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| Photo courtesy of the Texas Dept. of Agriculture |
The Texas Supreme Court recently confirmed that state regulations cannot unjustifiably deprive landowners of their fair share of the groundwater beneath their land. In Edwards Aquifer Authority v. Day, the Court confirmed that landowners own and have a constitutionally-protected property right to their fair share of the groundwater “in place” under their land, a principle developed under the common law and Texas statutory law. While the state may control and manage Texas water supplies by permitting its use, the Court held that state regulators may not deprive landowners of all beneficial use of the groundwater below their property without adequate compensation.
The existing permitting process may be inadequate to protect landowners’ groundwater rights.
The Court addressed whether a taking occurred under the Authority’s groundwater permitting process. Whether the Authority’s current permitting process adequately protects landowners’ property interest to their fair share of the groundwater is open to debate, but the Supreme Court appears to suggest that it does not.
The Authority and its regulations, which are governed by Chapter 36 of the Texas Water Code, were created to safeguard public safety and welfare, to prevent waste, and to afford each owner a fair share of a common reservoir.
The regulations allow the Authority to issue permits to those who seek to withdraw water from the Edward Aquifer up to a cap of roughly 572,000 acre-feet per year. In issuing permits, the Authority is required to give preference to “existing users” (those who operated a well for three or more years prior to 1993), considering only the amount of groundwater put to beneficial use without waste.
Under this type of “historical use” requirement, a landowner could be deprived of all use of groundwater, other than a small amount for domestic or livestock use, merely because such landowner did not use water during the historical period.
The Authority defended the “use-it-or-lose-it” approach to issuing permits, arguing that it protects investments that landowners made in developing groundwater resources.
But the Supreme Court indicated that this approach incentivizes landowners to pump as much water from the reservoir as possible in order to preserve their right to the water in the future, whereas non-use of groundwater would conserve water resources.
The Court suggested that a broader approach than the current “historic use” requirement in issuing permits may be needed to protect a landowner’s property right to the water in place beneath the land.
The Supreme Court did not find that the Authority’s conduct in denying a 700 acre-feet permit to the landowners in Edwards Aquifer constitutes a taking.
Instead, the Court remanded the two landowners’ constitutional takings claim to the trial court, cautioning that “a landowner cannot be deprived of all beneficial use of the groundwater below his property merely because he did not use it during the historical period and supply is limited.”
This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713-651-3662) and Marti Cherry (mcherry@fulbright.com or 214-855-8094) of the Fulbright's Energy Practice and the firm’s Shale and Hydraulic Fracturing Task Force.
