[00:00:00] Speaker 02:
We have six cases on the calendar this morning from six different tribunals.

[00:00:18] Speaker 02:
One from the claims court, one from the court of international trade, one from the district court,

[00:00:24] Speaker 02:
And three cases that have been submitted in the briefs will not be argued from the trademark board, from the patent board, and from the Merit Systems Protection Board.

[00:00:36] Speaker 02:
Our first case is the United Water Conservation District versus the United States, 2023-1602.

[00:00:45] Speaker 02:
Mr. Murray.

[00:01:00] Speaker 05:
Good morning.

[00:01:00] Speaker 05:
I may have pleased the court.

[00:01:01] Speaker 05:
And just a simple matter of housekeeping to try to keep that we've got United Water Conservation District on one side, the United States on the other.

[00:01:08] Speaker 05:
I'm going to refer to my United Water Conservation District as United, as we did in the papers, the briefs, and the complaint.

[00:01:15] Speaker 05:
And the government, I'll refer to the United States as the government to try to keep as few Uniteds flying around as possible.

[00:01:21] Speaker 02:
We are united in accepting your proposal.

[00:01:24] Speaker 05:
Thank you.

[00:01:25] Speaker 05:
So the question before the court in this appeal is whether United pled a physical takings or a claim or a regulatory takings claim.

[00:01:35] Speaker 05:
And the answer to that question is controlled by two key Supreme Court precedents.

[00:01:40] Speaker 05:
The first is Cedar Point nursery, which is the precedent in which the Supreme Court fairly recently in the last five years or so

[00:01:47] Speaker 05:
It described the essential test of whether something is a physical taking or a regulatory taking.

[00:01:54] Speaker 05:
And what the court said there was that it doesn't matter whether if it's an appropriation of private property, it's a physical taking, period.

[00:02:03] Speaker 05:
It doesn't matter whether it's in the garb of a regulation or a statute.

[00:02:08] Speaker 05:
If it appropriates property, it's a physical taking.

[00:02:11] Speaker 05:
If it's merely restricting the use of the property rights holder's own property,

[00:02:15] Speaker 02:
Why isn't this premature as a regulatory taking because there was no application for a permit?

[00:02:23] Speaker 05:
If this were to be appropriately reviewed as a regulatory taking, it would be premature and we haven't disputed that.

[00:02:29] Speaker 05:
We dispute very much that the court applied the proper framework to this.

[00:02:35] Speaker 05:
This is a physical taking because it's an appropriation as we explained in our brief and I'll explain here today.

[00:02:41] Speaker 05:
leaving the water right in United's hands and allowing United to use the water, you know, restricting how United used water.

[00:02:48] Speaker 05:
It was allowed to divert.

[00:02:49] Speaker 05:
They were essentially appropriating the water that United otherwise had a proper, invested property right under California law to divert, appropriate, and put the beneficial use.

[00:02:58] Speaker 05:
And they were appropriating that and preventing us to have access to that water.

[00:03:02] Speaker 05:
And that's the second Supreme Court case that I think is really key here in controlling is the International Paper case, which

[00:03:08] Speaker 05:
is really, there's no daylight between the facts there and our case.

[00:03:14] Speaker 04:
I don't know, is that true?

[00:03:15] Speaker 04:
I mean, first of all, that's a really old case.

[00:03:17] Speaker 04:
So we're not, it didn't really confront the boundary between physical takings and regulatory takings.

[00:03:23] Speaker 04:
But wasn't one of the facts in the paper case that the water was completely diverted?

[00:03:29] Speaker 05:
Well, Your Honor, that's true.

[00:03:32] Speaker 05:
It was, they were diverted off.

[00:03:34] Speaker 04:
The restriction on the amount of water you were entitled to use, it was a complete diversion, which fits in line with those other dam cases also, where the water was completely cut off.

[00:03:44] Speaker 04:
Aren't the facts different here in that the water wasn't completely diverted.

[00:03:50] Speaker 04:
You were just required to not take a certain amount that would enable the fish ladder to be operable.

[00:03:58] Speaker 05:
Well, it's more than just the fish water, because, Your Honor, the water issue is essentially meant to, for the public purpose, the United States was claiming it, the government was claiming it, for the public purpose of enhancing fish migration downstream.

[00:04:11] Speaker 05:
And not just use of the water at the end.

[00:04:13] Speaker 04:
Sure, but we don't need to quibble about what the purpose was.

[00:04:15] Speaker 04:
We agree that the United States took an action.

[00:04:20] Speaker 04:
to somehow restrict your water use.

[00:04:23] Speaker 04:
I mean, they directed you to do something.

[00:04:25] Speaker 04:
You did it voluntarily.

[00:04:26] Speaker 04:
I assume they're going to talk about whether that was an actual taking or not.

[00:04:30] Speaker 04:
We'll get there when we don't.

[00:04:31] Speaker 04:
I don't know.

[00:04:31] Speaker 04:
I'm interested in talking about that with you.

[00:04:33] Speaker 04:
But to me, that kind of action seems to fall much more easily onto the regulatory side of restricting the use of your property rather than taking it away entirely, which is the paper case

[00:04:48] Speaker 04:
And the other case, I'm not quite as familiar with.

[00:04:52] Speaker 04:
That's a question of degree.

[00:04:57] Speaker 04:
And so again, the question is a question of degree.

[00:05:00] Speaker 04:
That often is the case with deciding whether it's a regulatory taking or a physical taking.

[00:05:05] Speaker 04:
But that's not what the Cedars-Fulton measuring case is.

[00:05:07] Speaker 04:
Can we talk about Casitas, because that's our main case on point.

[00:05:10] Speaker 04:
And Casitas seemed to base its finding that the water diversion there, for a very similar purpose, was based on a particular set of facts, which involved the water being actually placed in the Casitas Canal,

[00:05:25] Speaker 04:
and then physically diverted from that canal after it was placed there.

[00:05:29] Speaker 04:
You don't have that here, right?

[00:05:30] Speaker 04:
We don't have that here.

[00:05:31] Speaker 04:
You have upstream diversion.

[00:05:33] Speaker 05:
We have essentially an election of the use of the water at the point of diversion where the government says, we're claiming the use of this water for fish migration rather than allowing us, per our license right, to take and appropriate it.

[00:05:49] Speaker 04:
But it's not necessarily permanent.

[00:05:53] Speaker 04:
flow increases so that you don't they don't have to divert as much to continue their fish migration operations it may be that

[00:06:01] Speaker 04:
that you can get your full diversion?

[00:06:04] Speaker 04:
No, Your Honor, I don't think that's accurate, because let me try to... Oh, is that not true?

[00:06:10] Speaker 04:
Let me just actually, hypothetically, let's just assume that drought conditions disappear, the water flow in this river increases dramatically so that you can still get your full beneficial use or whatever.

[00:06:23] Speaker 04:
I fumble around the terms, but the full amount you're entitled to

[00:06:28] Speaker 04:
and the fish migration is still completely operable.

[00:06:32] Speaker 04:
In that case, they wouldn't be diverting as much.

[00:06:36] Speaker 04:
because you would be getting, or they wouldn't be lowering the amount you're entitled to.

[00:06:41] Speaker 04:
They'd still be taking as much as they needed to operate the migration, but you would be getting your full benefit.

[00:06:48] Speaker 05:
Your Honor, I don't think that's how this license works.

[00:06:51] Speaker 04:
The license essentially puts, I'm not talking about the license, I'm talking about the hypothetical fact that the water flow increases enough that both objectives can be maintained here without impinging upon either.

[00:07:05] Speaker 04:
that you'll get your full amount and the fish migration services, fish migration will have enough.

[00:07:12] Speaker 04:
I'm gonna start calling it fish ladder because I think it's easier and I understand it's a broader thing, but the fish ladder will have enough to be operable.

[00:07:18] Speaker 04:
If that's the case, there's no taking it out, right?

[00:07:21] Speaker 05:
And that counterfactual hypothetical, absolutely, that would likely be the case.

[00:07:25] Speaker 05:
But that's, we would have the opportunity to prove that.

[00:07:27] Speaker 04:
Why doesn't that take it away from

[00:07:30] Speaker 04:
the scenarios in the paper cases and the dam cases where it was at least either a temporary permanent diversion or a complete permanent diversion rather than just a limitation on the amount that's diverted.

[00:07:45] Speaker 05:
Because we have alleged that we have lost water in the years at issue here, and that that water was appropriated by the government due to these restrictions from our right to take it and give it to a public purpose.

[00:07:57] Speaker 05:
So we have a... Yes?

[00:07:59] Speaker 01:
Isn't it a matter of possession?

[00:08:01] Speaker 01:
I mean, in the international paper case, the water was in the international paper mill.

[00:08:07] Speaker 01:
They had taken possession of it, and then the government took it back.

[00:08:11] Speaker 01:
I mean, here, the water's in the river.

[00:08:13] Speaker 01:
The government's not taking possession of it.

[00:08:16] Speaker 01:
It's there in the river.

[00:08:16] Speaker 01:
It stays in the river.

[00:08:18] Speaker 01:
It's in the river.

[00:08:19] Speaker 01:
Doesn't there have to be an actual transfer or a transfer of possession?

[00:08:24] Speaker 01:
Or is possession a non-issue?

[00:08:27] Speaker 05:
Well, possession is not the issue.

[00:08:28] Speaker 05:
Really, that's part of the confusion the trial court had, I think, is that it didn't focus on the proper property right.

[00:08:33] Speaker 05:
The property right here is the right to use the water to put it to beneficial use.

[00:08:37] Speaker 05:
And so to get to your national paper.

[00:08:40] Speaker 01:
How do you have a taking without a transfer of possession?

[00:08:43] Speaker 05:
Because essentially the government denied us access to the water.

[00:08:47] Speaker 01:
If you look at the international paper case, if you look at the Dugan case and the Dengue case... The international paper, and there's a transfer of possession to international paper, and then the government takes it back.

[00:08:58] Speaker 05:
Not under the facts of the case is properly understood, Your Honor.

[00:09:02] Speaker 05:
Essentially, they cut off the water.

[00:09:04] Speaker 05:
If you look at the case, they talk about the direction was to cut off the water.

[00:09:08] Speaker 05:
So the analogy to international paper in our circumstance is that the canal, the power company's canal is like the Santa Clara River here.

[00:09:16] Speaker 05:
That was what the paper company was drawing water into its canal, which is analogous to United's diversion canal.

[00:09:23] Speaker 05:
That was analogous to our situation.

[00:09:26] Speaker 05:
And the government said, we're cutting off the water.

[00:09:28] Speaker 05:
And I take Judge Hughes' point that that was a complete cutting off of water.

[00:09:32] Speaker 05:
But that's really a question of degree.

[00:09:34] Speaker 05:
If there's an appropriation, it's a per se physical taking.

[00:09:38] Speaker 01:
But my point is, in international paper, international paper had possession.

[00:09:44] Speaker 01:
The water was in their mill.

[00:09:46] Speaker 01:
It was in their canal.

[00:09:47] Speaker 01:
Here, the water is in the Santa Clara River.

[00:09:49] Speaker 01:
It never left the Santa Clara.

[00:09:50] Speaker 05:
Not in the period for which they asserted the takings claim.

[00:09:52] Speaker 05:
Again, they were temporarily allowed to run out their manufacturing of current stock.

[00:09:56] Speaker 05:
And then after that point, there were nine months where the government directive from the Secretary of War said, do not let them draw any water.

[00:10:04] Speaker 05:
So the period of issue in the actual takings claim that the Supreme Court found to be a physical taking in appropriation of the use right

[00:10:11] Speaker 05:
was there was no water in their canal.

[00:10:13] Speaker 05:
The power company said, you can't draw water because we have to use it all for power generation.

[00:10:19] Speaker 05:
So I think that's where the court got a little bit below, got a little bit turned around in that it sort of accepted the premise.

[00:10:26] Speaker 04:
The issue with the court below, and what I'm a little concerned that you're not addressing, is it tried to follow our Casitas case, which is the most relevant case on point and binds the lower court and binds us.

[00:10:40] Speaker 04:
And I don't understand how under a fair reading, the Casitas case, yours is not a regulatory taking because the Casitas case was very specific that the entire reason this was a physical taking as opposed to a regulatory taking was that the water had entered into the Casitas canal and was diverted from that.

[00:11:03] Speaker 04:
And I have some problems with casitas anyway.

[00:11:05] Speaker 04:
I'm not convinced that it's correct, but I'm bound by it, and I'm bound by the factual distinctions it made to conclude that that was a physical taking.

[00:11:14] Speaker 04:
And it relied very specifically on the fact that it entered the canal and was in the possession of the casitas people, and it was physically removed from their possession through

[00:11:26] Speaker 04:
the bypass to the fish ladder there.

[00:11:29] Speaker 04:
You agree that this is not the situation with yours.

[00:11:32] Speaker 04:
And if that's the basis for it to be a physical taking there, you don't have it, right?

[00:11:37] Speaker 05:
That's not the basis for physical taking.

[00:11:38] Speaker 04:
But, I mean, do you want to look at the language of the opinion and the re-hearing, the concurrence, the denial of re-hearing?

[00:11:45] Speaker 04:
Because it says overtly that that's the basis for the opinions.

[00:11:50] Speaker 05:
And that was before Cedar Point clarified that there's an appropriation as an appropriation period, whether it's a regulatory loss or not.

[00:11:58] Speaker 04:
And so I think that what the court was struggling with then... Are you saying that Cedar Point implicitly overruled casitas?

[00:12:04] Speaker 05:
What I'm saying, what we said in our briefs, is that CACEDAs could not overrule international paper.

[00:12:09] Speaker 05:
And international paper, the appropriation of the use right was- International paper is a case from what, like 1911 or 1913?

[00:12:16] Speaker 04:
It didn't even address any boundaries between regulatory takings and physical takings.

[00:12:21] Speaker 04:
There was very little regulatory state at all in 1911.

[00:12:25] Speaker 04:
We have a much healthier, robust,

[00:12:29] Speaker 04:
line of precedent from the Supreme Court about what constitutes a regulatory taking that we would look to and whether it would fall under that.

[00:12:37] Speaker 04:
And if you analyze it under that, it is a government action that limits the use of your property right.

[00:12:45] Speaker 04:
It doesn't take it away physically.

[00:12:47] Speaker 05:
But again, I think the way to visualize this, Your Honor, and hopefully this is helpful, is that if you look at the Freeman diversion, the water, the San Pedro River water that hits there, is essentially the whole of it in a year is a pie.

[00:13:01] Speaker 05:
And under our license rights and under operating conditions, the Freeman diversion is the device by which we divide that pie and take our slice.

[00:13:08] Speaker 05:
And essentially what the government did here is say, we think your slice of the pie is too much.

[00:13:13] Speaker 05:
And so we're going to take our own knife and say, you need to cut a piece of that pie piece in half, or cut it, and we're going to take that piece of the pie for the fish migration.

[00:13:24] Speaker 05:
And that's an appropriation.

[00:13:25] Speaker 05:
And again, it's not a complete appropriation of the total.

[00:13:28] Speaker 05:
We haven't alleged it's a complete appropriation.

[00:13:30] Speaker 05:
I see that I'm in my rebuttal time, so.

[00:13:34] Speaker 05:
We will save it for you.

[00:13:35] Speaker 02:
Yeah, thank you.

[00:13:37] Speaker 02:
And there's one piece.

[00:13:46] Speaker 00:
Good morning, Your Honors, and may it please the Court.

[00:13:48] Speaker 00:
I believe the Court has a complete and correct understanding of the case thus far.

[00:13:54] Speaker 00:
So if you don't mind, I'll just briefly review some of the... Well, can you address that slice of the pie argument?

[00:13:59] Speaker 04:
Because I think that's their most compelling point is that it's not just a restriction on use.

[00:14:05] Speaker 04:
It's taking a portion of their ownership.

[00:14:09] Speaker 04:
And so if a property owner had 50 acres and the government came in and said, we're taking 25, that's a physical taking, right?

[00:14:19] Speaker 04:
Yes.

[00:14:20] Speaker 04:
Right.

[00:14:20] Speaker 04:
And so what's the difference between that and this, where they're saying, we have a beneficial use interest and it's in water feed or something.

[00:14:30] Speaker 04:
I'm just going to call it water.

[00:14:31] Speaker 04:
They have a beneficial use in a certain amount of water.

[00:14:35] Speaker 04:
And you're saying, no, you can only take less water.

[00:14:38] Speaker 04:
What's the difference?

[00:14:39] Speaker 00:
I think you touched on it.

[00:14:41] Speaker 00:
I believe United's point is that they believe they've lost the water.

[00:14:47] Speaker 00:
as if they were entitled to particular molecules of water, and once those molecules pass them by, they could never get them back.

[00:14:54] Speaker 00:
So that, in their view, is a permanent loss.

[00:14:57] Speaker 00:
But you made the point that the river is dynamic, and the river is constantly gravity-fed and flowing.

[00:15:04] Speaker 00:
Therefore, just because this particular molecule passed by the canal doesn't mean that at some point more molecules can come, and the United can channel it into their system,

[00:15:15] Speaker 00:
and then divert it into their canal and then make use of it.

[00:15:18] Speaker 04:
So in your view, the analogy there to the actual land is you haven't taken any of their ownership right.

[00:15:25] Speaker 04:
You've just prevented them from enjoying the benefits of that ownership right to comply with the Endangered Species Act.

[00:15:35] Speaker 04:
And it may be under a regulatory claim that that's taking.

[00:15:38] Speaker 04:
But it's still a regulatory claim.

[00:15:40] Speaker 00:
Indeed.

[00:15:41] Speaker 00:
If anything, it's a restriction on use, and thus analyzed under a pencentral regulatory takings claim analysis.

[00:15:48] Speaker 04:
So I'm going to ask you a question, and you're not going to want to answer it or not.

[00:15:52] Speaker 04:
You don't have to if you don't want to.

[00:15:55] Speaker 04:
Do government agree with Casitas 1?

[00:16:01] Speaker 04:
I know you moved for rehearing, so apparently you had some issues with it.

[00:16:06] Speaker 04:
Let me ask you a different one.

[00:16:08] Speaker 04:
If CEDIS 1 is interpreted based upon its facts, which it's very clear in the opinion, and it's very clear even though it's not presidential, it's very clear from the opinion

[00:16:19] Speaker 04:
Concurring in the denial that it was the specific fact that the water entered the canal and was physically diverted from the canal after it was in the possession of casitas back to a fish pond.

[00:16:34] Speaker 04:
Under those facts, if that's the extent of what it can be a physical taking, that's still, I mean, I think the plaintiffs, the appellants have said, if that's not the system here.

[00:16:52] Speaker 04:
Correct, that is not the system.

[00:16:54] Speaker 04:
I'm just curious if you have a view about casitas, because if there's other scenarios where the facts there would still lead to physical takings claims coming out of these environmental species cases, if the diversion is not upstream like it is here, but is somehow within the private property owner's facilities.

[00:17:18] Speaker 04:
In someplace other than the canal?

[00:17:21] Speaker 04:
Well, anytime where the water has passed a line, I looked at the diagram in Cacetus, and it's not easy to read, but it looks to me like the water passes a line where it passes into the ownership of the Cacetus Canal instead of just the river.

[00:17:36] Speaker 04:
And the diversion happens after that.

[00:17:41] Speaker 04:
any other case where you have something like that with the water, like in this case, if the water had already been diverted into their canal, and you said build another canal from your facility to divert it back, under CACEDAS that would be a physical taking, right?

[00:18:00] Speaker 00:
Build another canal to divert the water from the first to,

[00:18:05] Speaker 04:
So they get it, it diverts into their facility.

[00:18:08] Speaker 04:
I don't, we don't have a map of their facility.

[00:18:11] Speaker 04:
Let's just assume it diverts into their facility somewhere and then they're allowed to send it out.

[00:18:15] Speaker 04:
However, if you said, well, we need to somehow deal with the fish problem and the way you should resolve it is after it's in your facility, build another,

[00:18:26] Speaker 04:
some kind of canal or something back to the river that's under your control.

[00:18:30] Speaker 04:
And then you can require them to divert certain amounts into that canal.

[00:18:35] Speaker 04:
That's the casitas fact.

[00:18:39] Speaker 00:
I am so sorry, and I'm not sure I'm following you because we're in milky waters.

[00:18:44] Speaker 00:
Instead of what they have now, you said, we don't like this setup.

[00:18:48] Speaker 04:
Build a setup just like... Oh, I see what you're saying.

[00:18:51] Speaker 04:
That's what I'm trying to say.

[00:18:53] Speaker 04:
I see, okay.

[00:18:53] Speaker 04:
And I see... I'm just trying to test, because I find, because he just president...

[00:18:59] Speaker 04:
I just don't know if there's other cases that have come back.

[00:19:03] Speaker 04:
We're bound by it.

[00:19:04] Speaker 00:
Oh, indeed.

[00:19:05] Speaker 00:
And that's my answer, is we're bound by casitas.

[00:19:08] Speaker 00:
But I think the point you're trying to make touches upon maybe some of the language in casitas that spoke about the fact that the government made, it was found that the government made casitas build the ladder.

[00:19:20] Speaker 00:
And I think if that's what you're touching on,

[00:19:24] Speaker 00:
I apologize, Your Honor, I don't want to repine at all.

[00:19:27] Speaker 00:
I just don't want to see my name in another decision because said counsel said this.

[00:19:31] Speaker 00:
But that's not the case here.

[00:19:33] Speaker 00:
So we need not even worry about it.

[00:19:35] Speaker 04:
And to the extent I don't know the exact nature of your... I guess what I'm also asking is I'm having a hard time looking at casitas and trying to decide

[00:19:48] Speaker 04:
beyond anything but just factual distinctions, how to distinguish the kind of regulatory action was taken in casitas that led to a physical taking can be distinguished from regulatory actions that accomplish the same exact purpose to be only regulatory takings.

[00:20:09] Speaker 04:
I think the distinction, go ahead.

[00:20:11] Speaker 04:
Can you give me,

[00:20:13] Speaker 04:
a rule to draw from Casitas that's not just, well, it's not the facts.

[00:20:17] Speaker 04:
And if you can't, that's fine.

[00:20:18] Speaker 04:
I can't get beyond it either.

[00:20:20] Speaker 04:
But I'm a little curious what the government's position is on the dividing line that Casitas sets out.

[00:20:28] Speaker 00:
There's not an official position, so I will opine.

[00:20:30] Speaker 00:
And I can only simply, because of the importance and weight that the courts seem to place on the canal,

[00:20:40] Speaker 00:
as being a location that perhaps indicates a point of possession.

[00:20:45] Speaker 00:
And the reason that's important is because when you have a usufructory water use holder, they don't possess the water.

[00:20:55] Speaker 00:
So if there's going to be, and Yolanda, you spoke to the element of possession, we've got to establish possession.

[00:21:00] Speaker 01:
Did I read the international paper right?

[00:21:03] Speaker 00:
I believe so.

[00:21:04] Speaker 00:
And just as an aside, please bring me back.

[00:21:07] Speaker 00:
As an aside, whether international paper is read as saying that the water was in the mill and the government made it be withdrawn or that the government prevented the water from ever entering the mill, we don't have that case here.

[00:21:20] Speaker 00:
So international paper, and indeed your honor, is another case.

[00:21:23] Speaker 00:
But it has no application here because the facts as alleged do not establish either circumstance.

[00:21:54] Speaker 01:
What was the impact of the letter?

[00:21:58] Speaker 01:
Was it raised below, or is it raised for the first time on appeal?

[00:22:01] Speaker 00:
Well, the letter is core.

[00:22:03] Speaker 00:
It's fundamental here, because it's the sole source of the alleged taking.

[00:22:07] Speaker 00:
And that's why I think it's an important question.

[00:22:11] Speaker 00:
Indeed.

[00:22:11] Speaker 00:
And below, we stated that the letter, if anything, it wasn't a final agency action.

[00:22:17] Speaker 00:
It was just a letter.

[00:22:18] Speaker 00:
So on that basis alone, what we alleged below was sufficient to say that this isn't a proper basis for a takings claim, because it's not a final agency action.

[00:22:28] Speaker 00:
We consider it to be a threshold issue with putting up fraud as an argument because, as I said, it is the sole government action that supposedly brought about this taking.

[00:22:40] Speaker 00:
But what we have to, in reading just the text of the letter, and so if the court wants to stick to solely the complaint and this letter, which is incorporated by reference by the complaint.

[00:22:52] Speaker 00:
So if you just look at those two documents, this court can determine that there is no sufficient

[00:22:58] Speaker 00:
that the facts alleged don't establish a plausible takings claim.

[00:23:03] Speaker 04:
And that's because the letter, for example, changed no legal obligation of... I'm a little confused by this argument.

[00:23:09] Speaker 04:
And let me see if I can kind of tease out what I hope you're arguing and what I hope you're not arguing.

[00:23:16] Speaker 04:
Because the government sees this as a regulatory taking.

[00:23:19] Speaker 04:
Correct.

[00:23:19] Speaker 04:
So your view clearly would be this can't be the source of a regulatory taking claim because there's no final agency action.

[00:23:26] Speaker 04:
Yes, yes, yes.

[00:23:27] Speaker 04:
And they agree with that.

[00:23:28] Speaker 04:
Yes.

[00:23:29] Speaker 04:
But if this was properly characterized as a physical taking, let's just assume this now, I know you disagree, why wouldn't this letter be sufficient to constitute agency action that led to a physical taking?

[00:23:44] Speaker 00:
A physical taker would require some sort of physical invasion.

[00:23:47] Speaker 04:
The hypothetical assumes that the action taken in response to this letter results in a physical taking.

[00:23:53] Speaker 04:
I want to debate whether it's taking or not now.

[00:23:56] Speaker 04:
I want to debate whether this letter

[00:23:59] Speaker 04:
can form the basis for physical taking because it seems to me your view in the brief was that it couldn't because it wasn't a final agency order and it was just a recommendation for what they should do.

[00:24:12] Speaker 04:
I get it if it's regulatory that's not enough.

[00:24:15] Speaker 04:
they can see that.

[00:24:16] Speaker 04:
But if it actually was a physical taking, why wasn't a letter from the government saying, do this, or we're going to sue you under the Environmental Species Act, sufficient to constitute a physical taking, to constitute sufficient agency action to be a taking?

[00:24:36] Speaker 00:
I hope I'm answering what upset you, but it's because it required no ouster, no seizure.

[00:24:43] Speaker 00:
No, no, no, no.

[00:24:43] Speaker 04:
It did require an ouster.

[00:24:45] Speaker 04:
Again, I'm not debating the merits of the taking claim.

[00:24:50] Speaker 04:
I'm trying to figure out if you think this letter in a physical takings context would constitute sufficient agency action to base a takings claim on.

[00:25:01] Speaker 04:
I just put my cards on the table.

[00:25:05] Speaker 04:
I don't see why you would ever argue that it's not because you want parties to voluntarily comply with enforcement orders, even if they lead to a takings claim, don't you?

[00:25:18] Speaker 04:
If you say, this endangers fish, you should do this.

[00:25:23] Speaker 04:
You're allowed to do that even if you're going to compensate them because it's taking their property.

[00:25:28] Speaker 04:
So you shouldn't want them to have to wait and undergo an enforcement action before it can constitute a takings claim.

[00:25:37] Speaker 04:
That's what I'm trying to get at.

[00:25:38] Speaker 04:
So assuming it's a takings, an actual physical takings, is the government's position that this letter nonetheless can't be the action that supports the takings claim?

[00:25:52] Speaker 04:
I'm not going to hold you.

[00:25:55] Speaker 04:
I'm asking this as a hypothetical.

[00:25:56] Speaker 04:
I'm not going to hold you.

[00:25:57] Speaker 04:
I was a government attorney.

[00:25:59] Speaker 04:
I know how hard it is to answer these hypotheticals.

[00:26:02] Speaker 04:
But as a policy matter, it can't be the case that this kind of letter, which is not just, oh, you might think about doing this.

[00:26:10] Speaker 04:
It's pretty strong.

[00:26:11] Speaker 04:
And do this, or we'll sue you.

[00:26:14] Speaker 04:
That that's an agency action, that if they comply with it and it meets the grounds for a physical taking, that's all they need, right?

[00:26:21] Speaker 00:
Your Honor, I am so sorry, but the reason I am so reluctant to just go ahead and agree with you is simply because I don't read that letter as being a mandate.

[00:26:33] Speaker 00:
OK, then let's add that to the hypothetical.

[00:26:35] Speaker 04:
The letter says, take this action or we'll sue you.

[00:26:40] Speaker 04:
Is that enough?

[00:26:42] Speaker 04:
You don't have to wait until they get sued and the agency says, yes, do this.

[00:26:48] Speaker 04:
Let me make it simple.

[00:26:49] Speaker 04:
A voluntary action, I think there's plenty of precedent on this, so I don't think you're giving up much.

[00:26:54] Speaker 04:
A voluntary action in response to a government demand that's accompanied by a threat of civil or even criminal enforcement is a sufficient agency action that can constitute a taking.

[00:27:08] Speaker 04:
Is it not?

[00:27:12] Speaker 00:
I believe so.

[00:27:14] Speaker 00:
OK.

[00:27:15] Speaker 03:
I'm not going to put that in.

[00:27:16] Speaker 00:
Don't you dare, please.

[00:27:19] Speaker 01:
I hope they don't.

[00:27:21] Speaker 01:
Let me ask a hypothetical, because I don't get to ask many hypotheticals at the district board.

[00:27:27] Speaker 01:
You've got a taxpayer, and they've got a bank account.

[00:27:30] Speaker 01:
And there's $100,000 in the bank account.

[00:27:34] Speaker 01:
The IRS says, this taxpayer owes us money in one situation

[00:27:39] Speaker 01:
the bank puts a hold on the money.

[00:27:41] Speaker 01:
It stays in the account, but the account holder can't access it.

[00:27:46] Speaker 01:
Their checks bounce.

[00:27:48] Speaker 01:
Their withdrawals are refused.

[00:27:50] Speaker 01:
The money never leaves the bank.

[00:27:52] Speaker 01:
But it stays in the bank account of the taxpayer.

[00:27:56] Speaker 01:
In another scenario, the IRS says, give me the $100,000.

[00:28:00] Speaker 01:
And the bank actually takes it out of the taxpayer's account

[00:28:07] Speaker 01:
Is one a regulatory taking and one a physical taking?

[00:28:10] Speaker 01:
Are they both the same type of taking?

[00:28:14] Speaker 01:
How do you know?

[00:28:17] Speaker 01:
Because money's fungible just like water's fungible.

[00:28:21] Speaker 01:
It's not that I have an interest in this bill or I have an interest in this molecule of water.

[00:28:26] Speaker 01:
It's money.

[00:28:26] Speaker 01:
It's water.

[00:28:27] Speaker 01:
In one case, it stays in the bank.

[00:28:30] Speaker 01:
In one case, it's taken out of the bank.

[00:28:32] Speaker 01:
Is that a fair analogy here?

[00:28:34] Speaker 00:
The circumstance in which one is dispossessed of something one owned, that would be akin to physical taking.

[00:28:46] Speaker 00:
But if it's just a restriction on use, meaning if, for example, in the example where the- I can't get it.

[00:28:53] Speaker 01:
Right.

[00:28:53] Speaker 01:
Right.

[00:28:54] Speaker 01:
I'm just as bored one way as I am by the way.

[00:28:56] Speaker 00:
You're limited on your use.

[00:28:59] Speaker 00:
There's a restriction.

[00:29:00] Speaker 00:
There's an interference with.

[00:29:02] Speaker 00:
there's a limitation on your use, which would be more of the regulatory.

[00:29:06] Speaker 00:
For some reason, this is harkening back to, I think it's horror in which the court indicated that the consequence of a government action may be the same, that the owner doesn't have the thing, but the court

[00:29:19] Speaker 00:
emphasize that it's the means, not just the end, that the court has to look at.

[00:29:24] Speaker 00:
So the question I, as I, the hypothetical I think you're posing is trying to look at the means that gets to the point where a claimant can say, but I don't have it in my hand.

[00:29:36] Speaker 02:
Your time has expired.

[00:29:40] Speaker 02:
Can I just ask her one more question?

[00:29:42] Speaker 02:
Well, one more question, and then I'd like to ask her, since she hasn't really had a chance to state her case, to give us a brief summary of your position.

[00:29:53] Speaker 04:
Okay.

[00:29:54] Speaker 04:
If regulation, even if it doesn't physically take the property, deprives the property owner of all economic use,

[00:30:06] Speaker 04:
then that's something that's analyzed under the regulatory takings framework and can still result in compensation, right?

[00:30:14] Speaker 00:
Yes, yes.

[00:30:18] Speaker 02:
Do you want to give us a brief summary of your position?

[00:30:21] Speaker 00:
I can.

[00:30:23] Speaker 00:
I can close with two points.

[00:30:24] Speaker 00:
Thank you, Your Honor, for the ability.

[00:30:26] Speaker 00:
It's simply that the facts alleged in the complaint do not establish they nips by way of its 2016 correspondence either commandeered or ousted or regulated any water in which United had a possessory ownership interest at this time of the taking.

[00:30:42] Speaker 00:
And two, the facts alleged fail to show that United no longer possesses its water right

[00:30:47] Speaker 00:
or any portion of its water right as it alleges in its reply brief.

[00:30:52] Speaker 02:
And for that reason, this Court should affirm.

[00:30:58] Speaker 05:
Thank you so much.

[00:31:05] Speaker 05:
I just want to address a few points on rebuttal.

[00:31:09] Speaker 04:
Can I get back to your pie analogy?

[00:31:11] Speaker 05:
Absolutely.

[00:31:11] Speaker 04:
I was trying to get there, your honor.

[00:31:12] Speaker 04:
Well, because I think, I mean, it's instructive, but I'm not sure it helps you that much.

[00:31:16] Speaker 04:
Because if you compare it to the real property analogy, they haven't permanently taken your ownership rights in this water.

[00:31:26] Speaker 04:
You still have them.

[00:31:28] Speaker 04:
If the water, again, if the water flow increased in a level that can accommodate your entire

[00:31:36] Speaker 04:
the fish fodder, then it would be increased.

[00:31:40] Speaker 05:
In that case, we wouldn't be able to prove an appropriation, but still, as the facility operates... You wouldn't be able to allege anything, because nothing would be taken.

[00:31:50] Speaker 05:
We would, Your Honor, because our license provides us the authority to divert under certain seasonal flows and certain cubic feet of water, and they basically compress that to say you can't draw under certain seasonal flow conditions.

[00:32:03] Speaker 04:
They actually haven't taken part of your license.

[00:32:06] Speaker 04:
They put a limitation on the use.

[00:32:09] Speaker 04:
Let me go back to the property analogy.

[00:32:14] Speaker 04:
If somebody has 50 acres and the government comes in and says we're taking 25 of these acres to build a dam, that's no doubt physical taking.

[00:32:23] Speaker 04:
Sure, yeah, absolutely.

[00:32:24] Speaker 04:
If they say, this is a wetland that has some kind of unique species in it, and you can't develop it because it will endanger the species habitat, but you nonetheless retain an ownership right.

[00:32:40] Speaker 04:
What is that?

[00:32:41] Speaker 05:
That's a regulatory taking.

[00:32:43] Speaker 04:
But again, I think you want to be- Because, one, they take away the property, and the second, they put a limitation on the use of the property.

[00:32:52] Speaker 05:
Ryan, it's important to understand though that the license right that conveys the vested property right under California law entitles United to withdraw a certain amount of water under certain conditions up to a certain number of acre feet per year.

[00:33:04] Speaker 03:
And so this is again where I get to this issue of whether the right... If they're not taking away that license or changing it, they're limiting the amount you can draw.

[00:33:13] Speaker 03:
And if that changes, you can get it back.

[00:33:16] Speaker 05:
Again, they are limiting and utilizing the complaint and the facts as they stand before this court are that we lost 50,000 acre feet of water because we would have been able to operate and withdraw more water than we were allowed to under this restriction, this enforcement that you want to properly characterize as such.

[00:33:34] Speaker 05:
And that that was essentially cutting our piece of the pie.

[00:33:37] Speaker 05:
cutting a slice off and taking it back.

[00:33:39] Speaker 05:
And again, the key distinction as laid out in C-Report, we had the block quote from page 30 of our brief, our opening brief, is that a regulatory taking is a restriction on your use of your own property.

[00:33:52] Speaker 05:
Once they've cut off that piece of our pie slice and said, you've got too much pie, I want that part of the pie for fish ladder, fish migration,

[00:33:59] Speaker 05:
We don't ever have any ability to use that piece that they've taken.

[00:34:03] Speaker 05:
That is what we have here.

[00:34:05] Speaker 01:
That's why it's a fiscal taking because they've appropriated that.

[00:34:18] Speaker 01:
It's not taking the 25 acres for the dam.

[00:34:21] Speaker 05:
In a real property situation, you're absolutely right, Your Honor.

[00:34:23] Speaker 05:
But that's what's so odd.

[00:34:24] Speaker 05:
And I think that's why these water cases can be confusing and cause some confusion about the regulatory versus physical taking.

[00:34:30] Speaker 05:
Because the right is a use of fluctuating right.

[00:34:33] Speaker 05:
The property right itself is the right to use the water.

[00:34:36] Speaker 05:
And possession is certainly an incident to that.

[00:34:38] Speaker 05:
You can't use water you can't possess.

[00:34:40] Speaker 05:
But we have a vested property right.

[00:34:41] Speaker 05:
And there's really been no dispute on the facts before you.

[00:34:44] Speaker 05:
But we have a vested property right

[00:34:46] Speaker 05:
to divert additional water that we were not allowed to divert under this restriction.

[00:34:50] Speaker 05:
And that was essentially the same as international paper of shutting off that amount of water.

[00:34:56] Speaker 05:
And the Supreme Court has heard multiple times that cutting off that water, cutting off houses.

[00:35:02] Speaker 04:
Are there any cases from our court where this kind of upstream water diversion has been termed physical taking?

[00:35:09] Speaker 04:
The only physical taking case I see from our court involving water rights is casitas.

[00:35:15] Speaker 04:
And you seem to be wanting to run away from that case as fast as you can.

[00:35:18] Speaker 05:
No, Your Honor, again, I want to be clear.

[00:35:20] Speaker 05:
Casitas says it's a physical taking.

[00:35:22] Speaker 05:
And I think the key point is Casitas didn't and couldn't with the international paper say that it has to be in the canal first.

[00:35:29] Speaker 05:
It certainly cited that as a factor.

[00:35:31] Speaker 05:
And we've tried to reconcile that as part of that you can say it's an additional factor.

[00:35:35] Speaker 05:
But it's not a requirement.

[00:35:36] Speaker 05:
It's not a prerequisite.

[00:35:37] Speaker 05:
And I know it's an old case.

[00:35:40] Speaker 05:
But Casitas cited it.

[00:35:44] Speaker 05:
The court below cited it.

[00:35:45] Speaker 05:
So again, there's recognition that it's a case that still has

[00:35:47] Speaker 05:
And again, unless the water that's not diverted is considered to be our property, then there's not a restriction on our use of our property.

[00:36:00] Speaker 05:
It's essentially the appropriation, the confiscation, the reallocation of that water that we have a right to use.

[00:36:06] Speaker 05:
Do you have a final thought, Council?

[00:36:12] Speaker 05:
There's a lot of confusion in the ESA space, because it's a regulation.

[00:36:16] Speaker 05:
And I think Cedar Point really is a very key consideration for this court to have, and recognize that you have to look at whether what happened here was they appropriated water that we otherwise had a right to, or they just limited our ability to use water that we never got in the first place.

[00:36:32] Speaker 05:
And that's a key distinction.

[00:36:34] Speaker 05:
The court should be reversed a little.

[00:36:35] Speaker 02:
Thank you.

[00:36:35] Speaker 02:
Thank you, counsel.

[00:36:36] Speaker 02:
We appreciate both arguments and the case is submitted.