Tennessee Water Laws and Regulations

This article is reprinted by permission of the author and first appeared in a program presented by HalfMoon LLC on September 27, 2011. 

Understanding Tennessee Surface Water and Groundwater Rights and Regulations

By:  Robert M. Steele, Esq.
Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C.

I.  Fundamental Principles for Discussion

     -  Water supply law has traditionally been…

·               a creature of state law, not federal.

·               based on common law developed over time.

·               related to real property ownership.

-  Western states' water law and eastern states' water law have traditionally been very different, and largely remain so today.

-  Eastern water law has primarily been based on a system of riparian rights for surface water use, and Tennessee has mostly followed such a structure.

-  However, of necessity, eastern states have been transitioning into a system of "regulated riparianism" as agencies, rules, and permitting come into play.

-  Tennessee has followed this same eastern regulatory trend, but to a lesser degree of regulation than in many other states.

-  Water supply law still differs considerably from state-to-state even within the same region.

- Surface water and groundwater are intertwined and interconnected legally as well as physically, and so the two topics will be blended together in this presentation.

-  Water conflicts on larger scales, and not just in smaller localized settings, are becoming more prevalent even in the more water-rich east, as they always have been in the dry west.

- The federal role in water supply, aside from drinking water regulation, is often as manager and arbiter of certain sought-after surface water resources that span state boundaries; but this presence can also add to the conflict and complications.

-  Water quantity and water quality are also inexorably intertwined.

-  Water resources issues will only become more and more important in Tennessee and elsewhere as time goes on.

II.  Beyond Just Tennessee:  Changing Eastern Water Law and Water Wars

"Whiskey is for drinkin' and water is for fightin'" (Mark Twain)

A.          Water Law 101

When a finite resource faces growing demand and competing users, that can lead to shortages and depletion, and to both small-scale and large-scale disputes.  Governing legal mechanisms are often late in keeping pace with changed conditions.  Today even areas where historically there has been plenty of water for all face a number of factors that can result in water limits and reallocations.  Such trends affecting and diminishing fresh water resources include:

·            Population growth and increased use demands;

·            Development patterns and urban sprawl;

·            Modern agricultural methods and expansion;

·            Pollution reducing suitable resources available;

·            Climate change and its potentially significant hydrology impacts (rainfall levels, drought, storms, snowpack, etc.);

·            Species protection and enhanced environmental and preservation values; and

·            Certain growing industries like energy development and their water needs.

Before looking at the developing regulatory structures for managing water supplies and trying to avoid the “tragedy of the commons” (where everyone has the right to use something, until nothing is left for anyone), we must keep in mind that traditionally water resource issues were dealt with by the common law as a form of property interest either held privately or shared with others.  Water law has also been primarily a function of state law.  Even today, despite some historical commonalities and new administrative overlays, “water law” is often very different from state to state.  This fact stands in contrast to much of our modern environmental protection law and water pollution control regulation which has been federalized, or at least one can say that delegated programs and federal standards provide a similar base in every state, onto which states may add their own enhancements and special priorities.

           1.          The Brown Arid West

Many people are aware that our western states’ common law on water is generally very different from that historically prevailing in the eastern states.  It is valuable to review this contrast even if our primary focus in this program is on the east and Tennessee.

The pioneers who settled the west adopted a system that recognized that water there was much more scarce than in the east or in England where earlier common law first developed.  Western water law assumes that there is insufficient water to satisfy all potential users.  Under the prior appropriation doctrine, water resources are claimed as property rights based on need and actual use, and are allocated on a first in time, first in right basis.  When supplies are insufficient, water users with older or more senior rights are allocated water on a priority basis ahead of junior water rights holders.  The senior holder is entitled to his full claimed quantity from the shared source before the junior holder gets anything, regardless of the relative values of the beneficial uses to which each is putting the water.  Such rights must continue to be used in order to be maintained in this priority system.  Also, such rights may be severed and sold separately from real property interests.

Naturally, appropriative rights established in this manner can lead to waste and to allocations that are not in the best interest of the community overall.  Even with many states creating elaborate administrative and permit systems to deal with these rights and titles, there can often be unfairness and an aggravation of scarcity problems in the west.  There can also be complex issues of precise quantification of certain rights, and gaps in official records due to abandoned or forfeited claims or other historical questions that can defy clear answers.

In light of this system, many western states have understandably adopted rules, or their courts have instituted refinements, to limit changes in the manner or place of water diversions to prevent harm to the interests of junior appropriators.  Similar doctrines may govern groundwater as well as surface water in many of these states (see more below).  Under this system, with population growth and a shortage of resources, and also with extensive federal and tribal lands and major federal involvement in water management in many systems in the west, there has been a long history of disputes in the west over this valuable and essential resource.  See, e.g.,  Montana v. Wyoming, et al., 131 S. Ct. 551, 178 L. Ed. 2d. 367 (May 2, 2011); American Falls Reservoir Dist. No. 2 v. Idaho Dept. of Water Resources, 143 Idaho 862, 154 P.3d 433 (2007); Spear T Ranch v. Knaub, 269 Neb. 177, 691 N.W.2d 116 (2005), and 271 Neb. 578, 713 N.W.2d 489 (2006);  Whetzel, Council Releases Proposed Strategy to Restore Delta, Improve Water Reliability, 42 BNA ENV'T REP., No. 32, pp. 1841-42 (Aug. 12, 2011); Morin, Whose Water is It?, BUS. L. TODAY, pp. 19-23 (ABA March/April 2006).

          2.          The Green Humid East

By contrast, the eastern states began and have continued with a common law system of riparian rights.  Riparianism defines water use rights in association with ownership of land that abuts or underlies a surface watercourse.  Each riparian owner can use water from the water body bordering or crossing his property. The right comes along with the land and does not depend on when the use begins or whether the use actually continues, in contrast to prior appropriation.  While treated as an interest in property, riparian rights are usually not absolute but are “usufruct” in nature (a strong right of usage, without undue diminishment, that is almost like ownership even if a state owns its waters).

The key feature of most riparian systems is that these water rights are non-exclusive and shared with the other riparian owners regardless of parcel size or relative location or length of water frontage.  Once the old English rule of allowing no diminishment of the stream’s natural flow was abandoned, the American rule developed whereby each riparian owner along the water body is entitled to reasonable use of the water so long as that does not interfere with the same use rights enjoyed by the co-riparian owners.  Each use is limited not by a set volume but by a reasonableness standard in relation to other uses of the same stream.  Typical rights include in-stream water use, withdrawal and use on the riparian parcel, and “wharfing” out into the river subject to navigation rights and to who owns the stream bed.

When there are competing uses that start to collide in a riparian setting, they may be valued against each other, with domestic use for human consumption enjoying the highest value (and in some places an absolute priority).  See, e.g., American Ass'n, Inc. v. Eastern Kentucky Land Co., 2 Tenn. Ch. App. 132 (1901). As society has changed, industrial use has probably risen above agricultural irrigation in next relative value after domestic use, depending on the jurisdiction.  Other recognized uses include power generation and recreation.  General principles governing the reasonableness of riparian water uses, and as used by courts to resolve disputes that may arise over whether a use is reasonable, are found in the RESTATEMENT (SECOND) OF TORTS, as follows:

Section 850:  Harm by One Riparian Proprietor to Another

A riparian proprietor is subject to liability for making an unreasonable use of the water of a watercourse or lake that causes harm to another riparian proprietor’s reasonable use of water or his land.

Section 850A:  Reasonableness of the Use of Water

The determination of the reasonableness of a use of water depends upon a consideration of the interests of the riparian proprietor making the use, of any riparian proprietor harmed by it, and of society as a whole.  Factors that affect the determination include the following:

(a)      The purpose of the use,

(b)     the suitability of the use to the watershed or lake,

(c)      the economic value of the use,

(d)     the social value of the use,

(e)      the extent and amount of harm it causes,

(f)      the practicality of avoiding the harm by adjusting the use or method of use of one proprietor or the other,

(g)      the practicality of adjusting the quantity of water used by each proprietor,

(h)     The protection of existing values of water uses, land, investments and enterprises, and

(i)       The justice of requiring the user causing harm to bear the loss.”

A riparian system is based upon the assumption that water resources are plentiful and generally sufficient in quantity and quality for all reasonable users.  However, problems develop when that primary assumption may no longer be true.  If all rights holders and reasonable users must be accommodated, then in times of shortage or when more riparians begin to exercise their rights, all users are subject to possible reduction in use.  The riparian landowner thus may not be assured of a consistent water supply over long periods of time. 

Moreover, traditional riparian-based allocations among private parties using the common law did not provide states with regulatory authority, and may not have accounted for environmental values and protection of the resource itself and preservation of it against complete use.  Another limitation is that riparian water use was historically limited to the riparian parcel itself and could not be transported off-site for use.  However, over time most eastern states’ common law began to allow off-tract use in order to accommodate municipal water systems and irrigation, among other needs, so long as reasonableness factors were still met and the equities among sharing users were balanced.   See generally, e.g., Miano & Crane, Eastern Water Law:  Historical Perspectives and Emerging Trends, 18 NAT. RESOURCES & ENV’T, No. 2, pp. 14-18 (ABA Fall 2003).

          3.          Don’t Forget Groundwater

The historical information above is focused generally on surface waters in defined water bodies.  However, groundwater (specifically, percolating groundwaters) has its own legal variations developed over time and also now undergoing modernization (see more below).

In the west, prior appropriation may still rule in many states, as it does for surface water.  The doctrine is “first in time, first in right.”  If there is not enough groundwater to go around, junior priority users of a resource subject to multiple filed claims must curtail in reverse order of seniority until water withdrawals are reduced enough to satisfy the full share or shares of senior rights holders.

In the east (and in some western states), by contrast, three main common law doctrines have developed with regard to groundwater.

(a) Absolute Ownership – This is the rule of capture but with no legal protection to any user.  If you can extract it, you get to keep it, unless the pumping is done with deliberate intent to injure another.  Of course this “big well/big pump” approach must be undertaken on your own land, but the old English doctrine pays almost no regard to quantity, purpose, or neighbors. 

(b) American Reasonable Use – This doctrine is found in many of the eastern states.  The extracted groundwater generally must be put to reasonable use on the overlying tract of land.  Virtually all uses, however, are deemed reasonable even if they may deplete the well supplies of neighbors (again unless the intent is malicious, or there is waste).  An overlying owner may deprive other owners over the same aquifer under this doctrine.  However, some state’s common law may deem transport of this extracted groundwater off-site as unreasonable if that use then begins to injure others.

(c) Correlative Rights - This doctrine has been called “vertical riparianism.” In some cases it may be referred to as "Restatement reasonable use."  In essence, multiple owners of land above an aquifer have equal rights to extract the groundwater from the same shared resource and put it to beneficial uses.  However, an owner’s rights do not allow him to deplete his neighbors’ wells and supplies materially.  In a water shortage, a court may apportion the available supply among all of the using owners, and reductions may be required.  Off-tract uses may be deemed subordinate and allowed only when enough water is available for all.  Also, the RESTATEMENT (SECOND) OF TORTS contains a groundwater allocation provision at Section 858.  This rule addresses reasonable share and liability for unreasonable harm to others, and it identifies the Section 850A factors (see above) for riparian surface uses as applicable when considering the reasonableness of competing groundwater uses.  See also, e.g., Nashville, Chattanooga & St. Louis Ry. v. Rickert, 89 S.W.2d 889 (Tenn. Ct. App. 1935), cert. denied (Tenn. 1936).

As with surface water, groundwater common law in many states became ill-suited to deal with modern conditions and demands.  In addition, scientific knowledge about groundwater and its characteristics, movements, and interactions with surface water has increased dramatically so that groundwater is not so out-of-sight and mysterious as it was once considered to be even by courts of law.  See generally, e.g., Abrams, Common Law Riparianism, pp. 97-103, EASTERN WATER RESOURCES: EMERGING ISSUES IN COMPETITION, SCIENCE AND POLITICS (ABA May 2006) (hereinafter, “2006 ABA CONF.”).

B.    Eastern Evolution

Several years ago Professor Joseph Dellapenna coined the term “regulated riparianism” to refer to the dramatic and fundamental shift going on now in eastern water law.  What this means is that most states have of necessity moved away from a pure common law system of water rights based on lines of case holdings to statutory and administrative, state-specific regimes for managing water resources and deciding among competing parties, policies, and interests.  The range of laws and regulations being adopted across the states is vast, despite the creation of a "model code," and it is beyond the scope of this presentation to attempt to survey them state-by-state.  So keep in mind that for water, every state is different.  Nonetheless, certain common themes and general points can be illustrated even in an abbreviated forum.

Regulated riparianism adds to the common law system a regime of state law administration that often merges the better concepts from prior caselaw with more modern policy considerations.  Many states now have a regulatory structure under which a state agency must issue permits for some, most, or all water withdrawals and uses.  Permit application requirements and permit issuance criteria often incorporate the riparian idea of accommodating reasonable and justifiable uses and the prior appropriation idea that a user, once permitted, is then assured of a stable supply of water during the life of the permit.  This trend of regulatory intervention gives a state significant control over water allocation and preferences by utilizing administrative infrastructure, planning, and enforcement to accomplish its purposes.  The state agency up front, rather than the competing users themselves and the courts after-the-fact, can decide before a use begins whether it is reasonable and appropriate.  The agency is charged with protecting other users and also public values like minimum flows for environmental and species protection, recreation, and aesthetics, depending on the specific details and extent of powers in any state’s enacted laws and programs.

In adopting these approaches, states have often created data-gathering mechanisms on water withdrawal, uses, and returns.  However, many also exempt certain classes of users from participation or compliance due to political pressures or concerns about interference with traditional rights in water. Planning and coordination are increasingly seen as being important for proper development, allocation, use, and preservation of water resources that may be deemed “public trust” assets (whether navigable or not) as well as a form of common or private property.  Some states will require withdrawal proposals to fit within predetermined regional or local plans or designated areas.  Some may require elaborate environmental impact studies before permitting a proposed use of surface water or groundwater. Other elements of proof may involve an evaluation of the proposed use, likely or possible detriment to others from the project, costs and alternatives considered, and other relevant topics. 

Burdens that may not have existed before are created for eastern water users who now must become permit applicants in a regulated riparianism system.  But in many cases, a party can also thereby obtain the benefits of certainty and legal protection for a permitted use, at least for a set period of time, while hopefully avoiding changes and litigation challenges going forward. See generally, e.g., City of Waterbury v. Town of Washington, 260 Conn. 506, 800 A.2d 1102 (2002); Dellapenna, Replacing Common Law Riparianism with Regulated Riparianism, pp. 106-14, 2006 ABA CONF.

Two brief and contrasting examples of the many variations on control of water resources at the state level include:

·                  Florida has long-established and powerful regional water management districts within the state.  Strict permitting is required for consumptive uses of surface water and groundwater and for many other activities involving water and water bodies.  Florida took the lead in years past in moving to a regulated regime due to water’s critical importance to the life of the state and due to the unprecedented growth pressures faced there.  See FLA. STAT. Ch. 373.013 et seq. (2007).  Reservations of capacity help to protect in-stream minimum flows, and the state environmental agency also works with the districts in carrying out Florida’s chosen system. See also South Florida Water Management Dist. v. Miccosukee Tribe of Indians, 541 U.S. 95 (2004), and extensive related opinions both before and after on water transfers.

·                  Tennessee (about which we will go into more detail below) regulates only surface water withdrawals, or groundwater withdrawals that impact surface waters, through its Aquatic Resource Alteration Program (“ARAP”) permits.  The ARAP law and rules use water quality authority as a back entrance to reach at least a minimal level of water quantity regulation in the state.  The state also requires water withdrawals over a certain size to register initially and report volume data annually, and it has an interbasin transfer law requiring an agency permit before certain parties can move water over designated broad boundary lines.  These relatively modest measures have given the state greater control than the former common law system administered only by landowners and the court system.  Tennessee may also consider legislation that, for the first time, would compel its many large and small public water supply systems to create plans and coordinate resources to better meet increased needs brought on by growth and drought.  See TENN. CODE ANN. § 69-3-108(b), § 69-8-301 et seq., and § 69-8-201; TENN. COMP. R. & REGS § 1200-4-7-.04(5)(c), Ch. 1200-5-8, and Ch. 1200-4-13.

Even with the continuing evolution of governing statutes and regulations on water resources taking place now in nearly every eastern state, there are still many opportunities for conflict and dispute among competing private water users, among public systems, and among states themselves.  Big fundamental water wars have been common in the water-sparse west, but only now are becoming more common and strident in the water-rich east as well, as broad societal and ecological changes continue to take place ahead of legal system evolution. See, e.g., Elliott & Klein, Water Law 101, pp. 9-61, EASTERN WATER RESOURCES CONFERENCE – SURPLUS AND SCARCITY: ADAPTING TO HYDROLOGIC DISRUPTION IN THE EAST (ABA May 2010) (hereinafter, "2010 ABA CONF."). Appendix B of the article cited just above contains some detailed state-by-state information on water supply laws.

C.   Water Wars Come East

As mentioned above, localized disputes over water resources have always existed, such as between towns or among neighboring landowners.  Presumably mechanisms to solve these conflicts, or ways to prevent them from happening, have improved in recent years with the advent of regulatory legal systems that go beyond the common law.  However, as demand for water increases and available resources have arguably diminished, larger conflicts have grown lately in the east over water allocation, access, transfers, and related issues.  Especially when disputes cross state boundaries and go beyond the differing state-by-state regulatory mechanisms established on top of existing common law, then high-stakes negotiation and litigation can ensue of the kind with which westerners historically have been more familiar.  See generally, e.g., Ricci, Boenning & Pasko, Battles Over Eastern Water, 21 NAT. RESOURCES & ENV’T, No. 1, pp. 38-42, 68 (ABA Summer 2006); USA Today, “Bitter Water Battles Brew in Southeast,” March 18, 2008.

Certainly there have been successful interstate compacts formed to govern shared resources and resolve contention and competition over water in the east.  One example has been the Delaware River Basin Compact, dating from 1961, which has managed diversions in that basin by New York, Pennsylvania, New Jersey, Delaware, and parties within those states.  The costs and uncertainties of court battles and of the water rights themselves were an incentive for those entities to negotiate a more permanent and satisfactory arrangement to govern their shared fresh-water resource system.  The Delaware River Basin Commission manages that resource and appears to have the ability to respond in times of drought or other need.  See, e.g., Weston, The Nexus Between Science and Water Law, pp. 25-42, 2006 ABA CONF.

Many other regions have not been so prudent or fortunate, and the following are just several of many current examples.

1.        Georgia on My Mind

There has been no hotter topic or more important environmental issue in Georgia lately than water – despite that state receiving relatively more rain over the last two years.  Georgia had been facing an unprecedented drought, while the greater Atlanta area has sprawled to nearly five million people in size with no large rivers or significant underground sources from which to draw its needed water supplies.  Reservoirs and rainfall, along with the Governor’s 2008 “pray for rain day,” have been what the state has mostly had to rely upon.

A major long-running water dispute there involves Georgia, Alabama, and Florida and the shared Apalachicola, Chattahoochee, and Flint (“ACF”) rivers system.  The situation arose twenty years ago and has had a long, complex legal history of negotiations, commissions, litigation, and federal involvement through the United States Army Corps of Engineers (the "Corps") and even the White House.  The details of this matter are far beyond the scope of this program.  But suffice to say that starting with Lake Lanier above Atlanta, Georgia wants to hold (or wants the Corps to hold) more water at the top of this system to feed the exploding water needs of Atlanta and its region especially in the dry hot months.  However, downstream economic interests in Alabama, including navigation and power generation, rely on a steady adequate flow being maintained in these rivers.  Farther down in Florida, seasonal flows must be maintained to sustain the oyster fishing industry and hold back salt water intrusion.  Federal interests include endangered species protection.  Attempted compacts and understandings have fallen apart over time and courts have weighed in periodically on myriad sub-issues and technical factors.  Also, Congress has become more involved as the federal role and stake have grown in importance and now include the Departments of the Interior and Energy as well.  Deadlines for the three Governors to agree on an ACF water-sharing plan have also come and gone.  Basic issues of growth, economic well-being, and environmental protection are all at play in this extended eastern water war with no apparent end in sight.  In-state and state-by-state legal changes toward regulated riparianism have not been able to solve this larger problem. In the most recent litigation developments, a federal district judge first held that Lake Lanier was not built by the Corps for Congressionally authorized purposes that included allocation for drinking water supply to local communities. However, this ruling has lately been reversed by the 11th Circuit Court of Appeals.  In Re: MDL-1824 Tri-State Water Rights Litigation, No. 09-14657 (11th Cir. June 28, 2011), reversing 40 ER 1779 (N.D. Ga. 2009).

The water-hungry eyes of Atlanta and Georgia have also turned lately toward Tennessee.  These issues closer to home will be addressed later on in these materials.

(See also the Maryland and Virginia border and water access claims along the Potomac River.  There is also current shared river system negotiation between Georgia and South Carolina, and major litigation over flows and allocations of the Catawba River between South Carolina and North Carolina.)

                  2.      Diverting the Great Lakes?

The Great Lakes are the largest freshwater resource in the world.  The states and Canadian provinces around them have entered into agreements over the last twenty-five years obliging each of them to notify, consult, and agree before significantly increasing consumption or diversions.  The Great Lakes Charter 2005 Annex Implementing Agreement set forth regulatory principles and decision-making standards for allowing water withdrawals and minimizing impacts on others and on the environment in the Great Lakes Basin.  The standards used strongly reflected common law riparian principles coupled with the doctrine of reasonable use, but added modern conservation and other concepts as well.

While the American southwest and other areas thirst for Great Lakes water, these prior legal steps by the region’s riparian states have now resulted in a Compact that has been ratified without changes by each state’s or province’s legislature as well as by Congress.  This Compact further strengthens the ban on major water diversions leaving the Great Lakes Basin.  Most eligible states ratified the “Great Lakes – St. Lawrence River Basin Water Resources Compact” without great controversy.  In Ohio, however, debate in the State Senate raised the issue of modification over concern for private property rights in that state, specifically the rights of owners to tap into and use “groundwater on their own land.”  Several Republican Senators were concerned that declaring the waters of the basin to be “a precious natural resource shared and held in trust by the states” would trump traditional Ohio law, and that covered waters should exclude groundwater and non-navigable surface waters.  Another concern raised in Ohio was the power under the agreement of one member state unilaterally to veto a water transfer sought by another member state, such as for a competitive economic development project. Subsequently Ohio ratified the Compact as well.  However, with the recent economic downturn lingering into 2010 and 2011, new debate and proposals have emerged in Ohio and elsewhere about allowing large withdrawals without permits, or diversion of Great Lakes water to communities in-state but outside of the basin boundary.  See, e.g., Silverman, Cuomo to Sign Bill Requiring Large Users of Water to Have Permits for Withdrawals, 42 BNA ENV'T REP., No. 33, p. 1898 (Aug. 19, 2011); Raupe, Governor Vetoes Legislation to Allow Diversion of Lake Erie Water Without Permit, 42 BNA ENV'T REP., No. 29, p. 1670-71 (July 22, 2011).

Other specific stories related to the Great Lakes region include: Waukesha, Wisconsin, near Milwaukee but outside of the basin and denied water from it; those Chicago suburbs lying outside of the basin but receiving Lake Michigan water due to prior allowed reversal of flow of the Chicago River, together with concerns of non-native Asian carp infiltration to the Great Lakes by this route from the Mississippi River Basin; and the experience of Nestle’ Waters and the bottled water industry in Michigan – singled out for attention in that state’s transition from riparianism to a regulated administrative system, fighting to classify bottled water beverage production as an in-basin, on-site consumptive use rather than a prohibited out-of-basin water resource diversion and transfer.  See Michigan Citizens for Water Conservation v. Nestle’ Waters N. Am., Inc., 269 Mich. App. 25, 709 N.W.2d 174 (2005), aff’d in part, rev’d in part, 479 Mich. 280, 737 N.W.2d 447 (2007), reh’g denied, 480 Mich. 1203, 739 N.W.2d 332 (2007).

        D.  Conclusion

The law of water resources and water supply in America’s eastern states is undergoing dramatic change from largely historical common law riparian regimes to more modern “regulated riparianism.”  The new statutes, regulations, and administrative programs touch both surface water and groundwater and are appearing largely at the state level with a wide range of state-by-state differences and variations.  Even with these legal changes, small-scale and large-scale conflicts and disputes over water – water wars as have been common in the arid west – are becoming more prevalent now even in the wetter east as resources are pressured and diminished by both natural forces and increased human demands from competing users. 

 

See generally, e.g., Griffith, The East and West Converge, Prior Appropriation Meets Regulated Riparianism, WHOSE DROP IS IT ANYWAY? LEGAL ISSUES SURROUNDING OUR NATION'S WATER RESOURCES, pp. 35-47 (ABA 2011); Water, 24 NAT. RESOURCES & ENV'T, No. 3 (ABA Winter 2010); Wade, Valuation of Water Supplies in Eastern Watershed Conflicts and Planning, E. WATER L. & POL'Y REP., pp. 211-17 (Aug./Sept. 2008).

 

III. Tennessee:  Surface Water and Groundwater Supply, Ownership, Use, Rights, Regulation and Permitting

A.             Water Property, Use Rights, and Public Interest

Before you can address permits and filings for securing a water supply in Tennessee, you need to consider property ownership and rights of use for any water resource.

1.               Most Tennesseans believe that they own the water on and under their fee-owned land, and that this right comes with land ownership.

2.               But in fact, the state claims ownership of all waters of Tennessee in the "public trust," including the groundwater, unless the water body is isolated and confined to a single private property.  See TENN. CODE ANN. §§ 68-221-702, 69-3-102(a), and 69-3-103.  Historically the beds of navigable watercourses are also owned by the state in trust.  But landowners can own the beds of non-navigable streams, and landowners' water use rights in either case are very strong in Tennessee even though they are deemed "incomplete and incorporeal."

3.               Common law governs when not altered by the state’s constitution or legislation.

An excellent article on Tennessee water law which is not out-of-date as one might think is:  Comment, Water Rights in Tennessee, 27 TENN. L. REV. 557 (1960).

Surface water use in Tennessee is based on traditional riparian rights that are held by owners of property adjacent to or underneath any surface water body.  Typically these rights are not separated from the riparian lands. From the property perspective and not yet considering modern regulatory restrictions (see below), the owners of riparian land along streams and lakes have rights of building out into the water, reasonable use of the water in-stream, and certain rights of withdrawal and consumption of the water on land as well while not blocking or interfering with flows to the detriment of other rights holders.  This is not property ownership of the water itself but is a "usufruct" right of use.  See, e.g., Cox v. Howell, 108 Tenn. 130, 65 S.W. 868 (1901).  See also The Pointe, LLC v. Lake Management Ass'n, Inc., 50 S.W.3d. 471 (Tenn. Ct. App. 2000), appeal denied in 2001.

1. Legally and technically navigable watercourses involve state (public) ownership by common law or statute of the underlying stream bed or lake bed, with public rights of navigation up to the low water mark that cannot be unduly interfered with.  TENN. CODE ANN. 69-1-101 et seq.  Other historical variations exist based on stream status.  See, e.g., Webster v. Harris, 111 Tenn. 668, 69 S.W. 782 (1902) (later partially overruled).

2. Riparian owners’ water rights in Tennessee, unlike the more famous appropriative, quantified and severable water rights under western water law, are shared with the other property owners and allow for reasonable and beneficial uses of the water flexibly measured in comparison to the other owners' uses and to the overall size and character of the river or lake.  There is no first-in-time priority or set entitlement to a particular flow or quantity of the shared watercourse that your lands adjoin.  The rights are equal and correlative among holders, and what is a reasonable diversion or use of a stream vis-à-vis the rights of other riparian owners may depend on the size and flow of the stream, the purpose of the use, and other specific facts. However, those rights do not depend on the size of your riparian parcel, years of ownership, length of its watercourse frontage, or even necessarily the upstream versus downstream positions.  The only common law water purpose priority in Tennessee may be for domestic use withdrawals.  See, e.g., American Ass'n, Inc. v. Eastern Kentucky Land Co., supra.  Water use may have to be adjusted to accommodate new users or to reasonably share the impact of drought conditions.  See also RESTATEMENT (SECOND) OF TORTS § 850A.  This required flexibility can ultimately mean uncertainty, without governmental intervention.  See also, e.g., Tallassee Power Co. v. Clark, 77 F.2d 601 (6th Cir. 1935).

3. One key issue with riparian landowners’ rights to withdraw and use water is whether it can be used only on the riparian parcel itself.  May the water be transported by pipeline or other means for use elsewhere within the same watershed or even outside of the area, either absolutely or only so long as no other owners’ rights are damaged or interfered with?  Private company projects, or municipal and other public water supply systems, can still face problems from this traditional and sometimes vague restriction within overall considerations of "reasonableness."  See generally 78 AM. JUR. 2D Waters, §§ 287-90. 

Groundwater use in Tennessee appears to be based on both American rule reasonable use and correlative rights, and such rights are possessed by the land fee owners above the groundwater (almost as good as owning the water but not exactly the same; remember the term “usufruct” regarding non-ownership use rights of property vested in another without unduly altering or destroying it).  In Tennessee you can still install a water well on your land and pump groundwater for your use with little real common law or regulatory constraint compared to many other states.

1. The separate landowners over a particular common source groundwater aquifer each share a similar right of reasonable use of that water resource – your pumping cannot unduly limit or injure your neighbors’ rights to supply their ponds, springs, and wells from the same aquifer.  Unlike in western water law, there is no priority of use or quantification of rights among the shared owners, and no guarantee of an exact flow or amount to any owner.

2. Each landowner is restricted to a reasonable exercise of his own rights and a reasonable use of his own property, in view of the similar rights of others. See Nashville, Chattanooga & St. Louis Ry. V. Rickert, supra; RESTATEMENT (SECOND) OF TORTS § 850A.  Reasonable use factors might include purpose of the use, suitability to the aquifer or watercourse, economic value, social value, extent or potential for harm caused, practicality of avoidance or adjustment, and impacts on the rights of others. Groundwater rights may also be restricted to (or favored for) water usage on the overlying land or within the same basin.

3.Some groundwater not presumed or considered to be “percolating,” and instead proven to be part of a rare underground stream in a defined channel, may instead be allocated more like a surface water body.  Also, spring water captured at a spring mouth cave in Tennessee may usually be considered as groundwater.

4.See below regarding the Mississippi versus Memphis groundwater dispute and litigation.  See generally 25 TENN. JUR. Waters and Watercourses, §§ 1-22; 30 TENN. DIG. 2D Water Law.

B.            Water Regulation, Permits, and Programs

As discussed, water procurement in the east, including in Tennessee, has largely evolved toward various models of “regulated riparianism.”  Environmental protection and resource and species preservation have joined property rights, navigation, and other traditional interests as meriting governmental regulation for the common good.  States typically require permits for water extraction or use and seek to balance competing values.  Federal agencies may have interests as well, both as property holders and as interstate regulators.  Regulatory standards and criteria for water uses and potential environmental impacts, and the methods of administration, vary greatly from place to place.  Every state is different when it comes to water law.

As mentioned above, Tennessee has comparatively less than other jurisdictions in water resources planning, supply management, coordination, and restrictions on obtaining water.  See TENN. CODE ANN. § 69-8-101 et seq.  We also do not have a “little NEPA” law requiring environmental impact statements for major state actions, no “developments of regional impact” incurring special regulation, nor true utility plant siting laws although Tennessee at times has worked on interagency procedures for assessing and coordinating impacts (including water supply) of private power plant proposals.

While describing below those water supply regulation programs that Tennessee does implement, this presentation’s scope will not focus on interstate cooperative agreements (such as that between Tennessee and Kentucky) which may be entered into for management of shared river systems.  Nor will this article cover the TMDL (total maximum daily load) process and how water quality issues and assimilative capacity of water bodies receiving permitted discharges may affect water supply withdrawals and availability from certain sources.  Likewise we do not try to analyze the impacts of groundwater cleanups and quality or the groundwater classification rule of the Tennessee Department of Environment and Conservation (“TDEC”).  So what do we have to deal with in this area of law and regulation in Tennessee?

·      Aquatic Resource Alteration Program (“ARAP”) permits have become a primary method for TDEC to regulate withdrawals of surface waters in the state if those withdrawals may have an impact on the bodies of water in question.  ARAP’s are not just for physical alterations from dams, culverts, and channel work in streams, lakes, and wetlands, although those aspects can also be part of any water supply project’s necessary licensing.

1.               TENN. CODE ANN. § 69-3-108(b) states in relevant part that:

“(B) It is unlawful for any person . . . to carry out any of the following activities, except in accordance with the conditions of a valid permit:

(1) The alteration of the physical, chemical, radiological, biological, or bacteriological properties of any waters of the state; . . .

(4) The development of a natural resource or the construction, installation, or operation of any establishment . . . , the operation of which will or is likely to . . . alter the physical, chemical, radiological, biological or bacteriological properties of any waters of the state in any manner not already lawfully authorized.”

2.               One way potentially to alter a surface water body, both as to chemistry and biology, is to take out a portion of its content or flow, with or without a comparable return flow.  This can occur and trigger the need for an ARAP permit wholly apart from any jurisdiction due to physical alterations needed for intake structures, enclosure of a spring mouth, pipelines, or the like.  ARAP permits for water withdrawals are individual permits and are not among TDEC’s list of ARAP general permits by rule available.

3.               TENN. COMP. R. & REGS. § 1200-4-7-.04(5)(c), which is within Chapter 1200-4-7 on ARAP’s, was added to the rules some years ago to spell out existing TDEC practice:

“An Individual Permit is required for water withdrawals which will or will likely result in alteration of the properties of the source stream.

(1)  Persons proposing to withdraw water from waters of the state in a manner which will or will likely result in an alteration of the properties of the source stream, shall file an application with the Department which includes the following minimum information:

(i)  proposed withdrawal rates and volumes;
(ii)  proposed withdrawal schedule; and
(iii)  flow data of the source stream (if free flowing).

(2)  Where a permit for water withdrawal is required, the Commissioner shall establish permit conditions which are protective of the source stream’s resource value.  These conditions may include flow levels below which no withdrawal may occur.  The Commissioner may also establish a maximum withdrawal rate in order to maintain the natural flow fluctuation characteristics of the source stream.” 

(Existing water withdrawals as of July 25, 2000 which do not adversely alter or affect the classified use of the source stream are not covered by these requirements, per rule § 1200-4-7-.02(4)).

4.               ARAP’s are administered by TDEC’s Division of Water Pollution Control (“DWPC”), Natural Resources Section, the staff of which is located in Nashville.

5.               Not all withdrawals require an ARAP permit. A withdrawal or diversion from a small stream requiring an ARAP may not need a permit when the same amount is taken from a larger water body. But neither are all proposed withdrawals worthy of being permitted. Fact-specific evaluations must be made in addition to any deminimis limit of up to 5% loss of capacity, or an unofficial “10% of volume” upper-range for permitability of a surface water withdrawal proposal.  TDEC rules at Chapter 1200-4-7 addressing antidegradation concepts and justification analysis in permit decisions and for certain specially protected Tennessee waters (both as to already impaired waters, or as to pristine high-quality waters) have also been refined over recent years.

6.               Groundwater wells, in contrast to surface water withdrawals, may not require an ARAP permit for water withdrawal unless pumping a well materially reduces flow to or in a surface water body (by causing ground infiltration, or by interdicting a natural spring outflow to the surface stream or lake).

7.               ARAP application forms and summaries of permitting procedures and requirements – including notice and opportunity for comment by the public and by other pertinent state and federal agencies, such as the United States Fish & Wildlife Service and the Tennessee Wildlife Resources Agency – may be found on-line at the TDEC website as well as the TDEC regulations themselves.  The law allows limited third-party appeals of state water permits when specific conditions have been met.

8.               An ARAP permit for withdrawal can help to guarantee you a flow as against other later users of the same resource, beyond the common law.  The advent of regulation in this way may limit a Tennessee water user on the one hand, but it also provides more western-style certainty for a permitted period of years.

·      Interbasin Transfer Permits may also be required from TDEC DWPC under the statute passed in 2000 and found at TENN. CODE ANN. § 69-8-201.  This law was intended to regulate certain water withdrawals from streams and aquifers in Tennessee if the water is to be transferred out of a major river basin to another for use there and without return.  Both surface water and groundwater resources can be affected, if the groundwater used impacts surface water bodies.

1. Basin lines were drawn broadly by TDEC (10 for the state) rather than trying to coincide with every local watershed and ridgeline.  One key motivation for this law was the water wars among other states and our fear of a massive “Atlanta” water diversion from the Tennessee River to out-of-state users.  But the law’s structure and administration both seek to avoid the constitutional flaws of an overtly out-of-state restriction on use and transfers.  A number of these permits have been considered and issued by TDEC including at least one crossing the state line.  These permits have also been a part of inter-connection of certain drought-impacted community water systems with others drawing from major river sources.

2. Program regulations including criteria for permitting decisions are found at TENN. COMP. R. & REGS. Ch. 1200-4-13.

3. Critical Factor – interbasin transfer permitting applies only to public water supply systems including governmental entities and utility districts, to other entities granted state power of eminent domain to acquire property, and to private companies that may withdraw and transfer the water to public suppliers in another basin, either directly or indirectly.  Private industry otherwise should not have to comply.

4. As stated, regulated public water supply systems ("PWS") are subject to Tennessee's interbasin transfer permitting law.  This program involves the usual steps of application, provision of extensive data, variable fee payments, and public notice and opportunity to comment.  Permits granted for such transfers may contain conditions to protect resources and avoid adverse impacts.  The criteria to be used by TDEC in making an interbasin transfer permit decision are set forth by rule:

"(a)  the quantity of the proposed withdrawal and the stream flow of the losing river(s), with special concern for low-flow conditions;

(b)  protection of the present uses, and consideration of projected stream uses of the losing river(s), including but not limited to, present agricultural, municipal, industrial and in-stream uses, and assimilative needs, with special concern for low-flow conditions;

(c)  protection of the water quality in the losing river(s) at low-flow conditions;

(d)  the reasonably foreseeable future water needs of the losing river basin;

(e)  the reasonably foreseeable future water needs of the applicant for the water to be transferred, including methods of water use, conservation, and efficiency of use;

(f)  the beneficial impact of any proposed transfer, and the capability of the applicant to implement effectively its responsibilities under the requested permit;

(g)  the nature of the applicant's use of the water, to determine whether the use is reasonable and beneficial;

(h)  whether the proposed project shall promote conservation of water;

(i)  the feasibility, the costs, and the environmental impacts of alternative sources of supply;

(j)  the requirements of other state or federal agencies with authority relating to water resources;

(k)  the availability of water in the losing river basin to respond to emergencies, including drought;

(l)  whether the project shall have any beneficial or detrimental impact on navigation, hydropower or other power generation, fish and wildlife habitat, aesthetics, or recreation;

(m)  the quantity, location, and timing of water returned to the basin of origin or a downstream basin;

(n)  climatic conditions;

(o)  any offsetting increases in flow in the basin of origin that may be arranged through permit conditions;

(p)  the number of downstream river miles from which water will be diverted as a result of the transfer; and

(q)  such other factors as are reasonably necessary to carry out the purposes of the Act and this rule chapter."

TENN. COMP. R. & REGS. § 1200-4-13-.05

5. See below for more discussion regarding potential Tennessee water conflicts with Georgia.

·      Water Withdrawal Registrations are required before using water sources at greater-than-threshold quantities, pursuant to the Water Resources Information Act of 2002, TENN. CODE ANN. § 69-8-301 et seq.  This law requires measurement and an informational filing only – not a permitting requirement – to TDEC’s Division of Water Supply (“DWS”) in Nashville.  New sources must report before any qualifying continuous withdrawal begins, while ongoing withdrawals over the limit must file an annual update and renewal on TDEC forms by February 15 of each year.

1. Program regulations are found at TENN. COMP. R. & REGS. Ch. 1200-5-8.

2. This requirement applies to all persons withdrawing water from either a surface water or groundwater source if the average withdrawal is 10,000 gallons or more per day, for the number of days of actual withdrawal.

3. Exclusions from this program are key.  The requirement does not apply to withdrawals for agricultural purposes, thus eliminating the gathering of data on a very large segment of total water withdrawals in Tennessee.  Emergency withdrawals also do not need to be pre-registered.  Moreover, nonrecurring withdrawals over the volume threshold are not covered.  “Recurring” is defined as the withdrawal of water on more than 4 days a year. 

4. DWS forms and information needed and measurement requirements for water withdrawal registrations may be found on-line at the TDEC website as well as at other sources.  Purposes for water withdrawals and amounts of water returns are also to be shown.  An initial filing will include an estimate of the first year’s withdrawal from that source before it starts up.

5. Public water supply systems do not typically make filings with DWS under this program because much of the same information, if not more, is already produced and reported by these utilities under the Safe Drinking Water Acts and their federal and state regulations.

6. This state statute and its requirements do not create a great compliance burden on withdrawing parties and sources, other than the need for measurements. However, potential penalties for failure to register can be severe.

7. There are no fees paid for water withdrawals or for making these filings to DWS.  There are also no availability determinations or qualitative testing duties or other such aspects built into this information database-creation program.  But is this law, following the ARAP rules on withdrawals and the interbasin transfer law, a step onto the slippery slope toward consumptive use permitting of groundwater or more direct regulation of all water supply and withdrawals in Tennessee?  TDEC claims no such agenda at this time, and these laws are now nearly a decade old. But perhaps efforts will be made (with or without use of data gathered under this statute) in the future to expand and modify this program as water supply issues become more of a concern to many different stakeholders even in historically water-abundant Tennessee. (See below also regarding TVA and Corps interests in approving withdrawals from certain water bodies.)

·      Water Wells in Tennessee must be designed, built, and operated in accordance with state statutes and the rules of and codes adopted by DWS.  Obtaining your water supply from groundwater wells may allow avoidance of some potentially applicable programs such as ARAP permitting.  However, such boreholes and wells must be installed properly following construction standards and only by licensed contractors.  Location issues, variances if needed, and completion reports within 30 days after the well is done may need to be addressed.  There is also a Board of Groundwater Management to advise and assist TDEC in this area.

1. Statutes include TENN. CODE ANN. § 69-11-101 et seq.  TDEC DWS regulations are found at TENN. COMP. R. & REGS. Ch. 1200-4-9.  Regulated persons holding water well drilling licenses ought to know how to carry out the details of well construction and commissioning.  For pump testing of new wells, also be aware of the water withdrawal registration law and its trigger for “recurring” extractions (see above).

2. Statute § 69-11-111 requires the well owner or driller to notify DWS of the intent to drill a water well, with appropriate information provided, before doing so.  Remaining requirements and filings include registration after construction, inspections and fees.

3. Wellhead protection plan requirements and numerous other duties apply only to PWS entities and drinking water supply wells and not to private parties building groundwater wells for industrial, commercial, or agricultural purposes  (see more below).

·      Local Requirements might also exist and come into play for a water supply project.  To say that Tennessee has less regulation than most jurisdictions may not hold as true when considering groundwater wells and extraction in Memphis and Shelby County. The local government through its "Ground Water Quality Control Board" regulates the construction and location of wells in Shelby County due to the importance of protecting the aquifers there as the sole source of drinking water for its large population.  There is a Shelby County Well Construction Code that also includes provisions limiting water pumped by private parties for commercial and industrial purposes to reasonable use, and requiring the Health Department to have parties conserve water and reuse cooling water.  Well-drilling standards, reports and filings, and site setbacks can also apply at this local level.

·      Intake Structures to be built for surface water withdrawals from streams, rivers, or lakes, if a necessary part of a water supply project, will require additional permitting and other considerations for the siting and physical work involved.

1. Building a permanent water intake structure in a water body or along its banks could or will likely trigger the need for a TDEC ARAP permit (see above) for the physical alteration involved.  If so, then the same individual ARAP permit may cover and authorize that as well as the water withdrawal too (if necessary).  However, note that TDEC has an ARAP “General Permit for Construction of Intake and Outfall Structures.”  This tool may allow streamlining of certain intake structure permitting, with or without a separate individual ARAP approval needed for the water withdrawal itself.

2. If an intake structure will be constructed in or along a waterway navigable under federal law, a permit will likely be required under the 1899 Rivers and Harbors Act, 33 U.S.C. § 403.  No alteration or obstruction of a navigable water of the United States may occur without such a permit from the Corps of Engineers.  See also TENN. CODE ANN. § 69-1-117.  The state also claims ownership of navigable river beds and maintains authority to prohibit or regulate impairments to navigation in certain cases.

3. Often such intakes along waters will impact wetlands and perhaps involve dredging or filling in waters of the United States and jurisdictional areas in proximity.  Section 404 of the Clean Water Act governs Corps consideration and issuance of federal wetlands permits where needed.  See 33 U.S.C. § 1344, and Corps regulations, and the extensive body of caselaw and commentaries on wetlands permits and issues.  Isolated wetlands also can trigger separate state permitting under the broader ARAP provisions governing alterations to any waters of the state – not just federally protected waters or wetlands and not just “dredge and fill” activities in those areas.  When federal and state jurisdictions coincide or overlap, the ARAP permit from TDEC can serve as the necessary Section 401 state water quality certification for a Corps Section 404 permit.

4. Within the area of the Tennessee River “and its tributaries,” the Tennessee Valley Authority (“TVA”) is another federal agency with power over those waters.  See 16 U.S.C. § 931c-1(a).  Under Section 26a of the TVA Act, a TVA permit is required for construction or modification of an obstruction affecting navigation or flood control on these waterways, which obstruction could include a water intake structure. 

5. For electric generating projects or other facilities or industries requiring withdrawal and use of large quantities of cooling water, the federal Clean Water Act at 33 U.S.C. § 1326(b) mandates that NPDES discharge permits include standards for “the location, design, construction, and capacity of cooling water intake structures” that “reflect the best technology available for minimizing adverse environmental impacts.”  The United States Environmental Protection Agency (“EPA”) originally pursued three stages of regulations for cooling water intake structures to attempt to minimize or eliminate problems such as destruction of fish and other aquatic life entrapped in the structure by the flow in from the river or lake.  See 40 CFR Parts 9122-25; Riverkeeper, Inc. v. EPA, 358 F.3d 174 (2d Cir. 2004), and subsequent history, including 475 F.3d 83 (2d Cir. 2007). The rules have been the subject of many legal challenges over recent years. There are also moves by the Obama Administration to retract and redo portions of these rules, including new proposed regulations in 2011, and continued recent litigation and settlements which are beyond the scope of these materials.

·      Other Permitting Considerations for water supply projects can depend upon configurations of structures and resources, location, and many other specific facts to be analyzed for each project.  Other possible issues can include:

1. Aside from physical construction controls and concerns, TVA may have an interest in water supply withdrawals from the Tennessee River system based on their potential impacts on TVA's hydroelectric facilities and water-level management duties.  Similarly, new or increased withdrawals from the Cumberland River reservoirs in the area of Corps-operated dams and locks may also require Corps approval and even the payment of storage fees (and maintenance expenses) for water so allocated to and used by the PWS or private party.  Nashville Tennessean, "Corps Studies Why Old Hickory So Low," Nov. 21, 2010; Nashville Tennessean, "Sumner, Wilson Water Bills May Rise," July 11, 2010.  Old Hickory Lake, Percy Priest Lake, and the Cheatham Lake through Nashville may be subject to differing purposes of original construction and to varied Corps policies now as to connections and charges.

2. In the same vein, one should always be on the lookout for other special designations, categories, or restrictions affecting the water body from which a supply may be drawn or at which an alteration may take place.  Aside from private covenants or federal concerns, there are “scenic rivers” designated in Tennessee, parks and natural areas, Exceptional Tennessee Waters, Outstanding Natural Resource Waters, and other types of protection. See, e.g., TENN. CODE ANN. § 11-13-101.  Generally, however, there is less of this additional legal overlay present in Tennessee than in many other states.

3. Construction and operation of an actual dam requires an approval certificate from TDEC and compliance with TENN. CODE ANN. § 69-12-101 et seq. and TENN. COMP. R. & REGS. Ch. 1200-5-7.  However, many private structures or features similar to dams can be unregulated in Tennessee.

4. Pipelines may need to connect boreholes and intakes to tanks and to the facilities and locations where the water will be used.  While not transporting oil or natural gas, such pipelines still may incur permitting for construction of road crossings and for travel through wetlands and over, under, or through streams or other waters. Tennessee Department of Transportation ("TDOT") right-of-way approvals may be needed.  ARAP and Section 404 permits may also be needed.  Even if a project's water pipelines serve a private business rather than a public supplier, the construction still may qualify and be permitted as routine “utility line” crossings of streams under an ARAP general permit for such and/or a Corps nationwide permit by rule if applicable.

5. Construction stormwater permitting requirements, with erosion and sediment control measures, may not apply to most intake structures, water well sites, and/or pipeline work if those sites do not each have the required minimum of 1 acre of land surface to be disturbed.  However, if these areas are connected (including by new roadways) and aggregate more than the minimum acreage, or are part of a larger common plan of development with a new facility or plant being built, then they may require notices of intent and coverage with TDEC under the state’s general permit for stormwater discharges from construction activity.  (Field precautions to control siltation and runoff should be taken in any event.)  See Id. at Ch. 1200-4-10, and related rules and general permit promulgated by TDEC.

6. “Water in” usually means “water out” too, and thus discharge permitting either for an outdoor NPDES discharge of pollutants into waters of the state and United States, or by permit or agreement to a sanitary sewer and publicly owned treatment works (“POTW”).  An individual NPDES permit may address intake as well as discharge if both will take place near the same location on the same surface water body.  “Uncontaminated” groundwater or spring water may be discharged under industrial stormwater general permits when new sources or lines are tested and put into service. But surface waters with existing contaminants moved from one water body to another may pose regulatory problems per ongoing litigation claiming that such water supply movements may require water pollution discharge permitting. See South Florida Water Management Dist. v. Miccosukee Tribe of Indians, supra.

7. Major federal actions, sometimes including federal permit issuance to private parties, may trigger the National Environmental Policy Act (“NEPA”) and require advance environmental assessment or perhaps a full Environmental Impact Statement (“EIS”) associated with a project that includes water withdrawal and water supply procurement and transport.  See 42 U.S.C. § 4321 et seq.  Potentially applicable authorities like the Endangered Species Act, 16 U.S.C. § 1531 et seq., can come into play in this and in other forums such as in the comments from agencies on state ARAP permit proposals (see above), and in connection with federal wetlands and other reviews.

·      Bottled drinking water production illustrates how the intended use of water can impact required permitting. Private companies may acquire and access flowing springs, surface water, groundwater from wells, or even purchase already treated municipal drinking water, depending upon whether they are making and selling purified water products or bottling a “natural spring water.”  Many of the ownership rights, ARAP and other permitting requirements, and procurement issues discussed above apply to this industry also.  However, more standards and duties are applicable too due to the intended use of this water.

1. Even if the water sources and bottling facility do not choose to become a regulated public water supply system in Tennessee, TDEC DWS does administer certain requirements for water bottlers perhaps best described as “PWS-Lite.”  The bases for this authority are found in general statutes on water and in TDEC policy and historical practice moreso than in specific regulations. Locations to be developed as raw water sources for bottled drinking water – whether wells or springs – should be inspected and given preliminary approval for suitability by a DWS field office staffer.  Then raw water quality test results, a fee, and plans for construction of the spring capture equipment and structures or borehole wells and pipelines, and other water-handling improvements, are submitted to DWS.  There they are reviewed by its engineering section and eventually approved for construction.  For the sake of both the environment and the Tennessee water consumer, even in a non-PWS situation, TDEC has an interest in regulating the raw water from the original natural source up to the walls of the bottling plant (or to the tanker truck loading point if the water produced will be trucked rather than piped to the bottling plant).

2. Within the bottling plant and to market, the private company and facility are regulated like other food processors and manufacturers by the regulatory services section of the Tennessee Department of Agriculture (“TDA”).  The plant itself is inspected and licensed and must meet state and federal standards.  The finished water product must comply with requirements of the federal Food and Drug Administration (“FDA”) for quality and labeling, as carried out by TDA (no separate TDA rules exist specifically for bottled water content).  See, e.g., 21 CFR 165.110; 21 CFR Part 129.  For example, “standards of identity” must be met before water produced by a true spring or by a borehole next to a spring can be labeled and sold as “natural spring water.”  Also, many other states have requirements and approval procedures that must be met before a  bottled water product can enter and be sold to consumers in those states, even if the water is compliant with requirements and fully approved by applicable authorities in its home state of origin. So “50-state” permitting of product from a new source becomes necessary because many states do not automatically grant reciprocity to such out-of-state products.

C.            A Brief Look at Public Water Supply Systems

In the sections above on water rights issues, and on regulations and requirements focused mostly on private water supply projects, we alluded to some of the differences when compared to public water supply systems -- PWS's.  Public systems are typically public utilities incorporated or franchised under state law and operated by counties, municipalities, or utility districts.  Sometimes they may be private corporations operating as PWS's supplying drinking water through distribution systems to the public.  In other cases, a PWS may be a stand-alone private facility or community that only produces and supplies drinking water to its own residents, guests, or workers located on a single site.  PWS's must possess common law water rights for withdrawal and use, even if traditional doctrines give preference to municipal supply and ease concerns about use of the water outside of the riparian land only.  Beyond this, in Tennessee there is comparatively little regional or state coordination of water supply procurement.  Many cities, towns, counties, and districts have been virtually "on their own" when it came to finding water for their needs.  Only lately have various agencies begun to assist with water resources regional planning, and several state-sponsored watershed resource studies and pilot projects are now underway for certain PWS's in Tennessee. But after source procurement subject to these requirements, there is extensive additional regulation of the drinking water use of water at the state and federal levels, which PWS's must comply with and which is an important part of “water law.”

1. The Federal Safe Drinking Water Act ("SDWA"), found at 42 U.S.C. § 300f et seq., dates from 1974 and was substantially amended in 1986.  Its approach and goals are to set national standards for levels of contaminants that might be allowed in drinking water, to protect aquifers, and to create controls for underground injection of pollutants.  EPA over time has promulgated maximum contaminant levels ("MCL's") as standards for many substances.  Numerous requirements and provisions from the SDWA and its regulations are enforceable either by EPA or by states with authority to carry out this program.

2. The Tennessee Safe Drinking Water Act of 1983 works hand-in-hand with the federal authority and is found at TENN. CODE ANN. § 68-221-701 et seq.  It recognizes that the waters of Tennessee are held in public trust and the people of Tennessee "have a right to both an adequate quantity and quality of drinking water."  Id. at § 702.  Under this law, the Tennessee Water Quality Control Board is authorized to promulgate standards for construction and operation of public drinking water supplies, and regulatory oversight authority is given to TDEC's Division of Water Supply.  DWS regulates many hundreds of PWS's in the state which, in 2000, withdrew and distributed nearly 900 million gallons per day of surface water and groundwater.  TDEC's extensive requirements and detailed rules for public water systems cover over 300 pages and can be found at TENN. COMP. R. & REGS. Ch. 1200-5-1.  Additional guidance and policy materials are found at the TDEC DWS website.

3. A public water supply system is defined as one that pipes water for human consumption and has at least 15 service connections or regularly serves an average of at least 25 individuals daily for at least 60 days out of the year.  A PWS that is a "community water system" has the requisite number of connections or customers who are year-round residents.  A "non-community water system" sometimes serves a single facility or complex with a transient population, such as hotels and motels, churches, camps, or restaurants.  A PWS classified as "non-transient, non-community" serves at least 25 of the same persons over 6 months per year but is otherwise not a community system subject to new user tie-ins --again such as an isolated plant or facility supplying its own drinking water rather than connecting to and purchasing from any local water utility (often because no such service is available in that location).  Excluded from many of these coverages and requirements are systems that only have water distribution and storage facilities (not collection or treatment), only obtain finished water from a regulated PWS, do not sell water to anyone, and are not carriers of passengers.  Id. at § 1200-5-1-.03. Certain "consecutive water systems" that only pass along drinking water already treated by a fully regulated PWS have to meet lesser regulatory requirements nonetheless.  Id. at § 1200-5-1-.15.

4. PWS statutes and rules, among many other things, state that TDEC has to approve plans before beginning construction of any new system components or making changes to an existing system.  DWS must also approve a PWS's proposed sources of raw water as to both quantity and quality.  TDEC's operational supervision of PWS's is detailed and extensive via the promulgated DWS regulations cited above.  Operation and maintenance plans must be created and approved, as must drought management plans now too, noncompliance must be reported promptly, emergency plans must be in place, interbasin transfers are regulated, wellhead and surface water intake protection areas are to be studied and maintained, required testing and tank inspections must be carried out, certified operators must be present, extensive records are to be kept, and many other aspects of regulation must be met.  The ultimate purpose of all of these requirements is that drinking water standards set by federal and state law are met and public health is protected.

D.            Conclusion

Water supply issues are becoming more important in Tennessee as additional resources are developed and utilized, and as allocation of shared uses becomes even more of an issue than in the past.  Traditional common law governing water rights in surface bodies and groundwater will continue to play a role.  Moreover, prudent governmental regulation of water supply and protection of water resources are also likely to expand and be further refined even here in Tennessee, once described in the "Ballad of Davy Crockett" as "the greenest state in the land of the free."

IV.  Other Current Issues in Tennessee Surface Water Supply and Tennessee Groundwater Supply

A. Surface Water

1. Any further consumptive use regulation on the horizon for Tennessee? Regulated riparianism may continue to evolve here, especially if shortages return.\

2. Likely increased water supply planning and coordination among public utility suppliers and from the state, including more pilot projects like the existing two.

3. Drought Management Plans, being required of each municipal supplier and district, to be reviewed and approved by TDEC; these can have significant implications for all users.

4. Eastern water wars may reach Tennessee too: For years Tennessee had feared that a Georgia agent or surrogate might purchase riparian land along the vast Tennessee River near Chattanooga and not far from Georgia, begin to pump huge quantities of water there, and pipe that supply down Interstate 75 to feed the spreading Atlanta suburbs (or, alternatively, Atlanta might try to buy water from a Tennessee water utility).  Under riparian common law, there may have been little power to stop that action as even a massive diversion (off-tract but for domestic use) might not be shown to damage the equal rights of other riparian owners on so large a river.  In addition, the state could not be certain that TVA could or would have forestalled this action through its various management powers over the Tennessee River system’s dams, water levels, and navigation.

As part of its move toward regulated riparianism, as noted above, Tennessee enacted its Interbasin Water Transfer Act, TENN. CODE ANN. § 69-8-201, to give TDEC authority to control and permit such transfers by or on behalf of public water systems.  It was styled as a cross-basin transfer mechanism rather than an out-of-state transfer prohibition so as to avoid interstate commerce-based Constitutional challenges (as with many flow-control laws for solid waste).  However, fear of this “Atlanta scenario,” or of Georgia purchasing from an existing Tennessee withdrawer that would increase its volume accordingly, was a strong impetus for this statute and the regulatory permitting program that it created.

In addition, in February 2008, the Georgia legislature passed a resolution calling for a commission to be formed to look into correcting an alleged surveying error made in 1818 when the border between Georgia and Tennessee was laid out.  If the border location were now to be “corrected” as desired by Georgia, the new state line would extend over a mile north of the current boundary and put a corner of the Tennessee River at Lake Nickajack into Georgia!  Whether this move by Georgia was a publicity stunt to highlight its own lack of land use planning and resource development and conservation, or a precursor to another expensive inter-state litigation battle over water, it has been met with both humorous and serious responses from authorities in Tennessee.  No state boundary can be moved without Tennessee consent and/or Congressional action, among many other good reasons why this will never happen.  But this grasping at straws and potential new legal fight shows how water has become a predominant issue for many states – and their businesses and citizens – even in the southeast which has always been rich in water resources available in almost all of its sub-regions. See, e.g., Nashville Tennessean, “Odom Returns Water War ‘Barrage’ in Georgia-Tennessee Border Spat,” Feb. 26, 2008.  See generally, e.g., Little, Eastern Water Law:  Less Water, More Change, TRENDS, pp. 8-9 (ABA SEER, March/April 2008).  Most recently Governor Haslam has reportedly said that he might be willing to discuss water issues (plus other issues) with Georgia's governor.  Even this mild statement was met by a storm of immediate criticism within Tennessee in 2011.

"We Tennesseans will give up Lake Nickajack [to Georgia] when they pry our cold dead fingers off the Evenrudes on our bass-fishing boats."  Haltom, The Second Battle of Lookout Mountain, TENN. B.J., p. 40 (April 2008).

B.  Groundwater

1. Hydraulic fracturing, or "fraking," for natural gas drilling and development in Marcellus Shale formations requires a good deal of water withdrawal and use, and could lead to some regulatory response in Tennessee as is happening in multiple other states (including perhaps new targeted groundwater management plans and use permitting?).  Supposedly millions of gallons are required for each production well and injection operation.  See, e.g., Collins, New Withdrawals, New Impairments as Pennsylvania Develops the Marcellus Shale, p. 1-10, 2010 ABA CONF.

2. Singing the Aquifer Blues: Even though the City of Memphis lies on the banks of the Mississippi River, it does not pull any of its drinking water from that mighty resource.  Instead this city and its growing suburbs pump all of their raw water needed from a large number of wells throughout the area which reach down to deep, protected, clean aquifers known as the Memphis Sand and Fort Pillow formations.  It is believed that Memphis is the largest city in the nation to rely solely on groundwater for its drinking water source, and citizens and officials there have always been rightly proud of the abundant quantity and exceptional quality of the water in “their aquifers.”  Large agricultural withdrawals of groundwater – almost entirely unregulated – in both western Tennessee and eastern Arkansas have apparently done little to reach or diminish the Memphis drinking water supply.  Memphis has also created its own layer of local regulation to strictly control well-drilling and groundwater access within its jurisdiction.  See generally, e.g., Archer, Liquid Assets, MEMPHIS, Vol. 29, No. 12, p. 40  et seq. (March 2005).

However, in 2005 the State of Mississippi filed a federal lawsuit against Memphis and its water utility on behalf of its northern delta communities and the growing Mississippi suburbs just over the state line south of Memphis.  The lawsuit alleged that Memphis’ unreasonable “overuse” of the huge Lake Erie-sized aquifer, which also underlies part of northern Mississippi, was depriving or would eventually deprive these communities of their fair share of this shared water resource and (despite recharge) was unduly depleting its overall capacity.  The plaintiffs' lawyers hired by the state claimed that underground flows in the aquifer were now artificially northward and thus Memphis was committing “theft” of Mississippi groundwater!  Mississippi sought relief of $1.3 billion in damages and an injunction that would force Memphis to start taking a substantial portion of its raw water intake for drinking water purposes from the Mississippi River.  Such a move would require massive expenditures by Memphis for new intake infrastructure and greater treatment capability. 

This case with major implications flew somewhat “under the radar” of the national and legal press.  But its implications were tremendous for many industries and communities.  Despite both Tennessee and Mississippi separately enacting statutes and moving toward systems of “regulated riparianism” for their respective “water law,” this case would have almost entirely played out under common law theories of conversion, trespass, and unjust enrichment and historical standards for reasonable use and allocation of a shared resource -- in this instance on a massive scale.  Furthermore, because this matter involved a vast body of groundwater rather than a shared surface river system, there was no readily present third-party arbiter or federal presence such as the Corps of Engineers, TVA, Interior Department, or other agency to participate in the dispute and perhaps compel or contribute to a solution.

Initially the federal district judge in northern Mississippi refused to allow the case to be moved to a more neutral locale or to send it to the United States Supreme Court under the high court’s original jurisdiction over disputes between states pursuant to the Constitution.  Thus, there ensued several years involving intensive discovery, complex technical studies, scientific expert opinions, legal research, economics analysis, and other preparations for trial.  Much of this work focused not only on the facts of aquifer location, capacity, and usage but also on the common law principles of “reasonable use.” What duties are or are not owed by one eastern groundwater user – with wells on its own property that go “straight down” – toward other users in another state owning land over the same shared aquifer resource and who are alleging injury and seeking limitations on and allocations of the parties’ water rights as have never existed before?  Can a state claim sovereign ownership of groundwater in an interstate aquifer that underlies its borders?  Are states that dispute interstate water sources supposed to use "equitable apportionment" rather than common law torts, with remedies only for "serious detriments"?

On February 4, 2008, several years into this case, the judge unexpectedly declared before trial was to begin that indeed the State of Tennessee was an essential party to the lawsuit, and that this was an original claim between states that must be heard only by the Supreme Court.  The complaint was dismissed without prejudice, to the joy of the Memphis legal team who would rather have defended the case at the appeals level or tried it in Washington, D.C. rather than in Oxford, Mississippi. See Hood, ex rel. Mississippi v. City of Memphis, 533 F. Supp. 2d 646 (N.D. Miss. 2008), later affirmed on appeal at 570 F. 3d 625 (5th Cir. 2009). Subsequently the Supreme Court declined to hear this claim or to perform an "equitable apportionment" between the states despite its original jurisdiction over such actions. However, it is possible that this important recent eastern water war could be resurrected in some other form such as by demand for a negotiated compact or a new suit for equitable apportionment.  See generally, e.g., Wilson, Water War: State of Mississippi v. MLGW, MEMPHIS LAW., Vol. 27, No. 3, pp. 6-9 (May/June 2010); Memphis Commercial Appeal, “U.S. Judge Says He Can’t Rule on Memphis Case,” Feb. 5, 2008; TBA E-Newsletter, “State of Mississippi’s Lawsuit Against Memphis,” March 6, 2008.

Endnotes:

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Robert M. Steele is a shareholder in the law firm of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., resident primarily in its Nashville, Tennessee office.  For many years he has had a broad federal and state environmental, energy, and natural resources practice with special emphasis in the areas of:  permitting, compliance, audits, and enforcement for a wide variety of facilities, including major water supply and electric utility projects; Superfund, brownfield, petroleum, and other types of site remediation; and liability counseling and environmental diligence and documentation for financial transactions, real estate transfers, and business acquisitions. Bob graduated summa cum laude and Phi Beta Kappa from Furman University in 1978, and he received his J.D. degree from Vanderbilt University School of Law in 1981 where he was Order of the Coif and Articles Editor of the Vanderbilt Law Review.  Over the years he has been a frequent speaker and author in his fields of practice and is a member of environmental sections and committees within the American, Florida, and Tennessee bar associations.  Bob also is listed in past and current editions of The Best Lawyers in America and Chambers USA for environmental law.