January 01, 2014

Tarrant Water District: Either a minimalist contractual decision or an invitation to hoard water

Sidney F. Ansbacher

This article follows Tarrant Water District: Another battle in the Texas-Oklahoma water wars, my previous article published in Vol. 43 Trends No. 5 (May/June 2012). That piece predicted that the U.S. Supreme Court could resolve the Red River Compact dispute over water rights between the Tarrant Regional Water District in Texas and the Oklahoma Water Resources Board by interpreting the four-state compact by its contract terms. Alternatively, the Court could take the opportunity to expound on interstate water law in a time of rapidly diminishing potable water resources.

Justice Sotomayor’s unanimous opinion in Tarrant Regional Water District v. Herrmann, 133 S. Ct. 2120 (2013), left commentators in two camps. Some opined that Tarrant is a minimalist contractual interpretation. Others alleged it is the “worst water rights” decision in years because of the resulting invitation to hoard water resources. The ruling was conservative enough to please the University of Texas’s iconic coach Darrell Royal, who coined the phrase: “Three things can happen when you pass, and two of ’em are bad.” Nevertheless, the opinion contained some nuggets that heartened states’ rights proponents who hoped the Court would help protect intrastate waters against interstate allocation.

The case centered on a clause in the 1978 Red River Compact (compact) allocating water rights from the Red River basin among the neighboring states of Oklahoma, Texas, Louisiana, and Arkansas. Tarrant sought water from the Kiamichi River in Oklahoma, which is a tributary of the Red River, to serve consumers in the rapidly growing Arlington/Ft. Worth, Texas area. The Oklahoma Water Resources Board rejected Tarrant’s agreements with multiple willing Oklahoma public entity water suppliers. Tarrant filed suit. The two key issues were whether the compact allocated excess waters and whether Oklahoma could limit or bar interstate diversion to Tarrant. The compact was silent concerning interstate diversions.

Lower courts disposed of much of the dispute on various procedural grounds. The narrow issue before the Supreme Court was interpretation of compact language governing the subbasin where the Kiamichi entered the Red. The compact provides that the four compacting states “shall have equal rights to the use of runoff originating in [this] subbasin . . . and undesignated water flowing into [this] subbasin . . . so long as the flow of the Red River at the Arkansas-Louisiana state boundary is 3,000 cubic feet per second or more, provided no state is entitled to more than twenty-five percent (25%) of the water in excess of 3,000 cubic feet per second.” Tarrant claimed the compact’s language gave each of the four states a co-equal 25 percent of water rights, regardless of state boundaries. Tarrant additionally contended that the compact’s silence on interstate diversions meant that the compact did not prohibit them. Tarrant also alleged that Sporhase v. Nebraska, 458 U.S. 941 (1982), prohibited Oklahoma’s efforts to limit or prohibit interstate water sales without legislative approval.

Oklahoma countered that the compact allowed each signatory to take its 25 percent in-state. Oklahoma contended the compact’s silence on the right to divert water across state lines did not allow Tarrant’s argument that each state could take 25 percent of its needs from any state that entered into the compact. Rather, Oklahoma said the silence required the Court to defer to each state’s sovereign right to protect its own water resources.

The Court’s limited consideration of the 1982 Sporhase decision

Sporhase was a landmark Supreme Court water rights decision. A Nebraska statute prohibited interstate diversions from Nebraska unless the receiving state afforded reciprocal rights for water diversions to Nebraska. The U.S. Supreme Court reversed the Nebraska Supreme Court, which held that intrastate water is a sovereign resource that each state may regulate as it sees fit. The Sporhase majority struck the requirement, holding the reciprocity requirement was not narrowly tailored to serve the admittedly significant water resources goals of Nebraska. The Supreme Court held that water was a commodity in commerce that could not be hoarded in-state without undergoing dormant Commerce Clause review. The opinion emphasized the water’s location in the Ogallala Aquifer, which underlies much of the Great Plains and is the region’s principal source of groundwater.

The Supreme Court could have reevaluated Sporhase, but Tarrant barely discussed Sporhase. In footnote 11 of the Tarrant decision, the Court cited Sporhase to note: “Of course, the power of States to control water within their borders may be subject to limits in certain circumstances.” 133 S. Ct. at 2133. The Court instead followed the Tenth Circuit Court of Appeals’ and the Western District of Oklahoma’s lead that Sporhase was distinguishable because it addressed unallocated water. While the Court recognized Tarrant’s claim to arguably “unallocated” water over 3,000 cubic feet per second, the opinion concluded the compact did allocate the excess but only to the state where the excess water was located. Tarrant apparently dismissed the Sporhase argument for similar reasons to those the lower courts used, namely that Tarrant concerned the interpretation of where, not whether, the Red River Compact allocated water and that congressional approval of the compact obviated Sporhase.

A troubling conflation of law of submerged lands and in-state water rights

The Tarrant opinion acknowledged that Oklahoma could not categorically prevent the interstate allocation without the compact. Like the Tenth Circuit, Tarrant held Congress’ approval of the compact confirmed its terms. Justice Sotomayor acknowledged that silence alone does not show congressional approval of a Commerce Clause violation. The opinion concluded the compact elsewhere implied strongly that a state’s diversions subject to the compact were solely intrastate. Also, the parties’ prior failure in over thirty years of implementing the compact to argue as Tarrant did supported Oklahoma’s position. Sotomayor cited a “well-established principle that states do not easily cede their sovereign powers, including their control over waters within their own territories.” 133 S. Ct. at 2132. This combined to imply that silence on interstate diversion indicates the lack of such authority rather than the absence of regulation.

The most significant portion of the opinion might be this emphasis on state sovereign’s “‘absolute rights to all their navigable waters and the soils under them for their own common use.’” 133 S. Ct. at 2132 (quoting Martin v. Lessee of Waddell, 16 Pet. 367, 410, 10 L. Ed. 997 (1842)). One major problem arises from the opinion’s conflating of the law of sovereign submerged lands and a state’s rights to regulate in-state water. State sovereign land rights arise under the Equal Footing Doctrine and are virtually per se limited to each state’s static boundaries, absent accretion or erosion. See, generally, S. Ansbacher, Stop the Beach Renourishment: A Case of MacGuffins and Legal Fictions, 35 Nova L. Rev. 587, 626–647 (2011). Conversely, Sporhase confirms that water itself constitutes a commodity in commerce subject to federal preemption under certain circumstances. See, generally, L. Starr, High Court Wades Into State Law Water Allocation, 62 Duke L.J. 1425 (2013). Tarrant’s blanket statement virtually equating the laws of water supply with the submerged sovereign lands public trust doctrine is arguably legally wrong. It can lead to great inequities in a thirsty region like the Great Plains that relies on the massive and overburdened Ogallala Aquifer.

The vast available data on the Ogallala Aquifer show the risks of balkanized water politics in that region. The U.S. Department of Agriculture’s website on the aquifer contains numerous valuable tools discussing drawdowns and depleted water resources throughout the region reliant on the aquifer. Thus, the Tarrant opinion’s sketchy consideration of the applicable law and simplified, conflated legal analyses can have far-reaching consequences beyond the Red River basin.

Implications of Tarrant

The Supreme Court also could have addressed whether and how federal law preempted state water law. Instead, Justice Sotomayor hewed to the narrowest path she could find: construing the compact’s language. The Court conducted no policy analysis in its holding. The Court emphasized the contractual four corners and the compact’s express statement that it did not supplant the states’ own respective water laws. Justice Sotomayor said the compact could preempt state law under the Supremacy Clause. That is, a congressional approval of an interstate compact could express preemption. It just did not do so here. This narrow construction ensured a unanimous court, albeit little direct precedent of consequence.

The Supreme Court held that Tarrant could only establish a dormant Commerce Clause claim by alleging that Oklahoma exceeded its 25 percent share of excess waters allocated to it under the compact. That would require Tarrant to first seek an accounting of Oklahoma’s use pursuant to the compact. Tarrant neither alleged Oklahoma’s overuse nor sought an accounting. Tarrant’s claim to Texas’s alleged borderless common area 25 percent share failed in the face of the presumption against implied interstate diversion in a water compact. Therefore, Tarrant’s argument foundered.

The opinion made gestures toward various policy and resource issues. The Court might have expounded on the underlying implications of water hoarding outright or in dicta. Instead, it did virtually as little as possible to address the crucial underlying policies of how to allocate disappointment among the West’s increasingly parched states. The decision is likely entirely correct on the merits. Its sketchy, almost nonexistent consideration of Sporhase and conflation of sovereign submerged lands and water allocation law are far more troubling.

The Tarrant Court failed to analyze significant authority and confused two significant water law standards. Justice Sotomayor focused instead on the quotidian but daunting administrative implications of Tarrant’s arguments. The Court emphasized the “herculean task” of recordkeeping that Tarrant’s argument would require of the Oklahoma Water Resources Board. The other three states could request surplus water from Oklahoma, thus requiring Oklahoma to monitor and account to establish the 25 percent cap usage. Further, the other three states’ shares must also be determined, to ascertain whether and where they could tap their common area quarter share. Sotomayor cautioned “the end would be a jurisdictional and administrative quagmire.” 133 S. Ct. at 2134. The more legally significant point concludes the Court’s analysis. See, Starr, supra, concerning the problems arising from the Supreme Court analyzing public trust water cases based on legally irrelevant administrative convenience. To the point, the Court noted the Red River Compact contained none of these necessarily complex mechanisms that Tarrant’s argument likely required. This added inference upon inference supporting Oklahoma’s position.

After this decision, Tarrant must look for other remedies to its water crisis. Tarrant’s perspective of the position that Oklahoma enjoys is likely best summed up by a football figure who has connections in three of the four signatory states to the Red River Compact. As ex-Arkansas Razorback football player, then Oklahoma Sooner and Dallas Cowboy coach, Barry Switzer, said: “Some people are born on third base and go through life thinking they hit a triple.” Conversely, Oklahoma’s position concerning its rights to water, as confirmed by Tarrant, is summed up by Coach Royal again: “You dance with who brung ya.”

Sidney F. Ansbacher

Sidney F. Ansbacher is a shareholder with Gray Robinson, P.A., in Jacksonville, Florida.