## Facts

- California’s State Water Project (SWP) and the federal Central Valley Project (CVP) coordinated pumping from the Sacramento–San Joaquin Delta and delivered water to users under water service contracts.
- Plaintiffs were California water districts and agricultural water users who contracted for specified quantities and delivery schedules of SWP/CVP project water.
- Federal fishery agencies issued biological opinions under the Endangered Species Act (ESA) to protect the winter-run Chinook salmon and delta smelt.
- ESA-driven operating restrictions limited the time and manner of Delta pumping, leaving water in the system to benefit protected fish and reducing water available for contractual delivery.
- Plaintiffs alleged they were deprived of the beneficial use of a quantifiable amount of water they otherwise would have received, and sought just compensation under the Fifth Amendment Takings Clause.
- The case was decided on cross-motions for summary judgment as to liability only.

## Issues

1. Whether plaintiffs had a compensable property interest in the beneficial use of a specific, quantifiable volume of water under their contracts and California law.
2. Whether ESA-based pumping restrictions constituted a taking, rather than a noncompensable frustration of contract expectations.
3. If a taking occurred, whether it was properly characterized as a physical taking or a regulatory taking.
4. Whether California limitations (public trust, reasonable use, nuisance) so qualified plaintiffs’ interests that no compensable taking occurred absent a state-law determination.

## Decision

- The Court of Federal Claims granted plaintiffs’ motion for summary judgment on liability and denied the government’s cross-motion.
- The court held plaintiffs possessed a compensable property interest in the contractual right to receive and beneficially use a specified volume of project water.
- The court determined the ESA restrictions effected a compensable physical taking by preventing use of water that otherwise would have been delivered and rendering the relevant usufructuary right valueless.
- The court rejected the argument that the claim sounded only in contract and that sovereign regulatory action could not support takings liability when the affected interest arose through contracts.
- The court held California public trust, reasonable use, and nuisance doctrines did not negate compensation because no competent state authority had made a determination curtailing plaintiffs’ rights.

## Legal Principles

- Contract-based entitlements may constitute protected property interests when they are tied to an identifiable, quantifiable resource interest (here, the beneficial use of a stipulated volume of water), not merely abstract contractual expectations.
- Government action that prevents the use of a specific quantity of water and effectively reallocates that water to another use can be treated as a physical taking when it deprives the holder of practical, beneficial use.
- The government’s exercise of sovereign regulatory authority can support takings liability even when the affected property interest arises through contracts; contractual relationships do not provide categorical immunity from the Takings Clause.
- State law defines and limits water-use rights, but asserted state-law limitations (public trust, reasonable use, nuisance) must be applied through appropriate state decisionmakers before they can be treated as reducing the compensable scope of the right for federal takings analysis.
- The government may pursue endangered-species protection, but it may not place the full cost of that protection on a discrete group by appropriating their protected property interests without just compensation.

## Conclusion

The court held that ESA-driven operational restrictions reducing SWP/CVP contract deliveries took plaintiffs’ protected property interests in the beneficial use of a specific quantity of water, constituting a compensable physical taking, and that state-law limitation doctrines did not bar compensation absent a prior state determination curtailing those rights.


Tulare Lake Basin Water Storage District v. United States, 49 Fed. Cl. 313 (Ct. Fed. Cl. 2001)