Tarrant Regional Water District v. Herrmann

• [Questions Presented]
• [Issues]
• [Facts]
• [Discussion]
• [Analysis]

Issue(s)

Whether signatories to a multi-state compact agree to give up their sovereign rights to exclusive use within their borders and to the licensing of permits for the use of water within their borders when the compact provides signatory states with equal rights to use of water in areas where the distribution of water is allocated asymmetrically between the states?

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Facts

Tarrant Regional Water District (“Tarrant”) is a Texas state agency that provides water to the northern part of Texas. Because the Dallas-Forth Worth metropolitan area has rapidly expanded, the region’s need for water has also grown. This case represents Tarrant’s effort to secure water from Oklahoma to satisfy that growing need.

Tarrant seeks to export water to Texas from sources within Oklahoma that are covered by the Red River Compact (“Compact”). The Red River forms the boundary between south-eastern Oklahoma and north-eastern Texas and in 1955, the United States Congress gave permission to Arkansas, Louisiana, Oklahoma, and Texas to negotiate a water apportioning agreement in the Red River Basin. In 1978, the states signed the Compact and Congress ratified it in 1980. The Compact divides the basin into five subbasins.

Herrmann is a member of the Oklahoma Water Resources Board (“OWRB”), which was created by the Oklahoma Legislature to rule on permit applications to appropriate water from within the state to be used by and within another state. The OWRB makes permit rulings based on criteria that the Oklahoma Legislature has established through many statutes.

In 2007, Tarrant sued members of the OWRB, including Herrmann, in the United States District Court for the Western District of Oklahoma seeking two things: 1) a declaratory judgment that certain Oklahoma statutes dealing with water appropriation are unconstitutional; and 2) an injunction preventing the OWRB from applying the statutes to their application for water. The OWRB moved to dismiss Tarrant’s complaint but the District Court denied the motion. The OWRB filed an interlocutory appeal on the ruling but the United States Court of Appeals for the Tenth Circuit affirmed the District Court’s ruling.

In 2009, after the Oklahoma Legislature passed House Bill 1483, which substantially changed the water permit application process, Tarrant amended its complaint to challenge five more statutory provisions under the dormant Commerce Clause and the Supremacy Clause.

Again, the OWRB filed a motion to dismiss and in the alternative a motion for summary judgment on the dormant Commerce Clause argument and the Supremacy Clause argument. The District Court granted the motion for summary judgment in favor of OWRB. With regards to Tarrant’s dormant Commerce Clause argument, the District Court held that “in light of the right of Oklahoma to control compact waters within its borders not inconsistent with the Compact, and without showing a particular statute which is necessarily inconsistent with the Compact,” the dormant Commerce Clause is not applicable. With regard to Tarrant’s Supremacy Clause argument, the District Court held that the Compact does not preempt the Oklahoma water statutes because it explicitly states that it is not intended to supplant any state legislation which is consistent with the Compact. On the argument Oklahoma statutes should be invalidated to the extent that they apply to water not governed by the Compact, the District Court granted Tarrant leave to amend its complaint and establish that Tarrant had executed a contract to export water that was not subject to the Compact.

Tarrant then signed a contract to acquire ground water with landowners from Stephens County and agreed to a memorandum of understanding (“m.o.u.”) with the Apache Tribe. The District Court dismissed the claim ruling that neither of these agreements created a justiciable controversy. Tarrant lacked standing on the Stephens County claim because most of the statutes Tarrant challenged applied only to stream water and the agreement Tarrant signed was for groundwater. Also, the Apache Tribe issue was not ripe because the m.o.u. agreement was too contingent. Then, Tarrant filed an appeal with the Court of Appeals who affirmed the District Court’s holdings.

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Discussion

Although this decision will likely affect many United States citizens, the effects of this decision will be felt most drastically in either Texas or Oklahoma. Amici in support of Tarrant urge the Supreme Court to overturn the Tenth Circuit’s decision because they believe that it will cause serious social, economic, and environmental harm to Texas and its citizens. On the other hand, amici in support of OWRB, argue that overturning the decision would cause serious social, economic, and environmental harm to Oklahoma and its citizens.

EFFECTS ON TEXAS

Amici supporting Tarrant argue that access to Oklahoma’s water is essential to Texas’ economy because without access to this water, Texas will suffer from huge water shortages. Texas’ increasing water need stems from two challenges: rapid population growth and recurring drought. The Fort Worth Chamber of Commerce explains that a failure to meet the region’s increasing water supply needs would be devastating to Texas’ economy for many reasons. One reason is that access to water is an important requirement for the operation of many businesses and industries inside the state including manufacturing, mining, livestock production, and agriculture. Without access to water, these businesses may fail and hundreds of thousands of jobs will be lost and as will billions of dollars in tax revenue. One study estimates that if the regions needs are unmet by 2060, a single year drought could cost over $50 billion in taxes and cause the loss of more than 500,000 jobs. Thus, the Amici explain, Texas must tap into several new sources of water to secure its future.

In an amicus brief, the cities of Arlington and Fort Worth explain that, after extensive review, Texas state and regional water planners have identified water sources within Oklahoma as the most reliable, environmentally friendly, and affordable sources to meet their increasing needs. The amici argue that Oklahoma has an ample supply of water which can be easily accessed without constructing new facilities. They argue that Oklahoma has an abundance of water because the water Tarrant seeks to apportion from Oklahoma is currently being wasted and emptied into the Gulf of Mexico. Therefore, they argue that the Supreme Court should overturn the decision below to effectively allow Tarrant to appropriate water from Oklahoma to fulfill their needs and avoid disaster.

EFFECTS ON OKLAHOMA

Amici supporting OWRB argue that Oklahoma’s statutes against appropriating water for out-of-state use are necessary to protect the “health, safety, and welfare interests of Oklahomans.” Oklahomans for Responsible Water Policy (“Oklahomans”), a grassroots citizen’s organization, explain that Oklahoma, like Texas, is suffering from extreme drought conditions. They explain that forecasts made by the US Drought Monitor indicate that the drought will continue into the future; thus, it is imperative that Oklahoma preserve its water resources to protect its citizens. The amici also explain that Oklahoma does not have an abundance of water which is being wasted; the amount of water government officials classified as “surplus” or “available” is “widely overstated” because it does not account for many of Oklahoma’s non-consumptive uses of water. For example, much of the water that Tarrant seeks to apportion is actually being used for hydro-electric power generation, recreational maintenance and tourism, and to preserve wildlife habitats.

Oklahomans fear that apportioning water to Texas would severely harm their economy and them. South-eastern Oklahoma has historically been a severely impoverished region that only recently blossomed due to tourism and recreational opportunities that water access in the Red River Basin has created. The Oklahomans explain that the water access provides citizens in the region with well-paying jobs. They worry that removal of water, especially in time of drought, would end all further economic development and could actually reverse it. Therefore, the Oklahomans argue that the Supreme Court should uphold the Tenth Circuit’s decision and signal to them that their lives are equally important to the lives of Texans.

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Analysis

Tarrant argues that the Red River Compact ("Compact") provides Texas with cross-border rights to access its equal share of Subbasin 5 water located in Oklahoma. Furthermore, Tarrant argues that Oklahoma’s water permitting statutes violate the Dormant Commerce Clause (“DCC”) by discriminating against out-of-state water users. The Oklahoma Water Resources Board ("OWRB") argues that signatory states to the Compact do not silently surrender their sovereignty and that the DCC does not apply in this case because the Compact shelters Oklahoma’s water laws from scrutiny under the DCC.

Cross-Border Rights

Tarrant first argues that the Compact references only “last downstream major damsites” and makes no mention of state borders. Section 5.05(b)(1) of the Compact, argues Tarrant, gives four states equal rights to the use of water originating in Subbasin 5 without placing any geographical limitations on the exercise of those rights, evincing the drafters' intent not to allocate water by state in Subbasin 5. Second, Tarrant notes that in Russello v. United States, the Supreme Court held that where a legislature includes language in one section but omits it in another, that omission is intentional. Tarrant argues that because other provisions in the Compact mention state lines, the proper interpretation of Section 5.05(b)(1) is to allow cross-border appropriation of water by signatory states. Finally, Tarrant argues that any other interpretation of section 5.05(b)(1) would make little sense because Louisiana has no Subbasin 5 water within its borders; thus, states must be able to access water outside of their borders.

OWRB first responds by arguing that section 5.05(b)(1) enforces only a cap on water use. This cap, argues OWRB, prevents upstream states from hoarding more than 25 percent of the water when flow is in excess of 3,000 cubic feet per second (cfs), allowing downstream states to receive sufficient flows. Second OWRB argues that the words of the Compact are “equal rights to use,” not “equal share,” and that an “equal share” reading is not possible under section 5.05(b)(1) because Louisiana would receive 3,000 cfs plus 25 percent of the excess, while other states would only each get 25 percent of the excess above 3,000 cfs. Finally, OWRB contends that Tarrant’s reading of the statute’s plain language is paradoxical because it relies on silence regarding state borders. OWRB argues that consideration for a state’s sovereign border is obvious and so the drafters did not feel the need to expressly draft it into every provision.

Tarrant further contends that because states have unrestricted use of water from upstream reservoirs, Subbasin 5 is composed of surplus water allowed to flow from upstream basins; this explains the willingness and intent of states to share Subbasin 5 water equally. Tarrant argues that the cap on usage of Subbasin 5 water only makes sense if states have equal share rights because states could just appropriate the water a few miles upstream before it flowed into Subbasin 5, where the state would enjoy unlimited use of its waters.

OWRB responds by arguing that, first, Subbasin 5 water is made up of more than surplus water from upstream; OWRB contends that rain runoff comprises a substantial part of the water in Subbasin 5. Second, OWRB argues that states cannot simply appropriate water by taking it upstream from reservoirs where states have unlimited usage rights because these reservoirs often serve as major recreational sites, and diverting this water would curtail the site’s recreational use by lowering the water level.

Tarrant first argues that the lower court erred in finding that sections 2.01 and 2.01(a) evince Congressional intent to defer to state water laws because these sections carry important caveats that subject state water laws to the apportionment of water under the Compact. Second, Tarrant argues that the presumption against preemption does not apply to the Compact because, unlike a typical federal statute, Congress does not impose an interstate compact on the states. Rather, argues Tarrant, an interstate compact it is a negotiated solution to a common problem between two or more states and preemption of state law by Congressional approval is proper because it respects the decision of states to compromise on their sovereign rights.

OWRB argues that in-state control over water is a fundamental principle of state sovereignty and a compact cannot override this absent express language; similarly, Congress does not preempt state sovereignty absent a clear statement. OWRB further argues that when states agree to cede sovereignty, the language is clear and the compact will detail how one state may obtain access to water, where the diversion of water is permitted, and what laws are applicable to the cross-border rights. Finally, OWRB argues that reading silence as consent raises jurisdictional obstacles, such as issues regarding authorization of the diversion, oversight of the usage of water, and implementation of eminent domain powers.

Tarrant also argues that extrinsic evidence shows the drafters considered apportioning water by state borders in predecessor drafts but ultimately rejected approach in the final draft. Furthermore, Tarrant argues that the drafters understood the allocation of excess water as referring to the entire amount, notwithstanding borders, because the drafters knew that Texas could not access 25 percent of the water in Subbasin 5 within its own borders. Finally, Tarrant argues that the construction of federal reservoirs located entirely within Oklahoma allow for the use of water by Texas because funding for those reservoirs was justified in part by the projected water demand of the North Texas region. Tarrant argues that the drafters would have considered these expectations binding, and the only way Texas can access this water is by taking it downstream in Subbasin 5.

OWRB contends that predecessor drafts always included border limitations, and that section 5.05(b)(1) was introduced by the Army Corps of Engineers in the 1976 draft as a solution to a tragedy-of-the-commons problem. OWRB argues that none of the signatories understood this provision to eliminate state borders. OWRB also argues that Congress has never promised any of the federal reservoir water to the Dallas/Fort Worth Region. Finally, ORWB argues that Texas’ conduct under the Compact is evidence of the parties’ intent that the Compact did not grant cross-border rights. OWRB contends that if Texas thought it could divert Subbasin 5 water for free, then it would not have offered to buy water from Arkansas after the Compact was ratified, nor would Texas have defined Subbasin 5 water as in-state waters in its compliance rules, nor would Texas have offered Oklahoma $1 billion for Subbasin 5 Kiamichi River water.

The Dormant Commerce Clause

Tarrant argues that Oklahoma’s water permitting scheme violates the DCC because the Compact does not show an unambiguous Congressional intent allowing interstate discrimination. Tarrant argues that section 5.05(b)(1) clearly allocates Subbasin 5 water without regard to state boundaries. Tarrant also argues that the lower court found Tarrant’s reading of section 5.05(b)(1) a possible one; such recognition of ambiguity, argues Tarrant, necessarily implies that an unmistakably clear statement has not been made. Furthermore, Tarrant argues that the lower court erred in using the Compact’s interpretive comments when analyzing the DCC issue because if the Compact is unmistakably clear, then there is no need to review the interpretive comments. Finally, Tarrant argues that although some of Oklahoma’s water permitting laws predate the Compact, the DCC is still applicable to them, and any law that discriminates against out-of-state water users is in violation of the DCC.

OWRB argues that the Compact protects Oklahoma’s laws from DCC scrutiny because the purpose of an interstate compact is to leave allocation of water exclusively to the states. Once states agree how to apportion a resource, argues OWRB, an interstate compact keeps the federal government from exercising federal authority over that resource. OWRB also argues that twelve key provisions in the Compact demonstrate Congressional intent to consent to state water laws securing in-state use. OWRB argues that there is no evidence of Congressional intent to waive the DCC for these provisions but to apply it selectively to section 5.05(b)(1). Finally, OWRB argues that a state-granted right to appropriate water is not “commerce;” rather, OWRB argues that it falls into the same category of licenses like marriage or parking permits that are not commerce and thus not subject to DCC scrutiny.

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Conclusion

The Supreme Court ruling in this case will decide whether the parties to the Red River Compact have signed away their sovereign rights to water within their borders and whether parties to the Compact may enact laws that are discriminatory towards out-of-state users. If the Supreme Court adopts Tarrant’s position, Texas would be able to go into the part of Oklahoma that constitutes Subbasin 5 and divert water directly for use in Texas. Furthermore, Oklahoma would not be able to enforce laws that prohibit water permit applicants from using Oklahoma water outside its borders. This decision would help Texas to escape serious economic disaster caused by water shortages. If the Supreme Court adopts the position of the OWRB, Oklahoma would have exclusive use of water within its borders and its sovereignty would not be compromised by the Compact. Furthermore, Oklahoma would be able to enforce laws relating to any water under the Compact, even if these are discriminatory, because Congress has approved of the allocation of water under the Compact and has thus insulated state laws from Commerce Clause scrutiny. This decision would allow Oklahoma to preserve its water and protect its citizens.

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