2. A TUTORIAL ON AMERICAN WATER LAW - OVERVIEW & FINDINGS.  To understand Tennessee’s options in dealing with these conflicts, we first provided an overview of relevant water law principles.  This review led to five conclusions:

·                     Tennessee is a riparian & common law state.  Under riparian law, a land owner has the right to “reasonable” use of the water flowing past his property subject to the equal rights of other riparians.  Water used but not consumed must be returned to the watercourse without impairing its quality.  Nonriparian use of water is prohibited except by municipalities.  Diverting water from the drainage area of the watercourse without return flow is deemed unreasonable and, if a downstream riparian complains, forbidden. 

·                     Groundwater users can pump from an aquifer underlying their land for reasonable use.  Water use on non-overlying land is prohibited.  Groundwater users’ rights are correlative to those of others - this means that in satisfying reasonable use, a user must not pump in quantities that  impair the ability of others whose land overlies the aquifer.

·                     Common law water rights are property rights but not ownership rights.  They are called “usufruct” - the right to use water as it is available.  Other riparian users must demonstrate damage to their present uses as a result of another’s use before courts will grant an injunction or require compensation.  However, if the user is a municipality, the courts usually won’t prevent the use, even if damage is demonstrated.

·                     Interbasin diversion may be stopped without proving actual damage.  Under riparian law, diversion is, per se, unreasonable.  Even though the issue has never come before Tennessee Courts, given the riparian users likely to be affected by diversion, a suit by someone is likely.

·                     Although riparian rights can’t be lost through disuse, a user whose use is “unreasonable” may “vest” (secure) that use by prescription.  Prescription is continued use over a period of usually 20 years without action to stop the use by those whose rights are threatened.  This is significant for the Memphis Sand Aquifer - it relates to Mississippi’s ability to complain against Tennessee’s ongoing water use.

3. TENNESSEE RIPARIAN LAW PRINCIPLES - SIGNIFICANCE TO THESE CONFLICTS.  Tennessee claims to own all the “waters of the state,” including groundwater (and excluding atmospheric moisture; e.g., clouds) and to hold them in public trust.  This fiduciary responsibility on behalf of its citizens, coupled with the state’s police powers to protect public health, navigation, wildlife and aquatic habitat, and to act in time of drought, gives it considerable power to manage its water.  The state does not have any actual property right to these waters except in cases where the state itself is a riparian (i.e.,  where state lands adjoin a watercourse).

·                     The governor can act to prevent uses that would damage public rights in water.  Although the General Assembly hasn’t enacted extensive administrative withdrawal permit programs, as have surrounding states, authority to prevent major damage is still considerable. 

·                     “Aquatic Resource Alteration Permit” (ARAP) rules could provide additional state authority to prevent interstate diversion of the Tennessee River.  Under these rules, supplemented by new rules being finalized, ARAPS can deny water withdrawals if they impose a negative impact on “instream” environments absent any polluting discharges (i.e., low river flow effects on fisheries).  This supplements other traditional legal protections. 

·                     Although the federal government generally defers to state law, where Congress has expressed a specific federal purpose (e.g., preventing pollution of interstate waters), federal law is supreme and states cannot regulate the federal government unless the latter waives its sovereign immunity.  Moreover, the Constitution provides that Congress has authority over interstate commerce and navigation.  Thus, navigable waters have overriding federal interests that states cannot impair through law. 

4. INTERSTATE WATER ALLOCATION  APPROACHES & METHODS.  In general, when a watercourse (surface or groundwater) flows through two or more states, and there is conflict between an upper and lower riparian over rights to that watercourse’s flow, there are six ways the issue can be legally resolved:

(1) A private lawsuit between water users in different states - these are becoming rare because states now take an interest in interstate water allocation on behalf of their residents. 

(2) An equitable apportionment lawsuit between different states - these are becoming more frequent and have led to a decline in private suits.

(3) Interstate allocation by act of Congress - without the need for consent by affected states’ legislatures.

(4) Allocation through agreement among all states with rights to the watercourse (interstate compact).

(5) State regulation of interstate water export.

(6) Interstate cooperation to allocate water without a compact - this is thought to be of minor importance and uncertain prospects. 

·                     Allocation through interstate compact is the preferred method because unlike the others, it permits certainty, is durable, provides greater state discretion in allocating water, and  is the least contentious in the long run.

5. THE TWO CASE STUDIES AS “WATER ALLOCATION” CONTROVERSIES

(A) The possible diversion of the Tennessee River near Chattanooga to supply the needs of Atlanta, Georgia.

Background.  Georgia is in the throes of a water war with Alabama and Florida, the focus of which is water allocation from two basins: the Alabama-Coosa-Tallapoosa and Apalachicola-Chattahoochee-Flint.  Two compacts, ratified by Congress in 1997, and scheduled to take effect once the three states agree on an allocation formula, will place verifiable limits on Georgia’s ability to draw water from both basins.  Among other options, Atlanta has considered exploring purchasing water from Chattanooga’s municipal supplier, the Tennessee American Water Company, and diverting it via pipeline.  From a legal standpoint, we found that:

·                     Although the Tennessee River is an interstate watercourse, since any hypothetical diversion would occur in Tennessee, it would likely be decided under Tennessee law.  Although the headwaters of several Tennessee tributaries rise in Georgia, Georgia isn’t a riparian to the Tennessee River.  Courts are unlikely to apportion water to a state that isn’t a riparian.

·                     Although there are no cases deciding interbasin transfers in Tennessee, diverting large amounts of water without return flow is probably impermissible under Tennessee law if any downstream riparian complains.  The lower riparian may not even have to show damages to stop the diversion (e.g., large interbasin transfers).  Generally, existing conditions are one factor which the courts consider when deciding the merits of such diversions.  

·                     While Georgia now receives some Tennessee River water, the amounts are small and the flow is returned to the river, generating no riparian conflicts.  Since 1997, Tennessee American Water Company has supplied water to Ft. Oglethorpe and Catoosa County, Georgia: communities experiencing high population growth.  However, the volumes discussed for an Atlanta diversion must be greater than 30 Mgal/d to be “economically feasible.”

·                     The U.S. Supreme Court has never considered the allocation of interstate waters to a state that has no riparian right to the water.  Thus, if the issue went to the court because of an equitable apportionment suit, the diversion would probably be prevented.  Legal scholars think it is unlikely that the Court would act in a manner that would create a property right where no such right now exists.

(B) Competition between water users in West Tennessee and Northern Mississippi over the Memphis Sand Aquifer

Background.  Memphis is one of the largest cities in the world to rely on groundwater wells for its water supply.  The city’s water is provided by a publicly-owned municipal utility, Memphis Light, Gas, and Water (MLGW).   MLGW’s wells tap into the Memphis Sand Aquifer, a reservoir underlying nearly 7400 mi² of W. Tennessee and parts of N. Mississippi, SW Kentucky, and E. Arkansas.  While MLGW is the largest aquifer user, DeSoto County, Mississippi, an area experiencing rapid population growth, views the aquifer as a potential source of future supply.  20-40 Mgal/d of Memphis’ nearly 145 Mgal/d withdrawn from the aquifer come from beneath DeSoto County.  Thus, demands have arisen to pursue a more integrated, regional approach to aquifer management.

·                     Two major problems could give rise to legal conflict between Mississippi and Tennessee regarding the MSA - Mississippi’s concern with declining water levels in the aquifer, and the MSA’s susceptibility to contamination.  Aquifer recharge occurs along a broad belt encompassing parts of three states and this area needs protection from development to preserve the aquifer.  A major cone of depression has developed in the Memphis area but it has not been determined if any “overdrafting” has occurred; i.e., that water levels could not return to normal if pumping ceased.

·                     There is concern that pumping from the MSA - by parties in Mississippi or Tennessee - may impair the rights of users in the other state.  Thus, under common law, MLGW could be held liable if it is shown that it is pumping in quantities that impair the rights of other land owners who overlie the aquifer in Tennessee or Mississippi.   Some landowners in Mississippi have complained that pumping for Memphis’ municipal use is damaging their ability to use the aquifer.  In the future, Tennessee landowners might possibly lodge complaints.  As of this writing, there has been no determination of a significant decline in water levels in Mississippi or of a measurable effect on well yields in north Mississippi. 

·                     A judgment against MLGW or other Tennessee water users regarding damage to the MSA could not only be brought to court in Mississippi but if the court rendered a judgment for injunctive relief against MLGW, it would probably have to be enforced by Tennessee courts.  Under the “Full Faith and Credit” clause of the U.S. Constitution, Tennessee must enforce a judgment from a Mississippi court.  A suit could properly be brought against MLGW in Mississippi because, although the damage was “caused” by a Tennessee entity, it “occurred” in Mississippi.

·                     It might be appropriate for Tennessee and Mississippi to act to restrain pumping of the MSA, to encourage Memphis and other large users to conserve on use, and to continue their efforts to better understand what is actually happening in the aquifer.  If the states of Tennessee and Mississippi do not act to protect their interests in protecting the aquifer, the issue may be taken to court, either by individuals claiming damage to their rights in Mississippi or Tennessee, or by a suit in the Supreme Court against one state brought by citizens of the other acting for its citizens. 

6. LONG-TERM CHALLENGES TO WATER SUPPLY WHICH UNDERLIE THESE CASES

·                     Water supply is generally plentiful statewide, but regional variations in use pose serious challenges.  E. Tennessee uses 2.5 times as much water as Middle Tennessee & 24 times as much as W. Tennessee due in part to power generation.  Moreover, while surface water use predominates statewide, groundwater constitutes 89% of water used for non-power purposes in W. Tennessee - with half of the state’s population (residing in the western one-quarter of the state) relying on groundwater for drinking water.

·                     Periodic drought is a major challenge to water supply and quality in the state.  This is evidenced by problems arising in 1985-88 where precipitation statewide was 75 percent of normal and streamflow about half of normal, leading to emergency measures to allocate and conserve in a few local areas of the state. 

·                     Additional water conflicts arising from proposed diversions could arise in the future.  Projected population increases/shifts may generate new conflicts, even without drought.  Existing water rights may be damaged or lost to new uses.  Trends show that water use for thermoelectric generation increased between 1975-1995, while agricultural water use increased from roughly 50 Mgal/d to over 85 Mgal/d between 1975-1990 before declining. 

·                     Tennessee must act consistently toward in-state and out-of-state users.  Thus, water diversions cannot simply be fought against out-of-state uses while allowed for in-state uses.  However, because in-state uses are, generally, more likely to return flow to the same system/basin than would be the case for out-of-state uses in a different basin, in-state uses would likely be more acceptable under riparian law and water quality statutes (i.e., the Utility District Act, Water Resource Act, and Water Quality Control Act).

7. INSTITUTIONAL MECHANISMS AND APPROACHES TO RESOLVE THESE CONFLICTS

·                     The viability of solutions to Tennessee’s water problems must be viewed in light of both legal precedent AND public opinion.  A survey of nearly 40 users representing various groups around the state, conducted last summer, suggests resistance to radical change in water management on the part of current users but willingness to accept moderate changes; including a statewide set of water supply data, a statewide planning process & drought management system, and mediation.

·                     Changes to current law, & new laws and institutions that might be considered include interstate compacts, especially for MSA; permits for large water withdrawals or interbasin transfers; and some kind of water marketing scheme.  Our survey found that a withdrawal permitting system and the selling of water rights would probably not be favored. Most believe water is plentiful & free. 

·                     Neighboring states (AL, GA, KY, MS, NC, VA) employ many methods to avert intrastate & interstate conflicts.  These have developed gradually, through consultation & coordination with many groups.  Drought emergency management plans, comprehensive assessment of vulnerabilities, and minimum stream flow regulations are some features of these approaches - and all these states require permits for most water withdrawals.  AL and NC have passed legislation allowing for the designation of areas which are experiencing critical stress wherein withdrawals can be restricted.  VA has groundwater management areas.  Basin-wide management and long term planning for water supplies are being given increasing consideration by these states as they begin to experience supply problems due to population growth and urbanization.  Finally, GA recently took steps to improve regional planning, including water planning, by requiring state involvement in land use planning in the 18-county Atlanta metro area.  While these states also face problems in implementation, they have in place procedures for managing withdrawal and inter-basin diversion.

·                     Interstate compacts are not panaceas.  Once consummated, they require regular, intensive, face-to-face negotiations and careful coordination of politically-neutral technical staffs. Congress no longer funds them, and disputes can still arise over demand projections & water allocation.                                                                                                    

·                     Water markets have arisen under extreme drought conditions, generally require a large physical infrastructure for “moving” water, and, if imposed by state statute, could be seen as a “takings” issue. Under riparian law, there is no right to a specified amount of water, and no such thing as “excess” water.  Thus, you one cannot contract delivery of a specific amount of water for a specified term.  Statutory change would be required to make water marketing work in Tennessee.  Moreover, if this market is mandatory, damages/compensation might have to be paid.  If the market is voluntary, damages to downstream riparians might occur.  Efforts to follow a market approach by allowing the sale and transfer of water rights brokered through state or local banks have had mixed success.