Resource Users Forced to Choose Between Remedies in ESA/Takings Cases

Water users in the Pacific Northwest and elsewhere have increasingly found themselves at odds with federal regulators requiring additional flows to protect endangered species and their habitat. Irrigation districts and water users have frequently turned to the courts, seeking to invalidate the ESA-driven agency actions that limit their water supplies. They have also sued the federal government for damages resulting from the diversions, alleging breach of contract and takings under the Fifth Amendment. The injunction cases are typically brought in federal district court, alleging a violation of the federal ESA. Plaintiffs’ damages cases, on the other hand, are statutorily required to be brought in the U.S. Court of Federal Claims (CFC). Filing in both courts and litigating simultaneously may no longer be a successful strategy. Relying on a 143-year old statute and an opinion issued earlier this year by the U.S. Supreme Court interpreting it—United States v. Tohono O’Odham Nation, --- U.S. ---, 131 S.Ct. 1723 (2011)—the U.S. Department of Justice has recently successfully moved to dismiss several pending lawsuits in the CFC on jurisdictional grounds. So far, the majority of courts to consider Tohono-based motions to dismiss have granted the motions, indicating that plaintiffs cannot simultaneously seek equitable relief in federal district court and money damages in the CFC where their claims are based on substantially the same operative facts—regardless of the type of relief sought in each suit.

Based on Tohono, the United States also recently moved to dismiss a takings and breach of contract case filed by Klamath Basin water users against the United States government over ten years ago. While the Tohono opinion does not itself address ESA issues, its principles apply in a variety of ESA and other cases where, for example, resource users allege takings based on the application of federal environmental laws.

The Tohono Opinion

In Tohono, the U.S. Supreme Court addressed the meaning of 28 U.S.C. § 1500, governing jurisdiction of the CFC. Section 1500 provides:

The United States Court of Federal Claims shall not have jurisdiction of any claim for or in respect to which the plaintiff or his assignee has pending in any other court any suit or process against the United States or any person who, at the time when the cause of action alleged in such suit or process arose, was, in respect thereto, acting or professing to act, directly or indirectly under the authority of the United States.

Congress enacted section 1500 in 1868 in order to curb the filing of duplicative lawsuits; specifically, suits brought by residents of the Confederacy after the Civil War to recover cotton taken by the Federal Government under the Abandoned Property Collection Act, 12 Stat. 820, who simultaneously sought relief under tort law for the same alleged actions. Congress last reenacted the statute in 1948,[1] but the Court in Tohono found that the purpose of protecting the federal government “from burdens of redundant litigation” is “no less significant today” than it was over 150 years ago.[2]

Plaintiffs in Tohono, the Tohono O’Odham Nation (Nation), alleged that the federal government breached its fiduciary duties as trustee of various funds and property owned by the Nation.The Nation had filed suit in federal district court seeking equitable relief and, the next day, sued in the CFC seeking money damages. The CFC dismissed the Tribe’s action due to the existence of its separate action in federal district court. The Federal Circuit Court of Appeals (CAFC) reversed and remanded. The Supreme Court accepted certiorari, and held that two lawsuits—including both of the Nation’s at issue—are “for or in respect to” the same claim within the meaning of 28 U.S.C. § 1500 if they are based on substantially the same operative facts—regardless of the type of relief sought in each suit.[3]

The majority decided that, due to the substantial overlap in operative facts between the Nation’s two suits and the fact that they filed in federal district court first, the CFC lacked jurisdiction.[4] In concurring and dissenting opinions authored by Justice Sotomayor and Ginsburg, respectively, the Justices took issue with the majority’s reasoning and conclusion, describing section 1500 as “anachronistic” and the case’s outcome—dismissal—unduly harsh. The majority noted that such issues must be raised with Congress, not the courts.

Klamath Irrigation and other cases affected by Tohono

As previously reported in this newsletter, the history of the Klamath litigation is long—lasting over ten years—and complex. See J. Ferrell, Klamath Basin Decisions Leave Irrigators High and Dry, Marten Law News (April 25, 2007); J. Kray, Oregon Supreme Court to Address Right of Klamath Basin Water Users to Compensation for Water Taken to Protect Species under ESA, Marten Law News (March 9, 2009) and Klamath Basin Water Users One Step Closer to Obtaining Compensation for Water Taken to Protect Species under ESA, Marten Law News (March 29, 2010); D. MacDougal & A. Orford, The Klamath Adjudication: Will It Ever End?, Marten Law News (July 7, 2011). It began when the National Marine Fisheries Service (NMFS) and U.S. Fish and Wildlife Service (USFWS) concluded that operations of the 1905 federal reclamation project on the Klamath threatened the continued existence of certain species listed under the ESA, including Coho salmon, short-nosed suckerfish, and Lost River suckerfish. Accordingly, the Services reached a “jeopardy” decision in their ESA section 7 Biological Opinions (“BiOp”). To comply with that decision, in April 2001, Reclamation terminated delivery of irrigation water to the irrigation districts and other Klamath water users operating the project and using its water.

Certain Klamath water users subsequently:

1) filed suit in Oregon federal district court in Kandra v. United States,[5] seeking declaratory and injunctive relief, alleging that Reclamation’s adoption of its 2001 annual operations plan to comply with the BiOp violated plaintiffs’ Reclamation contracts, federal Reclamation law, and NEPA; that the BiOps violated the ESA, APA and other federal laws; and

2) pursued Fifth Amendment takings and breach of contract and compact claims in the CFC (Klamath Irrigation).

Plaintiffs in Kandra filed suit on April 9, 2011; plaintiffs in Klamath Irrigation filed in the CFC on October 11, 2001. The Oregon federal district court dismissed the Kandra suit on November 27, 2001.[6] The CFC rejected plaintiffs’ efforts toward money damages several years ago by dismissing all of their claims. Plaintiffs appealed, and, earlier this year, the CAFC reversed.[7] The CAFC vacated and remanded the CFC’s judgment based on opinions issued in 2005 and 2007, and revived plaintiffs’ takings and breach of contract claims. See D. MacDougal, J. Ferrell, Federal Circuit Resurrects Klamath Water Users’ Takings and Contract Claims, Marten Law News (May 25, 2011). The CAFC issued its mandate at the beginning of April 2011, likely affording the Klamath Irrigation plaintiffs new hopes for success.[8] Just 15 days after the CAFC issued its mandate, however, the Supreme Court’s Tohono opinion came down. Thus the stage was set for DOJ to potentially end a long-running, complicated, and contentious lawsuit with a simple motion to dismiss for lack of jurisdiction, and for the Klamath water users to potentially lose all of their claims—again.

The parties are currently briefing the issue. The United States argues that: 1) the CFC lacks jurisdiction over plaintiffs’ complaint because the contract and takings claims alleged therein are “for or in respect to” the Kandra suit that was pending when plaintiffs first filed suit in 2001; 2) the claims in the district court and CFC are based on substantially the same operative facts; 3) the Kandra plaintiffs are either the same as the Klamath plaintiffs or are “assignees” of Klamath plaintiffs; and 4) the resolution of Kandra (its dismissal) does not affect the application of section 1500.[9]

Klamath plaintiffs assert that section 1500 and Tohono do not divest the CFC of jurisdiction because, according to plaintiffs, they never had the same claims pending in another court.[10] Plaintiffs urge the CFC to carefully compare the operative facts between cases in order to determine whether it has jurisdiction. They emphasize that the district court case was based on the administrative record, and that all operative facts occurred in 2001. By contrast, the CFC case required proof of the nature and scope of plaintiffs’ property right and the government’s actions, all of which occurred after Reclamation implemented the Services’ RPA, from 2001 on. Plaintiffs further argue that the parties in the two cases are different, with only three common members; that plaintiffs never assigned any of their rights to assert the claims at issue; and that, even if they had, any attempted assignment of the takings claim would be void under the Anti-Assignments Act.[11]

So far, every CFC and appellate court to consider a motion to dismiss based on Tohono’s interpretation of section 1500’s applicationhas largely granted that motion or affirmed the lower court’s decision to dismiss.[12] In some of these cases, the CFC has dismissed cases filed years ago based on section 1500—stripping plaintiffs of any viable cause of action, as the applicable statutes of limitations on their claims in federal district court have run. Acknowledging the significant hardship imposed by such rulings, one court mentioned that a certain case it dismissed earlier this month may be appropriate for congressional reference—a process under which a bill is referred to the chief judge of the CFC by either house of Congress, for review by a three-judge panel.[13]

Conclusion

Filing first in district court or the CFC—and seeing that case through final judgment and possibly appeal—before seeking money damages in the CFC or equitable relief in district court, is not an optimal litigation strategy. It may preclude complete relief, particularly in litigation similar to Klamath Irrigation where plaintiffs wish to both challenge a BiOp and assert takings and breach of contract claims that arose due to application of the ESA. It will likely result in lost claims (absent a tolling agreement), as applicable CFC statutes of limitation run while the federal civil litigation is pending, or vice versa. But—barring Congressional action, a creative construction of Tohono by the CFC in the pending Klamath contracts case, or a factually intensive comparison between Kandra and Klamath Irrigation by the CFC in Klamath—pursuing relief in just one court at a time could be plaintiffs’ only feasible option to seek equitable and monetary relief in the ESA/takings circumstance and similar scenarios.

For more information contact Jessica Ferrell or any other member of Marten Law’s Natural Resource or Litigation practice groups.