Casitas Municipal Water Dist v. Us

United States Court of Appeals
for the Federal Circuit
______________________
CASITAS MUNICIPAL WATER DISTRICT,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
______________________
2012-5033
______________________
Appeal from the United States Court of Federal
Claims in No. 05-CV-168, Senior Judge John P. Wiese.
______________________
Decided: February 27, 2013
______________________
ROGER J. MARZULLA, Marzulla Law, of Washington,
DC, argued for plaintiff-appellant. With him on the brief
was NANCIE G. MARZULLA.
KATHERINE J. BARTON, Attorney, Environment and
Natural Resources Division, United States Department of
Justice, of Washington, DC, argued for defendant-
appellee. With her on the brief was IGNACIA S. MORENO,
Assistant Attorney General.
JENNIFER L. SPALETTA, Herum Crabtree, of Stock-
ton, California, for amicus curiae Stockton East Water
District.
2 CASITAS MUNICIPAL WATER DIST v. US
RODERICK E. WALSTON, of Best Best & Krieger LLP,
Walnut Creek, California, for amici curiae Westlands
Water District & Sweetwater Company.
CLIFFORD T. LEE, Deputy Attorney General, Cali-
fornia Department of Justice, of San Francisco, Califor-
nia, for amicus curiae, California State Water Resources
Control Board. With him on the brief were KAMALA D.
HARRIS, Attorney General of California, and MARK
BRECKLER, Chief Assistant Attorney General. Of counsel
on the brief was TARA L. MUELLER, Deputy Attorney
General, of Oakland, California.
JOHN D. ECHEVERRIA, Vermont Law School, of South
Royalton, Vermont, for amicus curiae Natural Resources
Defense Council. Of counsel on the brief was KATHERINE
S. POOLE, Natural Resources Defense Council, of San
Francisco, California.
______________________
Before NEWMAN, LOURIE, and SCHALL, Circuit Judges.
SCHALL, Circuit Judge.
Casitas Municipal Water District (“Casitas”) operates
the Ventura River Project (the “Project”). The Project,
which is owned by the U.S. Bureau of Reclamation
(“BOR”), provides water to residential, industrial, and
agricultural customers in Ventura County, California.
Ventura County is located on the southern coast of Cali-
fornia, approximately sixty miles northwest of Los Ange-
les.
On January 26, 2005, Casitas brought suit in the
United States Court of Federal Claims, alleging that, by
imposing certain operating criteria on the Project, the
United States had taken its property without just com-
pensation, in violation of the Fifth Amendment to the
Constitution. On December 5, 2011, the Court of Federal
CASITAS MUNICIPAL WATER DIST v. US 3
Claims dismissed Casitas’s complaint without prejudice,
on the ground that Casitas’s takings claim was not ripe.
In dismissing the complaint, the court held that Casitas’s
claim was not ripe because Casitas had failed to demon-
strate that the operating criteria had as yet caused it to
deliver less water to its customers than it otherwise
would have delivered. Casitas Mun. Water Dist. v. United
States, 102 Fed. Cl. 443 (2011) (“Casitas V”). Casitas now
appeals the dismissal of its complaint. For the reasons
set forth below, we affirm.
BACKGROUND
I. THE VENTURA RIVER PROJECT
The Project includes Casitas Dam, Casitas Reservoir,
the Robles Diversion Dam, and the Robles-Casitas Canal.
The Project combines water from Coyote Creek and the
Ventura River into Casitas Reservoir, also known as
“Lake Casitas.” Casitas Reservoir is located on Coyote
Creek and is formed by Casitas Dam. Coyote Creek
provides approximately sixty percent of the Project’s
water. The remaining forty percent comes from the
nearby Ventura River, which flows through Ventura
County to the Pacific Ocean. Water from the Ventura
River is diverted by the Robles Diversion Dam into a four-
and-a-half-mile-long canal (the Robles-Casitas Canal),
which carries water from the Ventura River to Casitas
Reservoir. Water from the Reservoir is distributed to
Casitas’s customers via a conveyance system comprising
thirty-four miles of pipeline, five pumping stations, and
six balancing reservoirs.
The Project was constructed pursuant to a contract
between BOR and Casitas dated March 7, 1956 (the “1956
Contract” or the “Contract”). Under the Contract, BOR
agreed to build the Project in exchange for a commitment
by Casitas to repay the construction costs over a forty-
year period. Casitas also agreed to pay all operating and
maintenance costs of the Project. Article 4 of the Contract
4 CASITAS MUNICIPAL WATER DIST v. US
states that Casitas “shall have the perpetual right to use
all water that becomes available through the construction
and operation of the Project.” Finally, the Contract
requires that Casitas apply to the State of California to
appropriate the water for the Project. State water per-
mits were issued to Casitas on May 10, 1956, and the
Project was completed and transferred to Casitas for
operation in 1959.
Casitas’s diversion and use of water for the Project
are governed by a license granted to it by the State Water
Resources Control Board (“SWRCB” or the “Board”), the
state agency responsible for the issuance of permits and
licenses for the appropriation of water in California. See
Cal. Water Code §§ 1225, 1250 (West 2012). The current
version of Casitas’s license (which is the version in effect
at all times pertinent to the case) is dated January 17,
1986 (the “License”). The License provides that Casitas
may divert up to 107,800 acre-feet of water per year from
the Ventura River and other tributaries and may put up
to 28,500 acre-feet of water per year to beneficial use for
the Project.
II. LISTING OF THE WEST COAST STEELHEAD TROUT
In August of 1997, the National Marine Fisheries
Service (“NMFS”) listed the West Coast steelhead trout as
an endangered species under the Endangered Species Act
(“ESA”), 16 U.S.C. §§ 1531–44. In its final listing, NMFS
determined that the primary cause of the decline of the
steelhead was “extensive loss of steelhead habitat due to
water development, including impassable dams and
dewatering.” Endangered and Threatened Species: List-
ing of Several Evolutionary Significant Units (ESUs) of
West Coast Steelhead, 62 Fed. Reg. 43,937, 43,949 (Aug.
18, 1997). As a result of the listing, Casitas, its officers,
and the BOR faced possible civil and criminal liability
under section 9 of the ESA if continued operation of the
CASITAS MUNICIPAL WATER DIST v. US 5
Project resulted in harm to the steelhead trout. See 16
U.S.C. §§ 1538(a)(1), 1540(a)–(b).
Following the NMFS listing, Casitas explored ways to
mitigate the impact of Project operations on the steelhead
population. A report by a consulting firm commissioned
by Casitas and other local water agencies concluded that
“[p]roviding access to habitats upstream of Robles Diver-
sion is one of the most important actions that can be
taken to improve steelhead populations in the Ventura
River.” Casitas V, 102 Fed. Cl. at 446–47. The report also
stated:
The best long-term passage can probably be pro-
vided by (1) constructing a fish ladder at Robles
Diversion, (2) installing a fish collection/bypass
facility in the canal, and (3) perhaps maintaining
a low flow passage channel . . . to Robles Diversion
to assist fish in low flow years.
Id. at 447.
Eventually, on March 31, 2003, NMFS issued a biolog-
ical opinion in which it concluded that construction and
operation of a fish ladder at the Robles Diversion Dam
would not jeopardize the continued existence of steelhead
trout, but might result in incidental take of the fish. 1 The
opinion thus included an incidental take statement reliev-
ing Casitas (the Project operator) and BOR (the Project
owner) of liability under the ESA if the two implemented
1 ESA makes it illegal to “take” any species listed as
endangered under the Act. 16 U.S.C. § 1538. “Take” is
defined as “harass, harm, pursue, hunt, shoot, wound,
kill, trap, capture, or collect, or to attempt to engage in
any such conduct.” Id. § 1532(19). An “incidental take” is
defined as a take that “result[s] from, but [is] not the
purpose of, carrying out an otherwise lawful activity
conducted by the Federal agency or applicant.” See 50
C.F.R. § 402.02; see also 16 U.S.C. § 1539(a)(1)(B).
6 CASITAS MUNICIPAL WATER DIST v. US
a set of nondiscretionary, reasonable, and prudent
measures designed to minimize the incidental take of the
steelhead. See 16 U.S.C. §§ 1539(a)(1)(B), (a)(2)(A). In
addition, the opinion called for a flow regime (“biological
opinion operating criteria” or “operating criteria”) that
would increase the amount of water to be bypassed by
Casitas during steelhead migration periods in order to
maintain an adequate flow of water in the Ventura River
for fish passage to upstream spawning sites. Under
protest, Casitas’s board of directors passed a resolution
implementing the biological opinion operating criteria on
April 9, 2003.
Casitas formally opened the Robles fish ladder facility
on December 9, 2004. The facility directs steelhead trout
moving downstream in the Ventura River into a diversion
flume, which then guides the fish into a ladder to prevent
them from entering the Robles-Casitas Canal. The ladder
also allows steelhead trout moving upstream to pass
around the Robles Diversion Dam. See Casitas Mun.
Water Dist. v. United States, 543 F.3d 1276, 1291 Fig. 2
(Fed. Cir. 2008) (diagram of the fish ladder facility).
III. CASITAS’S SUIT IN THE COURT OF FEDERAL CLAIMS
On January 26, 2005, Casitas filed suit in the Court of
Federal Claims. In its suit, Casitas asserted that, by
imposing the biological opinion operating criteria, the
United States had breached the 1956 Contract. In the
alternative, Casitas asserted that, by imposing the oper-
ating criteria, the United States had taken Casitas’s
property without just compensation, in violation of the
Fifth Amendment. Under its contract theory, Casitas
sought reimbursement of the approximately $9.5 million
that it had spent to build the fish ladder facility. Under
its takings theory, it sought compensation for the water it
claimed it had lost by the imposition of the operating
criteria.
CASITAS MUNICIPAL WATER DIST v. US 7
In due course, the government moved for summary
judgment on the breach of contract claim and for partial
summary judgment on the takings claim. On October 2,
2006, the Court of Federal Claims dismissed Casitas’s
contract claim. The court ruled that the costs associated
with the construction of the fish ladder facility were
operation and maintenance costs and thus not reimbursa-
ble under the Contract. Casitas Mun. Water Dist. v.
United States, 72 Fed. Cl. 746, 751 (2006) (“Casitas I”). In
addition, the court ruled that, even if the government had
breached the Contract, the sovereign acts doctrine shield-
ed it from liability. Id. at 755. 2
In a subsequent decision, issued on March 29, 2007,
the Court of Federal Claims addressed the government’s
motion concerning Casitas’s takings claim. Casitas Mun.
Water Dist. v. United States, 76 Fed. Cl. 100 (2007) (“Ca-
sitas II”). To resolve the takings issue, the government
accepted for purposes of its motion Casitas’s characteriza-
tion of its property right. Specifically, the government
accepted Casitas’s claim that it possessed the right to
divert 107,800 acre-feet of water per year from the Ventu-
ra River and the right to put 28,500 acre-feet of water to
beneficial use each year. For purposes of summary judg-
2 Under the sovereign acts doctrine, “‘the United
States[,] when sued as a contractor[,] cannot be held liable
for an obstruction to the performance of the particular
contract resulting from its public and general acts as
sovereign.’” Yankee Atomic Elec. Co. v. United States, 112
F.3d 1569, 1574 (Fed. Cir. 1997) (quoting Horowitz v.
United States, 267 U.S. 458, 461 (1925). The doctrine
recognizes that “[t]he two characters which the govern-
ment possesses as a contractor and as a sovereign cannot
be thus fused; nor can the United States while sued in the
one character be made liable in damages for their acts
done in the other.” Yankee Atomic, 112 F.3d at 1574(quoting Jones v. United States, 1 Ct. Cl. 383, 384 (1865)).
8 CASITAS MUNICIPAL WATER DIST v. US
ment, the government challenged only Casitas’s claim
that diversion of water from the Robles-Casitas Canal
constituted a physical taking, arguing that any taking
that took place was regulatory in nature. For its part,
Casitas conceded that, if the alleged taking were deemed
to be regulatory, it could not prevail. 3 In other words, to
dispose of the case in the trial court on summary judg-
ment, the parties asked the court to decide only the
question of whether a diversion of water from the Robles-
Casitas Canal would constitute a physical or a regulatory
taking. Ruling for the government, the court held that
the alleged taking was regulatory because it involved the
government’s restraint on Casitas’s use of its property
rather than the government’s takeover of the property
(either by physical invasion or by directing the property’s
use to its own needs). Casitas II, 76 Fed. Cl. at 105–06.
Based upon the parties’ stipulations, it therefore entered
summary judgment for the government on Casitas’s
takings claims and dismissed the complaint. Casitas
appealed the dismissal of its complaint to this court.
IV. THE FIRST APPEAL
On appeal, we affirmed the dismissal of Casitas’s
breach of contract claim in Casitas I. Casitas Mun. Water
Dist. v. United States, 543 F.3d 1276, 1288 (Fed. Cir.
2008) (“Casitas III”), reh’g and reh’g en banc denied, 556
F.3d 1329 (Fed. Cir. 2009) (“Casitas IV”). However, we
reversed the dismissal of Casitas’s takings claim in Ca-
3 Casitas’s concession was prompted by the fact
that a plaintiff pursuing a regulatory takings claim must
demonstrate a significant loss in value relative to the
property as a whole. See Penn Cent. Transp. Co. v. City of
New York, 438 U.S. 104, 130-31 (1978). No such limita-
tion exists, however, in the case of a physical taking.
Lorreto v. Teleprompter Manhattan CATV Corp., 458 U.S.
419, 436 (1982).
CASITAS MUNICIPAL WATER DIST v. US 9
sitas II and remanded the case for further proceedings on
that claim. Casitas III, 543 F.3d at 1296–97.
Addressing the question of whether the alleged taking
in this case was physical or regulatory, we noted that the
government had admitted, for purposes of summary
judgment, that Casitas had a property right in the water
diverted from the Ventura River, Casitas III, 543 F.3d at
1288, and that the government admitted that it had
required Casitas to build the fish ladder facility, id. at
1290. We also noted the government’s admission that the
operation of the fish ladder caused water, which prior to
the ladder’s construction flowed into Casitas Reservoir via
the Robles-Casitas Canal, to be physically diverted away
from the canal and into the fish ladder. Id. at 1291.
Specifically, we noted the government’s admission that
the operation of the fish ladder includes closing a gate
located in the Robles-Casitas Canal, and that the closure
of the gate causes water that would have gone into Ca-
sitas Reservoir via the Robles-Casitas Canal to be divert-
ed into the fish ladder. Id. “These admissions,” we
stated, “make clear that the government did not merely
require some water to remain in stream, but instead
actively caused the physical diversion of water away from
the Robles-Casitas Canal—after the water had left the
Ventura River and was in the Robles-Casitas Canal—and
towards the fish ladder, thus reducing Casitas’s water
supply.” Id. at 1291–92 (footnote omitted). In conclusion,
we held that “[t]he government requirement that Casitas
build the fish ladder and divert water to it should be
analyzed under the physical takings rubric.” Id. at 1296.
We thus reversed the decision of the Court of Federal
Claims in Casitas II and remanded the case to the court
for further proceedings. We closed the opinion with a
footnote stating:
We have reversed the grant of summary judgment
in favor of the government based solely upon our
determination that the governmental actions at
10 CASITAS MUNICIPAL WATER DIST v. US
issue in this case are properly analyzed under a
physical taking rubric. On remand, after receiv-
ing the views of the parties and ruling on any
matters left open during the summary judgment
proceedings, the Court of Federal Claims will be
in a position to determine the ultimate question of
whether a taking occurred in this case.
Id. at 1297 n.17.
The government moved for panel rehearing and
rehearing en banc. Concurring in the order denying the
motions, the Casitas III majority explained that, because
of the government’s concessions, it had not undertaken to
decide “if, under California law, there can be a right to
divert water.” Casitas IV, 556 F.3d at 1331 n.1. The
panel majority further explained: “Nor did we undertake
to reach a conclusion about whether Casitas will experi-
ence a reduction in the amount of water that it can bene-
ficially use. These concerns and others are undoubtedly
critical to the ultimate outcome of Casitas’s action, but
they are not before us in this appeal.” Id.V. PROCEEDINGS ON REMAND FOLLOWING THE FIRST APPEAL
On remand, the Court of Federal Claims held a trial
on Casitas’s takings claim. At the trial, Casitas alleged
that the operation of the fish ladder facility at the Robles
Diversion Dam had annually deprived it of 3,492 acre-feet
of water previously granted it by the State of California.
Casitas V, 102 Fed. Cl. at 451. Following the trial, the
court issued a lengthy opinion in which it held that Ca-
sitas’s claim was not ripe. Id. at 471–72. Accordingly, the
court directed the dismissal of Casitas’s complaint with-
out prejudice, stating that the complaint could be “refiled
(without the payment of additional filing fees) if and when
plaintiff’s action accrues consistent with this decision.”
Id. at 478.
CASITAS MUNICIPAL WATER DIST v. US 11
The court’s dismissal was based upon its conclusion as
to the scope of Casitas’s property right. The government
argued that Casitas had neither an absolute, unqualified
right to divert a specific quantity of water at all times, nor
a possessory right to all of the water it diverted into the
Robles-Casitas Canal and stored in Casitas Reservoir. Id.
at 452–53. Under California law, the government urged,
Casitas had a compensable property interest only in the
amount of water it put to beneficial use, regardless of the
amount of water it may have diverted or stored. Id. at
453. According to the government, in order to establish a
taking, Casitas had to demonstrate that the specific
amount of water actually taken otherwise would have
been put to beneficial use. Id. For its part, Casitas
contended that, under the License, it possessed the right
to divert up to 107,800 acre-feet of water annually and
that this right was integral to its ability to meet its cus-
tomers’ needs. In Casitas’s view, the court was required
to focus not on the effect of the operating restrictions on
beneficial use of the water, but, rather, on the effect of
those restrictions on Casitas’s total water supply (includ-
ing the water stored in the reservoir). Id.
The Court of Federal Claims viewed the dispute
between the parties as boiling down to one question:
“[D]oes California law recognize a right to divert inde-
pendent of a right to beneficial use?” Id. The court an-
swered this question in the negative. First, the court
stated that it did not read California law as recognizing a
separate, independently compensable right to divert
water. Id. Instead, the court concluded, “the only com-
pensable right under California water law is a right to
beneficial use.” Id. at 455. Noting that under the License
Casitas’s water right was “‘limited to the amount [of
water] actually beneficially used for the stated purposes,’”
the court stated that “[t]he holder of an appropriated
water right . . . receives nothing more than this right to
beneficial use and possesses no legal entitlement to water
12 CASITAS MUNICIPAL WATER DIST v. US
that is diverted but never beneficially used.” Id. at 454–
55. Thus, the court held that, in order to succeed on its
claim, Casitas had to “demonstrate an interference
with . . . beneficial use in order to establish a Fifth
Amendment taking of its property.” Id. at 455.
Addressing the dispute within this framework, the
Court of Federal Claims concluded that Casitas’s right to
“beneficial use [would be] affected when its customers
(whether actual or potential) receive less water as a result
of the biological opinion operating criteria than they
otherwise would have received under the [prior operating]
criteria.” Id. at 470. Because the court found, based upon
the record before it, that Casitas had failed to show that
the biological opinion operating criteria had thus far
resulted in any reduction of water deliveries, it held that
Casitas’s takings claim was not yet ripe. Id. at 471–72. It
therefore ordered Casitas’s complaint dismissed without
prejudice. Id. at 478. Casitas now appeals that dismissal.
We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).
DISCUSSION
I. FIFTH AMENDMENT TAKINGS
The Fifth Amendment to the Constitution proscribes
the taking of private property “for public use, without just
compensation.” U.S. Const. amend. V, cl. 4. When evalu-
ating whether governmental action constitutes a taking, a
court employs a two-part test. First, the court determines
whether the claimant has identified a cognizable Fifth
Amendment property interest that is asserted to be the
subject of the taking. Second, if the court concludes that a
cognizable property interest exists, it determines whether
the government’s action amounted to a compensable
taking of that interest. See, e.g., Palmyra Pac. Seafoods,
L.L.C. v. United States, 561 F.3d 1361, 1364–65 (Fed. Cir.
2009); Am. Pelagic Fishing Co. v. United States, 379 F.3d
1363, 1372 (Fed. Cir. 2004); see also Air Pegasus of D.C.,
CASITAS MUNICIPAL WATER DIST v. US 13
Inc. v. United States, 424 F.3d 1206, 1212–13 (Fed. Cir.
2005).
“Because the Constitution protects rather than cre-
ates property interests, the existence of a property inter-
est is determined by reference to existing rules or
understandings that stem from an independent source
such as state law.” Phillips v. Wash. Legal Found., 524
U.S. 156, 164 (1998) (internal quotations and citation
omitted); see also Maritrans Inc. v. United States, 342
F.3d 1344, 1352 (Fed. Cir. 2003) (noting that “‘existing
rules and understandings’ and ‘background principles’
derived from an independent source, such as state, feder-
al, or common law, define the dimensions of the requisite
property rights for purposes of establishing a cognizable
taking”).
II. THE POSITIONS OF THE PARTIES
Under the License, Casitas is permitted to divert
water from the Ventura River for storage in Casitas
Reservoir. Casitas V, 102 Fed. Cl. at 446. In that regard,
Article X, section 2, of the California Constitution pro-
vides as follows: “The right to water or to the use or flow
of water in or from any natural stream or watercourse in
this State is and shall be limited to such water as shall be
reasonably required for the beneficial use to be
served . . . .” Cal. Const. art. X, § 2. Likewise, under the
California Water Code, “[t]he right to the water or to the
use or flow of water in or from any natural stream or
watercourse in this State is and shall be limited to such
water as shall be reasonably required for the beneficial
use to be served.” Cal. Water Code § 100 (West 2012); see
Erickson v. Queen Valley Ranch Co., 22 Cal. App. 3d 578,
584 (1971) (“Plaintiff’s existing appropriative right is
measured not by the flow originally appropriated and not
by the capacity of the diversion ditch, but by the amount
of water put to beneficial use at the delivery point plus
such additional flow as is reasonably necessary to deliver
14 CASITAS MUNICIPAL WATER DIST v. US
it.”). On appeal, Casitas and the government agree that,
under California law, beneficial use is the proper measure
of Casitas’s property right. See Appellant’s Br. 39 (“Bene-
ficial use is the measure of the water right, and any water
license that purported to authorize diversion of water
without a sufficient showing of beneficial use would, in
fact, be invalid.”); Appellee’s Br. 21–22 (“California law
recognizes a right not to the use of water per se but only to
its ‘beneficial use.’”). Where Casitas and the government
part company is on the question of what, under the facts
of this case, beneficial use encompasses. 4
A. CASITAS’S POSITION
Preliminarily, Casitas asserts that, in Casitas V, the
Court of Federal Claims ignored the statement in Casitas
III that “the governmental actions at issue in this case are
properly analyzed under a physical taking rubric,” 543
F.3d at 1297 n.17. Casitas states that the court’s holding
that a taking did not occur when water was diverted away
from the canal “cannot be squared with [the alleged
holding in Casitas III] that the physical taking occurred
at the Robles facility, and consisted of the Government’s
appropriation for public use of water belonging to Ca-
sitas.” Appellant’s Br. 28. Casitas contends that, had the
court applied the “physical taking rubric, as instructed” in
Casitas III, it would have concluded that Casitas had
experienced a total water loss of 3,492 acre-feet per year.
Id. at 27–28. According to Casitas, this loss comprises
1,915 acre-feet to operate the fish ladder and 1,577 acre-
feet to operate and maintain the screen in the fish ladder
4 Stockton East Water District has submitted an
amicus brief in support of Casitas, urging reversal of the
decision of the Court of Federal Claims. A similar amicus
brief has been submitted by the Westlands Water District
and Sweetwater Company. The SWRCB and the Natural
Resources Defense Council have submitted amicus briefs
in support of the government, urging affirmance.
CASITAS MUNICIPAL WATER DIST v. US 15
that prevents fish from being swept into the Robles-
Casitas Canal. Id.Turning to the concept of beneficial use, Casitas
argues that the Court of Federal Claims erred in deter-
mining that, in this case, beneficial use does not encom-
pass the right to divert and store annually 107,800 acre-
feet of water, the amount set forth in the License. Id. at
22. Under California law, Casitas contends, when the
SWRCB issued the License, it necessarily determined
that Casitas’s right to divert and store water is for benefi-
cial use. Id. Citing California Water Code § 1610 (“the
board shall issue a license which confirms the right to the
appropriation of such an amount of water as has been
determined to have been applied to beneficial use”) and
Central Delta Water Agency v. State Water Resources
Control Board, 124 Cal. App. 4th 245 (2004) (stating at
260 that “[t]he Water Code . . . requires that the applicant
set forth and the Board determine the beneficial purpose,
place of use, amount of use and method of use to which
the appropriated water will be put”), Casitas states:
“There can be, quite simply, no variance between the
amount one is entitled to divert under a valid California
water license and the amount one beneficially uses: They
are the same thing.” Appellant’s Br. 39. Casitas thus
reasons that, “[b]y issuing a water license to Casitas, the
[Board] . . . has already determined that Casitas can
make beneficial use of 107,800 acre-feet of diversions per
year,” id. at 41, and that the License “represents the
[Board’s] determination that Casitas puts those quanti-
ties to beneficial use,” id. at 43.
Pointing to our determination in Casitas III that the
government actively caused the diversion of water away
from the Robles-Casitas Canal and towards the fish
ladder, thus reducing Casitas’s water supply, 543 F.3d at1291–92, Casitas argues that its takings claim has al-
ready accrued and is not dependent on some future water
loss. That is because, Casitas asserts, when the water
16 CASITAS MUNICIPAL WATER DIST v. US
was diverted “Casitas actually, physically lost water that
the Government appropriated—a taking of water that is
forever gone.” Appellant’s Br. 52.
Casitas further argues that its claim has accrued even
if one accepts the holding of the Court of Federal Claims
that a taking would only occur upon there being “an
impact on plaintiff’s ability to deliver water.” Casitas V,
102 Fed. Cl. at 473. Appellant’s Br. 52–53. Casitas urges
that “the facts demonstrate that the biological opinion
already reduced Casitas’s safe yield—that is, the water
that Casitas had available to deliver to its customers—by
an average 1,915 acre-feet per year.” Appellant’s Br. 54.
According to Casitas, that is the portion of Casitas’s water
that entered the fish ladder instead of remaining in the
canal to be transported to Casitas Reservoir for later
delivery to Casitas’s customers. Id. Casitas maintains
that this safe-yield amount is the amount of water that it
must have on hand in order to be able to serve its custom-
ers in periods of future drought. 5 See Oral Argument at
9:30–10:17, Casitas Mun. Water Dist. v. United States, No.
2012-5033 (Fed. Cir. Nov. 6, 2012), available at
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
12-5033.mp3.
Finally, relying on Lynch v. United States, 292 U.S.
571 (1934), and Lion Raisins, Inc. v. United States, 416
F.3d 1356 (Fed. Cir. 2005), Casitas claims that there was
a taking of a contract right, which it argues it possessed
under Article 4 of the 1956 Contract. Appellant’s Br. 49–
50. As noted above, Article 4 of the Contract states that
5 As noted by the Court of Federal Claims, the term
“safe yield” refers to “a commonly used water-planning
tool that attempts to limit delivery risk by calculating the
amount of water a project can safely deliver to its custom-
ers on an annual basis without drawing its reservoir down
to a dangerously low level at the end of a critical drought
period.” Casitas V, 102 Fed. Cl. at 462.
CASITAS MUNICIPAL WATER DIST v. US 17
Casitas “shall have the perpetual right to use all water
that becomes available through the construction and
operation of the Project.” Casitas contends that, “[b]y
appropriating 3,492 acre-feet of Ventura Project water,”
the government has taken this right of perpetual use.
Appellant’s Br. 49.
B. THE GOVERNMENT’S POSITION
The government argues that the Court of Federal
Claims did not err in dismissing Casitas’s takings claim
as unripe. The government contends that, under Califor-
nia water law, private rights in public waters are limited
to the right of use and that California law recognizes a
right not to water’s use per se, but only to its beneficial
use. Appellee’s Br. 23–24. According to the government,
the court correctly held that Casitas “must demonstrate
an interference with th[e] beneficial use” authorized in
the License “in order to establish a Fifth Amendment
taking of its property.” Id. at 26.
Turning to Casitas’s principal argument, the govern-
ment urges us to reject the contention that the License
gives Casitas a compensable property right to divert
water, even if, as the government sees it, that water is not
applied to a beneficial use. The government points to the
fact that the License enumerates particular purposes for
which the Ventura River’s water may be used: “Municipal,
Domestic, Irrigation, Industrial, Recreational and
Standby Emergency uses.” Id. at 27. In the government’s
view, the License then places “an overarching caveat on
the scope of the license” when it states that “the amount
of water to which this right [of use] is entitled and hereby
confirmed is limited to the amount beneficially used for
the stated purposes” and when it further limits the right
of use by providing that “the amount of water put to
beneficial use * * * shall not exceed 28,500 acre-feet per
year.” Id. In addition, the government asserts that,
according to its own records, for the 40-year period from
18 CASITAS MUNICIPAL WATER DIST v. US
1966 to 2006, Casitas has used, on average, only 17,543
acre-feet of water per year. Id. at 28.
The government also urges us to reject the proposi-
tion—advanced by Casitas—that, in granting the License,
the Board necessarily determined that Casitas could put
to beneficial use 107,800 acre-feet of water per year. Id.
The government contends that, since Casitas’s license
limits it to the beneficial use of 28,500 acre-feet per year,
it cannot divert 107,800 acre-feet per year to beneficial
use. Id. It further contends that the 107,800 acre-feet-
per-year figure in the License does not represent a guar-
antee as to beneficial use, but, rather, simply states the
maximum amount of water that Casitas may divert per
year. Id. at 28–30. In addition, the government argues
that Casitas is incorrect in contending that, in Casitas III,
we instructed the Court of Federal Claims to proceed on
remand on the basis that Casitas has a property interest
in the diversion of water. Id. at 33–34. In the govern-
ment’s view, Casitas III left open the critical question of
the scope of Casitas’s property interest, as evidenced by
the panel majority’s concurrence in the denial of rehear-
ing and rehearing en banc in Casitas IV. Id. at 35–37.
The government thus urges us to affirm the dismissal of
Casitas’s takings claim as unripe on the ground that there
has been no interference with Casitas’s right under the
License to beneficial use of diverted water.
As to actual accrual of the takings claim, the govern-
ment argues that, in situations where governmental
action and impingement on a compensable property
interest are not coincident, a takings claim does not
accrue until damages are apparent. Id. at 50–51. The
government also argues that, under a physical takings
rubric, a compensable taking “will not accrue unless and
until Casitas experiences a compensable harm in the form
of the loss of the beneficial use of water.” Id. at 58. The
government contends that the trial court’s finding that up
to this point there has been no encroachment on Casitas’s
CASITAS MUNICIPAL WATER DIST v. US 19
right to beneficial use is supported by the record. Id. at
41–49.
Lastly, the government asserts that Casitas has
waived its argument that it has suffered a taking of a
contractual right, by failing to raise the argument prior to
this appeal. Id. at 37.
III. ANALYSIS
A. STANDARD OF REVIEW
This court reviews legal conclusions by the Court of
Federal Claims de novo and factual findings for clear
error. Estate of Hage v. United States, 687 F.3d 1281,
1285 (Fed. Cir. 2012). The nature or scope of a compen-
sable property interest in a takings analysis is a question
of law. Tex. State Bank v. United States, 423 F.3d 1370,
1378 (Fed. Cir. 2005). In addition, whether the Court of
Federal Claims properly dismissed a complaint for lack of
subject matter jurisdiction also is a question of law.
Howard W. Heck and Assocs., Inc. v. United States, 134
F.3d 1468, 1471 (Fed. Cir. 1998) (citing Wheeler v. United
States, 11 F.3d 156, 158 (Fed. Cir. 1993)). Finally, the
Court of Federal Claims must address ripeness as a
“threshold consideration[]” before addressing the merits.
See Palazzola v. Rhode Island, 533 U.S. 606, 618 (2001).
B. APPLYING THE PHYSICAL TAKINGS RUBRIC
We first address Casitas’s argument that the Court of
Federal Claims did not follow this court’s prior holding
that, on remand after the first appeal, “[t]he government
requirement that Casitas build the fish ladder and divert
water to it should be analyzed under the physical takings
rubric.” Casitas III, 543 F.3d at 1296. As part of its
argument, Casitas repeatedly asserts that, in Casitas III,
we held that a taking had, in fact, already occurred based
on the diversion of water down the fish ladder:
20 CASITAS MUNICIPAL WATER DIST v. US
So the trial court’s contrary holding that “the tak-
ings claim does not accrue when the water is ac-
tually diverted,” and that Casitas’s claim is
therefore not ripe, cannot be squared with this
Court’s holding that the physical taking occurred
at the Robles facility, and consisted of the Gov-
ernment’s appropriation for a public use of water
belonging to Casitas.
Appellant’s Br. 28 (emphasis added); see also id. at 22
(“For what was taken in this case (as this Court held) was
a specific quantity of water that Casitas was entitled to
divert and store in its reservoir under the terms of its
License.”); id. at 27 (“This Court carefully explained that
the taking consists of the Government-required diversion
of water out of the Robles-Casitas canal and into the fish
ladder—an appropriation of Casitas’s water for a public
use . . . .”); id. at 36 (“The fact is that (as this Court held)
the physical appropriation of water belonging to Casitas
began when the fish ladder went into operation in 2005,
and the location of the taking was the Robles facility.”).
In support of its argument, Casitas highlights statements
from this court’s prior opinions that water diverted into
the canal “has become the property of Casitas” and that
“[t]he operation of the fish ladder diversion works thus
takes the property of Casitas.” Id. at 28 (quoting Casitas
IV, 556 F.3d at 1332); see also Appellant’s Br. 36–37
(quoting Casitas III, 543 F.3d at 1296, 1294, 1291). In
essence, Casitas argues that, in the first appeal, this court
determined that the diversion amounted to a physical
taking, and that the Court of Federal Claims thus erred
in not finding in Casitas’s favor on its takings claim on
remand.
Casitas’s argument fails, however, because it reads
too broadly from our prior opinions. Any statements in
Casitas III or Casitas IV addressing the scope of Casitas’s
property interest in the diverted water must be read in
light of (1) the government’s temporary concessions for
CASITAS MUNICIPAL WATER DIST v. US 21
purposes of summary judgment and Casitas III’s review of
the grant of summary judgment based upon those conces-
sions; and (2) the narrowness of the issue actually ad-
dressed in Casitas III. We discuss these points in turn.
First, as noted above, in order to put the case in a
posture for summary judgment, the government made
certain temporary concessions regarding the scope of
Casitas’s property interest. Casitas III, 543 F.3d at 1297
n.17 (“[T]he government made certain conditional conces-
sions in order to put the case in a posture for summary
judgment.”); Casitas V, 102 Fed. Cl. at 450 (“[D]efendant
filed a summary judgment motion in which it accepted,
for the purposes of the motion, plaintiff’s characterization
of its property right.”). Specifically, the government
conditionally accepted Casitas’s assertion that it had a
right to divert up to 107,800 acre-feet of water per year
and may put up to 28,500 acre-feet of water per year to
beneficial use. Casitas III, 543 F.3d at 1288. Since they
were integral to the Court of Federal Claims’s decision in
Casitas II, this court relied on those concessions through-
out the first appeal. Casitas III, 543 F.3d at 1288; Casitas
IV, 556 F.3d at 1331. The government’s concessions (and
this court’s reliance on those concessions) only persisted,
however, through the first appeal. See Begnaud v. White,
170 F.3d 323, 327 (6th Cir. 1948) (noting that concessions
made solely for the purposes of summary judgment are
“no longer effective” if the motion is denied). We thus find
misplaced Casitas’s reliance on statements from Casitas
III and Casitas IV based on the government’s concessions
for purposes of summary judgment.
The narrowness of the issues addressed in the first
appeal also undercuts Casitas’s position. Prior to the
instant appeal, this court has neither substantively
considered the scope of Casitas’s rights in the diverted
water nor addressed whether a taking actually occurred.
Casitas IV, 556 F.3d at 1331 n.1 (“Because of the govern-
ment’s concessions, the majority did not undertake to
22 CASITAS MUNICIPAL WATER DIST v. US
decide if, under California Law, there can be a right to
divert water.”); Casitas III, 543 F.3d at 1297 n.17 (“On
remand, . . . the Court of Federal Claims will be in a
position to determine the ultimate question of whether a
taking occurred in this case.”). Instead, as acknowledged
by Casitas, the only currently relevant issue before this
court in the first appeal was the trial court’s determina-
tion, at summary judgment, that a regulatory takings
analysis rather than a physical takings analysis should
apply to Casitas’s claim. Appellant’s Br. 20 (“In fact, the
entire reason behind the first appeal was to determine
whether a physical or regulatory takings analysis ap-
plied.”); see Casitas III, 543 F.3d at 1288–97. The precise
scope of Casitas’s property right was, in fact, not ad-
dressed until the trial leading to the opinion now on
appeal. Casitas V, 102 Fed. Cl. at 445 n.2 (“Although an
examination of the nature of a claimant’s property inter-
est is generally a threshold inquiry in a takings case, that
issue was not addressed as part of the earlier proceedings
before this court.”).
For these reasons, any statements in Casitas III or
Casitas IV seeming to characterize Casitas’s property
right or an alleged taking in no way bound the Court of
Federal Claims on remand, because those statements
were either based explicitly and solely on the govern-
ment’s now-obsolete concessions or related to issues not
actually addressed in the first appeal. See Begnaud, 170
F.3d at 327; Nat’l Am. Ins. Co. v. United States, 498 F.3d
1301, 1306 (Fed. Cir. 2007) (noting that the Court of
Federal Claims is not bound by statements “unnecessary
to the decision in the case”). Thus, on remand, the Court
of Federal Claims was correct to perform a full physical
takings analysis, beginning with an assessment of the
scope of Casitas’s right to the diverted water. See, e.g.,
Palmyra Pac. Seafoods, 561 F.3d at 1364–65. We now
address that assessment.
CASITAS MUNICIPAL WATER DIST v. US 23
C. THE SCOPE OF CASITAS’S PROPERTY INTEREST—
CALIFORNIA LAW
In the opinion currently on appeal, the Court of
Federal Claims held that “the only compensable right
under California water law is a right to beneficial use”
and that “[t]he holder of an appropriated water right, in
other words, receives nothing more than this right to
beneficial use and possesses no legal entitlement to water
that is diverted but never beneficially used.” Casitas V,
102 Fed. Cl. at 455. We agree with that holding and with
the court’s assessment of the scope of Casitas’s rights.
Under well-established California law, “the right of
property in water is usufructuary, and consists not so
much of the fluid itself as the advantage of its use.” Eddy
v. Simpson, 3 Cal. 249, 252 (1853), quoted in United
States v. State Water Res. Control Bd., 182 Cal. App. 3d
82, 100 (Cal. Ct. App. 1986). In other words, a party
having a right to use a given amount of California surface
water does not have a possessory property interest in the
corpus or molecules of the water itself. See People v.
Shirokow, 26 Cal. 3d 301, 307 (1980) (“Both riparian and
appropriative rights are usufructuary only and confer no
right of private ownership in the watercourse.”); Kidd v.
Laird, 15 Cal. 161, 180 (1860) (stating that a right to use
“carries with it no specific property in the water itself”);
Allegretti & Co. v. Cnty. of Imperial, 138 Cal. App. 4th
1261, 1271 n.5 (Cal. Ct. App. 2006) (“Water rights carry
no specific property right to or in the corpus of any wa-
ter.”); Cent. and W. Basin Water Replenishment Dist. v. S.
Cal. Water Co., 109 Cal. App. 4th 891, 905 (Cal. Ct. App.
2003) (“Water rights holders have the right to take and
use water but they do not own the water and cannot
waste it.”) (internal quotations omitted). The California
Water Code reflects this view, clarifying that it should not
be “construed as giving or confirming any right, title, or
24 CASITAS MUNICIPAL WATER DIST v. US
interest to or in the corpus of any water.” Cal. Water
Code § 1001 (West 2012).
Despite this preclusion on a private entity’s owner-
ship of the corpus of water itself, appropriative water
rights (such as those at issue here) have long been recog-
nized by California courts as private property subject to
ownership and disposition. Thayer v. Cal. Dev. Co., 164
Cal. 117, 125 (1912) (“Under the law of this state as
established at the beginning, the water-right which a
person gains by diversion from a stream for a beneficial
use is a private right, a right subject to ownership and
disposition by him, as in the case of other private proper-
ty.”); Wells A. Hutchins, The California Law of Water
Rights 120–21 (1956); see also State Water Res. Control
Bd., 182 Cal. App. 3d 82, 100 (Cal. Ct. App. 1986) (“It is
equally axiomatic that once rights to use water are ac-
quired, they become vested property rights. As such, they
cannot be infringed by others or taken by government
action without due process and just compensation.”). In
other words, although a private entity cannot own water
itself, the right to use that water is considered private
property. The California Water Code reflects this legal
framework and describes appropriative rights as being
“acquired.” Cal. Water Code § 102 (West 2012) (“All
water within the State is the property of the people of the
State, but the right to the use of water may be acquired by
appropriation in the manner provided by law.”) (emphasis
added).
Although appropriative rights are viewed as property
under California law, those rights are limited to the
“beneficial use” of the water involved. See Hufford v. Dye,
162 Cal. 147, 153 (1912) (“It is the well-settled law of this
state that one making an appropriation of the waters of a
stream acquires no title to the waters but only a right to
their beneficial use and only to the extent that they are
employed for that purpose.”). This principle, set forth
explicitly in the California Constitution, limits water
CASITAS MUNICIPAL WATER DIST v. US 25
rights holders to the use of the amount of water “reasona-
bly required for the beneficial use to be served . . . .” Cal.
Const. art. X, § 2. The same limitation is found in the
California Water Code. See Cal. Water Code § 100 (West
2012) (adopting the constitutional language related to
beneficial use); id. § 1240 (limiting appropriations to
“some useful or beneficial purpose”). California courts
have found the beneficial use limitation a valid exercise of
state power to regulate water rights for public benefit and
have deemed it an “overriding constitutional limitation”
on those rights. State Water Res. Control Bd., 182 Cal.
App. 3d at 105–06.
D. THE SCOPE OF CASITAS’S PROPERTY INTEREST—
ANALYSIS
With that background, we now turn to the scope of
Casitas’s property interest, addressing first Casitas’s
argument that the License demonstrates that the SWRCB
determined Casitas can make beneficial use of, and thus
has a potentially compensable property right in, 107,800
acre-feet of water per year. Appellant’s Br. 38–48. Ca-
sitas relies on Central Delta Water Agency v. State Water
Resources Control Board, 124 Cal. App. 4th 245 (Cal. Ct.
App. 2004), to argue that, because the Board is the entity
that determines “the estimated amount which can be put
to beneficial use,” “[b]y issuing a water license to Casitas,
the [Board] . . . has already determined that Casitas can
make beneficial use of 107,800 acre-feet of diversions per
year.” Appellant’s Br. 41.
In Central Delta, various parties challenged a decision
of the SWRCB issuing permits for the appropriation of
water for a wetlands project and certifying a final envi-
ronmental impact report for the project. Central Delta,
124 Cal. App. 4th at 252. In so doing, the parties argued
that the Board’s decision was defective because the per-
mits, which allowed the impoundment of water in a
reservoir, failed to identify any actual beneficial use (or
26 CASITAS MUNICIPAL WATER DIST v. US
estimated amounts of beneficial use) for the impounded
water. Id. at 253. Agreeing, the appeals court found that
the Board’s general statement of potential use did not
satisfy its statutory and constitutional obligations to
determine “that an actual, intended beneficial use, in
estimated amounts [would] be made of the impounded
waters.” Id. The court therefore reversed the decision of
the trial court sustaining the Board’s decision and ordered
the court to set aside the permits and to direct the Board
to require amendment of the permit applications. Id.
In this case, in the License, the Board set a limit of
107,800 acre-feet per year on the total amount of water to
be diverted by Casitas. At the same time, it limited the
amount of water that could be put to beneficial use to
28,500 acre-feet per year, thereby satisfying the require-
ments set forth in Central Delta. It is the License’s diver-
sion limitation—set at 107,800 acre-feet per year—that
Casitas seeks to change from a limitation to a right, i.e., a
right to beneficial use. Central Delta, however, does not
stand for the proposition that the presence of a maximum
diversion amount in a water license demonstrates that
the Board has determined that that maximum amount
can be applied to beneficial use. In addition, here the
Board expressly limited the amount “placed to beneficial
use” at only 28,500 acre-feet per year. 6 Central Delta does
not help Casitas.
6 Framing this argument slightly differently, Ca-
sitas asserts that “[t]here can be, quite simply, no vari-
ance between the amount one is entitled to divert under a
valid California water license and the amount one benefi-
cially uses: They are the same thing.” Appellant’s Br. 39.
In essence, Casitas argues that two alleged predicates—
(1) the License gives Casitas a right to divert 107,800
acre-feet of water per year and (2) in a valid license,
rights are limited to beneficial use—lead to a conclusion
that Casitas’s alleged right to divert 107,800 acre-feet of
CASITAS MUNICIPAL WATER DIST v. US 27
We now turn to the question of whether the storage of
water or diversion to storage of water, in and of them-
selves, constitute beneficial uses. We conclude that they
do not. The Court of Federal Claims correctly determined
that the state of California does not categorize storage or
diversion for storage, in and of themselves, as beneficial
uses. See Lindblom v. Round Valley Water Co., 178 Cal.
450, 456 (1918) (“Storage of water in a reservoir is not in
itself a beneficial use. It is a mere means to the end of
applying the water to such use.”); see also Bazet v. Nugget
Bar Placers, 211 Cal. 607, 618 (1931) (same). The lan-
guage of the License supports this interpretation of the
beneficial use limitation, clearly identifying only “with-
drawal from storage”—in contrast to “collection to stor-
age”—as a beneficial use. J.A. 7781.
Casitas relies on Meridian v. City and County of San
Francisco, 13 Cal. 2d 424, 449 (1939), for that case’s
statement that “the storage of water for the purposes of
flood control, equalization and stabilization of flow and
future use, is included within the beneficial uses to which
the waters of the rivers and streams of the state may be
put” under the doctrine of beneficial use. Appellant’s Rep.
Br. 15–16 (emphasis added). In Meridian, the California
Supreme Court denied a downstream landowner’s request
to enjoin the upstream governmental entities’ proposed
increase in storage because “the water allotted to the
plaintiff by the trial court is abundantly sufficient in
amount to supply all of its needs and . . . no substantial
damage to its land has in that respect resulted by reason
of the city’s storage.” Meridian, 13 Cal. 2d at 451. The
water per year must therefore be for beneficial use. This
argument fails, however, because diversion and beneficial
use are not the same thing and because the License
clearly entitled Casitas only to the amount “placed to
beneficial use,” an amount limited to 28,500 acre-feet per
year.
28 CASITAS MUNICIPAL WATER DIST v. US
issue in Meridian was whether the state had the right to
divert to storage water “in excess of the present and
future needs” of downstream appropriators. Id. at 444.
The court found that when such an excess exists, “it is for
the state to say whether, in the conservation of this
natural resource in the interest of the public, the diver-
sion is excessive.” Id. at 450. Thus, Meridian stands for
the narrow proposition that government diversion of
excess water for storage is not improper when holders of
downstream rights are not affected. Meridian does not,
however, stand for the broader proposition asserted by
Casitas—i.e., that an appropriative rights holder’s diver-
sion to storage of water that may be put to “future use”
necessarily amounts to a beneficial use, in and of itself.
In addition to seeking to expand its limit on beneficial
use from 28,500 acre-feet per year to 107,800 acre-feet per
year, Casitas asserts that its compensable property right
is not limited to water put to beneficial use. See Appel-
lant’s Rep. Br. 5 (“[T]he Government cannot prevent
Casitas from accessing water it was entitled to divert
under its California permit without paying just compen-
sation.”); see also id. at 6–7; Appellant’s Br. 44–48. We
find this argument unpersuasive. Pertinent sections of
the California Water Code, relevant case law, and the
language of the License itself demonstrate that the water
rights conveyed to Casitas in the License were limited to
the water beneficially used.
Section 1240 of the California Water Code states that
“[t]he appropriation must be for some useful and benefi-
cial purpose, and when the appropriator or his successor
in interest ceases to use it for such purpose the right
ceases.” Cal. Water Code § 1240 (West 2012). Section
1627 of the Water Code similarly limits an appropriative
rights holder, stating that “[a] license shall be effective for
such time as the water actually appropriated under it is
used for a useful and beneficial purpose in conformity
with this division but no longer.” Id. § 1627 (emphasis
CASITAS MUNICIPAL WATER DIST v. US 29
added); see also id. § 1390 (stating a similar limitation for
“permits”). The License includes language from § 1627,
J.A. 7783, and also states that “the amount of water to
which this right is entitled and hereby confirmed is lim-
ited to the amount actually beneficially used for the stated
purposes” of “Municipal, Domestic, Irrigation, Industrial,
Recreational and Standby Emergency uses.” J.A. 7781
(emphasis added). The License then explicitly limits
“[t]he total amount of water to be placed to beneficial use”
to 28,500 acre-feet per year. Id.
As discussed above, under California law, the concept
of beneficial use provides an “overriding constitutional
limitation” on a party’s water rights. State Water Res.
Control Bd., 182 Cal. App. 3d at 105. In addition, the
California Supreme Court has stated that an appropriat-
ive rights holder is entitled only to the amount of water
beneficially used, not necessarily the entire amount
diverted:
The quantity of water to which a person becomes
entitled by such diversion is not determined by
the capacity of the ditch diverting the water; the
extent of the right gained by the diversion is lim-
ited to the amount of water applied to a beneficial
use, which has been interpreted to mean the
amount actually used and reasonably necessary
for a useful purpose to which the water has been
applied.
Haight v. Costanich, 184 Cal. 426, 431 (1920). It is the
holder’s rights (as limited by beneficial use) that repre-
sent the property interest subject to a potential govern-
ment taking. State Water Res. Control Bd., 182 Cal. App.
3d at 100. Based upon this authority, we agree with the
Court of Federal Claims’s holding that “the only compen-
sable right under California water law is a right to benefi-
cial use.” Casitas V, 102 Fed. Cl. at 455.
30 CASITAS MUNICIPAL WATER DIST v. US
The cases cited by Casitas do not undermine this
conclusion. Contrary to Casitas’s argument, Appellant’s
Rep. Br. 5–6, United States v. Gerlach Live Stock Co., 339
U.S. 725 (1950), did not remove the beneficial use limita-
tion to California water rights. Instead, that opinion
explicitly noted that the beneficial use limitation, as
stated in the California Constitution, “is not transgressed
by the awards in question which only compensate for the
loss of actual beneficial use.” Gerlach, 339 U.S. at 751–
52. At issue in Gerlach was whether the government’s
action preventing spill over from Friant Dam from reach-
ing the claimants’ land amounted to “waste or unreasona-
ble use or unreasonable method of use or unreasonable
method of diversion of water.” Id. at 730, 752. If the prior
spill over had been deemed “waste,” the claimants could
not have received compensation for its loss. Id. at 752.
Because the spill over would have benefited claimants’
land, however, the Supreme Court found it was not waste
but beneficial, and therefore compensable. Id. at 752–55.
Thus, Gerlach stands for the same proposition stated by
the Court of Federal Claims—that “the only compensable
right under California water law is a right to beneficial
use.” Casitas V, 102 Fed. Cl. at 455.
This court’s recent decision in Estate of Hage v. Unit-
ed States, 687 F.3d 1281 (Fed. Cir. 2012), also does not
support Casitas’s argument. Casitas relies on general
language from that decision noting that “the government
could not prevent [claimants] from accessing water to
which they owned rights without just compensation.”
Appellant’s Rep. Br. 13–14. The outcome of the case,
however, contradicts Casitas’s argument. In Estate of
Hage, this court found no physical taking had occurred
because, applying a beneficial use limitation under Neva-
da law similar to the one at issue here, the court deter-
mined that the claimants could not show “that the
government actually took water that they could have put
to beneficial use.” Estate of Hage, 687 F.3d at 1290.
CASITAS MUNICIPAL WATER DIST v. US 31
Thus, Estate of Hage further confirms that under a bene-
ficial use limitation, such as that applied under California
law, compensable water rights are limited to water bene-
ficially used.
We have considered and find unpersuasive Casitas’s
additional arguments on this issue. For these reasons, we
agree with the Court of Federal Claim’s holdings regard-
ing the scope of Casitas’s property interest. Casitas V,
102 Fed. Cl. at 455.
E. ACCRUAL OF CASITAS’S TAKINGS CLAIM
We now address the trial court’s determination that
Casitas’s takings claim has not accrued and will not
accrue until Casitas can demonstrate that the biological
opinion operating criteria have caused Casitas to deliver
to its customers less water than it otherwise would have
delivered. Casitas V, 102 Fed. Cl. at 470–74. As noted
above, the second step in a takings analysis is to assess
whether governmental action amounted to a compensable
taking of the identified property interest. See, e.g., Pal-
myra Pac. Seafoods, 561 F.3d at 1364–65. For the rea-
sons discussed below, we conclude that the Court of
Federal Claims did not err in finding that the diversion of
the required amount of water down the fish ladder does
not currently impinge on Casitas’s compensable property
interest—the right to beneficial use.
The Court of Federal Claims determined that Casitas
“can establish a compensable injury when . . . diversions
resulting from the biological opinion criteria reduce the
water project’s safe yield to the point when deliveries are
affected—i.e., to the point when use becomes constrained.”
Casitas V, 102 Fed. Cl. at 473. Casitas asserts that “even
accepting the trial Court’s theory that the taking occurs
when there is an ‘impact on plaintiff’s ability to deliver
water,’ Casitas’s claim is ripe.” Appellant’s Br. 52–53; see
also id. at 54–55. Casitas fails, however, to identify any
way that “deliveries are affected.” See Casitas V, 102 Fed.
32 CASITAS MUNICIPAL WATER DIST v. US
Cl. at 473. In other words, Casitas fails to demonstrate as
clearly erroneous the “evidence before the court . . . that
there has been no encroachment on plaintiff’s beneficial
use to date.” See id. at 470 (listing various factual find-
ings indicating that no encroachment has yet occurred).
Next, Casitas challenges the trial court’s test for
potential injury by asserting that the court “misapplied
this Court’s accrual cases, which make clear that the
triggering event for accrual (and statute of limitations) is
the governmental action that gives rise to the claim, and
not the damage that subsequently results.” Appellant’s
Br. 53. Casitas argues that the issuance of the biological
opinion in 2003 was the “sovereign act” that marked the
accrual of Casitas’s takings claim, making future at-
tempts to assert its claim after dismissal potentially
barred by the statute of limitations. Id. We disagree that
the court misapplied the relevant precedent in holding
that “there is no injury—and thus no accrual of plaintiff’s
taking claim—until plaintiff suffers an actual reduction in
beneficial use.” Casitas V, 102 Fed. Cl. at 474. In our
view, a compensable injury could not have occurred
because the act constituting a taking has not yet occurred.
“The Tucker Act, 28 U.S.C. §1491(a)(1), provides the
Court of Federal Claims with jurisdiction over takings
claims brought against the United States.” John R. Sand
& Gravel Co. v. United States, 457 F.3d 1345, 1354 (Fed.
Cir. 2006), aff’d 552 U.S. 130 (2008). “Pursuant to 28
U.S.C. § 2501, claims brought in the Court of Federal
Claims under the Tucker Act are ‘barred unless the
petition thereon is filed within six years after such claim
first accrues.’” Id. A claim under the Tucker Act, includ-
ing takings claims, “first accrues” “only when all the
events which fix the government's alleged liability have
occurred and the plaintiff was or should have been aware
of their existence.” Hopland Band of Pomo Indians v.
United States, 855 F.2d 1573, 1577 (Fed. Cir. 1988). The
act that causes accrual of a physical taking claim is the
CASITAS MUNICIPAL WATER DIST v. US 33
act that constitutes the taking. See Ingrum v. United
States, 560 F.3d 1311, 1314 (Fed. Cir. 2009) (“[A] claim
alleging a Fifth Amendment taking accrues when the act
that constitutes the taking occurs.”).
Casitas’s argument fails because it misidentifies the
issuance of the biological opinion as the act causing
accrual of its claim. As made clear in this court’s opinion
in Casitas III, however, any taking in this case would be
physical, not regulatory in nature. Casitas III, 543 F.3d
at 1296 (“The character of the government action was a
physical diversion for a public use—the protection of an
endangered species. The government-caused diversion to
the fish ladder has permanently taken that water away
from Casitas.”). Further, as noted above, the only diver-
sion relevant to the takings claim would be a diversion
that impinges on Casitas’s right to beneficial use. No
such diversion has yet occurred. Casitas V, 102 Fed. Cl.
at 470–74. It is this potential future diversion of water
(i.e., a diversion that impinges on Casitas’s right to bene-
ficial use) that, if and when it occurs, will begin the cas-
cade of “events which fix the government's alleged
liability” under Hopland Band. Because the act constitut-
ing a taking has not yet occurred, Casitas’s takings claim
has not yet accrued. See Ingrum, 560 F.3d at 1314. 7
Casitas relies on Estate of Hage v. United States,
supra. In that case, the Hages filed a complaint in the
Court of Federal Claims in 1991, alleging a physical
taking of water rights based on the construction of fences
around water sources on federal lands in which they held
7 In the language of the cases relied on by Casitas,
because there has not yet been any “government action”
constituting a taking, there cannot be any damages, let
alone those “complete and fully calculable.” Appellant’s
Br. 55 (quoting Goodrich v. United States, 434 F.3d 1329,
1336 (Fed. Cir. 2006), and Fallini v. United States, 56
F.3d 1378, 1382 (Fed. Cir. 1995), respectively).
34 CASITAS MUNICIPAL WATER DIST v. US
grazing permits. Estate of Hage, 687 F.3d at 1288–89.
The government had erected fences in 1981–82 and again
in 1988–90. Id. at 1289. The Court of Federal Claims
held that the construction of the fences amounted to a
physical taking, but did not specify which fences—those
erected in 1981–82, those built in 1988–90, or all—
constituted the taking. Id. This court dismissed as time-
barred any takings claim based on fences erected in 1981–
82, more than six years prior to the filing of the com-
plaint. Id.
Casitas argues that this application of the accrual
rule is proper, but that this rule would render its claim
time-barred if dismissed and later refiled. See Appellant’s
Rep. Br. 26. Estate of Hage does not, however, set forth a
rule that would preclude Casitas’s claim if refiled after an
alleged taking has actually occurred. In Estate of Hage,
this court found any takings claim based on the fences
erected in 1981–82 time-barred because the construction
of those fences constituted the physical act causing accru-
al of any portion of the takings claim related to those
fences. Estate of Hage, 687 F.3d at 1289. In contrast,
here, a diversion constituting a physical taking—i.e., one
impinging on Casitas’s right to beneficial use—has not yet
occurred and may never occur. A takings claim based on
an act that has yet to occur cannot be time-barred.
In conclusion, we hold that the Court of Federal
Claims properly found that the diversion of water down
the fish ladder to date has not impinged on Casitas’s
compensable property interest—the right to beneficial
use. If and when Casitas has sufficient evidence to file a
complaint alleging a compensable injury, Casitas’s tak-
ings claims will have accrued.
F. CASITAS’S CONTACT-BASED TAKINGS ARGUMENT
We need not address the substance of Casitas’s con-
tract-based takings argument because we agree with the
government that Casitas failed to raise the argument
CASITAS MUNICIPAL WATER DIST v. US 35
until this appeal. See San Carlos Apache Tribe v. United
States, 639 F.3d 1346, 1354–55 (Fed. Cir. 2011) (“Because
the Tribe did not raise this argument before the Court of
Federal Claims, it is waived on appeal.”). Neither Ca-
sitas’s proposed conclusions of law, J.A. 1880–81, nor its
post-trial briefs, J.A. 11253 ¶ 22 & J.A. 11355 ¶ 22, actu-
ally set forth its current argument—that the Contract
was a property interest subject to a contract-based taking.
The post-trial briefs merely recite Article 4 of the 1956
Contract in a block quote. The proposed conclusions of
law provide little more, adding only a quote from this
court’s opinion in Casitas III, noting that Article 4 “consti-
tutes a promise by the United States that Casitas shall
have the perpetual right to water made available by the
construction and operation of the Project . . . .” J.A. 1880–
81 (quoting Casitas III, 543 F.3d at 1286).
CONCLUSION
For the foregoing reasons, we affirm the decision of
the Court of Federal Claims dismissing Casitas’s com-
plaint without prejudice.
AFFIRMED
COSTS
Each party shall bear its own costs.