In a case that could reshape water rights and property laws across the American West, the City of Fresno and several Central Valley irrigation districts have petitioned the Supreme Court to review a dispute involving water deliveries, the Bureau of Reclamation, and a contentious property rights question. At the heart of the matter is whether Reclamation’s 2014 decision to withhold contracted water deliveries to growers in the Central Valley region constitutes a Fifth Amendment “taking” of the growers’ property rights, for which they must be compensated.
The case hinges on the operation of the Central Valley Project (CVP), the largest reclamation project authorized under the Reclamation Act of 1902. The CVP serves California’s Central Valley, a region renowned for its agricultural productivity, supporting thousands of growers who produce over 250 crops. The project, originally initiated by the state of California, was assumed by the federal government in 1935 and is currently operated by Reclamation. It employs twenty dams and reservoirs, eleven power plants, and hundreds of miles of major canals to meet the area’s irrigation needs.
The dispute arises from the complex web of contracts governing water deliveries in the region. In 1939, Reclamation entered into the Exchange Contract with water-rights holders on the San Joaquin River, purchasing most of their water rights but reserving certain rights for critical years. Later, Reclamation entered into the Friant Contract, obligating it to deliver specified amounts of water to entities within the Friant Division, including the City and various irrigation districts. The Friant Contract is subject to the terms of the Exchange Contract, meaning Reclamation’s duties to the Exchange Contractors take precedence in critical years.
In 2014, during a severe drought, Reclamation informed the Exchange Contractors that it would exercise its authority to use their reserved rights, providing substitute water as required by the Exchange Contract. Consequently, Reclamation informed the Friant Division that it would not supply them with any water that year other than the minimum needed for public health and safety. In response, the City and other entities within the Friant Division filed a lawsuit against Reclamation, arguing that the federal government had inappropriately “taken” their property rights and requesting monetary compensation.
The Court of Federal Claims initially heard the case. The plaintiffs argued that Reclamation had breached the Friant Contract by failing to make contracted water deliveries and that the water users in the Friant Division were the beneficial owners of the water delivered by Reclamation, entitling them to compensation for the alleged taking. However, the court disagreed, ruling that the Friant Contract’s subordination to the Exchange Contract meant that Reclamation was required to satisfy the terms of the Exchange Contract before it could satisfy the terms of the Friant Contract. Therefore, Reclamation had not violated the Friant Contract when it failed to make the required water deliveries in 2014.
The plaintiffs’ takings claim was also dismissed. The court held that the water users in the Friant Division did not hold any property rights in the water deliveries they receive from Reclamation and, for that reason, could not bring a takings claim against the government. This decision has significant implications for farmers and ranchers throughout the country, as it could affect how water rights and property laws are interpreted and applied in the context of federal water delivery projects.
Should the Supreme Court agree to hear this matter, the outcome could have far-reaching consequences for water management and property rights in the American West. The case raises important questions about the balance between federal water delivery obligations and the property rights of water users, particularly in the face of increasing water scarcity and competing demands for this vital resource. As the legal battle unfolds, the agricultural community and policymakers will be watching closely to see how the highest court in the land addresses these critical issues.