Tarrant Reg'l Water Dist. v. Herrmann

The Red River Compact, (or Compact), 94 Stat. 3305 , allocates water rights among the States within the Red River basin as it winds through Texas, Oklahoma, Arkansas, and Louisiana. Petitioner Tarrant Regional Water District (Tarrant), a Texas agency, claims that it is entitled to acquire water under the Compact from within Oklahoma and that therefore the Compact pre-empts several Oklahoma statutes that restrict out-of-state diversions of water. In the alternative, Tarrant argues that the Oklahoma laws are unconstitutional restrictions on interstate commerce. We hold that Tarrant's claims lack merit.

A

The Red River (or River) begins in the Llano Estacado Mesa on the border between New Mexico and Texas. From this broad plain, it first runs through the Texas Panhandle and then marks the border between Texas and Oklahoma. It continues in an easterly direction until it reaches the shared border with Arkansas. Once the River enters Arkansas, it turns southward and flows into Louisiana, where it empties into the Mississippi and Atchafalaya Rivers.

As an important geographic feature of this region, the Red River has lent its name to a valley, a Civil War campaign, and a famed college football rivalry between the Longhorns of Texas and the Sooners of Oklahoma. But college pride has not been the only source of controversy between Texas and Oklahoma regarding the Red River. The River has been the cause of numerous historical conflicts between the two States, leading to a mobilization of their militias at one time, Oklahoma v. Texas, 258 U.S. 574 , 580, 42 S.Ct. 406 , 66 L.Ed. 771 (1922), and the declaration of martial law along a stretch of the River by Oklahoma Governor "Alfalfa Bill" Murray at another, see Okla. H. Res. 1121, 50th Legislature, 2d Sess. (2006) (resolution commemorating "Alfalfa Bill" Murray's actions during the "Red River Bridge War"). Such disputes over the River and its waters are a natural result of the River's distribution of water flows. The River's course means that upstream States like Oklahoma and Texas may appropriate substantial amounts of water from both the River and its tributaries to the disadvantage of downstream States like Arkansas and especially Louisiana, which lacks sufficiently large reservoirs to store water.

Absent an agreement among the States, disputes over the allocation of water are subject to equitable apportionment by the courts, Arizona v. California, 460 U.S. 605 , 609, 103 S.Ct. 1382 , 75 L.Ed.2d 318 (1983), which often results in protracted and costly legal proceedings.

Thus in 1955, to forestall future disputes over the River and its water, Congress authorized the States of Arkansas, Louisiana, Oklahoma, and Texas to negotiate a compact to apportion the water of the Red River basin among themselves. See Act of Aug. 11, 1955, Pub.L. 346, 69 Stat. 654 . These negotiations lasted over 20 years and finally culminated in the signing of the Red River Compact in 1978. Congress approved the Compact in 1980, transforming it into federal law. See Act of Dec. 22, 1980, 94 Stat. 3305 ; Compact, 1 App. 7 -51.

The provision of the Compact central to the present dispute is § 5.05 (b)(1), which

Subbasin 5's allocation scheme allows upstream States to keep the water that they have stored, but also ensures that Louisiana will receive a steady supply of water from the Red River, with each upstream State contributing during times of low flow.

To ensure that its apportionments are honored, the Compact includes an accounting provision, but an accounting is not mandatory "until one or more affected states deem the accounting necessary." § 2.11, id., at 13; see Comment on Art. II, id., at 15-16. This is because the "extensive gaging and record keeping required" to carry out such an accounting would impose "a significant financial burden on the involved states." Id., at 16. Given these costs, the signatory States did "not envisio[n] that it w[ould] be undertaken as a routine matter." Ibid. Indeed, it appears that no State has ever asked for such an accounting in the Compact's history. See Brief for Respondents 45; Reply Brief 11-12.

While the Compact allocates water rights among its signatories, it also provides that it should not "be deemed to ... [i]nterfere with or impair the right or power of any Signatory State to regulate within its boundaries the appropriation, use, and control of water, or quality of water, not inconsistent with its obligations under this Compact." § 2.10, 1 App. 12 . Rather, "[s]ubject to the general constraints of water availability and the apportionment of the Compact, each state [remains] free to

In Tarrant's view, this provision essentially creates a borderless common in which each of the four signatory States may cross each other's boundaries to access a shared pool of water. Tarrant reaches this interpretation in two steps. First, it observes that § 5.05(b)(1)'s "equal rights" language grants each State an equal entitlement to the waters of subbasin 5, subject to a 25 percent cap. Second, Tarrant argues § 5.05(b)(1)'s silence concerning state lines indicates that the Compact's drafters did not intend to allocate water according to state borders in this section. According to Tarrant, "the '25 percent' language [of § 5.05(b)(1) ] makes clear that, in exercising its 'equal rights' to the common pool of water, no State may take more than a one-quarter share, " Reply Brief 3, but any of the signatory States may "cross state lines to obtain [its]

§ 5.05(b)(1)'s silence means that state borders are irrelevant to the allocation of water in subbasin 5 of Reach II, then the Oklahoma water laws at issue conflict with the cross-border rights created by federal law in the form of the Compact and must be pre-empted. But if § 5.05(b)(1)'s silence instead reflects a background understanding on the part of the Compact's drafters that state borders were to be respected within the Compact's allocation, then the Oklahoma statutes do not conflict with the Compact's allocation of water.

B

Interstate compacts are construed as contracts under the principles of contract law. Texas v. New Mexico, 482 U.S. 124 , 128, 107 S.Ct. 2279 , 96 L.Ed.2d 105 (1987). So, as with any contract, we begin by examining the express terms of the Compact as the best indication of the intent of the parties, see also Montana v. Wyoming, 563 U.S. ----, ----, and n. 4, ----, 131 S.Ct. 1765 , 1771-1772, and n. 4, 1778, 179 L.Ed.2d 799 (2011) ; Restatement (Second) of Contracts § 203(b) (1979).

Tarrant argues that because other provisions of the Compact reference state borders, § 5.05(b)(1)'s silence with respect to state lines must mean that the Compact's drafters intended to permit cross-border diversions. For example, § 5.03(b), which governs subbasin 3 of Reach II, provides that

"[t]he States of Oklahoma and Arkansas shall have free and unrestricted use of the water of this subbasin within their respective states, subject, however, to the limitation that Oklahoma shall allow a quantity of water equal to ... 40 percent of the total runoff originating below the following existing, authorized or proposed last major downstream damsites in Oklahoma to flow into Arkansas." 1 App. 23 -24 (emphasis added).

Section 6.03(b), which covers subbasin 3 of Reach III, similarly provides that "Texas and Louisiana within their respective

boundaries shall each have the unrestricted use of the water of this subbasin subject to the following [conditions]." Id., at 33 (emphasis added). Thus, § 5.03 (b)

Montana v. United States, 450 U.S. 544 , 552, 101 S.Ct. 1245 , 67 L.Ed.2d 493 (1981) ). See also Solid Waste Agency of Northern Cook Cty. v. Army Corps of Engineers, 531 U.S. 159 , 174, 121 S.Ct. 675 , 148 L.Ed.2d 576 (2001) ; Utah Div. of State Lands v. United States, 482 U.S. 193 , 195, 107 S.Ct. 2318 , 96 L.Ed.2d 162 (1987).

Given these principles, when confronted with silence in compacts touching on the States' authority to control their waters, we have concluded that "[i]f any inference at all is to be drawn from [such] silence on the subject of regulatory authority, we think it is that each State was left to regulate the activities of her own citizens." Virginia v. Maryland, 540 U.S. 56 , 67, 124 S.Ct. 598 , 157 L.Ed.2d 461 (2003). Cf. New Jersey v. New York, 523 U.S. 767 , 783, n. 6, 118 S.Ct. 1726 , 140 L.Ed.2d 993 (1998) ("[T]he silence of the Compact was on the subject of settled law governing avulsion, which the parties' silence showed no intent to modify").

Tarrant asks us to infer from § 5.05(b)(1)'s silence regarding state borders that the signatory States have dispensed with the core state prerogative to

language in the Red River Compact counts heavily against Tarrant's reading of it.

Tellingly, many of these compacts provide for the terms and mechanics of how

Put plainly, the end result would be a jurisdictional and administrative quagmire. The provisions in the other interstate water compacts resolve these complications. The absence of comparable provisions in the Red River Compact strongly suggests that cross-border rights were never intended to be part of the States' agreement.

Tarrant counters that not all interstate compacts that permit cross-border diversions have explicit language to this effect. On this front, Tarrant manages to identify one interstate compact that it contends permits cross-border diversions without express language to that effect, the Upper Niobrara River Compact, Pub.L. 91-52, 83 Stat. 86 . Tarrant observes that this compact, which deals with a river mostly located in Nebraska with only a small portion in Wyoming, provides that "[t]here shall be no restrictions on the use of the surface waters of [the river] by Wyoming." See Art. V(A) 1, id ., at 88. Tarrant suggests that this language, coupled with the fact that the bulk of the river is in Nebraska, implicitly indicates that the compact grants Wyoming a right to enter Nebraska and use the river's water. First, we are not convinced that a single compact's failure to reference state borders does much to detract from the overall custom in this area. See supra, at 2133 - 2134, and n. 12. Second, the Upper Niobrara River Compact is not a helpful counterexample for Tarrant. The general provision that Tarrant quotes is paired with a host of detailed conditions. See Arts. V(A) 1(a)-(f), 83 Stat. 88 . Contrary to Tarrant's position, then, assuming that the Upper Niobrara River compact does create any cross-border rights, it does so not through silence, but through the detailed scheme that would apply to any such contemplated diversions.

Tarrant also argues that § 2.05(d) of the Red River Compact, which provides that "[e]ach Signatory State shall have the right to" "[u]se the bed and banks of the Red River and its tributaries to convey stored water, imported or exported water, and water apportioned according to this Compact,"

1 App. 11 , in fact authorizes

right to water located in Oklahoma, there would have been "compelling business reasons" to mention this right given that billions of dollars were at stake. See 2 App. 362 -363 (summarizing Texas purchase proposal). Yet there is no indication that Tarrant or any other Texas agency or the State of Texas itself previously made any mention of cross-border rights within the Compact, and none of the other signatory States has ever made such a claim.

4

The Compact creates no cross-border rights in Texas. Tarrant's remaining arguments do not persuade us otherwise.

First, Tarrant argues that its interpretation of the Compact is necessary to realize the "structure and purpose of Reach II." Brief for Petitioner 34-38. Tarrant contends that because the boundary of subbasin 5 is set by the location of the last existing, authorized, or proposed sites for a downstream dam before the Red River, see Compact §§ 5.01(a), 5.02(a), 5.03(b), 5.04(a), 1 App. 22 -24, the Compact allows each of the States upstream from Louisiana to prevent water from flowing from its tributaries into subbasin 5. Tarrant reasons that each State will therefore hold whatever water it needs in its upstream basins. Given this, Tarrant maintains that any water that a State voluntarily allows to reach subbasin 5 must be surplus water that State did not intend to use, and if the upstream State has no need for that water, then there is no reason not to allow other States to access and use it, even across borders.

the tributaries covered by subbasins 1 through 4. Tarrant's account of the purposes of subbasin 5 does not explain how these waters were to be allocated.

Tarrant's second argument regarding the purposes of Reach II is that § 5.05(b)(1)'s 25 percent cap on each State's access to excess water in subbasin 5 should be read to imply that if a State cannot access sufficient water within its borders to meet its share under the cap, then it must be able to cross borders to reach that water. Were it otherwise, Tarrant explains, the 25 percent cap would have no purpose. To support this argument, Tarrant draws on a 1970 engineering report that it contends shows that only 16 percent of the freshwater flowing into subbasin 5 was located in Texas. Brief for Petitioner 9, n. 5. The OWRB challenges this percentage with its own calculations drawn from the report, and asserts that Texas had access to at least 29 percent of the excess water in subbasin 5 within its own borders. Brief for Respondents 26, 47-48, and n. 17.

Fortunately, we need not delve into calculations based on a decades-old engineering report to resolve this argument. As we have explained, supra, at 2126 - 2128, Texas does not have a minimum guarantee of 25 percent of the excess water in subbasin 5. If it believes that Oklahoma is using more than its 25 percent allotment and wishes to stop it from doing so, then it may call for an accounting under § 2.11 of the Compact and, depending on the results of that accounting, insist that Oklahoma desist from taking more than its provided share. See Compact § 2.11, and Comment on Art. II, 1 App. 13 -16. This is the appropriate remedy provided under the Compact. But Texas has never done so and Tarrant offers no evidence that in the present day Texas cannot access its 25 percent share on its own land.

C

Under the Compact's terms, water located within Oklahoma's portion of subbasin 5 of Reach II remains under Oklahoma's

control. Accordingly, Tarrant's theory that Oklahoma's water statutes are pre-empted because they prevent Texas from exercising its rights under the Compact must fail for the reason that the Compact does not create any cross-border rights in signatory States.

Tarrant also challenges the constitutionality of the Oklahoma water statutes under a dormant Commerce Clause theory. Tarrant argues that the Oklahoma water statutes impermissibly " 'discriminat[e] against interstate commerce' for the 'forbidden purpose' of favoring local interests" by erecting barriers to the distribution of water left unallocated under the Compact. Brief for Petitioner 47-48 (quoting Department of Revenue of Ky. v. Davis, 553 U.S. 328 , 338, 128 S.Ct. 1801 , 170 L.Ed.2d 685 (2008) ). Tarrant's argument is premised on the position that if we "adopt the Tenth Circuit's or respondent's interpretation [of the Compact], ... a substantial amount of Reach II, Subbasin 5 water located in Oklahoma is not apportioned to any State and therefore is available to permit applicants like Tarrant."

continue its existing internal water administration." Comment on Art. II, id., at 14 . Even during periods of water shortage, "no attempt is made to specify the steps that will be taken [by States to ensure water deliveries]; it is left to the state's internal water administration." Ibid.

creates a permitting review process that applies only to out-of-state water users. § 105.12(F). Oklahoma also requires legislative approval for out-of-state water-use permits, § 105.12A(D), and further provides that "[w]ater use within Oklahoma ... be developed to the maximum extent feasible for the benefit of Oklahoma so that out-of-state downstream users will not acquire vested rights therein to the detriment of the citizens of this state," § 1086.1(A)(3). Interpreting these laws, Oklahoma's attorney general has concluded that "we consider the proposition unrealistic that an out-of-state user is a proper permit applicant before the [OWRB]" because "[w]e can find no intention to create the possibility that such a valuable resource as water may become

and § 6.03(b) mimic § 5.05(b)(1) in allocating water rights within a subbasin, but differ in that they make explicit reference to water use "within" state boundaries. Relying on the expressio unius canon of construction, Tarrant finds that § 5.05(b)'s silence regarding borders is significant because " '[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed [that] Congress acts intentionally and purposely in the disparate inclusion or exclusion.' " Brief for Petitioner 29 (quoting Russello v. United States, 464 U.S. 16 , 23, 104 S.Ct. 296 , 78 L.Ed.2d 17 (1983) ).

But Tarrant's argument fails to account for other sections of the Compact that cut against its reading. For example, § 5.05(b)(3), which governs the waters of subbasin 5 in Reach II when flows are below 1,000 CFS, requires that during such periods, Arkansas, Texas, and Oklahoma allow water " within their respective states to flow into the Red River as required to maintain a 1,000 [CFS] flow at the Arkansas-Louisiana state boundary." 1 App. 25 (emphasis added). Obviously none of the upstream States can redirect water that lies outside of their borders, so the phrase "within their respective states" is superfluous in § 5.05(b)(3). In contrast, § 5.05(b)(2), which governs when the River's flow at the Arkansas-Louisiana border is above 1,000 CFS but below 3,000 CFS, requires that upstream States allow a flow to Louisiana equivalent to 40 percent of total weekly runoff originating within the subbasin and 40 percent of undesignated water flowing into subbasin 5 of Reach II. Id ., at 25. This language can only refer to water within each State's borders because otherwise each State would have to contribute 40 percent to the total water flow, which would add up to more than 100 percent. Read together and to avoid absurd results, §§ 5.05(b)(2) and (3) suggest that each upstream

would upset the balance struck by all these sections.

At the very least, the problems that arise from Tarrant's proposed reading suggest that § 5.05(b)(1)'s silence is ambiguous

such cross-border relationships will operate, including who can assert such cross-border rights, see, e.g., Kansas-Nebraska Big Blue River Compact, Art. VII(1), 86 Stat. 198 , who should bear the costs of any cross-border diversions, see, e.g., Belle Fourche River Compact, Art. VI, 58 Stat. 96 -97, and how such diversions should be administered, Arkansas River Basin Compact, Kansas-Oklahoma, Art. VII(A), 80 Stat. 1411 . See also Brief for Professors of Law and Political Science as Amici Curiae 11-14 (giving more examples).

Provisions like these are critical for managing the complexities that ensue from cross-border diversions. Consider the mechanics of a cross-border diversion or taking of water in this case. If Tarrant were correct, then applicants from Arkansas, Texas, and Louisiana could all apply to the OWRB for permits to take water from Oklahoma. The OWRB would then be obligated to determine the total amount of water in Oklahoma beyond the 25 percent cap created in § 5.05(b)(1), given that the Compact would only obligate Oklahoma to deliver water beyond its quarter share. This alone would be a herculean task because the Compact does not require ongoing monitoring or accounting, see Compact § 2.11, 1 App. 13 , and not all of the water in subbasin 5 is located or originates in Oklahoma. Moreover, the OWRB would be tasked with determining the priority under the Compact of applicants from other States. This would almost certainly require the OWRB to not only determine whether Oklahoma had received more or less than its 25 percent allotment, but whether other States had as well.

cross-border diversions. Because the present border between Texas and Oklahoma east of the Texas Panhandle is set by the vegetation line on the south bank of the River, Red River Boundary Compact, 114 Stat. 919 , Tarrant contends that § 2.05(d) reflects an understanding on the part of the Compact's drafters that state borders could be crossed. But the issue is not as simple as Tarrant makes it out to be. When the Compact was drafted, the Texas-Oklahoma border was fixed at the south bank of the River. See Texas v. Oklahoma, 457 U.S. 172 , 102 S.Ct. 2923 , 72 L.Ed.2d 762 (1982). If Texas was able to access water through the south bank of the River-an issue left unbriefed by the parties-the Compact's framers may have believed that Texas could reach the River and take water from it without having to enter Oklahoman land, casting doubt on Tarrant's theory. In any event, even if § 2.05(d) is read to establish a cross-border right, it does so through express language setting forth the location and purposes under which such an incursion is permissible. This is different from the inference from silence that Tarrant asks us to draw in § 5.05(b)(1).

3

The parties' conduct under the Compact also undermines Tarrant's position. A "part[y's] course of performance under the Compact is highly significant" evidence of its understanding of the compact's terms. Alabama v. North Carolina, 560 U.S., at ----, 130 S.Ct. 2295 . Since the Compact was approved by Congress in 1980, no signatory State had pressed for a cross-border diversion under the Compact until Tarrant filed its suit in 2007. Brief for Respondents 26, 49-51. Indeed, Tarrant attempted to purchase water from Oklahoma over the course of 2000 until 2002, see supra, at 2128, a strange offer if Tarrant believed it was entitled to demand such water without payment under the Compact.

In response, Tarrant maintains that there were "compelling business reasons" for it to purchase water. Reply Brief 17. We are unpersuaded. If Tarrant believed that it had a

This argument is founded on a shaky premise: It assumes that flows from these dammed-up tributaries are the sole source of water in subbasin 5. But § 5.05(b)(1) explains that "[s]ignatory States shall have equal rights to the use of runoff originating in subbasin 5," as well as "water flowing into subbasin 5," which would include flows from the main stem of the River itself. Id ., at 25. Thus, there are waters that are specific to subbasin 5 separate from those originating in

Brief for Petitioner 47. So, Tarrant continues, because Oklahoma's laws prevent this "unallocated water" from being distributed out of State, those laws violate the Commerce Clause.

Tarrant's assumption that that the Compact leaves some water "unallocated" is incorrect. The interpretive comment for Article V of the Compact makes clear that when the River's flow is above 3,000 CFS, "all states are free to use whatever amount of water they can put to beneficial use," subject to the requirement that "[i]f the states have competing uses and the amount of water available in excess of 3000 CFS cannot satisfy all such uses, each state will honor the other's right to 25% of the excess flow." 1 App. 29 -30. If more than 25 percent of subbasin 5's water is located in Oklahoma, that water is not "unallocated"; rather, it is allocated to Oklahoma unless and until another State calls for an accounting