Anyone familiar with the operation of state and federal water projects in California recognizes that the Sacramento-San Joaquin River Delta is the heart of the state's elaborate plumbing system. A recent federal court decision also places the Delta squarely at the heart of an intensifying debate over one of the nation's bedrock environmental laws, potentially throwing into question the protections afforded a host of threatened and endangered species throughout the water-short West. On the last day of 2003, Judge John Paul Wiese of the U.S. Court of Federal Claims in Washington, D.C., ordered the federal government to pay nearly $14 million, plus a decade's worth of accrued interest (which could bring the total to as much as $26 million), to five San Joaquin Valley water districts. The damage award stems from a case originally decided April 30, 2001, when Wiese ruled that the reduction of deliveries to State Water Project (SWP) contractors, a consequence of efforts to comply with Endangered Species Act (ESA) protections for Sacramento River winter-run chinook salmon and the delta smelt, constituted a taking of private property under the Fifth Amendment to the U.S. Constitution. The ruling, the first of its kind, was denounced by environmentalists, who regard it as a threat to enforcement of legal protections for threatened and endangered species. The purpose of such suits is "to bust the federal budget as the price tag for complying with environmental protection laws," Barry Nelson, a policy analyst with the Natural Resources Defense Council, told the Associated Press. The ruling won equally vocal praise from property-rights activists and ESA critics, who have long argued that private landowners and businesses bear a disproportionate share of the cost of such protections. "What the court found is that the government is certainly free to protect the fish under the Endangered Species Act but must pay for the water that it takes to do so," Roger Marzulla, the plaintiffs' attorney, told AP. If Wiese's ruling is allowed to stand (there's been no decision yet whether the federal government will appeal), it will have significant implications throughout California and the West, where competition over limited water supplies is intensifying. California's delta is the current legal epicenter, but the vibrations from Tulare Lake Basin Water Storage District, et al. v. The United States may soon be felt anywhere that farmers and urban agencies have been forced to give up water to protect fish and wildlife. Marzulla, in fact, has filed a nearly identical suit in the Court of Federal Claims on behalf of farmers in the Klamath Basin, on the California-Oregon border, seeking $1 billion in compensation for a "taking" of water to protect endangered fish in the summer of 2001. The Delta case grew out of efforts to protect salmon during 1992 and both salmon and smelt during 1994. Both species live in the Delta, the smelt residing there for their entire life cycle and the chinooks passing through as juveniles on their way to the sea. The Delta is also the location of the main pumping plants for the SWP, operated by the California Department of Water Resources (DWR), and the Central Valley Project (CVP), operated by the U.S. Bureau of Reclamation. Biologists have long implicated the CVP and SWP pumping plants in the demise of fish. Salmon fry and smelt may be sucked into the pump intakes and dumped into aqueducts, or become so confused by the effect of water diversions on river flows and delta salinity that they lose their way and cannot complete their migrations. As a result of these and other factors, the winter-run chinook has been listed as endangered since 1990, and the smelt has been listed as threatened since 1993. In 1992, the National Marine Fisheries Service, which has jurisdiction over anadromous species such as salmon (which spend their lives in both fresh and salt water), issued a biological opinion asserting that a change in SWP and CVP operations was necessary under the ESA to protect the winter-run salmon during their migration. The suggested alternative was to close the gates on the Delta Cross Channel, a structure that allows Sacramento River water to be diverted into the south Delta. Closing the gates would allowing the vulnerable young fish to proceed unmolested into San Francisco Bay and the ocean instead of being shunted south toward the deadly pumps. Closing those gates, however, meant the CVP and SWP would have to curtail their diversions from the south Delta, because continuing to pump in the absence of an inflow from the Sacramento River would cause south Delta salinity to rise higher than allowed under permits issued by the State Water Resources Control Board. Accordingly, the CVP and SWP pumps shut down, interrupting deliveries to project contractors for part of 1992. The same thing happened two years later. The Tulare Lake Basin Water Storage District and the Kern County Water Agency, both of which have direct contracts with DWR for SWP water, and three entities that get SWP water through Tulare Lake and Kern County — Hansen Ranches, Lost Hills Water District and Wheeler Ridge-Maricopa Water Supply District — filed a claim seeking compensation for the SWP water they were denied. That the water districts sued the federal government over a state agency's failure to deliver water might seem odd. But the move turned out to be a smart legal strategy. Had the water districts sued the state, they likely would have lost because SWP contracts explicitly immunize the state from liability for "any damage, direct or indirect, arising from shortages in the amount of water to be made available to the agency under this contract caused by drought, operation of area of origin statutes, or any other causes beyond its control." By suing the federal government over violation of a state contract, the plaintiffs also avoided a pitfall that foiled a previous effort to claim Fifth Amendment compensation for water-delivery reductions. In 1995, CVP contractors lost a breach-of-contract suit they had filed against the federal government, seeking damages when their water deliveries were reduced to protect fish in the Sacramento River and Delta. The 9th Circuit Court of Appeals ruled in O'Neill v. United States 50 F.3rd 677, that CVP contracts immunize the federal government from such claims in the same way the SWP contracts protect the state. "In the present case," Judge Wiese wrote, "the federal government enjoys no such contractual immunity from liability." Contacts: United States Court of Federal Claims: Roger Marzulla, attorney for the water agencies, (202) 822-6770. Natural Resources Defense Council, (212) 727-2700.