Special Master Appointed to Hear Interstate Aquifer Dispute

By Lars-Eric Hedberg

Nov. 13 — The resource at issue and relief sought may be different, but for the third time in roughly the past year, the U.S. Supreme Court has appointed a special master to oversee an interstate water dispute and recommend a ruling to the court.

In a Nov. 10 order, the U.S. Supreme Court appointed senior Judge Eugene E. Siler Jr. of the U.S. Court of Appeals for the Sixth Circuit to conduct proceedings in a groundwater lawsuit filed by Mississippi against Tennessee, in which the southern neighbor seeks natural resources damages.

Mississippi alleged in its June 2014 complaint that groundwater pumping by Memphis Light, Gas & Water Division from the Memphis Sand Aquifer, also called the Sparta Sand, has caused water to flow from Mississippi into Tennessee. The groundwater, Mississippi wrote, naturally accumulated within Mississippi before the formation of the states and wouldn't naturally have moved into Tennessee but for the pumping.

It asks the court to award more than $615 million in natural resources damages rather than equitably apportion aquifer water because the groundwater at issue “is not a shared resource.” No compact apportions aquifer water.

Usually damages in interstate water disputes are available for breach of compact, which the court regards as federal law and a contract between an upstream state and downstream state, according to John B. Draper, an attorney practicing water law at Draper & Draper LLC in Santa Fe.

“That's not to say it couldn't happen in this case,” which does not involve a compact, Draper told Bloomberg BNA on Nov. 13. “In a recent decision, the Supreme Court awarded disgorgement damages for the first time to Kansas.”

The $1.8 million award represented partial disgorgement of Nebraska's benefit from breaching the 1943 Republican River Compact (Kansas v. Nebraska, 135 S. Ct. 1042, 191 L. Ed. 2d 1, 83 U.S.L.W. 4095, 2015 BL 46831 (2015).

Tennessee had, in its Sept. 14 answer, urged the high court to dismiss the complaint, saying Mississippi, among other things, had failed to state a claim and had no property right to aquifer water or showing of harm or injury.

Senior Circuit Judge Appointed

The court often appoints special masters to act as quasi-trial court judges and conduct proceedings in original jurisdiction cases. The special master will issue case management orders, make evidentiary rulings, conduct hearings and conferences and recommend a ruling to the court. The parties will file exceptions to the special master's report, which the court can accept in whole or in part or deny, with or without oral arguments.

According to the order, Siler has the “authority to fix the time and conditions for the filing of additional pleadings, to direct subsequent proceedings, to summon witnesses, to issue subpoenas, and to take such evidence as may be introduced and such as he may deem it necessary to call for.”

Siler received his commission to the Sixth Circuit in 1991 after his nomination from President George H.W. Bush. He assumed senior status a decade later. Previously, he served as chief judge on the U.S. District Court for the Eastern District of Kentucky.

Motion to Dismiss Likely Next

Typically, the special master's first order of business is to direct the defendant to file a motion to dismiss to test the sufficiency of the plaintiff's claims (similar to a Rule 12(b)(6) motion to dismiss) or rule on an existing motion to dismiss.

Special masters in two interstate disputes, one involving compact claims and the other an equitable apportionment, recently heard oral argument on motions to dismiss.

On June 19, Special Master Ralph Lancaster denied Georgia's motion to dismiss Florida's Apalachicola-Chattahoochee-Flint River Basin water apportionment action for failure to join the U.S. on the ground that he could grant adequate relief without a judgment against the federal government should Florida prevail (Florida v. Georgia, U.S., No. 142, ORIG., 6/19/15).

On Aug. 19, Special Master A. Gregory Grimsal heard oral argument on New Mexico's motion to dismiss complaints filed by Texas and the U.S. on the grounds that the Rio Grande Compact doesn't impose “a Texas stateline delivery obligation and a duty on New Mexico to protect Rio Grande Project deliveries to the stateline” (Texas v. New Mexico, U.S., No. 142, ORIG., oral arguments 8/19/15).

Grimsal hasn't ruled on the motion.

Possible Motion to Dismiss Argument

Tennessee's filings and the history of the dispute offer clues into what it may argue in a motion to dismiss.

In addition to the defenses raised above, Tennessee has argued that Mississippi should frame its case as an equitable apportionment of aquifer water rather than a state-law tort claim.

“Mississippi has no sovereign right to exclude other States and their political subdivisions from (or to charge them for obtaining) any of the groundwater in the Aquifer, in the absence of an allocation obtained through an interstate compact or an equitable apportionment,” Tennessee wrote in its answer.

It argued in both its brief in opposition and answer that issue preclusion—specifically, defensive non-mutual collateral estoppel—bars Mississippi's complaint. This means that although Tennessee wasn't a defendant in an earlier case, an issue before the court, whether an apportionment is necessary has already been litigated and decided.

The U.S. Court of Appeals for the Fifth Circuit affirmed the dismissal of Mississippi's complaint against Memphis and concluded that the state must file an equitable apportionment action against Tennessee in the Supreme Court rather than seek damages against the city (Hood ex rel. Miss. v. City of Memphis, 570 F.3d 625, 2009 BL 122204 (5th Cir. 2009)).

Supreme Court Denied Mississippi Petition

The Supreme Court denied Mississippi's petition to hear oral argument on the Fifth Circuit's ruling. It also denied without prejudice Mississippi's motion to file a bill of complaint against Tennessee and Memphis in 2010 (Mississippi v. City of Memphis, 559 U.S. 901, 130 S. Ct. 1317, 175 L. Ed. 2d 1071, 2010 BL 15954 (2010)).

It has also argued that claims for damages are barred under Supreme Court precedent where the state doesn't have any ownership right to aquifer water but rather a usufructuary right, or the right to use, the resource.

The Tennessee Office of the Attorney General and Reporter declined to comment on the appointment of the special master.

C. Michael Ellingburg Sr. of Daniel Coker Horton & Bell PA in Jackson, Miss., is counsel of record for Mississippi.

David C. Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC in Washington, D.C., is counsel of record for Tennessee.

Leo M. Bearman of Baker, Donelson, Bearman, Caldwell & Berkowitz PC in Memphis, Tenn., is counsel of record for Memphis Light, Gas & Water.

To contact the reporter on this story: Lars-Eric Hedberg in Washington at lhedberg@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com