Texas Water Grab: Are water use restrictions a property taking?

In 2011, Texas experienced the worst drought in its history. Thousands of square miles burned in wildfires, thousands of homes were lost, and dozens of people died. Estimated damages included billions of dollars in agricultural and livestock losses[1]. Although water scarcity is a familiar issue for Texans, 2011 put a new spotlight on the future of water in the Lone Star State.

Water management, especially groundwater management, confronts a myriad of legal and political concerns: property rights, conservation, public vs. private resources, and the powers and limits of local governments. In Texas, courts have long applied the rule of capture[2] in deciding water rights issues. Laid out in Houston & Texas Central Railroad Co. v. East in 1904, the Rule of Capture gives landowners the right to drill wells and withdraw unlimited water from beneath their land, even if doing so decreases the water available in other wells.[3] Even if these withdraws cause a neighbor’s well to dry up, the victim will have no cause of action under tort liability–except in the rare case where a court finds “waste.” In contrast, Texas law treats surface water as held in trust by the state, and the first-in-time user also becomes “first-in-right,” and there is a general “use-it-or-lose-it” doctrine that if a water right goes unused, it can be forfeited.[4] This approach to surface water law, called prior appropriation, is common among most western states, but the adoption of the rule of capture is more anomalous. Applied together, both rules encourage exploitation, and have made it difficult to manage water use.

Looking for other means of enforcing conservation, Texas turned to state regulation of water withdrawal. Chapter 36 of the Texas Water Code allows for the creation of groundwater conservation districts, which have broad authority to make and enforce rules limiting groundwater use and protect water quality and availability.[5] The largest such district is the High Plains Underground Water Conservation District, which encompasses 16 counties in Western Texas that spread north of Lubbock into the Texas panhandle, and draw water from the famous Ogallala Aquifer.[6] In response to the record-breaking drought of 2011, the High Plains district enacted rules this past January restricting groundwater use and requiring new wells to have meters installed to measure withdrawals.[7] These steps are designed to meet the wider state goal of conservation, ensuring 50% of the water in the aquifer as of 2010 is still available for use in 2060.[8]

Local farmers aren’t happy about these new rules. Farmers and landowners object to the new regulations as impositions on their property rights, and some have formed a group called the Protect Water Rights Coalition.[9] They argue that farmers have been adopting and improving water conservation methods for decades, and that the new rules will severely decrease their crop yields. They also point out that no such use restrictions apply to urban areas in Texas, where backyard swimming pools are a common sight.[10] Lubbock does restrict lawn-watering to twice a week, and will reduce this to once a week next year.[11] Although they are prepared to do so, the Protect Water Rights Coalition has yet to file a lawsuit challenging the new regulations. They, like most interested in Texas water laws, are awaiting an important upcoming court decision likely to change the legal landscape.

In February 2010, before the worst of the drought, the Supreme Court of Texas held that landowners have a real property right to the groundwater under their land “in place,” not, as had previously been the rule, only once it was extracted.[12] The court also held that this property interest cannot be taken for public use without just compensation, effectively creating a cause of action for groundwater rights under the takings clause of the Texas constitution.[13] The Court distinguished this ruling from the Rule of Capture by pointing out that Houston & Texas Railroad v. East focused on the “correlative rights” of East, specifically his right to sue for damages, but did not preclude all “correlative rights” to groundwater.[14] The language of the East opinion, however, does not make this distinction, and instead directly states that “[i]n the absence of express contract and a positive authorized legislation,… the law recognizes no correlative rights in respect to underground waters.”[15] The Court argued that the reasons given for not recognizing these rights – the impracticality and uncertainty of it – imply that the court did not preclude all correlative rights.[16] The Court further noted that the decision in East recognized the railroad’s ownership of the water once it had reached the surface, but did not consider the issue of ownership of groundwater in place.[17] On that question, the Court turned to oil and gas law, which had also been governed by the rule of capture, but additionally recognizes an exclusive real property interest in oil and gas in the ground[18]. Groundwater, the Court said, should be subject to the same framework.

The Edwards Aquifer Authority objected that groundwater is fundamentally different from oil and gas, both legally and in nature. The Court rejected both of these arguments, and noted that water, like oil and gas, is a commodity, and bottled water sells at a higher price than the equivalent volume of oil.[19] However, the court agreed that pumping can be regulated – but at a certain point, restriction could become a taking. The court failed to define when a regulation might morph into a taking, instead remanding the issue to the district court. Now, state regulators are holding their breath, awaiting what could be a game-changing decision.

If the district court sets a relatively low bar for what is considered a taking, groundwater management districts across the state may have to re-evaluate their management plans. These local bodies are perennially underfunded, and certainly can’t afford the risk of a barrage of litigation. They could choose to focus on voluntary measures instead, which may be more popular in the wake of the 2011 drought. Unfortunately, the drought may have made some farmers more averse to formal water restrictions because they want to have the flexibility to increase irrigation during dry spells.  In a region where 95% of water use occurs in the agricultural sector, which relies on the Ogallala and other aquifers, it’s hard to see how they can now succeed in tempering water use. Whether or not the Day ruling and it’s fallout will affect other state water regulation is hard to say. The Great Plains and Western states’ approaches to water use are inconsistent across and within jurisdictions. But, as the recognition of property rights in groundwater represents such a drastic break with traditional water law, this ruling may spark several states to re-evaluate their own approach. In the mean time, farmers throughout Texas remain focused on reinforcing their irrigation systems for the next drought.

— Sarah Duffy is a General Member with MJEAL.

The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

[1] Chris Amico et al., Dried Out: Confronting the Texas Drought, NPR (Nov. 10, 2012, 10:15 AM), http://stateimpact.npr.org/texas/drought/.

[2] Hous. & T.C. Ry. Co. v. East, 81 S.W. 279 (Tex. 1904).

[3] Id.

[4] Todd H. Votteler, Raiders of the Lost Aquifer? 15 Tul. Envtl. L.J. 257, 269 (2002).

[5] V.T.C.A., Water Code § 36.101 (2011).

[6] April Reese, “For the first time, West Texas farmers grapple with pumping restrictions,” Greenwire Oct. 24, 2012, http://www.eenews.net/gw/.

[7] Rules of the High Plains Underground Water Dist. No. 1 (2012).

[8] April Reese, For the first time, West Texas farmers grapple with pumping restrictions, Greenwire (Oct. 24, 2012), http://www.eenews.net/gw/.

[9] Kate Galbraith, Texas Farmers Battle Ogallala Pumping Limit, The Texas Tribune, March 18, 2012, available at http://www.texastribune.org/texas-environmental-news/water-supply/texas-farmers-regulators-battle-over-ogallala/

[10] Id.

[11] Id.

[12] Edwards Aquifer Authority v. Day, No. 08-0964, 2012 Tex. LEXIS 488. (Decision published without opinion. Opinion retrieved from http://www.supreme.courts.state.tx.us/historical/2012/feb/080964.pdf)

[13] Id.

[14] Id. at 14.

[15] East, 81 S.W. at 280-81.

[16] Day, 2012 Tex. at 14-15.

[17] Id. at 15.

[18] Id. at 22.

[19] Id. at 25.