Physical Takings, Regulatory Takings, and Water Rights
March 1, 2010
Santa Clara Law Review, Vol. 51, p. 365, 2011
Alleged takings of property are divided into two broad categories: physical takings claims, which are categorically subject to compensation, and regulatory takings claims, which are analyzed under the multi-factor Penn Central test and rarely result in compensation being paid. This Article addresses the question of whether alleged takings of water rights should be treated as physical or regulatory takings. It is an increasingly salient question, as growing conflict between federal environmental laws and appropriative water rights has produced a proliferation of takings claims over the past decade. Because whether a claim is analyzed as a physical or a regulatory taking tends to be dispositive of the question of whether compensation must be paid, the legal issue is a critical one: millions of dollars and control over the region’s most precious natural resource are at stake.
Scholars and courts have offered a variety of rationales for treating alleged takings of water rights as either physical or regulatory. This Article is the first to assess the merits of all the major rationales, on both sides, that have been offered to date. I find serious conceptual problems with these arguments, which seek to analogize water-rights takings to takings of other forms of property. These analogies are often in deep tension with relevant Supreme Court precedent, and fail to take account for the unique attributes of property rights in water. I conclude that while water-rights takings cannot fit straightforwardly as either physical or regulatory takings under current doctrine, treating them as physical takings - that is, applying a categorical takings rule requiring compensation when the government restricts any exercise of water rights otherwise permissible under background principles of state property law - is the soundest approach. By placing these background principles at the center of adjudication of alleged takings of water rights, this approach both preserves state property law’s historical role in controlling water appropriation and ensures that compensation will be paid when - but only when - the government seeks to restrict water rights in a manner that exceeds its substantial regulatory authority under state water law doctrine.
Number of Pages in PDF File: 44
Keywords: water rights, takings, physical takings, regulatory takings, just compensation property law, environmental law, water law, Endangered Species Act
JEL Classification: K11, K32, K40
Date posted: April 7, 2010 ; Last revised: May 4, 2014