Federal Circuit Denies En Banc Review In Casitas

The U.S. Court of Appeals has denied a petition for rehearing and rehearing en banc in Casitas Municipal Water District v. United States, No. 2007-5153 (Sep. 25, 2008), a decision we noted here.  In September 2008, a panel held that contractual water rights were taken when the federal government required the landowner to construct a fish ladder and divert water in order to protect endangered steelhead trout.  The court held that the requirement resulted in a physical diversion of water for public use, and that "Casitas will never, at the end of any period of time, be able to get the water back.  The character of the government action was a physical diversion for public use -- the protection of an endangered species." Slip op. at 30.

The per curiam order denying rehearing is available here.  Three Federal Circuit judges dissented, arguing that no physical taking occurred because the federal government did not appropriate water from Casitas, it only restricted its right to divert water, "a burden on Casitas' usufructuary right."

Despite Loretto's recognition that regulations on the use of property, even those imposing affirmative obligations on property owners, do not constitute physical takings, the panel majority reached a novel conclusion—a requirement under the Endangered Species Act to leave in a river a minimum amount of water that is not itself privately owned must be analyzed as a physical taking of a party’s use of that water.

The dissent argued instead that Penn Central's ad hoc analysis should apply.

Three judges concurred separately, emphasizing that the case "as it was presented to [the court] on appeal" involved a physical, not a regulatory, taking, because the government conceded that Casitas had a property right in the water, and the requirement of building a fish ladder resulted in a permanent appropriation of that water. The appropriation was "sending it down the fish ladder where Casitas could not recover it."

The Federal Circuit has 12 active circuit judges, and a highly fractured court means this is a case to watch.