“Unless and Until It Proves To Be Necessary”: Applying Water Interest To Prevent Unjust Enrichment in Interstate Water Disputes

14 Dec 2013 02:14pm Chad O. Dorr 
The Pecos River is a lifeline of water that flows through the arid region of eastern New Mexico and west Texas. Along its course, farmers use its waters for irrigation and communities use it for drinking water and recreation. Through much of the twentieth century, the river could not meet all the demands placed on it, setting the stage for regular disputes among those reliant on its waters. Seeking a measure of predictability in their respective shares to the river, the states negotiated, and the U.S. Congress approved, the Pecos River Compact in 1949. Despite this mutual agreement, disputes continued. As the upstream state, New Mexico has control of all the river’s surface waters until it crosses into Texas. Texas claimed New Mexico was taking more than its share and ultimately sought its day in court—the U.S. Supreme Court sitting in its original jurisdiction.

The Court designated a Special Master to hear the evidence, determine liability, and calculate the extent of damages (if any) in beyond the retirement of his predecessor, Special Master Charles Meyers found that for nearly forty years, New Mexico had breached the Compact by failing to deliver an accumulated 340,100 acre-feet of water. Rather than converting that water deficit into monetary damages, his Report recommended that the Court order repayment in kind, or in specie. The Court agreed and ordered judgment in Texas’s favor, authorizing repayment in water.

The Special Master also recognized that if damages could be awarded in specie, then interest in water might also be appropriate. He recommended that the Court award “water interest”—a novel version of postjudgment interest—to prevent New Mexico’s procrastination in repayment. While the Court approved of the in specie damages award, it summarily disposed of the water interest issue in a footnote, saying it was unpersuaded that water interest should be awarded “unless and until it prove[d] to be necessary.” However, by failing to disapprove of the concept outright or outlining guiding principles for when and how water interest ought to be applied, the Court opened the door for potentially enormous liability.

As competition for scarce natural resources increases, litigants are increasingly seeking to have courts apply “water interest” to in specie awards. This Comment analyzes the issue that the Court disposed of in a footnote. It examines the propriety of water interest, finding that additional water above the award is not necessary to fully compensate the plaintiff. However, because the upstream party is a fiduciary of the water and has heightened duties to protect the property of its downstream neighbor(s), courts should consider restitutionary remedies to prevent the upstream state’s unjust enrichment. This Comment establishes that interest is a necessary component of restitution, and thus water interest is a justified component of an in specie remedy. The Comment then explores practical implications of awarding water interest and establishes guidelines for its correct application through a case study of United States v. Board of Directors, Truckee-Carson Irrigation District.
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