: The Myth of Physical Requisition
The Penn Central
test never purported to capture the entirety of the rich
landscape (or waterscape) of takings cases -- more on that point at the end of
this presentation. The result in Casitas
underscores that important point. But, beyond that, this particular case, Casitas
, has been plagued by important
misunderstandings in the way it has been portrayed to the wider world. I want to focus on clearing up two of those misunderstandings. The first
important misunderstanding is the claim that the International Paper
decision, penned (presumably at lightning speed at his standing desk, as was his
custom) by the enigmatic Justice Holmes, was a case about requisition in the narrow sense -- in other words the government taking physical possession of the water at issue. But the water in International Paper
was not requisitioned
in a narrow physical sense, only in a broader regulatory sense. The second misunderstanding is the failure to appreciate that any physical action on the
water at issue in Casitas
was inherently worked by a government hand.
Before I explore those two points, and close with a few words about
how the law on Penn Central
has shaped up, I want to make an observation
about the title of this program, which is also helpful substantively and not just by way of introduction. The title of the program is “Physically Taking the Intangible, the Federal Circuit’s Decision in Casitas Municipal Water District
With all due respect to the folks who crafted that title, it’s rather loaded, isn’t it? The peculiar procedural posture of the case -- which sent up from the
Court of Federal Claims to the Federal Circuit only an issue of takings characterization (regulatory vs. physical) -- meant that the very issue before
the court was whether the taking in Casitas
was a physical or a regulatory one. By labeling the water rights at issue “intangible,” the program’s title appears
to telegraph that there is an inherent mismatch in applying physical
takings analysis, which is what the Federal Circuit did, to the non-physical, intangible
rights at issue. I would have expected a more neutrally framed title. Perhaps “Physically Taking Use Rights in Water -- the Federal Circuit’s Decision in Casitas
Beyond that, I think referencing the rights at issue in Casitas
“intangible” is also loaded. When I call to mind the concept of intangible rights, I think of intellectual property like patents and copyrights, regulatory
goodwill as in Winstar
,1 trade secrets, or stocks and bonds. By contrast, water is
tangible. And that’s true whether looked at from the perspective of the
plaintiff or defendant in Casitas
. The plaintiff wants the disputed water for people to physically drink or to use in farming. The defendant wants the
disputed water for the physical benefit of endangered fish. Tangibility is an undisputed starting premise all around, not a matter in controversy. The
authorities in the margin make this point.2
The archetypal physical taking are agents of the government showing
up on your doorstep and saying, “We’re sorry, Sir, the government needs your land, we’re building a road/quartering troops/building a Post Office. You’ll be
fairly compensated as determined by a court, if you don’t agree to the offer we’re about to make to you.”
The archetypal regulatory taking is getting a letter in the mail with an
order from an agency stating: “We’re sorry, Sir, you cannot build a new house
on the corner of your property. It does not comply with county setback regulations. If you begin building in violation of this decision, you will be
1 United States v. Winstar Corporation
, 518 U.S. 839 (1996).
2 Water is tangible. See Continental Ins. Co. v. Northeastern Pharm. & Chem. Co.
, 811 F.2d
1180, 1186 (8th Cir. 1987) (“The policies’ definition of ‘property damage’ as damage to
‘tangible property’ or ‘physical injury’ seems to contemplate damage to tangible property such as land, trees, air, and water.”); Port of Portland v. Water Quality Ins.
, 796 F.2d 1188, 1194 (9th Cir. 1986) (“[D]ischarge of pollution into water causes damage to tangible property and hence cleanup costs are recoverable under a
property damage liability clause.”) (noting that this is the “reasonable, enlightened view”); United States Aviex Co. v. Travelers Ins. Co.
, 125 Mich. App. 579, 336 N.W.2d 838,
843 (1983) (insurance company liable for cleanup costs for percolating subsurface waters as property damage); Kutsher’s Country Club Corp. v. Lincoln Ins. Co.
, 119 Misc.2d
889, 465 N.Y.S.2d 136, 139 (Sup. Ct. 1983) (oil spill into water was property damage); Lansco, Inc. v. Department of Env’tl Prot.
, 138 N.J. Super. 275, 350 A.2d 520, 524 (Ch.
Div.1975) (oil spill into water caused damage to identifiable physical property), aff’d
, 145 N.J. Super. 433, 368 A.2d 363 (App. Div. 1976), cert. denied
, 73 N.J. 57, 372 A.2d 322
fined $1,000 per day and your structure will be subject to demolition. If you wish to bring a challenge to our decision, you have 60 days to do so.”
The government’s argument here was that the water use rights held by
Casitas were being affected by a regulatory order, much like my setback
hypothetical. “We’re sorry, Casitas Municipal Water District, you have to allow X quantity of water to flow downriver for the benefit of certain
endangered fish, and we hereby order you to do so, on pain of penal consequences defined by the Endangered Species Act.”
The problem with that line of reasoning is that it assumes that the entire
universe of takings law is defined by a physical vs. regulatory dichotomy of classification. The Supreme Court has never said as much. There are rich
veins of cases handed down before Penn Central
,3 which are inconsistent with any claim to monolithic status for such an analytical dichotomy. The richest of
such veins is perhaps in the area of water rights. In particular, the Supreme Court’s 1931 decision in International Paper v. United States
appears to erect
a strong barrier to the claim that the dichotomy is even consistent with, let alone compelled by, Supreme Court precedent. For International Paper
that an order by the United States to a third party to cut off water rights to a third party triggered Takings Clause compensation.
The government’s response to that argument is that in International
(and two other decisions -- Dugan
5), “the United States requisitioned water for the consumptive use of others).”6 Use of the word
“requisition,” in the context in which the government places it, conjures up notions of the government physically seizing water (obviously a physical
taking, as a matter of the dichotomy). And it is tough to fault the United States for using that word, since it is the word chosen by Justice Holmes in his
opinion in International Paper
: “The Secretary of War in the name of the 3 Penn Cent. Transp. Co. v. New York City
, 438 U.S. 104 (1978).
4 International Paper Co. v. United States
, 282 U.S. 399 (1931).
5 See Dugan v. Rank
, 372 U.S. 609, 625-26 (1963); United States v. Gerlach Stock Co.
6 United States’ Combined Petition for Panel Rehearing and Rehearing En Banc, at 11 , in
Casitas Mun. Water Dist. v. United States
, No. 2007-5153 (Dec. 10, 2008).
President, with the power of the country behind him, in critical time of war, requisitioned what was needed and got it.”7
One of the bonuses (or downsides, depending on how you look at it), of
being a general appellate practitioner like I am is that you read lots of
Supreme Court decisions, and you come to get a feel for the Justices. From my forays into Supreme Court opinions, I know one of Justice Holmes’s greatest
strengths (brevity) can also at times be his greatest weakness. Some Justices -- I won’t name names -- go on at length, repeating points -- so much so
sometimes I wish they were in front of me so I could beg them to stop. Holmes often creates the opposite demand -- for more -- more explanation, more rebuttal to the obvious counterarguments, and even for more of his
excellent prose. Placed in the full context Holmes himself did not set out at length, the Justice’s emphasis on the concept of requisition makes perfect
sense, and is perfectly consistent with and supportive of the Federal Circuit’s holding in Casitas
. But that’s because Holmes was using the word in the sense
of a mere order being issued -- which is precisely in the nature of non-physical regulation. A starting point here is to take a look at the Black’s Law Definition
of “requisition,” which embodies both the physical and non-physical senses of the word:
“Requistion. A demand in writing, or formal request or requirement.
The taking or seizure of property by government.” Black’s Law Dictionary, sixth edition, at page 1304 (1990). Indeed, a requisition’s primary usage is as
an order, and its secondary meaning (which the government was relying on) is a physical seizure. In International Paper
, Justice Holmes was clearly talking
about a mere order -- a regulatory ukase. Indeed, he begins his opinion by stating no later than in the second paragraph:
On December 28, 1917, the Secretary of War wrote to the Power Company that ‘The President of the United States by virtue of and
pursuant to the authority vested in him, and by reason of the exigencies of the national security and defence, hereby places an order with you for and hereby requisitions
the total quantity and
output of the electrical power which is capable of being produced and/or delivered by you through the use of all waters diverted or
7 International Paper
, 282 U.S. at 406.
capable of being diverted through your intake canal and for your plants and machinery connected therewith.’
, 282 U.S.
at 405 (emphasis added).
On the facts of International Paper
, no government agents ever showed
up to physically seize the water rights at issue from the Niagara Falls Power Company, thereby depriving International Paper of those rights. This is
particularly clear from the facts set out by the Court of Claims, which were written up in great detail, and thus not subject to Justice Holmes’ tendency for
abridged statements of facts and for aphorism over explanation.8 At no time in the International Paper
dispute did the United States ever physically seize or divert water for its own use. Instead, it issued an order to a third party, the
Niagara Falls Power Company, to stop providing water to International Paper, and then entered into a settlement agreement that allowed the power
In the United States’ own Motion in Support of Partial Summary
Judgment, it made the same point -- though it did so, as if the point supported a finding of no physical taking: “It is undisputed that the government has
never physically diverted or appropriated water from the Ventura River for its own use.”9 If you make a comparison to the real facts of International Paper
what you come to is that just as it was undisputed that Reclamation agents were not drinking or bathing in the water taken from Casitas, so it was undisputed in International Paper
that federal troops engaged in the “War to
end all wars” were not consuming the paper company’s water in that case. Yet, the Supreme Court found that a taking had occurred.
Note as well that a forerunner kind of argument to Penn Central
upheld by the Court of Claims below, but rejected by the Supreme Court in
. The government pointed to a grab-bag of regulatory power it was exercising, including the Burton Act, a treaty with Great Britain,
and the Federal Power Commission Act of 1920. Said the Court of Claims: “To sum up our conclusions: The Government did not, and did not intend to, take
8 International Paper Co. v. United States
, 68 Ct. Cl. 414, 1929 WL 2492 (1929).
the plaintiff’s property. If it be held that it took the property of the Niagara Falls Company, the loss of the plaintiff was incident to the exercise of a
Justice Holmes rejected that progenitor of the Penn Central
takings argument. Here is the force of Holmes’ rhetoric at its best: “There is no room for quibbling distinctions between the taking of power and the taking
of water rights. The petitioner’s right was to the use of the water; and when all the water that it used was withdrawn from petitioner’s mill and turned
elsewhere by the government requisition for the production of power it is hard to see what more the government could do to take the use.”11 In other words, the mere regulatory order here, under authority of a treaty, the Burton
Act, and the Federal Power Commission Act to the power company (not even directly to International Paper) was enough for a taking to be established.
Given that International Paper
found a taking without requiring a direct
physical seizure, the government was hard-pressed to sustain its argument
that International Paper
involved some readily distinguishable form of “requisition” while Casitas
involved regulation with the mere incidental effect
of impinging on property rights. Both cases involved different forms of requisitions for third parties -- in International Paper
, a requisition to support
the diversion of water to third parties engaged in activities seen as of greater use to the World War I effort; in Casitas
a requisition to support the diversion of water to deprived fish, and thus ultimately for the benefit of the human
proponents of those fish. Both cases involved regulatory action and not a physical intrusion -- not even one as small as the de minimis
intrusion found to
trigger physical takings analysis in Loretto
, which involved the installation of cable television equipment.12
For the same reason, the Federal Circuit found it hard to sustain Judge
Wiese’s volte face
on similar issues as compared to his earlier ruling in the
case.13 According to Judge Wiese, the government was correct that his 10 International Paper
, 68 Ct. Cl. 414.
11 International Paper
, 282 U.S. at 407.
12 See Loretto v. Teleprompter Manhattan CATV Corp.
, 458 U.S. 419 (1982).
13 Tulare Lake Basin Water Storage Dist. v. United States
, 49 Fed. Cl. 313 (2001).
ruling was overtaken by the Supreme Court’s decision in the land development moratorium case, Tahoe-Sierra
.14 Since it is axiomatic that lower
courts cannot conclude that a later Supreme Court case overtakes an earlier Supreme Court case unless the Supreme Court itself says so explicitly, there
was never a plausible basis for the government’s claim that Tahoe-Sierra
changed anything more than the landscape -- not the waterscape -- if you’ll
forgive the play on words. I refer to the notable case of Rodriguez de Quijas
My own theory for why Judge Wiese accepted such a weak argument,
instead of standing firm on his Tulare
ruling and its implications for Casitas
is the savage nature with which his Tulare
ruling was attacked, both by other members of the Court of Federal Claims and by commentators, both in legal
academia and the policy community. Said Court of Federal Claims Judge Allegra in Klamath Irrigation District
:16 “[W[ith all due respect, Tulare
to be wrong on some counts, incomplete in others and, distinguishable, at all events.” Ouch, perhaps not as biting as a dissent by Justice Scalia in a case on
the culture wars front, but not something I’d like to be on the receiving end of from a colleague I’d be seeing most everyday at the Howard T. Markey
National Courts Building. A true count of American legal journals would run much higher, but Judge Allegra also catalogued three commentators who had
advanced what he called “intense criticism” of Judge Wiese’s Tulare
Luckily, we’re not a country run by means of plebiscites of law review
author electors. But hopefully, the 2-to-1 panel decision and the vote of at
least six Judges on the full Federal Circuit against rehearing Casitas
en banc, shows that Tulare
is not, and never was an unreasonable judicial decision.
14 Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency
, 535 U.S. 302
15 Rodriguez de Quijas v. Shearson/American Exp., Inc.
, 490 U.S. 477, 484 (1989) (“If a
precedent of this Court has direct application in a case, yet appears to rest on reasons
rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to this Court the prerogative of overruling its own
16 Klamath Irrigation Dist. v. United States
, 67 Fed. Cl. 504, 538 (2005).
Instead, it involves a legal subject on which reasonable judicial minds could at least disagree. I think it’s a sad state of affairs, even as to contentious matters
like takings cases and the impact of the Endangered Species Act, where those with differing views and legal points to make cannot more civilly agree to
The Government’s Agency in
A corollary of the archetypal physical takings rubric is that the
compliance action that causes the harm to property rights that induces the
plaintiff to bring suit is caused by the hand of the regulated party and not the direct hand of the government. For instance, in Tahoe-Sierra
, it was the landowners living under the development moratorium that felt harm by
obeying the government order to refrain from new construction or lot improvements that could have had the effect of damaging Lake Tahoe and its
environs. By contrast, if a telegraph company puts up poles on your property, then it has entered into a physical intrusion that demands compensation.18
The notion of directness in a physical intrusion vs. the indirect nature of regulation, which causes mere compliance activity, is at the heart of the
physical vs. regulatory takings dichotomy.
One would assume, given all the fuss about Casitas
, that on this
dimension of a direct physical intrusion, the government was also on good ground in maintaining that an indirect regulatory directive was involved, and not a direct intrusion. But that issue also turns out to be a lot more
complicated than those unhappy with Casitas
have allowed either.
And that is because it turns out that the regulatory target of the
Endangered Species Act here was not a private actor, but rather than the government itself. Of course, the Endangered Species has some provisions
that reach private conduct, and some reaching government conduct. It is not sufficient, however, to assume that just because Casitas was a non-federal
party, therefore the ESA regulatory action here was directed at Casitas. In point of fact it was not. Instead, the ESA regulatory action here was directed at an arm of the United States, specifically the Bureau of Reclamation, because
the United States retained all ownership in the dam system that is part of the
18 See St. Louis v. Western Union Telegraph Co.
, 148 U.S. 92 (1893).
Casitas’s actions onsite were as a mere agent of the government. This
starts to make Casitas
look a lot like Loretto
. Recall that in Loretto
, there were no City of New York employees who showed up to install the cable boxes at
issue. Instead, the installer of the cable boxes were employees of the private cable company, which was the nominal defendant in the takings suit. As the
Supreme Court stated, “[t]he one incontestable case for compensation (short of formal expropriation) seems to occur when the government deliberately
brings it about that its agents . . . regularly use, or permanently occupy space, or a thing which therefore was understood to be under private ownership.”19
Tweak the facts of Casitas
a bit and you’ll see the point. Suppose the
government contract with Casitas preserved ownership and
for the federal government, not simply ownership rights. In that case, the ESA
document at issue from the National Marine Fisheries Service (“NMFS”) would have involved Bureau of Reclamation officials specifically diverting the water,
as a physical matter for the fish’s benefit. The only reason Casitas employees
or agents were turning the dials is because they were
the government agents
for purposes of operating the Project. “As Reclamation itself has stated, ‘Casitas Municipal Water District operates the Ventura Project on
Moreover, the nature of the ESA document issued by NMFS here, and
claimed to be a regulatory directive by the government, makes this point.
What was issued was not an incidental take permit
to Casitas, but an
incidental take statement
to the Bureau of Reclamation.21 Compare
§ 1539 (incidental take permits) with
16 U.S.C. § 1536 (incidental take statements).
The Federal Circuit majority recognized the importance of the effect
, 458 U.S. at 427 n.5.
20 Def.’s Mot. for Partial S.J., at 12.
These admissions make clear that the government did not merely require some water to remain in stream, but instead actively
caused the physical diversion of water away from the Robles-Casitas Canal -- after the water had left the Ventura River and was
in the Robles-Casitas Canal-and towards the fish ladder, thus
reducing Casitas' water supply . . . . The active hand of the
was also at play in International Paper
, where the
Court remarked that “[t]he petitioner’s right was to the use of the
water; and when all the water that it used was withdrawn from the petitioner’s mill and turned elsewhere by government requisition for the production of power it is hard to see what
more the Government could do to take the use.”
Conclusion -- The Limits of
It is ironic that there are those who have tried to reify the illustrative
dichotomy created in Penn Central
between regulatory and physical takings as
a universal analytic that encompasses all takings cases. Given clear statements in Penn Central
about the nature of takings jurisprudence, that
would be particularly odd. As Loretto
In Penn Central Transportation Co. v. New York City, supra
, the Court
surveyed some of the general principles governing the Takings Clause. The Court noted that no “set formula” existed to determine, in all cases, whether compensation is constitutionally due for a government restriction of property.
Ordinarily, the Court must engage in “essentially ad hoc
, factual inquiries.” Id.
, at 124. But the inquiry is not standardless. [The Court then went on to
discuss what have become the balancing factors of  the economic impact of the regulation,  investment-backed expectations, and  the character of
Application of International Paper
, and Dugan
is similarly not
“standardless.” To the critics of Casitas
, who are, I think, one in the same with those who are the dichotomists who would universalize a physical vs. regulatory takings framework -- i.e., they have a Penn Central
hammer ever in
, 543 F.3d 1276, 1291-92 (emphasis added) (quoting International Paper
quest of nails -- I paraphrase Shakespeare, in Hamlet
: “There are more things in heaven and earth -- and in our watercourses -- Penn Central
than are dreamt of in your philosophy.”
For my next feat, I’d like to consider the process by which an approach
the Supreme Court established as a balancing test of multiple factors has descended into a test in which the government always wins, especially in the
Federal Circuit. And there I can paraphrase Justice Thurgood Marshall in Fullilove
: Penn Central
is merely “strict in theory, but [it’s turned out to be]
23 Fullilove v. Klutznick
, 448 U.S. 448, 519 (1980) (Marshall, J., concurring).
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