State Fears Ruling’s Effect on Environmental Water Policy

State officials are urging the Bush administration to fight a court ruling that would force the federal government to pay Central Valley farmers $26 million for water diverted to environmental protections -- opening the door to a wave of similar claims.

Although the core of the ruling came down nearly a year ago, Bush administration officials have yet to signal whether they will appeal the case. They say a settlement is possible.

If the administration lets the decision stand, state officials warn, it could create a precedent that would make it prohibitively expensive to enforce water quality rules and fish protections.

“We’re concerned that if the case is not overturned, decades of hard work at recognizing the importance of the environment [in water policy] is going to get thrown out the window,” said Richard Katz, a member of the State Water Resources Control Board. “To lose this case or let it stand would be a devastating setback for the environment and water quality in California.”

The state concerns are bipartisan. Last week, the water board, representing the Schwarzenegger administration, wrote to three Bush Cabinet members, asking them to appeal the case and shift it to the California Supreme Court.

A month ago, Democratic Atty. General Bill Lockyer made a similar request, saying the ruling had wrongly interpreted fundamental aspects of California law dealing with the public trust doctrine.

“We just want it made very clear to the people in Washington that it’s a bipartisan effort in California and a lot of people will be watching carefully,” Katz said.

U.S. Department of Interior Solicitor Sue Ellen Wooldridge said Monday she did not know whether the case would be appealed.

“I don’t think that’s been decided yet,” she said.

But she added that “a settlement is a possibility in the case.”

The court decision came in a lawsuit filed on behalf of Central Valley irrigation districts and farmers by Marzulla & Marzulla, a husband-and-wife law firm in Washington, D.C., that is a leader in the property rights movement. Nancie Marzulla founded Defenders of Property Rights, an organization that counted Gale Norton among its legal advisors before she became U.S. secretary of the Interior.

In a series of rulings, a federal claims court judge concluded that when federal fishery protections forced the cutback of state water deliveries to Central Valley irrigation districts during the drought of the early 1990s, it amounted to a taking under the federal Constitution. The government, he concluded, owed the districts $14 million plus interest and legal fees -- an amount that attorneys in the case say would total about $26 million.

The attorney fees are still being negotiated and a final judgment has not yet been issued in the case. When it is, the government will have 60 days to appeal.

The ruling, by Judge Paul Wiese, is already being cited in other cases, although it has been criticized in law review articles.

“It seems bizarre in the extreme for the administration to be thinking about settling the case,” said John D. Echeverria of Georgetown University’s Environmental Law & Policy Institute. “As a practical matter, it would send a powerful message within the federal family and the federal courts on this issue.... The administration would be opening the floodgates to a whole series of claims.”

Echeverria said nearly a dozen current cases across the West involve water-related takings claims, including two others filed by the Marzulla firm in California.

California officials are particularly concerned with the ruling’s potential effect on state law.

“The decision itself has flaws on its face,” said state Deputy Atty. Gen. Clifford Lee. “It would make the state’s authority to manage resources in the public interest in many cases prohibitively expensive.”

In previous federal cases, when farmers or irrigation districts have challenged reduced water deliveries stemming from environmental regulations, courts have found that Endangered Species Act protections trumped their contract rights.

But to the applause of property rights advocates, Wiese concluded in this case that if the government wanted to hold back water for fish, it had to pay. In doing so, the judge essentially endowed the irrigation districts -- the end users of the water -- with a property right to the water.

That, state attorneys say, flies in the face of California water law, under which the state Department of Water Resources holds the rights to the water it diverts for farm and municipal use.