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City of Fresno v. United States

ELR Citation: 50 ELR 20069
Nos. 16-1276L, (Fed. Cl., 03/25/2020) (Kaplan, J.)

The Court of Federal Claims granted in part and denied in part the Bureau of Reclamation's motion to dismiss a lawsuit concerning its curtailing of water deliveries during a drought in California. The city of Fresno and irrigation districts argued that the Bureau breached its water-supply contracts with them by failing to make available to them the water quantities that the contracts required. The Bureau contended that plaintiffs failed to state a claim for breach of contract because the contracts contained an immunity provision that shielded the Bureau from liability when it reasonably determined that the water must instead be allocated to other water users to meet its obligations to them, and it thus moved to dismiss. The court found that plaintiffs' factual allegations that the Bureau's allocation decision was arbitrary and capricious were sufficient to address the immunity provision, and thus that plaintiffs set forth sufficient facts to defeat the Bureau's motion. Plaintiffs also argued that the Bureau's failure to deliver water to them led them and their water users to suffer huge losses of crops, groundwater reserves, and water shortages and rationing, and thus effected a Fifth Amendment taking of their property for which they were owed compensation. The court found that plaintiffs did not have property interests under California law in the water supplied to them by the Bureau, and thus concluded they lacked standing to pursue their takings claim. It therefore granted the Bureau's motion to dismiss the takings claim, but denied its motion to dismiss the breach-of-contract claim.