Over the past year, federal courts in Oklahoma have entered rulings resolving many of the claims at issue in the fight over whether Oklahoma water can be transferred to water providers located in Texas. Oklahoma has a series of statutes that impose limits, restrictions, and a moratorium on water sales across state lines.

These statutes were challenged in two separate federal-court lawsuits – one by Tarrant Regional Water Authority (Tarrant Regional), and the other by the City of Hugo and its municipal authority. Tarrant Regional sued the individual members of the Oklahoma Water Resources Board (OWRB) seeking to set aside the restrictions on out-of-state water sales so that it could acquire surface-water appropriations to export to Texas. The City of Hugo and its municipal authority likewise sued the OWRB board members, seeking to set aside the restrictions so that it could sell water to the City of Irving, Texas.

It is anticipated that these two disputes will be making their way through the U.S. Court of Appeals for the Tenth Circuit over the next year.

On November 18, 2009, Judge Joe Heaton, sitting in the U.S. District Court for the Western District of Oklahoma, granted summary judgment, in part, in favor of the OWRB board members and against Tarrant Regional. Judge Heaton’s decision rejected Tarrant Regional’s claims that the moratorium on water sales violated the federal Commerce Clause. The argument was that the federal Commerce Clause prohibits state laws that would discriminate against other states regarding articles of commerce, such as water.

In Sporhase v. Nebraska, 458 U.S. 941 (1982), the U.S. Supreme Court held that restrictions on out-of-state water transfers would require Commerce Clause scrutiny – while leaving open the question as to whether such restrictions might survive such scrutiny. The Tarrant Regional case turned on the existence of the Red River Compact – an agreement between Oklahoma, Texas, and Louisiana regarding the allocation of water in the Red River and its tributaries. The Red River Compact was approved by Congress, as a result, and carries the same force and effect as a federal law. The Red River Compact applies directly to the water at issue and specifically contemplates allocating the water between the states involved. The Compact authorized the states to make full use of the water allocated to it “in any manner deemed beneficial by that state.” The Court determined that protection of Oklahoma’s water for use in Oklahoma was, in fact, one of the purposes of the Red River Compact.

Based on this analysis, Judge Heaton rejected Tarrant Regional’s challenge against the moratorium against out-of-state water sales. Judge Heaton noted that the case presented a “close question.”

In resisting Judge Heaton’s November 18, 2009 decision, Tarrant Regional claimed that it had identified public and private parties interested in selling water not subject to the Red River Compact. In his November 18, 2009 decision, Judge Heaton declined to reach the issue on the basis that it was speculative and uncertain. Judge Heaton likewise took care to point out that he did not decide whether the Commerce Clause would prevent Oklahoma from restricting out-of-state sales of water not subject to the Red River Compact.

As one might expect, Tarrant Regional quickly sought to amend its complaint to add more information regarding its intent to purchase groundwater that would fall outside the Red River Compact. The OWRB argued, and Judge Heaton agreed, that existing Oklahoma statutes would not appear to pose an obstacle to the export of groundwater. But because Tarrant Regional had not yet filed its application for export of groundwater, Judge Heaton determined that the claim was not yet ripe for consideration.

In addition, in its amended complaint, Tarrant Regional added claims that it intended to purchase water from the Apache Tribe of Oklahoma, on the basis that such water sales would likewise fall outside of the Red River Compact. The Court avoided this controversy by pointing out that “the arrangement with the Apache Tribe is so fraught with uncertainties and contingencies that it does not provide the necessary basis for a justiciable claim.”

Judge Heaton entered judgment in the Tarrant Regional case on July 16, 2010. Tarrant Regional filed its appeal on August 12, 2010, placing the matter before the Tenth Circuit.

On April 30, 2010, Judge J. Thomas Marten, sitting in the U.S. District Court for the Eastern District of Oklahoma, granted summary judgment, in part, in favor of the OWRB board members, against the City of Hugo, its municipal authority, and the City of Irving, Texas. Judge Marten relied on Judge Heaton’s November 18, 2009 decision in Tarrant Regional as a guide, and likewise rejected the cities’ claims that the moratorium on water sales violated the federal Commerce Clause. The City of Hugo case is already on appeal before the Tenth Circuit. The cities filed their opening brief on August 12, 2010. The OWRB board members are expected to file their brief by September 16.