VOLUME 1 2013 NUMBER 1to 2004. Yet, the city is pursuing water transfers from outside its wa-tershed to secure future supplies. Professor Robert Glennon of the University of Arizona’s

VOLUME 1 2013 NUMBER 1

ARTICLES—WATER LAW EDITION

COPING WITH WATER SCARCITY, RISK &UNCERTAINTY: RESILIENCE & HOPE . . . . .G. Tracy Mehan, III 1

INTERSTATE WATER COMPACTS:A LICENSE TO HOARD? . . . . . . . . . . . . . . . . . . . . . . . . . . . Linda Christie 15

INVESTMENT IMPACT OF WATERRELIABILITY—RECENT DOW EXPERIENCE . . . . . . . Paul Bork 37

INVESTMENT RISKS FOR WATERPROJECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sharlene Leurig 69

STATE WATER PLANNING: THEORY V.PRACTICE IN TEXAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mary E. Kelly 85

THE POTENTIAL IMPACT OF FEDERALLAWS ON STATE WATER SUPPLIES . . . . . . . . Brad B. Castleberry 99

& Sara R. Thornton

THE SHAPE OF ILLUSION: WATER LAWAND POLICY IN THE FOURTHDIMENSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . George William Sherk 113

STUDENT COMMENT

“DROPPING” THE MIGRATORY BIRDTREATY ACT: THE NEGATIVE EFFECTSOF THE MBTA ON PROPERTY RIGHTSAND HUMAN HEALTH . . . . . . . . . . . . . . . . . . . . . . . . . . . Sabita Maharaj 127

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The Journal of Real Property Law is pleased to an-nounce that the Texas Wesleyan University School of Law,henceforth, will be known as the Texas A&M UniversitySchool of Law. Accordingly, the Journal also has changedits name and will now be called the Texas A&M Journal ofReal Property Law. This is an exciting change for the Jour-nal and the entire staff and editors are thrilled about thefuture of the publication and the opportunities that thechange will bring. However, none of the Journal’s successwould have been possible without the effort and dedicationof the editors and staff that preceded this change. Theywere invaluable to the creation and development of theJournal and are owed a great debt of thanks for the soundfoundation they established. In recognition of their tremen-dous work, this issue is dedicated to the first and secondstaff and editorial teams of the Texas Wesleyan Journal ofReal Property Law. The Journal will continue to provideelectronic access to all of its publications, including thosefrom the first and second years, on the Journal’s website:www.realpropertyjournal.org.

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Sarah Burns Stuart Keplar William SweetEdward Cawlfield Andrew Kubiak Gordan TruongKourtney Doman Sabita Maharaj Whitney VaughanNicholas Edwards Cooper Walker

Faculty AdvisorProfessor Gabriel Eckstein

ARTICLES—WATER LAW EDITION

COPING WITH WATER SCARCITY,RISK & UNCERTAINTY:

RESILIENCE & HOPE

By G. Tracy Mehan, III †

I. INTRODUCTION: RISK AND UNCERTAINTY . . . . . . . . . . . . . . 1II. RESILIENCE & HOPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

A. Signs of Hope: Pricing, Markets, Technology . . . . . . . 4B. Hope Amongst Risk and Uncertainty . . . . . . . . . . . . . . . 12

I. INTRODUCTION: RISK AND UNCERTAINTY

It is most appropriate that we gather here in Texas, a state blessedwith a vibrant economy and robust population growth, but still comingto terms with a searing drought.1 Here we get a glimpse of the daunt-ing circumstances impacting water supply and security throughout theUnited States. This is a good time and place to consider how we oftenundervalue a resource and commodity that is so important in ourlives. In this way we can secure our future water supplies while copingwith all the risks, challenges and opportunities this entails.

The great Scottish economist, Adam Smith, captured the paradox ofdiamonds and water, at the margin, in his classic book, An Inquiry intothe Nature and Causes of the Wealth of Nations (1776) published thesame year as the signing of America’s Declaration of Independence:

Nothing is more useful than water; but it will purchase scarce any-thing; scarce anything can be had in exchange for it. A diamond, onthe contrary, has scarce any value in use; but a very great quantityof other goods may frequently be had in exchange for it.2

Thus, diamonds, which are for mere adornment, are valued morehighly than water, which is essential for life on this planet. Trying toovercome or resolve this paradox in the United States is an ongoingchallenge for all Americans, as well as Texans. Take the case of theColorado River, which provides water for millions of people from San

† Principal, The Cadmus Group, Inc. (www.cadmusgroup.com); Former Assis-tant Administrator for Water, U.S. Environmental Protection Agency, 2001–2003;and adjunct professor for environmental law, George Mason University School ofLaw. This Article is based on the Author’s Keynote Address to the Symposium onSecuring Water Supplies for the Future: Risk, Challenges, and Opportunities, spon-sored by the Texas Wesleyan Journal of Real Property Law, Nov. 9, 2012.

1. For general background on the Texas situation, see Documentary: Life By theDrop: A Special Report on Drought, Water and the Future of Texas, STATEIMPACT.NPR

.ORG, http://stateimpact.npr.org/texas/tag/life-by-the-drop./.2. ADAM SMITH, AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH

OF NATIONS at ¶13 (1776).

1

2 TEXAS A&M J. OF REAL PROPERTY LAW [Vol. 1

Diego to Denver and many farms, cities and towns in between.3 It isalso an area of rapid population increase.

A blue-ribbon committee of the National Research Council(“NRC”), part of the National Academies, reviewed data from tree-ring studies which provide a much longer-term picture of weather andclimate patterns than do stream gauges which extend back only a hun-dred years. Tree-ring data sets go back 300, 500 or 800 years and indi-cate that average annual water flows vary more than previouslythought. Extended droughts are not uncommon at all, and futuredroughts may be longer and more severe because of an evident re-gional warming trend. The preponderance of the evidence suggeststhat rising temperatures will reduce the river’s flow and water sup-plies, says the NRC.

In 1922, when the Colorado River Compact was originally estab-lished and allocated water between upper and lower basin states,negotiators assumed that there would be greater annual average riverflow. But the tree-ring data reconstructions show that the years from1905-1922 were exceptionally wet ones, hardly the basis for sustaina-ble calculations of water availability for the long run. Arizona in-creased its population by 40% since 1990, the state of Colorado by30%. Clark County, Nevada, home to Las Vegas, doubled its waterconsumption between 1985 and 2000 even in the face of improvedwater conservation efforts. Las Vegas gets its water from Lake Mead,America’s largest artificial reservoir.4 It has, at various times, beenhalf full as has Lake Powell, another manmade structure on the Colo-rado River. Most disturbing, researchers at the Scripps Institution ofOceanography believe that there is a 50% chance Lake Mead will rundry by 2021 and a 10% chance it will run out of usable water by 2014depending on the drought worsening and water use increases. This, inturn, will interfere with the generation of electricity by threatening theoperation of Hoover Dam’s turbines.

Notwithstanding its reputation as a boom town and for wretchedexcess, Las Vegas is an interesting case study illustrating the dauntingchallenges of transplanting a humid lifestyle to an arid land.5 The LasVegas Strip, home to many of the world’s largest hotels, with foun-tains, a lake and even Pirate ship battles, demonstrates the benefit of

3. Most of my discussion on the Colorado River and Basin draws off the recentreport by NAT’L RESEARCH COUNCIL, COLORADO RIVER BASIN WATER MANAGE-

MENT: EVALUATING AND ADJUSTING TO HYDROCLIMATIC VARIABILITY (2007).4. Lake Mead May Dry Up by 2021, NAT’L GEOGRAPHIC NEWS, NATIONALGE-

OGRAPHIC.COM (Feb. 13, 2008), available at http://news.nationalgeographic.com/news/2008/02/080213-AP-lake-mead.html.

5. George F. Will, A City That Bets on Water, WASH. POST (Feb. 27, 2005), avail-able at http://www.washingtonpost.com/wp-dyn/articles/A54745-2005Feb25.html. Foran extended discussion of Las Vegas’s sustained efforts at managing its water re-sources, see ROBERT GLENNON, UNQUENCHABLE: AMERICA’S WATER CRISES AND

WHAT TO DO ABOUT IT, 1–16 (2009).

2013] WATER SCARCITY, RISK & UNCERTAINTY 3

water reuse and recycling, an increasingly attractive option given thescarcity and price of water and water treatment. The average hotelroom uses 300 gallons of water per day, but almost all of it is recycled.The Strip accounts for barely 1-3%6 of Nevada’s water use but gener-ates 60% of its economic output.

Note that, statewide, agriculture accounts for 75% of water use.7This historic allocation, as well as the differential in economic valuebetween agriculture and non-agricultural uses, raises the possibility ofwater transfers or trading, which would provide newer uses morewater while offering financial incentives to agriculturalists. Las Vegasstarted paying homeowners $1 per square foot to remove Kentuckybluegrass or turf and saved 2.8 billion gallons of water. Water con-sumption has actually declined despite population growth from 2002to 2004. Yet, the city is pursuing water transfers from outside its wa-tershed to secure future supplies.

Professor Robert Glennon of the University of Arizona’s RogersCollege of Law, author of Unquenchable: America’s Water Crisis andWhat To Do About It, observes: “To understand the depth of thewater crisis, consider that more than thirty-five of the lower forty-eight states are fighting with their neighbors over water.”8 Lookingforward, if the economy continues its recovery, and, as predicted,America’s population grows by more than 135 million over the nextforty years, effective water stewardship will remain a pressing issue fordecades to come.9

II. RESILIENCE & HOPE

There are, indeed, many risks and much uncertainty in our nation’swater future. That said, people, their businesses and enterprises, andthe communities in which they live, are all capable of great ingenuity,resilience and adaptability in the face of adversity. Resilience is predi-cated upon “staunch acceptance of reality; a deep belief, often but-tressed by strongly held values, that life is meaningful; and an uncannyability to improvise.” That is the view of Diane L. Coutu, senior

6. There is a discrepancy between the Will and Glennon accounts. Glennonquotes the top local water official regarding the 3% figure. See generally Will, A CityThat Bets on Water, supra note 5; GLENNON, supra note 5.

7. Current Water Use, CRWUA, CRWUA.ORG, http://www.crwua.org/ColoradoRiver/MemberStates/Nevada.aspx (last visited Feb. 11, 2013).

8. GLENNON, supra note 5, at 18.9. An Urgent Call To Action: Report of the State-EPA Nutrient Innovations

Task Group, State—EPA Nutrient Innovations Task Force 1 (Aug. 2009) (citing U.S.Census Bureau reports from 2008 & 2009), available at www.epa.gov/waterscience/criteria/nutrient.


editor at the Harvard Business Review who specializes in psychologyand business.10

Resilience, however, is not the same thing as optimism. Coutu citesJames Collins, the celebrated author of the best-selling business book,Good to Great, on the case of Admiral Jim Stockdale, a prisoner ofwar who was tortured by the Vietcong for eight years. In response toCollins’s enquiry as to who did not make it out of the camps, Stock-dale replied, “Oh, that’s easy. It was the optimists. They were theones who said we were going to be home by Christmas . . . . Youknow, I think they all died of broken hearts.”

“But for bigger challenges, a cool, almost pessimistic, sense ofreality is far more important,” says Coutu. To successfully adapt tochanging realities, we must soberly assess the situation in order to re-alistically manage ourselves as well as hydrology.

A. Signs of Hope: Pricing, Markets, Technology

Let me offer some thoughts on how sound economics, especiallywater pricing and markets, along with technological innovation, offerhopeful signs in terms of actions already underway and those yet to beundertaken to secure our water future. As to our water supply issues,we should recognize that our situation is neither dire nor hopeless.We are blessed with vast resources, great wealth and advantages interms of our ability to manage our natural resources and, hopefully,ourselves.

One very positive development, an indicator, possibly, of a new ap-preciation of water’s value, is the finding of the U.S. Geological Sur-vey that water use has varied less than 3% since 1985 as withdrawalshave stabilized for the two largest uses—thermoelectric and irriga-tion—basically a flattening out or decline of water use despite a grow-ing population and economy.11 Ironically, many large drinking watersystems, not just in the western United States, are getting quite anx-ious about declining water demand or usage and its impact on theirtraditional volumetric pricing model.12 This recent trend, emergingsince 2008, is probably due to the prevalence of water-efficient toilets

10. Diane L. Coutu, How Resilience Works, HARV. BUS. REV. 2, 4 (May 2002).11. Susan S. Hutson et al., Estimated use of water in the United States in 2000,

U.S.G.S. 1268 CIRCULAR 46 (released 2004, revised 2005), available at http://pubs.usgs.gov/circ/2004/circ1268/. For more detailed water-use information see http://water.usgs.gov/watuse. Estimates of water use in the U.S. indicate that about 408billion gallons per day (one thousand million gallons per day) were withdrawn for alluses during 2000. See also Susan S. Hutson et al., Estimated Use of Water in theUnited States in 2005, U.S.G.S. 1344 CIRCULAR 42–45 (2009), available at http://pubs.usgs.gov/circ/2004/ circ1344.

12. See Janet A. Beecher & Thomas W. Chesnutt, Declining Sales and Water Util-ity Revenues: A Framework for Understanding and Adapting, NAT’L WATER RATES

SUMMIT ALLIANCE FOR WATER EFFICIENCY (2012), available at http://www.allianceforwaterefficiency.org/Declining-Sales-and-Revenues.aspx.


and fixtures, modern building codes and even learned behavior fromwater conservation and efficiency drives which target water users dur-ing droughts. The fundamental economic problem is the loading offixed costs into a variable revenue source.13 This may be a “newnormal.”

Debating the allocation between swimming pools, drinking water,trout streams, irrigation and industrial uses is important, but it is not amatter of life or death in America or Canada as it is in sub-SaharaAfrica or parts of Asia. Many of our problems stem from our afflu-ence rather than our want. “More than half of the residential water inSouthern California (an arid region) goes for landscaping; across theU.S., the average household uses about one-third of its water out-doors,” writes economist David Zetland.14 There is nothing wrongwith landscape irrigation or swimming pools in and of themselves, butthere is something very wrong with our pricing system which fails toestablish the value of water for swimming pools and Scottish lawns inthe desert relative to other human uses, wants and needs.

“Absolute scarcity is not our problem,” maintains Peter H. Gleick,president of the Pacific Institute for Studies in Development, Environ-ment, and Security in Oakland, California, and a MacArthur (“ge-nius”) Fellow, viewing the matter from a global perspective. Hebelieves that “there is almost no place on the planet where basichuman needs for drinking, sanitation, cooking, cleaning cannot be metwith locally available resources.”15

What is true for the entire world is even more so for the UnitedStates, although we aspire to very ambitious standards of economicgrowth and personal lifestyles. Given our expectations—rational or“exuberant”—it is necessary to redefine proper water management toencompass demand-side management as much as the supply-side, andproper pricing of water and water services to include not just the costof collection, treatment, and delivery, but also water’s scarcity value.Moreover, it is well past time to start treating wastewater as an asset,and emphasizing water efficiency, conservation, reuse and recycling.There is no such thing as wastewater, goes the current saying, justwater that is wasted!

Getting the prices right will be necessary for purposes of maintain-ing water infrastructure while encouraging water efficiency. In theUnited States at least, we do not cover the full cost of our infrastruc-ture, on a life-cycle basis, or its operations and maintenance

13. The Author thanks David Zetland for this formulation of the economicproblem.

14. DAVID ZETLAND, THE END OF ABUNDANCE: ECONOMIC SOLUTIONS TO

WATER SCARCITY 65 (2011).15. Dr. Peter H. Gleick, The 15th Abel Wolman Distinguished Lecture, THE U.S.

NAT’L RESEARCH COUNCIL OF THE U.S. NAT’L ACADEMY OF SCIENCES 9 (Apr. 23,2008).


(“O&M”). The American Water Works Association (“AWWA”) re-cently estimated the cost of restoring existing drinking water systemsand expanding them to serve a growing population to be “at least $1trillion over the next twenty-five years, if we are to maintain currentlevels of water service.”16 “Most Americans pay less than $3.75 forevery 1,000 gallons of safe water delivered to their taps,” says AWWA,a veritable bargain compared to a bottle of water.17

The 2011 American Water Intelligence (“AWI”) Tariff Survey18 of-fers a critical appraisal of where we are in this country on water pric-ing. AWI is the U.S. spin-off of Global Water Intelligence, a highlyregarded trade magazine in the water business. Water rates increasedan average of 8.1% between July 2010 and July 2011. Rates rose intwenty-nine of the thirty-three American cities for which AWI couldcompile comparative historical data. AWI sees this movement onrates as positive, but just a beginning. “Americans continue to buywater at half the cost that they would pay if they lived in NorthernEurope. It is an amazing price discrepancy for a product that is prettysimilar on both sides of the Atlantic.”19

Americans use twice as much water, per capita, as Europeans.Thus, actual household water bills are not much different. “ButAmerican utilities have to work harder to produce the same amountof money,” observes AWI. “The result is that the operating surplusesthat can go toward supporting capital projects are typically smaller inthe U.S. than in Europe (the average surplus in the U.S. is in the re-gion of 28 percent compared to 35 percent in Northern Europe).” So“the main implication of the low level of operating surplus is that theU.S. water and sewer utilities spend less on capital projects than theirNorthern European counterparts,” opines AWI. “This is evident inthe number of main breaks, boil orders and discharge permit viola-tions in the U.S. compared to cities in Northern Europe (SouthernEurope is a different story).”

Unfortunately, the 8.1% increase in rates is not a robust signal thatAmerican utilities are moving to address this shortfall in capital in-vestment. The data indicate that the average increase is driven by asmall number of cities pursuing very large increases. “11 cities have

16. Buried No Longer: Confronting America’s Water Infrastructure Challenge, AM.WATER WORKS ASS’N 3, http://www.climateneeds.umd.edu/reports/American-Water-Works.pdf.

17. Id.18. Cities Hike Water Charges as Financing Options Evaporate, AM. WATER IN-

TELLIGENCE 8–11 (Sept. 2011), http://www.americanwaterintel.com/archive/2/9/analysis/cities-hike-water-charges-financing-options-evaporate.html. (Summarizing the re-sults of the Tariff Survey, “the full survey, spreadsheet, complete with details of tariffstructures and social tariffs, will be available to download from the AWI websitewithin the next month.”).

19. What does an 8.1 percent water tariff increase mean?, AM. WATER INTELLI-

GENCE 4 (Sept. 5, 2011), http://www.americanwaterintel.com/insight/what-does-81-percent-water-tariff-increase-mean.html.


above average increases, but 22 have below average increases,” saysAWI. “Furthermore, falling volume demand as a result of the eco-nomic downturn (and in some cases demand management programs)may mean that increases in tariffs lead to smaller increases inrevenue.”

“In the longer term, it is inevitable that all U.S. water and sewerutilities will have to increase their operating surpluses to Europeanlevels because there are no longer any alternative sources of fundingin the U.S.,” claims AWI. “In the meantime, we will see a period ofgrowing diversity-and creativity.” As the Northern European experi-ence shows, pricing is also a critical demand-side management tool.Consider also the case of Santa Barbara, California as told by DavidZetland.20

In the early 1990s, after several years of drought, Santa Barbara sawits reservoir shrink. Limits on lawn watering and car washing wereimposed. Then the water agency instituted steep, increasing blockrates resulting in prices 200% higher at the upper rates of water usage.“The impact on changes in behavior and aggressive price penaltieswas fast and significant. Median monthly consumption dropped from25 to 17 [cubic meters] per month,” writes Zetland. And the con-sumption stayed low: “After the drought ended and prices were low-ered, consumption was still only 60 percent of pre-drought levels.”21

Last year, the United States Conference of Mayors City Water Con-servation Achievement Awards garnered fifty-six applicants for twoawards. I had the pleasure of serving as a judge in this competition asI had several years prior. Many, if not most, of the applications werefrom communities in arid states and Florida dealing with pressingwater demand. There were an overwhelming number of affirmativeresponses to the following question: “Does your city use water rates toachieve water conservation?”

While most of the applicant communities, quite rightly, used abroad range of non-price policies and programs to encourage waterefficiency and conservation, an overwhelming number indicated thatthey at least partially relied on pricing as a demand-management tool.Some used increasing block rates, similar to those in Santa Barbara.Others used seasonal or drought pricing strategies. But compared tothe competition several years earlier, this was a huge jump in the num-ber of municipal water systems utilizing pricing for such purposes. Itook this to be an encouraging development.

20. See ZETLAND, supra note 14, at 48.21. See generally G. Tracy Mehan III & Ian Kline, Pricing as a demand-manage-

ment tool: Implications for water policy and governance, AM. WATER WORKS ASS’N61 (2012) (extending the discussion of the literature on demand-managementpricing), http://www.cadmusgroup.com/wpcontent/uploads/2012/11/Mehan_JAWWA_Feb2012.pdf.


We should provide a basic water supply for every household to useat reasonable cost. Beyond that basic level necessary for humanneeds, users should pay a price that includes both the cost of the infra-structure and the scarcity value of water. They are not buying a merecommodity, but a very sophisticated, highly technical, heavily engi-neered, capital-intensive service.

In addition to the movement towards getting the prices right, watermarkets are emerging throughout the arid west. Given the prior ap-propriation doctrine for allocating water (“first in time, first in right”),which obtains in western states, water rights are very real, i.e. legallydefensible. Thus, they can be bought, sold or leased-to cities, farmers,environmental groups, and the like. “Rarely does one hear of a crisisin condominiums, pick-up trucks or laptop computers, mainly becausemarkets work to eliminate shortages by balancing supply and de-mand,” writes Terry Anderson, Brandon Scarborough and LawrenceWatson, in their new, magisterial study of water markets.22 “Withoutmarkets and prices to provide incentives for both demanders and sup-pliers, water crises will persist.”23

Agriculture is the biggest user of water on the planet by far, typi-cally using 70-80% or more of available water.24 This is very much thecase in the arid states in the western U.S. Recall Nevada, which Ialready mentioned. Robert Glennon has observed: “The economicvalue of water for municipal and industrial uses dwarfs the value ofthe same water to farmers. California growers consume 80 percent ofthe state’s water yet contribute only 2 percent to the gross stateproduct.”25

Given that most of the water rights are held by farmers and ranch-ers, and the relative disparity in economic value between, say, growingand selling crops and municipal and industrial use, e.g., manufacturingcomputer chips, there is an incentive for mutually beneficial transac-tions, assuming third-party and environmental impacts can be miti-gated. Many farmers, who happen to be senior water appropriators,may be in a position to make a lot of money selling or leasing water.

Glennon also noted that it takes roughly 150,000 gallons of water toproduce one ton of alfalfa, but it takes fewer than ten gallons to pro-duce Intel’s Core 2 Duo microprocessor which sells for $400. A ton ofalfalfa fetches up to $110 (as of 2009). “In other words, each acre-footused to grow alfalfa generates at most $264,” writes Glennon. “Thatsame acre foot used to manufacture Core 2 Duo chips generates $13million.”26 So it should come as no surprise that between 1987 and

22. TERRY ANDERSON ET AL., TAPPING WATER MARKETS 5 (2012).23. Id. at 6.24. STEVE MAXWELL & SCOTT YATES, THE FUTURE OF WATER: A STARTLING

LOOK AHEAD 54 (2011).25. GLENNON, supra note 5, at 18.26. Id. at 201.


2005, there were 3,232 sales and leases of water rights in the westernstates, involving a “staggering” (Glennon’s term) 31 million acre feetof water. “That’s more than twice the annual flow of the ColoradoRiver,” claims Professor Glennon.27 Consider, again, the case of theLas Vegas Strip using such a small amount of water for such a largeamount of GDP.

Water markets can offer environmental benefits, too. Today, mostwestern states allow the leasing of water rights by fish and game agen-cies or water trusts to protect fisheries and other environmental val-ues. The pioneering institution in this area was the Oregon WaterTrust, now the Freshwater Trust,28 which paid ranchers to perma-nently shorten their irrigation season and leave water instream in latesummer when the fish needed it most.29

“From 1998 until approximately 2006, more than $300 million (ad-justed for inflation) have been spent on leases and purchase of waterfor instream, which is nearly four times the amount spent by privateentities and government agencies between 1990 and 1997.”30 Encour-aging the growth of water trusts, with a view toward emulating theboom in land trusts in this country, would be an effective water man-agement tool.

Finally, technology will be instrumental in achieving sustainabilityin water management, specifically, for water reuse and recycling, andto ensure an adequate supply of potable water. Desalination,microfiltration, reverse osmosis, and ultraviolet light are some of theapproaches which will, increasingly, be deployed to attain this goal inthe face of droughts, climate change, population shifts and the de-mands of either affluence or poverty. New technology will also facili-tate the deployment of cost-effective distributed or decentralizedsystems to supplement traditional, large-scale treatment works.

The business of water, sometimes referred to as the “water indus-try,” is a multi-faceted sector that includes architectural and engineer-ing services; pump, pipe and motor manufacturers; membranetechnology companies; software and computer services; and numerousother providers of the myriads of equipment and tools necessary tothe capture, treatment and provision of water and wastewaterservices.

The respected financial analyst, Steve Maxwell, describes this indus-try as “a balkanized and teeming ‘bazaar’ of fundamentally quite dif-ferent businesses-all of which have something to do with the deliveryof clean water but which can’t all be quite accurately classified under

27. Id. at 273.28. See generally THE FRESHWATER TRUST, http://www.thefreshwatertrust.org.29. BRANDON SCARBOROUGH AND HERTHA L. LUND, SAVING OUR STREAMS:

HARNESSING WATER MARKETS—A PRACTICAL GUIDE (2007), http://perc.org/sites/default/files/SOS_Full_Text.pdf.

30. Id. at 10.


any single heading.”31 Despite the lack of reliable market research onthis business, Maxwell maintains that the size of the U.S. water andwastewater sector, i.e., industry, is “generally estimated” at $120 bil-lion per year, with the world market roughly four times larger orabout $500 billion per year.

There is much ferment and innovation, in the private water busi-ness, particularly in the areas of treatment technologies such as mem-branes and infrastructure innovations such as pipe linings. Given theuniversal, worldwide need for water and wastewater services, the“animal spirits” in this competitive private sector are generating manynew ways of approaching enhancing stewardship of water resources.Mamta Badkar of Business Insider recently reported on a number of“fascinating” trends in the water industry based on a report by CitiInvestment Research and Analysis.32 Noting that global water con-sumption is doubling every twenty years, the $450 billion water mar-ket (a bit smaller than Maxwell’s estimate) is rapidly innovating.Companies are turning to water reuse, desalination, and other eco-nomical technologies. They are also merging manufacturers with ser-vice providers. A sampling of some of the ten trends identified by Citifollows:

Water reuse will become a new source of water supply. This is con-sistent with the general shift in attitude which no longer speaks of“wastewater” but rather “water that is wasted.” Innovations, again, inthe area of membrane technologies are driving this change as is waterscarcity; and Citi also sees these technologies displacing chemicals inwater treatment as another trend to watch. The membrane watertreatment market is predicted to grow from $1.5 billion in 2009 to $2.8billion in 2020. Highly contaminated water, say, from hydraulic frac-turing to obtain natural gas is driving point-of-use technologies to dealwith the issues of disposal of “produced water” from this water-inten-sive practice.

Other developments highlighted by Citi are the replacement ofchlorine, over time, by ultraviolet light disinfection and growth oppor-tunities in water efficiency products. This latter trend encompasseswater-efficient products such as bio-gas recovery systems, “water me-ters that could help companies gain from water footprint initiatives,”pipe rehabilitation and relining systems, and water derivative productslike water-free toilets.

The water business or industry is moving toward a sustainable busi-ness model which, in effect, yields a kind of stewardship for profit. It

31. Steve Maxwell, A look at the challenges and opportunities in the world watermarket, AM. WATER WORKS ASS’N 104, 107 (May 2010).

32. Mamta Badkar, 10 Fascinating Trends In The Water Industry And The Compa-nies Poised To Gain From Them, BUSINESSINSIDER.COM (May 25, 2011), http://www.businessinsider.com/10-fascinating-trends-in-water-companies-poised-to-gain2011-5?op=1.


may approximate something like sustainability’s triple bottom line(environmental, economic and social). The movement of private busi-ness capital into the water sphere is a welcome development whichcan benefit literally billions of people throughout the world. SteveMaxwell observes, “As the global water crisis intensifies, we face nu-merous and daunting political and economic challenges.” “The flipside of this coin represents virtually limitless opportunities for creativeand innovative firms to help provide needed solutions,” says Maxwell.

Some of the biggest American companies have moved decidedlyinto these exciting, new water markets—GE , IBM, Dow, ITT (nowXylem). There are, of course, water technology enterprises proliferat-ing throughout North America, Europe, Israel, Australia and Singa-pore. Desalination, a technology which utilizes the new filtration andmembrane technologies removes salt from seawater or brackishgroundwater, is a promising approach to water reclamation or treat-ment notwithstanding legitimate questions regarding financial, envi-ronmental and energy issues.33

Only 2.5% of the world’s water is freshwater and suitable forhuman consumption. Hence, cities from Algiers to Tampa, Floridaare pursuing desalination as a solution to water scarcity. The NationalResearch Council (“NRC”) notes that in 2006, worldwide onlinedesalination capacity was roughly 10 billion gallons a day or 0.3% ofthe total freshwater used in the world. From 2000 to 2005, U.S.desalination capacity grew by roughly 40%, accounting for about0.4% of freshwater used in this country. The NRC recommends anambitious research project to address issues such as the effects ofwaste products of desalination. However, it notes that the cost of thistechnology is improving due to new, less expensive membrane tech-nologies and greater energy efficiency and the increasing costs ofother alternatives.

Water transfers or re-allocation and conservation will be cost-com-petitive given lower energy costs. Thus, the decision to use desalina-tion will be a local decision dependent on the circumstances. El Paso,Texas is utilizing desalination as part of its overall program, which in-cludes conservation and water reclamation.34 Orange County, Cali-fornia is on the cutting edge of water recycling, reuse or reclamation.With an expected increase in water demand of 16% by 2030, it has

33. For the discussion of desalination, see generally DESALINATION: A NATIONAL

PERSPECTIVE, COMMITTEE ON ADVANCING DESALINATION TECHNOLOGY, NAT’L RE-

SEARCH COUNCIL (2008), http://waterwebster.org/documents/NRCDesalinationreport_000.pdf.

34. Neda Simeonova, A Forward—Looking Approach: El Paso Water Utilities Ex-plores Aggressive Reclaimed Water Programs, WATER & WASTES DIGEST 24 (Apr.2008), http://www.wwdmag.com/sites/default/files/AForward.pdf.


implemented an ambitious system by world-class standards.35 As de-scribed by Anjali Athavaley of The Wall Street Journal, this operationyields 70 million gallons of water a day for 500,000 people a year. Itcost $481 million to build and $29 million per year to operate.

Elizabeth Royte, the author of Bottlemania: How Water Went onSale and Why We Bought it, wryly commented that, “[i]f you like theidea [of water recycling], you call it indirect potable reuse. If the idearevolts you, you call it toilet to tap.”36 Humor aside, Orange County’sproject is a state of the art system which starts with treated wastewaterand serves up essentially distilled water. Utilizing microfiltration, re-verse-osmosis, ultraviolet light and hydrogen peroxide, it provides in-direct potable water that is pumped into a groundwater basin where ittakes a year to move through sand, gravel and clay to a drinking waterwell. Jim Cook, who chaired the NRC’s committee on reclaimedwater, says that Orange County’s final product is cleaner than itsgroundwater.

Technology may not be a sufficient condition for successful watermanagement in the 21st century, but it will certainly be a necessarycondition given the growing economy, constant population shifts, af-fluent lifestyles, droughts and climate variability, all of which will con-tinue to put pressure on a limited supply of potable water.

B. Hope Amidst Risk and Uncertainty

There is a rational basis for hope in our quest to secure our waterfuture. Americans are an innovative and prosperous people. And, asWinston Churchill supposedly said, “You can always count on Ameri-cans to do the right thing, after they’ve tried everything else.”37 Wewill, no doubt, continue to pursue those supply-side solutions wherewe can find them. But the truly cost-effective sources of new waterwill be found on the demand side through realistic pricing and thecreation of expanding water markets to reallocate water use in rela-tive economic terms and to protect environmental and natural re-source values.

We will also discover new supplies or sources of water, right underour noses, through water reuse, recycling and reclamation, which ren-ders obsolete the very idea of wastewater. These new sources will notcome from the ground or from watercourses but, ultimately, from theminds and imaginations of creative men and women focused on water

35. See also Kate Galbraith, Texas’ Water Wars Spark Interest in Desalination: TheLast Drop, WATER-SPOUTS.BLOGSPOT.COM (June 10, 2012), http://water-spouts.blogspot.com/2012/06/texas-water-woes-spark-interest-in.html.

36. Elizabeth Royte, A Tall, Cool Drink of . . . Sewage?, N.Y. TIMES (Aug. 10,2008), NYTIMES.COM, available at http://www.nytimes.com/2008/08/10/magazine/10wastewater-t.html?pagewanted=all&_r=0.

37. The Author says “supposedly” because he cannot find a definitive source forthis quote although the internet has countless citations un-sourced.


and its paramount role in our lives and communities. There we willfind the true source of resilience in the face of risk and uncertainty,thereby justifying our hopes for the future. We may even get beyondjust coping and actually thrive in the renewal of our sense of waterstewardship.

INTERSTATE WATER COMPACTS:A LICENSE TO HOARD?

By Linda Christie†

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15II. RESOLVING INTERSTATE WATER DISPUTES . . . . . . . . . . . . . 17

A. Frequent Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17B. Dispute Resolution: Federal Intervention . . . . . . . . . . . . 18C. Dispute Resolution: Interstate Compacts . . . . . . . . . . . . . 20

III. THE CURRENT DISPUTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23A. The Red River & the Red River Compact . . . . . . . . . . . 23B. TRWD’s Proposal to Appropriate Water from

Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25C. Oklahoma’s Water Embargo . . . . . . . . . . . . . . . . . . . . . . . . 27D. The Tenth Circuit’s Decision . . . . . . . . . . . . . . . . . . . . . . . . 28

1. Dormant Commerce Clause . . . . . . . . . . . . . . . . . . . . 282. Preemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

E. The Parties’ Legal Arguments at the CertiorariStage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301. TWRD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302. OWRB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

IV. THE IMPORTANCE OF THE CASE . . . . . . . . . . . . . . . . . . . . . . . . 32A. A License to Hoard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33B. Costly Uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33C. Federal Intervention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

V. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

I. INTRODUCTION

Ensuring sufficient water supply is a paramount concern of govern-ment throughout the arid West. The scarcity of water influences virtu-ally every aspect of the vast region’s economy and environment,1 andhas been a simmering source of interstate and federal-state conflict formore than a century. To facilitate the equitable sharing of water,avoid strife, encourage economic development, and forestall federalintervention, states have proactively entered into more than thirtyagreements among themselves to address the allocation and appropri-ation of water across state borders and water sources.2 Such interstatecompacts—the “oldest mechanism available to promote formal inter-

† The Author wishes to extend a special thanks to Michael B. Kimberly withMayer Brown LLP for his assistance with the Article.

1. Olen Paul Matthews & Michael Pease, The Commerce Clause, Interstate Com-pacts, and Marketing Water across State Boundaries, 46 NAT. RES. J. 601, 602 (2006).

2. See National Counsel for Interstate Compacts, Compact Search Results, APPS.CSG.ORG (Feb. 11, 2013), http://tinyurl.com/bvvmqbc.

15


state cooperation”3—are authorized by § 10 of the Constitution.4They are, at bottom, contracts between and among states;5 contractsthat must be approved by Congress before taking effect, and once ap-proved, assume the status of federal law.6 Although not a panacea,these water compacts have become a vital tool in water managementthroughout the country.

There is a very important dispute over one such compact currentlypending before the Supreme Court on a petition for certiorari. Tar-rant Regional Water District v. Herrmann7 is a lawsuit between NorthTexas’s Tarrant Regional Water District (“TRWD”) and theOklahoma Water Resources Board (“OWRB”) concerning Texas’sright under the Red River Compact—which allocates water from theRed River system among Texas, Oklahoma, Arkansas, and Louisi-ana—to access water located in Oklahoma. At issue in the case aretwo significant questions of federal constitutional law: (1) Whether theRed River Compact—an agreement designed to enhance cooperationand resource sharing among its signatories, and using language pre-sent in virtually all water compacts between western states—expresslyauthorizes Oklahoma to hoard its water by enacting discriminatorystate water laws that otherwise would be invalid under the DormantCommerce Clause; and (2) whether compact language that allocates tothe signatory states “equal” shares of water within a particular regionpreempts protectionist state laws that obstruct other states from acces-sing their allotted share of the water in another state. The Tenth Cir-cuit answered the former in the affirmative and the latter in thenegative. How the Supreme Court answers these questions will havefar-ranging consequences for the future vitality of existing water com-pacts and the likelihood of future agreements.

The purpose of this essay is to familiarize readers with the facts andbackground of these issues in this important case, and to lay out thepolicy implications inherent in its resolution. This Article begins byproviding some background and history regarding management of,and disputes over, water in the United States, with an emphasis on thevalue of interstate compacts in resolving and preventing disputes. Thepath of the current dispute between Texas and Oklahoma requires theArticle to trace three things: (1) describing the creation of the RedRiver Compact as well as its terms; (2) detailing TRWD’s need forwater and Oklahoma’s water export restrictions; and (3) laying out the

3. See generally CAROLINE N. BROUN ET AL., THE EVOLVING USE AND THE

CHANGING ROLE OF INTERSTATE COMPACTS, A PRACTITIONER’S GUIDE 3 (2006).4. U.S. Const. art. I, § 10, cl. 3.5. See generally CATHERINE BROUN ET AL., THE EVOLVING USE AND THE

CHANGING ROLE OF INTERSTATE COMPACTS, A PRACTITIONER’S GUIDE 64 (2006).6. Texas v. New Mexico, 462 U.S. 554, 564 (1983).7. Tarrant Reg’l Water Dist. v. Herrmann, 656 F.3d 1222 (10th Cir. 2011), pet. for

cert. filed (U.S. No. 11-889).

2013] INTERSTATE WATER COMPACTS 17

reasoning of the Tenth Circuit below8 and the parties’ certiorari-stagelegal arguments. Finally, the Author will explain what she believes arethe consequences and policy implications at stake in the resolution ofthis dispute.

II. RESOLVING INTERSTATE WATER DISPUTES

As the world has developed economically and its population hasexploded, the need for fresh water has grown dramatically. As withmost other vital natural resources, this growing need is sowing discordbetween resource rich and resource poor countries.9 That water stub-bornly refuses to respect political boundaries only increases the poten-tial for conflict.

Such water-based conflicts, although a relatively recent phenome-non on the world stage, are well-known to the United States. Despiteregular acknowledgement that a primary purpose of our union is tomake “each State . . . the greater by a division of its resources, naturaland created, with every other State, and those of every other Statewith it,”10 states have often jealously guarded their resources (andwater in particular), which has in turn led to conflicts with otherstates, and with the federal government. This Section will discuss therecurring conflicts over water and attempts to resolve them throughCongressional action, legal proceedings, and interstate compacts, con-cluding with a discussion of the superiority of compacts as a resolutionmechanism. Understanding this background will allow better appreci-ation of what is at stake in this case.

A. Frequent Disputes

Reflecting the importance of the resource, disputes between statesover water are as old as the country itself—older, in fact. Marylandand Virginia, for example, have laid conflicting claims to the PotomacRiver since the Seventeenth Century.11

As the United States expanded westward into more arid regions ofthe continent, these conflicts became more frequent. Western dis-putes over water occurred throughout the Twentieth Century and in-

8. The Author will focus on the legal issues that are raised in the petition forcertiorari.

9. Lee A. Laudicina, Note, International Water Disputes: How to Prevent a WarOver the Nile River, 4 LOY. U. CHI. INT’L L. REV. 235 (2007) (“United Nations figuressuggest there are nearly 300 potential water conflicts around the world.”). See alsoJeffrey Sachs, Stemming the Water Wars, THE GUARDIAN (Apr. 26, 2009), http://www.guardian.co.uk/commentisfree/cif-green/2009/apr/26/water-shortage (noting the linkbetween water shortages and international conflicts in arid lands, warning that “futurewater stresses will be widespread, [spanning] both rich and poor countries.”).

10. West v. Kan. Natural Gas Co., 221 U.S. 229, 255 (1911).11. Virginia v. Maryland, 540 U.S. 56, 60 (2003).


volved nearly every state in the region.12 Perhaps the most famous ofthese western water disputes involved Arizona, California, and theFederal Government. In 1934, the Bureau of Reclamation began con-structing a dam on the Colorado River that would straddle the borderof Arizona and California.13 The Metropolitan Water District ofSouthern California was bankrolling the dam’s construction, a majorpurpose of which was to supply the growing communities of SouthernCalifornia with water.14 Arizona objected, and not satisfied with thefederal response, ultimately mounted an armed resistance, with theArizona National Guard commandeering two ferry boats—dubbedthe “Arizona Navy”—filling them with armed men, and sending themup the Colorado.15 Thankfully, the dispute ended peacefully;16 never-theless, the episode serves as an important reminder of the passionswater disputes can stir.

In recent years, water disputes have boomeranged back east. Mary-land and Virginia renewed their dispute over access to the Potomac inthe early 2000s.17 Georgia, Alabama, and Florida have been em-broiled in a twenty-plus year dispute over flow from the Apalachicola-Chattahoochee-Flint River basin as conflicting demands familiar inthe west—population growth, environmental protection, and agricul-ture—come to a head in the southeast.18 And the Great Lakes, thelargest source of fresh surface water in the United States, is sure to bethe battleground of the future.19 Thus, it is unlikely that any region ofthe country will remain immune from these types of disputes, increas-ing the importance of finding effective modes of dispute resolutionwhile encouraging interstate cooperation.

B. Dispute Resolution: Federal Intervention

The three dominant modes of resolving interstate water disputesare (1) congressional action, (2) federal court decree, and (3) inter-

12. See, e.g., Nebraska v. Wyoming, 507 U.S. 584 (1993) (Platte River); Coloradov. New Mexico, 459 U.S. 176 (1982) (Vermejo River); Washington v. Oregon, 297 U.S.517 (1936) (Walla Walla River); Wyoming v. Colorado, 259 U.S. 419 (1922) (LaramieRiver).

13. John B. Draper, et al., Gunboats on the Colorado: Interstate Water Controver-sies, Past and Present, 55 PROCEEDINGS OF THE ROCKY MOUNTAIN MINERAL LAW

INST. § 18.01 (2009).14. Id.15. Id.16. Id. After a case before the Supreme Court, Arizona acquiesced in the project

in exchange for irrigation project approvals.17. Virginia, 540 U.S. at 56.18. See In re Tri-State Water Rights Litig., 644 F.3d 1160, 1165 (11th Cir. 2011).19. See, e.g., Noah D. Hall, Toward a New Horizontal Federalism: Interstate Water

Management in the Great Lakes Region, 77 U. COLO. L. REV. 405, 429–30 (2006).


state compact.20 The Author will begin with the first two, before turn-ing to the most often utilized mode of resolution: compacts.

In Arizona v. California,21 the Supreme Court first explicitly ac-knowledged Congress’s power to unilaterally apportion water amongstates under the Commerce Clause. Congress has exercised thispower in only three instances over the last 100-plus years.22 Congresshas also occasionally acted unilaterally to delegate to states morepower over their water resources.23 Congress has not eschewed actionin this area for lack of interest in, or experience with, the nation’swater resources, however: it regularly legislates in the area of waterquality and environmental protection, and the federal government—through the Bureau of Reclamation—remains the largest wholesalerof water in the nation.24 Rather, it is likely Congress has largelyavoided the business of interstate water allocation and apportionmentbecause of the intense local and regional interests and passions in-volved. But it is not hard to see this reticence dissipating in the futureas interstate conflicts over water grow and intensify.

The federal courts find themselves attempting to resolve interstatewater disputes more often than Congress, although such occasions arestill relatively rare. The Supreme Court has reluctantly confronted ahandful of interstate water disputes via its original jurisdiction,25 whilelower courts have entertained battles between state proxies.26 Thedoctrine followed by courts in such cases is known as “equitable ap-portionment,” which, as the name suggests, calls for a considerationby the court of numerous factors in order to achieve the fairest distri-bution of disputed water.27 The outcomes of such equitable analyses

20. There can be combinations, of course. Interstate compacts require congres-sional approval; federal courts may hear disputes arising from compacts, etc.

21. Arizona, 373 U.S. at 546.22. The Truckee-Carson-Pyramid Lake Water Rights Settlement Act, H.R. 3941,

101st Cong. (1990); The Boulder Canyon Project Act, H.R. 5773, 70th Cong. (1928);Act of February 25, 1905, Pub. L. No. 58-108 ch. 798, 33 Stat. 814 (relating to theconstruction of a dam and reservoir on the Rio Grande, in New Mexico, for the im-pounding of flood waters of said river for purposes of irrigation).

23. See, e.g., Water Resources Development Act, 100 Stat. 4082 (1986). The lawprovides, inter alia, that “[n]o water shall be diverted or exported from any portion ofthe Great Lakes within the United States, from any tributary within the United Statesof any of the Great Lakes, for use outside the Great Lakes basin unless such diversionor export is approved by the Governor of each of the Great Lake States.” 42 U.S.C.§ 1962d–20(d) (2006).

24. Bureau of Reclamation, Facts & Information, USBR.GOV (Jan. 24, 2013), http://www.usbr.gov/main/about/fact.html.

25. See supra note 12.26. See, e.g., In re Tri-State Water Rights Litig., 644 F.3d 1160 (11th Cir. 2011).27. See Nebraska v. Wyoming, 325 U.S. 589, 618 (1945) (stating “Priority of appro-

priation is the guiding principle. But physical and climatic conditions, the consump-tive use of water in the several sections of the river, the character and rate of returnflows, the extent of established uses, the availability of storage water, the practicaleffect of wasteful uses on downstream areas, the damage to upstream areas as com-pared to the benefits to downstream areas if a limitation is imposed on the former—


are inevitably unpredictable, not helped by the fact that “equitableallocation tends to present questions that do not draw on judicial com-petence.”28 Despite this lack of institutional competence, in the ab-sence of cooperation between states, we can expect many more suitsin our water-scarce future, because “[a]s the value of water rises, sodoes the value of a . . . judgment allocating it.”29

C. Dispute Resolution: Interstate Compacts

By far the most successful method of resolving interstate disputesover water has been the interstate compact. The first water allocationcompact, the Colorado River Compact of 1922, was precipitated bythe Supreme Court’s decision in Wyoming v. Colorado—preceding itsequitable apportionment line of cases—where it held that the defaultrule for determining the allocation of the nation’s water resources isthe rule of “prior appropriation”: the first person to use a quantity ofwater from a water source for a beneficial use has the right to con-tinue to use that quantity of water for that purpose.30 This doctrine,as the states involved realized, created a collective action problem byincentivizing users to put all available water sources into immediateuse in order to avoid losing their rights to it.31 The Colorado RiverCompact of 1922 was designed to forestall this problem by allocatingwater ex ante according to a negotiated agreement, rather than by thearbitrary development of senior priorities.32 In the decades since theColorado River Compact, many other states (primarily in the west)have negotiated tens of additional interstate water compacts, withmore the thirty such agreements in place across the country. Thesecompacts play a central role in regulating the allocation, appro-priation, development, exportation, and management of westernwaterways.

The events leading to the creation of the Colorado River Compactdemonstrate perhaps the most valuable result and the driving forcebehind most interstate water compacts: solving collective actionproblems while creating settled expectations that make the develop-

these are all relevant factors. They are merely an illustrative, not an exhaustive, cata-logue. They indicate the nature of the problem of apportionment and the delicateadjustment of interests which must be made.”).

28. Jonathan Horne, On Not Resolving Interstate Disputes, 6 N.Y.U. J.L. & LIB-

ERTY 95, 111 (2011).29. Id. at 101.30. Wyoming, 259 U.S. at 470.31. See Leila C. Behnampour, Comment, Reforming a Western Water Institution:

How Expanding the Productivity of Water Rights Could Lessen Our Water Woes, 41ENVTL. L. 201, 209–10 (2011) (“[P]rior appropriation principles actually create incen-tives to use as much water as possible to ensure continuance of the amount of water inthe right.”).

32. See Arizona, 373 U.S. at 553–59.


ment of reliable, long-term water supplies possible.33 Important in al-lowing the settling of expectations is that compacts function ascontracts, and should later disputes arise regarding the application ofa compact, courts must interpret and enforce the compact “within thefour corners of the agreement.”34 Without these agreements, uncer-tainty would reign as allocations would be resolved only as disputesarose, and through unpredictable litigation or federal lobbying. Suchuncertainty would surely retard economic development throughoutwater-scarce regions.35 Thus, as compared to amorphous doctrinessuch as “equitable apportionment,” the ex ante ordering of rights byinterstate compact is far preferable.

The benefits of interstate compacts do not end there. As noted byJustice Felix Frankfurter, compacts allow states to free themselvesfrom strict legal rules and reach a “sensible compromise” in anonadversarial environment.36 In addition, and related, compacts en-courage water allocations and apportionments based on input fromstakeholders on the ground, considering myriad regional, state, andlocal interests, and force policy makers to sit and think about the fu-ture management of resources.37

Furthermore, and particularly important to the culture and politicsof western states, states resolving water disputes on their own “effec-tively preempt federal interference into matters that are traditionallywithin the purview of the states but that have regional or nationalimplications.”38 Ongoing disputes between states always carry withthem the specter of top-down solutions imposed by Congress. Impor-tantly for our discussion, this specter fades only when a compact iseffective in ending a dispute. Should a dispute reignite, the threat ofcongressional interference reemerges.39 Crucially, any congressional

33. BROUN ET AL., supra note 5, at 26, 267; accord Texas v. New Mexico, 462 U.S.554, 567 (1983).

34. BROUN ET AL., supra note 5, at 64.35. See Horne, supra note 28, at 149 (stating “[B]ecause citizens of these states

must plan economic activity that depends on particular rights to the waters, statesmust (sooner or later) negotiate with each other to secure protection for thisactivity.”).

36. Felix Frankfurter & James M. Landis, The Compact Clause of the Constitu-tion—A Study in Interstate Adjustments, 34 YALE L.J. 685, 706–07 (1925).

37. Justin Newell Hesser, Comment, The Nature of Interstate Groundwater Re-sources and the Need for States to Effectively Manage the Resource Through InterstateCompacts, 11 WYO. L. REV. 25, 42 (2011).

38. BROUN ET AL., supra note 5, at 27.39. See, e.g., Bob Ewegen, Editorial, McCain Suggests Raiding Colorado’s Water,

Denver Post, DENVERPOST.COM (Aug. 16, 2008), http://www.denverpost.com/opinion/ci_10218277 (“The problem, from Colorado’s perspective, is that in the 76 years sincethe [Colorado River] compact was signed, California, Nevada and Arizona havegrown much more rapidly in population—and political power—than the upper basinstates. So when the lower basin states talk about ‘renegotiating’ the compact, that’stheir code for a process of give and take—in which Colorado, Utah, New Mexico andWyoming give and California, Arizona and Nevada take.”).


action subsequent to a congressionally-approved interstate compactcan supersede provisions of that compact. Despite the need for con-gressional approval, almost all compacts are agreements solely be-tween states, which do not bind Congress.40 Accordingly, “Congressmay use its substantial legislative power . . . to significantly erode thepurpose or regulatory authority of a compact.”41 It is imperative,then, if states wish to maintain control over their water, that they con-tinue to cooperate, and work towards mutually beneficial solutions,even after the compacts enter force.

Finally, the cooperation and coordination required by interstatecompacts has the benefit of strengthening our union and preventingstrife. As states sit down at the negotiating table, then transform fromrivals into partners. In contrast, without agreement, states will con-tinue to jealously guard resources located within their borders andfight each other in court and in Congress, undermining the very the-ory upon which the U.S. Constitution was framed, i.e., “that the peo-ples of the several states must sink or swim together, and that in thelong run, prosperity and salvation are in union and not division.”42

Moreover, and more ominously, “[t]he intentional, self-serving natureof [such] protectionist measure[s] is likely to invoke anxiety in otherstates and invite hostile retaliatory measures.”43 A scenario we wouldsurely all wish to avoid.

Given these benefits, and the shortcomings of the alternatives, it isno surprise that both Congress and the courts strongly encouragestates to resolve water disputes via compact. The Supreme Courtrarely misses an opportunity to encourage state parties before it to sitdown at the bargaining table:

[S]o awkward and unsatisfactory is the available litigious solutionfor these problems that this Court deemed it appropriate to empha-size the practical constitutional alternative provided by the Com-pact Clause. Experience led us to suggest that a problem such asthat involved here is more likely to be wisely solved by cooperativestudy and by conference and mutual concession on the part of rep-resentatives of the States so vitally interested in it than by proceed-ings in any court however constituted.44

Likewise, Congress puts such value on interstate agreements concern-ing the allocation and apportionment of water, that approval for fed-

40. BROUN ET AL., supra note 5, at 43–44; John D. Leshy, Interstate GroundwaterResources: The Federal Role, 14 HASTINGS W.-NW. J. ENVT’L L. & POL’Y 1475, 1483(2008).

41. BROUN ET AL., supra note 5, at 44.42. Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 523 (1935).43. Catherine Gauge O’Grady, Targeting State Protectionism Instead of Interstate

Discrimination Under the Dormant Commerce Clause, 34 SAN DIEGO L. REV. 571,580 (1997).

44. West Virginia ex rel. Dyer v. Sims, 341 U.S. 22, 27 (1951) (quotation marksomitted).


eral water projects is often conditioned upon the execution of suchcompacts.45

III. THE CURRENT DISPUTE

In this Section, the Author lays out the facts and legal arguments atissue in Tarrant. This Section first discusses the Red River system andthe interstate compact governing it. The Author then describesTRWD’s water predicament and its plan to acquire water fromOklahoma. The Author next details Oklahoma’s legislative and regu-latory regime, which effectively prevents the exportation of water outof the state. The Section ends by summarizing the reasoning of theTenth Circuit in its ruling for Oklahoma and each side’s argumentsbefore the Supreme Court.

A. The Red River & the Red River Compact

The Red River is a major tributary of the Mississippi River. It risesin two primary forks from the Texas Panhandle and flows east, adja-cent to the border between Texas and Oklahoma. It thereafter marksa portion of the border between Texas and Arkansas before flowingthrough Arkansas and Louisiana and discharging into the Gulf ofMexico.

Arkansas, Louisiana, Oklahoma, and Texas, having been “movedby considerations of interstate comity,” and with the consent of Con-gress, executed the Red River Compact (“the Compact”). The com-pact was executed in order to, inter alia, “promote interstate comityand remove causes of controversy between each of the affectedstates” by “provid[ing] an equitable apportionment among the Signa-tory States of the water of the Red River and its tributaries,” therebyenabling “state planning and action by ascertaining and identifyingeach state’s share in the interstate water of the Red River Basin.”46

The Compact divides the Red River Basin into five “Reaches,” andthose Reaches into respective subbasins. Reach 2, subbasin 5—theprimary subject of dispute between TRWD and OWRB—is definedgeographically without reference to state borders. This subbasin cov-ers an area that includes territory within Arkansas, Oklahoma, andTexas.47 Although just 22% of the subbasin falls geographically withinOklahoma,48 a majority of the subbasin’s water is located there.49 Themain stem of the river itself falls within Oklahoma along Oklahoma’sborder with Texas; the vegetation line of the river’s south bank marksthe boundary between the two states, resulting in the main channel of

45. BROUN ET AL., supra note 5, at 267.46. Red River Compact § 1.01; TEX. WATER CODE ANN. § 46.013 (West 2011).47. Id. at § 5.05(a); Herrmann, 656 F.3d at 1250 (map).48. Red River Compact § 5.05(a); 656 F.3d at 1250 (chart).49. Herrmann, 656 F.3d at 1251 (chart).


the Red River lying wholly within Oklahoma. Just 17.4% of the yieldof the subbasin’s water is located within Texas, and only a small frac-tion of that is useful as a source for municipal water supply. The mainstem of the Red River is high in saline and thus not useful as a sourceof potable water.50 Instead, the primary potable water sources withinReach 2, subbasin 5 include the fresh-water tributaries to the RedRiver, immediately before they discharge into the main stem and be-come polluted by the river’s salinity.

In section 5.05, the Compact allocates water within Reach 2 sub-basin 5 by reference to these fresh water sources and such allocationsare dependent on the rate of flow downstream into Louisiana. Asrelevant here, the Compact provides that “so long as the flow of theRed River at the Arkansas-Louisiana state boundary is 3,000 cubicfeet per second or more,” each signatory state “shall have equal rightsto the use of runoff originating in . . . and undesignated water flowinginto” Reach 2, subbasin 5. With an eye towards maintaining the 3,000cubic feet per second flow into Louisiana, the Compact limits these“equal rights” by constraining each state to no “more than 25 percentof the water in excess of 3,000 cubic feet per second” at the Arkansas-Louisiana state boundary.51 In other words, once the flow of the RedRiver into Louisiana hits 3,000 cubic feet per second, the “equalrights” provision kicks in, but in order to keep the flow into Louisianaat or above 3,000 cubic feet per second, none of the four signatorystates may take more than one-quarter of that excess flow. The mean-ings of “equal rights” and “25 percent” share are at the heart of thepreemption issue in this case. Other provisions of the Compact im-portant to this case, both to the preemption and Dormant CommerceClause analyses are as follows. Section 2.01 provides that “[e]ach Sig-natory State may use the water allocated to it by this Compact in anymanner deemed beneficial by that state.”52 It provides further that“[e]ach state may freely administer water rights and uses in accor-dance with the laws of that state,” but that “such use shall be subjectto the availability of water in accordance with the apportionmentsmade by this Compact.”53 Section 2.10, using language that appears insimilar form in almost every interstate water compact, provides that

50. U.S. Geological Survey, Stream Monitoring and Educational Program in theRed River Basin, Texas, Fact Sheet 170–97 (1997), available at http://pubs.usgs.gov/fs/fs-170-97/FS_170-97.htm (citations omitted) (stating “Salinity is the greatest limitationon water use in the Red River Basin and is largely the result of naturally occurringsalt springs in parts of the upper reaches of the basin. The salt sources contributewater with large concentrations of dissolved solids, principally chloride. At certaintimes and locations, the salinity of streams in the basin exceeds that of seawater.”).

51. Red River Compact § 5.05(b)(1) (explaining the signatories are allocated dif-ferent shares of subbasin 5 water when the Red River’s flow is below 3,000, 1,000, or526 cubic feet per second at various locations.). Id. at § 5.05(b)(2)–(3), (c). The flowof the river substantially exceeds 3000 cfs the great majority of the time.

52. Id. at § 2.01.53. Id.


“nothing in this compact shall be deemed” to “interfere with or impairthe right” of “any Signatory State to regulate within its boundaries theappropriation, use, and control of water,” provided that its exercise ofthat right is “not inconsistent with its obligations under this Com-pact.”54 In addition, although seemingly unrelated to the water in dis-pute in this case, section 4.02(b) ends up playing an important role inthe Tenth Circuit’s analysis. Section 4.02 governs water allocationfrom Reach 1, subbasin 2. Subsection 4.02(b) grants to Oklahoma“free and unrestricted use of the water of this subbasin.”55 Finally,and essential to TRWD’s challenge, there is no provision in Compactthat declares expressly that any signatory state’s use or regulation ofwater within its boundaries is free from the limitations imposed by thedormant Commerce Clause, or from obligations under the Compact.

B. TRWD’s Proposal to Appropriate Water from Oklahoma

From four reservoirs and through more than 150 miles of pipeline,TRWD provides water to over two million residents of North CentralTexas through its wholesale customers. In cooperation with otherNorth Texas water suppliers, TRWD is charged with developing addi-tional water resources to meet the current and future demands of theregion. TRWD is “an entity created under Texas law . . . to obtainwater” for Texas residents; it therefore is authorized to invoke, andobtain water pursuant to, “Texas’s water rights under the Red RiverCompact.”56

TRWD is in dire need of new sources of water.57 It currently sup-plies 448,800 acre feet58 of water per year59 to more than 100 whole-sale customers, who in turn serve the Dallas Fort-Worth metroplex,the nation’s fourth largest metropolitan area. TRWD’s long term planshows that by 2060, the population of Dallas-Fort Worth will havemore than doubled, and its customers’ demand for water will exceedsupply by more than 477,000 acre feet, or 155 billion gallons, peryear.60

In addition to these long-range needs, TRWD also faces an immi-nent water shortage as a result of extreme drought. Media coverage

54. Id. at § 2.10.55. Id. § 4.02(b).56. Brief of Amicus Curiae the State of Texas in support of Appellant, Herrmann,

656 F.3d 1222, NO. CIV-07-45-HE, 2010 WL 416578, at *1–2.57. See Freese and Nichols, Inc. et al., Recommended Water Management Strate-

gies for Whole Water Providers, 2011 REGION C WATER PLAN 4E.1 at 4E.14 (Oct.2010), available at http://www.regioncwater.org/Documents/2011RegionCWaterPlan/Chapter%204E_final.pdf [hereinafter WATER PLAN].

58. An acre foot is the volume of one acre of surface area to a depth of one footand is equal to 325,853 gallons; 448,800 acre feet equals approximately 146 billiongallons.

59. WATER PLAN, supra note 57, at 4E.14.60. WATER PLAN, supra note 57, at 4E.18.


has characterized Texas’s drought condition as “catastrophic,” costingTexas more than $5 billion in recent agricultural losses.61 As a resultof the drought, TRWD estimates that it will face a 50,000 acre foot peryear shortfall in less than eight years’ time.62

Oklahoma, by contrast, sits within the heart of the Mississippi Riverwatershed and, in the words of the OWRB, is “blessed with an abun-dance of water.”63 OWRB estimates that the entire state ofOklahoma currently uses less than two million acre feet per year ofstream water.64 Another 34 million acre feet of unused water flowsout of Oklahoma annually, bound for the Gulf of Mexico. From thesoutheast part of Oklahoma alone, more than twelve times the volumeof TRWD’s entire projected 2060 shortfall is discharged to the Gulf ofMexico each year. And OWRB has acknowledged that “the averageannual flow of the six major river basins in southeastern Oklahoma is6,363,628 acre feet,” which is enough to supply the entire state ofOklahoma three times over.65

Consistent with the Texas State and Region C Water Plans, TRWDhas identified water it claims is apportioned to Texas—but locatedwithin Oklahoma, just a few miles north of its border with Texas—asamong the most practical sources of water for addressing both its im-mediate and long-term needs.66 In the permit application underlyingthis lawsuit, TRWD proposed taking 310,000 acre feet of its share ofReach 2, subbasin 5 water from the Kiamichi River, not far abovewhere it discharges into the Red River. The proposal involves placingpumps into the tributary and running underground pipelines to ex-isting reservoirs serving TRWD and other regional water suppliers.The project would require both a federal environmental impact as-sessment and a permit from the Army Corps of Engineers. Becausethe plan uses existing reservoir infrastructure and does not involvepumping water vast distances to a higher elevation, it has a lesser envi-ronmental impact than TRWD’s other options.67 And time is of theessence: TRWD estimates that, with lead times for alignment plan-

61. Kate Galbraith, Catastrophic Drought in Texas Causes Global Economic Rip-ples, N.Y.TIMES (Oct. 31, 2011), available at http://tinyurl.com/tarrant6.

62. WATER PLAN, supra note 57, at 4E.14.63. 2012 OKLAHOMA COMPREHENSIVE WATER PLAN EXECUTIVE REPORT, 3

(Feb. 2012), http://www.owrb.ok.gov/supply/ocwp/pdf_ocwp/WaterPlanUpdate/draftreports/OCWP%20Executive%20Rpt%20FINAL.pdf.

64. Id.65. OKLA. WATER RES. BD., STATUS REPORT TO THE OFFICE OF GOVERNOR:

JOINT STATE/TRIBAL WATERS COMPACT & WATER MARKETING PROPOSAL, 27(2002), http://www.owrb.ok.gov/studies/legislative/southeast/southeast_pdf/Status%20Report_Part%201.pdf.

66. WATER PLAN, supra note 57, at 4E.15–16.67. Alternatives to drawing water from within Oklahoma involve obtaining water

from sources to the south and east of the Metroplex and pumping the water to ahigher elevation over hundreds of miles. These alternatives (including taking waterfrom Wright Patman Lake and constructing a new Tehuacana Reservoir) are substan-tially more expensive than the Oklahoma project and involve far greater environmen-


ning, environmental review, permitting, design engineering, and con-struction, it will be fifteen to twenty years before water can bedelivered.

C. Oklahoma’s Water Embargo

Notwithstanding Oklahoma’s enormous water reserves, Oklahomahas enacted a panoply of laws that, taken together, prohibit OWRBfrom issuing permits for out-of-state water use. OWRB’s executivedirector has openly acknowledged that Oklahoma’s restrictive waterlaws were intended to “protect Oklahoma’s water supply” against“out-of-state” water users and “actually strengthen” its protectionistscheme as compared with the state’s prior express moratorium on theremoval of water from the state.68 As a consequence, these laws pre-vent TRWD from obtaining water that originates in Oklahoma.

Oklahoma law requires any entity (including any “state or federalgovernmental agency” like TRWD) that “intend[s] to acquire theright to the beneficial use of any water” within Oklahoma to apply tothe OWRB for “a permit to appropriate” before “commencing anyconstruction” or “taking [any water] from any constructed works.”69

Several aspects of the Oklahoma permitting scheme make it impossi-ble for an out-of-state water user to obtain a permit to appropriate.First is an opinion from the Oklahoma Attorney General issued in1978, and still binding on the OWRB,70 stating that no “out-of-stateuser is a proper permit applicant before [OWRB].”71 Second isOklahoma’s express public policy, which OWRB is statutorily re-quired to “effectuat[e],”72 that “[w]ater use within Oklahoma . . . bedeveloped to the maximum extent feasible for the benefit ofOklahoma so that out-of-state downstream users will not acquirevested rights therein to the detriment of the citizens of this state.”73

Third is the time restriction placed on out-of-state users that that, as a

tal impacts, both in terms of new infrastructure and massive electricity usage. SeeWATER PLAN, supra note 57, at 4D.9–10, 4D.20, 4E.21, Table 4D.6.

68. New Bill Protects Oklahoma Water Rights, OKLA. WATER NEWS 4, (2009),available at http://tinyurl.com/tarrant5 (Oklahoma earlier had in force an outrightstatutory prohibition on exports of water for out-of-state use). See OKLA. STAT. ANN.tit. 82, § 1B (West Supp. 2012); OKLA. STAT. ANN. tit. 74, § 1221.A (West Supp. 2012)(the express moratorium expired in 2009, during the pendency of this action and wasreplaced with the collection of discriminatory statutes discussed in text).

69. OKLA. STAT. ANN. tit. 82, § 105.9 (West 1990).70. Hendrick v. Walters, 865 P.2d 1232, 1243 (Okla. 1993). (“Public officers have

the duty to follow [the] opinions [of the Oklahoma Attorney General] until they arejudicially relieved of compliance.”). No court has overruled the aforementionedopinion.

71. Okla. Op. Att’y Gen. No. 77–274 (1978).72. Id. at § 1086.2 (West Supp. 2012).73. Id. at § 1086.1(A)(3) (because out-of-state use of water necessarily precludes

in-state use of that water for any purpose (including recreation and “conservation”),arguably any permit to appropriate water for out-of-state use is “to the detriment” ofOklahomans).


practical matter, is a categorical bar to major municipal proposals likeTRWD’s.74 Finally, there is Oklahoma’s express preference for in-state uses over “[u]se[s] of water outside the state.”75 The practicalupshot of this statutory scheme is a categorical prohibition againstpermits to appropriate Oklahoma surface water for use in anotherstate.

D. The Tenth Circuit’s Decision

At the same time that TRWD filed its permit applications withOWRB, it filed suit against the members of OWRB in federal districtcourt in Oklahoma, alleging, inter alia, (1) that Oklahoma’s water em-bargo laws violate the Dormant Commerce Clause by unduly restrict-ing interstate commerce in water, and (2) that the Red RiverCompact—specifically the “equal rights” provision of section5.05(b)(1)—preempts the Oklahoma statutes that prevent TRWD’sappropriation of water from Reach 2, subbasin 5. TRWD sought adeclaratory judgment to that effect and an injunction prohibitingOWRB from enforcing the statutes. The parties agreed by joint stipu-lation, approved by the court, that no action will be taken on TRWD’sapplication until the lawsuit has concluded. The district court grantedsummary judgment to OWRB on both claims,76 and the Tenth Circuitaffirmed.

1. Dormant Commerce Clause

In addressing the Dormant Commerce Clause issue, the court ofappeals focused its inquiry on whether Congress, in giving its consentto the Compact had consented to Oklahoma’s restrictions on waterexport. By way of background, courts have held that the CommerceClause restricts states “from engaging in purposeful economic protec-tionism.”77 Export restrictions on natural resources are one form ofsuch disfavored protectionism,78 and in Sporhase v. Nebraska ex rel.Douglas,79 the Supreme Court held that water is an article of com-

74. A permit to appropriate surface water for out-of-state use must provide “thatthe whole of the amount of the water authorized by the permit [will] be put to benefi-cial use within a period of less than seven years.” Id. § 105.16(A). Given the enor-mous lead time necessary for planning and construction—greater than 15 years—thislimit functions as an absolute bar to TRWD’s proposal.

75. Id. § 105.12(A)(5). In passing on an application for out-of-state use, OWRBmust, for example, “evaluate whether the water that is the subject of the applicationcould feasibly be transported to alleviate water shortages in the State of Oklahoma”instead.

76. Tarrant Reg’l Water Dist. v. Herrmann, NO. CIV-07-0045-HE, 2009 WL3922803 (W.D. Okla. Nov. 18, 2009).

77. Donald H. Regan, The Supreme Court and State Protectionism: Making Senseof the Dormant Commerce Clause, 84 MICH. L. REV. 1091, 1092 (1986).

78. Idaho ex rel. Evans v. Oregon, 462 U.S. 1017, 1025 (1983) (“[A] State may notpreserve solely for its own inhabitants natural resources located within its borders.”).

79. Sporhase v. Nebraska ex rel. Douglas, 458 U.S. 941, 954 (1982).


merce and thus state laws burdening its trade are subject to DormantCommerce Clause constraints. Congress, however, may “permit thestates to regulate the commerce in a manner which would otherwisenot be permissible”80 by making a “clear expression of approval.”81

The court held that the Compact itself—despite its avowed purpose to“promote interstate comity and remove causes of controversy” amongthe signatories—actually contains this clear expression of approvalfrom Congress for Oklahoma to prohibit water export. In doing so,the court of appeals did not point to a provision of the Compact thatcontained this approval, rather it held, “the broad language of keyCompact provisions” provided “the clear statement of congressionalauthorization of state regulation that Sporhase and Wunnickerequire.”82

In reaching this conclusion, the court of appeals found that “theCompact provisions using words and phrases such as ‘unrestricteduse,’ ‘control,’ ‘in any manner,’ ‘freely administer,’ and ‘nothing shallbe deemed to interfere’ give the Oklahoma Legislature wide latitudeto regulate interstate commerce in its state’s apportioned water.”83

Those phrases come from three Compact provisions described above:“unrestricted use” is from section 4.02(b), which governs allocationsfrom Reach 1, subbasin 2; “in any manner” and “freely administer”come from section 2.01, while “control” and “nothing shall be deemedto interfere” come from section 2.10(a), both general provisions of theCompact. The court of appeals also relied in part on the Compact’s“Interpretive Comments”84—which “the Compact’s NegotiatingCommittee wrote . . . so that future readers might be apprised of theintent” of the drafting committee,85 and which state “each state is freeto continue its existing internal water administration, or to modify it inany manner it deems appropriate.”86—to confirm its reading of theCompact.

2. PreemptionThe court of appeals also rejected TRWD’s Supremacy Clause

claim that the Compact’s “equal rights” provision preemptsOklahoma laws that prevent TRWD from appropriating water allo-cated to it from parts of Reach 2, subbasin 5. Invoking the presump-tion against preemption, the court deemed the presumption“particularly strong in this case” because of a general history of “def-erence to state water law by Congress.”87 The court then focused in

80. South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87–88 (1984).81. Id. at 92.82. Herrmann, 656 F.3d at 1222, 1237.83. Id. at 1239.84. Id. at 1238.85. Id. at 1228.86. Id.87. Id. at 1242 (quotation marks omitted).


on and the language in section 2.10 of the Compact—“Nothing in thisCompact shall be deemed to: (a) Interfere with or impair the right orpower of any Signatory State to regulate within its boundaries the ap-propriation, use, and control of water, or quality of water, not incon-sistent with its obligations under this Compact”—concluding that itwas an “interpretive rule of non-interference” whereby Congress, inconsenting to the Compact, deferred to state regulation.88 Further,the court bootstrapped from its previous Dormant Commerce Clauseanalysis, reasoning that “a compact that authorizes state regulatorywater laws so as to insulate them from dormant Commerce Clausechallenge, as this one does, is unlikely to preempt those very samelaws.”89

The court acknowledged that state powers cannot be exercised in amanner inconsistent with the terms of the Compact, as stated in sec-tion 2.10(a). But, employing the presumption against preemption, itinterpreted the “equal rights to the use” guaranteed by sec-tion 5.05(b)(1) of the Compact, when read in the context of the mini-mum flow provisions in the rest of section 5.05, to merely ensure that“an equitable share of water from the subbasin reaches the statesdownstream from Oklahoma and Texas.”90 Once minimum down-stream flow requirements are met, according to the court, section 5.05gives equal rights to use of the excess, but does not entitle a “Texasuser” to “take Texas’s share of that water from a tributary located inOklahoma,” even though Texas’s share is not available to it fromTexas sources.91 Having read the Compact in this way, the court heldthat it does not conflict with Oklahoma law.

E. The Parties’ Legal Arguments at the Certiorari Stage

1. TRWD

TRWD argues in its petition for certiorari that, in reaching its con-clusions on each issue, the Tenth Circuit misread and rewrote provi-sions of the Compact, misused the presumption against preemption,and misapplied clear Supreme Court precedent. TRWD insists thatnothing in the Compact indicates Congress’s acquiescence toOklahoma’s discriminatory water export regime and that the plainlanguage of the Compact “allocates an equal portion of the disputedwater to Texas and thereby preempts inconsistent Oklahoma law.”92

In challenging the Tenth Circuit’s Dormant Commerce Clause hold-ing, TRWD zeroes in on the rule that that “Congress must manifest itsunambiguous intent before a federal statute will be read to permit or

88. Id. at 1236, 1238, 1246.89. Id. at 1245.90. Id. at 1243.91. Id. at 1245.92. Herrmann, NO. CIV-07-0045-HE, 2009 WL 3922803, at *3.


to approve” of protectionist state laws that would otherwise violatethe Commerce Clause.93 TRWD argues that Tenth Circuit’s cobblingtogether of phrases from various provisions of the Compact and itsinterpretative comments is insufficient to create such an “unmistaka-bly clear”94 impression as to Congress’s intent.95 In fact, TRWD ar-gues, the provisions relied on by the Tenth Circuit, when read in theirentirety, do not give any indication of an intention to use the Compactas a vehicle to grant Oklahoma permission to enact protectionistlaws.96 TRWD goes on to point out that other reasoning employed bythe Tenth Circuit—that the deference to state law embodied in thegeneral provisions of the Compact demonstrates Congress’s approvalof discriminatory laws—has been expressly rejected in prior SupremeCourt cases.97 Finally, TRWD argues that the Tenth Circuit’s resort tothe Compact’s interpretative comments, which TRWD labels “legisla-tive history,” is, itself, evidence that there was no “clear” congres-sional consent to Oklahoma’s discriminatory regulations.98

As to the Tenth Circuit’s preemption analysis, TRWD argues thatlanguage of § 5.05(b) is clear and susceptible to only one interpreta-tion: that Texas is entitled to 25% of the of the excess flow fromReach 2, subbasin 5 above 3000 cubic feet, and that it may collect itsportion from outside of Texas. TRWD insists that the Tenth Circuit’sreading of § 5.05, with its selective reference to other, more general,provisions in the Compact, is an impermissible rewriting of the obliga-tions assigned by the Compact.99 The Tenth Circuit got off on thewrong foot in its interpretation, TRWD claims, by applying the pre-sumption against preemption, which in turn led it to give unnaturalmeaning to various provisions. TRWD concedes that the Compact istechnically a federal law, and that it does not contain an express pre-emption provision;100 nonetheless, TRWD argues, the presumptionhas no place in the interpretation of an interstate compact—a contractbetween states—because “[a]n interstate compact is not imposedupon the States by Congress; it is, instead, the product of two or moreStates exercising their sovereign prerogative to negotiate a collabora-tive solution to a common problem.”101

93. Wyoming v. Oklahoma, 502 U.S. 437, 458 (1992).94. South-Central, 467 U.S. at 91.95. Herrmann, NO. CIV-07-0045-HE, 2009 WL 3922803, at *20.96. See id. at *9.97. See, e.g., Sporhase v. Nebraska ex rel. Douglas, 458 U.S. 941, 959–60 (1982)

(holding that general “deference to state water law” does not “indicate that Congresswished to remove federal constitutional constraints on such state laws”; rather, suchlanguage must be understood, instead, as deferring only to “valid state law,” an ordi-nary “ingredient[ ]” of which is conformity with “[t]he negative implications of theCommerce Clause”).

98. Herrmann, NO. CIV-07-0045-HE, 2009 WL 3922803, at *22.99. Id. at *28.

100. See Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992).101. Herrmann, NO. CIV-07-0045-HE, 2009 WL 3922803, at *33.


2. OWRB

Unsurprisingly, given that this case is at the certiorari stage,OWRB’s legal arguments largely track the reasoning of the Tenth Cir-cuit. OWRB spends most of its brief in opposition attempting to con-vince the Court that its dispute with TRWD is minor, emphasizingthat it is a dispute over just a few words in the Compact, and does noteven involve any of the actual signatories.102

As to the Dormant Commerce Clause issue, OWRB argues that inconsenting to a compact that allocated water among small group ofstates—in other words, “legislat[ing] on the specific subject at is-sue”—Congress blessed those states’ enactment of protectionist re-gimes regarding that water.103 OWRB insists, as the Tenth Circuit did,that Sporhase and Wunnicke are distinguishable because they did notinvolve interstate compacts governing the articles of commerce at is-sue in each respective case, and thus lacked this form of Congressionalacquiescence.104

As to the preemption issue, OWRB begins by challenging TRWD’sinterpretation of the Compact language, claiming that overarchinggoal of the Compact “is to allow one state to divert its water within itsstate and the other to do so within the other state,” and that TRWD’sinterpretation flies in the face of that goal.105 OWRB further en-dorses the “Tenth Circuit[’s] meticulous interpretation and preemp-tion analysis of section 5.05(b)(1)’s ‘equal rights’ provision in thecontext of the policy and purpose expressed throughout the Com-pact,”106 insisting that “[h]ad it been the intent of the Compact draft-ers to allocate the water located within Oklahoma to Texas, aftertwenty years of negotiations, surely they would have [clearly] saidso.”107

IV. THE IMPORTANCE OF THE CASE

Whichever side you agree with in this case, the importance of theissues presented cannot be overstated. Beyond the immediate im-pacts that will be felt in the water-starved regions of north Texas, ifthe Tenth Circuit is correct in its conclusions, many (even most) watercompacts between western states could be significantly weakened, andthe ability of a compact state to hoard its natural resources from therest of the country could be greatly enhanced. These effects will onlybe magnified as the need for water increases and disputes of waterbecome more common.

102. See Tarrant Reg’l Water Dist. v. Herrmann, NO. 11-889, 2012 WL 590128, at*10–12 (Feb. 21, 2012).

103. Id. at *25.104. Id. at *25–26.105. Id. at *28–29.106. Id. at *30–31.107. Id at *31.


A. A License to Hoard

As discussed earlier, the primary purpose of Dormant CommerceClause restrictions is to prevent state-level economic protectionism.108

And the reason for the primacy of this purpose is that such protection-ism “tends to undermine the political union established by the Consti-tution” and is “likely to provoke retaliation by other states.”109 Itfollows then, that anything that makes it easier for states to engage ineconomic protectionism—particularly with regard to a vital re-source—should catch our eye, and should be examined closely.

What the Tenth Circuit did in this case that has the potential toresult in widespread water-protectionism was to take general provi-sions providing that the Compact is limited to its subject matter; andthat anything outside the compact remains status quo, and which arepresent in similar forms in almost all western water compacts; and ele-vate them to the status of a clear statement of congressional acquies-cence in discriminatory water export laws. In other words, if theTenth Circuit is correct that a statement in a compact that genericallyprovides that “[n]othing in this Compact shall be deemed to . . .[i]nterfere with [water regulations] not inconsistent with its obliga-tions under this Compact,” grants a state free reign to prevent exportof water, then most states in the western part of this country have alicense to hoard their water at the expense of other states.110 Regard-less of whether the court’s interpretation is sound, it is unlikely thatthis outcome of the compact process was anticipated; it will require areexamination of the interstate compact’s place in the resolution ofwater disputes, particularly as water-starved states increasingly look totheir more blessed neighbors with a jealous eye.

Further, by encouraging hoarding, the Tenth Circuit’s decisionmakes it more likely that disputes between and among states willemerge and more likely that existing disputes will intensify. Althoughit is doubtful that we will see a return of the “Arizona Navy,” there isa very real risk that these disputes over water, a resource that we allneed to survive and thrive, will create cycles of retaliation that leaveus all worse off.

B. Costly Uncertainty

As already noted, the primary value of water compacts is their abil-ity to settle expectations and allow for the type of advanced planningthat is necessary for future economic development. It is vital for thissettling of expectations that the terms and provisions of a compact

108. See Philadelphia v. New Jersey, 437 U.S. 617, 624 (1977) (adopting a “virtuallyper se rule of invalidity” for discriminatory state statutes that raise the specter ofeconomic protectionism).

109. Brannon P. Denning, Reconstructing the Dormant Commerce Clause Doctrine,50 WM. & MARY L. REV. 417, 485 (2008).

110. Herrmann, 656 F.3d at 1222.


have a clear and unchanging meaning. If the Tenth Circuit is correct,however, that the presumption against preemption guides the inter-pretation of an interstate compact’s terms, the predictability gainsfrom existing compacts will be greatly reduced. This is because em-ploying the presumption against preemption to compacts encouragestheir rewriting by courts. Instead of searching for the plainest or mostobvious reading of a provision when such a provision conflicts with astate law, courts instead will actively seek out an interpretation thatsaves state laws, adopting that interpretation so long as it is not “un-reasonable.”111 This greatly increases the range of possible interpreta-tions of any given provision, and consequently diminishes thecertainty that these provisions would otherwise provide.

An additional, and related, increase in uncertainty following fromthe application of the presumption against preemption to interstatecompacts is the incentive it provides for states to get creative in theirlawmaking in order to shirk their responsibilities under a compact.Knowing that a compact provision that conflicts with a state law willbe given not necessarily the best interpretation, but a “reasonable”interpretation that saves the conflicting state law, a state has an incen-tive to pass a law that directly conflicts with the best interpretation ofan unfavorable provision. Such a perverse incentive makes it thatmuch more difficult to achieve the important goal of settlingexpectations.

C. Federal Intervention

This increase in uncertainty with respect to the meaning of compactprovisions and the likelihood of interstate disputes reduces the valueof existing compacts and could make future compacts more difficult toexecute. The ultimate outcome of this unraveling of the carefully-bal-anced network of interstate compacts that govern allocation of thenation’s water is likely to be increased litigation and, eventually, solu-tions imposed by Congress.

One large advantage compacts have over litigation is that their out-comes are much more predictable.112 As the uncertainty of compactoutcomes increase, their value relative to litigation decreases. If statescome to believe that any “sensible compromise” can be undone bysignatories later in the game, they are likely to prefer trying their luckin the courtroom upfront, where they have a chance to score a waterwindfall, rather than engaging in what are often protracted negotia-tions.113 This is a possibility that should give us pause, because, to put

111. Id. at 1245.112. See Horne, supra note 28.113. Red River Compact, Pub. L. No. 84-346, 69 Stat. 654 (1955) (showing that

negotiations on the Red River Compact were authorized by Congress in 1955). RedRiver Compact, Pub. L. No. 96-564, 94 Stat. 3305 (1980) (showing that the Compactwas not ratified by Congress until 1980.).


it bluntly, courts are “very bad at resolving interstate waterdisputes.”114

In addition, as noted above, Congress has the power to undo previ-ously executed compacts; if it sees that current compacts are becomingineffective and increasing, rather than decreasing interstate strife, itmay put that power to use. The odds of intervention increase as statesseek to alleviate water shortages in environmentally-risky ways115 andas state disputes encroach on federal water interests.116 In consideringthis possibility, it is important to remember that a state like Texas,with its thirty-six representatives in the House, will have far moreclout in such disputes than a state like Oklahoma, with only five.

V. CONCLUSION

The need for cooperation in resolving interstate water disputes hasnever been greater. The most effective mode of encouraging this nec-essary cooperation over the past 100 years has been the interstatecompact. The Tenth Circuit’s decision in Tarrant, however, raisesquestions about the continuing viability of these compacts. Thesequestions are of vital importance, not just to the future of the Ameri-can West, but to the entire country.

114. Horne, supra note 28, at 104.115. In this case, for example, TRWD’s alternatives to acquiring its water from

Oklahoma pose a much greater environmental impact. See WATER PLAN, supra note57, at 4E.15–16.

116. Again, using this case as an example, the Hugo, Sardis (formerly Clayton), andTuskahoma federal reservoirs—all located in southeastern Oklahoma within Reach 2,subbasin 5—were expressly authorized as water sources for both Oklahoma andNorth Texas. At the time the reservoirs were under consideration, Oklahoma’s antici-pated future water demands did not justify the cost of their construction. Thus,Oklahoma legislators represented that the demands of North Texas (and specificallyTarrant) should be taken into account to justify Congress’s authorization and subse-quent funding of the projects. See, e.g., HEARING BEFORE SUBCOMM. OF THE COMM.OF PUBLIC WORDS, UNITED STATES SENATE, 84TH CONG. (1956) (statement of Okla.Sen. Monroney) (“[T]he water for sale to municipalities, such great municipalities asDallas and Fort Worth . . . [a]nd others that are desperate for . . . water supply . . . willnot only reimburse the cost of the upstream dams, but it will carry the cost of theauxiliary dam, the dry dam located at Millwood.”).

INVESTMENT IMPACT OF WATERRELIABILITY—RECENT DOW EXPERIENCE†

By Paul Bork‡

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37II. WATER RIGHTS—LEGAL BACKGROUND . . . . . . . . . . . . . . . . 38

III. TXO’S WATER USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39A. Details of Brazos River . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40B. Details of TXO Water Demand . . . . . . . . . . . . . . . . . . . . . 41

IV. LEVELS OF PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43A. LOP in the Water Arena—Reservoirs . . . . . . . . . . . . . . . 43B. LOP in the Water Arena—Alternate Supply . . . . . . . . 43

1. LOP in the Water Arena—Alternate Supply—Commercial Reservoirs . . . . . . . . . . . . . . . . . . . . . . . . . 44

2. LOP in the Water Arena—Alternate Supply—Real Alternate Supplies . . . . . . . . . . . . . . . . . . . . . . . . 45

C. LOP in the Water Arena—Conclusion . . . . . . . . . . . . . . 48V. WATER QUALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

VI. WATER RIGHTS—ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . 50A. Recent Enforcement History . . . . . . . . . . . . . . . . . . . . . . . . 52B. Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

VII. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

I. INTRODUCTION

All human activity requires water. Some activities are short enoughthat water consumption does not need to occur during the activity.

† DISCLAIMER: This paper represents the personal views of Paul Bork and notthose of The Dow Chemical Company and/or any of its subsidiaries (Dow) or anyorganization to which Dow is a member, any similarities between these views may notbe entirely coincidental, but they are independent.

‡ Author Bio: The Author has been the Dow site attorney for various sites andthe Dow corporate attorney for Air, Water, RCR, and M&A (globally). He served onvarious boards, traded currency, audited facilities, managed litigation, provided ad-vice and training, reviewed correspondence, negotiated contracts, drafted policies, ne-gotiated violations, assisted state and federal statutory and regulatory advocacy, andobtained patents. One accomplishment (minor statute change) received appreciationfrom both the Dow President and the U.S. President. The Author has supportedDow’s Freeport Operations over most of his career and been the environmental coun-sel for the site for the past ten years. A flag that flew over the Texas Capital flies inthe Author’s office in Michigan, thanks to State Representative Dennis Bonnen rec-ognizing the Author’s supporting of Dow’s Texas operations. He currently is the envi-ronmental counsel for all Dow sites in Texas, Illinois, Arkansas, and Canada(including Rohm and Haas, and Union Carbide sites). He also has responsibilitieswith respect to certain sites in California, West Virginia, and Louisiana, as well assupporting several company-wide functions and periodically serving as an expert ne-gotiator on critical projects. The Author holds a B.S. in chemical engineering fromMichigan Tech, an MBA from Louisiana State University, and a J.D. from the Univer-sity of Michigan Law School.

37


Examples of this are a Sumo wrestling match, Karate sparing andtraveling to and from work (for many people). Some activities aremoving and the water can be consumed in only part of the geographywhere the activity occurs. Examples of this are while driving throughDeath Valley the Author carried some in a container and consumedduring the traverse when the Author made the trip, but clearly thiscould be accomplished without consuming water (provided nothingsignificantly slowed the traverse), a boxing match and traveling to andfrom work (for other people). All other human activities require theconsumption of water during and in the locations where the humanactivity occurs.

For some human activity, the activity itself consumes water as wellas needing water for the human part of the activity. One example ofthis is Dow’s Freeport Texas chemical complex (“TXO”). TXO is thelargest chemical complex in the United States, employing 8,000 people(including contractors), operating sixty-five world scale productionplants, producing billions of pounds of products (44% of Dow’s USsales), which are shipped out in pipelines, on trucks, rail and ships on5,000 acres of property at the end of the Brazos River.1 This facilityoperates 24 hours a day, 7 days a week and 365-6 days a year. TXO isthe successor of the United States government’s chemical complex,built to support World War II. Dow was the operator of this facilityfor the US government and purchased the site when the war was won.TXO needs water to support its employees, as well as for the chemicalproduction processes. Since water is needed to operate TXO, invest-ment will only occur if the water supply is reliable. This paper ad-dresses that reliability of that water supply, in general and in responseto the Texas Commission on Environmental Quality (“TCEQ”) en-forcement of recent water rights calls TXO has made on the BrazosRiver. These concerns have recently been highlighted in the droughtof 2011, which has been called the worst single year drought forTexas.2

II. WATER RIGHTS—LEGAL BACKGROUND

Rather than repeat the work of others in this area, this papermerely cites with approval the recent paper of Michael Booth3 for itspresentation of the background and current status of the law, includ-

1. ABOUT DOW IN TEXAS, DOW, http://www.dow.com/texas/freeport/about/in-dex.htm (last visited Apr. 12, 2013).

2. See generally Chris Amico et al., Dried Out: Confronting the Texas Drought,STATE IMPACT TEX., http://stateimpact.npr.org/texas/drought/ (last visited Mar. 28,2013).

3. See generally Michael J. Booth et al., TCEQ Water Curtailment Rules – HowMeaningful is the Priority System?, UTCLE—Water Law Seminar, Nov. 1–2, 2012,http://www.utcle.org/eLibrary/preview.php?asset_file_id=36172.

2013] INVESTMENT IMPACT OF WATER RELIABILITY 39

ing TCEQ’s regulations and the ongoing case4 challenging the existingTCEQ water call regulations and their application. The Author ex-presses no view regarding the paper’s presentation of Mr. Booth’sviews with respect to the legality or appropriateness of these regula-tions or his views on this case. The Author notes in passing that thesecond sentence in Section D of this paper should read in part, “Apriority call made by The Dow Chemical Company (‘Dow’) on No-vember 14, 2012.” Any similarities between the views of Mr. Boothand those of the Author may not be entirely coincidental, but they areboth independent and beyond the scope of this paper.

III. TXO’S WATER USE

TXO chemical processes consume water to carry heat and energy.Examples of this are the cooling and condensation of chemicals andchemical intermediates, as required by heat exchangers and distilla-tion columns. Another major use of water is the conversion of waterinto extraordinarily pure water, which is then boiled and superheatedto produce the various grades of steam that is used to heat and boilchemical intermediates and feeds; as required in heat exchangers,boilers, re-boilers and distillation columns. Most of this water is re-cycled. Some water is recycled by passing the cooling water through acooling tower, which evaporates some of the water and cools the restdown; it can then be collected, treated and reused for cooling again.

Other water is recycled by being collected, treated and re-boiledinto steam which can be reused for heating again. Unfortunately,both of these recycle processes concentrate undesirable materials inthe recycled water, limiting the number of times the water can be re-cycled. This is accomplished by diverting a part of the recycle streaminto a purge or waste stream. This water ends up as part of the TXOTexas Pollution Discharge Elimination System (“TXPDES”) dis-charge stream. Enormous efforts are made to reduce the size of thesepurge streams, but after all efforts are exhausted, some purge isneeded for all recycle streams. Sometimes the recycle loop is insuffi-ciently closed to require an express purge stream. One example ofthis would be a chemical process that required water in the product.If a sufficient part of the recycling water stream were to be incorpo-rated into the product, an express purge stream may not be required.

TXO chemical processes consume water to carry other chemicals,as water is a chemical, not reacting in most chemical productionprocesses (at least not intentionally or significantly). An example ofthis is to carry salt from underground salt domes into the chlorine andcaustic production plant. This one plant generates both chlorine andcaustic (sodium hydroxide) in a ratio that the chemistry fixes as 1.00 to

4. See Tex. Farm Bureau v. Tex. Comm’n on Envtl. Quality, No. D-1-GN-12-003937 (53d Jud. Dist. Ct., Travis County, Tex. filed Dec. 14, 2012).


1.01. Many other processes use water to carry chemicals or particu-lates from place to place.

TXO chemical processes consume water as reaction media. An ex-ample of this is reaction of salt in a chlorine and caustic productionplant. The reactivity of a chemical can be moderated by reducing itsconcentration, thus having the reaction take place in water sometimesprovides a means to control the rate of reaction. Again the water isnormally recycled, but a purge is required. Again, a chlorine andcaustic production plant is an example of this.

TXO chemical processes consume water as a component of theirproducts. An example of this is the 50% caustic that Dow sells. Thediluting reduces the costs of the production, as the caustic is made atless than 50% strength and a more concentrated caustic would requireremoving more water. The 50% caustic is less reactive and dangerousto use. A similar home product where a large part of the produce isinert is laundry soap. It is easier to place about half a cup of laundrysoap into a load of laundry than measuring out a teaspoon. Marketingmay also play a part in the home-laundry use.

TXO chemical processes require people to operate and these peo-ple require water, as do all people. While a small percentage of theTXO water use, all usage is critical. As the children’s story goes, thelack of a nail can cause the failure of the war.

TXO also uses water for firefighting. In the unlikely event a firewere to occur in various places in the TXO, water, collected in a firefighting pond and directed with a dedicated firefighting water distribu-tion system will be used to fight the fire.

In addition to these requirements, TXO shares about 10% of thewater it consumes. This water is shared with nearby neighbors, in-cluding local industry (“BASF”5 is an example of this) and municipali-ties (the city of Lake Jackson is an example of this).

For these reasons, TXO requires good water all the time. Dow is inthe chemical manufacturing business. Dow does not desire to be inthe water business. However, it is unacceptable to Dow for TXO notto have water for any quarter, month, day, hour, minute or second andDow must be in the water business to a sufficient degree to obtain thenecessary continuous supply of good water.

A. Details of Brazos River

The Brazos River is the second largest River reaching the Gulf ofMexico from the United States, crossing Texas.

5. www.basf.com (last visited Apr. 23, 2013).


The inserted diagram from the BRA shows the reach of the BrazosRiver and the drought stage of Texas on one day during the 2011drought. The flatness of Texas and the Brazos River is such that theRosharon Gage, at river mile fifty-six, is tidally influenced during peri-ods of low flow, or the flow increases in periods of low tides and de-creases during periods of high tides. This back and forth surges of thetidal water makes measuring the Brazos River flow over short timesdifficult.

B. Details of TXO Water Demand

TXO has a number of water rights, but typically they are operatingunder a 1942 water right.6 This is one of the most senior water rightson the Brazos River. It has two water intakes, one at mile markertwenty (Brazoria Intake) the other at mile marker forty-six (HarrisIntake). This makes TXO the last water intake on the Brazos River.TXO has two reservoirs, one near each intake. They are operated asone reservoir with a combined capacity to operate TXO for about a

6. Certificate of Adjudication 12-5328:February 28, 1929: 20,000 acre feetFebruary 14, 1942: 150,000 acre feetApril 4, 1960: 65,000 acre feetMarch 8, 1976: 3,136 acre feet


month.7 TXO consumes about 310 acre feet of water daily.8 Duringperiods of droughts when the air is dry and blowing, many reservoirslose as much water to evaporation as they do to consumptive use, sothe experience is that these reservoirs are expected to produce suffi-cient water for at least forty-five days of operation. Keeping reser-voirs full can become a water demand during periods of drought andnear drought.9 Pumps are not continuously variable and come in largesizes. TXO has the ability to pump 180 cfs (360 acre feet/day)–takingthe rest of their demand from the reservoirs or pump at 290 cfs (580acre feet/day)–putting the surplus of the pumping into the reservoirsto fill them.

A further factor for TXO is that the bottom of the Brazos River isbelow sea level all the way up the river to the Harris Intake. Thismeans if there is insufficient water flowing down the Brazos River tokeep the Gulf of Mexico at bay (intended), then the Gulf of Mexicowater will flow up the Brazos River bed and produce sea water at theHarris Intake. Experience shows that the front edge of this “saltwater wedge” moves down the Brazos River when there is about 100cfs flowing past the Harris Intake and upstream edge of this “saltwater wedge” moves up the Brazos River when there is less thanabout 100 cfs flowing past the Harris Intake.10

The form of the “salt water wedge” means that a structure blockingthe bottom of the Brazos River and allowing free flow at the top ofthe Brazos River can effectively stop the upriver flow of the “saltwater wedge” without requiring additional river flow of fresh water.This structure is called a salt water barrier. There are two types of saltwater barriers, permanent (an example is at the end of the Guade-loupe River)11 and temporary (made largely of earth and which is ex-pected to be washed out each year during the period of high riverflow).12

7. TCEQ—Questions for Senior Water Right Holder Making Call, Nov. 14, 2012(see attachment).

Brazoria Reservoir 21,000 acre feetHarris Reservoir 7,000 acre feet

8. TCEQ—Questions for Senior Water Right Holder Making Call, Nov. 14, 2012.Average daily use for the first ten months of 2012 was 306 acre feet.

9. Historically, Dow consumed 440 acre feet/day, or 140 million gallons per day,or 220 cubic feet per second or 100,000 gallons per minute.

10. Since the increase salinity of sea water also causes the sea water in the BrazosRiver bed to be more dense than the fresh water, the sea water forms a wedge, wherethe sea water is further up the Brazos River at the bottom of the Brazos River bedthan it is at the top of the Brazos River.

11. See discussion in http://articles.orlandosentinel.com/2012-06-29/features/sns-mct-gbra-puts-in-saltwater-barrier-on-guadalupe-20120629_1_water-level-water-sup-ply-river-level (last visited May 3, 2013).

12. See Dow’s attached extract from their permit for a temporary salt waterbarrier.


IV. LEVELS OF PROTECTION

We have a non-unique concept in the chemical industry, levels ofprotection (“LOP”). It is used in many areas without such formal-ity–for example, in the legal arena of wills. One might expressly disin-herit a daughter, then allocate all the assets and finally have aresiduary bequest to another. This would have three LOP. However,in the chemical industry, this can be a very formalized process. Forexample, to keep chemicals out of the environment, we may have ves-sels, pipes, fittings and valves designed not to leak as one LOP, wemight have an aggressive inspection and leak fixing program for a sec-ond LOP and a containment system, for example, a dike or dome overthe plant as a third LOP.

A pressure relief valve, routed to a flare might be another LOP.However, these levels of LOPs might not protect against the sameincidents and might not be independent, so they may not count as fourindependent LOPs.

A. LOP in the Water Arena—Reservoirs

One may ask if a reservoir can be a LOP for TXO against failure ofthe Brazos River water supply. While a reservoir can be a partialLOP, this is not an independent LOP, as the reservoir is filled fromthe Brazos River and only lasts while water from the Brazos River isin the reservoir.

Dow actually has two reservoirs, which contain about a month ofwater. One can suggest that this is a LOP against the Brazos Riverbeing out of good water for any second, minute, day, or perhapsmonth. However, Dow operates TXO in a manner that is knowinglysafe and inside applicable permits and legal requirements. Severaldays of operation are needed to appropriately shut down TXO, so thisLOP is only effective against the Brazos River being out of goodwater for any second, minute, day or couple of days. The reservoirsare not a LOP against the Brazos River not having good water for amonth or quarter.

Additionally, the reservoirs are not independent of the BrazosRiver, as there needs to be sufficient water in the Brazos River forDow to fill, re-fill and keep the reservoirs full against losses, such asevaporation. Dow has a limited physical and permit capacity to pumpwater from the Brazos River, so the Brazos River has to have a suffi-cient surplus of water, beyond TXO’s current needs to allow re-fillingof the reservoirs after their partial consumption to have the reservoirsfunction as a LOP.

B. LOP in the Water Arena—Alternate Supply

In many ways, water is similar to other utilities needed to operateTXO. For example, electrical power is necessary for each and every


chemical plant and the operation of all TXO. A common way to ad-dress reliability in the supply of electricity is to dual source the plant’selectrical grid. TXO generates its own power and also has a linkage tothe commercial Texas power grid. This means for some power relia-bility issues, TXO can switch the source of electrical power and con-tinue to operate during a reliability issue with one of its powersources.

One might ask if this concept is applicable to water supply for TXO.Texas has a concept of a bed and banks permit13 that allows a personwho is selling water to convey that water down the Texas rivers, withthe water legally, but not physically, separated from the natural flowsof the Texas rivers. Similar to wheeling power from other sources,there are losses as the water is transported down the Texas rivers, butthe legal ownership of the water is reserved for the purchaser. Wateris different from power in that Texas owns the wheeling mechanismrather than a commercial company, and allows fairly unconstraineduse of the wheeling mechanism.

1. LOP in the Water Arena—Alternate Supply—Commercial Reservoirs

Some background is needed here to understand the next issues.Texas law allocates water in Texas rivers on a priority basis, “first intime is first in right.”14 The right to this priority is a water right.These water rights are property rights.15 However, Texas treats waterheld in a reservoir as not subject to allocation according to waterrights.16 This is true even when the water is released to the same riverfrom which it was captured.

This fairly unconstrained use of the wheeling mechanism is requiredto allow commercial use of water from reservoirs, which for the pur-poses of this paper is the selling of water. Other use of water in thispaper, such as that by TXO is designated consumptive use. On theBrazos River, the Brazos River Authority (“BRA”) operates most ofthe reservoirs and sells most of the water.17

Commercial water use requires that the water stored in reservoirsbe severed from water rights. Otherwise there would be no reason foranyone to store water in a reservoir, as the water would be required tobe provided at no cost to any water right holder with an older waterright than the one under which the water was stored. One aspect ofwater law that could benefit from some fine-tuning is the concept thatwater cannot be diverted into storage while a senior water right has an

13. TEX. WATER CODE ANN. § 11.042 (West 1997 & Supp. 2012).14. TEX. WATER CODE ANN. § 11.027 (West 2005).15. Tex. Water Rights Comm’n v. Wright, 464 S.W.2d 642 (Tex. 1971).16. TEX. WATER CODE ANN. §§ 11.036, 11.091 (West 2011).17. The Brazos River Authority Mission, BRAZOS RIVER AUTH., http://www.bra-

zos.org/ourMission.asp (last visited Mar. 26, 2013).


outstanding call. Lack of precision in implementing this aspect ofTexas water law allows a reservoir owner to divert water from thesenior water right to fill a reservoir, requiring the purchase of waterfrom this or another reservoir. The total flow in the river does notchange, it just has the effect of unjustly enriching reservoir ownersfrom those owning senior water rights.

Commercial reservoirs rely on the ability to store water with a smallamount of loss. In the power area, the equivalent to commercial res-ervoirs are peaking power generators, such as many gas turbines andhydroelectric power generators from some reservoirs. Commercialreservoirs, unlike peaking power generators do not create any addi-tional water. They are not an additional source of water. They arenot an independent LOP. They are simply changing the time somewater is in the river.

There is only one way a commercial reservoir makes any sense.This is when a river cannot meet the water demand from the river, butthe river’s average flow is sufficient to meet the average water de-mand from the river. For some commercial reservoirs, the flow rateswill allow slow filling of the reservoir over a period of years and theselling of water over another period of years during drought or peri-ods where the periodic flow is below the demand. Other commercialreservoirs will be blessed with high flow rates and the physical abilityto fill the reservoir with an episodic event, perhaps several times peryear, even during drought periods. The types of commercial agree-ments an operator of a reservoir enters will reflect the needs of theircustomers. Some will be buying water each year, these customers willnot have any water rights themselves (many cities are in this cate-gory),18 others will be using the reservoir capacity only as a backupwater supply or as a LOP against a drought water shortage. There arealso opportunities for episodic purchasers of water to acquire theresidual of a water supply agreement from a continuous water pur-chaser, particularly if the continuous water purchase has agreementsallowing for growth–at least until that growth occurs.

From a LOP perspective a commercial reservoir is not an indepen-dent water supply, but this can be a very significant LOP against themore numerous, shorter-term water supply issues.

2. LOP in the Water Arena—Alternate Supply—Real Alternate Supplies

If commercial reservoirs are not a real alternative supply, but sim-ply change the time some water is in a river, one can ask if there areany real alternate supplies of water. Yes, there are some real alternate

18. ORDER SUSPENDING WATER RIGHTS ON THE BRAZOS RIVER, APPENDIX C:JUNIOR WATER RIGHTS NOT SUSPENDED BY THIS ORDER 1–2, TCEQ, Nov. 27, 2012,http://www7.tceq.state.tx.us/uploads/eagendas/Agendas/2012/12-5-2012/2012-2421-WR.pdf.


supplies of water. Four come to mind: 1) from a different river, 2)from groundwater, 3) another user’s return and 4) from the ocean.There is an effective fifth alternative, which is an effective substitutefor obtaining water: a salt-water barrier. Finally, there is an effectivesixth alternative, which is also an effective substitute for obtainingwater: reduction of water demand. Neither of these last two alterna-tives actually require nor consume water.

Water from a different river can be divided into two categories:water from Texas rivers and water from non-Texas rivers. Dow’s ex-perience and this paper will be limited to a brief discussion of waterfrom Texas rivers. The ability to take water from non-Texas rivers,involves the interaction of another state’s law and may well involve agreat deal of politics. The Metroplex (Dallas–Fort Worth area) is ex-periencing both of these in their ongoing efforts to consumeOklahoma water. Texas has additional protections and requires addi-tional showings in permitting the moving of water from one river ba-sin to another.19 This seems to be proper policy to avoid a watershortage in one area migrating and causing problems in other riverbasin(s). So while there may be permitting constraints, obtainingwater from another river basin can provide a fairly independent LOP.However, often a drought is broader than one river basin. In 2011,most of Texas was in an extreme drought.20

It may be difficult to physically transfer the water from one riverbasin to the desired river basin. One way to accomplish this is to useexisting infrastructure. If a municipality receives water from two riverbasins and has an interconnection that has sufficient additional capac-ity for the water user, this may be an economical way to transfer thewater. Alternatively, if an existing pipeline happens to flow in theproper direction, purchase or use of an existing pipeline may be eco-nomical. Acquiring right-of-ways and constructing a pipeline is ex-tremely expensive and may make obtaining such a LOP, even for apartial demand, too expensive.

Water rights have no impact on groundwater, which is regulatedseparately.21 Groundwater can be purchased in two ways: 1) in theground or 2) already extracted in a river. One buys groundwater inthe ground from the land owner. However, the regulation of ground-water is delegated to the groundwater management district (some-times known as the subsidence district) which has jurisdiction over thegroundwater in a county or group of counties. Many groundwatermanagement districts require a permit to “export” groundwater from

19. TEX. WATER CODE ANN. § 11.085 (West 2008 & Supp. 2012).20. Dried Out: Confronting the Texas Drought, STATEIMPACT, http://stateimpact.

npr.org/texas/drought/ (last visited Mar. 28, 2013) (showing the animated display ofthe drought through 2011).

21. See generally TEX. WATER CODE ANN. CH. 36 (West 2008).


the geographic area of the groundwater management district and mayeven require payment of a severance fee “export” the water.

One buys groundwater in a river from the person managing thewater. This person can be the owner of the land that generated thegroundwater. It can also be a person that first used the groundwater.The first user of the groundwater may be a municipality. If one isbuying already used water (often called a return flow), many of thebarriers to groundwater use may have been overcome.

In any event, one must use often use a bed and banks permit totransport the purchased water down a Texas river to the consumptiveuse location.22 While it is not likely that any one groundwater sourcecould substitute for the entire TXO water demand and become aLOP, acquiring groundwater that replaces some of the TXO waterdemand during periods of drought can function as a partial LOP.

Return flows back to a Texas river that was the water’s source aresubject to the priority system of water rights.23 Typically, a municipaluser has return flows equal to about 40% of their intake, since abouthalf their water is used for watering outside plants. Irrigation use typi-cally does not have return flows. Power generation typically recycletheir water, using evaporative losses to provide cooling and only re-turn a purge to the river, would have a very small return flow.24 Re-turn flows to another Texas river are subject to the permitting forinterbasin transfers.25 However, a return flow reused without enteringa Texas river is not subject to the priority system of water rights.26

TXO recently started to reuse the return flow from the city of LakeJackson. This reuse replaces about 2,500 gpm of TXO’s water de-mand. This is an example of a partial LOP. It operated during peri-ods of drought, but also in the periods leading up to the drought,which may help keep the Harris and Brazoria reservoirs fuller than ifthe city of Lake Jackson reuse were not in place.

Given TXO’s location at the end of the Brazos River, located by theUnited States government to allow easy shipment by boat duringWWII, access to sea water from the Gulf of Mexico is not difficult. Infact, TXO already uses sea water as a partial replacement for freshwater, so this is already pumped to the site. Desalination is a veryreal, commercial process. It would allow TXO to manufacture thewater it needs without being dependent on droughts and infringementby others of its water rights. A new, large desalination plant can pro-duce water for a price of about $700/acre foot.27 When the Brazos

22. TEX. WATER CODE ANN. § 11.042 (West 2009).23. TEX. WATER CODE ANN. § 11.046 (West 2011).24. Interview with Tim Finley, Senior Envtl. Eng’r, Dow Chemical (Mar. 27,

2013).25. TEX. WATER CODE ANN. § 11.046.26. Id.27. Interview with Tim Finley, Senior Envtl. Eng’r, Dow Chemical (Mar. 27,

2013).


River is flowing at a sufficient rate (220 cfs) at the TXO Harris intake,the water is available for the cost of pumping the water down to theTXO plant and the maintenance of the water system ($40/acre foot).28

When BRA interruptible water is available, as during a moderatedrought, the current price is $62.50/acre foot.29 Desalination, with itslarge price premium becomes a difficult to implement LOP.

The fifth alternative is a saltwater barrier. With the installation of asaltwater barrier, the amount of water flow in the Brazoria Riverneeded to meet TXO’s demand is decreased by about 100 cfs at theHarris Intake. This is because the normal function of 100 cfs passingthe Harris Intake to keep the “salt water wedge” from reaching theHarris Intake and eliminating the ability for TXO to get good freshwater from the Brazos River is being replaced by a submerged, physi-cal dam—the saltwater barrier.

The sixth alternative is reduction of water demand. TXO has ag-gressively reduced its water demand.30 Including the reuse of the cityof Lake Jackson water, TXO accomplished about 9,500 gpm of waterreduction efforts at a cost identified as in excess of three million dol-lars. In addition, there were several water demand efforts that makesense to use during periods of extreme drought, these drought projectswill reduce TXO’s water demand by an additional 3,500 gpm. Again,each gpm of demand reduction enables the existing TXO infrastruc-ture to operate better, providing a longer period of operation during adrought. These demand reduction projects can be viewed as an addi-tional partial LOP. Water demand reduction did not stop with theprojects claimed in the Texas Environmental Excellence Award appli-cation. In 2011, TXO purchased property upon which to double itsreservoir capacity. While it takes many years to permit and constructa reservoir, doubling the capacity will have the effect of reducingTXO’s water demand during short periods of droughts, adding an ad-ditional partial LOP.

C. LOP in the Water Arena—Conclusion

There does not appear to be a single adequate alternative supply forthe TXO facility. However, every 10% reduction of TXO water con-sumption during drought periods increases the capacity of the Dowreservoirs by three days. It makes sense to look for a variety of alter-native partial LOPs. Each of these partial LOPs may not be signifi-

28. Interview with Ernie Schreiber, Envtl. Operations, Dow Chemical (Mar. 28,2013).

29. WATER SUPPLY CONTRACTS, BRAZOS RIVER AUTHORITY, http://www.brazos.org/water-contracts.asp (last visited Mar. 26, 2013).

30. See the Oct. 8, 2012 application for the Texas Environmental ExcellenceAward, which includes many details of these conservation efforts. TCEQ awardedDow one (of ten) 2013 Texas Environmental Excellence Awards in a ceremony onMay 2, 2013.


cant to the entire facility, but if a partial LOP’s water source is diversefrom the Brazos River there is at least a partial additional LOP, re-ducing the potential for TXO to run out of water. Note that the par-tial LOP of the saltwater barrier, while on the Brazos River, is diverseas it is not dependent on additional water flowing in the Brazos River.

V. WATER QUALITY

There is a contentious issue in water rights law: water quality. Oneaspect of water rights is that the “first in time is the first in right.”31

This means that junior water rights are not allowed to be granted iftheir exercise might adversely impact senior water rights.32 One con-cern is the amount of salt in the water that is allowed. One can won-der if a senior water right holder is able to make a call on the river ifthe quality of the river is adversely impacted by a junior water rightholder. This might occur because a junior water right holder is takingwater from a sweet tributary and allowing the salty tributaries to in-crease the salinity of the water reaching the senior water right holder.Alternatively, a junior water right holder with several reservoirs mightduring periods of low flow, release salty water from a high salt im-poundment while impounding the same amount of sweet water intothe junior water right holder’s sweet water reservoir. This “trade” ofwater between the junior water rights holder might have the same ef-fect as if the junior water right holder was discharging salt into theriver. A third alternative is if a junior water right holder is takingsufficient water to allow a “salt water wedge” flow up stream until itadversely impacts the senior water rights intake.

A water rights holder has the right to have the same quantity andquality as when the water right was established.33 The Brazoria In-take has the “salt water wedge” upriver from its location of river miletwenty five in the normal variation of the Brazos River and TXO doesnot make a call on the Brazos River to keep the Brazos River water asfar down the Brazos River as the Brazoria Intake.

If there were no quality aspects of a water right, then TXO waterrights would be meaningless, as the Gulf of Mexico water will fill anyvoid left by misappropriated Brazos River water. Further, this TXOconcern would then apply with equal vigor to the next water right upthe Brazos River and so forth until the thwang (lowest part of theriver bed) reaches sea level. We could construct arguments whetherthis was the high tide or the low tide levels. However, there is nosupport for the concept that in this area near the ocean, water rightsdisappear.

31. TEX. WATER CODE ANN. § 11.027 (West 2008).32. TEX. WATER CODE ANN. § 11.1351 (West 2008).33. TEX. WATER CODE ANN. § 11.001 (West 1997).


VI. WATER RIGHTS—ENFORCEMENT

Water rights have been enforced by making a call on the river andenforcing that call by suing the junior water rights holders that in-fringe the water rights of the calling senior water right holder.34 Whilemany theories might apply, typically a trespass legal theory is the oneused to enforce water rights. TCEQ is the current state administrativeagency charged with managing water rights.35 TCEQ has police pow-ers to enforce water rights for water rights holders.36 There are anumber of potential issues where TCEQ might decide to enforce agiven water right in a manner different than that which the water rightholder might pursue in a civil enforcement action. For example, theremight be a water user that has a politically favored status (“Favorite”)and that the TCEQ and/or the Senior might not want to deprive ofwater as the priority system would require. For the purposes of thispaper, there is no need to distinguish among the various potential Fa-vorites or the reasons for their political favor.37

For example, no responsible senior water right holder (“Senior”)would desire to have the Favorite lack of water, caused by their appli-cation of their senior water rights against Favorite’s water rights. Sucha Senior might rationally prefer that the Favorite that failed to planfor sufficient water supplies should buy water from the Senior at theincremental cost of such water would generate if used by the Senior,rather than being force by the government to donate the water to theFavorite that failed to plan for sufficient water supplies. Dependingon the particular facts, some Seniors might want to add a reasonablefee to the avoided benefit of the water. Depending on the price of-fered, the Favorite might be able to buy water from storage or anothersource senior to the Favorite and willing to sell at a lower price thanthat offered by the Senior. This is how goods are typically allocated inthe United States and Texas.

Alternatively, the Senior might want to both share water with theFavorite and take their full priority of water. This has the effect of theSenior providing a gift of water to the Favorite and sticking someoneelse with the bill. The problem with this is it essentially expands theSenior’s water rights by the amount of water provided to the Favorite,

34. TEX. WATER CODE ANN. § 11.041 (West 2008).35. TEX. WATER CODE ANN. § 11.002(1) (West 2011) (defining “commission” as

the Texas Natural Resource Conservation Committee (“TNRCC”). The TCEQ is thesuccessor organization to the TNRCC, starting in 2002, as part of the legislative sunsetreview of all state agencies. See HISTORY OF THE TCEQ, TCEQ, http://www.tceq.texas.gov/about/pre_agency_flow.html/at_download/file (last visited March 27, 2013);see also TEX. WATER CODE ANN. § 5.014 (West 2011)).

36. TEX. WATER CODE ANN. §§ 5.102, 5.120, 5.122, 11.139 (West 2008).37. Examples of such politically favored water users might include: a Senior’s par-

ents’ ranch or business, the ranch or business of someone upon which the Senior’sbusiness depended, the Senior’s church, a city, a electrical power generator and thelegislature.


as the burden of this favor is shifted to junior water rights holders, seefuture discussion for more details. There are other situations wheresimilar cases of shifted favor burdens occur.38 Some may say that thecourts or TCEQ will not allow a Senior to double count its waterrights in this way. The result is the same if the courts or the TCEQcarve out an exception for their Favorite, which has occurred, so thediscussion of this issue continues.

This problem is exasperated when we add to the situation a juniorwater right holder (“Junior”), whose priority is between that of theFavorite and the Senior. This Junior and the Favorite both shouldhave their water rights cut off, at least in part, by the priority of theSenior. If both should have been cut off completely and the Seniorprovides water out of priority, the Junior is not adversely impacted.This is indistinguishable to the Junior from the circumstance wherethe Senior consumed the water itself. The only concern is if the Se-nior is forced to share, the state is taking the Senior’s water, withoutcompensation.

To assist illustrating the problem being discussed, consider the riverhaving a water flow of 1,000; the Senior a water demand of 600; aFavorite a water demand of 200 and the Junior a water demand of 500.Clearly the Junior’s entire water demand of 500 is at risk to the prior-ity claim of the Senior. However, the Senior’s priority claim is only tothe extent of the Senior’s water need. In this case, the Junior shouldreceive 400 of its water demand, which is the 1,000 in the river minusthe 600 of the Senior. However, from the Junior’s perspective, theFavorite’s water demand of 200 has now assumed the priority of theSenior’s water right, since the Junior only receives a water flow of 200:the same effect as if the Senior had inappropriately increased its waterright by the 200 of Favorite.

38. One that comes to mind is when there is a long line of cars on a road with astop light that is allow few to proceed each cycle and many are backed up. A new caron a side street with a stop sign pulls up and stops. Rather than following the trafficlaws, a car which is about to proceed through the stop light, stops and motions the carbehind the stop sign to move forward. This favor imposes a delay of two cars to therest of the cars behind the favor granting car, as it takes longer to have the side streetcar proceed than it would have to have the cars already on the stop lighted roadproceed. The driver of the car granting the favor feels better, but they have violatedthe driving laws, extended the traffic jam longer than it would have been if the trafficlaws were followed and pushed the vast majority of the time delay cost of the favor onto each and every driver of the cars that are in line on the stop lighted street. This issomething for drivers to consider when driving, particularly when driving in front ofthe author on a stop light stopped street.

While the Author is not saying that granting the side street car a favor is evil, thereis a cost of this favor that is not born by the one granting the favor. The traffic lawswere generated to promote safe driving and move traffic quickly. Any underminingof them should be as carefully considered as undermining the water priority laws.When people act in ways contrary to the established requirements, unintended conse-quences, such as auto accidents and removing incentives for Favorites to adequatelyplan and manage water before and during droughts may occur.


One can suggest that water right priority is being followed since theonly Junior(s) who are curtailed are those whose water rights are jun-ior to Senior and Senior is not impacted. However, this is simplyfalse, as the burden of the favorable treatment of Favorite has beenpassed on to the Junior(s). This is the same as the footnote 38 case,where the car allowing the stop signed car gets through the stop lightwithout having to wait another cycle, it is just the entire trail of carsstopped behind the favor granting car that are burdened with an addi-tional two car time delay.

A. Recent Enforcement History

Though the rules and practices are changing, TCEQ has enforcedthe recent calls with Favorites. This has been criticized as violating thepriority system. We can all agree that there should be certain Favor-ites. The questions are: 1) who is a Favorite 2) what aspects of a Fa-vorite’s water demand should be favorably treated, 3) whatdemonstration should be required for Favorite treatment, 4) what ef-forts should be required of the Favorite to continue the Favorite treat-ment and 5) how are these previous four questions answered.39 Thereneeds to be an understanding of the appropriate Favorites and associ-ated conditions.40 It might be entirely appropriate to have Favoritetreatment only occur once a potential Favorite attempted to solve itswater shortage issue by appropriately attempting to purchase waterfrom those Junior(s) who will carry the burden of providing the waterto the Favorite. Otherwise, the Junior(s) are being forced to fund theFavorites, and the normal incentives for the Favorites to manage po-tential water shortage issues, that exist for the non-Favorites, areremoved.

39. Examples of potential Favorite(s) include: cities, power generators, waterproviders to cities and power generators and reservoirs of water providers to citiesand power generators.

Examples of water uses that might be excluded include ornamental watering, waterconsuming maintenance that can be delayed, increase cycle time for water, implementcity water plan.

Examples of activities that might be required to keep Favorite status include:greater planning for future water demands, perhaps acquiring more water contracts—buying water from those Juniors that were cut off in prior years, reduce Favoritewater demand towards best in class performance, that is measured and reported byTCEQ.

40. Continuing the driving analogy, many might agree that it would be appropri-ate for the favor to be granted to an ambulance on the stop street. Others mightdesire the additional requirement that they are in an urgent situation and using theiremergency lights to get the favor. In any event, it makes sense to have the conditionsfor such Favorite treatment spelled out in the traffic laws and not require ad hocdecisions to be made each time one is driving down a street where the traffic isstopped by a light and a car stopped by a stop sign presents a Favorite situation.


B. Future

Texas is growing at an unprecedented rate and appears, as alwaysdoes in the middle of movements, to be poised to continue growingfor a fairly long time. With this increase in population and associatedchanges the needs of Texas and various Texas citizens will change.This change will create problems, obstacles and opportunities. All ofthis is well known. However, as applied to Texas water law, it doesn’tappear that there is any need to not continue to follow the existingwater law and have new Texans buy water from those that alreadyhave the water rights, or create new water for consumption, throughadditional storage or use of groundwater, where available. When theUS Government built the TXO and Dow assumed the operation ofthe facility, water rights were purchased from existing water rightholders at an agreed price. With these purchases Dow assumed thepriority of the former water right holder and the former water rightholder enjoyed the benefits from the price paid for their former waterrights. Cities need to compete among themselves in terms of roads,weather, location to various jobs and universities, as well as in theprovision of water. If one city can manage to provide water for itselfat a substantially cheaper price, this should become no less of a differ-entiation factor than the time one takes to drive to work. The same istrue for power generation. No one would consider that the labor lawsshould not apply to the cities and power generators or other Favor-ite(s). Emergency rules should be used to apply to emergencies, notjust to the demands of Favorite(s). The Texas rivers provide a meansto easily transport water so there should be a wide open market forgroundwater and additional stored water sufficient to change the useor non-use of resources or to induce investment in facilities to deliverthe water that will be needed.

VII. CONCLUSION

Water law is changing, responding to the growing population ofTexas and related changing needs. Just as we do not take a farmer’sproperty next to a growing city without compensation and due processof law, water should also be distributed largely by following the ex-isting law and capitalistic distribution system used to distribute mostgoods and services in Texas and the United States.


TCEQ – Questions for Senior Water Right Holder Making Call

Contact InformationWhat is the name of the city, public water supply system, or waterright holder?

The Dow Chemical CompanyWho is the primary contact? Phone number, address, email?

Julie WoodardThe Dow Chemical Company2301 N. Brazosport Blvd, Bldg B-101Freeport, TX 77541979-238-1726 (Office); 979-665-6452 (Cell)

[email protected] county are you in?

Brazoria CountyIf a public water system, how many connections do you have?

NASources of WaterWhat is your primary source of water? What is the name of thestream, lake, or aquifer?

Brazos RiverDo you have alternate sources of water?

NoHow much storage do you have? How many days supply is it?

Brazoria Reservoir: 21,000 acre-ft, 30 days capacity when full

Harris Reservoir: 7,000 acre-ft, 15 days capacity when fullWhat permit(s) are you making your call under? What priority date?

Certificate of Adjudication 12-5328

February 28, 1929: 20,000 acre-ft/yearFebruary 14, 1942: 150,000 acre-ft/yearApril 4, 1960: 65,000 acre-ft/yearMarch 8, 1976: 3,136 acre-ft/year

What provision(s) in your permit is not being met under currentconditions?

Permitted withdrawal rate is 662 cfs, current withdrawal rate is290 cfs


What amount of water have you used under your permit(s) to datethis year?

Water usage year-to-date is 93,405 acre-ft, 1/1/2012 thru 10/31/2012. This amount includes water diverted for use by the BrazosportWater Authority under their water right.Do you have or can you get a water supply contract?

Yes, BRA is selling interruptible waterWhat other public water systems are located nearby, if applicable?

NASystem NeedsWhat is the minimal amount your system/customers need for basicfunctions? Please answer in cubic feet per second (cfs), acre-feet, oranother measurement method as appropriate.

290 cfs is needed when refilling the reservoir180 cfs is needed when depleting the reservoir

What level of streamflow is required to make your diversions or main-tain your uses?

Minimum flow at the Rosharon gage needs to be at least 325 cfs, asa minimum point in any 24-hour period. Of this 325 cfs, 100 cfs flowmargin is needed to manage the location of the salt wedge below theHarris intake.What is your average daily usage?

Average daily usage is 306 acre-ftWhat is your minimum needed daily demand?

Current daily consumptive demand is 225 cfsHow many days of water do you have remaining?

We currently have 41 days of reservoir storage














INVESTMENT RISKS FOR WATER PROJECTS

By Sharlene Leurig†

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69II. MARKET STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

III. SUPPLY RISKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74IV. DEMAND RISKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76V. GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

VI. ROLE OF MARKETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79VII. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

I. INTRODUCTION

Unlike most of the developed world, where investor-owned watersystems serve the majority of the population, the United States reliesmostly on water provided by public systems. To a great extent, thesesystems were financed through the taxation authority of the federalgovernment—the iconic Hoover Dam only one of the many hundredsof pipelines and reservoirs built by agencies such as the Bureau ofReclamation and Army Corps of Engineers for the benefit of localeconomic development. Similarly, many of the drinking and waste-water treatment facilities in operation today were built to help com-munities comply with the federal Safe Drinking Water Act and CleanWater Act and financed in large part by federal dollars distributedthrough the Environmental Protection Agency, sometimes leveragedby state revolving loan funds. What of our public water systems hasnot been paid for by federal or state tax dollars has been debt-fi-nanced through the tax-exempt municipal bond market. Of the $3.7trillion municipal bond market,1 roughly 10% is debt issued by waterand wastewater systems to build, repair and expand waterinfrastructure.2

† The Author is Senior Manager of the Water Program at Ceres, where sheworks with water service providers to build business models that are resilient toweather extremes, climate change and resource depletion. Her focus includes the rolemunicipal bond market participants play in driving sustainable water managementincluding infrastructure transformation of development of rate structures that enablethe transition to sustainable water systems. She was a fellow in the MIT-USGS Sci-ence Impact Collaborative at the Massachusetts Institute of Technology, where shefocused on the role of science in multi-stakeholder resource planning and disputeresolution, and holds a BA in Physics and English from Washington University in St.Louis and a Master in City Planning from the Massachusetts Institute of Technology.

1. William Selway, U.S. Municipal Bond Market Shrinks as States, Cities CutDebt, BLOOMBERG (June 7, 2012, 11:04 AM), available at http://www.bloomberg.com/news/2012-06-07/u-s-municipal-bond-market-shrinks-as-states-cities-cut-debt.html.

2. See generally MUNICIPAL SEC. RULEMAKING BD., 2011 FACT BOOK, http://www.msrb.org/msrb1/pdfs/MSRB2011FactBook.pdf.

69


Water use has remained static over the last three decades,3 attribu-table to passive savings as our household, agricultural and industrialtechnologies became more water efficient, and in some places by be-havior changes such as movements away from lush lawns and towardxeriscaping in desert communities. Yet population movements, infra-structure decay, over-allocated water resources and climate variabilityand change are necessitating a new round of investments in capitalassets for water treatment, storage and delivery.

In the absence of significant federal subsidies, states and local gov-ernments will have to make room on their balance sheets to financethe $300 billion4 to $1 trillion5 in projected capital needs over the nextthirty years, or incent private capital to participate in water projects.Much of this projected need is simply to replace existing assets; cost ofsecuring new water supplies could easily double this need—the stateof Texas alone projects $53 billion in capital expenditures for new sup-plies by 2060.6 How local governments will pay for this investment incritical infrastructure, and whether these capital expenditures will besufficient to secure reliable water supplies, is as important to water-intensive industrial and commercial entities as to households, as pub-lic water systems count industrial and commercial water users amongtheir customers.

To a great extent, corporations’ access to reliable and cost-effectivewater supplies is in the hands of local entities. Yet as market aware-ness of water risks in corporate performance has risen, leading to aproliferation of investor risk assessment tools including Ceres’ AquaGauge, World Resources Institute’s Aqueduct and others, few equi-ties investors or corporate risk managers have developed analyticaltools to assess risk down the supply chain. Fewer still have cultivatedengagement pathways beyond the corporation to manage risk in thewatersheds or aquifers feeding their operations or supply chain.Water is a shared resource, one that cannot be adequately managedwithout long-term planning, cooperation between providers and theircustomers and even between users competing for the same resource.

At present, our tools for assessing water providers’ risks and thereliability of their resources are inadequate to determine risk and re-

3. J.F. Kenny et al., USGS Circular 1344: Estimated use of water in the UnitedStates in 2005, U.S. Geological Survey 2009, 43, http://pubs.usgs.gov/circ/1344/pdf/c1344.pdf.

4. 2007 DRINKING WATER INFRASTRUCTURE NEEDS SURVEY AND ASSESSMENT,FOURTH REPORT TO CONG. OF THE U.S. ENVTL. PROT. AGENCY, EPA 816-R-09-001(Mar. 2009), available at http://water.epa.gov/infrastructure/drinkingwater/dwns/index.cfm.

5. See Burried No Longer: Confronting America’s Water Infrastructure Chal-lenge, AM. WATER WORKS ASS’N 10 (Feb. 27, 2012), http://www.awwa.org/publications/breakingnewsdetail.cfm?itemnumber=58522 (stating “AWWA Report finds in-frastructure bill to top $1 trillion.”).

6. TEXAS WATER DEVELOPMENT BOARD, WATER FOR TEX. 2012 STATE WATER

PLAN 7 (2012).

2013] INVESTMENT RISKS FOR WATER PROJECTS 71

silience, as they fail to recognize the interconnectedness of water re-sources, the impending exhaustion of groundwater resources that haveserved as insurance against drought, and the persistent deferment ofbasic maintenance and asset replacement, among other factors. Evenworse, the market in its current state too often sends perverse signalsto water managers who are balancing long-term resource resilienceagainst short-term financial metrics. Credit ratings and cost of capitalare among the most compelling benchmarks against which water man-agers adjust their performance. For this reason, it is imperative thatthe short-term outlook of markets and their focus on water systems’operational characteristics, rather than resource fundamentals, be ad-justed if water providers are to develop more resilient water manage-ment practices. This is an imperative not only for the security andresilience of water resources, but also for sustainable returns for inves-tors across a range of asset classes: those who lend to public watersystems through the bond market, those with equity positions in waterinfrastructure projects, and even those with long positions in watertechnology companies and investor-owned utilities.

Better disclosure is fundamental to identifying and managing theshortcomings in our water management practices. Disclosure is neces-sary but insufficient—investors and financial intermediaries must ad-just their own assessment methodologies to measure what matters,and price accordingly.

II. MARKET STRUCTURE

In the United States, public utilities owned by municipal govern-ments or political subdivisions supply the lion’s share of water tohouseholds, commercial and industrial enterprises alike. Unlike otherdeveloped countries, which tend to have a handful of large companiesproviding water services, the domestic water sector is a highly decen-tralized market with tens of thousands of providers (the Environmen-tal Protection Agency (“EPA”) estimates more than 53,000 state andmunicipal water utilities).7 These numbers are somewhat misleading:while 56% of the systems out there serve 500 people or less, nearlyhalf of the U.S. population is served by 1% of public systems.8

The ability of water systems to raise financing for system replace-ment or expansion depends greatly on size. Though the majority ofthe population is serviced by systems that are large enough to go di-rectly to the capital markets, most of the tens of thousands of watersystems are too small to be creditworthy. As a result, they rely heavilyon state revolving funds (“SRF”) to finance upgrades. SRFs are alimited resource, perhaps unnecessarily so: they are seeded by Con-

7. See generally 2006 Community Water System Survey, 1 EPA (2006), http://water.epa.gov/infrastructure/drinkingwater/pws/upload/cwssreportvolumeI2006.pdf.

8. Id. at 28.


gressional contributions to the EPA and matched with a required 20%minimum contribution from the states, which stretch this resource tovarying degrees. Some states essentially grant the money in the formof forgivable principal, 0% interest loans, while others leverage theSRF funds by floating their own bonds to guaranty the debt of localborrowers. While some estimates suggest that the $40 billion of netassets behind the Clean Water State Revolving Fund alone could beleveraged to fund $3 trillion worth of infrastructure improvements9

(far outstripping even the most inflated estimate of water infrastruc-ture need), in practice the use of SRF funding has barely scratched thesurface of smaller systems’ capital needs.

With too little money to go around (or in some states, too muchmoney flowing in the form of subsidized loans to borrowers who couldotherwise reach the bond market directly), the result is persistent un-derfunding of smaller systems, poor water quality in rural areas, andthousands of systems out of compliance with environmental regula-tions year after year. As regulatory non-compliance is often an indi-cator of system failure, we may expect a wave of forced capitalexpenditures in the coming decades as delivery, treatment, and stor-age assets reach their failure point. This wave of capital needs may inturn force consolidation in the sector, either through privatization bythe few investor-owned utilities operating in the United States, or ac-quisition by large public regional providers. Texas is one state that hasseen a recent spate of privatization of small systems by companies likeAqua America, Inc. and SouthWest Water Company.

One percent of the total number of water systems in the UnitedStates serve nearly half the population. These systems raise moneyfor their capital improvement programs through the financial markets,predominantly through the sale of municipal bonds backed by reve-nue from water sales and sewage fees. The municipal market is highlyeffective at delivering long-term, affordable capital to public watersystems—capital programs are often financed by bond series withprincipal repayments of up to thirty to forty year maturity, helpingsystems smooth the cost of large projects over several generations ofratepayers.

Municipal bonds are often tax-exempt, making them appealing toindividual investors—often through mutual funds—and banks and in-surance companies seeking tax-exempt yield at reasonably low risk.Since 2003, water and wastewater systems have floated nearly $350billion in bonds.10 Bond issuances by water and wastewater enter-prises peaked in 2010, surfing on a wave of the federal stimulus pro-gram’s Build America Bonds, which infused nearly $45 billion in

9. Michael Curley, The Gold Mine, 29 ENVTL. F. 24 (2012).10. Greg Swartz, Senior Vice President, & Piper Jaffray, Ariz. Pub. Fin. Office,

Panel Presentation at W. Governors’ Ass’n/ W. States Water Council: Drinking Water& Wastewater Infrastructure Fin. (Nov. 15, 2012).


bonds for water and wastewater systems. That investment droppedprecipitously in 2011 to $30 billion, and even further to $25 billion in2012, well below the ten-year average for debt issuance.11

There are several reasons for the decline in bond-financed capitalimprovement programs even in this environment of interest rates atall-time lows and growing need for water infrastructure improvementand development. One reason is that water systems are delaying in-frastructure expenditures in the hopes of another flush of federalspending through ARRA-like programs or the much-anticipated Na-tional Infrastructure Bank, which could be structured to leverage pub-lic funds to attract private capital. And for many systems, theeconomic environment that has produced low borrowing rates is alsoresponsible for stagnant economic development, a constraint to theupward rate adjustments that would be necessitated by increaseddebt.

Alongside these reasons is a trend that has escaped recognition bymany water commentators and policy advocates: in recent years, percapita demand for water has declined at unprecedented rates, slowingdemand even against the longer-term decadal trend of declining percapita water use across the United States.12 This unexpected down-turn in demand raises profound challenges for water providers, whoare simultaneously confronting supply-side pressures and a financialmodel that streamlines supply projects but constrains demand man-agement. Because the predominant business model in the drinkingwater sector is one of volume-based sales, it is also a source of consid-erable risk for water systems and the investors who finance their infra-structure. And at the heart of water systems’ limits to financing is thewillingness and ability of their customers to pay for their services, aproblem that certainly extends to industrial and commercial custom-ers but which rests, for the most part, on discovering sustainable reve-nue models for residential customers, which constitute the majority ofwater systems’ revenues regardless of system size.13

There are no magical financing schemes waiting in the wings forwater systems, despite the wishes of policymakers and the boosterismof some private market commentators. In recent years as the scale ofneed for capital improvements has outpaced revenue gains in thewater sector, many have asked whether alternative financing modelslike public-private partnerships (“PPP”), private equity or infrastruc-ture funds could play more of a role in financing water infrastructure,as such funding schemes do for transportation, airports, and othersorts of critical infrastructure. There is no doubt that far more oppor-tunity exists to leverage public funding to attract private capital for

11. Id.12. See generally Thomas D. Rockaway et al., Residential Water Use Trends in

North America, 103:2 J. AWAA 76 (2011).13. See 2006 Community Water System Survey, supra note 7.


water, but the repayment of such schemes will almost always be borneby ratepayers and taxpayers, just as they would be through public fi-nancing. A recent large scale water supply project in Southern Cali-fornia demonstrates this point: the Carlsbad Seawater DesalinationPlant is a joint venture of the San Diego County Water Authority(“SDCWA”) and Poseidon Resources, a private entity which securedequity from a third-party investor. The financing terms for this pro-ject, whose total price tag approaches one billion dollars, were securedby a thirty-year water purchase agreement with SDCWA for 56,000acre-feet a year at around $2,000 an acre-foot, a model not dramati-cally different from those that finance electric power generation facili-ties.14 The majority of the project was financed through tax-exemptbonds issued by the California Pollution Control Financing Authorityon behalf of both SDCWA and Poseidon. Ultimately, while privateinvestors bear some degree of construction and contract risks, the pro-ject will be repaid by ratepayers of the San Diego County Water Au-thority and its contractor agencies.

In addition, the political hurdles to increasing private capital’s par-ticipation in water projects may be more obstinate in the UnitedStates than in any other developed country, as Americans hold pecu-liarly strong views of the sanctity of not only water but also the con-veyance, storage, and treatment systems through which it passes as akind of public good. In part this American ideology may reflect dis-trust in the ability of government to properly regulate private entities,with water representing the most precious and fundamental of allphysical needs. Whatever the explanation for this cultural attitude to-ward private involvement in water infrastructure, the result is that thePPP market in the United States remains a tiny fraction of total waterinfrastructure spending—the average annual bond issuance by waterand wastewater systems over the last decade was more than $30 bil-lion, while the total PPP market was around $2 billion.15

But whatever the financing structure for water projects, fundamen-tal risks are affecting the sector in ways that should be considered bywater system managers, policymakers, and investors.

III. SUPPLY RISKS

Supply risks imperil the ability of human users to exercise the use ofwater on which they depend for health or economic purposes. Supplyrisk takes myriad forms, both physical and legal. For water systems,these supply risks may translate into reduced revenue if water cannotbe diverted for sale; increased capital expenditures to secure addi-

14. Favorable Desalination Project Bond Sale Saves Ratepayers $200 Million, SAN

DIEGO COUNTY WATER AUTH. (Dec. 14, 2012), http://www.sdcwa.org/favorable-desalination-project-bond-sale-saves-ratepayers-200-million.

15. Interview with Laurent Auguste, President and CEO, Veolia Water NorthAmerica, at Ceres (Jan. 28, 2013).


tional supplies; or treatment facilities that lower debt ratios or higheroperating costs that impair operating ratios.

It should be noted that corporate water users are also subject tothese supply risks, whether they buy directly from a water system,hold water rights to surface resources, or manage their own supplyinfrastructure such as groundwater wells or storage reservoirs.

Physical risk may take the form of:• Over abstracted resources. Groundwater accounts for 20% of

water used in the U.S.16 and in areas of heavy usage and irregu-lar precipitation is being rapidly depleted. Because groundwateris often the cheapest source of supply and its use is virtually un-regulated, groundwater supplies can be both the lowest cost andthe highest risk of supply options over the long-term. Becausewater users with groundwater resources often increase the ex-ploitation of those resources during droughts or when surfacesupplies rise in cost, choices that seem financially prudent in theshort-term may come at the expense of long-term supply secur-ity. The city of Lubbock is one example where emergencydrought reinforcements came in the form of a well field drilledinto the Ogallala Aquifer17—the Panhandle groundwater sourceon track to be depleted within a generation.18

• Imperiled resources. Groundwater supplies can also be imperiledfrom manmade pollutants or intrusion of natural contaminantsthat make water unfit for human consumption. Industrial wasteinjected into aquifers imperils the use of groundwater supplies inregions with unstable surface water supplies—in many cases, thispollution of aquifers is legally permitted by state and federalagencies, as in Texas, where more than fifty exemptions for dis-posal of industrial waste including uranium mining waste havebeen issued for aquifer injection, the most recent in September2012.19

In low-lying coastal areas like Florida and Cape Cod, saline intru-sion into aquifers is rapidly escalating costs of groundwater treatment.Sea level rise is also necessitating significant expenditures to replace

16. J.F. Kenny et al., USGS Circular 1344: Estimated use of water in the UnitedStates in 2005, U.S. GEOLOGICAL SURVEY 2009, 43 (2009), http://pubs.usgs.gov/circ/1344/pdf/c1344.pdf.

17. Adam D. Young, Drought taxing area lakes, Water Advisory Commission todiscuss strategic supply plan, LUBBOCK AVALANCHE J. (Aug. 15, 2012), available athttp://lubbockonline.com/local-news/2012-08-15/drought-taxing-area-lakes-water-ad-visory-commission-discussstrategic-supply#.UGzJk_k-uvU.

18. Groundwater Depletion in Semiarid Regions of Texas and California ThreatensU.S. Food Security, U. OF TEX. AT AUSTIN, NEWSWISE (May 24, 2012, 12:45 PM),available at http://www.newswise.com/articles/groundwater-depletion-in-semiarid-re-gions-of-texas-and-california-threatens-u-s-food-security.

19. Abrahm Lustgarten, Poisoning the Well: How the Feds Let Industry Pollute theNation’s Underground Water Supply, PROPUBLICA (Dec. 11, 2012, 12:01 AM), http://www.propublica.org/article/poisoning-the-well-how-the-feds-let-industry-pollute-the-nations-undergroun.


stormwater and sewage systems overwhelmed by higher tides—inMiami Beach alone, the cost of improving stormwater infrastructureto handle higher sea level is roughly $200 million.20

Legal risks include:• Over-allocated resources. The most notable example is the Colo-

rado River, which supplies water to more than 35 million Ameri-cans. A 2012 study by the Bureau of Reclamation projects thatover the next fifty years, future average flow of the river will befar below the total allocated rights.21 Climate change exacer-bates this risk, as it is projected to significantly diminishsnowpack and rainfall feeding river systems. In an over-allo-cated system, the standing of a water right is a vital metric ofrisk, as junior and senior rights holders will be disproportion-ately affected by physical water shortages.

• Exposure to endangered species findings. The Endangered Spe-cies Act can be used to limit water diversion in order to protectnon-human species dependent on the same water resource. Pro-tection of endangered species has resulted in significant reduc-tions in permissible water withdrawals for major metropolitanareas, including Southern California, which has been denied de-livery of as much as 800,000 acre-feet of water per year due tothe endangered Delta smelt,22 and in San Antonio, where pump-ing from the Edwards Aquifer has been dramatically reducedsince the 1990s due to impacts on endangered fish and salaman-der species.

IV. DEMAND RISKS

Demand risk is the economic consequence of water demand failingto meet projected estimates. Demand may fall short of projections forany number of reasons including:

• Economic growth or population gains falling short of projec-tions,

• Passive efficiencies, meaning a reduction in per capita usage dueto uptake of high-efficiency appliances or behavior changes thatwere the result of forces exogenous to the water provider, or

• Active efficiencies, meaning a reduction in per capita usage dueto uptake of high-efficiency appliances or reductions in outdoorwater use that were influenced by the water provider through

20. Curtis Morgan, Rising sea comes at a cost for South Florida cities, THE MIAMI

HERALD (Sept. 1, 2012), available at http://www.miamiherald.com/2012/09/01/2980388/rising-sea-come-at-a-cost-for.html.

21. SEC’Y SALAZAR RELEASES COLORADO RIVER BASIN STUDY PROJECTING MA-

JOR IMBALANCES IN WATER SUPPLY AND DEMAND, U.S. DEP’T OF THE INTERIOR,BUREAU OF RECLAMATION (Dec. 12, 2012), available at http://www.usbr.gov/news-room/newsrelease/detail.cfm?RecordID=41645.

22. Paul C. Barton, House Passes Bill Taking Aim at Tiny California Fish,NEWS10.NET (Feb. 29, 2012, 4:16 PM), http://origin.news10.net/news/article/181409/2/House-passes-bill-taking-aim-at-tiny-California-fish.


appliance rebate programs, water pricing structures, or outdoorwatering limits.

As appliance standards have increased consumer efficiency acrossthe country over the past four decades, household water use has falleneverywhere, by tens of thousands of gallons per household annually inLouisville, Kentucky to nearly 100,000 gallons per Las Vegas house-hold (this terrific reduction is the combined effect of passive efficiencygains and conservation programs by Southern Nevada Water Author-ity).23 Despite this widespread demand decline, many systems con-tinue to forecast future demand assuming that per capita use willremain fixed. In a sector whose revenue is largely driven by volumet-ric sales, the risk that demand may not meet future estimates is funda-mentally revenue risk. Declining demand, without compensatory rateincreases, reduces anticipated revenues while doing little to reducefixed costs such as human labor, maintenance and debt service. In-deed, it is not atypical for a water system to have 80% of its costs fixedbut 80% of its revenue variable and based on volumetric sales.24

The relationship between water price and demand further compli-cates demand forecasts for water providers. Demand for water isprice-dependent, although the sensitivity of customers to price de-pends on many factors, including customer class (i.e. industrial vs. res-idential) and income. For many years, water was considered to be aperfectly inelastic good, meaning that demand was independent ofprice. In part this theory was buoyed by observations of customerresponse to changes from extraordinarily low baseline prices (a fewtenths of a cent per gallon), which with even a doubling in price couldmake the difference virtually imperceptible to a middle-class cus-tomer. Yet in recent years as water rates have risen, and as mostwater utilities have transitioned away from flat fees to metered pric-ing, there is evidence that water prices may be entering a range inwhich customers will be increasingly sensitive to price increases.25

Yet few utilities factor demand response to pricing in their demandforecasts, and many systems do not estimate the sensitivity of custom-ers to price when setting rates or estimating revenues.

23. See generally Rockaway, supra note 12.24. See Jeff Hughes, Pricing and Revenues: A Challenging Relationship, U. OF N.C.

ENVTL. FIN. (Aug. 23, 2012), available at http://efc.web.unc.edu/2012/08/23/pricing-and-revenues-a-challenging-relationship/.

25. Janice A. Beecher & Thomas W. Chesnutt, Declining Water Sales and UtilityRevenues: A Framework for Understanding and Adapting, ALLIANCE FOR WATER EF-

FICIENCY 4 (Aug. 29–30, 2012), http://www.allianceforwaterefficiency.org/uploadedFiles/Resource_Center/Library/rates/Summit-Summary-and-Declining-Water-Sales-and-Utility-Revenues-2012-12-16.pdf.


V. GOVERNANCE

The governance of public water systems poses its own risks totimely cost recovery and long-term affordability of water services.Unlike electricity prices, which typically are set by state-level publicutility commissions (“PUC”), most water systems depend on citycouncils or water boards whose membership is elected or appointedby elected officials to set prices. As a result, the process of water ratesetting is highly politicized.

Governance by individuals who are answerable to voters can lead tomanagement myopically focused on minimizing water rate increases.As a result, too many water providers deliver services at rates belowthe actual cost of service, a math that works out through persistentdeficit financing and under-budgeting for asset replacement. It is notat all uncommon for a water system to replace its buried assets (pipes)at such an incremental pace that complete replacement would only beachieved once every 300 years—Washington, DC is one city thatstruggled to revise rates to improve this absurdly protractedschedule.26

Some states have sought to reduce the political nature of water util-ity rate setting—for example, Wisconsin is the only state that requiresboth investor-owned public water utilities to file rate adjustments withstate public utility commissions, and Indiana permits public water sys-tems to opt into state-level regulation at the PUC. Short of movingthe forum for rate setting, the onus is on water managers to anticipatepolitics and articulate the imperative for investment in language re-sponsive to the values and needs of political constituents.

On top of this political challenge is the fundamental problem ofmisaligned planning horizons endemic to the sector. Prices (rates) arereassessed in many places annually (if that frequently). Water manag-ers may present boards or city councils with forecasts of five-year ratechanges, but rarely do they look beyond that window. Capital deci-sions, including supply projects, are identified and prioritized based onplanning horizons of up to fifty years, and debt financing over somethirty to forty years. Yet rarely do utility managers and finance direc-tors looking over these multi-decade horizons communicate the rateeffects of supply decisions over the long-term to city council mem-bers—and even if they did, city council members responsive to near-term election needs may be lacking motivation to take steps todaythat may increase near-term costs to their customers in favor of long-term affordability.

Water conservation falls subject to this near-term/long-term mis-match in incentives. On the one hand, conservation helps assure fu-ture supply and can defer or even obviate the need for new capital-

26. DC Water Chief: Right Place, Right Time, 1 WATER INTELLIGENCE 22 (Dec.2010), http://www.dcwater.com/news/pdfs/AWI_Hawkins.pdf.


intensive infrastructure—reservoirs, pipelines, and treatment plants—to bring new supplies to market. On the other hand, under a businessmodel in which debt obligations are repaid with revenue highly de-pendent on volumetric sales, and in which most costs are fixed, therevenue forgone in reduced sales must be made up for through higherfixed charges, or higher unit costs, concepts that can inflame votersand create political risk for elected officials.

VI. ROLE OF MARKETS

Although these risks are already driving credit degradation acrossthe sector, investors do not adequately assess the supply, demand andrate risk factors described above. The credit metrics and disclosurestandards in the water sector are artifacts of the decades throughwhich water systems maintained some of the lowest credit defaultrates of municipal issuers. Yet as the economic downturn has precipi-tated credit downgrades well in excess of sector averages,27 it has alsounderscored the need for improved credit assessment even among es-sential services providers. In doing so, the markets can also play amore effective role in driving better governance and improved watermanagement.

Institutional investors seek metrics that will allow them to readilycompare systems against each other and against sector benchmarks.For this reason, they focus on characteristics that are easy to measure,and that are readily available for many systems. The metrics thatwater systems report are defined by credit rating agency methodolo-gies and by the disclosure guidance of bond market professional as-sociations, although institutional investors may seek out additionalmetrics for their own proprietary credit assessment approaches.Credit assessment metrics define how investors assess water systems,but they also determine the information that water systems give to themarket. And because credit ratings and investor pricing decisions dic-tate the cost of capital paid by water systems when they go to mar-ket—a cost water systems seek to minimize—these metrics can alsodrive water management decisions.

The credit assessment process faces two problems: first, investorsmay not be measuring what matters, and second, the focus on short-term metrics may incentivize water managers to manage to short-termfinancial performance at the expense of long-term supply reliabilityand rate affordability.

Alongside the near-term financial ratios used by investors to assesscredit health, investors also evaluate operational characteristics to un-cover any looming capital expenditures that may sizably increase debtload. These operational characteristics include the water systems’

27. REPUCCI & BARBERIO, FITCH RATINGS, U.S. PUBLIC FIN. RATING ACTIONS

2011 1 (2012).


treatment and storage capacity compared to daily maximum demandand failure to comply environmental regulations such as drinkingwater or surface water quality standards that may precipitate invest-ment in treatment facilities. While growth needs and regulatory com-pliance certainly pose costs to water systems, supply and demand riskshave equivalent potential to undermine systems’ credit health; creditmetrics barely touch on these factors. For example, bond buyers donot seek, nor do water systems provide, information on the seniorityof water rights even in over-allocated water basins. Bond buyers donot seek out information on the storage capacity of groundwater sup-plies despite their precipitous decline in many regions. With respectto demand risk, bond buyers ask water systems to provide historicaland future estimates of population and economic growth as a way ofestimating future water demand, but not per capita demand trends orprice sensitivity analysis.28

How water systems behave during drought provides an instructivewindow into the perverse ways in which credit ratings can influencewater management decisions. At the heart of the issue is the highlyvariable revenue water systems depend upon to meet largely fixedcosts—revenue that primarily flows from the residential sector29 andin the southeast and arid west 50-70% of which comes from outdoorwatering.30 Because water systems in the southeast and west are sodependent on outdoor watering for revenues, they may have little fi-nancial incentive to discourage usage during drought and often do soonly when brought to the edge of supply failure. Midland, Texas of-fers a classic example: in 2012, once two of its three reservoirs had runcompletely dry and the third was severely compromised, the town fi-nally took steps to reduce residential use. The drop in sales triggereda credit downgrade of the water system, and in January of 2013, Mid-land lifted the higher rates for high volume users it had imposed justmonths earlier to discourage excessive water use—the most likely rea-son for the about-face, restoration of the utility’s credit ratios to en-able further borrowing. With the Panhandle seeing little recoveryfrom the drought of 2011, it remains to be seen whether Midland sim-ply bought itself a short-term credit fix at the cost of irrevocably com-promising its surface supplies.

In response to credit degradation spurred by the economic down-turn and by growing awareness of water supply risks, institutional in-vestors are beginning to develop tools to enable their own water riskassessment. Tools range from map-based risk models such as

28. See National Federation of Municipal Analysts, Recommended Best Practices inDisclosure for Water and Sewer Transactions, NAT’L FED’N OF MUN. ANALYSIS (Mar.2006), http://www.nfma.org/assets/documents/DG.BP.rbp_water_sewer.doc.pdf.

29. See 2006 Community Water System Survey, supra note 7, at 20.30. Research Report on Turfgrass Allowance, EPA WATERSENSE at 2, EPA.GOV

(Dec. 9, 2009), http://www.epa.gov/WaterSense/docs/home_turfgrass-report508.pdf.


Aqueduct, a project of World Resources Institute, to corporate riskassessment tools such as Aqua Gauge, a project of Ceres. The abilityof investors to shape their own view of water risks is an importantfactor in a market that efficiently communicates risk through pricing.But for water systems seen as having outsized risk, the outcome canbe sobering. Already, some investors predicate buy decisions onwater availability, and in some cases simply do not buy in regionswhere the risk is viewed as being excessive or uncompensated. Recentregulatory filings by insurance companies—large investors in munici-pal bonds—describe such geographic screens.31

Theoretically, assessment by investors could provide an importantfeedback signal to water managers participating in the market, andfinancial incentive to attain a better level of practice. But it is alsopossible that pricing signals sent through the bond market could unin-tentionally drive unsustainable water management practices if thosepractices enhance short-term financial metrics, or could send inappro-priate pricing signals to systems with strong management practicesand comparatively low water risk if the mode of measurement is inap-propriately designed. Geographic screens that do not consider place-based practice, such as long-range planning, demand management,and cost recovery could raise the cost of capital for entire states orregions and disadvantage well-managed systems that happen to be inthat region.

In this environment, it is all the more important that risk assess-ments are designed to measure the metrics that matter, and rewardsustainable water management no matter where the water is beingused.

Disclosure is a tool that water systems can use to manage their ownmarket risk—by providing superior information, systems can counter-act investor bias and position themselves to perform well in investor-risk analysis. But developing and propagating disclosure expectationswithin the municipal bond market is challenging given the nature ofsecurities regulation. Municipal entities are not regulated directly bythe Securities and Exchange Commission (“SEC”), as the 1975 TowerAmendment to the Securities Exchange Act restricts the ability of theSEC and Municipal Securities Rulemaking Board (“MSRB”) to setdisclosure expectations or filing requirements for municipal issuers.32

As a result, regulators’ disclosure guidance such as the SEC’s disclo-sure guidance for publicly-traded corporations clarifying expectations

31. See Nationwide Mutual Insurance Company, Insurer Climate Risk DisclosureSurvey Questions, CAL. DEP’T OF INS., CLIMATE RISK SURVEY SEARCH DATABASE

(2011); see also The Traveler’s Group, 2011 Insurer Climate Risk Disclosure SurveyQuestions, CAL. DEP’T OF INS., CLIMATE RISK SURVEY SEARCH DATABASE (updatedFeb. 2012).

32. Andrew Ackerman, SEC Looks to Target Tower Amendment, THE BOND

BUYER, BONDBUYER.COM (May 13, 2009), http://www.bondbuyer.com/issues/118_91/-303354-1.html.


for disclosure of material risks related to climate change, includingwater stress and scarcity,33 has limited reach with respect to publicwater providers. However, municipal advisors, including bond under-writers, are regulated by the SEC, and may be subject to disclosureguidance.

Yet beyond the idiosyncrasies of regulatory oversight in the munici-pal market, the reality is that meaningful disclosure for water andsewer entities beyond basic financial statements is distinct from mean-ingful disclosure for other municipal issuers—the credit factors affect-ing water providers are materially different from public hospitals,school districts, and general obligations issuers. In this regard, theSEC’s recommendations for improving fairness and efficiency of themunicipal market through development of best practices is realisti-cally the most effective way of developing disclosure standards withthe greatest relevance to the water sector:

Municipal market participants should follow and should encourageothers to follow existing industry best practices and expand and de-velop additional best practices guidelines in a number of areas toenhance disclosures and disclosure practices in the municipal securi-ties market.34

To assist the water sector in perfecting disclosure practices, the Bos-ton-based sustainability advocacy group, Ceres, working with somethe nation’s largest water systems and members of its Investor Net-work on Climate Risk, a group of 100 investors with $11 trillion undermanagement, has developed a disclosure framework for water andsewer utilities that gets to the root of the changes affecting the watersector today. The framework, which was released in February 2013,has already been employed by Cascade Water Alliance, a regionalwholesale water supplier near Seattle, in development of the OfficialStatement associated with its December 2012 bond issuance. The ob-jective is for investors to use this disclosure framework as a best prac-tice in disclosure, and incorporate the factors in the framework intocredit assessment and dialogue with utility management and their fi-nancial representatives including underwriters. Uptake of this disclo-sure framework depends on cooperation from water systems alongwith their financial advisors and bond counsel, who may resist adop-tion on the pretext of increased compliance costs for continued disclo-sure in the secondary market (investor-to-investor transactions). Yetthis resistance could be offset if issuers with superior disclosure prac-tices are rewarded in the market by a lower cost of capital.

33. See COMMISSION GUIDANCE REGARDING DISCLOSURE RELATED TO CLIMATE

CHANGE, 17 CFR PARTS 211, 231 & 241, RELEASE NO. 33-9106; 34-61469; FR-82,SEC. & EXCH. COMM’N (Feb. 8, 2010), http://www.sec.gov/rules/interp/2010/33-9106.pdf.

34. See REPORT ON MUNICIPAL SECURITIES MARKET, U.S. SEC. & EXCH. COMM’N(July 31, 2012), http://www.sec.gov/news/studies/2012/munireport073112.pdf.


For the market to truly reflect the business strength of a water en-terprise, sellers will need to make available better information, andbuyers will need to make use of this information. Good disclosure isnot enough—the use of disclosure by investors is also necessary. In-vestment indices with selective eligibility criteria based upon manage-ment practice, and other investment products that better measure theresilience of water systems’ business models and governance of thesesystems are much needed in the municipal market. Such products ex-ist to some extent for corporate securities—one example is the ECPIGlobal Blue Gold Equity Index, which is limited to firms active inwater-related businesses (e.g. water treatment, infrastructure, distri-bution) and further subject to a proprietary Environmental SocialGovernance (“ESG”) screen that selects companies based on their en-vironmental score and endorsement of the CEO Water Mandate. In-clusion in such indices is often viewed as a boon to corporatemanagement, as widely used indices create a readymade market forshare trading which can result in higher share value.

Conceptually, there is no reason why an index for municipal watersystems could not be structured to help investors identify systems withsuperior management practices. Hopefully, the turbulence created bycredit degradation in the market will spur investors to develop suchproducts, which can better aid investors in anticipating and pricingrisk, and create a virtuous circle in the market by communicating ben-eficial price signals to systems that are operating as 21st century waterenterprises.

VII. CONCLUSION

The operating environment for water utilities is changing in waysthat can undermine the reliability and affordability of this essentialservice. For investors and water systems this changing reality requiresnew ways to evaluate risk. This also invites a new era of innovationfor both the water utility business model and investment tools to fi-nance water needs and evaluate water investments.

STATE WATER PLANNING:THEORY V. PRACTICE IN TEXAS

By Mary E. Kelly†

I. SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85II. TEXAS WATER PLAN PROJECTIONS . . . . . . . . . . . . . . . . . . . . . 86

III. COMPARISON OF PROJECTIONS TO RECENT TRENDS IN

ACTUAL USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88IV. INCENTIVES TO INFLATE THE GAP BETWEEN DEMAND

AND SUPPLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90V. ROLE OF THE STATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

VI. POTENTIAL PITFALLS IN LONG-TERM FOCUS . . . . . . . . . . . 92VII. LACK OF CONNECTION WITH OTHER POLICY ISSUES . . . . 94

A. Groundwater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94B. Environmental Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

I. SUMMARY

The current Texas water planning process, which was initiated in1997, relies on a “bottom-up” approach: sixteen regional water plan-ning groups (“RWPGs”) develop water supply and demand projec-tions that are then compiled into a “state plan” by the Texas WaterDevelopment Board (“TWDB”). The projections are made for a 50-year period for all types of water uses and based on drought-of-recordrainfall conditions. The plan is reviewed and revised every five years.1

The bottom-line figures from the plan drive tend to drive state dis-cussions of the need to fund new water infrastructure. The most cur-rent plan projects a 50-year need of $53 billion to supply 8.3 millionacre feet of additional water by 2060, which make for scary headlinesindeed.

This essay discusses whether the Texas water planning process re-ally does produce the kind of reliable demand and cost projectionsthat should be driving state funding and water policy debates. It ex-amines issues such as the built-in incentives for regional water plan-ning groups, the appropriate role for state review of regional plans,the focus on a 50-year timeline, and the disconnect between waterplanning and critical policy issues, such as groundwater managementand protection of healthy flows.

† The Author is an attorney and founder of the environmental consulting firm,Parula, LLC (www.parulallc.com).

1. WATER FOR TEXAS 2012 STATE WATER PLAN, TEX. WATER DEV. BD. (2012),http://www.twdb.state.tx.us/publications/state_water_plan/2012/2012_SWP.pdf; seealso Tom Gooch et al, Building From Regional to Statewide Water Planning, THE TEX.APPROACH TO WATER PLANNING (2010), http://ussdams.com/proceedings/2010Proc/977-994.pdf.

85


The essay shows that while the Texas water planning process is valu-able and important, its execution in practice is often flawed, resultingin over-estimates of the gap between projected demand and supply;new supply costs; lost opportunities for resolving real near-term needsthrough cost-effective solutions; and a limited ability to deal with criti-cal policy issues that will have significant effect on the state’s ability tosustainably manage its water resources for future generations.

II. TEXAS WATER PLAN PROJECTIONS

The 2012 Texas Water Plan projects that the state will need 8.3 mil-lion acre feet of additional water by the year 2060.2 Most of the in-crease is projected for the municipal sector.

FIGURE 1: WATER DEMAND PROJECTION BY USE CATEGORY

(ACRE FEET PER YEAR).3

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

2010 2020 2030 2040 2050 2060

IrrigationMunicipalSteam-electricManufacturingMiningLivestock

The current plan projects a steady increase in municipal use (from4.85 million acre feet in 2010 to 8.41 million acre feet in 2060). Thisincrease is tied directly to projected population growth. Irrigation useis projected to decline by over 1 million acre feet/year by 2060 fromthe current level of 10 million acre feet/year.

In order to supply this projected new demand, the plan proposesover 500 different water supply “strategies,” from conservation toconstruction of over twenty-six new reservoirs (for a projected 1.5 mil-lion acre feet/year) and several major long-distance pipelines. Theplan projects a capital cost of $53 billion to implement all of thestrategies.4

2. See generally WATER FOR TEXAS 2012 STATE WATER PLAN, supra note 2.3. 2012 WATER FOR TEXAS, CH. 3: POPULATION AND WATER DEMAND

PROJECTION at 137, TEX. WATER DEV. BD. (2012), http://www.twdb.state.tx.us/publications/state_water_plan/2012/2012_SWP.pdf.

4. Id.

2013] STATE WATER PLANNING 87

FIGURE 2: RELATIVE VALUES OF RECOMMENDED WATER

MANAGEMENT STRATEGIES IN 2060.5

Aquifer Storage and Recovery, 0.9%

Conjunctive Use, 1.5%

Other Surface Water, 33.9%

New Major Reservoir, 16.7%

Reuse, 10.2%Groundwater, 8.9%

Other Conservation*, 0.3%

Irrigation Conservation, 16.7%

Municipal Conservation, 7.2%

Seawater Desalination, 1.4%

Groundwater Desalination, 2.0%

Surface Water Desalination, <0.1%

Brush Control, 0.2%Weather Modification, 0.2%

FIGURE 3: RECOMMENDED NEW MAJOR RESERVOIRS.6

Fastrill ReplacementFastrill ReplacementProjectProject

(Off-Channel)(Off-Channel)

MarvinMarvinNicholsNichols

ReservoirReservoir

Lake Ralph HallLake Ralph Hall

Cedar Ridge ReservoirCedar Ridge Reservoir

Jim Bertram Lake 07Jim Bertram Lake 07

Post ReservoirPost Reservoir

Lake ColumbiaLake Columbia

Allens CreekAllens CreekReservoirReservoir

Turkey Peak ReservoirTurkey Peak Reservoir

Millers CreekMillers CreekReservoir AugmentationReservoir Augmentation

Coryell County ReservoirCoryell County Reservoir(Off-Channel)(Off-Channel)

Guadalupe-Blanco River Authority Mid Basin ProjectGuadalupe-Blanco River Authority Mid Basin Project(Off-Channel)(Off-Channel)

Laredo Low WaterLaredo Low WaterWeirWeir

Guadalupe-Blanco River Authority Exelon ProjectGuadalupe-Blanco River Authority Exelon Project(Off-Channel)(Off-Channel)

Guadalupe-BlancoGuadalupe-BlancoRiver Authority New AppropriationRiver Authority New Appropriation

(Lower Basin - Off-Channel)(Lower Basin - Off-Channel)

Lavaca Off-ChannelLavaca Off-ChannelReservoirReservoir

Lower Colorado River AuthorityLower Colorado River AuthoritySan Antonio Water System Project (Off-Channel)San Antonio Water System Project (Off-Channel)

Gulf Coast Water Authority Off-Channel ReservoirGulf Coast Water Authority Off-Channel Reservoir

Dow Off-ChannelDow Off-ChannelReservoirReservoir

Brazoria Off-ChannelBrazoria Off-ChannelReservoirReservoir

Fort Bend Off-ChannelFort Bend Off-ChannelReservoirReservoir

Lake RinggoldLake Ringgold

LowerLowerBois d'Arc ReservoirBois d'Arc Reservoir

Brushy Creek ReservoirBrushy Creek Reservoir

Brownsville WeirBrownsville Weir

Nueces Off-ChannelNueces Off-ChannelReservoirReservoir

Fastrill ReplacementProject

(Off-Channel)

MarvinNichols

Reservoir

Lake Ralph Hall

Cedar Ridge Reservoir

Jim Bertram Lake 07

Post Reservoir

Lake Columbia

Allens CreekReservoir

Turkey Peak Reservoir

Millers CreekReservoir Augmentation

Coryell County Reservoir(Off-Channel)

Guadalupe-Blanco River Authority Mid Basin Project(Off-Channel)

Laredo Low WaterWeir

Guadalupe-Blanco River Authority Exelon Project(Off-Channel)

Guadalupe-BlancoRiver Authority New Appropriation

(Lower Basin - Off-Channel)

Lavaca Off-ChannelReservoir

Lower Colorado River AuthoritySan Antonio Water System Project (Off-Channel)

Gulf Coast Water Authority Off-Channel Reservoir

Dow Off-ChannelReservoir

Brazoria Off-ChannelReservoir

Fort Bend Off-ChannelReservoir

Lake Ringgold

LowerBois d'Arc Reservoir

Brushy Creek Reservoir

Brownsville Weir

Nueces Off-ChannelReservoir

5. 2012 WATER FOR TEXAS, CH. 7: WATER MANAGEMENT STRATEGIES at 191,TEX. WATER DEV. BD. (2012), http://www.twdb.state.tx.us/publications/state_water_plan/2012/2012_SWP.pdf.

6. Id.


Most of the projected new demand and capital costs would be lo-cated in the Dallas/Fort Worth area (Region C), the Houston-Galves-ton area (Region H) and Central Texas (Region L). In fact, thesethree regions account for over three quarters of the proposed $53 bil-lion in new supply projects, with the remaining one-quarter split al-most equally between the other thirteen regions. The twenty mostexpensive projects proposed in the 2012 plan, eleven of which are inRegion C, account for 51% of the total projected $53 billion cost ofthe plan. Region C alone accounts for 40% of the projected cost ofthe plan, but only about a quarter of the state’s population.7

III. COMPARISON OF PROJECTIONS TO RECENT TRENDS

IN ACTUAL USE

One way to evaluate the reliability of the state water plan projec-tions is to compare them to recent and historical trends.

FIGURE 4: ACTUAL WATER USE (MILLION ACRE FEET) V.POPULATION (MILLIONS)8

0

5

10

15

20

25

30

2008 2009 2010

Population (millions)Total Use (MAF)

7. See id. at 212–13.8. Texas Water Development Board, TWBD, http://www.twdb.state.tx.us/water

planning/waterusesurvey/estimates/.


FIGURE 5: HISTORICAL TOTAL TEXAS STATEWIDE WATER USE

(MILLION ACRE FEET)9

0

5

10

15

20

25

30

74 84 86 88 90 92 94 96 98 0 2 4 6 8 2010

use

&

pop

Year

MAF UsePopulation

Figures 4 and 5 show that, contrary to the state water plan projec-tions, municipal use has essentially been flat for the last three years,while total use has declined slightly even as population has increased.These last three years are unlikely to be an aberration. Figure 5 showsthat total water use in Texas, while varying from year to year, has notmirrored the increase in population.

Declines in irrigation are balancing some municipal increases, but,overall, Figure 5 shows that efficiency practices may also be starting totake hold, changing underlying demand patterns.

Similar use trends are shown all over the country, including thewestern U.S. For example, a December 2012 report by CERES findsa “pervasive trend of declining municipal water demand across theU.S.”10 This mirrors earlier analysis by the U.S. Geological Surveyand others.11

Inaccuracy in demand projections is important. Not only can it pre-sent a false picture of the scope of the needed actions (and drive sup-ply “solutions” towards big, expensive projects); but, as the CERESreport notes, if new supply projects are built and demand fails to ma-terialize, water providers may run into trouble with downgrading oftheir credit ratings.

9. Texas Water Development Board, TWBD, http://www.twdb.state.tx.us/waterplanning/waterusesurvey/estimates/.

10. Sharlene Leurig, Water Ripples: Expanding Risks for U.S. Water Providers,CERES 11–14 (Dec. 2012), http://www.ceres.org/resources/reports/water-ripples-ex-panding-risks-for-u.s.-water-providers.

11. See, e.g., Trends in Water Use in The United States, USGS (Jan. 10, 2013, 10:00AM), http://ga.water.usgs.gov/edu/wateruse-trends.html.


IV. INCENTIVES TO INFLATE THE GAP BETWEEN

DEMAND AND SUPPLY

Region C (Dallas/Fort Worth) accounts for almost one-third of theprojected municipal water demand increase by 2060. Digging into thedetails of the plan, one finds that many cities in the Dallas/Fort Wortharea project that per capita demand in 2060 will be the same as pre-sent per capita demand (well over 200 gallons per capita per day).Regional planners then included supply projects that would meet122% of projected demand. Not surprisingly, Region C accounts for40% of the projected cost of the state plan, far more than its share ofstate population (25%).

There are several factors that may serve to drive what appear to besubstantially inflated water demand projections. First, Texas law re-quires that to receive a permit from the Texas Commission on Envi-ronmental Quality, a project must be “included” in the plan. Thus, ifentities have ideas about different projects they might want to do inthe future, even in 2060, the incentive is to ensure that projected gapbetween demand and supply will justify inclusion of that project in theplan.

Second, the planning process is based on water use in drought ofrecord, which can result in substantially increased projected demand.In fact, the Region C plan states that “[d]ry year demands are signifi-cantly higher than normal year demands, especially for municipal use(because of increased lawn irrigation use). Normal-year demands inRegion C might be 10 to 15 percent lower than dry year demands.”12

Dry year demands could be reduced through the application ofdrought management measures, such as watering restrictions or othermeasures. This could be reflected in either adjustments to projecteddemand or inclusion of drought management as a water supplystrategy.

A 2009 report prepared for the TWDB discussed the barriers (realand perceived) to including reasonable drought management mea-sures as a demand side management strategy in the regional waterplans.13 The report found that:

[t]he most common reasons for opposing the use of drought man-agement measures as a water management strategy were the re-moval of the safety factor provided by drought management plans,potential economic impacts and the unwillingness of water provid-ers and the public to accept a planning approach that includes fu-ture shortages and demand reduction measures. Proponents, on the

12. Region C Water Planning Group, 11 REGION C WATER PLAN at ES5 (Oct.2010), http:// www. regioncwater . org / Documents / 2011RegionCWaterPlan / EXECUTIVE_SUMMARY_Final.pdf.

13. Drought Management in the Texas Regional and State Water Planning Process,BBC RESEARCH & CONSULTING (May 31, 2009), https://www.twdb.state.tx.us/publications/reports/contracted_reports/doc/0804830819_DroughtMgmt.pdf.


other hand, argue that during periods of drought most providerswould implement drought measures, and not including effects fromthese measures in the planning process could lead to unnecessarywater projects [being proposed].14

Clearly, the current Texas drought has shown that demand reduc-tion measures are gaining more traction and are often the most cost-effective response, thus increasing public support for this approach.

The researchers also found that RWPGs were not including droughtmanagement measures because the lack of information on water sup-plies under varying hydrological conditions promoted a more “cau-tious” approach to water planning and that, in many regions,“relatively affordable new supply alternatives remain.”15 But, withthe more persistent drought evident over the last few years and higherconstruction and energy cost estimates for many of the big new infra-structure projects, drought management could be a much more impor-tant component in many regions.

Third, while the regional water planning groups are made up of va-rious stakeholders (including water providers, water users, recreationand environmental interests), much of the work of actually developingthe details of the plan falls to the consultants hired by the RWPGs.These consultants are often traditional engineering firms, which havehistorically focused on “hard infrastructure” supply options such asnew reservoirs and long-distance pipeline projects. Often, due toeconomies of scale,16 a larger projected gap between demand and sup-ply is needed to justify these bigger, more expensive projects.

While things have improved in the last decade of Texas water plan-ning with respect to including improved efficiency as a strategy to re-duce projected new demand, more remains to be done to ensure thatdrought management and efficiency measures are being given thegreatest degree of consideration possible.

V. ROLE OF THE STATE

Given these factors, it might seem that a substantive review by thestate, through the TWDB, for example, might be helpful to ensurethat the plan is based on realistic demand projections. However, theprocess does not currently work that way. Instead, the TWDB pro-vides the regions with population projections and initial projected dry-year demand (adjusted for appliance water efficiency measures re-

14. Id. at ES 1–2 (emphasis added).15. Id. at ES2.16. That is, the more water demand proposed to be supplied by a big infrastruc-

ture project, the lower the projected cost per acre foot. Without a substantial demandprojection, some big reservoirs, or long-distance pipeline projects, would likely beeconomically infeasible.


quired by law).17 The decisions about what efficiency or drought man-agement measures to apply over the 50-year time period areessentially left solely to the regions.18

In reviewing regional plans to compile the state water plan, statelaw charges the TWDB with providing “guidance” for the regionalplan development and resolving any conflicts between regions.19

But, it does not charge the Board with a substantive review of thestrategies chosen by the regions. Nor does it require, for example,TWDB to compile projected water supply strategy costs in a way thatdoes not include multiple projects that would serve the same pro-jected demand. That is, the total cost of the plan projected now caninclude two projects that would meet the exact same projected de-mand, even though both projects would not be built. Moreover, cur-rent state law does not clearly require that TWDB independentlyassess project priorities in a way that identifies which projects areneeded to meet real short-term demand, which are most cost-effec-tive, and/or which need state assistance.

As a result, in many policy and media circles the “plan” gets boileddown only to the projected 50-year bottom line: 8.3 million acre feetof additional supply and $53 billion.

VI. POTENTIAL PITFALLS IN LONG-TERM FOCUS

The 1968 State Water Plan (prepared by the state) projected thatTexas would need 12 to 13 million acre feet of water from the Missis-sippi River by 2020.20 Of course, that massive pipeline project neverhappened and yet the state thrived.

17. Memorandum from Tex. Water Dev. Bd. on Briefing and Discussion on Pro-cess for Development and Adoption of Population and Water Demand Projectionsfor the 2016 Regional Water Plans (Mar. 7, 2013, 10:08 PM), http://www.twdb.state.tx.us/board/2013/01/WorkSession/WS04.pdf; see also Process for Requesting Adjustmentsto Population and Water Demand Projections, (Mar. 7, 2013, 10:08 PM), http://www.twdb.state.tx.us/waterplanning/rwp/planningdocu/2016/doc/chairsconfcalls/5-25-2011/att_E_projection_adjust.pdf.

18. TEX. WATER CODE ANN. § 16.053(h)(7)(B) (West Supp. 2012) (stating thatTWDB cannot approve a regional plan unless it concludes that “(B) the plan includeswater conservation practices and drought management measures incorporating, at aminimum, the provisions of Sections 11.1271 and 11.1272 [Texas Water Code].” Butthose sections of the Code just require various entities to have drought managementand water conservation plans and does not control their content.).

19. Id. at § 16.053(h)(7)(A), (C).20. See, e.g., Todd H. Votteler, Water Boondoggles: The Biggest Little Water Plan

in Texas, http://www.edwardsaquifer.net/pdf/waterplan.pdf.


FIGURE 6: PROPOSED RESERVOIRS AND PIPELINES FOR 1968 TEXAS

WATER PLAN MISSISSIPPI IMPORTATION PROJECT.21

Long-term water projections are difficult and should not be—butoften are—viewed as gospel. Many things can change over the courseof five decades, with technological innovation, dynamic economiesand changing social values.22

Yes, some large projects, such as new reservoirs, do take a long timeto design and permit. But, with the Texas plan’s focus on a 50-yeartime frame, and few, if any, mechanisms to draw out the shorter-termneeds, the state may be losing opportunities to support cost-effectiveapproaches to meeting demand, such as drought management, effi-ciency improvements, and private land stewardship incentives to boostwatershed health and aquifer recharge.

While the State Plan compiled by the TWDB does present supplyand demand projections by decade, it does not clearly identify priorityprojects by decade. Recent discussions of state water plan funding in

21. Texas Water Development Board, TWDB, http://www.twdb.state.tx.us/publications/State_Water_Plan/1968/68SWP_fig2.pdf.

22. See Leurig, Water Ripples: Expanding Risks for U.S. Water Providers, supranote 11, at 13–14.


the 83rd legislative session have thus all keyed off the state having toeventually finance half of the $53 billion 50-year cost,23 instead ofwhat the state role should be in ensuring realistic needs in the nexttwo or three decades are met in a cost-effective and sustainablemanner.

VII. LACK OF CONNECTION WITH OTHER POLICY ISSUES

With recent developments on both the groundwater and environ-mental flows fronts in Texas, there is a need to reexamine how theplanning process can be improved to ensure that the state has a com-plete and integrated view of supply and demand issues.

A. Groundwater

Updated every five years, the state plan projects demand for andsupply both groundwater and surface water. The regional water plan-ning groups must now use the desired future conditions (“DFCs”) de-veloped by the groundwater management areas (“GMAs”) as oneconsideration in the planning process.24 The DFCs can be used in de-termining how much groundwater will be available to meet futureneeds (“modeled available groundwater” or “MAG”). In areas of thestate where groundwater pumping may affect surface water flows, theDFCs may also affect the amount of surface water projected to beavailable for existing and projected new uses.

Unfortunately, the schedules for development of regional and statewater plans and new DFCs are disconnected. The current law wouldresult in the following timeframe:

March 2015: Initially prepared plans due from regional water plan-ning groupsSeptember 2015: Planning groups adopt and submit final plans toTWDBSeptember 2015: New DFCs must be proposed by GMAsFall 2015: TWDB reviews regional plansJanuary 2017: New state water plan due to Legislature

Given the expense and effort involved in updating the regionalwater plans and the state plan, relying on the existing DFCs, which arelikely to change soon, is an inefficient use of time and resources.

If the due date for the next set of regional plans were to be delayedto 2017 (two-year delay), the RWPGs would instead have the oppor-

23. See Water for Texas 2012 State Water Plan, supra note 2 at ES 6 (The StateWater Plan concludes, based on surveys of the regional planners, that the state wouldhave to pick up one-half the projected $53 billion tab for proposed new supplyprojects.).

24. See, e.g., Carolyn Brittin, The State Water Plan and Regional Water PlanningGroup Updates from the Groundwater Perspective, TEX. GROUNDWATER SUMMIT

(Sept. 10, 2012), http://www.slideshare.net/TXGroundwaterSummit/state-water-plan-and-rwpg-updates-from-the-groundwater-perspective-carolyn-brittin.


tunity to use the new DFCs currently being developed. This shouldresult in a much more realistic view of groundwater supply and de-mand. The revised schedule would be:

September 2015: New DFCs must be proposedMarch 2017: Initially prepared plans due from regional water plan-ning groupsSeptember 2017: Planning groups adopt and submit final regionalplans to TWDBFall 2017: TWDB reviews regional plansJanuary 2019: New state water plan due to Legislature

A two-year delay in the deadline for the revised state plan does notmean the RWPGs would halt work over the next two years. Instead,they could continue work with the funding already available undercurrent appropriations ($9.1 million).25 Once the RWPGs receive thenew DFCs (in the fall of 2015) they could prepare updated plans. TheLegislature could award any additional funds needed by the RWPGsin the 2015 session.

Another groundwater issue is the lack of connection between sur-face water and groundwater availability models. A 2005 report pre-pared for the Texas Commission on Environmental Quality foundthat, based on available data, most large streams in Texas gain, ratherthan lose, water during low flow conditions.26 The report concludedthat discharge of groundwater from aquifers through seeps andsprings provided more than half of river flows throughout most ofTexas during dry times.27 Examples of areas of the state with highgroundwater/surface water interconnectivity include the Hill Countyand Edwards-Trinity Plateau (encompassing the headwaters of the Pe-cos, Devils, Nueces, Frio, Sabinal, Medina, Guadalupe, Llano, SanSaba, Pedernales and Blanco rivers); the lower Brazos River; thelower Colorado River and the Canadian River in Hemphill County.28

Despite the evidence of important interconnections, many areas ofTexas lack sufficient data and modeling tools to carefully considersuch interconnection in planning, permitting and management deci-sions. In 2007, TWDB staff recommended that the state focus on

25. Memorandum from Tex. Water Dev. Bd. Staff on Authorizing the ExecutiveAdministrator to publish a request for regional water planning grant applications forup to $9.5 million to complete the fourth cycle (2011–2015) of regional water planning(Mar. 7, 2013, 10:08 PM), http://www.twdb.state.tx.us/board/2012/07/Board/Brd24.pdf(awarded $3.6 million to the RWPGs for this next round of planning. It also issued a“request for applications” for an additional $5.5 million in appropriated FY 12–13funds, to be divided among the different regions according to need and issues).

26. See generally B.R. Scanlon, et al., Groundwater Surface Water Interactions inTexas, BUREAU OF ECON. GEOLOGY, U. TEX. AT AUSTIN (Aug. 2005).

27. During times of rainfall, surface runoff dominates flows.28. See also Laura B. Marbury and Mary E. Kelly, Down to the Last Drop, ENVTL.

DEFENSE FUND 3–6, TEXSCIENCE.ORG (Mar. 2009), http://texscience.org/water/rule_capture/Marbury_Kelly_2009_down_to_the_last_drop.pdf (providing more detaileddiscussion of these interconnectivity hot spots).


three areas of necessary improvement, “measuring streamflow gainsand losses; identifying better ways to consider surface water-ground-water interaction in the groundwater availability models; and identify-ing appropriate ways to connect [surface] water availability andgroundwater availability models.”29

The groundwater availability models (“GAMs”) are used to deter-mine the DFCs for groundwater. The surface water availability mod-els (“WAMs”) are used in evaluating surface water right permitrequests, regional water planning and the Senate Bill 3 environmentalflows process. Unfortunately, these models are generally not linkedand thus there are substantial uncertainties about the reliability of themodels in areas of the state where there is significant interconnectionbetween surface water and groundwater.30

As use of both surface and groundwater increases, and with the per-sistence of drought, there is a much more pressing need to better un-derstand these interconnections and reduce uncertainties in themodels used for planning, permitting and management decisions.

B. Environmental Flows

Under Senate Bill 3, enacted in 2007, Texas has initiated a processto develop quantified environmental flow standards for each of its ma-jor river basins. To date, standards have been enacted for four basins(Sabine/Neches; Trinity/San Jacinto; Colorado/Lavaca; andGuadalupe/San Antonio) and three more basins (Nueces, Brazos andRio Grande) are scheduled to have rules in place by March 2014.31

These standards reflect the flow regime necessary to maintain asound ecological environment in rivers and bays. The standards andflow requirements are highly relevant to regional water planning.TWDB’s rules for regional planning groups do require considerationof adopted environmental flow standards in evaluating environmentalwater needs and in evaluating proposed water supply strategies.32

However, current law does not require coordination between theRWPGs and the Senate Bill 3 “Basin and Bay Stakeholder Commit-tees” (“BBASCs”), which have a more diverse stakeholder member-

29. Robert E. Mace, et al., Surface Water and Groundwater—Together Again?State Bar of Tex. at 8th Annual Changing Face of Water Rights in Tex. (June 2007),http://www.txessarchive.org/documents/MaceandOthers2020071.pdf; see also Marbury& Kelly, Down to the Last Drop, supra note 22, at 6 (making a number of similarrecommendations before the 2009 legislative session).

30. See Mace, Surface Water and Groundwater—Together Again?, supra note 30(An exception is the Edwards Aquifer area and contribution of flows to the SanMarcos and Guadalupe Rivers due to the high level of effort to manage that system inlight of federal endangered species restrictions.).

31. See ENVIRONMENTAL FLOWS ASSESSMENT, TEX. COMM’N ON ENVTL. QUAL-

ITY (Dec. 16, 2009), http://www.tceq.texas.gov/permitting/water_rights/eflows.32. See 31 TEX. ADMIN. CODE § 358.3 (22)–(23) (2012); 31 TEX. ADMIN. CODE

§ 357.34(d)(3)(B) (2012).


ship and which have spent considerable time evaluatingenvironmental flow needs. The Texas Environmental Flows ScienceAdvisory Committee recently recommended better coordination be-tween the Senate Bill 1 planning process and the Senate Bill 3 envi-ronmental flows process.33

33. Memorandum from the Tex. Envtl. Flows Sci. Advisory Comm. to the Envtl.Flows Advisory Grp. 4 (Dec. 13, 2012).

THE POTENTIAL IMPACT OF FEDERAL LAWSON STATE WATER SUPPLIES

By Brad B. Castleberry & Sara R. Thornton†

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99II. WATER SUPPLIES FOR GROWING POPULATIONS. . . . . . . . . 99

III. SECTION 404(C) OF THE CLEAN WATER ACT . . . . . . . . . . . 100IV. ENDANGERED SPECIES ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103V. LACEY ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

VI. WILD & SCENIC RIVERS ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . 107VII. NATIONAL WILDLIFE REFUGE SYSTEM

ADMINISTRATION ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109VIII. PREVENTING THE INVISIBLE LEGAL DAM: PATH

FORWARD FOR DEVELOPING WATER SUPPLIES . . . . . . . . . 111

I. INTRODUCTION

States have long held the exclusive right to allocate their surfaceand groundwater supplies absent some express federal authority, usu-ally via a contract with a federal agency for stored water in a federallysponsored and funded project. Over time, however, an emphasis onfederal involvement has led to scrutiny of projects where there are nofederal dollars being expended—only federal permits needed to im-plement projects by the states. This federal involvement can some-times have extremely costly impacts to states, effectively creating aninvisible dam of laws and regulations under the guise of protecting theenvironment. This paper will explore a few of those actions that arecurrently being experienced in the arid southwest where new reser-voirs are needed to support a growing population and a thirst forwater that cannot be quenched by conservation alone.

II. WATER SUPPLIES FOR GROWING POPULATIONS

Water is an invaluable resource that, for many years, people be-lieved would exist in perpetuity. As populations grow, however, thisbelief is confronting the harsh reality that existing water supplies arelimited, and additional water supplies must be developed. In Texas,

† Brad B. Castleberry is a principal with Lloyd Gosselink. He practices in theareas of water law, natural resources, environmental permitting, and construction liti-gation. He represents clients on a variety of issues, including water supply planning,water quality management, and environmental defense. Sara R. Thornton is an asso-ciate with Lloyd Gosselink and practices in the areas of environmental, water andadministrative law. She assists clients with various permitting, compliance, and en-forcement issues related to water supply and water quality matters. Brad and Sararepresent water purveyors throughout Texas, not only in regulatory permitting, com-pliance and enforcement, but also in addressing critical environmental and naturalresource policy issues.

99


this reality hit hard in 2011 when drought conditions reached an ex-treme state, requiring the Governor of Texas to declare an ongoingstate of emergency due to extreme drought conditions.1 During thatyear, twenty-three public water systems in Texas claimed to have lessthan six months’ water supply with the town of Spicewood Beach nearAustin, Texas completely running out of water and requiring thatwater be trucked in for a continual water supply.2 It seems an un-fathomable situation—but it’s not entirely surprising when you under-stand how population has grown in Texas, whereas Texas’ watersupply storage has not.3 In fact, since 1980, the per capita water stor-age in Texas has decreased by 30%.4

According to the Water for Texas 2012 State Water Plan, Texas is thesecond most populated state in the U.S. and it had a greater popula-tion growth than any other state between 2000 and 2010—increasingfrom 20.8 million to 25.1 million.5 This growing population is not ex-pected to slow, but instead, between 2010 to 2060 it is expected togrow approximately 80% to 46.3 million.6 Thankfully, this estimatedgrowth does not have a corresponding percentage increase in demandfor water—instead, the water demand is only projected to increase by22%, given the implementation of conservation and reuse.7 Even so,based on the current inability to meet existing water demands undernewly experienced drought conditions, additional water supplies mustbe developed to also meet this increased demand. But to accomplishthis, additional water supply projects will have to find a way to over-come a myriad of invisible “dams” that may be created by certain fed-eral laws and regulations, potentially blocking development.

III. SECTION 404(C) OF THE CLEAN WATER ACT

The development of additional water resources, including newwater supply reservoirs, must comply with a number of federal laws,including Section 404 of the Clean Water Act (“CWA”). Pursuant toSection 404 of the CWA, the U.S. Army Corps of Engineers(“USACE”) may issue a permit (“404 permit”) for the discharge ofdredged or fill material into the navigable waters at specified disposal

1. Office of the Tex. Gov., Proclamation, Perry Again Renews Proclamation Ex-tending Drought Emergency (Dec. 28, 2012), http://governor.state.tx.us/news/proclamation/18013/.

2. Marc Airhart, Five Key Lessons (and Challenges) from the Great TexasDrought, KNOW (Sept. 10, 2012), http://www.utexas.edu/know/2012/09/10/great-texas-drought.

3. Id.4. Id.5. Water for Texas 2012 State Water Plan 129, TEX. WATER DEV. BD. (2012),

http://www.twdb.state.tx.us/publications/state_water_plan/2012/03.pdf.6. Id. at 132.7. Id. at 136.

2013] IMPACT OF FEDERAL LAWS 101

sites after notice and opportunity for a public hearing.8 Importantly,without a 404 permit, a new water supply reservoir cannot be con-structed given the necessity of the actions involved in construction.Beyond complying with the numerous requirements for a 404 permitto be issued, a permittee is also faced with the possibility that the per-mit issuance by the USACE may be vetoed by the EnvironmentalProtection Agency (“EPA”)—effectively killing the water supplyreservoir.

Under Section 404(c) of the CWA, the EPA is expressly given theright to veto a 404 permit application either before or after theUSACE’s approval of such application.9 Section 404(c) provides thatthe Administrator of the EPA may outright prohibit the issuance of a404 permit or overrule the USACE determination to issue a permit by“withdrawal of specification.”10 The Administrator may veto a 404permit after notice and opportunity for public hearing and when he orshe determines that issuing the 404 permit will have an unacceptableadverse effect on (1) municipal water supplies, (2) fish and wildlife, or(3) recreational areas.11 The Administrator may only make this deter-mination after consulting with the Secretary of the Army, actingthrough the Chief of Engineers, and then the Administrator must setforth in writing and make public the reasons for prohibiting the 404permit.12

As of 2013, the EPA has vetoed thirteen 404 permits pursuant toSection 404(c) of the CWA.13 The types of projects vetoed vary, butmost were vetoed due to unacceptable adverse impacts to a variety ofaquatic resources and wildlife habitats. Four of the projects vetoedwere reservoir projects—(1) Two Forks Reservoir, final determinationin 1990; (2) Big River, final determination in 1990; (3) Ware Creek,final determination in 1989; and (4) Lake Alma, final determination in1988.14

Although the EPA has not vetoed a water supply reservoir since1990, the EPA’s veto authority under Section 404(c) is alive andwell—and the extent of that authority is currently being tested in thecourts. On January 13, 2011, the EPA issued a Final Determination towithdraw specification of certain streams as disposal sites for dredged

8. Clean Water Act of 1977 § 404(a), 33 U.S.C. § 1344(a) (2006).9. Id. § 1344(c); see also 40 C.F.R. § 231.1(a) (2011).

10. Id.; 40 C.F.R. § 231.2(a) (2011) (quoting “Withdraw specification means to re-move from designation any area already specified as a disposal site by the U.S. ArmyCorps of Engineers or by a state which has assumed the section 404 program, or anyportion of such area.”).

11. § 1344(c).12. Id. § 1344(c)–(d).13. See generally Chronology of 404(c) Actions, U.S. ENVTL. PROT. AGENCY,

available at http://water.epa.gov/lawsregs/guidance/wetlands/404c.cfm (last updatedAug. 21, 2012).

14. Id.


or fill material in connection with the construction of a surface mine—essentially vetoing certain portions of an existing 404 permit authoriz-ing such disposal sites that was issued by the USACE almost threeyears before EPA’s veto.15 The basis of EPA’s veto was that the dis-charge of dredged or fill material associated with the construction andoperation of the coal mine would result in unacceptable adverse ef-fects on wildlife, particularly through significant loss of wildlife habitatand significant degradation of downstream aquatic ecosystems.16 Thecoal mine operator filed suit against EPA seeking a declaration thatEPA lacked the authority to modify or revoke the 404 permit follow-ing the USACE’s issuance of the permit.17 The district court agreedwith the coal mine operator, holding that EPA lacked the authorityunder section 404(c) to utilize its veto authority for an indefinite pe-riod of time after the permit has been issued.18 But EPA has appealedthis decision, which is currently before the U.S. Court of Appeals forthe D.C. Circuit.

EPA’s veto of a 404 permit for a reservoir is not outside the realmof possibility if it determines that a reservoir would have unacceptableadverse impacts to aquatic resources and wildlife habitat. In the mostrecent veto of a 404 permit for a water supply reservoir, the Two ForksReservoir in 1990, EPA based its veto on a number of factors. EPAdetermined that the project would have significant impacts to fisher-ies, by eliminating trout habitat that would in turn reduce trout stand-ing crop.19 EPA also noted impacts to endangered species, includingthe bald eagle and peregrine falcon, along with impacts to other wild-life.20 Another basis for EPA’s veto was the lack of a need for thewater supply project, particularly that there was no need within thenext twenty-five years for the water supply. Further, the populationthe project would serve was actually decreasing, which was in turnexpected to result in a decrease in demand for water supplies.21

The lack of a recent veto action of a large reservoir project may bedue in part to a lull in the construction of dams and reservoirs acrossthe United States. But, with the increasing need for additional watersupplies, new water supply reservoirs must be developed. In fact, theTexas 2012 State Water Plan identifies a number of new reservoirs tomeet water demands throughout the state that will require 404 per-mits and must survive EPA scrutiny and its veto. EPA’s prior veto

15. Mingo Logan Coal Co. v. EPA, 850 F.Supp.2d 133, 136–37 (D.D.C. 2012), ap-peal docketed, No. 12-5150 (D.C. Cir. filed May 15, 2012).

16. Final Determination Notice of The Clean Water Act Concerning The SpruceNo. 1 Mine, 76 Fed. Reg. 3126 (Jan. 19, 2011).

17. Mingo, 850 F.Supp. at 134.18. Id. at 153.19. Proposed Determination South Platte River, 54 Fed. Reg. 36,862, 36,866 (Sept.

5, 1989).20. Id.21. Id.


actions, and the bases for each, should be used by those developingwater supplies as a precautionary guide for securing a 404 permit.

IV. ENDANGERED SPECIES ACT

The Endangered Species Act (“ESA”), believed to be perhaps themost stringent, comprehensive, and controversial environmental legis-lation in the history of the United States, also poses a significant bar-rier to the development of additional water supplies in Texas.22

Enacted in 1973, the ESA provides protection to endangered andthreatened species and their habitats by prohibiting the “take” oflisted species and any interstate or international trade of listed spe-cies.23 Under Section 7 of the ESA, federal agencies are required to“insure that any action authorized, funded, or carried out by suchagency . . . is not likely to jeopardize the continued existence of anyendangered species or threatened species or result in destruction ormodification of habitat of such species which is determined by theSecretary [of the Interior] . . . to be critical.”24 Critical habitat must bedesignated for listed species under the ESA when it is deemed “pru-dent and determinable” and includes geographic areas containing thephysical or biological features essential to the conservation of the spe-cies and potentially needing management and protection.25 Only fed-eral agency actions or federally funded or permitted activities mustavoid impacts to critical habitat.26

The USACE’s issuance of a 404 permit for a water supply projectqualifies as an agency action that must comply with section 7 of theESA. If the project might affect threatened or endangered species ortheir designated critical habitat, the USACE must consult with theUnited States Fish & Wildlife Service (“FWS”) or the NationalMarine Fisheries Service (“NMFS”), as applicable, before decidingwhether to issue the permit. Additionally, the 404 permit applicantwould need to submit a biological evaluation for the species as part ofits 404 permit application. The existence of a listed species, or its criti-cal habitat, within the area of a water supply project could signifi-cantly impede and slow the development of the project. In Texas, anumber of species are currently being proposed for listing as endan-gered or threatened, known as “candidate” species, or currently peti-tioned for listing. Of these species, twelve are freshwater musselsfound throughout the state in multiple river basins.27 There is no

22. ENDANGERED SPECIES ACT LAW, POLICY AND PERSPECTIVES 1 (Donald C.Baur & Wm. Robert Irvin eds., 2d ed. 2010).

23. Id.24. 16 U.S.C. § 1536(a)(2) (2000).25. 16 U.S.C. § 1533(a)(3) (2000); 16 U.S.C. §1532(5)(A) (2000).26. Baur & Irvin, supra note 22, at 45–46.27. Federal Status of the Texas Mussels listed by the State of Texas, U.S. FISH &

WILDLIFE SERV. (Oct. 2011), http://www.fws.gov/southwest/es/Documents/R2ES/Sta-tus_Table_Texas_Mussels_Oct_2011.pdf.


doubt that the listing of these mussel species, and designation of criti-cal habitat for same, would impact the development of future watersupplies in Texas.

An applicant for a 404 permit can take certain proactive measuresto ensure compliance with the ESA in anticipation of a listing whichmight occur within a water supply project footprint. For instance, anapplicant may seek to enter a Candidate Conservation Agreementwith Assurances with the FWS pursuant to section 10 of the ESA.28

The applicant might enter into such an agreement with the FWS andagree to certain voluntary conservation measures, and in exchangemay receive a permit from the FWS that provides assurance that addi-tional land, water, or resource use restrictions under the ESA will notbe imposed on the applicant in the event the species becomes listed inthe future.29

V. LACEY ACT

An additional federal law, not widely known for affecting the devel-opment of reservoirs and other future and existing water supplies, isthe Lacey Act. The federal government originally enacted the LaceyAct in 1900 to outlaw the interstate trafficking of birds and other ani-mals illegally killed in their state of origin.30 But, in the wake of inva-sive species like the zebra mussel, Asian carp, and snakehead fish,which are spreading across the United States at an unprecedentedrate, the Lacey Act was amended to also address these foreign invad-ers. Section 42 of the Lacey Act prohibits the importation, shipmentor possession of injurious mammals, birds, fish (including mollusksand crustacea), amphibia, and reptiles.31 Zebra mussels are one of afew species specifically prohibited within section 42, whereas other in-jurious species, injurious to human beings, to the interests of agricul-ture, horticulture, forestry, or to wildlife or to the wildlife resources ofthe United States, are identified by the Secretary of the Interior andincluded in Part 16 of Title 50 of the CFR.32 The purpose of 50 CFRPart 16 is to implement the Lacey Act.33

Section 16.13 of 50 CFR provides that “[t]he importation, transpor-tation, or acquisition . . . of live mollusks, veligers, or viable eggs ofzebra mussels, genus Dreissena” is prohibited.34 Section 42 of the

28. Using Existing Tools to Expand Cooperative Conservation for Candidate Spe-cies Across Federal and Non-Federal Lands 1, U.S. FISH & WILDLIFE SERV., http://www.fws.gov/endangered/esa-library/pdf/CCA-CCAA%20%20final%20guidance%20signed%208Sept08.PDF.

29. Id.30. Lacey Act, U.S. FISH & WILDLIFE SERV., http://www.fws.gov/international/

laws-treaties-agreements/us-conservation-laws/lacey-act.html.31. Lacey Act § 42, 18 U.S.C. § 42(a)(1) (Supp. V 2012).32. Id.; see also 50 C.F.R. § 16.1–16.33 (2012).33. 50 C.F.R. § 16.1.34. 50 C.F.R. § 16.13(a)(2)(iii).


Lacey Act and Part 16 of 50 CFR apply to the importation of injuriousspecies, e.g., zebra mussels, into the United States or the transporta-tion between the continental United States, the District of Columbia,Hawaii, the Commonwealth of Puerto Rico or any territory or posses-sion of the United States by any means without a permit issued by theFWS.35 Therefore, a violation of section 42 of the Lacey Act couldonly occur if an invasive species like the zebra mussel is transportedacross state lines. Most would think this provision was intended toprevent people from intentionally smuggling invasive species—butthis provision, by its plain language, applies to any interstate transportregardless of the intent or the mechanism of transport. This meansany water supply project that moves water containing invasive speciesacross state lines results in a violation of section 42 of the Lacey Act.

The Great Lakes, no stranger to invasive species, is subject to a newthreat—the introduction of bighead and silver carp, types of Asiancarp. This potential invasion is likely to occur through the ChicagoArea Waterway System (“CAWS”), a man-made connection betweenthe Mississippi River Basin and Lake Michigan.36 This invasion viathis man-made connection could also result in Lacey Act violations.37

Five states bordering the Great Lakes filed suit against the USACEand the Metropolitan Water Reclamation District of Greater Chicago(“Metro District”), the entities operating CAWS, seeking injunctiverelief requiring USACE and Metro District to take all measures toprevent the spread of Asian carp into Lake Michigan because failureto do so would create a public nuisance.38 The states’ request for in-junctive relief was denied.39 In December 2012, the court dismissedthe states’ claims of public nuisance and violations of the Administra-tive Procedure Act because operation and maintenance of CAWS byUSACE, and not closing CAWS, is mandated by federal law.40 Ab-sent a constitutional violation, the court could not order “parties totake action that would directly contravene statutory mandates andprohibitions, and the common law recognizes that actions required bylaw do not give rise to liability for nuisance.”41 But this does raise aquestion as to when and if Asian carp invade Lake Michigan, will theFWS proceed against the USACE and Metro District for violations of

35. Injurious Wildlife: A Summary of the Injurious Provisions of the Lacey Act(18 U.S.C. 42; 50 CFR 16), U.S. FISH & WILDLIFE SERV., http://www.anstaskforce.gov/Documents/Injurious_Wildlife_Fact_Sheet_2007.pdf (emphasis added).

36. Michigan v. U.S. Army Corps of Eng’rs, No. 10C4457, 2012 WL 6016926, at *1(N.D. Ill. Dec. 3, 2012).

37. Id. at 20–21.38. Michigan v. U.S. Army Corps of Eng’rs, No. 10-CV-4457, 2010 WL 5018559, at

*1 (N.D. Ill. Dec. 2, 2010), aff’d, 667 F.3d 765 (7th Cir. 2011).39. Id.40. Michigan, 2012 WL 6016926, at *1.41. Id.


the Lacey Act? Even the court recognized that a Lacey Act violationcould occur, but apparently no action by FWS has been taken—yet.42

Violations of the Lacey Act are not restricted to areas like theGreat Lakes. In fact, two water supply projects in North Texas re-cently faced this very issue—that through the simple act of operating apump station the projects could be subject to fines of up to $500,000for a violation of section 42 of the Lacey Act.43 In early 2009, theTexas Parks and Wildlife Department discovered zebra mussels inLake Texoma, a reservoir located on the boundary of Oklahoma andTexas.44 The zebra mussels were presumably introduced into LakeTexoma by boaters from northern states. Zebra mussels spread viaoverland dispersal—by attaching to boats and surviving out of waterfor up to several days before the boat is placed back into water andthen spreading throughout the new body of water.45

One of the water supply projects, owned and operated by the NorthTexas Municipal Water District (“NTMWD”), diverted water fromLake Texoma within Oklahoma that was then transported to andthrough Lake Lavon, a lake wholly in Texas. NTMWD, upon learningof the introduction of zebra mussels into Lake Texoma, ceased diver-sions from the lake to prevent the spread of zebra mussels into Texas.Had it not done so, NTMWD could have faced significant charges forcivil and criminal violations under the Lacey Act because divertingwater from Lake Texoma would have resulted in an interstate trans-port of invasive species. But, ongoing drought conditions and increas-ing water demands necessitated that NTMWD ultimately access itsLake Texoma water supplies, which constitute 25% of its total waterportfolio. To achieve this, NTMWD decided to expend significant re-sources to construct an approximately 48-mile pipeline to transportthe Lake Texoma water directly to a water treatment plant where allzebra mussels would be extirpated—preventing further introductionor propagation of zebra mussels into Texas’s waterways. Additionally,NTMWD had to secure federal legislation for an exemption from theLacey Act for this conveyance because it still constitutes a violation ofthe Lacey Act even though no zebra mussels would actually be intro-duced and transported into other bodies of water in Texas.46

Although it seems that this situation is unique, the potential for fu-ture applications of the Lacey Act restricting water supplies is not atall unlikely. Multiple reservoirs are located on boundaries of statesthat are defined by rivers, particularly in Texas. As more freshwater

42. Id. at 20–21.43. See 18 U.S.C. § 3571(c) (2006).44. Lone Zebra Mussel found in Lake Texoma, TEX. PARKS & WILDLIFE, TPWD

(Apr. 29, 2009), http://www.tpwd.state.tx.us/newsmedia/releases/?req=20090421a.45. Id.46. Lake Pontchartrain Basin Restoration Program, Pub. L. No. 112–237, § 5, 126

Stat. 1628, 1629 (2012).


invasive species are introduced and designated, moving these speciesacross state lines will be subject to the Lacey Act—with the potentialto completely cut off such water supply without obtaining a legislativeexemption from the Lacey Act—not so easy to obtain.

VI. WILD & SCENIC RIVERS ACT

As the need to develop additional water supplies grows, others willseek to preserve these waters, particularly rivers, in their natural stateto prevent their development for use as water supplies. One mecha-nism for doing so is through the designation of a river pursuant to theNational Wild & Scenic Rivers Act (“WSRA”). Congress passed theWSRA in 1968 for the purpose of declaring that selected rivers bepreserved in a free-flowing condition and their immediate environ-ments be protected.47 Under the WSRA, “free-flowing” means “ex-isting or flowing in natural condition without impoundment, diversion,straightening, rip-rapping, or other modification of the waterway.”48

Rivers are selected for inclusion in the WSRA based on their out-standingly remarkable values, which includes, but is not limited to,scenic, recreational, geologic, fish and wildlife, historic, and culturalvalues.49 A river may be included in the National Wild and ScenicRivers System (“National System”) either by an act of Congress orthrough designation by the Secretary of the Interior following protec-tion in a state river system and application by the state governor.50

In a perfect world, preserving all rivers in their free-flowing statewould be ideal. But, we do not live in a perfect world—we live in aworld with an ever-expanding population that cannot survive on ex-isting freshwater supplies. This is particularly true in Texas. The des-ignation of a river as wild and scenic could effectively eliminate thatriver as a future water supply. Designation of a river requires the fed-eral government to protect the river’s instream flow, which it may dothrough the reservation of federal water rights.51 Under the WSRA,the quantity of water for a federal water right is only the amount nec-essary to achieve its purposes, meaning that the federal governmentcan only acquire the rights to preserve the outstanding remarkablevalues for which the river was protected.52 Further, the U.S. SupremeCourt has held that the federal government may only reserve “unap-propriated” water.53 The priority date of the federal reserved rightwould likely date back to the date of the river’s designation, but the

47. 16 U.S.C. § 1271 (2000).48. 16 U.S.C. § 1286(b) (2000).49. 16 U.S.C. § 1271.50. 16 U.S.C. § 1273(a) (2000).51. NAT’L WILD & SCENIC RIVERS SYS., WATER QUANTITY AND QUALITY AS RE-

LATED TO THE MANAGEMENT OF WILD & SCENIC RIVERS 1 (Oct. 2003).52. 114 CONG. REC. 26,594 (1968).53. See generally Cappaert v. United States, 426 U.S. 128 (1976); see also United

States v. New Mexico, 438 U.S. 696 (1973).


legislation designating the river may specify some other date of prior-ity.54 The federal right would be junior to rights existing on the dateof the establishment of the federal right but senior to all rights vestingafter that date.55

The potential for federal water rights causes serious concern forstate and local governments whose water use and future water diver-sions may be impacted by new downstream wild and scenic seg-ments.56 For instance, suppose the designated portion of the river islocated downstream of a diversion point for a water right holder.57 Ifthe holder’s rights are junior to the federal government’s appropria-tion, then the federal government can place a “call” on the river.58

This means the federal government can demand the upstream juniorappropriators, including the water right holder, withhold their benefi-cial use and provide sufficient water to meet the federal government’swater right under the WSRA. And in the reverse, if the water rightsholder’s rights are more senior to the federal government’s appropria-tion, their use would have priority over the federal government.59

But, having a senior water right may not protect public or privateparties either because the WSRA appears to allow the federal govern-ment to “take” water rights.60 The federal government may have topay for those rights,61 but money alone cannot replace existing fresh-water supplies. The WSRA seems to give the federal government theability to condemn other water rights: “any taking by the UnitedStates of a water right which is vested under either State or Federallaw at the time such river is included . . . shall entitle the owner . . . tojust compensation.”62

The WSRA also prohibits federally assisted water resourcesprojects if they would have a “direct and adverse effect” on the valuesfor which a river was added to the National System.63 Such water

54. See Winters v. United States, 207 U.S. 564, 577 (1908) (stating priority date forwater rights reserved for Indian Tribes was held to be the date of the Treaty reservingsuch rights).

55. CYNTHIA BROUGHER, CONG. RESEARCH. SERV., RL41081, THE WILD AND

SCENIC RIVERS ACT AND FEDERAL WATER RIGHTS 5 (2010), http://www.rivers.gov/publications/crs-water-rights-2010.pdf.

56. Sharon Megdal et al., The Forgotten Sector: Arizona Water Law and the Envi-ronment, 1 ARIZ J. ENVTL. L. & POL’Y 243, 259 (2011).

57. JOSEPH L. SAX, BARTON H. THOMPSON, JR., JOHN D. LESHY & ROBERT H.ABRAMS, LEGAL CONTROL OF WATER RESOURCES: CASES AND MATERIALS 671 (4thed. 2006).

58. Megdal et al., supra note 56, at 259.59. Id.60. Id.61. Id.62. 16 U.S.C. § 1284(b) (Supp. V 2012).63. NAT’L WILD & SCENIC RIVERS SYS., WILD AND SCENIC RIVERS ACT: SECTION

7, 5–6 (2004), http://www.rivers.gov/rivers/documents/section-7.pdf. The Act also spe-cifically prohibits the Federal Energy Regulatory Commission from licensing the con-struction of any dam, water conduit, reservoir, powerhouse, transmission line, or


resources projects that would likely be subject to this standard in-clude, but are not limited to:

dams; water diversion projects; fisheries habitat and watershed res-toration/ enhancement projects; bridge and other roadway construc-tion/reconstruction projects; bank stabilization projects;channelization projects; levee construction; recreation facilities suchas boat ramps and fishing piers; and, activities that require a Section404 permit from the [USACE].64

This prohibition also applies to rivers designated for potential addi-tion in the National System until such time as the river is either desig-nated or determined to not be included in the National System.65 So,if a river is designated or proposed for designation, there is littlechance that the river may be developed in the future as a potentialwater supply project. Even projects upstream or downstream of theriver may be affected, since such projects will only be allowed if thedesignated river is not invaded by the project, or the scenic, recrea-tional, fish, or wildlife values present at the date of designation are notunreasonably diminished.66 Consequently, every effort must be madeto ensure that Texas rivers identified as potential or existing sources ofwater supplies do not become designated in a way that would preventtheir use as a water supply.

VII. NATIONAL WILDLIFE REFUGE SYSTEM ADMINISTRATION ACT

The National Wildlife Refuge System Administration Act(“NWRSA”), much like the WSRA, can also effectively block the de-velopment of water supplies. Originally enacted in 1966, NWRSA isthe “organic act” for the National Wildlife Refuge System (the “Ref-uge System”) and sets forth all the guidelines and directives for theadministration and management of all areas in the system.67 The Ref-uge System consists of “wildlife refuges, areas for the protection andconservation of fish and wildlife that are threatened with extinction,wildlife ranges, game ranges, wildlife management areas, [and] water-fowl production areas.”68 In 1997, Congress amended NWRSA tomanage the Refuge System as a national system of related lands, wa-ters, and interests for the protection and conservation of the nation’swildlife resources.69 Once any area is designated as part of the Refuge

other project works under the Federal Power Act on or directly affecting any river inthe National System. 16 U.S.C. § 1278(a).

64. Id. at 6.65. 16 U.S.C. § 1278(b)–(b)(i) (2000).66. WILD AND SCENIC RIVERS ACT: SECTION 7, supra note 63, at 6.67. U.S. FISH & WILDLIFE SERV., DIGEST OF FEDERAL RESOURCE LAWS OF IN-

TEREST TO THE U.S. FISH AND WILDLIFE SERVICE, NATIONAL WILDLIFE REFUGE

SYSTEM ADMINISTRATION ACT, available at http://www.fws.gov/laws/lawsdigest/NWRSACT.HTML.

68. 16 U.S.C. § 668dd(a)(1) (2000).69. U.S. FISH & WILDLIFE SERV., supra note 67.


System, “no person shall disturb, injure, burn, remove, destroy or pos-sess any real or personal property of the United States, including nat-ural growth, in any area of the System.”70

Not surprisingly, the location of a water supply reservoir within anarea of the Refuge System is also prohibited, which is precisely whathappened to the Fastrill Reservoir. The Fastrill Reservoir was origi-nally identified as a potential reservoir to serve the Dallas/Ft. WorthMetroplex in 1961 at a site along the Upper Neches River in Texas.71

The reservoir was subsequently included and incorporated in statewater planning beginning in 1984, and subsequently in regional waterplans in 1997, 2001, and 2005.72 In 1985, the USFWS identified thesite of the Fastrill Reservoir as a potential wildlife refuge.73 Due tofunding constraints, the USFWS conducted only a draft environmen-tal assessment (“EA”) of the site as a wildlife refuge in 1988 and theproject was set aside.74

Not until 2003 did the USFWS revive the process for examiningdesignation of the site of the Fastrill Reservoir as a wildlife refuge.75

From 2003 to 2005, the UFWS gathered public input regarding thedesignation of the refuge, prepared another EA, and determined thatan environmental impact statement (“EIS”) did not need to be pre-pared.76 During this time, the City of Dallas and the State of Texascontinued to identify the Fastrill Reservoir as a potential reservoir sitein the state and regional water plans, and, in 2005, the Texas legisla-ture designated the Fastrill Reservoir as a “critical resource.”77 Then,on August 23, 2006, a landowner, in the footprint of the reservoir siteand proposed acquisition boundary of the refuge, granted USFWS aconservation easement on a one-acre tract of land—thereby creatingthe Neches Wildlife Refuge.78 Dallas and Texas filed instant suitsclaiming that the EA was flawed, that an EIS should have been pre-pared, and that the refuge violated the 10th Amendment.79 The dis-trict court ruled in favor of the USFWS and its designation of therefuge, and Dallas and Texas appealed.80

On appeal, the court determined that the EA conducted by theUSFWS was sufficient, the USFWS’s decision-making process was notarbitrary and capricious, an EIS was not required, and did not con-

70. 16 U.S.C. § 668dd(c) (2000).71. City of Dallas v. Hall, 562 F.3d 712, 715 (5th Cir. 2009).72. Id.73. Id.74. Id. at 716.75. Id.76. Id.77. Id.78. Id.79. Id.80. Id.


sider the 10th Amendment argument.81 The court’s decision turned inpart on the fact that only preliminary proposals and studies had beenconducted by Dallas and Texas on the reservoir; therefore, theUSFWS had little ability, or requirement, to assess potential impactsregarding the Fastrill Reservoir.82 The ultimate effect of this decisionis that the Fastrill Reservoir is effectively blocked from development.Further, it appears that even when a state plans for water supplies,those plans may be for naught if state and federal permits and prop-erty have yet to be acquired for the project.

VIII. PREVENTING THE INVISIBLE LEGAL DAM: PATH FORWARD

FOR DEVELOPING WATER SUPPLIES

With the invisible “dam” these myriad of federal laws could create,the development of needed water supplies must be undertaken withcareful planning and preparation, particularly in establishing the needfor the water supply project and selecting (1) the source of supply; (2)the type of water supply project; and (3) the location of such watersupply project. It is imperative to understand the interplay betweenfederal laws and water supply project development even if there areno federal resources to be expended in constructing or operating theproject. The permitting process alone can be a minefield based uponthe laws discussed herein, along with others, including the NationalEnvironmental Policy Act, the National Wildlife Refuge System Ad-ministration Act, and section 402 of the Clean Water Act. As Texas,and the arid but growing southwest, continue to grapple with growingpopulations, water supply projects will be needed and states will haveto understand their ability to timely develop resources in cooperationwith the federal government.

81. Id. at 718–23.82. Id. at 719.

THE SHAPE OF ILLUSION: WATER LAW ANDPOLICY IN THE FOURTH DIMENSION

By George William Sherk†

I. INTRODUCTION: “YOU CAN’T HANDLE THE TRUTH!” . . . . 113II. ILLUSION: STATIONARITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

III. ILLUSION: PHYSICALLY AVAILABLE WATER IS LEGALLY

AVAILABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117A. Hydropower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117B. Water Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119C. Species Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119D. Resource Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120E. Allocation Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

IV. ILLUSION: STATE PRIMACY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122V. CONCLUSION: THE FOURTH DIMENSION . . . . . . . . . . . . . . . . 123

I. INTRODUCTION: “YOU CAN’T HANDLE THE TRUTH!”

With these words, Colonel Nathan R. Jessep, played by Jack Nichol-son in the movie A Few Good Men, expressed his outrage at beingcaught in a lie. The lie is not relevant to our purposes today. What isrelevant is the fact that the truth eventually became known.

As we look to secure water supplies for the future, it is essentialthat decisions regarding the allocation and management of water re-sources be based as much as possible on truth, not on illusions createdand perpetrated in the name of political expediency. As Col. Jessepcould not stand being caught in a lie, future water allocation and man-agement decisions will not stand if they are based on illusion.

This paper addresses three illusions. The following Section focuseson the myth of stationarity. The second Section debunks the assump-tion that physically available water supplies are also legally available.The third Section addresses the illusion of “state primacy” in the allo-cation and management of water resources. Conclusions are con-tained in the final Section, “The Fourth Dimension.”

II. ILLUSION: STATIONARITY

“Stationarity—the idea that natural systems fluctuate within an un-changing envelope of variability—is a foundational concept that per-

† D.Sc., School of Engineering and Applied Science, The George WashingtonUniversity, Washington, DC; J.D., University of Denver Sturm College of Law, Den-ver, CO; M.A., B.A., Colorado State University, Fort Collins, CO; Of Counsel, Sulli-van & Worcester, Attorneys at Law, Washington, DC; Consultant, PetroleumTechnology Research Centre, Regina, SK; [email protected] [email protected].

113


meates training and practice in water-resource engineering.”1 Thisconcept was illustrated by Sauchyn:2

FIGURE 1: HYPOTHETICALSTATIONARITY

Unfortunately, while stationarity may be a foundational concept, itis an illusion. As Milly, et al., have noted, “stationarity is dead andshould no longer serve as a central, default assumption in water-re-source risk assessment and planning.”3

1. P.C.D. Milly, et al., Stationarity Is Dead: Whither Water Management?, 319SCIENCE 573 (2008).

2. Dave Sauchyn, PowerPoint Presentation, Historic Water and Climate Fluctua-tions: The Effects of Climate on Water in the Canadian West Over the Last 1,000 years,WATER, ENERGY AND CLIMATE SEC. IN A CHANGING WORLD CONFERENCE (Oct.15–19, 2012) (on file with Author).

3. See P.C.D. Milly et al., Stationarity Is Dead: Whither Water Management?,supra note 1, at 573. A closely related issue, unfortunately beyond the scope of thisbrief overview, is the death of policy stationarity. As Wiltshire has noted, “[p]olicystationarity—the blind adherence to old courses of action—will no longer work in theera of climate change.” Kimery Wiltshire, Beyond Stationarity: Building the Centerfor Change, 8 SW. HYDROLOGY 28 (2009). See also, Robert W. Adler, ClimateChange and the Hegemony of State Water Law, 29 STAN. ENVTL. L.J. 1, 7 (2010)(“There are serious limitations in the ability of the dominant existing systems of waterlaw to respond adequately to major changes in water supplies.”). Adler has alsonoted that “[w]ithout substantial reforms, existing water institutions will have diffi-culty meeting existing demands on water resources, let alone the increased demandsbrought about by climate change.” Robert W. Adler, Water Marketing as an AdaptiveResponse to the Threat of Climate Change, 31 HAMLINE L. REV. 729, 738 (2008) (em-phasis in original). Accord, John N. Matthews et al., Converging Currents in Climate-Relevant Conversation: Water, Infrastructure, and Institutions, 9 PLOS BIOLOGY

E1001159 (2011); John N. Matthews and A. J. Wickel, Embracing Uncertainty inFreshwater Climate Adaptation: A Natural History Approach, 3 CLIMATE & DEV. 269(2009).

2013] THE SHAPE OF ILLUSION 115

The cause of death? “[S]ubstantial anthropogenic change ofEarth’s climate is altering the means and extremes of precipitation,evapotranspiration and rates of discharge of rivers.”4 In essence, theeffects of climate change have rendered the concept of stationarityillusory.5

In Figure 1, while the streamflow varies dramatically, the annualaverage flows do not vary at all. This was a teddy bear belief, com-forting but not real. Recent research by Sauchyn6 (and others) hasshown that average annual flows are decreasing throughout westernNorth America:

FIGURE 2: AVERAGE ANNUAL FLOW (M3/SEC), BOW RIVER AT

BANFF, ALBERTA, 1911-2010

4. See Milly et al., supra note 1, at 573.5. An excellent summary was provided by Abrams and Hall:Anthropogenic climate change (climate change caused by human activitiessuch as pollution) has undercut the reliability of the stationarity assumption.That is the conclusion of leading scientists, and is already evidenced by ob-served changes in means and extremes of precipitation, evaporation, andrates of discharge of rivers. The changes being observed in recent years arebeyond what can be explained using the stationarity hypothesis, but are con-sistent with the observed results and updated predictions of improved cli-mate change models. In layman’s terms, what stationarity-based modelscannot explain, climate change models do explain. Moreover, the changesthat those improved climate models predict for water availability in theUnited States are momentous because the impacts exacerbate, rather thanrelieve, existing regional shortages and flooding events.

Abrams and Hall, Framing Water Policy in a Carbon Affected and Carbon Con-strained Environment, 50 NAT. RES. J. 3, 11–12 (2010) (citations omitted).

6. See Sauchyn, supra note 3. The Bow River in Alberta is not unlike any num-ber of rivers in North America that have their headwaters in mountainous regions andthen flow through populated areas.


The myth of stationarity had the effect of concealing natural varia-bility. Such variability must be considered with regard to the physicalavailability of water to meet both present and future water supplyneeds. Not to consider such variability is to build a house (or a watersupply system) on sand.

This is illustrated in Figure 3, a depiction of long-term rainfall varia-bility in New Mexico:

FIGURE 3: NEW MEXICO RAINFALL7

Two aspects of Figure 3 are of note: The average rainfall over theperiod of record (14.5”) and the 1950’s drought of record. Note thesimilarity. In essence, what had been perceived as the “drought ofrecord” was not an anomalous event; it was the long-term average.The illusion that it had been the “drought of record” was based onrainfall occurring only at the end of the Spanish Settlement period andthe beginning of the Statehood period. Given the reconstruction ofthe historic record illustrated above, fundamental assumptions regard-ing the physical availability of water were incorrect.8 As noted above,water allocation and management decisions will not stand if based onsuch illusions.

7. Henri D. Grissino-Mayer, A 2129-Year Reconstruction of Precipitation forNorthwestern New Mexico, USA, TREE RINGS, ENV’T. & HUMANITY 191, 198 (J.S.Dean & T.W. Swetnam eds., Radiocarbon 1996).

8. J. L. Banner, et al., Climate Change Impacts on Texas Water: A White PaperAssessment of the Past, Present and Future and Recommendations for Action, 1 TEX.WATER J. 1, 4, 6 (2010) (it should be noted that in Texas “[t]he 1950s drought iscommonly used as the worst-case-scenario for drought planning.”).


III. ILLUSION: PHYSICALLY AVAILABLE WATER IS

LEGALLY AVAILABLE9

The mere fact that water is flowing in a stream or is impounded in areservoir does not mean that the water is legally available for use orappropriation. There are multiple constraints on the legal availabilityof water. Some of these constraints are obvious while others are moresubtle.

Perhaps the most obvious constraint is the need to protect existingwater rights or permits from adverse impacts associated with newuses. While there are multiple, state-specific exceptions, state waterrights or permit systems almost always protect existing uses. In theprior appropriation doctrine states, this would amount to protectingsenior appropriators from the effects of more junior water uses. Inpermit riparian states, one of the factors almost always included in thelist of factors to be considered when a new use is proposed is whetherthat use will adversely impact existing uses.10

Any number of federal and state statutes may also restrict the legalavailability of water. For example:

A. Hydropower

In 1920, Congress enacted the Federal Water Power Act11 whichgave the Federal Power Commission (“FPC”)12 virtually exclusive au-thority over the licensure of hydroelectric projects.13 The provisionsof the 1920 Act were incorporated into the Federal Power Act of 1935(the “FPA”).14

With regard to the legal availability of water, of particular relevanceis the language of 16 U.S.C. § 802(a)(2) which requires license appli-cants to present to the FPC “[s]atisfactory evidence [of compliance]with the requirements of the laws of the State or States within whichthe proposed project is to be located with respect to bed and banks

9. Portions of this section are adapted from George William Sherk, TheManagement of Interstate Water Conflicts in the Twenty-First Century: Is it Time toCall Uncle? 12 N.Y.U. ENVTL. L.J. 764 (2005).

10. See generally George William Sherk, East Meets West: The Tale of Two WaterDoctrines, 5 WATER RES. IMPACT 5 (2003); George William Sherk, Meetings of Wa-ters: The Conceptual Confluence of Water Law in the Eastern and Western States, 5NATURAL RES. & ENV’T 3 (1991); and George William Sherk, Eastern Water Law:Trends in State Legislation, 9 VA. ENVTL L.J. 287 (1990).

11. Federal Water Power Act of 1920, ch. 285, 41 Stat. 1063 (codified as amendedat 16 U.S.C. §§ 791a–828c (2006 & Supp. V 2011)).

12. Pursuant to the Department of Energy Organization Act of 1977, Pub. L. No.95-91, 91 Stat. 565 (codified as amended at 42 U.S.C. §§ 7101–7385o (2000)), the FPCwas terminated, and its hydroelectric licensing power was transferred to the newly-created Federal Energy Regulatory Commission (FERC). 42 U.S.C. §§ 7171(a),7172(a)(1)(A) (2000).

13. 16 U.S.C. § 817 (2000).14. Federal Power Act of 1935, ch. 687, 49 Stat. 838 (codified as amended at 16

U.S.C. §§ 791a–828c (2006 & Supp. V 2011)).


and to the appropriation, diversion and use of water for power pur-poses.” In terms of the “laws of the State or States,” Congress dis-claimed any intent “to affect or in any way interfere with the laws ofthe respective States relating to the control, appropriation, use, or dis-tribution of water used in irrigation or for municipal or other uses, orany vested right acquired therein.”15

For twenty-five years following enactment of the Federal WaterPower Act, the FPC interpreted these provisions as requiring it to de-fer to state water laws.16 This changed in 1946 when the SupremeCourt addressed these provisions in a case involving licensure of aproject for which the license applicant had failed to obtain a state per-mit. In First Iowa Hydro-Electric Cooperative v. FPC, the Court con-cluded that “[t]he detailed provisions of the [Federal Power] Actproviding for the federal plan of regulation leave no room or need forconflicting state controls.”17 The Court rejected Iowa’s contentionthat 16 U.S.C. § 821 required a contrary result, concluding that thisprovision preserved only “proprietary rights” or “rights of the samenature as those relating to the use of water in irrigation or for munici-pal purposes.”18

In 1990, the First Iowa decision was reaffirmed in California v.FERC (“Rock Creek”).19 In a case involving the establishment ofminimum stream flows, the Supreme Court, in an opinion written byJustice O’Connor, refused to overturn First Iowa, concluding:

As Congress directed in FPA § 10(a), FERC set the conditions ofthe license, including the minimum stream flow, after consideringwhich requirements would best protect wildlife and ensure that theproject would be economically feasible, and thus further power de-velopment. . . . Allowing California to impose significantly higherminimum stream flow requirements would disturb and conflict withthe balance embodied in that considered federal agency determina-tion. FERC has indicated that the California requirements interferewith its comprehensive planning authority, and we agree that al-lowing California to impose the challenged requirements would becontrary to congressional intent regarding the Commission’s licens-

15. 16 U.S.C. § 821 (2006).16. Roderick E. Walston, State Regulation of Federally Licensed Hydropower

Projects: The Conflict between California and First Iowa, 43 OKLA. L. REV. 87, 91(1990) (The FPC refused “to issue licenses for hydropower projects if the applicantsfailed to acquire water rights under state law.”), cited in George William Sherk, Ap-proaching a Gordian Knot: The Ongoing State/Federal Conflict Over Hydropwer, 31LAND & WATER L. REV. 349, 352 (1996).

17. First Iowa Hydro-Elec. Coop. v. Fed. Power Comm’n, 328 U.S. 152, 181 (1946)(footnote omitted).

18. Id. at 176.19. California v. Fed. Energy Regulatory Comm’n (“Rock Creek”), 495 U.S. 490

(1990).


ing authority and would “constitute a veto of the project that wasapproved and licensed by FERC.”20

The Rock Creek decision made it clear that the authority of the Fed-eral Energy Regulatory Commission (“FERC”) under the FPA willpreempt conflicting state laws and regulations and could preclude theissuance of water use permits under state law. In essence, waterneeded for hydroelectric projects licensed by FERC may be legallyunavailable for other uses.21

B. Water Quality

With enactment of the Federal Water Pollution Control ActAmendments in 1972 (now known as the Clean Water Act), Congressintended to restore and maintain the chemical, physical, and biologicalintegrity of the nation’s water resources.22 To achieve these objec-tives, the Clean Water Act imposes a number of requirements thatmay have the effect of limiting the legal availability of water.

One of these requirements is the National Pollutant DischargeElimination System (“NPDES”) permit.23 These permits, the issuanceof which is a condition precedent to the discharge of pollutants, con-tain specific provisions relating to the type and concentration ofmaterials to be discharged. The provisions contained in the NPDESpermit are determined in part by the assimilative capacity of the wa-tercourse into which the pollutants are to be discharged. If the assimi-lative capacity of the watercourse changes (as would occur through areduction in streamflows), then the provisions of specific NPDES per-mits may have to be changed in order to reduce the type or concentra-tion of materials to be discharged.24 In essence, the streamflowsanticipated when NPDES permits were issued, specifically the assimi-lative capacity provided by a given streamflow, may have the effect oflimiting the availability of water for future uses that would reducethese streamflows.

C. Species Protection

There are a number of federal and state species protection statutes.Perhaps the best known is the Endangered Species Act (“ESA”)which essentially prohibits any federal agency from taking any action(including destruction of critical habitat) that would jeopardize thecontinued existence of a threatened or endangered plant or animal

20. Id. at 506–07 (citations omitted) (quoting California ex rel. State Water Res.Control Bd. v. Fed. Energy Regulatory Comm’n, 877 F.2d 743, 749 (9th Cir. 1989)).

21. The potential for conflict regarding such conflicting uses is addressed ingreater detail in Sherk, Approaching a Gordian Knot: The Ongoing State/FederalConflict Over Hydropwer, supra note 16.

22. 33 U.S.C. § 1251(a) (2000).23. 33 U.S.C. §1342 (2000).24. Id.


species.25 The ESA also prohibits all parties (both public and private)from undertaking actions that would result in the “taking” of athreatened or endangered species.26

In essence, the ESA was intended to protect threatened and endan-gered species virtually irrespective of the cost of the protection.27 Ofparticular importance with regard to the legal availability of water, theESA may require restrictions on the use of water to protect athreatened or endangered species.28

D. Resource Management

With the enactment of the Coastal Zone Management Act(“CZMA”), Congress established a national goal “to preserve, pro-tect, develop, and where possible, to restore or enhance, the resourcesof the Nation’s coastal zone for this and succeeding generations.”29

One way to achieve this goal, Congress noted, was “to encourage thestates to exercise their full authority over the lands and waters in thecoastal zone by assisting the states, in cooperation with federal andlocal governments and other vitally affected interests, in developingland and water use programs for the coastal zone, including unifiedpolicies, criteria, standards, methods, and processes for dealing withland and water use decisions of more than local significance.”30

25. See generally Endangered Species Act, 16 U.S.C. §§ 1531–1544 (2006 & Supp.V 2011).

26. Id. at § 1538(a)(1). “The term ‘take’ means to harass, harm, pursue, hunt,shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such con-duct.” 16 U.S.C. §1532(19) (2000). “[E]ndangered species” are defined as “any spe-cies which is in danger of extinction throughout all or a significant portion of its rangeother than a species of the Class Insecta determined by the Secretary to constitute apest whose protection under the provisions of this chapter would present an over-whelming and overriding risk to man. 16 U.S.C. §1532(6) (2000). “[T]hreatened spe-cies” are defined as “any species which is likely to become an endangered specieswithin the foreseeable future throughout all or a significant portion of its range.” 16U.S.C. §1532(20) (2000).

27. See Tenn. Valley Auth. v. Hill, 437 U.S. 153, 184 (1978) (protection of the en-dangered snail darter under the ESA could preclude completion of a water project).

28. One of the clearest examples of the relationship between the ESA and statelaws regarding the allocation of water is Sierra Club v. Lujan, No. MO-91-CA-069,1993 WL 151353, at *1 (W.D. Tex. Feb. 1, 1993), sub nom. Sierra Club v. Babbitt, 995F.2d 571 (5th Cir. 1993). At issue in the case was the relationship between the pump-ing of ground water from the Edwards Aquifer (pursuant to Texas law) and the needto provide flows from Comal and San Marcos Springs in order not to adversely affectspecies protected by the ESA. The decision of the district court judge was succinct:“Priority is to be given to species whose survival is in conflict with economic activities,such as withdrawal of water from the Edwards.” Slip opinion at 32. See also River-side Irrigation Dist. v. Stipo, 658 F.2d 762 (10th Cir. 1981), sub nom. Riverside Irriga-tion Dist. v. Andrews, 568 F. Supp. 583 (D. Colo. 1983), aff’d 758 F.2d 508 (10th Cir.1985) (exercise of water rights on the South Platte River in Colorado could be re-stricted in order to ensure supply of water for endangered species located inNebraska).

29. 16 U.S.C. § 1452(1) (2000).30. 16 U.S.C. § 1451(i) (2000).


As a mechanism to “encourage the states to exercise their full au-thority over the lands and waters in the coastal zone,” the CZMAprovided that “[a]ny Federal agency which shall undertake any devel-opment project in the coastal zone of a state shall insure that the pro-ject is, to the maximum extent practicable, consistent with theenforceable policies of approved state management programs.”31

Coastal states are authorized to prepare such coastal zone manage-ment programs which are then submitted to the National Oceanic andAtmospheric Administration, Department of Commerce, forapproval.

Once the state coastal zone management program has been ap-proved, activities of federal agencies (including activities undertakenby federal agencies, activities requiring federal permits, and activitiesreceiving federal funding) must be consistent with the approved pro-gram to the maximum extent practicable.32 These federal activitiesneed not occur in the coastal zone. Only the effects of the activitiesneed be felt there.33

As a result, water that is physically available in an upstream statemay not be legally available if (a) development of the water resourcewould involve any federal agency34 and (b) the impacts of the pro-posed development would be inconsistent with a lower basin state’sapproved coastal zone management plan.

E. Allocation Mechanisms

Among the more subtle restrictions on the legal availability ofwater are the different mechanisms by which interstate water conflicts

31. 16 U.S.C. § 1456(c)(2) (2000).32. 15 U.S.C. § 1455 (2000).33. See 16 U.S.C. § 1456(c)(1)(A) (“Each Federal agency activity within or outside

the coastal zone that affects any land or water use or natural resource of the coastalzone shall be carried out in a manner which is consistent to the maximum extentpracticable with the enforceable policies of approved State management programs.”)(emphasis added).

34. For example, it would be virtually impossible to develop a water project with-out discharging dredge or fill materials into watercourses and wetlands. Such dis-charges are prohibited absent the issuance of a permit by the U.S. Army Corps ofEngineers. 33 U.S.C. §1344. See United States v. Riverside Bayview Homes, Inc., 474U.S. 121, 123 (1985) (“Under §§ 301 and 502 of the [Clean Water] Act, 33 U.S.C.§§ 1311 and 1362, any discharge of dredged or fill materials into ‘navigable waters’—defined as the ‘waters of the United States’—is forbidden unless authorized by a per-mit issued by the Corps of Engineers pursuant to § 404, 33 U.S.C. § 1344). Applica-tions for “§404 permits” are subject to Environmental Protection Agency review andmay also be reviewed by the Fish and Wildlife Service and the National Marine Fish-eries Service. Factors to be considered when permit applications are reviewed includethe anticipated impacts on water quality, fish, wildlife, recreation, land use, and aes-thetics. 40 C.F.R. § 230.10(c). The need to protect from flood damage that couldresult from the dredge or fill activity must also be considered. 40 C.F.R. § 230.41.Permit applications are to be denied “if there is a practicable alternative to the pro-posed discharge that would have less impact on the aquatic ecosystem.” 40 C.F.R.§ 230.10(a).


are managed in the United States. In general, there are three alterna-tive (but not mutually exclusive) conflict management mechanisms:Interstate water compacts (e.g., the Colorado River Compact35), fed-eral legislation (e.g., the Boulder Canyon Project Act36), and SupremeCourt equitable apportionment decisions (e.g., Kansas v. Colorado37).Compliance with the provisions of any of these conflict managementmechanisms may preclude an upstream state from using water towhich a lower basin state has an entitlement.

IV. ILLUSION: STATE PRIMACY

In 1978, the Supreme Court in California v. United States addressedthe relationship between the federal government and the states re-garding the allocation and management of water: “The history of therelationship between the Federal Government and the States in thereclamation of the arid lands of the Western States is both long andinvolved, but through it runs the consistent thread of purposeful andcontinued deference to state water law by Congress.”38 Three yearslater, former Solicitor of the Interior William Coldiron noted that thefederal government had deferred to state water in thirty-seven sepa-rate statutes39 beginning with the Mining Law of 186640 and the De-sert Land Act of 1877.41

Such comments would appear to suggest that state primacy in theallocation and management of water is not an illusion. While stateprimacy may have been less of an illusion in an era of abundant watersupplies, when conflicts over the use of water had yet to become thenorm, the actual relationship between the federal and state govern-ments was described by Justice Douglas in Oklahoma ex rel Phillips v.Guy F. Atkinson Co.:42

“Whenever the constitutional powers of the federal government andthose of the state come into conflict, the latter must yield.” Floridav. Mellon, 273 U.S. 12, 17 . . . . [T]he suggestion that this project

35. THE COLORADO RIVER COMPACT, 70 CONG. REC. 324 (1928), is discussed atGEORGE WILLIAM SHERK, DIVIDING THE WATERS: THE RESOLUTION OF INTER-

STATE WATER CONFLICTS IN THE UNITED STATES at 25–26 (2000).36. 43 U.S.C. §§ 617–617(v) (2000); see also Arizona v. California, 373 U.S. 546,

564–65 (1963) (concluding that Congress, when it enacted the BCPA in 1928, “in-tended to and did create its own comprehensive scheme for the apportionment amongCalifornia, Arizona, and Nevada of the Lower Basin’s share of the mainstream watersof the Colorado River, leaving each State its tributaries.”).

37. See generally GEORGE WILLIAM SHERK, DIVIDING THE WATERS: THE RESO-

LUTION OF INTERSTATE WATER CONFLICTS IN THE UNITED STATES (2000).38. California v. United States, 438 U.S. 645, 653 (1978).39. W. Coldiron, Nonreserved Water Rights—United States Compliance with

State Law, 88 Interior Dec. 1055, 1060 (11 Sept. 1981), http://www.doi.gov/solicitor/decisions/doi_decisions_088.pdf.

40. Submerged Lands, ch. 29, 14 Stat. 251 (1866).41. Desert Land Act, ch. 107, 19 Stat. 377 (1877).42. 313 U.S. 508, 534–535 (1941).


interferes with the state’s own program for water development andconservation is likewise of no avail. That program must bow beforethe “superior power” of Congress.

The “superior power” of Congress is based on several Constitu-tional provisions, including the Property Clause,43 the CommerceClause,44 and the Treaty Clause.45 To the extent that the allocation ormanagement of water resources is affected by federal laws or regula-tions based on any of these Constitutional provisions, conflicting statelaws may be preempted. The language of the Supremacy Clause46 isclear:

This Constitution, and the Laws of the United States which shall bemade in pursuance thereof; and all treaties made, or which shall bemade, under the authority of the United States, shall be the su-preme law of the land; and the judges in every state shall be boundthereby, anything in the constitution or laws of any state to the con-trary notwithstanding.

In essence, a different rule has emerged to replace the illusion ofstate primacy: States have primacy over that quantity of water that isnot required for federal purposes.

V. CONCLUSION: THE FOURTH DIMENSION

In The Tempest, Shakespeare noted that what is past is prologue.With regard to the allocation and management of water resources,precisely the opposite is likely to become the rule. As Barnett, et al.,have noted, “the greatest risk about the future of climate-sensitive sys-tems is to assume that the climate of the last century will be the cli-mate we will face in the next.”47

43. U.S. Const. art. IV, § 3, cl. 2, (“The Congress shall have Power to dispose ofand make all needful Rules and Regulations respecting the Territory or other Prop-erty belonging to the United States”).

44. U.S. Const. art. I, § 8, cl. 3; (“The Congress shall have power . . . [t]o regulateCommerce with foreign Nations, and among the several States, and with the IndianTribes”).

45. U.S. Const. art. II, § 2, cl. 2; (“The President . . . shall have Power, by and withthe Advice and Consent of the Senate, to make Treaties, provided two thirds of theSenators present concur”).

46. U.S. Const. art. VI, ¶ 2.47. Tim Barnett, et al., The Effects of Climate Change on Water Resources in the

West: Introduction and Overview, 62 CLIMATIC CHANGE 1, 8 (2004), cited in RobertW. Adler, Climate Change and the Hegemony of State Water Law, 29 STAN. ENVTL.L.J. 1, 9 (2010). Accord, Roger Piekle, Collateral Damage from the Death of Station-arity, GEWEX WCRP 5 (May 2009) (“. . . we have to improve our ability to antici-pate the future, because relying on the statistics of the past will no longer be a usefulguide to what is to come”).


Particularly in Texas, the physical availability of water is going todecrease.48 As depicted in Figure 4, the only real question is howmuch?

FIGURE 4: TREE RING AND CLIMATE MODEL49 PROJECTED PALMER

DROUGHT SEVERITY INDEX50

1700 1750 1800 1850 1900 1950 2000 2050 2100

!5

0

5

year

PDSI

As the amount of water that is physically available decreases, theamount that is legally available will also decrease, perhaps at a greaterrate. As physically available supplies decline, the percentage of re-maining supplies that is already committed to existing uses and statu-tory or regulatory requirements may very well increase at adisproportionate rate.

A reduction in both the physical and legal availability of water isgoing to increase dramatically the risk associated with the develop-ment of new water supplies. For example, repayment of revenuebonds issued for the construction of water supply systems, and guaran-teed through the delivery of water to municipal and industrial custom-ers, could end up facing default if the water to be delivered is neitherphysically nor legally available. Similar limitations could face water-dependent industries that plan to develop their own water supplies.

48. “The Southwest appears to be entering a new drought era . . . [A] near perpet-ual state of drought will materialize in the coming decades as a consequence of in-creasing temperature.” Martin Hoerling & John Eischeid, Past Peak Water in theSouthwest, 6 SW. HYDROLOGY 18 (2007), cited in Adler, supra note 3, at 14, availableat http://www.swhydro.arizona.edu/archive/V6_N1/feature2.pdf.

49. Jay L. Banner, et al., Climate Change Impacts on Texas Water: A White PaperAssessment of the Past, Present and Future and Recommendations for Action, 1 TEX.WATER J. 1, 6 (2010), available at http://journals.tdl.org/twj/index.php/twj/issue/view/121. The historic record is based on tree ring studies. The future projections arebased on Intergovernmental Panel on Climate Change (IPCC) emission scenario A2using the Canadian Global Climate Model. This model assumes high populationgrowth and slow technological change. It is, in essence, the “business as usual”model.

50. Id. The Palmer Drought Severity Index (PDSI) considers both precipitationand temperature.


FIGURE 5: OBSERVED AND MODELED SURFACE TEMPERATURE

ANOMALIES FOR TEXAS51

1900

7

6

5

4

3

1

0

–1

–2–4

–2

0

2

4

6

8

10

12

–3

2

1920 1940 1960 1960 21002080206020402020Year

A2

A1B

Observation

°F °C

B1

Surf

ace

Tem

pera

ture

Ano

mal

y

2000

With regard to the risks associated with the development of newwater supply systems in Texas, the modeled surface temperatureanomalies illustrated in Figure 5 provide a disturbing analogy. Eachof the emission scenarios (models A2, A1B and B1) show an increasein surface temperature anomalies.52 It is not a question of whethersurface temperature anomalies will increase. The only relevant ques-tions are now how soon and how much?

This is precisely what can be said of the risk associated with thedevelopment of new water supply systems. How much is the risk go-ing to increase? How soon? Until such questions have been an-swered, the success of any attempt to secure water supplies for thefuture may also be illusory.

51. Id. at 9.52. See Banner, et al., Climate Change Impacts on Texas Water: A White Paper

Assessment of the Past, Present and Future and Recommendations for Action, supranote 49, at 9. Model A2 is the “business as usual” scenario. Model A1B assumedmore balanced energy uses. Model B1 assumes a rapid change to clean, efficient en-ergy technologies.

STUDENT COMMENTS

“DROPPING” THE MIGRATORY BIRDTREATY ACT: THE NEGATIVE EFFECTSOF THE MBTA ON PROPERTY RIGHTS

AND HUMAN HEALTH

By Sabita Maharaj†

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127A. Migration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129B. Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

II. BACKGROUND OF THE MIGRATORY BIRD TREATY

ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130A. Origin and Purpose of the Act . . . . . . . . . . . . . . . . . . . . . . 130B. Violations Under the Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132C. Continued Necessity of the Act? . . . . . . . . . . . . . . . . . . . . . 135

III. NUISANCE TO HEALTH, ECONOMY, AND ENJOYMENT OF

PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137IV. CURRENT LEGAL OPTIONS AVAILABLE TO PERSONS

NEGATIVELY AFFECTED BY BIRDS PROTECTED BY THE

MBTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141A. Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141B. Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

V. POSSIBLE SOLUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144A. Repeal the Migratory Bird Treaty Act . . . . . . . . . . . . . . . 144B. Narrow the Migratory Bird Treaty Act . . . . . . . . . . . . . . 145C. Implement a Candidate Conservation Agreement to

Protect Migratory Birds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146VI. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

I. INTRODUCTION

It is 8:00 p.m. on an autumn night and a cold front is movingthrough the region.1 Brisk northwesterly winds signal a change in theseason.2 High above our neighborhoods, the wings of hundreds ofthousands of songbirds strain under the force of flight.3 Airborne andon the move, these nomads soon must land, hopefully where there isfood and shelter.4 The annual migrations of birds are a high stakes,

† J.D. Candidate, Texas A&M University School of Law, 2014; B.A., Universityof Tennessee, 2005. The author would like to thank Professor Dennis Kelly for hisguidance in the writing process, and Julie Celum Garrigue, Attorney at Law, for herthoughtful comments.

1. What is Migration?, N. J. AUDUBON, http://www.njaudubon.org/sectionoases/whatismigration.aspx (last visited Feb. 16, 2013).

2. Id.3. Id.4. Id.

127


life and death drama that has been played out for thousands of yearsand for countless millions of birds.5 The birds know what to do . . . .

Tanglewood Trail is a quiet, historical neighborhood that started asa ranch owned by Cass Overton Edwards in 1868.6 The eastern partof the Tanglewood area is bordered by a branch of the Trinity River,where children used to play.7 There is also a winding walking trailthrough the neighborhood. Prestigious names are given to the roadsin this neighborhood, such as Bellaire Drive and Marquette Court.8New home development in the neighborhood must be comprised ofbrick or stone with an attached two-car garage, and most homes areone story to keep the ranch-style feel of the neighborhood.9 The orig-inal Edwards family still lives in Tanglewood Trail.10

The yards are large and tree covered, and the proximity to the foodsource in the Trinity River provides an ideal setting for migratorybirds. This neighborhood is the type of environment egrets are insearch for to nest in from March through October. However, whatthe birds are searching for is on property that residents own. Re-sidents’ yards become overrun with egrets, and some residents pur-posefully leave town to avoid living through the nesting season.11

Egrets nesting for months in the trees above homes results in deadfish, chicks, and feces dropped on streets and in yards. The residentsof Tanglewood Trail cannot enjoy the walking trail during thesemonths and children cannot safely play outside.

Federal law essentially handcuffs residents from protecting theirhealth and their children’s health and severely restricts what they cando to protect their property from MBTA-protected birds. The useful-ness of these laws is no longer justifiable. While it is necessary forhuman enjoyment and the balance of the ecosystem to protect ani-mals, protection should not come at the expense of human health andproperty use and enjoyment.

5. Id.6. Wini Klein, TANGLEWOOD NEIGHBORHOOD ASS’N, http://www.tanglewood-

neighbors.org/TNA/Home.html (last visited Feb. 16, 2013).7. Id.8. Id.9. Id.

10. Id.11. Susy Solis, Egrets Return to North Texas, Landing in Fort Worth, CBS DAL-

LAS/FORT WORTH (June 9, 2012, 11:00 AM), http://dfw.cbslocal.com/2012/06/09/egrets-return-to-north-texas-landing-in-fort-worth/; Elizabeth Campbell, Neighbor-hood Overrun by Protected Birds that Create Mess and Stench, STAR-TELEGRAM.COM

(Aug. 6, 2012), http://www.star-telegram.com/2012/08/05/4156530/neighborhood-over-run-by-protected.html.

2013] “DROPPING” MIGRATORY BIRD TREATY ACT 129

A. Migration

Migration has been occurring annually since the beginning of theIce Age of the Quaternary period, roughly two million years ago.12 Ithas been an endless trek for these creatures, flying across oceans tofind the right place at the right time of year to mate, find food, andjust survive. Humans, as we are recognized today, began to evolveabout 200,000 years ago.13 By that calculation, a first-in-time theoryof property acquisition would give the birds priority over land. But,traditionally, humans are classified higher on a hierarchy, while ani-mals are reduced to property, and the value of animals is based ontheir usefulness to humans.14

The Snowy Egret and Great Egret (“egrets”) are classified as Neo-tropical Migratory Birds. These birds spend northern-hemispherewinters in Central America, the Caribbean, and the northern parts ofSouth America.15 As the cold season begins in these parts of theglobe, the food supply begins to shorten and the egrets must travel inorder to stay alive and keep their species population up through re-production. As the change of season forces the egrets to fly north insearch of food and nesting areas, a conflict arises between their nest-ing habits and human life. Global climate change can affect the pathof migration because of food supply fluctuations and temperaturechanges.16 The basis of the birds’ migration path can be traced to cli-mate change in the Arctic.17 The recent warming trends18 and meltingof ice and permafrost affects the composition of water in lakes andrivers, which in turn affects what fish species can survive in certainareas and can alter the food supply of the migratory birds that feed on

12. Ice Ages, NATURAL HISTORY NOTEBOOKS, http://nature.ca/notebooks/english/iceage.htm (last updated Oct. 12, 2012).

13. Dov Fox, The Second Generation of Racial Profiling, 38 AM. J. CRIM. L. 49, 62(2010); Dennis O’Neil, Early Modern Homo sapiens, EVOLUTION OF MODERN

HUMANS, http://anthro.palomar.edu/homo2/mod_homo_4.htm (last visited Feb. 16,2013); What Does it Mean to be Human?, SMITHSONIAN NAT’L MUSEUM OF NATURAL

HISTORY, http://humanorigins.si.edu/evidence/human-fossils/species/homo-sapiens(last visited Feb. 16, 2013).

14. Elizabeth L. DeCoux, Pretenders to the Throne: A First Amendment Analysisof the Property Status of Animals, 18 FORDHAM ENVTL. L. REV. 185, 188–89 (2007).

15. Floyd E. Hayes, Definitions for Migrant Birds: What is a Neotropical Migrant?,122 THE AUK 521 (1995); Neotropical Migratory Bird Basics, SMITHSONIAN NA-

TIONAL ZOOLOGICAL PARK, http://nationalzoo.si.edu/scbi/migratorybirds/fact_sheets/default.cfm?fxsht=9 (last visited Feb. 16, 2013).

16. Joseph Dunsay, How Climate Change Affects Migrating Birds, http://www.environmentalgraffiti.com/news-migrating-birds-and-climate-change (last visited Feb.16, 2013).

17. Randall S. Abate, Climate Change, The United States, And The Impacts of Arc-tic Melting: A Case Study In The Need For Enforceable International EnvironmentalHuman Rights, 43A STAN. J. INT’L L. 3, 33 (2007).

18. Id. at 30 (stating that the temperature has warmed in the Arctic region abouttwice as much as the rest of the world. Near future (next fifty years) warming esti-mates are between 3–5 degrees and even up to 7 degrees.).


those fish.19 So, naturally, migratory birds will have to adjust theirflight path; and places that have not previously experienced stopoversby migratory birds are experiencing it now, and will into the future.

The new path that migratory birds choose and their choice of stop-over locations are unpredictable and unforeseeable, which can lead toa greater chance of conflict between humans and bird species. This iscurrently an issue in North Texas.

B. Conflict

For certain neighborhoods in the Fort Worth and Carrollton sub-urbs in North Texas, this was the first year the egrets stopped over inthis area. Egrets land in North Texas beginning in March and stay theentire summer to nest. Egrets are protected by the Migratory BirdTreaty Act (“MBTA” or “Act”).20 From March through October theegrets nest in the trees of residents’ yards. One resident of Tan-glewood Trail neighborhood in Fort Worth claimed to have eighty-fivenests in his yard.21 The strict protection that the MBTA provides formigratory birds essentially handcuffs humans in what actions we cantake to protect our livelihood, our health, and ourselves. Because ofthe restrictions the MBTA purposefully and inadvertently places onhuman life in order to protect migratory birds, this Article proposesthree solutions: repeal, alter, or replace the Act.

II. BACKGROUND OF THE MIGRATORY BIRD TREATY ACT

A. Origin and Purpose of the Act

The Migratory Bird Treaty Act started out in 1916 as a treaty be-tween the United States and Great Britain to protect many species ofbirds that traveled annually between the United States and Canadafrom being killed by humans.22 The basis of protecting the birds fromdeath was that they destroyed insects that were harmful to crops andwere a good source of food to humans.23 The treaty passed legislationin 1918 to become the Migratory Bird Treaty Act.24 It then was heldconstitutional in 1920 by the Supreme Court in Missouri v. Holland.25

The Act states in pertinent part that it:

19. Id. at 33.20. Code Compliance, PLANNING & DEV. DEP’T CITY OF FORT WORTH TEX.,

fortworthtexas.gov/codecompliance/info (last visited Feb. 16, 2013).21. Solis, supra note 11 (quoting Richard Steed counting up to eighty-five egret

nests in his yard).22. Missouri v. Holland, 252 U.S. 416, 431 (1920); Hye-Jong Linda Lee, Note, The

Pragmatic Bird Treaty Act: Protecting “Property,” 31 B.C. ENVTL. AFF. L. REV. 649(2004).

23. Holland, 252 U.S. at 431; Scott Finet, Habitat Protection and the MigratoryBird Treaty Act, 10 TUL. ENVTL. L.J. 1, 9–10 (1996).

24. Finet, supra note 23, at 7.25. Holland, 252 U.S. at 435.


shall be unlawful at any time, by any means or in any manner, topursue, hunt, take, capture, kill, attempt to take, capture, or kill,possess, offer for sale, sell, offer to barter, barter, offer to purchase,purchase, deliver for shipment, ship, export, import, cause to beshipped, exported, or imported, deliver for transportation, transportor cause to be transported, carry or cause to be carried, or receivefor shipment, transportation, carriage, or export, any migratorybird, any part, nest or egg of any such bird . . . .26

The Act has only been minimally amended since its inception in1918,27 yet times have changed drastically. The goal of the Act was tocurb hunting of migratory birds because it led to a rapid populationdecline.28 As stated above, migratory birds were beneficial forhumans because of their ability to kill detrimental insects and becausethe birds themselves were a source of food. An additional cause oftheir population decline was due to the feather trade that flourishedbetween 1870 and 1920.29 Women’s fashions during that time incorpo-rated feathers in hats and feathers were worn as status symbols.Harper’s Bazaar magazine described the 1897 winter season hat trendas “piled high with feathers, birds, fruit, flowers, furs, even mice andsmall reptiles. Birds were by far the most popular accessory: [w]omensported egret plumes, owl heads, sparrow wings, and whole humming-birds; a single hat could feature all that, plus four or five warblers.”30

At the height of the feather trade, hunting birds to sell feathers be-came a lucrative business.31 In 1903, the price offered to hunters foregret plumes was $32 per ounce.32 About four herons or egrets wereneeded to measure about an ounce of plumes.33 The feather trade leftmany orphaned chicks to fend for their own livelihood, which addedto the population decline of migratory birds.34 The Act was meant toput an end to the commercial bird trade because it caused a sharpdecrease in bird populations.35

The protection that the Act gives to migratory birds is grounded inthe notion that birds are a resource.36 At the turn of the twentiethcentury, songbirds were used as food for humans and incorporated in

26. 16 U.S.C. § 703 (2006).27. Act of June 1, 1974, Pub. L. No. 93-300, 88 Stat. 190.28. Feather Trade: Hunting and Collecting, FEATHER TRADE, http://americanhis

tory.si.edu/feather/fthc.htm (last visited Feb. 16, 2013).29. Id.30. Jennifer Price, Hats Off to Audubon, HERITAGE (Dec. 2004), http://archive

.audubonmagazine.org/features0412/hats.html.31. Merle Patchett, Murderous Millinery, FASHIONING FEATHERS, http://fashion

ingfeathers.com/murderous-millinery/ (last visited Feb. 16, 2013).32. Id.33. Id.34. Id.35. A Guide to the Laws and Treaties of the United States for Protecting Migratory

Birds, LAWS & TREATIES PROTECTING MIGRATORY BIRDS, http://www.fws.gov/migratorybirds/RegulationsPolicies/treatlaw.html#mbta (last updated Apr. 11, 2011).

36. Lee, supra note 22, at 651.


soups and pies.37 Even hunters that killed solely for sport felt theneed to protect migratory birds, probably from the standpoint ofkeeping the sport alive.38 A need for legislative protection arose fromthe disparity between an increase in unregulated killings and theneeded benefits of live migratory birds to humans. A similarly situ-ated creature is the currently controversial Dunes Sagebrush Lizard(“DSL”); at issue is what level of protection it needs without resultingin negative effects on human life and economy.39 Right now, the lackof scientific information to determine whether the DSL needs to pros-per implies that one factor in deciding to legally protect the DSL iswhether the research could end in a beneficial result for humans.40

Proponents of classifying the DSL as an endangered species to protectit are motivated by the prospect of studying it before it disappears.41

Since these societal goals and mores occurred at the time of theMBTA’s inception as well, it is with this mindset to determinewhether the Act is still relevant and useful to humans in the twenty-first century.

B. Violations Under the Act

It is not settled whether the Migratory Bird Treaty Act is mainlyaimed at deterring pleasure killings and killings for commercial gainby hunters or whether the Act is meant to punish anyone whose actsmay result in the killing of a migratory bird.

The word “take” is used in multiple Acts that protect animals suchas: the Endangered Species Act (“ESA”), the Bald and Gold EaglesProtection Act (“BGEPA”), and the Migratory Bird Treaty Act(“MBTA”).42 Each Act’s definition of “take” varies.43 The discrep-ancies between what constitutes a “taking” is a source of confusion for

37. Id.38. Id. at 652.39. Charles Sartain, The Lizard that (Almost) Shut Down the Permian Basin, EN-

ERGY AND THE LAW, (June 20, 2012), http://www.energyandthelaw.com/2012/06/20/the-lizard-that-almost-shut-down-the-permian-basin/ (stating that if the Dune Sage-brush Lizard is listed as an endangered species, its habitat, the shinnery oak, will needprotection, meaning the exploration and oil production from the Permian Basin inWest Texas and New Mexico will halt which negatively affects the economies of thoseareas that depend on the oil business.).

40. Jemma Denney, The Texas Conservation Plan, The Good, The Bad andThe Lizard, ECOSYSTEM MARKETPLACE, (June 18, 2012), http://www.ecosystemmarketplace.com/pages/dynamic/article.page.php?page_id=9100&section=news_articles&eod.

41. Id.42. 16 U.S.C. § 1538 (2006); 16 U.S.C. § 668 (2006); 16 U.S.C. § 703(a) (2006).43. 16 U.S.C. § 1532(19) (The term “take” means to harass, harm, pursue, hunt,

shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such con-duct); 16 U.S.C. § 718(j)(5) (The term “take” means to pursue, hunt, shoot, capture,collect, or kill; or to attempt to pursue, hunt, shoot, capture, collect, or kill); 16 U.S.C.§ 668(c) (“take” includes also pursue, shoot, shoot at, poison, wound, kill, capture,trap, collect, molest or disturb).


courts and for everyday people using their land in ways they see fit,such as using pesticide on a field, clearing trees of unwanted nests, orproviding their children a healthy place to play outside.

The District Court for the Eastern District of California said thatthe purpose of the MBTA is to protect migratory birds from indis-criminate slaughter, like what occurred in the early 1900’s.44 Thecourt also said that Congress’s main focus was on hunters when it im-plemented the Act and that criminal penalties should be assessed foreach bird killed.45 But this same court goes on to say that just becauseproscribing hunting was Congress’s main focus, it does not mean thathunting was the only type of bird killings it was meant to ban.46 Thewords of the Act itself do not include “poison,” yet this court said thatthe use of pesticide in a field that resulted in the poisoning and killingof migratory birds is within the proscriptions of the MBTA.47 Thecourt relied on the fact the BGEPA, enacted in 1940, was modeledafter the MBTA and specifically includes the word “poison;” there-fore, poisoning is inferred by legislative intent and included into thelist of activities that violate the MBTA.48

The MBTA was amended in 1986 to add a scienter requirement forfelony charges, but violation of the Act is a strict liability offense formisdemeanor charges.49 Congress specifically noted that nothing inthe 1986 amendment is meant to alter the strict liability standard formisdemeanors.50 Since 1986, individuals have been found guilty underthe strict liability standard for being the recipient of feathers that weresent through the mail and for possession of ducks and geese in excessof the limit.51 Given the nature of strict liability, these actions do notrequire a showing of specific intent or knowledge to be held violationsof the Act.52 The penalty for such misdemeanor charge can be a fineup to $15,000 or six months imprisonment.53 A misdemeanor is acriminal charge, yet generally strict liability is limited to civil casesbecause criminal law is based upon a theory of punishing viciouswill.54 Since the misdemeanor penalty is strict liability and a personcan be charged multiple times for each bird affected by a “taking,”day-to-day activities can put one in jeopardy of a very high fine or adamaging criminal charge on his or her record.

44. United States v. Corbin Farm Serv., 444 F. Supp. 510, 530 (E.D. Cal. 1978).45. Id. at 529.46. Id. at 532.47. Id.48. Id.49. 16 U.S.C. § 707(b) (2006) (adding whoever, in violation of this subchapter,

shall knowingly . . .); United States v. Morgan, 311 F.3d 611, 615 (5th Cir. 2002).50. Morgan, 311 F.3d. at 615.51. Id.52. Id.53. § 707(a).54. United States v. Cordoba-Hincapie, 825 F. Supp. 485, 493 (E.D.N.Y. 1993).


Certain circuit courts have held that the MBTA should not be readto prohibit “takings” or deaths of migratory birds that result from log-ging activities.55 In the 1991 case, Seattle Audubon Society v. Evans(Seattle II), the Ninth Circuit said that destroying a migratory bird’shabitat is not equivalent to a “taking.”56 This court said that the Act’sdefinition of what actions are unlawful is descriptive of the acts byhunters and poachers.57 Although, one could conclude that destroy-ing a migratory bird’s habitat could indirectly and unintentionally endin a bird killing, resulting in a violation of the Act under strict liabilitystandards through habitat destruction.

The District Court of Illinois came to a similar holding in Mahler v.U.S. Forest Service. The Forest Service had a plan to clear-cut forty-six acres of a forest in which migratory birds could be nesting.58 Thiscourt relied on Seattle II’s definition of “take” in that it is descriptiveof those acts associated with hunters and poachers.59 The court statedthat the Congressional purpose and language of MBTA was intendedto forestall hunting of migratory birds and the sale of bird parts andthat the court would not extend protection to habitat destruction.60

Conversely, in United States v. Moon Lake Electric Ass’n, Inc., theDistrict Court of Colorado disagreed with the Ninth Circuit’s decisionof excluding habitat destruction from the definition of “taking.”61

This court compared the MBTA definition to the definition of “take”in the Endangered Species Act (“ESA”), which includes harm.62

Under the ESA, harm includes an act that substantially modifieshabitat in a way that impairs breeding, feeding, and shelter.63 TheDistrict Court of Colorado used this analysis to hold that the NinthCircuit’s definition ignores the strict liability component of the Actand that the Act was not limited in its aim to solely poachers andhunters.64

An additional case that agrees with Moon Lake’s holding that theAct extends beyond solely poaching and hunting activities and appliesto federal agencies is Center for Biological Diversity v. Pirie. In Pirie,a United States District Court held that the Navy would have to halttraining activities on land where migratory birds nested and acquire a

55. Seattle Audubon Soc’y v. Evans, 952 F.2d 297 (9th Cir. 1991); Mahler v. U.S.Forest Serv., 927 F. Supp. 1559 (S.D. Ind. 1996).

56. Seattle Audubon Soc’y, 952 F.2d at 302.57. Id.58. Mahler, 927 F. Supp. at 1561–73.59. Id. at 1574.60. Id.61. United States v. Moon Lake Elec. Ass’n, Inc., 45 F. Supp. 2d 1070, 1075 (D.

Colo. 1999).62. Id. at 1076.63. Id.64. Id. at 1077 (stating that a distinction between direct and indirect takings is

illogical).


permit, or be in violation of the MBTA.65 The court granted an in-junction prohibiting any further Navy activities until the Navy ac-quired a permit from the Fish and Wildlife Services.66

In 2001, President Clinton issued Executive Order 13186, which ap-plies to federal agency actions that may have a negative effect onmigratory bird populations.67 The Executive Order recognizes pro-tecting migratory birds’ habitat from significant destruction.68 TheExecutive Order defines “take” as including intentional and uninten-tional takings and further extends “take” to the habitats upon whichmigratory birds depend.69 The two major U.S. Forest Service Cases(Seattle II and Mahler) may have been analyzed according to a differ-ent standard if the 2001 Executive Order was implemented at the timethey were litigated.

C. Continued Necessity of the Act?

Whether aimed against only hunters and poachers or aimed againstall actors that may affect migratory birds, the overriding goal of theMBTA was to prevent the population of migratory birds from a vastand rapid decline.70 The migratory birds that have led to conflict withNorth Texas residents are the Snowy Egret and the Great Egret. Bothspecies are currently classified as “Green” on the Audubon Watch-list.71 A “Green” classification means they have a low vulnerability toextinction based upon four classification factors established by the Na-tional Audubon Society.72 The Great Egret global population is up to1.2 million,73 and the Snowy Egret population is unknown but hascontinuously increased over the past forty years and is now stable.74

The International Union for Conservation of Nature and Natural Re-sources (“IUCN”) classifies plant and animal species according tolevel of risk of global extinction.75 Both egret species are listed underLeast Concern.76 A species is listed as Least Concern when it has a

65. Center for Biological Diversity v. Pirie, 201 F. Supp. 2d 113, 121–23 (D.D.C.2002); Catherine M. Vogel, Military Readiness and Environmental Security—CanThey Co-exist?, 39 REAL PROP. PROB. & TR. J. 315, 326 (2004).

66. Center for Biological Diversity, 201 F. Supp. 2d at 122.67. Vogel, supra note 65, at 326–27.68. Id. at 327.69. Id.; Exec. Order No. 13,186, 66 Fed. Reg. 3,853 (Jan. 10, 2001).70. Finet, supra note 23, at 8.71. Green, NAT’L AUDUBON SOC’Y BIRDS, http://birds.audubon.org/category/

watchlist-status/green?page=4 (last visited Feb. 16, 2013).72. See Watchlist Methodology and Criteria, NAT’L AUDUBON SOC’Y BIRDS, http://

birds.audubon.org/watchlist-methodology-and-criteria (last visited Feb. 16, 2013).73. Green, supra note 71.74. Snowy Egret, BIRDLIFE SPECIES FACTSHEET, http://www.birdlife.org/datazone/

speciesfactsheet.php?id=3711 (last visited Feb. 16, 2013).75. See THE IUCN RED LIST OF THREATENED SPECIES, http://www.iucnredlist.org

(last visited Feb. 16, 2013).76. THE IUCN RED LIST OF THREATENED SPECIES, http://www.iucnredlist.org

(then search “great egret” or “snowy egret”) (last visited Feb. 16, 2013).


history of extinction risk but is currently too widespread and populousto qualify for a high-risk classification such as Endangered,Threatened, or even Vulnerable.77 Additionally, neither species islisted on the Fish & Wildlife Services’ Endangered Species List. Theabove lists and statistics show that the egret population has reboundedsince the early twentieth century when the MBTA was first imple-mented to protect birds from unrestrained killings. The MBTA suc-cessfully served its purpose and achieved the goal of preventingextinction.

However, the MBTA is probably not the sole reason the egret pop-ulation has rebounded. Culture and fashions have changed since1870, and society’s general appreciation for the important part animalspecies play in a stable ecosystem has also changed. People for theEthical Treatment of Animals (“PETA”) was founded in 1980 and hasbecome a strong force in educating the public about the importance ofanimals and bringing awareness to the clothing trade.78 Many people,regardless of their economic status, choose not to wear clothing madefrom animals. A decline in the demand for feathers naturally oc-curred between the late nineteenth century when women, especially,wore birds and feathers for fashion and as a status symbol, and todaywhen many celebrities endorse PETA or a vegan lifestyle.79 Change inhairstyle trends added to the initial decline of using feathers in hats.80

It is also evident from viewing fashion magazines and runways thatfeathers are not used as a regular textile anymore.

A combination of factors enabled the egret population to reboundand become stable: the decrease of the use of feathers in fashion, theincrease in the public’s education regarding animals and their impor-tance to an effective ecosystem, and the strict liability of the MBTA.However, the lingering effects of the MBTA create an infringementon the use of private property by landowners. The protection ofegrets has led to them also becoming a nuisance and health concernfor humans. Since the MBTA was implemented with the goal of re-storing the egret population for the purpose of human utility, it fol-lows that the Act be limited when its effects become hazardous tohumans.

77. 2001 Categories and Criteria, THE IUCN RED LIST OF THREATENED SPECIES,http://www.iucnredlist.org/static/categories_criteria_3_1#categories (last visited Feb.16, 2013).

78. See generally All About PETA, PETA.ORG, http://www.peta.org/about/learn-about-peta/default.aspx (last visited Feb. 16, 2013).

79. See generally Celebrities, PETA.ORG, http://www.peta.org/tv/celebrities.aspx(last visited Feb. 16, 2013).

80. See Patchett, Murderous Millinery, supra note 31 (stating that as early as 1913,the bob, and other short hairstyles were introduced, ones that are not conducive towearing extravagant hats. So, the trend began to switch to wearing plain slouch hats).


III. NUISANCE TO HEALTH, ECONOMY, AND

ENJOYMENT OF PROPERTY

Nuisances can be public or private, or both public and private. Apublic nuisance is an unreasonable interference with a right commonto the general public.81 A private nuisance is an unreasonable inter-ference with the use and enjoyment of one’s property.82 Both typesare at issue here. Circumstances that affect the level of unreasonable-ness of a public nuisance include: whether the conduct significantlyinterferes with public health, safety, peace, comfort, or convenience;whether the conduct is of continuing nature or has produced a long-lasting effect; and whether the conduct is proscribed by statute or or-dinance.83 The Migratory Bird Treaty Act (“MBTA”), by proscribinglandowners from taking many actions to protect their land from thenesting of migratory birds, is in effect facilitating a public and privatenuisance.

Herons or egrets nest in colonies; these areas are called heronries.84

Migratory birds that create heronries in the trees around people’shomes create a threat to the health of visitors and residents of thatneighborhood. Tanglewood Trail neighborhood in Fort Worth, Texasis a prime example of this. For roughly eight months of the year,egrets (which are protected by the MBTA) make their nests in thetrees of residents’ yards. Because of the duration that the egrets nestin this area, the threat to the public’s health is not minor.

Bird droppings cover the yards, mailboxes, cars, sidewalks, streets,and sometimes people of Tanglewood Trail.85 The large amount ofbird droppings that accumulate, and the flies and odors that resultfrom the bird droppings, can cause human health hazards, especiallyto people that already suffer from breathing difficulties like asthma.86

Histoplasmosis is a fungus that causes lung infection.87 The funguslives in environments usually associated with large amounts of bird orbat droppings.88 The symptoms of Histoplasmosis are similar to pneu-

81. RESTATEMENT (SECOND) OF TORTS § 821B (1979).82. JESSE DUKEMINIER ET AL., PROPERTY 755–56 (Aspen Publishers, 7th ed.

2010).83. Id. at 755.84. RAY C. TELFAIR II, BRUCE C. THOMPSON & LINDA TSCHIRHART, TEXAS

PARKS AND WILDLIFE, NUISANCE HERONRIES IN TEXAS 5 (2d ed.), http://www.tpwd.state.tx.us/publications/pwdpubs/media/pwd_bk_w7000_0134.pdf.

85. Melissa Cutler, Egrets Take Over Fort Worth Neighborhood, MYFOXDFW.COM

(Aug. 7, 2012, 2:58 PM), http://www.myfoxdfw.com/story/19218379/egrets-take-over-fort-worth-neighborhood; Campbell, supra note 11.

86. Joel Thomas, Fort Worth Homeowners Regret Egrets, CBS DALL./FORT

WORTH (Nov. 2, 2012, 6:51 PM), http://dfw.cbslocal.com/2012/11/02/fort-worth-home-owners-regret-egrets/.

87. Histoplasmosis, CDC, www.cdc.gov/fungal/histoplasmosis (last visited Feb. 23,2012).

88. Id.


monia and can become serious if not treated properly and quickly.89

When these fungal spores become airborne, they are breathed in byresidents and visitors of the neighborhood and are a nuisance risk topeople’s health.90 Daily activities such as mowing the lawn and streetsweeping add to the risk of inhalation because these activities disturbthe soil and stir up the fungus into the air.91 So, people’s effort toclean up the neighborhood backfires and results in making the fungalspores airborne and more likely to be inhaled. Histoplasmosis is notonly contracted from breathing in contaminated air spores but alsothrough contact with contaminated soil.92 This is a problem for fami-lies that live in neighborhoods subjected to heronries. Children typi-cally play outside in the yard during the summer months and areespecially subject to coming in contact with the unsanitary accumula-tion of bird feces. One resident of Tanglewood Trail keeps her three-month old son indoors because she is concerned of how all the birdexcrement will affect his health, and so the family does not get to en-joy the backyard as much as they used to due to the egret nests.93

Other health hazards that result from heronries are broken eggs,feathers, and the remains of decomposing chicks.94 In Fort Worth, thesolid waste department will pick up dead birds Monday through Sat-urday as long as they are bagged.95 Bagging dead birds is the re-sidents’ responsibility.96 This can lead to a health hazard becausepeople may not be trained on the appropriate way to bag a dead birdand how to clean up in order to keep the process sanitary. Dead fishare also associated with heronries and can fall from nests and land inyards.97 These fish and bird remains draw in parasites and hoards offlies,98 which are carriers of disease. Other diseases associated with

89. Id.90. Janet St. James, Fort Worth Residents Aim to Tell Egret Invasion “Bye Bye

Birdie,” WFAA.COM (Nov. 8, 2012, 6:51 PM), http://www.wfaa.com/news/local/tarrant/Bye-Bye-Birdie-177537181.html.

91. Solis, supra note 11 (stating that a street sweeper being used by workers to putin a new water line churns up a billowing, stinky cloud that makes it difficult tobreathe as the machine passes by the homes).

92. IND. DEP’T. OF NATURAL RES., GREAT BLUE HERONS 2, http://www.in.gov/dnr/fishwild/files/fw-Nuisance_Info_Great_Blue_Heron.pdf.

93. Fox News, Invasion of Egrets Makes Life “Unbearable” in Texas, FOX NEWS

VIDEO (Aug. 8, 2012), http://video.foxnews.com/v/1776408959001/invasion-of-egrets-makes-life-unbearable-in-texas/.

94. TELFAIR II ET AL., supra note 84, at 1 (stating young birds are susceptible tostarvation or may fall from nests and die in a person’s yard).

95. Animal Care and Control, CITY OF FORT WORTH, TEX., http://fortworthtexas.gov/migratorybirds/ (last visited Feb. 16, 2013).

96. Id.97. John Metcalfe, Texas City Losing Battle of the Egrets, WJLA.COM (Aug. 11,

2011, 5:00 AM), http://www.wjla.com/blogs/weather/2011/08/texas-city-losing-the-battle-of-the-egrets-video—12398.html.

98. Fox News, supra note 93.


heronries are psittacosis, encephalitis, and arbovirus.99 Psittacosis is azoonotic infectious disease caused by bacterium and is contractedfrom parrots, macaws, and many other species of birds.100 This dis-ease has flu-like symptoms and can also develop into pneumonia andbecome deadly if not treated promptly.101

A similar situation between wild animals and their affect on humanhealth has arisen in the Great Plains of the United States. The BlackTail Prairie Dog (“BTPD”) is not yet a protected species but is listedas a “continual candidate” for Endangered Species Act protection.102

There is a conflict between the benefit of the species and the negativeimpact it has on human health. The BTPD burrows in farmland-typeenvironments and feeds on plant species that livestock typically do noteat.103 The BTPD is an important species in the prairie environmentbecause insects are dependent on the burrows that BTPDs create, andthe BTPD itself is a food source for other animals.104 However,BTPDs are transmitters of zoonotic diseases, including the bubonicplague.105 And, as human and animal habitats begin to collide, moreand more cases of human plague have surfaced.106 The human healthhazard associated with the overpopulation of the BTPD is a concernthat factors into whether this species should be protected. This exam-ple reaffirms the position that if a species transmits disease, or if dis-ease results from the exorbitant amount of excrement that a speciesleaves behind, the species should not be protected at the expense ofhuman health.

Residents and visitors to the neighborhood have had to changetheir lifestyle during the months that the birds are nesting.107 Peoplethat used to enjoy the walking trail through Tanglewood Trail nowspeed through and are subject to the stench and sight of bird excre-

99. Journal—Chamberlain Drive Rookery Death Toll, DFW URBAN WILDLIFE,(July 18, 2011), www.dfwurbanwildlife.com/2011/07/18/journal/july-18-2011-chamber-lain-drive-rookery-death-toll/.

100. Psittacosis, CDC BACTERIAL, MYCOTIC DISEASES, http://www.cdc.gov/ncidod/dbmd/diseaseinfo/psittacosis_t.htm (last visited Jan. 13, 2009).

101. Id.102. Christopher Pepper et al., Threatened or Endangered? Keystone Species or

Public Health Threat? The Black-Tailed Prairie Dog, The Endangered Species Act,and the Imminent Threat of Bubonic Plague, 24 J. LAND RESOURCES & ENVTL. L.355, 356; Christy Painter et al., Black—Tailed Prairie Dog Conservation Assessmentand Management Strategy 5 (last visited Nov. 12, 2009), available at http://www.fs.usda.gov/Internet/FSE_DOCUMENTS/stelprdb5167327.pdf (listed as a candidatespecies in 2000).

103. Black Tailed Prairie Dog, PRAIRIE DOG COALITION, http://www.prairiedogcoalition.org/pd-black-tailed-prairie-dog.php (last visited Feb. 16, 2013).

104. Id.105. Pepper et al., Threatened or Endangered? Keystone Species or Public Health

Threat? The Black-Tailed Prairie Dog, The Endangered Species Act, and the ImminentThreat of Bubonic Plague, supra note 102, at 366–67.

106. Id. at 377–78.107. See Cutler, supra note 85.


ment.108 One resident, Richard Steed, has to enter his home from theback door because of the bird nests above his front door, and the cur-rent options available to him are to either do nothing or take actionand risk a criminal sanction because of the restrictions that the MBTAimposes.109 He has counted eighty-five nests in his yard.110 He resortsto taking more business trips in the summer in order to escape thenasty conditions.111 Residents also cover their personal property withplastic sheets to protect their things from being destroyed by causticbird excrement.112 The large amount of excrement kills the grass andflowerbeds in residents’ yards and can destroy the paint on vehicles.113

The odor alone causes residents to feel as though they are living in azoo.114

This heronry was an unexpected occurrence because it was the firsttime the egrets decided to land in this neighborhood, but it is probablynot the last time and the neighborhood will probably lose much of itsmarketability. The well-known property case Spur Industries, Inc. v.Del E. Webb Development Co. involved a similar situation in which aneighborhood was located in the vicinity of a feedlot.115 The odor andflies from the feedlot were unhealthy to the residents and the feedlotwas held a nuisance.116 This court said that a public nuisance is onethat affects a considerable number of people, such as an entire com-munity or neighborhood.117 The homes in the neighborhood becamenearly impossible to sell because of the odors from the feedlot.118

One real estate agent who works in Tanglewood Trail has alreadynoted that it is definitely an extra burden on the homeowner to cleanthe home and curtilage to prepare it for sale.119 One can easily inferthat a home shown during the months when the egrets are nesting willnot appeal much to a buyer especially if the buyer is informed aboutthe restrictions on protecting their property that the MBTA imposes.

108. Id.109. Campbell, supra note 11.110. Solis, supra note 11.111. Campbell, supra note 11.112. Metcalfe, supra note 97.113. Jason Allen, Protected Egrets Concern Carrollton Neighborhood, CBS DALL./

FORT WORTH (May 30, 2011, 10:07 PM), http://dfw.cbslocal.com/2011/05/30/protected-egrets-concerning-carrollton-neighborhood/.

114. Solis, supra note 11 (“[T]he smell is not too nice . . . . It’s probably worse thana zoo.”).

115. Spur Indus., Inc. v. Del E. Webb Dev. Co., 494 P.2d 700 (Ariz. 1972).116. Id. at 705.117. Id.118. Id. at 704.119. E-mail from Betsy Senter, Tanglewood Branch Manager, Coldwell Banker

Residential Brokerage, to Author, (Oct. 15, 2012, 18:29 CST) (on file with Author).


IV. CURRENT LEGAL OPTIONS AVAILABLE TO PERSONS

NEGATIVELY AFFECTED BY BIRDS PROTECTED BY THE MBTA

A. Prevention

Prevention is the most advocated method of recourse that peoplecan take against migratory birds when they interfere with living condi-tions. Preventing the formation of heronries is a method founded onthe premise that nesting sites are widely available.120 The Departmentof Engineering formed a Best Practice Method for prevention thatavoids penalties from MBTA violations.121 The steps for Best Practiceare as follows: patrol daily to see if any nests are forming, use stickynetting, noise making devices, water cannons, or an EPA-approveddeterrent such as Bird-X or Bird Shield to scare away any birds thatmight be in the area.122 A Carrollton neighborhood worked togetherto take these steps to prevent a heronry from forming. One residentreported that neighbors walk through the neighborhood in the eve-nings sounding air horns.123 The City of Carrollton is intending to usea propane cannon to scare away any birds.124 Carrollton has had arough experience with heronries in the past. In 1998, the City wasfined $70,000 for destroying a nesting area, and city officials are wor-ried that cleaning the area throughout nesting season will lead tofines.125

Another tactic to prevent the formation of heronries is to thinbushes and underbrush. Potential nest sites are typically densely vege-tated, so cutting away some shrubs to create spaces between trees willhelp make the area unattractive to migratory birds.126 The use oflarge orange scare balloons with owl faces on them is also a strategy.However, in Fort Worth, the scare balloons did not work and are nowwhite from being covered with egret excrement.127 These scare tacticsmust be effective to deter the birds from nesting, because once theystart nesting, the Act proscribes disturbing the nests.128 Residentshave only a short amount of time to deter the birds. Once the birdsscout out an area for nesting, they move in quickly.129

120. TELFAIR II ET AL., supra note 84, at 6.121. EFCOG Best Practice #56, Managing Migratory Birds and In-use Nest, EFCOG.

ORG, http://www.efcog.org/bp/p/doc/BP56-Managing_Migratory_Birds.pdf.122. Id.123. Texas Town Uses Cannons to Fight off Egrets, WHDH.COM (Apr. 6, 2012, 3:55

PM), www1.whdh.com/news/articles/national/12007143854511/texas-town-uses-cannons-to-fight-off-egrets/.

124. Id.; see also Cathy Heidenreich, Bye Bye Birdie-Bird Management Strategiesfor Small Fruit, CORNELL U., CORNELL.EDU, http://www.fruit.cornell.edu/berry/ipm/ipmpdfs/byebyebirdiesmallfruit.pdf (describing the sounds a propane cannon elicits asvery loud thunderclaps and the cannon can be timed to go off at certain increments).

125. Allen, supra note 113.126. TELFAIR II ET AL., supra note 84, at 6.127. Fox News, supra note 93.128. Solis, supra note 11.129. Id.


Deterrence is an especially unsatisfactory remedy for neighbor-hoods that have never experienced a migratory bird invasion. Since itis impossible to predict sites of heronries,130 there is almost no defenseagainst the first invasion. After breeding season ends, which is usuallyby October 1st, it is recommended that residents destroy nests thathave been left behind so it will be less likely the birds will return thefollowing year.131 However, this is no small or inexpensive task forTanglewood Trail residents, such as Richard Steed, who have almost100 nests in their yards, some of which are located high in thetreetops.

B. Permits

Once the first egg is laid, the only option that residents have to de-fend their property is by filing for a permit because any habitat modi-fication or destruction that occurs after nesting begins is subject toMigratory Bird Treaty Act penalties. Federal regulations that governthe issuance of permits for “taking” from a migratory bird are speci-fied in Title 50 of the Code of Federal Regulations. A depredationpermit can be issued to disturb a migratory bird that is wreakinghavoc on a person’s property, including livestock and wildlife.132 Forexample, in Fund for Animals v. Kempthorne, cormorants, which aremigratory birds not protected by the Endangered Species Act, exper-ienced an immense population growth over the past decade.133 TheFish and Wildlife Service received many complaints from fishermanand commercial catfish farmers because the cormorants were stealingthe fish the farmers were attempting to cultivate.134 The Second Cir-cuit Court of Appeals held that a depredation order to “take” fromcormorants to prevent pillaging of public resources was permissible.135

Fifteen species of migratory birds can be controlled without a fed-eral permit when causing depredation or when the population of birdsis so great that they become a health hazard or nuisance.136 Unfortu-nately for the residents of Tanglewood Trail and others that are nega-tively affected by heronries, egrets are not on the list even though theyare a health hazard and nuisance.

The permitting process is not very accessible to the average person,and the process is quite tenuous and costly. To apply for a depreda-tion permit a person must complete the information requirements

130. TELFAIR II ET AL., supra note 84, at 6.131. Brett Johnson, DFW Heronries, TEX. PARKS & WILDLIFE, http://www.overton

park-na.org/TPWD_Egrets.pdf.132. DEPREDATION PERMITS, 50 C.F.R. § 21.41 (2012); DEPREDATION ORDER FOR

BLACKBIRDS, COWBIRDS, GRACKLES, CROWS, AND MAGPIES, 50 C.F.R. § 21.43(2012).

133. Fund for Animals v. Kempthorne, 538 F.3d 124, 128 (2d Cir. 2008).134. Id. at 128.135. Id. at 133.136. 50 C.F.R. § 21.43 (2012).


listed in 50 CFR section 13.12(a) and 50 CFR section 21.41, some ofwhich are: a description of the applicant, location of the depredation,the extent of the injury, the nature of the interests being injured, theparticular species of migratory birds causing the injury, a descriptionof the applicant’s previous efforts, and a description of the actions theapplicant plans to take if the permit is issued.137 The application alsorequires a fee of $50 and the applicant should expect a delay of atleast sixty days before receiving a permit, if one is issued.138 If a per-mit is issued, it only lasts for a year at most and then needs to be re-issued.139 Additionally, any birds that happen to be killed throughdepredation control must be collected by the applicant and turnedover to a Bureau representative.140 The delay and process of ob-taining a permit, and the duration of only one year, is an obstacle for aperson trying to protect his or her home from current damage of dep-redating migratory birds.

Yet, in 1989, a United States District Court said that requiring apermit before a person can defend his or her property from harmcaused by wild animals is not an unreasonable restraint.141 In UnitedStates v. Darst, the defendant was charged with violating the MBTAbecause a great horned owl was found in a trap he had set up becausethe owls were killing his chickens.142 The court found him guilty andupheld the permit requirement on the basis that it is better to have agovernment official decide whether killing protected wildlife is neces-sary, rather than allowing the individual landowner to decide.143

The Oregon Court of Appeals has also held that the permit require-ment is a reasonable restraint on a person’s right to protect hisproperty.144 In State v. Webber, wild deer were feeding from the de-fendant’s hay ranch on his property.145 The defendant did not obtaina permit and complying with the permit would require him to skin,dress, and dispose of a killed deer.146 The court said that the premiseof wildlife law is not to prevent a person from “taking” from wildlifethat is damaging land the person owns or damaging livestock, agricul-tural, or forest crops on such land.147 But, the defendant was foundguilty of killing and wasting one deer because he did not have a permit

137. General Information Requirements on Applications for Permits, 50 C.F.R.§ 13.12(a) (2009); 50 C.F.R. § 21.41; DEP’T OF THE INTERIOR, FED. FISH & WILDLIFE

PERMIT APPLICATION FORM, http://www.fws.gov/forms/3-200-13.pdf.138. DEP’T OF THE INTERIOR, supra note 137, at 1–4.139. 50 C.F.R. § 21.41 (2012).140. Id.141. United States v. Darst, 726 F. Supp. 286, 288 (D. Kan. 1989).142. Id. at 286–87.143. Id. at 288.144. State v. Webber, 736 P.2d 220, 221 (Or. Ct. App. 1987).145. Id. at 222.146. Id. at 221.147. Id. at 222.


before acting in defense of his property.148 Even if a permit require-ment is beneficial to the public good,149 the issue may arise where theproperty owner may continually lose more property during the delayof applying and waiting to receive a permit.

The strong blanket protections that the MBTA implements forceseven the military to recognize the Act before training in an area thatmay be home to nesting migratory birds.150 The Navy SEALs andMarines are required to adjust their training and create “work-around” options so as to not “take” from the nesting birds.151 Forcingour military to train in a “work-around” environment does not allowour troops to receive training most similar to actual wartime activi-ties.152 Continual threats to the United States and the wars that ourcountry has recently been involved in should lend importance to thestandard of training our troops receive, even at the possible expenseof migratory birds or their habitats.

V. POSSIBLE SOLUTIONS

A. Repeal the Migratory Bird Treaty Act

Because of the reasons previously stated, the Migratory Bird TreatyAct should be repealed. There are other options that would allowmore freedom to property owners while maintaining an increased mi-gratory bird population. The MBTA is not solely meeting its intendedpurpose of protecting migratory birds from rampant killings for thehunter’s economic gain, but the Act’s resulting effects limit what aperson can do on his or her private property, even to the extent that aperson cannot defend his or her property from damage that thesebirds cause. Since a depredation order for killing cormorants was per-missible because the birds were killing the source of the farmer’s live-lihood,153 it should follow that when birds are creating human healthhazards, human health should rank higher in priority of protection.

Since the Act was initially implemented to respond to the diminish-ing populations of migratory birds and now the population of migra-tory birds, especially egrets, is stable and not threatened, the Act hasaccomplished its goal of deterring rampant hunting and rebuildingbird populations.154 Now, the remaining effects of the Act are mostlydetrimental to human health and limiting on property rights. The En-

148. Id. at 221.149. United States v. Darst, 726 F. Supp. 286, 288 (D. Kan. 1989).150. Vogel, supra note 65, at 318.151. Id. (defining “work-around” as “Plans that modify and sometimes restrict as-

pects of its training exercises.” Examples of work-arounds include limiting Marinetraining in the Mojave Desert in California to the daytime and restricting live andsimulated fire operations).

152. Id. at 319.153. See Fund for Animals v. Kempthorne, 538 F.3d 124 (2d Cir. 2008).154. See Green, supra note 71.


dangered Species Act can and does protect migratory bird species if apopulation begins to decline.155 But, because of greater education anda general cultural appreciation for species vital to the ecosystem, thechance of an early twentieth-century population slide reoccurring isminimal.

B. Narrow the Migratory Bird Treaty Act

Even changing the Act to solely charging criminal sanctions againsthunters and poachers would give property owners more rights to pro-tect their health and property against migratory bird invasions. Thisadjustment would not be a far cry from the possible intent of the 1918Act.156 Since courts have struggled with interpreting the Act to deter-mine whether it is aimed at only hunters, or aimed at both intentionaland unintentional killings, a narrower Act would be much clearer forpeople to abide by and give more flexibility to landowners attemptingto protect their land and health. Taking a “people are generally good”approach, landowners will probably do minimal harm to wild animalsin the course of protecting their property from harm.

The Act could also be narrowed by charging only civil penalties forviolations committed without knowledge. Currently, a person will bestrictly liable for a violation of the Act and subjected to a criminalcharge of a misdemeanor.157 The naı̈ve violator will then have tocarry the stigma of being labeled a “convict,” which can be a disgraceto someone’s character.158 The Bald and Golden Eagle ProtectionAct (“BGEPA”) will only charge a violator with a criminal charge ifhe or she acted knowingly or with wanton disregard.159 This standardrelieves the naı̈ve actor from having to suffer the stigma of “convict,”and that person will only be subjected to civil penalties. Additionally,the amount of the penalty is influenced by whether the person canshow he or she acted in good faith.160 Since the enactment of theBGEPA in 1962, the population of breeding pairs of bald eagles inNorth America has increased twenty-fold.161 This shows that a strict

155. Birds Protected by the Migratory Bird Treaty Act: Comparison with OtherFederal Laws, U.S. FISH AND WILDLIFE SERVICE (1995), http://www.fws.gov/migratorybirds/RegulationsPolicies/mbta/compare.pdf.

156. See generally David G. Lombardi, The Migratory Bird Treaty Act: Steel ShotVersus Lead Shot for Hunting Migratory Waterfowl, 22 AKRON L. REV. 343 (1989)(stating that “the MBTA has largely been considered a hunting statute”).

157. 16 U.S.C. §707(a) (2006).158. William A. Tilleman II, It’s a Crime: Public Interest Laws (Fish and Game

Statutes) Ignore Mens Rea Offenses Towards a New Classification Scheme, 16 AM. J.CRIM. L. 279, 285 (1989).

159. 16 U.S.C. § 668(a).160. § 668(b).161. Susan Roeder Martin, Continued Protection of the Bald Eagle After Delisting,

FLA. BAR J. 44 (Jul./Aug. 2008), available at http://www.floridabar.org/DIVCOM/JN/JNJournal01.nsf/Articles/21403E59E56EF1E98525747100638C5C.


liability law that carries criminal charges may not be necessary for in-creasing and stabilizing migratory bird populations.

C. Implement a Candidate Conservation Agreement toProtect Migratory Birds

The Fish and Wildlife Service (“FWS”) has implemented a differenttype of program to protect species that are populous enough to avoida listing for protection under the Endangered Species Act but may bevital to our ecosystem. One example of such species is the DunesSagebrush Lizard. In the summer of 2012, it was being consideredwhether to add the Dunes Sagebrush Lizard (“DSL”) to the Endan-gered Species List.162 The possible result if the listing had occurredwould have been a drastic halt on the oil and gas industry in the Per-mian Basin.163 The DSL’s sole habitat is the shinnery oak dunehabitat,164 one of which is located in the Permian Basin in New Mex-ico and Texas.165 The Permian Basin produces roughly one millionbarrels of oil per day and four billion cubic feet of natural gas perday.166 Not only would oil and gas production be halted in the Per-mian Basin if the lizard was added to the Endangered Species List, butapproximately 27,000 jobs would be lost.167 The FWS points to the oilwells themselves, the access roads, pipelines, and seismic explorationas activities that significantly threaten the DSL’s habitat.168

The possible extreme detriment to the Texas economy and to alarge domestic energy source169 that would result from halting produc-tion in the Permian Basin gave rise to the Texas Conservation Plan(“TCP”). This plan is a Candidate Conservation Agreement with As-surances (“CCAA”). A CCAA is a conservation tool that providesregulatory assurances to non-federal property owners who voluntarilyagree to manage their lands or waters in such a way that would-bethreats to proposed species are removed or significantly reduced.170

For this Article’s purpose, only the inclusion of non-federal landown-

162. Sartain, supra note 39.163. Id.164. Species Profile for Dunes Sagebrush Lizard, U.S. FISH & WILDLIFE SERV.,

http://ecos.fws.gov/speciesProfile/profile/speciesProfile.action?spcode=C03J (last up-dated Dec. 29, 2012).

165. Sartain, supra note 39.166. Taylor Kilroy, “Reptile Dysfunction”: How Can a Three-inch Lizard Threaten

to Shut Down the Oil and Gas Industry in the Permian Basin?, 7 ENVT’L & ENERGY L.& POL’Y J. 87, 88 (2012).

167. Laura Peterson, et al., Natural Resource “Conflicts” in the U.S. Southwest: AStory of Hype Over Substance, 12 SUSTAINABLE DEV. L. & POL’Y 32, 34 (2011).

168. Kilroy, supra note 166, at 94.169. Texas Conservation Plan for the Dunes Sagebrush Lizard 1, U.S. FISH &

WILDLIFE SERV., (Feb. 13, 2012), http://www.fws.gov/southwest/es/Documents/R2ES/TX_CP_for_DSL_20120213.pdf (stating that the Permian Basin provides 20% of na-tion’s domestic energy source).

170. Id. at 4.


ers is germane. Non-federal landowners can voluntarily agreethrough a Certificate of Inclusion (“CI”) to participate in a CCAA.171

If the landowner chooses to participate, he or she is then only respon-sible for implementing and maintaining the conservation measuresthat he or she agreed to in the CI.172

A non-federal participant is only required to address those threatsthat he or she can control pursuant to property rights.173 Some waysproperty owners can do this is by creating new habitats, protectingexisting populations or habitats, or removing threats to the speciesthat are located on the property.174 Once a person signs a CI pursuantto a CCAA, he or she is provided with the assurances that he or shewill not become responsible for additional conservation measures andwill not incur additional regulatory obligations if the covered speciesis later listed under the ESA.175 This type of plan has worked formaintaining the population of the DSL since February 2012, whilealso allowing the oil industry to continue operations.176 Since aCCAA has been used successfully for a variety of species,177 it couldbe applied to migratory birds as well.

The DSL has found itself in several battles between economic inter-ests and conservation, between private landowners and governmentregulation, and between voluntary and government-mandated regula-tion;178 battles which are similar to those that have resulted from thecontinued implementation of the MBTA. As applied to the previ-ously discussed conflict that has arisen in Tanglewood Trail, residentscould sign a CI agreeing to take reasonable measures to conserve theegrets and the nests. A voluntary agreement would give a homeownera feeling of control over his or her property and actual control overthe property. For instance, Richard Steed could take the necessarymeasures to be able to access his home through his front door again,but also agree to maintain the egret nests that are in his backyard.Then those residents that have agreed to take measures to conservethe egrets and their habitat will have the protection of not being obli-gated to take further measures in the future if the egret population

171. Id. at 1.172. Id. at 5.173. Id.174. Id.175. Id.176. Sartain, supra note 39.177. See Candidate Conservation Agreement for the Lesser Prairie-Chicken and

Sand Dune Lizard in New Mexico, U.S. FISH & WILDLIFE SERV., (Dec. 8, 2008), http://www.fws.gov/southwest/es/Documents/R2ES/LPC-SDL_CCA-CCAA_2008.pdf(protection agreement for the Lesser Prairie-Chicken); Candidate Conservation, En-dangered Species Program, U.S. FISH & WILDLIFE SERV., http://www.fws.gov/endan-gered/what-we-do/cca.html (last visited Aug. 28, 2012) (describing differentagreements that cover the Louisiana Pine Snake, Yellowcheek Darter, and SouthernIdaho Ground Squirrel).

178. Kilroy, supra note 166, at 88–89.


does happen to decline to a threatened level. The halt on the oil in-dustry in the Permian Basin that would have resulted from listing theDSL on the Endangered Species List resembles the handcuffing limi-tations that the MBTA places on people and their use of their prop-erty. So, it would seem logical and appropriate to implement anagreement that gives the property owner freedom to protect his or herproperty, home, and health.

VI. CONCLUSION

When the Migratory Bird Treaty Act was implemented, lawmakersprobably did not foresee the negative effects on property rights andhuman health that could eventually transpire. Animal laws are gener-ally regarded as providing protection to maintain the species itself andprotection for the purpose of keeping a balanced ecosystem that isvital and beneficial to human life. Economic utility of a species forhuman benefit has also been a factor when determining the level ofprotection a species deserves. But when species protection begins tohinder human property rights and risk human health, it may be timeto re-evaluate the necessity of the regulation.

The time to reconsider the necessity and structures of the MBTAhas arrived. Egrets, which were once almost killed to extinction be-cause of people’s desire for their feathers, have had a major popula-tion rebound and have become a nuisance for property owners inNorth Texas. The health risks associated with a person’s exposure to amagnitude of birds, in an area covered by their droppings, underminesthe value of the MBTA. With continued efforts by organizations(such as PETA and Audubon Society) to educate the public on thevaluable role birds play in the ecosystem, migratory birds may be ableto remain at a stable population without the aid of the MBTA. Fur-thering that hope is the societal trend away from using animal furs andfeathers in fashion.

But if, in the future, the populations of certain species of migratorybirds are at risk of extinction or suffer from threatened habitat, theEndangered Species Act is still available to protect them. Or, a morespecifically tailored conservation plan, such as the Texas ConservationPlan or another CCAA could be put in place. A CCAA would elimi-nate the potential for people who “take” from migratory birds frombeing charged with undeserving misdemeanors, a consequence thatthe MBTA imposes. Such plans have proven effective in maintainingpopulations and environments of other species. If applied to migra-tory birds, a conservation plan would ultimately allow the propertyowner more freedom while promoting animal conservation.