Vol. 51-2 Water Rights & Utilities

Water Rights & Utilities

Delivery Credit of Evaporated Water: Texas v. New Mexico

Introduction

On December 14, 2020, the United States Supreme Court resolved a six-year-long deliver-credit dispute under the Pecos River Compact between Texas and New Mexico.

The Court held that New Mexico’s motion seeking delivery credit was timely.[1] On the merits, it held that New Mexico is entitled to the delivery credit of evaporated water stored at the request of Texas.[2]

The Pecos River Compact

The Pecos River originates in New Mexico and flows south into Texas, emptying into the Rio Grande River.[3] To equitably apportion the Pecos River’s water use, Texas and New Mexico signed the Pecos River Compact in 1948,[4] and, one year later, Congress approved the Compact to “‘provide for the equitable division’” and “‘remove causes of present and future controversies.’”[5] The Compact determines the amount of water that New Mexico has to deliver to Texas annually using an inflow-outflow method.[6] After some early disputes, in 1987 the Supreme Court issued a decree setting out the states’ rights and appointed a disinterested River Master to make the calculations.[7] Later, the Court integrated the River Master’s Manual as part of its amended decree and required the River Master to abide by the Manual when making the calculations.[8]

The Current Dispute

The current case’s dispute is rooted in a tropical storm that caused heavy rainfall in the Pecos River Basin in the fall of 2014.[9] The rain filled Red Bluff Reservoir in West Texas, just south of the New Mexico border.[10] In November, Texas’s Pecos River Commissioner wrote to his counterpart in New Mexico, requesting that New Mexico store Texas’ portion of the flow until Red Bluff Reservoir was ready to take it.[11] The New Mexico commissioner agreed and explained that the water “belongs to Texas” and that “‘[e]vaporative losses . . . should thus be borne by Texas’”.[12] Before the correspondence, the Bureau of Reclamation ordered New Mexico to hold the water in the Brantley Reservoir for safety concerns.[13] The flow was finally released to Texas in August 2015 and significant water had evaporated.[14]

The River Master did not calculate the water loss in his preliminary report but outlined a procedure for resolving this dispute.[15] According to the procedure, either state could file a motion to the River Master if they could not reach an agreement on a joint proposal.[16] In 2018, New Mexico filed a motion because negotiations between the states eventually broke down.[17] The River Master granted delivery credit for New Mexico, and Texas quickly moved for Supreme Court review, invoking the Court’s original jurisdiction.[18]

The Arguments of Texas and New Mexico

Texas argued that New Mexico forfeited the right to object to the River Master’s 2015 calculations by failing to follow the Manual’s deadlines, and that the River Master lacked authority to retroactively modify past reports without both states’ consent.[19] Texas claimed that the River Master erred in applying equitable tolling and in permitting New Mexico’s untimely request because the Manual deadlines are jurisdictional.[20]

Texas also argued that only limited circumstances under the Compact allow apportionment of evaporative losses occurring in New Mexico: under Article VI, the water is “unappropriated floodwater” or under Article XII, for consumptive use by the federal government when storing water “for use in” Texas.[21] Texas reasoned that because the water was not constructively held for use in Texas, Article XII does not apply.[22] Because the River Master decided the water was not unappropriated floodwater, Article VI does not apply.[23]

New Mexico argued that the equities weigh heavily in New Mexico’s favor.[24] It alleged that because the Court had “inherent authority to manage its amended decree” and the River Master’s authority was derived directly from the Court, he was empowered to take actions necessary to fulfill his duties, including adjusting deadlines and adopting procedures to address novel accounting issues.[25] A narrow interpretation of the River Master’s functions would defeat both the purpose for which the River Master was appointed and the Compact’s aim to promote interstate comity.[26] New Mexico argued that its motion was timely because it relied on the River Master’s devised procedure.[27] New Mexico further argued that “the plain language of the Compact, Amended Decree, and Manual” required Texas to bear the loss, and the record supported the River Master’s determination.[28] It framed the remedy it sought as a “one-time credit,” which was not a retroactive modification of the Manual but a correct application of equitable tolling doctrine.[29]

The Court’s Decision

The Court agreed with the River Master’s determination and denied Texas’s motion for review.[30] The Court disagreed with Texas’s first argument that the request was untimely.[31] It reasoned that because Texas had not objected to the River Master’s negotiation procedure, “it cannot run away from the procedure it agree[d] to.”[32] The Court ruled that the amended decree’s objections’ deadlines are not jurisdictional.[33]

On the merits, the Court agreed with New Mexico and the United States that the water was stored in New Mexico at Texas’s request.[34] The Court looked at the text of § C.5 of the Manual, which states:

If a quantity of the Texas allocation is stored in facilities constructed in New Mexico at the request of Texas, then . . . this quantity will be reduced by the amount of reservoir losses attributable to its storage, and, when released for delivery to Texas, the quantity released less channel losses is to be delivered by New Mexico at the New Mexico-Texas state line.[35]

The Court found that the stored water was part of the “Texas allocation” because the water would have flowed across the state line and counted toward Texas’s allocation but for the storage at Texas’s request.[36] The Court also found that New Mexico stored the water, clarifying § C.5 does not purport to define “stored” any way other than its ordinary meaning. The Court further found that Texas made the storage request.[37] In conclusion, the Court held that the text of § C.5 and the record evidence of the states’ correspondence established that the delivery credit should be granted to New Mexico.[38]

Justice Alito concurred in part and dissented in part.[39] He agreed that New Mexico did not forfeit any objection to the 2014 report but thought the River Master did not have the authority to change the amended decree.[40] He would have vacated and remanded the case because the relevance of Texas’s request for storage and New Mexico’s agreement with that request was unclear.[41]

Conclusion

The Court based its judgment on the Manual’s text and the correspondence between the Texas and New Mexico Pecos River Commissioners. It left some questions unaddressed. In the footnotes, the Court listed aspects of the River Master’s decision that were left unaddressed, which limited the case’s precedential value:[42] The Court did not reach the question of whether the River Master will have the authority to alter the amended decree. As Justice Alito pointed out, this may be inviting future problems. Moreover, the Court did not rule either on issues related to “unappropriated floodwaters” in the Complaint’s Article III or “consumptive use of water by the United States” in Article XII, leaving the interpretation of specific Compact terms open.

The case’s precedential value was further limited by the fact that a River Master was involved. For cases without the appointment of a River Master, the case does not provide much guidance for water-right lawyers.

Emily Willms Rogers is the Managing Partner of Bickerstaff Heath Delgado Acosta LLP and represents public and private clients in water rights, water quality, utility, and environmental law matters.

Kimberly Kelley is an attorney at Bickerstaff Heath Delgado Acosta LLP and practices in the areas of municipal, open government, water, and environmental law. She earned her undergraduate degree from Texas A&M University and graduated Texas Tech University School of Law, where she served on the editorial board of the Law Review.

Zhu Wen is a second-year student at The University of Texas School of Law and Staff Editor of the Texas Environmental Law Journal.