Texas, New Mexico to Argue Motion in Rio Grande Case

By Lars-Eric Hedberg

Aug. 18 — The special master in Texas's complaint against New Mexico over the allocation of Rio Grande water will consider, during oral arguments Aug. 19, the point of delivery requirement imposed by a compact.

The oral argument on New Mexico's motion to dismiss will be held at the U.S. District Court for the Eastern District of Louisiana in New Orleans.

New Mexico moved to dismiss the complaint in April 2014, arguing that both Texas and the U.S., also a plaintiff in the action, failed to state claims because their complaints “rest on the incorrect notion that the Compact imposes a Texas stateline delivery obligation and a duty on New Mexico to protect Rio Grande Project deliveries to the stateline.”

Instead, Article IV of the 1938 Rio Grande Compact requires New Mexico to deliver water to a point roughly 100 miles above the state line, the motion to dismiss said.

In its complaint, filed in January 2013 and granted by the Supreme Court a year later, Texas alleges that New Mexico is violating the 1938 compact by allowing surface water diversions and groundwater pumping below Elephant Butte Reservoir, part of the Bureau of Reclamation's Rio Grande Project. The bureau delivers project water to New Mexico and Texas irrigators holding federal contracts.

Citing its federal interests in protecting and distributing project water, the U.S. filed a motion in February 2014 to intervene as a plaintiff in this original action, and the U.S. Supreme Court granted the motion in March of that year.

Some Expect Texas to Prevail

Water law attorneys told Bloomberg BNA that the compact is ambiguous and its interpretation requires additional evidence. They also expect Texas to prevail on New Mexico's motion to dismiss.

Robert Abrams, professor of law at Florida A&M University, told Bloomberg BNA Aug. 18 that the case requires additional factual development and that he expects a merits ruling.

“I'd be very surprised if Texas and the U.S. do not get plenary review on the merits,” Abrams said.

Kevin Patrick, a senior partner at Patrick, Miller, Noto PC and a Water Law & Policy Monitor advisory board member, told Bloomberg BNA Aug. 18 that the project and compact purposes don't allow New Mexico users to take project water intended for Texas.

“I can't imagine the special master not ruling for Texas at this point,” Patrick said.

If Special Master A. Gregory Grimsal grants New Mexico's motion to dismiss, the U.S. Supreme Court, which appointed Grimsal, would have to ratify the ruling.

Rio Grande Compact, Project Water

The project is a system of dams, canals, diversions and other infrastructure constructed to provide for irrigation, flood control, hydroelectricity and water storage and transfer. According to the bureau, roughly 60 percent of the lands receiving water are in New Mexico, and 40 percent are in Texas.

In addition to delivering project water to users in southern New Mexico and Texas, the U.S. delivers 60,000 acre-feet of water per year to Mexico under the 1906 Convention Between the United States and Mexico Providing for the Equitable Distribution of the Waters of the Rio Grande for Irrigation Purposes.

Under Article IV, “The obligation of New Mexico to deliver water in the Rio Grande at San Marcial, during each calendar year, exclusive of the months of July, August and September,” shall correspond to certain index supplies.

Due to changed conditions, the Rio Grande Compact Commission, acting under Article V of the agreement, moved the delivery point to the reservoir to Elephant Butte Reservoir.

Primarily at issue in New Mexico's motion to dismiss is the point of delivery requirement.

New Mexico: Compact Language Clear

To support its contention, New Mexico relied on the plain language of the compact and highlighted the difference between its delivery obligations and those of Colorado, another signatory.

Article III calls for Colorado to deliver water to New Mexico at the stateline, but Article IV doesn't contain a requirement for New Mexico to deliver water at its border with Texas. Instead, it states that water shall be delivered at San Marcial in New Mexico—later shifted to Elephant Butte Reservoir.

This distinction, according to New Mexico, shows that the signatory states “and Congress knew how to fix a State's delivery obligation at the stateline.”

Relying on the express terms of the compact, it also argued that the compact doesn't impose “a silent obligation to cap depletions below” the reservoir within New Mexico at a level equal to when the compact was signed.

It noted that other compact terms contain delivery adjustments for depletions, which can be groundwater withdrawal or surface water diversions, but is silent as to any comparable language limiting increased or new diversions below the reservoir.

Lastly, New Mexico rejected claims by Texas and the federal government that the compact imposes an affirmative duty on New Mexico not to allow its groundwater and surface water users to intercept project water, noting that no such duty exists in the compact. Under Section 8 of the federal Reclamation Act, the project right is defined by state law and doesn't include groundwater, New Mexico wrote.

Texas, U.S.: Compact Purpose Paramount

In its June 2014 brief in opposition to the motion, Texas wrote that New Mexico misconstrued its delivery argument and urged the court to interpret consistently with the purpose of the agreement.

“New Mexico violates the Compact, including its delivery obligation in Article IV, when it allows water users to intercept, deplete or otherwise divert flows of the Rio Grande below Elephant Butte, which adversely affects Rio Grande Project operations including the amount of water that flows to irrigable lands in Texas,” Texas wrote.

Texas also said that the court “must interpret the Compact to give effect to the critical term ‘deliver' as it is used in Article IV, and avoid an interpretation that renders the term void or insignificant.”

New Mexico's interpretation, which, according to Texas, allows users to deplete waters below the reservoir, is inconsistent with the purpose of the compact and renders meaningless its delivery obligation.

The U.S. wrote in its brief that the Supreme Court “previously recognized that groundwater pumping that interferes with the equitable apportionment of water under an interstate water compact must be counted toward a state's use of its equitable apportionment” in Kansas v. Nebraska, 530 U.S. 1272 (U.S. 2000), when it denied Nebraska's motion to dismiss.

Finding otherwise in this case, the U.S. said, would defeat the fundamental purpose of the compact: to apportion Rio Grande waters among the signatory states.

Compact Language Called Ambiguous

Patrick said most compacts, including the Rio Grande, are not well-drafted.

“Compacts tended to be drafted by state engineers over a series of meetings, over a number of years,” Patrick said. “Where they couldn't reach an agreement, those provisions are ambiguous and lead to litigation.”

Adding to the ambiguity, most compacts were drafted before the relationship between surface water and groundwater was appreciated, Patrick added.

The Rio Grande Compact is silent on groundwater,

Abrams said the parties today are well aware of the hydrologic connection between basin surface water and groundwater.

“The silence on groundwater cuts in New Mexico's favor,” he said. “If it were explicitly excluded by compact, or it said New Mexico had no duty to prevent withdrawals harming compact deliveries, there would be no controversy on this point.”

Abrams said, however, that he believes the Supreme Court has left room for compact interpretation against the plain language of such agreements.

“Silence does not mean Texas loses,” he said.

Need for Extrinsic Evidence

Patrick and Abrams agreed that the compact is ambiguous, which means that the parties need to introduce extrinsic evidence to determine the meaning of the agreement.

Extrinsic evidence is any evidence not contained in a contract, such as the history of negotiations. Although they have the effect of federal law, the Supreme Court has construed compacts as contracts between two or more states.

“The plain language is not clear; therefore the special master will need to look at extrinsic evidence, such as the project purposes,” Patrick said. “This means it is far too early in the case to decide on a motion to dismiss.”

Abrams added that the special master would go back to the parties' discussions framing the compact to “discern their intentions.”

“Unless the legislative history clearly favors New Mexico's position, the case will move on from there” he said.

Compact Purpose

Patrick said Texas's frustration of compact purpose argument is strong.

“The compact was drafted to effectuate the project purposes, so we can't look at the language in a vacuum,” Patrick said. “It was drafted with the understanding that New Mexico is to deliver to Texas water at Elephant Butte, so it would make no sense to allow New Mexico's non-project water users to take this water below.”

“If you have an obligation to deliver water, and this is the purpose of the compact, then that needs to be upheld,” he said.

Abrams said that the purpose would become clear from extrinsic evidence introduced at a later time.

Pam Bush, Delaware River Basin Commission secretary and assistant general counsel, told Bloomberg BNA Aug. 18 that groundwater pumping affecting surface water allocated by a compact has been an issue in a recent interstate compact dispute.

“Groundwater pumping was an issue in the Republican River Compact original action brought by Kansas against Nebraska,” she said. “Kansas claimed Nebraska was depleting surface water allocated to the downstream state by authorizing withdrawals of hydrologically connected groundwater. Because there was a connection, Nebraska had to place controls on groundwater withdrawals to meet its compact obligations.”

Supreme Court Cited Breach of Compact

A majority of the Supreme Court ruled in February 2015 that Nebraska breached the compact during 2005 and 2006 by consuming 70,869 acre-feet of water and entered a judgment for $5.5 million in damages, $1.8 million of which represented partial disgorgement of Nebraska's benefit from breaching the agreement (Kansas v. Nebraska, 135 S. Ct. 1042, 191 L. Ed. 2d 1 (U.S. 2015)).

Bush added that if the case moves beyond the compact language issue, she would expect groundwater modeling to play a key evidentiary part.

Abrams also said that Kansas v. Nebraska would inform the Rio Grande dispute.

“Assuming the special master can discern the parties' intent, groundwater pumping, as we saw in the high plains case, can give rise to an action under a compact allocating surface water,” Abrams said.

“It is important to note that the complained of groundwater pumping in Kansas v. Nebraska was above the point of delivery, whereas it is occurring below the compact-mandated point of delivery in the Rio Grande Basin,” he said.

“Although it isn't spot on from a factual standpoint, Kansas v. Nebraska is good precedent for this case,” Patrick added.

Lessons Learned from Tarrant

“State lines were also important to the Supreme Court in the Red River Compact case,” Abrams said.

In Tarrant Regional Water District v. Herrmann, 133 S. Ct. 2120, 186 L. Ed. 2d 153 (U.S. 2013), the U.S. Supreme Court found that the Red River Compact was silent as to whether a Texas water district could obtain cross-border rights to Oklahoma water and held the compact “does not pre-empt Oklahoma's water statutes because the Compact creates no cross-border rights in its signatories for these statutes to infringe” upon.

According to Patrick, Tarrant contains mixed signals for the parties.

In what could be a warning for Texas and the U.S., “the Supreme Court focused on state sovereignty and used Oklahoma water law to interpret a federal compact,” said Patrick, who was a counsel for the Tarrant Regional Water District.

However, “the Supreme Court did not look at the plain language of the compact in Tarrant,” Patrick said. “They really juxtaposed state rights and sovereignty with the compact.”

Abrams believes the cases favor neither party.

“Precedent pulls in both directions, so no matter what happens before the special master, there may be federal review,” he said. “The Supreme Court wants a full deck of facts, especially in a case of first impression where an international treaty is also at issue.”

Motion to Intervene Argued

Grimsal also will hear oral argument Aug. 20 on Elephant Butte Irrigation District's motion to intervene.

Generally, non-state parties can't intervene in original actions because when a state begins or defends such an action involving its sovereign interests, it “must be deemed to represent all its citizens” (Kentucky v. Indiana, 281 U.S. 163, 50 S. Ct. 275, 74 L. Ed. 784 (U.S. 1930)).

A party seeking to intervene, whose state is already a party, however, may do so if it shows “some compelling interest in his own right, apart from his interest in a class with all other citizens and creatures of the state, which interest is not properly represented by the state” (New Jersey v. New York, 345 U.S. 369, 73 S. Ct. 689, 97 L. Ed. 1081 (U.S. 1953)).

In 2010, the Supreme Court ruled on three non-state entities' motions to intervene in an interstate water dispute.

After South Carolina filed an original action against North Carolina asking the Supreme Court to equitably apportion water from the Catawba River, the Catawba River Water Supply Project, Duke Energy Carolinas LLC, and the city of Charlotte sought to intervene.

Supreme Court Limited Intervenors

Although the special master granted all three motions, the Supreme Court held that only the water supply project and Duke Energy could intervene (South Carolina v. North Carolina, 558 U.S. 256, 130 S. Ct. 854, 175 L. Ed. 2d 713 (U.S. 2010)).

The high court emphasized their bi-state operations and found that they showed compelling interests apart from citizens of both states that the states could not properly represent—the water supply project supplies water from the river to North Carolina's Union County and South Carolina's Lancaster County, and Duke Energy operates 11 dams and reservoirs in both states that generate electricity and control flows.

According to its December 2014 motion to intervene, the irrigation district represents the interests of agricultural water users in southern New Mexico who receive supplies from the project and delivers water to them. It also operates structures on the river that divert water to both it and the El Paso County Water Improvement District No. 1 in Texas and coordinates reservoir releases, as well as owning the project distribution and drainage system that captures project return flows and delivers them to project beneficiaries in both states.

Based on its project responsibilities, the irrigation district contended that its interest is compelling and separate from other New Mexico citizens.

It also wrote that New Mexico cannot represent its interests.

“New Mexico, although representing the interests of water users in New Mexico, including both Project and non-Project users, has no particular responsibility for ensuring the integrity and feasibility of the Project, and for ensuring that adequate Project water supplies reach users in the Project area in Texas.”

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