Faculty Publications

Water scarcity due to climate change is forcing the state and local government agencies that regulate water use to prioritize certain water uses and users above others. Water agencies could just stand pat and enforce existing priorities, even if doing so would cut off valuable collective uses of water that are lower in priority than uses by narrow private interests. Alternatively, the agencies could try to adapt water priorities to climate change by reducing water obligations owed to certain groups of users in order to free up water supplies for other groups of users, even if doing so would trigger a mass of litigation from users set to receive less water than they were promised. Anticipating these dynamics, water law scholars developed the concept of “water bankruptcy,” a set of principles for better resolving the multiparty lawsuits bound to follow adaptation of water priorities to climate change. To date, however, proponents of water bankruptcy in principle have urged lawmakers to amend their own state and local procedures, overlooking the possibility that water bankruptcy in practice is already available to water agencies through the federal law of municipal bankruptcy, Chapter 9 of the Federal Bankruptcy Code.

This Article is the first attempt to examine the promise of water bankruptcy through Chapter 9 of the Bankruptcy Code, which allows local government units to readjust their debt obligations into more sustainable arrangements. As it turns out, the Code makes available a litigation process that is readymade for water bankruptcy, maximizing flexibility for eligible water agencies to consolidate in a single forum all claims to specific water sources, to breach and compensate obligations owed to large groups of water users, and even to pay for emergency water supplies. Water bankruptcy through the Bankruptcy Code also would not implicate the efficacy or constitutional concerns raised by recent Chapter 9 bankruptcies of general municipalities. Faced with dwindling freshwater supplies, water agencies and advocates of water bankruptcy in principle should appreciate the promise of water bankruptcy through the Bankruptcy Code.

Commercial actors long have argued that class actions are bad for business. But for even longer, business groups have supported other types of aggregate litigation that closely resemble class actions, such as expansive federal bankruptcy. While critics have successfully limited national aggregation via class actions, they have not even attempted to criticize aggregation via bankruptcy.

Why have business groups attacked aggregate litigation in some cases and supported it in others? This Article provides an answer by examining aggregation's origins and development, and what emerges, it turns out, is very much the opposite of what aggregation's pro-business critics would have us believe. Aggregate litigation is not bad for business--it was built for business. Lawmakers throughout history have provided aggregate litigation in response to demands and advocacy by wealthy commercial actors, who always have been aggregation's foremost advocates and beneficiaries. Over time, different aggregate devices have emerged, prospered, and perished based on their benefits to contemporaneous market actors.

Aggregation critics never have grappled with this long history. When business groups criticize aggregate litigation, they are attacking a foundational tool of their own prosperity. Any assertion that group lawsuits stymie commercial enterprise is woefully incomplete if it does not account for the pervasive commercial need for aggregate litigation.

This Note offers a framework for analyzing related-to bankruptcy jurisdiction under 28 U.S.C. § 1334 that courts can implement immediately within the bounds of the statute and case law. It argues that that the requirements for related-to jurisdiction should be better deployed in accordance with the relative merits of jurisdictional rules and standards. Part I describes the requirements that courts impose to test related-to bankruptcy jurisdiction. Part II demonstrates how the requirements for related-to jurisdiction can be better deployed in accordance with the relative merits of jurisdictional rules and standards. Part III proposes a broad threshold inquiry backstopped by a robust abstention doctrine, which will allow courts to both define bright boundaries where possible and fulfill the policy objectives of bankruptcy jurisdiction on a case-by-case basis.