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While common wisdom says the second Bush administration is a dark cloud for trial lawyers, some plaintiff attorneys expect it to rain good fortune on them. A recent $16.7 million settlement gave lawyers who specialize in suing the government over water rights a clear signal that the administration’s environmental policies could flush them from the ideological fringe into the legal mainstream. When the Interior Department agreed last month to pay San Joaquin Valley farmers for undelivered irrigation water, it did more than enrage state officials and environmental groups. It marked the first time that anyone had won money from the government by arguing that Endangered Species Act protections created an unconstitutional taking of private property. “We’ve changed the way the federal government is doing business,” said Roger Marzulla, the Washington, D.C., lawyer who represented the Tulare Basin farmers whose water was withheld in order to benefit endangered fish. The settlement also promises to change the way the property rights bar does business. Prior to the settlement in Tulare Lake Basin Water Storage District v. United States, 1:98-cv-00101, water takings suits did not have a great history of success, so they tended to be funded by property rights groups, such as the Pacific Legal Foundation, that were willing to lose money for their cause. Tulare has opened up the possibility of water takings suits as a profitable legal enterprise. San Francisco attorney Michael Van Zandt is poised for the shift. His first water takings suit, Hage v. United States, 1:91-cv-01470 which claims grazing restrictions on Nevada public land deprived a rancher of water rights — has been bankrolled by Stewards of the Range, an Idaho-based ranchers’ rights group. But the partner at San Francisco’s McQuaid Bedford & Van Zandt has three similar cases in the U.S. Court of Federal Claims that he says could pay for themselves. And he expects to file more. Some of his recent legal work has been funded not by advocacy groups but by insurance policies tied to farm loans, he noted. Banks have started requiring borrowers to obtain insurance to cover legal costs when environmental water restrictions threaten the value of farm property used as loan collateral. “We have quite a burgeoning practice in the water rights area,” Van Zandt said. For its part, the Pacific Legal Foundation seems happy enough to have some competition in funding water takings suits. Andrew Lloyd, director of the group’s Western Water Law Program, said PLF supported the Tulare suit with hopes of encouraging lawyers to pursue such cases on their own. Both property rights advocates and environmentalists expect that the Tulare settlement could open up a floodgate of water takings litigation. “I think and I hope that people who have had their water rights denied will avail themselves of the courts,” Lloyd said. John Echeverria, who heads the Georgetown Environmental Law & Policy Institute, put the matter less optimistically. “People are going to see money, and people are going to file lawsuits,” he said. “The [Tulare] settlement will be used as a stick to beat up on the Endangered Species Act.” San Francisco water attorney Antonio Rossmann, who represents environmental groups and government agencies, expressed shock that the government never tried to appeal the 2001 federal claims court decision that declared the water cuts to the Tulare farmers a taking. “This thing is crying out for appellate review,” he said. Echeverria says the settlement bolsters several suits brought by Van Zandt and Marzulla, including a $1 billion claim Marzulla has filed on behalf of Klamath Basin irrigators. Water rights lawyers agree. “It has the effect of strengthening the property rights in water,” said Theodore Chester Jr., a partner with Smiland & Khachigian in Los Angeles. “If you’re taking water for public benefit, the public has to pay for it.” The firm represents California’s largest irrigation district, whose members have a water rights case pending in the U.S. Supreme Court. The case, Orff v. U.S., 03-1566, is being closely watched since a plaintiff decision would allow individual farmers — rather than irrigation districts — to file takings cases over government water contracts. As takings cases proceed through the courts, state officials and environmental groups say plaintiffs should benefit from a convergence of factors that could ease the way for settlements. According to two lawyers at the Department of Interior, decisions on whether or how to settle water takings claims are made by high-ranking political appointees. The officials, who asked to not be identified, said career attorneys who handled the Tulare case were not involved in settlement talks. Water and property rights advocates hold key posts in the Interior Department. Secretary Gale Norton devoted her pre-government career to strengthening property rights at Mountain States Legal Foundation, while the department’s top water official, Jason Peltier, is a former California irrigation lobbyist who in 2001 referred to Marzulla’s Klamath plaintiffs as “poor bastards getting run over by regulators bloated on ESA steroids.” The department’s legal staff bears the stamp of its previous solicitor, William Myers III, a former lobbyist for ranchers and the mining industry. Water rights attorneys also gained an important ally in January when former takings attorney George Miller was appointed to the Court of Federal Claims. Increasingly, attorneys are bringing water rights cases through the federal claims court, which offers little opportunity for intervention by third parties such as state or environmental groups. California officials worry that the Tulare settlement undermines their state water contracts, and Deputy Attorney General Richard Frank says his office would like to challenge the 2001 federal claims court ruling that led to the settlement, but hasn’t found grounds to intervene. Meanwhile, state regulators bristle at Washington, D.C.’s involvement in California water issues. “They can stick it to California and help folks who supported them,” said Richard Katz, a member of the State Water Resources Control Board, who notes that irrigators tend to be staunch Bush supporters. “The irony here is you have a president who’s complaining of abuse of the legal system and calling for tort reform � creating an opening for any sort of entrepreneurial lawyer.” Not all water rights lawyers relish a potential flood of takings claims. J. Mark Atlas, who represents irrigators as of counsel at Sacramento-based McDonough, Holland & Allen, expressed caution. “It would take away from the substance of the argument if we’re going to have a bunch of water rights ambulance chasers,” he said.

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