Two dozen farmers from California's Central Valley wanted the federal government to pay them about $32 million as compensation for water they were supposed to get under a federal contract. The U.S. Bureau of Reclamation diverted the water to comply with Endangered Species Act requirements to protect two threatened fish.
But the federal government argued its contract with the Westlands Water District only allowed lawsuits by the district itself - not by individual landowners who are its members.
The state of California and the water district agreed, contending that letting farmers sue the government directly could result in a rash of cases and undermine water districts' ability to do business with the Bureau of Reclamation, the federal agency that manages water in the West.
Justices concluded that the 1982 Reclamation Reform Act "does not permit a plaintiff to sue the United States alone," Justice Clarence Thomas wrote for the court.
At issue was a 1963 water service contract between the Bureau of Reclamation and Westlands, the nation's largest water district, which encompasses 600,000 acres of cotton, tomatoes, onions and other farmland in western Fresno and Kings counties.
In 1993 the Bureau of Reclamation cut Westlands' water allocation by half because of federal requirements to protect the threatened winter-run chinook salmon and delta smelt. Westlands and some farmers in the water district sued.
Westlands dropped its suit two years later as part of negotiations to establish the California Federal Bay-Delta water project. But about two dozen individual property owners and farming partnerships, led by an aging farmer named Francis Orff, pressed the litigation.
The farmers contended they needed a way to get compensation for their losses.
Attorney Stuart Somach, of Sacramento, who represented Westlands, could not be immediately reached for comment.
But the Los Angeles-based lawyer representing the farmers, William Smiland, said his clients might still try to remedy what they consider a breach of contract by taking their case to the United States Court of Federal Claims.
He said there are still details to be worked out before his clients make that decision, but he emphasized this was a very serious matter for the plaintiffs, and other farmers in the region.
"When you buy water from the federal government and apply it to the land you acquire a property right - a right to be able to buy the water in the future, perpetually," Smiland said.
Taking the water hurts the farmers, who invested in their land and crops believing they could count on the amount of water written into the irrigation district's contract, he added.
In this case, the attorney said, the district's contract promised 900,000 acre feet of water every year, but got only about 450,000 - a disparity that caused them serious economic loss.
If the Supreme Court had agreed, hundreds of individual farmers could have tried to take on the Bureau of Reclamation, leading to chaotic litigation, according to government attorneys.
A win for the farmers could also have made it too expensive for the government to divert water from agrigulture to meet its environmental obligations under the Endangered Species and the Clean Water acts, environmental advocates said.
"If they'd been permitted to sue, they would have held the government hostage, and required the taxpayers to shell out every time the federal agencies wanted to use that water to protect the environment," said Lloyd Carter, director of Revive the San Joaquin, an environmental organization set on restoring the river.
Enormous pumps in the San Joaquin-Sacramento River Delta near San Francisco Bay send water to Westlands and other irrigation districts in the arid western half of the Central Valley. Delta water is also sent as far south as Los Angeles.
"This is a huge win for the environment of the western United States," Barry Nelson, a senior policy analyst at the Natural Resources Defense Council, said in a statement. "The court said unanimously that agribusinesses cannot use their subsidized federal water contracts to block laws that protect the public and the environment."
The case is Orff et al. v. United States of America, 03-1566.