The Federal Circuit Turns Takings Analysis On Its Head

by Elizabeth Wydra, Chief Counsel, Constitutional Accountability Center (CAC)

Yesterday, the United States Court of Appeals for the Federal Circuit refused to reconsider the panel decision in Casitas Municipal Water District v. United States, in which the appellate court said that the government’s diversion of river water to protect an endangered species of fish constituted a physical taking of property.

The Casitas case looked at whether a government regulation requiring that water remain in a stream to protect the endangered steelhead trout constituted a physical or regulatory taking. A physical taking is the paradigm case under the Takings Clause, and occurs when the government directly appropriates or invades private property. It is a per se taking under the Fifth Amendment, and just compensation must be given by the government.The alternative is to analyze a restriction on property as a regulatory taking, which does not always rise to the level of a compensable taking, particularly when the regulation of private property does not completely deprive a property-owner of all the economically beneficial use of her property.

The facts of this case make clear that the government was not seizing or impounding any quantity of water; rather, the government required that water be left in the stream for the trout instead of being diverted for use by the Casitas Water District. Nonetheless, the three-judge panel of the Federal Circuit determined last fall that the government’s action constituted a physical taking of the stream water. The court asserted that “[t]he fact that the government did not itself divert the water is of no import.” Nor, apparently, does it matter that an endangered species, rather than the government or the public, will be using the stream water.

Four judges dissented from the decision not to reconsider the panel’s ruling. These judges argued that:
The legal premise for this case should begin with Penn Central’s recognition that regulatory takings analysis applies to a government “interference aris[ing] from some public program adjusting the benefits and burdens of economic life to promote the common good,” Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978), and conclude with Tahoe Sierra, where the Court based its analysis on the “longstanding distinction between acquisitions of property for public use, on the one hand, and regulations prohibiting private uses, on the other,” Tahoe-Sierra Pres. Council v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 323 (2002).
The dissenting judges then went through a list of examples of alleged burdens on property that were analyzed as regulatory, not physical, takings: a land use permit condition requiring property owners to use part of their land for a public easement (Nollan v. California Coastal Commission (1987)); a wartime order requiring all nonessential gold mines to cease operations (United States v. Central Eureka Mining Co. (1958)); a requirement that coal companies leave in place a pillar of coal to prop up surface land above coal mines (Pennsylvania Coal v. Mahon (1922)); and a requirement that a landowner not cut and utilize trees that were used for owl nesting (Boise Cascade Corp. v. United States (Fed. Cir. 2002)). The dissent persuasively argued that requiring Casitas to leave water in the stream to protect an endangered fish species is no different from requiring coal companies to leave coal in the ground to prevent land surface collapse or preventing landowners from cutting trees used by nesting owls. As the dissent plainly states, the panel’s decision in Casitas is contrary to established law and implicates fundamental questions of Takings Clause jurisprudence.

The dissent has got it right on the law and on the import of the panel’s rogue opinion. Whether the Obama Administration fights this case in the trial court on remand or takes it up to the Supreme Court, it is clear that the panel’s decision should not be the last word. If the Casitas ruling remains in place, any time the government requires natural habitat to remain in place to protect an endangered species, it will risk effecting a physical taking and committing taxpayer dollars to compensate the property owner. And this will place at risk not just the coherence of Takings jurisprudence, but our country’s ability to protect already endangered species.