As we have been reporting this week, three cases being argued in December at the Federal Circuit attracted amicus briefs. One of those cases is City of Fresno v. United States. In this case, the Federal Circuit will review a judgment by the Court of Federal Claims ruling on cross-motions for summary judgment related to breach of contract and Fifth Amendment takings claims. The plaintiffs argue on appeal that the trial court erred both in concluding that the contractual water rights in question were subordinate to the rights of others during a drought and by dismissing takings claims for lack of standing. This is our argument preview.
The plaintiffs–the City of Fresno, and 25 “Friant Contractors” and “Growers”–argue in their opening brief that the Court of Federal Claims erred in dismissing their breach of contract and Fifth Amendment takings claims. They contend the lower court’s finding that their contract rights were “subordinate . . . at all times” is wrong because it contradicts the “plain language” of the relevant agreement. They argue the government “promised Friant Contractors that it would not deliver to the Exchange Contractors waters of the San Joaquin River—at any time, in any amount—unless and until legally obligated by the terms of the Exchange Contract.” As a result, the plaintiffs argue, “any amount of San Joaquin River water delivered” by the government to the “Exchange Contractors” that “exceeds its legal obligation” is a breach of the “Friant Contracts.” They explain that, contractually, the government is “only ever required to deliver waters of the San Joaquin River to the Exchange Contractors under Article 4 . . . in the case of an interruption of the delivery of substitute water,” and, they argue, waters from the San Joaquin River may not serve as “substitute water” for this purpose. In this way, the plaintiffs assert the Friant Contractors’ rights to the water are not “subordinate” to the Exchange contracts. The plaintiffs also claim the “trial court’s holding that the Government is immune from liability because it acted reasonably” is incorrect. They also argue the trial court erred in dismissing the Growers’ and Friant Contractors’ takings claims for lack of standing. They contend, not only do the Growers have an “equitable and beneficial interest” in the water, but also that not allowing the Contractors to “bring these taking claims in a representative capacity on behalf of their Growers directly contravenes established California law.”
The government, in its response brief, argues the “trial court did not err in granting summary judgment on appellants’ breach of contract claim or by dismissing appellants’ takings claim.” It contends it “did not breach any duties owed to the Friant Contractors by delivering the available San Joaquin River-sourced water to the Exchange Contractors in the historic drought year of 2014.” The government argues the Friant Contracts indicates “the Friant Contractors’ rights are ‘subject to’ to the terms of the Exchange Contract,” including those that provide for substitute water to be delivered per the Exchange Contract. It argues “’substitute water’ is ‘all water delivered hereunder . . . regardless of source.’” The government further contends that, because it acted reasonably during the time of the drought and the contract “provides immunity for damages arising out of the ‘actions taken by the Contracting Officer to meet legal obligations’ during a ‘Condition of Shortage,’” it is entitled to immunity. Moreover, it asserts, the trial court correctly dismissed the takings claims because the appellants do not hold water rights under the law. In particular, the government alleges, “none of the appellants are entitled to more than is specified in the Friant Contracts.”
In their separate response brief, various defendant-intervenors argue the trial court “properly entered summary judgment for defendants and defendant-intervenors on plaintiffs’ breach-of-contract claim.” They assert “the Friant Contract explicitly states that plaintiffs’ contractual right to receive water” Reclamation is “’subject to,’ i.e., subordinate to, the Exchange Contractors’ rights under the Exchange Contract.” They argue the Friant Contract provides immunity to reclamation “for any shortage in the amount of water it had available for delivery to plaintiffs that is caused either by drought or . . . to comply with legal obligations.” As a result, they argue, the action taken by the government in 2014 “was not remotely arbitrary, capricious, or unreasonable,” and so immunity exists. The defendant-intervenors further contend the plaintiffs’ arguments surrounding subordination and “substitute water” are meritless based on the plain language of the Friant Contract. Finally, they argue that, because the plaintiffs don’t have “property right in water received” from reclamation, neither the Growers nor their representatives have standing “to maintain (or have maintained on their behalf) a takings claim.”
In their reply brief, the plaintiffs suggest “the pivotal issue to be determined in this appeal is whether the Exchange Contract required” the delivery “to the Exchange Contractors all available waters of the San Joaquin River in 2014.” If not, they argue, there was a breach of contract. And, they argue, “the Government fails to identify a term in the Exchange Contract that required” the delivery of “all waters of the San Joaquin River to the Exchange Contractors.” They assert that 2014 was the first time the government “delivered all available San Joaquin River water to the Exchange Contractors, leaving the Friant landowners . . . with no Friant Division water to put to beneficial use on their land.” Plaintiffs argue this action was “contrary to California law and the federal Reclamation Act, . . . resulting in the unconstitutional taking of their property rights.”
The Pixley Irrigation District and three other groundwater sustainability agencies (GSAs) filed an amicus brief supporting the plaintiffs and reversal. They express concerns over the “devastating effects” the government’s reallocation of water had in “areas that were just embarking on sustainable groundwater management,” including areas subject to their planning authorities. The GSAs argue the government’s actions, if left uncorrected, “will have a lasting negative effect on the region served by the GSA Amici, including the farmer landowners and the disadvantaged communities served by their agencies.”
This case will be argued on Thursday, December 7. We will report on developments.