Trial Court Denies 2001 Klamath Project Takings Claims

Attorneys at Law Somach, Simmons and Dunn, Oct 4, 2017

On September 29, 2017, Judge Marian Blank Horn of the United States Court of Federal Claims issued her opinion in Lonny Baley, et al. and John Anderson Farms, Inc., et al. v. United States, finding that most water users in the Klamath Project (Project) have cognizable Fifth Amendment property interests, but ultimately ruling that the United States’ action in 2001 to withhold water from the Project does not constitute a compensable taking of property for any Project water user.  A copy of the opinion can be found here.   The Klamath takings case stems from the U.S. Bureau of Reclamation’s termination of delivery of irrigation water to the Project in 2001 due to allocation of all available water to Lost River and shortnose suckers and coho salmon under the Endangered Species Act (ESA).  A ten-day trial was held in February 2017 before Judge Horn on the issue of whether the Project water users have a Fifth Amendment property interest and, if so, whether the water users are entitled to compensation for the shutoff.  The trial followed more than fifteen years of litigation in the Federal Court of Claims, the Federal Circuit Court of Appeal, and certified questions regarding Oregon water law to the Oregon Supreme Court.  For additional background, please see:  United States Court of Federal Claims Will Apply “Physical” Takings Framework in Klamath Project Litigation.

Judge Horn’s 75-page decision includes an overview of the Project, the various types of water delivery contracts, the ESA, and water rights of the Klamath, Yurok and Hoopa Valley Tribes.  Judge Horn restates her December 2016 decision to apply a physical takings framework to analyze the subject claims.  The 2016 ruling was significant because, in general, physical takings constitute per se takings of private property with a “categorical duty” on the government to compensate the owner, while a regulatory takings analysis typically involves complex balancing of private and government interests before liability can be found.

The trial decision first finds that most water users in the Project have a cognizable Fifth Amendment property interest.  Various types of contractual relationships exist for delivery of Project water.  This includes standard Reclamation repayment contracts, Warren Act contracts, a settlement contract, and contracts for water on leased lands in National Wildlife Refuges.  In brief, Judge Horn finds that water users who obtain water via Reclamation repayment contracts and various Warren Act contracts (together constituting most Project irrigated acreage), do have a cognizable Fifth Amendment property interest in the beneficial use of Project water.  Nonetheless, the Court finds that water users subject to some Warren Act contracts and lessors on federal land do not possess a cognizable Fifth Amendment property interest.

Despite finding a property interest for certain classes of Project water users, the Court ruled that Project water rights are junior to instream water rights of the Klamath, Yurok, and Hoopa Valley Tribes, and thus the United States’ action in 2001 to shutoff Project water did not constitute a compensable taking.  In so holding, Judge Horn finds that the Tribes water rights “were at least co-extensive to the amount of was that was required . . . to satisfy [the United States’] obligations under the [ESA] concerning the Lost River and shortnose suckers and coho salmon in 2001. . . .”  In effect, the ruling indicates that the fact that the 2001 Project shutoff resulted from the ESA is without import; because of the senior instream tribal rights claims, the Project was not legally entitled to receive water in 2001, and thus there is no right to compensation.

Project water users made several arguments at trial regarding the existence, nature and scope, and relevance of tribal rights on the 2001 takings analysis, but these were not persuasive to the Court.  It is not yet known whether the Project water users will appeal the decision.

For more information on this case, please contact Richard S. Deitchman at (916) 446 7979 or rdeitchman@somachlaw.com.

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