Victory For Landowners In Klamath Water Basin Takings Case

The Fifth Amendment of the U.S. Constitution proscribes the taking of private property "for public use, without just compensation." In cases where the federal government, by means of any of its various agencies, takes property in violation of the Fifth Amendment----an action known as "inverse condemnation" or "taking"---- property owners have a right to seek just compensation via a takings claim filed in the U.S. Court of Federal Claims.

On February 18, 2011, a major victory was won by landowners in the Klamath Water Basin, a nearly 16,000 square-mile region comprising parts of southern Oregon and northern California which, under the oversight of the U.S. Bureau of Reclamation (Bureau), provides water to about 240,000 acres of irrigable crop lands. The long-running case, Klamath Irrigation District v. United States, stems from a 2001 decision by the Bureau not to deliver any water to Klamath Basin farmers and irrigators that year. The Bureau claimed it was doing so because it was obligated under the Endangered Species Act (ESA) of 1973 to protect endangered species.

The case against the government was filed in the U.S. Court of Federal Claims by several agricultural landowners as well as a number of water, drainage, and irrigation districts on their behalf who alleged that the government violated both the Fifth Amendment and the Klamath River Basin Compact (established in 1957 between Oregon and California, and with the consent of Congress, to promote orderly management of shared basin resources) by taking their vested rights to water without just compensation. The plaintiffs alternatively sued for breach of their water delivery contracts.

In 2005, the U.S. Court of Federal Claims----relying on a 1905 Oregon statute----denied the plaintiffs' takings claims, holding that there was no equitable property right in their use of Klamath Basin water for irrigation. In 2007, the trial court disposed of the claims that the government breached the Klamath River Basin Compact, and concluded that the contract claims were shielded by sovereign immunity.

However, recently the U.S. Court of Appeals for the Federal Circuit rejected the conclusions of the Federal Claims Court. Basing its decision largely on statements from the Oregon Supreme Court, which affirmed that the plaintiffs possess water rights in the Klamath Water Basin, the Federal Circuit remanded the case for further proceedings, thus reviving the plaintiffs' opportunity to potentially receive their just compensation. Moreover, in what now frustrates the government's claim to sovereign immunity, the Circuit Court's decision places a new burden on the government to prove that there were no alternatives to fulfilling its ESA obligations other than to halt the delivery of water.

Underscoring the magnitude of the victory, Nancie Marzulla, counsel for the Klamath water users, stated that "the government's decision not to deliver any water at all to the farmers in the Klamath Basin was devastating. We are extremely pleased that the Federal Circuit and Oregon Supreme Court have confirmed that these farmers have a property interest in water that they have put to beneficial use for over 100 years."