Uses.

Riparian water law systems tend to undergo two main transitions to either a permit system, referred to as regulated riparianism, or to prior appropriation, resulting in a dual system like California’s water law or in the replacement of the riparian system of water law. These transitions give rise to takings claims because both situations result in the curtailment or effective elimination of a future, unexercised riparian right. The riparian owner thus argues that the regulation that authorizes the transition is a taking of her future, unexercised right to use water.

Despite the potential for takings claims, these water law transitions are often a part of state efforts to improve and recognize the need for protection of the environment and water resources. The weaknesses of the riparian system of water law are as plentiful as historical water supplies in the eastern United States where riparianism prevails.[63] First, uncertainty and unpredictability stemming from the doctrine of reasonableness plague riparianism.[64] Because the determination of reasonableness changes as riparian users increase or as values on certain uses change, individual riparian landowners may be discouraged from making long-term investments using the local water resource.[65]

This overall instability generated by the doctrine of reasonableness inhibits effective water resource management.[66] Although in theory riparianism encourages sharing during times of shortage, parties’ legal rights are only adjudicated in a retrospective, piecemeal fashion. The environmental damage has often already occurred; thus legal remedies under riparianism are curative rather than preventative, undermining the basic ideas of protection and precaution. During litigation, courts understandably hesitate to adjudicate beyond the individual parties’ rights, even though the damage causes harm to parties outside the scope of the lawsuit.[67] Finally, the balancing of interests in the reasonableness inquiry inevitably favors large, wealthy users over small, domestic users. By virtue of sheer size, the large volume users tend to have more economic investment in the water use and have a greater impact on the local economy than the latter. Thus the financial interests of the larger, more affluent user will tend to outweigh the interests of smaller users. [68]

State legislatures, recognizing these weaknesses and seeming to embrace environmental values, have moved to resolve the weaknesses of riparianism by moving toward permit-based systems or prior appropriation. For example, Florida transitioned from common law riparianism to regulated riparianism with the passage of the Water Resources Act of 1972.[69] The Act recognizes that water, a basic resource of the state, has neither been adequately conserved nor fully controlled so as to realize its beneficial use.[70] The Act promotes “the conservation, replenishment, recapture, enhancement, development, and proper utilization of surface and ground water.”[71]

The Act also serves to preserve natural resources, fish, and wildlife, to promote recreational development and protect public land, and to otherwise support the public interest of the citizens of Florida.[72] Case law supports the dual purpose of the Act — to provide for the conservation of available water resources while maximizing beneficial use.[73] Reasonable-beneficial use is defined as “the use of water in such quantity as is necessary for economic and efficient utilization for a purpose and in a manner which is both reasonable and consistent with the public interest.”[74] In addition to the traditional reasonableness analysis, courts may also consider the beneficial application of the water, which imports the waste and economic efficiency analysis from the prior appropriation system.[75]

The effect of the transition from traditional riparianism to prior appropriation or regulated riparianism is analogous to the effect of zoning laws on real property, an effect that has generally been held to not effect a compensable taking. The Supreme Court first recognized the constitutionality of zoning the seminal case of Euclid.[76]The Court held that zoning is unconstitutional only where the zoning provisions are clearly arbitrary and unreasonable and have no substantial relation to the public health, safety, morals, or general welfare.[77] In the same way that modern life necessitates zoning laws, modern demands on water supplies also necessitate a compromise between human consumptive use and water for environmental protection purposes. Similar to zoning, these transitions in riparian water law ultimately benefit the entire community, including the injured property owner who is part of that community.

Even given a compensable private property right, courts overwhelmingly find that zoning and its inevitable restrictions on the use of real property do not effect takings for which the government must pay just compensation under the Fifth Amendment of the Constitution. Aside from the relatively narrow categories of per se takings, the remainder of takings challenges fall under the Penn Central balancing test, as described above. In Gove, the Supreme Court of Massachusetts found that a zoning regulation prohibiting residential structures on land in a coastal conservancy district did not effect a compensable taking. Evaluating the claim under Lucas, the court found that the undeveloped lot retained a value of $23,000.[78] The total deprivation claim does not rest on the deprivation of the single use that the landowner intends for her property. Applying Penn Central, the court focused on the magnitude of the regulation’s economic impact and the degree to which the regulation interferes with legitimate property interests and found both elements inadequate to constitute a taking.[79]

Similarly, a Florida court held that land-use regulations that restricted the landowner’s future use of property in a resource protection area did not effect a compensable taking.[80] The zoning of the resource protection area addressed conservation concerns expressed by state legislation.[81] As in Gove, the landowners failed to show that the regulation denied “all or a substantial portion” of the beneficial uses of their property, even though the restrictions affected the more economically valuable uses of the property.[82] The court elaborated on factors relevant to the Penn Central elements and found that the mere diminution of the value of the landowner’s property was insufficient to establish a deprivation of all or a substantial portion of the beneficial use of the property.[83]

In addition to the difficulty in establishing a compensable property right in the future exercise and use of a riparian water right, these zoning cases also illustrate the difficulty of establishing a takings claim under those tests most applicable to water rights. Transitions in riparian water law, tending to restrict future use of water rights, are unlikely to be considered either a total deprivation or a sufficient economic impact under the respective Lucas or Penn Central tests.

Riparianism to Prior Appropriation. Courts have generally not found that transitions from riparianism to prior appropriation constitute a taking of the riparian’s future, unexercised right to use water. This inquiry hinges on the nature of the future water rights, and courts tend to find that this right is not a vested, constitutionally protected right and thus cannot sustain a takings claim. Courts recognize the broad police power of states to implement or change water laws in order to achieve greater certainty and environmental and water resources protection goals. This power undermines the ability of individuals to claim a vested property right since the right is perpetually subject to overriding federal and state interests.

In Upper Guadalupe, the Supreme Court of Texas upheld an adjudication of water rights along the Upper Guadalupe River.[84] The Texas Water Rights Commission, pursuant to the Water Rights Adjudication Act of 1967, eliminated riparian rights that were asserted after the effective date of the Irrigation Act of 1895[85] and limited riparian rights to actual use between 1963 and 1967.[86] As a result, the Act of 1967 eliminated claims to future uses in excess of water usage during those years. [87] The riparian land owners along the Upper Guadalupe challenged the narrow period of determination for all riparian water rights as an unconstitutional taking of vested property rights without compensation.[88]

The Supreme Court of Texas held that after notice and upon reasonable terms, the termination of the riparians’ continuous non-use of water did not amount to a taking of their property and thus did not require just compensation.[89] The court relied on the scope of the property right in the riparians’ water right and found that the riparians held vested rights to a usufructory use of the waters of the state owns.[90] However, the riparians did not acquire vested rights to the non-use of water, and the four-year time period was adequate to determine use of water.[91] In Texas, a vested right to water is premised on a right to use the water beneficially. Non-use of the water is considered wasteful, and an individual cannot acquire a right to water that is wasteful.[92]

The court also concluded that the riparian’s failure to make use of the property right did not render the statutory forfeiture of that right a taking for which just compensation was required.[93] Adopting the language of the Supreme Court of Oregon in In re Willow Creek, the court stated that the statutory mechanism for transition cannot be arbitrary, unreasonable, or unduly burdensome.[94]

Similarly, in Deadman Creek Drainage Basin, Washington appealed a 1982 stream adjudication that held the changes to the 1917 water code did not diminish the water available to riparians.[95] The Supreme Court of Washington recognized that the 1917 water code established prior appropriation as the dominant system of water law in the state.[96] Thus, the court concluded that new water rights could only be acquired through the permit system, and existing rights not applied to beneficial use were not vested rights and were therefore relinquished.[97] Shortly after the passage of the water code, the court held that a riparian who intended a future use of water could not prevent condemnation by a nonriparian for an immediate use of water.[98]

In Deadman Creek, the court emphasized the history and movement of case law and legislative action toward the establishment of prior appropriation and the elimination of riparian law. This, in addition to a fifteen-year expiration after the effective date of the act, was sufficient to constitute adequate notice to riparian landowners to perfect their riparian rights. Thus, inaction by the riparian landowners resulted in a statutory reversion of the water rights to the state instead of a taking of compensable water rights.[99]

However, the riparian owners have prevailed in two notable takings cases where the courts found a constitutionally protected future water right. In Franco-American Charolaise, the Oklahoma Water Resources Board determined the water rights of existing users along Byrd’s Mill Spring and then allocated the remaining amount of water to the city of Ada.[100] The riparian owners contested this allocation as eliminating future, unexercised claims to use water.[101] Here the Supreme Court of Oklahoma declared that riparian owners enjoy a “vested common law right to the reasonable use of the stream… [that is] a valuable part of the property owner’s ‘bundle of sticks’ and may not be taken for public use without compensation,”[102] in accordance with the Oklahoma Constitution. In this exceptional case, the court expanded the scope of the vested private property right to include presently exercised and future unexercised rights to use water, bound by the doctrine of reasonableness.[103]

The court found that the 1963 water law amendments, upon which the Board determined water rights along the stream, were “fraught with a constitutional infirmity” in abolishing the right of riparian owners to assert prospective reasonable uses of stream water.[104] The court found that the mechanism to allow riparian owners to perfect their water rights, in the process of transitioning to a system of prior appropriation, failed to protect the full scope of the riparian water right. Under the perfecting system, riparians who assert future rights must assert those rights as appropriators instead of being free to use a non-quantified amount, within the bounds of reasonableness; furthermore, the system required quantification of a previously non-quantified amount, contrary to the basis of riparian rights.[105]

Franco-American Charolaise represents the rare case where a court has found a taking of a future riparian right. The dissent contests the majority finding that a prospective or future reasonable use is a vested right.[106] The dissent argues that the majority holding fails to account for reasonable limitations, including forfeiture, to which vested rights are subject and which are not considered a taking.[107] The dissent also argues that the majority fails to adequately incorporate the legislative attempt to phase out riparian law and implement prior appropriation as the system of water law in Oklahoma, an attempt that the Oklahoma legislature revisited in response to this case.[108]

Moreover, the dissent disagrees with the majority’s disregard of the zoning analogy.[109] The dissent argues that the transition to prior appropriate may limit a riparian landowner’s non-quantified future exercise of his right, but that the regulations neither physically deprive the landowner of the use of the water nor deprive the landowner of all economic use of his land.[110] As in zoning, the legislature is free to decide that a non-continuous, future exercise of a riparian right is injurious and wasteful of water as a public resources.

In Waters of Long Valley the Supreme Court of California similarly found that the State Water Resources Board did not have the authority to constitutionally extinguish a future use of water.[111] Unlike Franco-American Charolaise, however, the court interpreted the Board’s powers broadly, enabling the Board to place significant limitations on future riparian water rights.[112]

In 1966, nine claimants filed a petition with the Board for a determination of the water rights along the Long Valley Creek system.[113] The petitioner, Donald Ramelli, filed a notice of exceptions to the Board’s final determination of his water rights. For approximately sixty years prior to the determination, Ramelli and his predecessors watered approximately eighty-nine acres of riparian land. In his petition before the Board, Ramelli claimed prospective riparian rights to an additional 2,884 acres.[114] The Board approved Ramelli’s claim to the eighty-nine acres and rejected his claim for prospective irrigation water for the remaining acreage.[115] Here, the court overturned the Board’s determination, declining to construe the water rights determination procedure as enabling the Board to completely extinguish Ramelli’s future riparian rights.[116]

The court addressed the question of whether the Board could constitutionally extinguish a prospective riparian right, answering the question in the negative. Thus, the court held that the Board is authorized the define the scope of an unexercised riparian right, including lowering the priority of an unexercised riparian right in relation to all present and actively exercised water rights.[117]

California has previously recognized that a riparian right exists, whether exercised or not, and that dormant riparian rights are paramount of active appropriation rights.[118] The court also recognized the inherent inability for private lawsuits to provide “clarity, certainty, and security” to water rights and water users.[119] In light of these considerations and statutory language, the court found clear authorization for the Board to define and limit such prospective riparian rights.[120] This authorization is consistent with the general policy of the Water Code, which declares a policy of conservation of water resources and application to beneficial, non-wasteful, and reasonable uses.[121] The court also recognized the “pernicious effects” of uncertainty in water rights in support of the Board’s authority to determine the scope of present and prospective riparian rights.[122]

Although Ramelli argued that he had a vested right to a future, non-quantified amount of water, the court stated that the doctrines of beneficial and reasonable use still applied to any water right. Thus, to the extent that a future right violates these doctrines, that right cannot be properly considered vested.[123] The court re-emphasized the state interest in promoting clarity and certainty in water rights, which will in turn foster “more beneficial and efficient uses of state waters.”[124] In addition, no property rights exist in the unreasonable use of water, where reasonableness can only be determined by considering all the needs in the stream system.[125] Thus, accepting that vested future water right undermines state efforts to stabilize present water rights, in furtherance of the public interest.

While the Supreme Court of California ultimately reversed the determination of the Board, this case represents a victory for the Board and illustrates the opportunity for states to enact legislation for the protection of water resources without being required to pay for the taking of future, unexercised riparian rights.

These cases demonstrate the difficulty for a holder of riparian water rights to establish a successful takings claim for future, unexercised riparian rights. While present uses may translate into vested water rights, courts view future rights as exceedingly tenuous and disruptive of an already unstable water rights regime. Thus, they are unlikely to view these rights as constitutionally protected vested rights that require compensation when restricted or eliminated. Even in the rare case where courts recognize a vested property right in future riparian rights, courts nonetheless attempt to reconcile the future right in light of the purposes and benefits of the system of water law from which riparianism transitioned. This framework benefits environmental and water resource protection for states but may have an unintended consequence of encouraging riparian landowners to establish unnecessary but reasonable present uses in order to claim those uses in the future. The quantity of water available for future uses that results from the transition from common law riparianism to prior appropriation can be appropriated to other environmentally beneficial uses, in light of the expansion of the list of those uses.

Riparianism to Regulated Riparianism. As discussed earlier, Florida’s Water Resources Act of 1972 signaled the state’s transition to regulated riparianism. The provisions of the Act apply equally to groundwater and surface water. Similar to the transitions discussed above, the takings inquiry hinges on the interpretation of the nature of the riparian’s property right in water. Transitions from common law riparianism to regulated riparianism are also unlikely to effect a compensable taking of a future water right. In addition to the lack of a vested property right in future uses, courts distinguish between the failure or non-action of riparians to comply with the law in obtaining permits and a government action that effects a taking.

The Act divides responsibility for water management into five districts, organized not along political lines but instead along natural hydrological boundaries for a more accurate representation of both supply and needs.[126] All water users are required to obtain permits for use of water, excluding domestic uses and other exemptions for minimal adverse impacts on water resources.[127] The permits may last for up to fifty years for municipalities and public service corporations, but permit holders must apply to renew their permits at the end of the duration.[128]

In Village of Tequesta, Jupiter Inlet Corporation planned to build a 120-unit condo complex, located approximately 1200 feet from Tequesta’s well field, which drilled into a shallow-water aquifer.[129] As a result of excess withdrawals, intrusion of salt water threatened the shallow water aquifer as a result of the pressure imbalance between the water level in the saline intercoastal waterway and the water level in the shallow-water aquifer.[130] Because Jupiter was denied a permit to withdraw water from the shallow-water aquifer, Jupiter filed suit for inverse condemnation and an injunction due to the excessive pumping by Tequesta.[131]

The Supreme Court of Florida held that Jupiter did not have a constitutionally protected right in the water beneath its property and thus could not succeed on a takings claim for just compensation.[132] Here, the court defined the property right in water as usufructory instead of ownership of the corpus of water.[133] Because of the migratory, transient nature of the water and its temporary location on the owner’s property, the court limited the property right to use and not ownership of the corpus of water.[134]

The court held that the provision of the Act that gave riparians two years to transition into the permit system did not effect a taking and emphasized the failure of the riparian to obtain permits within the given timeframe. The loss of the water right resulted from abandonment by the riparian and not condemnation by the state.[135] The court adopted language from a previous case stating that mere impairment of private property, rather than actual and direct encroachment, was consequential damage that did not entitle the owner to just compensation.[136]

Another instance where the court failed to find an unconstitutional taking occurred in Omnerik, where the State of Wisconsin brought charges against the defendant for failure to obtain the necessary permits to divert water onto riparian land.[137] In conducting the takings inquiry, the court recognized the broad authority and interest of the state to prevent “the public harm of dry riverbeds replacing flowing streams.”[138] The court analogized the transition process to zoning, describing the transition process as affecting “all in a particular classification alike.”[139] Because the damage suffered by the defendant was only incidental and not an unreasonable burden to bear for the public good, the court found no taking had occurred.[140]

Riparians who assert a takings claim over restrictions on future, unexercised riparians rights are unlikely to prevail in court, giving states wide latitude to transition existing riparian water law provisions into more environmentally sensitive and sensible provisions. In transitions to prior appropriation or to dual systems, courts are hesitant to recognize a vested and constitutionally protected property right to future, unexercised uses of water. This hesitation stems in part from the recognition that a riparian’s eventual exercise of a future right would significantly disrupt the existing water allocation scheme, which in many cases is already fraught with uncertainty. Thus, in favor of greater stability and certainty, courts tend to not recognize this right, eliminating this dispositve element in the claim for just compensation. Where the state water law system transitions to regulated riparianism, courts recognize the same interests of stability and certainty and emphasize the failure of action by riparians that triggers the statutory forfeiture or abandonment. This trend suggests that state legislatures can enact both direct and indirect environmental protection measures while transitioning existing water systems, and with adequate safeguards for due process, avoid paying just compensation for those protective measures.

 

B. Prior Appropriation, Transitions, and Present Uses.

In the situation where prior appropriation rights are in transition, the takings issue arises with the reduction of water allocations for active, present uses due to compliance with statutory regulations. An affected appropriator would argue that the right to receive the specified amount of water is the foundation of her property right. To diminish that amount for the purposes of in-stream conservation or to comply with overarching environmental statutes is the quintessential taking for public purposes.[141]

When answering the question of just compensation under the current Fifth Amendment takings doctrine, courts have generally found that compliance with federal regulations do not effect compensable takings of private property rights by classifying the claim as a contract issue with relevant monetary damages. The question is not whether the state has the regulatory authority to constrain property uses. The rulings of the Supreme Court reveal that the state has the authority to constrain uses of property for the purposes of environmental protection; the state has the authority to conserve natural resources by requiring greater efficiency; and the state has the authority to legislate more efficient administration.[142]

The transition of prior appropriation to statutory compliance reflects both an independent need for environmental protection and the inability of the prior appropriation system to conserve or protect water resources. The weaknesses of the prior appropriation system prevent adequate protection of natural watercourses and the surrounding environment. The sense of certainty induced by the priority system is often illusory.[143] Gaps in the recording of priority exist throughout prior appropriation states because many water appropriations from valuable watercourses remain non-quantified.[144] In addition, the loss of water rights through forfeiture and abandonment undermine the definitiveness of priority.[145] The implications for protection of the environment arise when the federal government asserts reserved water rights with the earliest priority date in order to apply federal regulations and to defeat a takings claim. However, the maze of state regulations and amendments cloud the question of certainty and require detailed examination into the historical developments of water law.[146]

Furthermore, the prior appropriation system of water rights encourages premature development of water sources and potentially unnecessary use.[147] Appropriators benefit from establishing a history of use, regardless of the application or wisdom of the use. Strict adherence to prior appropriation is also problematic during times of water shortage. Junior appropriators receive water only after the senior appropriators call for their full allocation, and thus the junior appropriators tend to not receive any water. Because the risk of shortage is not distributed evenly among all the users of this common resource, senior appropriators may continue low productivity, inefficient uses of water while junior appropriators suffer the loss of high productivity uses of water.[148] Finally, even where environmental protection measures have been passed in accordance with the public interest, the measures tend to apply not to the vast majority of existing appropriations but instead to the relatively small minority of new appropriations.[149]

From an environmental protection perspective, federal environmental protection statutes remedy some of the weaknesses of the prior appropriation system. As a consequence of enforcement, however, these requirements provoke takings litigation. The statutory regulation that most frequently appears in the prior appropriation system of water law is the Endangered Species Act, which seeks to the habitats of threatened and endangered species as a means of protecting the species themselves.[150] With a clear environmental protection mandate, the Act has been described as “the most comprehensive legislation for the preservation of endangered species ever enacted by any nation.”[151] The Act requires all federal departments and agencies to ensure that their actions do not jeopardize the continued existence of any endangered or threatened species, including jeopardization through destruction or adverse habitat modification.[152]

The transition and incorporation of statutory regulations such as those required by the Endangered Species Act are similar to amortization provisions to eliminate non-conforming uses in land use law.[153] The majority of jurisdictions uphold the constitutionality of these provisions.[154] Such provisions must provide a reasonable fashion of elimination, a reasonable amount of time for the elimination of the non-conforming use, and no jeopardization of vested rights.[155] Where these factors are met, amortization provisions are generally held to be constitutional, requiring no compensation under the Fifth Amendment, as there is no constitutional bar to retroactive regulatory legislation.[156]

The majority view that such amortization provisions are constitutional prevails in states like California. In Gage, the California Court of Appeals held that an amortization provision that prohibited the defendant to continue his non-conforming use did not effect an unconstitutional taking of the defendant’s property rights.[157] The amortization provision only restricted the location of the defendant’s business and provided a reasonable and ample time for the defendant to move.[158] The court recognized the fundamental obstacle posed by non-conforming uses to comprehensive zoning and distinguished restrictions on present use from restrictions on future use as “one of degree.”[159] Moreover the court found that the elimination of existing uses within a reasonable time did not amount to a taking and did not deprive the property of all reasonable uses.[160]

The constitutionality of amortization provisions was also discussed in Leisz, where a town in Indiana passed a zoning ordinance requiring the registration of non-conforming uses.[161] The plaintiffs challenge the constitutionality of the provision, which required registration of the non-conforming use.[162] Failure to register resulted in the forfeiture of the use.[163] Here, the court concluded that under the Fifth Amendment takings doctrine, “a zoning ordinance that provides for the forfeiture of unregistered non-conforming uses does not fall” into either category of per se takings.[164] The new ordinance did not cause the plaintiffs to suffer a physical invasion because it merely restricted the use of the rental property to three unrelated adults, and the ordinance reduced the value of the property by 25-40%, well below the threshold of denial of all economically beneficial use of the property.[165]

In western prior appropriation states, the restrictions on water use imposed by the Endangered Species Act function as an analogous amortization provision by limiting an appropriator’s present and lawful use of water. One of the biggest obstacles to conservation of water resources and protection of aquatic and surrounding environments is the inability to curtail water uses, and federal legislation such as the Endangered Species Act minimizes this obstacle. Restrictions on the amount of water allocation does not deprive the water user of all water. The Act provokes lengthy litigation over its requirements to leave sufficient in-stream water for the protection of endangered species of fish. Two cases with differing outcomes best illustrate the takings argument and resolutions achieved by the Court of Federal Claims.

In 2001, the Court of Federal Claims in Tulare ruled that implementation of ESA requirements effected a taking of water appropriators and water contract recipients in California’s Central Valley. In this heavily criticized case, California’s State Water Resources Board granted water permits to the Federal Bureau of Reclamation and California’s Department of Water Resources.[166] The Bureau and the Department concurrently operated the Central Valley Project and the State Water Project, which contracted to provide water to the plaintiffs, a water agency and a water district. Under the mandate of the ESA, the National Marine Fisheries Service and the Fish and Wildlife Service issued a biological opinion that continued delivery of water under the contracts would further jeopardize the endangered delta smelt and the winter-run Chinook salmon.[167] The biological opinion included a reasonable and prudent alternative, as mandated by the ESA, which limited both the time and manner of pumping water out of the stream system. Implementation of this alternative caused a regulatory drought, reducing the amount of water available for delivery under the contracts.[168] Under the Board’s authority pursuant to the public trust doctrine and in response to the prevailing drought conditions in the Valley region, the Board implemented the reasonable and prudent alternatives, reducing the amount of water available to the plaintiffs.[169]

Here, the court held that the implementation of the reasonable and prudent alternative, pursuant to the ESA, effected a physical taking of the plaintiffs’ property. Relying on Causby, the court emphasized that the distinction between a mere impairment of the use of property and a physical invasion turns on the question of whether the intrusion is “so immediate and direct as to subtract from the owner’s full enjoyment of the property and to limit his exploitation of it.”[170] Applied to water rights, the court found that “a mere restriction on use — the hallmark of a regulatory action — completely eviscerates the right itself since the plaintiffs’ sole entitlement is to the use of the water.”[171] The court found that the government substituted itself as the beneficiary of the water contract rights and thus occupied the plaintiffs property, rendering the water right valueless.[172]

The court rejected the government’s reliance on the Penn Central balancing test. The government argued that the plaintiffs’ claim could not succeed both because the reasonable investment-back expectations were inherently limited by preemptive federal environmental protection regulation and protection for endangered and threatened fish species and because the economic loss was minimal when compared to the overall value of the contract.[173] However the court stated that the promissory assurances contained in the contract formed the basis of the plaintiffs’ rights, immutable even by the public trust doctrine, the doctrine of reasonable-beneficial use, or state nuisance law.[174]

The holding in this case has been heavily criticized for its failure to consider the background principles that would have inherently limited the plaintiffs’ water rights under the contract.[175] Moreover, the court in Tulare failed to consider whether the contracts were subject to enforcement of the ESA and whether the plaintiffs’ rights were limited as third-party beneficiaries whose rights derived from the federal and state contracts with the Board.[176]

This reframing of the water contracts was applied by the court in Klamath River Basin, which resulted in the contrary holding that the plaintiffs’ claim arose under contract law and not takings jurisprudence. Under similar facts as Tulare, the NMFS and FWS concluded in a final biological opinion that 2001 was likely to be the “driest year on record” and that the habitat of the Coho salmon, endangered shortnose, and the Lost River suckerfish required the increase and maintenance of water levels and river flows.[177] Thus, the Bureau of Reclamation implemented a reasonable and prudent alternative that called for the termination of water delivery in 2001, giving rise to the lawsuit.[178]

In reaching its holding, this Court of Federal Claims first examined the nature of the plaintiffs’ property right, defined not by the Federal Constitution but by independent sources such as federal, state, or common law.[179] The waters rights associated with the Klamath project were vested in the United States, based on a series of legislative acts in 1905.[180] The court found that the plaintiffs had protected property interests based on contracts with the United States. However, because the United States acted in a proprietary capacity, as opposed to a sovereign capacity, when it entered into the contracts, the plaintiffs’ claims arose under contract, and not constitutional takings, law.[181] The Bureau did not breach contract under the sovereign acts doctrine, which recognizes that “the Government… must remain free to exercise its powers.”[182] The test of determining the proprietary or sovereign capacity of the federal government is “whether, on balance, that legislation was designed to target prior governmental contracts.”[183] Legislation by the federal government is considered sovereign as long as its impact on contracts is “merely incidental to the accomplishment of a broader governmental objective.”[184]

Under the contracts framework, the court found that the plaintiffs’ beneficial interests were not absolute rights because the rights were limited by appurtenancy, beneficial-reasonable use, and, most importantly, contractual provisions that released the United States of liability for all shortages. The release of liability included hydrological shortages and “any other cause that impacts the availability of water through the system,” which the court interpreted to include the regulatory drought caused by implementation of the alternative.[185] In ruling that the United States acted in a proprietary capacity, the court noted that the plaintiffs still had available to them all contractual remedies to obtain damages.[186]

Many other takings cases that involve water reductions as a result of implementation of the Endangered Species Act have resulted in a Klamath outcome rather than a Tulare outcome. While both cases recognized vested property rights in the prior appropriation water right, the key question is whether the claim arises under takings jurisprudence or contract jurisprudence. As in Klamath, water rights created by contracts that provide for a release of government liability in regulatory drought situations will ultimately be viewed as a claim in contracts, rather than takings. The affected individuals still receive monetary payment in the form of damages for breach of contract instead of just compensation under the Fifth Amendment. Contract damages are preferable because federal government agencies can limit the amount or provide for greater restrictions before payment of damages is triggered, whereas the federal government has little control over the amount required for just compensation. The former circumstance is more conducive to passing legislation for the protection of water resources and the environment.

Part IV: Conclusion

In the water law and takings landscape, rare is the case where a holder of a water right prevails in obtaining just compensation for a taking that results from a transition of water laws. Even among other natural resources, water rights are a unique species of property rights, subject to a maze of federal and state interests that inherently limit the property nature of such rights. Because the takings inquiry necessarily depends on finding a constitutionally protected, vested, and compensable property right, holders of water rights must prove a decisive preliminary element of the takings claim.

Where riparians claim a taking of future rights, as a result of a transition of state water laws into prior appropriation or to a permit system, a vested property right in the future use of water is particularly difficult to prove. These transitions are driven by simultaneous needs for stability in the water law system and for protection of the environment and water resources. Recognizing these needs, courts are willing to give states room to maneuver within the bounds of the Fifth Amendment takings doctrine without triggering the just compensation requirement, even in the rare situation where courts recognize a vested property right in future, unexercised riparian rights.

Where prior appropriators claim a taking of present rights, as a result of the transition to compliance with federal environmental statutes, courts avoid the takings inquiry and attendant constitutional issues by reframing the case under contract law instead of constitutional law. Thus, while the government may still pay the appropriator, the payment is for damages under contract rather than just compensation under the Fifth Amendment. In such cases, the government tends to have more control over the triggering of damages through careful contract drafting.

As demand for water for human use and consumption increasingly conflicts with demands to augment or otherwise maintain water levels in natural watercourse systems, the takings issues that currently appear primarily in western states’ compliance with federal environmental statutes will likely shift eastward into traditionally riparian states. In the future, riparian states may also experience a form of regulatory drought that gives rise to takings litigation. Careful expansion of the reasonable use that defines the bounds of a riparian water right could effectively halt many takings claims, as well as meticulous contract drafting and limitations on damages. Moreover, framing the conflict as a Penn Central inquiry will benefit the government. Where riparians claim a taking of future rights to water as a result of federal environmental statute implementation, the legal arguments will mirror those discussed in this essay. The central problem for riparians remains the same, the difficulty of establishing the basic private property right in water.

Under the current Fifth Amendment takings doctrine, environmental protection goals, veiled as transitions in water laws, are likely to be met without triggering the requirement for just compensation. This takings litigation generates environmental benefits in the form of maintaining in-stream flows and the attendant benefits for water quality, habitat and ecosystem preservation, and hydrological cycle function. The environmental benefits reflect not the embrace of environmental values by courts but instead the relatively few cases where holders of water rights prevail in this area of takings law.

 


[1] See Cynthia A. Covell, A Survey of State In-stream Flow Programs in the Western United States, 1 U. Denv. Water L. Rev. 177 (1998) and Charlton H. Bonham, Perspectives from the Field: A Review of Western In-stream Flow Issues and Recommendations for a New Water Future, 36 Envtl. L. 1205 (2006).

[2] Pete Bodo, Trout are Endangered Because of the Drought, N.Y. Times, April 28, 2002, §8, at 10. City officials were reluctant to augment the in-stream water levels by releasing water from the reservoirs without mandatory regulations to protect trout. The decreased in-stream water level created a thermally inhospitable condition for the trout, which are adapted to function optimally in fifty- to sixty-degree water.

[3] Id.

[4] For example, in 2004, the Bureau of Reclamation launched a program called “Water 2025,” a matching-funds program that partners the federal agency with local organizations to prevent water conflicts in the western part of the United States. Grants for the fiscal year of 2006 were aimed primarily at increased efficiency and delivery of water for consumptive use. See Doi.gov, Water 2025: Preventing Crises and Conflict in the West — Western Water Initiative Challenge Grant Program for Fiscal Year 2006, http://www.doi.gov/water2025/grants-06.html (last visited Mar. 26, 2007).

[5] See In re Adjudication of the Existing Rights to the Use of All the Water, 55 P.3d 396 (Mont. 2002) (holding that Montana recognized that beneficial uses include fish, wildlife, and recreation uses and that valid in-stream and in-lake appropriations that did not require diversion existed in the state prior to 1973).

[6] City of Thornton v. City of Fort Collins, 830 P.2d 915 (Colo. 1992) (holding that a diversion in the conventional sense of removing water from its natural course or location is no longer required and that in-stream control of water constitutes a diversion) and State Eng’r v. City of Golden69 P.3d 1027, 1028 (Colo. 2003) (upholding by an equally divided court the water court’s grant of conditional decrees for in-channel flow rights to operate whitewater kayaking courses).

[7] 2 Colo. Code Regs. § 408-3(4)(p) (2006).

[8] U.S. Const. amend. V.

[9] Craig Anthony Arnold, The Reconstitution of Property: Property as a Web of Interests, 26 Harv. Envtl. L. Rev. 281, 285 n.20 (2002).

[10] Many scholars have argued for a re-working of this “bundle of sticks” analogy for the natural environment as property. As applied to natural resources, the “bundle of sticks” concept violates fundamental environmental ethics by failing to recognize the interconnectedness of people and their physical environments and by failing to recognize the unique characteristic of each object. Arnold, supra note 9. In his article, Arnold argues for a new analogy of property as a web of interests, which remedies the gaps in the bundle of sticks analogy. This web analogy affects the takings analysis by focusing on whether the government has “radically altered” the relationship between the object and the primary interest holder by shifting that primary interest to another interest-holder in the web. Id. at 347. This web concept, presented visually as the totality of all interests in the object, tends to further the argument of this essay that restrictions on water rights for environmental protection purposes are unlikely to constitute a taking, particularly when the primary interest-holder is aware of the various interests in addition to her own.

[11] Brian Gray, The Property Right in Water, 9 Hastings W.-N.W. J. Envtl. L. & Pol’y 1, 4 (2002).

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] National Audubon Society v. Superior Court (Mono Lake), 658 P.2d 709 (Cal. 1983), cert. denied, 464 U.S. 977 (1983), and U.S. v. Rands, 389 U.S. 121 (1967) (holding that the government’s exercise of a dominant navigational servitude was a “lawful exercise of a power to which the interests of riparian owners have always been subject”).

[17] Mono Lake, 658 P.2d at 721.

[18] Id. at 726.

[19] Gray, supra note 11, at 26.

[20] Id.

[21] A. Dan Turlock, Law of Water Rights and Resources § 3:9 (2006).

[22] Tyler v. Wilkinson, 24 F. Cas. 472, 474 (C.C.D.R.I. 1827).

[23] Turlock, supra note 21, § 3:60. Section 850A, Restatement (Second) of Torts (1979), states similar factors, such as the purpose of the use, the suitability of the use to the watercourse, the economic and social value of the use, the nature and degree of the harm, and equity and priority of use.

[24] Id.

[25] Id. § 3:10.

[26] Hoover v. Crane, 106 N.W.2d 563, 566 (Mich. 1960).

[27] See Baeth v. Hoisveen, 157 N.W.2d 728 (N.D. 1968) (holding that in a transition from riparianism to prior appropriation, vested water rights were determined by the actual application of water to a beneficial use).

[28] S.D. Codified Laws § 46-9-1 (2006).

[29] In re Waters of Long Valley Creek Sys., 599 P.2d 656, 661 (Cal. 1979) (en banc). See infra Part III(A).

[30] For example, the national environmental organization Sierra Club has incorporated in-stream flows as part of its water policies. Sierraclub.org, Sierra Club Conservation Policies, http://www.sierraclub.org/policy/conservation/ water.asp (last visited March 26, 2007).

[31] City of Thornton v. City of Fort Collins, 830 P.2d 915, 930 (Colo. 1992) (emphasis added).

[32] 2 Colo. Code Regs. § 408-3(4) (2006).

[33] See discussion supra Part I.

[34] Turlock, supra note 21, § 5:66.

[35] Idaho Code § 42-1501 (2007).

[36] See Dellapenna, infra note 63.

[37] Ore. Rev. Stat. § 537.140 (2005).

[38] Gray, supra note 11, at 17.

[39] See Douglas Grant, ESA Reductions in Reclamation Water Contract Deliveries: A Fifth Amendment Taking of Property?, 36 Envtl. L. 1331 (2006).

[40] Gray, supra note 11, at 17.

[41] Tulare Lake Basin Water Storage Dist. v. United States, 49 Fed. Cl. 313 (2001). In O’Neill, the Ninth Circuit formulated this test for the breach of a contract by the federal government: the plaintiff must prove that the contract provides for full water service under conditions of hydrological and regulatory drought; and contract terms must expressly and unmistakably protect plaintiff from the effects of new laws that alter the terms of the contract or laws that render the fulfillment of the terms of the contract illegal. O’Neill v. United States, 50 F.3d 677 (9th Cir. 1995). In addition, the Supreme Court in Winstar added that the plaintiff may recover damages for a breach of the contract if the contract grants the right that is impaired by government regulation and if the contract anticipates the regulation by expressly assigning liability for regulatory impairment to the government. United States v. Winstar, 518 U.S. 839 (1996).

[42] For a recent review of the Supreme Court’s takings jurisprudence, see John D. Echeverria, Lingle, etc.: The U.S. Supreme Court’s 2005 Takings Trilogy, 35 ELR 10577 (2005) (arguing that this trilogy of takings cases reflects the Court’s fairly conservative interpretation that the Takings Clause poses a slight imposition on public officials attempting to design programs in furtherance of the public welfare).

[43] Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992).

[44] See generally Tahoe Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302 (2002).

[45] See infra Part III(A).

[46] Lucas, 505 U.S. at 1015.

[47] James H. Davenport and Craig Bell, Governmental Interference with the Use of Water: When do Unconstitutional “Takings” Occur?, 9 U. Denv. Water L. Rev. 1, 69 (2005).

[48] Lucas, 505 U.S. 1003, 1015 (1992) (citing United States v. Causby, 329 U.S. 256 (1946) (holding that physical invasion of airspace functions as effective ouster of property owner from property), and Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982)).

[49] U.S. Const. amend. V.

[50] Tahoe Sierra, 535 U.S. at 324.

[51] However, the Oklahoma Supreme Court found a physical taking in Franco-American CharolaiseSee infra Part III.

[52] Lucas, 505 U.S. at 1019.

[53] Id. at 1029.

[54] See Michael C. Blumm and Lucas Ritchie, Lucas’s Unlikely Legacy: The Rise of Background Principles as Categorical Takings Defenses, 29 Harv. Envtl. L. Rev. 321 (2005) (arguing that to the likely chagrin of Justice Scalia, government defendants after Lucas increasingly relied on background principles to defend against paying compensation because of the clear formula and ease of application of the Lucas exceptions).

[55] Tahoe Sierra, 535 U.S. at 324.

[56] In Lucas, the petitioner was a part owner of the development from which he purchased two single parcels in an area that was “notoriously unstable.” Lucas, 505 U.S. at 1038 (Blackmun, J. dissenting). The majority viewed the two single parcels in isolation, independent of the petitioner’s prior ownership and development of the surrounding acreage, and found that the two parcels had no value after the application of the government regulation.

[57] Tahoe Sierra, 535 U.S. at 327 (citing Andrus v. Allard, 444 U.S. 51, 65-66 (1979)).

[58] Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 125 (1978). In Glisson, infra n. GG, a Florida Court of Appeals articulated several factors to determine whether the Penn Central elements had been met, including the existence of a physical invasion, the diminution in value of the property, the social value of the regulation, the public interest furthered by the regulation, whether the regulation was applied arbitrarily or capriciously, and the impact of the regulation on investment-backed expectations.

[59] Causby, 329 U.S. at 256.

[60] Loretto, 458 U.S. at 419.

[61] Penn Central, 438 U.S. at 124.

[62] See infra Part III(A) & (B).

[63] Joseph W. Dellapenna, The Law of Water Allocation in the Southeastern States at the Opening of the Twenty-First Century, 25 U. Ark. Little Rock L. Rev. 9 (2002).

[64] Id. at 16.

[65] Id.

[66] Id.

[67] Id.

[68] See Boomer v. Atlantic Cement, 257 N.E.2d 870 (N.Y. 1970) (refusing to enjoin the operations of a cement plant where the plant employed 300 workers and had invested $45 million in the plant, whereas the depreciation of the plaintiffs homes as a result of the pollution from the plant amounted to $140,000).

[69] Fla. Stat. § 373.013 et seq. (2007). This Act is considered a model statute for regulated riparianism. Dellapenna,supra n. 63, at 59.

[70] Fla. Stat. § 373.016 (2007).

[71] Fla. Stat. § 373.016(b) (2007).

[72] Fla. Stat. § 373.016(g), (i), & (j) (2007).

[73] Concerned Citizens of Putnam County for Responsive Gov’t, Inc. v. St. Johns River Water Mgmt. Dist., 622 So. 2d 520, 521 (Fla. App. 1993).

[74] Fla. Stat. § 373.019(16) (2007).

[75] Dellapenna, supra note 63, at 61.

[76] Village of Euclid v. Amber Realty Co., 272 U.S. 365 (1926).

[77] Id. at 395.

[78] Gove v. Zoning Bd. of Appeals of Chatham, 831 N.E.2d 865 (Mass. 2005). The court further noted that this value did not include other permitted economic uses of the land, such as use for recreation.

[79] Id. (citing Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 544 (2005)). In Gove, the landowner inherited the land and was thus not a bona fide purchaser for value, invested reasonably in land fit for development. In addition, the parcel of land, located on the southeastern corner of Cape Cod, was prone to erosion, storm damage, and inundation by seawater.

[80] Glisson v. Alachua County, 558 So. 2d 1030 (Fla. Dist. Ct. App. 1990). The protection area contained wetlands, exceptional upland habitat, hammock zones, and active use zones. Each portion of the protection area permitted increasing use for development, from no construction activities in the wetlands to full development in the active use zones. Id. at 1032-1033.

[81] Id. at 1031.

[82] Id. at 1037.

[83] Id.

[84] In re Adjudication of the Water Rights of the Upper Guadalupe Segment of the Guadalupe River Basin, 642 S.W.2d 438 (Tex. 1982).

[85] The Irrigation Acts of 1889 and 1895 implemented the dual system of water rights in Texas, meaning that the state appropriates certain waters by permits but still recognizes the rights of riparian owners.

[86] Upper Guadalupe, 642 S.W.2d at 444.

[87] The state appropriates flood waters, the waters on lands granted by Spain and Mexico, and the ordinary flow and underflow of streams on riparian lands granted after July 1, 1895. Tex. Water Code Ann. § 11.001(b) (2007).

[88] Upper Guadalupe, 642 S.W. 2d at 444.

[89] Id.

[90] Id. The court defined usufructory as “the right to use, enjoy, and receive the profits of property that belongs to another.”

[91] Id. at 445 (citing Tex. Water Rights Comm’n v. Wright, 464 S.W. 2d 642, 647 (Tex. 1971)).

[92] Id.

[93] Id. at 445.

[94] Id. (citing In re Willow Creek, 144 P. 505, 514 (Or. 1914)). The court emphasized that the mechanism must be “salutary and in the interest of an orderly regulation of the use of water to be made by skilled officers who have particular knowledge.”

[95] In re Deadman Creek Drainage Basin, 694 P.2d 1071 (Wash. 1985) (en banc).

[96] Id. at 1072.

[97] Id.

[98] Id. (citing State ex rel. South Fork Log Driving Co. v. Super. Ct., 173 P. 192 (Wash. 1918)).

[99] Id. at 1077.

[100] Franco-Am. Charolaise v. Okla. Water Resources Bd., 855 P.2d 568 (Okla. 1990).

[101] Id. at 570.

[102] Id. at 571.

[103] Id. at 576.

[104] Id. at 577.

[105] Id. at 576.

[106] Id. at 582 (Lavender, V.C.J., dissenting).

[107] Id. at 582.

[108] In 1993, the Oklahoma legislature responded to the holding in Franco-American by passing legislation that replaced “the incompatible dual systems of riparian and appropriative water rights… with an appropriation system of regulation” governed by the principles of beneficial use of water and priority in time. 82 Okl. Stat. § 105.1(A) (2007). To date, the Supreme Court of Oklahoma has not ruled on the constitutionality of this statute.

[109] Franco-American Charolaise, 855 P.2d at 583 (Lavender, VC.J., dissenting).

[110] Id. at 582.

[111] Waters of Long Valley, 599 P.2d 656 (Cal. 1979).

[112] Id. Pursuant to California’s Water Code, the Board is authorized to determine all claimed rights, based upon appropriation, riparian, or other bases of right, to the use of water in a stream system. Cal. Water Code § 2501 (2007).

[113] The system is a forty-five mile stream system that originates from the melting snow of the Sierra Nevada Mountains and traverses the semi-arid and desert portion of northern California.

[114] Waters of Long Valley, 599 P.2d at 660.

[115] Id.

[116] Id. at 660 and 663.

[117] Id. at 669.

[118] Id. at 660.

[119] Id. at 661.

[120] Id. at 661. The Water Code states that every decree for determination of water rights shall declare the priority, the amount, the season of use, the purpose of use, the point of diversion, the place of use, and other such factors as may be necessary to define the right to use the water with respect to each party. Cal. Water Code § 2769 (2007).

[121] “It is hereby declared that because of the conditions prevailing in this State the general welfare requires that the water resources of the State be put to beneficial use to the fullest extent of which they are capable, and that the waste or unreasonable use or unreasonable method of use of water be prevented, and that the conservation of such water is to be exercised with a view to the reasonable and beneficial use thereof in the interest of the people and for the public welfare.” Cal. Water Code § 100 (2007).

[122] Waters of Long Valley, 599 P.2d at 666.

[123] Id. at 661 n.3.

[124] Id. at 668.

[125] Id. at 665.

[126] Fla. Stat. § 373.069 (2007).

[127] Fla. Stat. § 373.219(1) (2007). The individual applicant must establish that the proposed use of water is a reasonable-beneficial use, will not interfere with existing uses, and is consistent with the public interest. Fla. Stat. § 373.223 (2007).

[128] Fla. Stat. § 373.236 (2007)

[129] Vill. of Tequesta v. Jupiter Inlet Corp., 317 So.2d 663, 665 (Fla. 1979).

[130] Id.

[131] Id.

[132] Id. at 670.

[133] Id. at 667. The court stated that ownership in reference to water rights has never meant that the overlying property owner had a property or proprietary interest in the corpus of the water itself.

[134] Id.

[135] Id. at 671.

[136] Id. at 670 (citing Arundel Corp. v. Griffin, 103 So. 422 (Fla. 1925) (en banc), and Seldon v. City of Jacksonville, 10 So. 457 (Fla. 1891)).

[137] Omnerik v. State, 218 N.W.2d 734 (Wis. 1974)

[138] Id. at 743.

[139] Id. at 744.

[140] Id. at 743.

[141] Joseph L. Sax, The Constitution, Property Rights and the Future of Water Law, 61 U. Colo. L. Rev. 257, 260 (1990).

[142] Id. at 262

[143] Dellapenna, supra note 63, at 22.

[144] Id.

[145] Id.

[146] See Klamath Irrigation District v. United States, 67 Fed. Cl. 504, 538 (2005), discussed infra.

[147] Dellapenna, supra note 63, at 22.

[148] Id.

[149] Id. at 28.

[150] Endangered Species Act, 16 U.S.C. § 1531(b) (2007).

[151] Tennessee Valley Authority v. Hill, 437 U.S. 153, 180 (1978).

[152] Endangered Species Act, 16 U.S.C. §§ 1531(c) and 1536(a)(2) (2007). The Act defines conserve to mean “to use and the use of all methods and procedures which are necessary to bring any endangered species or threatened species to the point at which” the protection of the Act is no longer necessary. 16 U.S.C. §1532(2) (2007).

[153] Sax, supra note 141, at 265.

[154] This majority view is contrasted by the view of states like Pennsylvania, where the state supreme court held inMoon that the amortization and discontinuance of a lawful pre-existing non-conforming use is per se confiscatory and in violation of the state constitution. Pa. Nw. v. Zoning & Hearing Bd. of Moon, 584 A.2d 1372 (Pa. 1991). Here, the plaintiff obtained the necessary paperwork to open an adult book store in the Township of Moon. Four days later, with suspicious efficiency, the Zoning Board passed an ordinance imposing heavy restrictions on the location of adult enterprises and gave non-complying businesses a ninety-day period to comply with the ordinance. The plaintiff was unable to comply and challenged the constitutionality of the provision. The Supreme Court of Pennsylvania found that the plaintiff had a vested property right by the lawful non-conforming use and found offensive this amortization provision that both restricted future uses and extinguished a lawful non-conforming use on an expedited timetable. Id.at 1376. As will be discussed below, where the Court of Federal Claims found a taking, similar reasoning was also used.

[155] 101A C.J.S. Zoning & Land Planning § 209 (February 2007). On balance, the amortization of the non-conforming use must have public benefits that outweigh the private injury or hardship suffered by the individual user. Court should also consider the investment of the user and whether the investment can be utilized or recovered through a permitted alternative use.

[156] Sax, supra note 141, at 265.

[157] City of Los Angeles v. Gage, 274 P.2d 34 (1954). The defendant purchased lots on which he built a two-family residential building, using part of the building to conduct a wholesale retail plumbing supply business. In 1946, after a series of zoning reclassifications that all expressly permitted Gage’s use of the property, the City passed an amortization provision for the discontinuance of non-conforming uses within five years of the effective date. Eight years later, Gage continued to operate his business in the residential zone, and the City brought suit against Gage to enjoin his non-conforming use and to comply with the comprehensive zoning plan.

[158] Id. at 44.

[159] Id.

[160] Id. at 45.

[161] Bd. of Zoning Appeals of Bloomington v. Leisz, 702 N.E.2d 1026 (Ind. 1998). In this case, the plaintiffs purchased real property from owners who had failed to register the existing lawful non-conforming use under a newly passed zoning ordinance. This case signaled the state’s return to the majority view from the minority view on the constitutionality of amortization provisions.

[162] Id.

[163] Id.

[164] Id. at 1029.

[165] Id.

[166] Tulare, 49 Fed. Cl. at 313.

[167] Id. at 315.

[168] Id. at 316. The term “regulatory drought” refers to water shortages caused by legal requirements to provide for environmental protection. These shortages would not occur but for the legal requirements and tend to exacerbate the impacts of existing natural drought. Gray, supra note 11, at 18.

[169] Id. The Tulare Lake Basin Water Storage District alleged a loss of at least 58,820 acre-feet of water in the three year period between 1992 and 1994, whereas the Kern County Water Agency alleged the loss of 319,420 acre-feet over the same period.

[170] Id. at 319 (quoting Causby).

[171] Id. (citing Eddy v. Simpson, 3 Cal. 249, 252-253 (1853) (stating that “the right to property in water is usufructory, and consists not so much of the fluid itself as the advantage of its use”)).

[172] Here, the court uses language from both per se physical invasions takings jurisprudence and regulations that deprive property of all economic value, despite finding a taking based on the former category.

[173] Tulare, 49 Fed. Cl. at 319.

[174] Id. at 322.

[175] Klamath Irrigation District v. United States, 67 Fed. Cl. 504, 538 (2005). See also Cari S. Parobeck, Of Farmers’ Takes and Fishes’ Takings: Fifth Amendment Compensation Claims When the Endangered Species Act and Western Water Rights Collide, 27 Harv. Envtl. L. Rev. 2003; Brittany K.T. Kauffman, What Remains of the Endangered Species Act and Western Water Rights After Tulare Lake Basin Water Storage District v. United States, 74 U. Colo. L. Rev. 837 (2003).

[176] Klamath, 67 Fed. Cl. at 538.

[177] Id. at 513.

[178] Id.

[179] Id. at 515 & 519 (citing Maritrans Inc. v. United States, 342 F.3d 1344, 1352 (Fed. Cir. 2003) and Cal. Or. Power Co. v. Beaver Portland Cement Co., 295 U.S. 142 (1935)).

[180] Id. at 523.

[181] Id. at 523. The court reasoned that the contract either bound the Bureau to certain promises to provide water or to pay damages for a breach. The contract did not confer on plaintiffs a right to be protected from taking. Id.

[182] Id. at 536 (quoting Yankee Atomic Elec. Co. v. United States, 112 F.3d 1569, 1575 (Fed. Cir. 1997)).

[183] Yankee Atomic, 112 F.3d at 1575.

[184] Klamath, 67 Fed. Cl. at 537 (quoting Winstar, 518 U.S. at 898).

[185] Id. at 535.

[186] Id. at 532. The court dismissed the plaintiffs’ reliance on Tulare, stating that “with all due respect, Tulare appears to be wrong on some counts, incomplete in others and, distinguishable, at all events.” Id. at 538.