Supreme Court Rules On Out-Of-State Diversions Of Water

Jun 13: In the case of Tarrant Regional Water District. v. Herrmann, in the U.S. Supreme Court, Case No. 11-889. Appealed from the U.S. Court of Appeals, Tenth Circuit [See WIMS 9/27/11]. In this important, unanimous opinion for the High Court, involving out-of-state diversions of water, the Justices indicate that, "The Red River Compact, (or Compact), 94 Stat. 3305, allocates water rights among the States within the Red River basin as it winds through Texas, Oklahoma, Arkansas, and Louisiana. Petitioner Tarrant Regional Water District (Tarrant), a Texas agency, claims that it is entitled to acquire water under the Compact from within Oklahoma and that therefore the Compact preempts several Oklahoma statutes that restrict out-of-state diversions of water. In the alternative, Tarrant argues that the Oklahoma laws are unconstitutional restrictions on interstate commerce. We hold that Tarrant's claims lack merit.    

    The High Court points out that absent an agreement among the States, disputes over the allocation of water are subject to equitable apportionment by the courts, Arizona v. California, 460 U. S. 605, 609 (1983), which often results in protracted and costly legal proceedings. In 1955, to forestall future disputes over the River and its water, Congress authorized the States of Arkansas, Louisiana, Oklahoma, and Texas to negotiate a compact to apportion the water of the Red River basin among themselves. The negotiations lasted over 20 years and finally culminated in the signing of the Red River Compact in 1978. Congress approved the Compact in 1980, transforming it into federal law.

    At issue in this case are rights under the Compact to water located in Oklahoma's portion of subbasin 5 of Reach II. Reach II posed the greatest difficulty to the parties' efforts to reach agreement. The problem was that Louisiana, the farthest downstream State, lacks suitable reservoir sites and therefore cannot store water during high flow periods to meet its future needs. The upstream States (Texas, Oklahoma, and Arkansas), which control the River's flow, were unwilling to release water stored within their own reservoirs for the benefit of any downstream States, like Louisiana. Without any such release, there would be no guaranteed flow of water to Louisiana.

 

    The provisions of the Compact relating to Reach II were crafted to address this problem. Subbasins 1-4 ended in last downstream major damsites controlled by the individual states. Subbasin 5, instead required that water be allowed to flow to Louisiana through the main stem of the River at certain minimum levels, assuring Louisiana an allocation of the River's waters and solving its flow-through problem.

 

    The provision of the Compact central to the present dispute is §5.05(b)(1), which sets the following allocation during times of normal flow: "(1) The Signatory States shall have equal rights to the use of runoff originating in subbasin 5 and undesignated water flowing into subbasin 5, so long as the flow of the Red River at the Arkansas-Louisiana state boundary is 3,000 cubic feet per second [hereinafter CFS] or more, provided no state is entitled to more than 25 percent of the water in excess of 3,000 [CFS]."

 

    Tarrant proposed to divert the Kiamichi River, at a point located in subbasin 5 of Reach II, before it discharges into the Red River and applied to Oklahoma Water Resources Board (OWRB, the respondent in this case) for a permit. Tarrant knew, however, that Oklahoma would likely deny its permits because various state laws (collectively, the Oklahoma water statutes) effectively prevent out-of-state applicants from taking or diverting water from within Oklahoma's borders.

 

    When Tarrant filed its permit application, it also filed suit against respondents in Federal District Court. Tarrant sought to enjoin enforcement of the Oklahoma water statutes by the OWRB. Tarrant argued that the statutes, and the interpretation of them adopted by Oklahoma's attorney general, were preempted by Federal law and violated the Commerce Clause by discriminating against interstate commerce in water.

 

    The District Court granted summary judgment for the OWRB on both of Tarrant's claims. The Tenth Circuit affirmed. 656 F. 3d 1222, 1250 (2011). The Supreme Court, in its current opinion now affirms the judgment of the Tenth Circuit. The High Court rules, "The Red River Compact does not preempt Oklahoma's water statutes because the Compact creates no cross-border rights in its signatories for these statutes to infringe. Nor do Oklahoma's laws run afoul of the Commerce Clause. We affirm the judgment of the Court of Appeals for the Tenth Circuit."

 

    [Note: The decision supports the rights of states to protect their own water rights and could have important ramifications in existing and future water disputes over Great Lakes water use and out-of-state diversions]. In fact, a number of states concerned about protecting their water rights via various compacts, particularly against Commerce Clause claims, filed an amicus brief in support of OWRB. The states included: CO, ID, IN, MI, NV, NM, and UT.

 

    Access the complete opinion (click here). Access the Supreme Court docket (click here). Access the merit and amicus briefs, including the one from the states above (click here). Access the complete Tenth Circuit opinion (click here). Access more information and analysis on the opinion from the SCOTUS blog (click here). [#Water, #GLakes]

 

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American Trucking Association v. Los Angeles

Jun 13: In the U.S. Supreme Court, Case No. 11-798. Appealed from the U.S. Court of Appeals, Ninth Circuit [See WIMS 9/27/11]. In this unanimous High Court decision, the Justices consider whether Federal law preempts certain provisions of an agreement that trucking companies must sign before they can transport cargo at the Port of Los Angeles. The Supreme Court concludes that "the Federal Aviation Administration Authorization Act of 1994 (FAAAA) expressly preempts two of the contract's provisions, which require such a company to develop an off-street parking plan and display designated placards on its vehicles." However, the High Court declines "to decide in the case's present, pre-enforcement posture whether, under Castle v. Hayes Freight Lines, Inc., 348 U. S. 61 (1954), federal law governing licenses for interstate motor carriers prevents the Port from using the agreement's penalty clause to punish violations of other,non-preempted provisions."

 

    Explaining further, the unanimous Court says, ". . .the kind of enforcement ATA [American Trucking Association] fears, and believes inconsistent with Castle, might never come to pass at all. In these circumstances, we decide not to decide ATA's Castle-based challenge. That claim, by its nature, attacks the Port's enforcement scheme. But given the preenforcement posture of this case, we cannot tell what that scheme entails. It might look like the one forbidden in Castle (as ATA anticipates), or else it might not (as the Port assures us). We see no reason to take a guess now about what the Port will do later. There will be time enough to address the Castle question when, if ever, the Port enforces its agreement in a way arguably violating that decision. " The Court said, ". . .the Castle question because the case's pre-enforcement posture obscures the nature of the agreement's remedial scheme, rendering any decision at this point a shot in the dark." 

 

    The Castle v. Hayes Freight Lines, Inc., case of 1954 held that Illinois could not bar a Federally licensed motor carrier from its highways for prior violations of state safety regulations. The parties here dispute whether Castle restricts the Port's remedial authority. The Port echoes the Ninth Circuit's view that banning a truck from "all of a State's freeways" is meaningfully different from denying it "access to a single Port." ATA responds that because the Port is a "crucial channel of interstate commerce," Castle applies to it just as much as to roads.

 

    ATA President and CEO Bill Graves hailed the opinion and said, "We are gratified that, at the conclusion of many years of litigation, the highest court in the land unanimously agreed with ATA on these rules. Our position has always been that the Port's attempt to regulate drayage operators -- in ways that had nothing to do with its efforts to improve air quality at the Port -- was inconsistent with Congress' command that the trucking industry be shaped by market forces, rather than an incompatible patchwork of state and local regulations. The decision is sure to send a signal to any other cities who may have been considering similar programs which would impermissibly regulate the port trucking industry."

 

    ATA characterized the case saying, at issue was the Port's attempt to impose so-called "concession agreements" on drayage operators wishing to move goods in and out of the Port. The Federal Aviation Administration Authorization Act prohibits the enforcement of any state or local "law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier." The question before the Supreme Court was whether certain provisions of the concession agreements that undisputedly "related to a price, route, or service" of motor carriers nevertheless escaped preemption because the Port asserted that it imposed these requirements to serve its "business interest" in expanding the Port, rather than in an effort to regulate the drayage market.

 

    ATA indicates that the Court concluded that, whatever the Port's asserted motivation, the concession agreements amounted to "classic regulatory authority" and thus fell within the scope of the FAAAA's preemption provision. It observed that the concession agreements, while technically contracts between the Port and trucking companies, were not the "result merely of the parties' voluntary commitments."  Rather, the Port compelled trucking companies to enter into the contracts as a condition of access to the Port, by "wielding coercive power over private parties, backed by the threat of criminal punishment."  By imposing the concession agreements through coercion rather than "ordinary bargaining," Los Angeles was "performing its prototypical regulatory role."

 

    Access the complete opinion (click here). Access the Supreme Court docket (click here). Access the merit and amicus briefs in the case (click here). Access the complete Ninth Circuit opinion and dissent (click here). Access a release from ATA (click here). [#Air, #Transport, #CA9, #SupCt]

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Conservation Congress v. U.S. Forest Service

Jun 13: In the U.S. Court of Appeals, Ninth Circuit, Case No. 12-16452. Appeal from the United States District Court for the Eastern District of California. The Appeals Court explains that the case arises from a Federal agency's authorization of a timber sale, known as the Mudflow Vegetation Management Project (Mudflow Project or Project), and its potential effects on the Northern Spotted Owl's (Owl) critical habitat. Plaintiff-Appellant Conservation Congress (CC) sued Federal Defendants-Appellees, alleging that they had failed to adequately evaluate the effects of the Mudflow Project on the Owl's critical habitat, in violation of section 7(a)(2) of the Endangered Species Act (ESA), among other claims.

 

    CC unsuccessfully sought to enjoin the Mudflow Project based on its ESA claim and appealed the district court's denial of its motion for a preliminary injunction. The Appeals Court concluded that "the district court did not abuse its discretion when it determined CC failed to show a likelihood of success on the merits as to its ESA claim that Defendants arbitrarily or capriciously approved the Mudflow Project and affirmed the district court decision.

 

    CC alleges that: (1) the Forest Service's biological assessment (BA) for the Mudflow Project failed to adequately evaluate the Project's potential effects on the Owl's critical habitat; and (2) the FWS issued an arbitrary concurrence letter accepting the BA's conclusion. A week before oral argument, Defendants filed a Suggestion of Mootness, seeking dismissal of the appeal because of recent events. Defendants argued that a new 2013 habitat designation, and subsequent reinstatement of informal consultation between the Forest Service and the FSW, render this appeal moot; however, the Appeals Court disagreed.

 

    First, CC asserts that the district court committed legal error by disregarding the purported requirement that the Forest Service perform a "cumulative effects" analysis during its informal consultation with the FWS. Second, CC claims that the district court committed clear factual error by ignoring evidence controverting Defendants' conclusion that the Mudflow Project would "degrade" the Owl's critical habitat, but not result in an adverse effect.

 

    The Appeals Court rules, "In essence, CC demands that Defendants conduct a more extensive, NEPA-like cumulative impacts analysis. But NEPA and ESA call for different regulatory review, and we must defer to the procedural mechanisms established by the implementing agency. . . CC's argument also fails because there is simply no statutory mandate to consider cumulative effects during informal consultation. . . under the plain meaning of 50 C.F.R. § 402.12(f), consideration of cumulative effects is permissive, not mandatory. The district court correctly determined that the Forest Service did not abuse its discretion in failing to consider a factor that it was not required to consider in the

first place."

 

    The Appeals Court also ruled, ". . .from the totality of the factors considered, that a thinning of 22 acres, out of a total of 408 acres of the Owl's degraded foraging habitat, to a basal area of 100–125 square feet per acre would necessarily mean that the Owl's total foraging habitat would be 'adversely' modified -- which, in the regulatory context, means appreciably diminished. . . Given the totality of the findings, Defendants reasonably concluded that the Mudflow Project 'may affect, but is not likely to adversely affect' the Owl or its critical habitat. . . Therefore, the district court did not abuse its discretion in deferring to Defendants' determination that the Mudflow Project would not likely adversely affect the Owl or its critical habitat, thus obviating the need for formal consultation."

 

    Access the complete opinion (click here). [#Wildlife, #Land, #CA9]

 

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Doe Run Resources Corp. v. Lexington Insurance Co.

Jun 13: U.S. Court of Appeals, Eighth Circuit, Case No: 12-2215. Appealed from the U.S. District Court for the Eastern District of Missouri - St. Louis. The Appeals Court explains that Doe Run Resources Corporation (Doe Run), the largest integrated lead producer in the Western Hemisphere, operates the Sweetwater Mine and Mill near Viburnum, Missouri. Doe Run extracts and crushes ore containing lead and other metals at the mine, processes the crushed ore at a mill near the mine, and either sells the resulting lead concentrate on the world market or transports it by truck to Doe Run's smelter for processing into ingots, bars, and other forms. In 2006, Nadist, LLC, a neighboring landowner, sued Doe Run, alleging environmental property damage resulting from the mine and mill operations (the Nadist Lawsuit).

 

    More than three years later, Doe Run tendered defense of the Nadist Lawsuit to Lexington Insurance Company (Lexington) under Commercial General Liability (CGL) policies Doe Run purchased between 1998 and 2006. When Lexington denied coverage on numerous grounds, Doe Run commenced this declaratory judgment action seeking to enforce Lexington's contractual duty to defend Doe Run. The district court granted summary judgment dismissing the complaint, concluding that Lexington had no duty to defend because the policies' absolute pollution exclusions unambiguously bar coverage of all claims asserted in the Nadist Lawsuit. The Appeals Court indicates that, "Missouri law governs the issues raised on appeal in this diversity case."

 

    The Appeals Court rules, "Here, the more specific lead exclusion, if included, would have overlapped the absolute pollution exclusion as it applies to the release of lead "pollutants," but the two exclusions would not have conflicted. The parties' deletion of the lead exclusion left the remainder of the CGL policy in full force and effect, including its absolute pollution exclusion. The judgment of the district court is affirmed."

 

    Access the complete opinion (click here). [#Remed, #CA8]

 

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