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| Image courtesy of the Texas Groundwater Protection Committee |
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.
Landowners possess an interest in the groundwater in place that is protected by the Texas Constitution
Edwards Aquifer involves a dispute between the Edwards Aquifer Authority (Authority) and two landowners who applied for a permit to pump 700 acre-feet of water per year from the Edwards Aquifer.
When the Authority granted a permit for only 14 acre-feet per year, the landowners filed suit, claiming the Authority confiscated their water without compensation in violation of the Texas Constitution (“takings claim”).
The Authority defended their decision, arguing the landowners owned water that was produced according to the rule of capture. But the landowners did not have a constitutionally-protected, vested interest in the groundwater “in place” beneath the soil.
As a result, the Authority claimed that its denial of a permit did not constitute a “taking” because landowners did not actually own the underground water that was not produced.
Although trial court agreed with the Authority and denied the landowners’ constitutional takings claim, the Court of Appeals reversed, finding the landowners possessed a vested, constitutionally-protected right to the groundwater in place before it is produced.
The Supreme Court agreed with the Court of Appeals. Under the rule of capture, a Texas rule that applies to water as well as oil and gas, “a landowner is the absolute owner of groundwater flowing at the surface from its well, even if the water originated from beneath the land of another.”
Thus, water at the surface of a well belongs to the owner of the well. However, the rule of capture does not answer who owns the water that remains underground, that is, the “water in place.”
Precisely who owns the water in place is important because the Authority, through legislation, has the right to regulate the use of underground water to provide for the public good and preserve the environment. If the landowner owns the water in place, the landowner has a vested property right in the water and may be entitled to compensation for governmental “takings” without adequate compensation. But if the landowner does not own the water until it reaches the surface, then no taking occurs if the Authority refuses to issue a permit to landowners who fail to meet the applicable regulations.
The Supreme Court ruled that landowners have absolute title to the water in place beneath their land. Although the landowners’ rights are still subject to the state’s police power, the Supreme Court found that the landowners’ “groundwater rights are property rights subject to constitutional protection.
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.
Footnote: In 2011, the Legislature amended section 36.002 of the Texas Water Code, recognizing that a landowner “owns the groundwater below the surface of the landowner’s land as real property. See TEX. WATER CODE § 36.002 (West 2012). The Edwards Aquifer Court noted that by specifying the ownership of groundwater as “real property,” the Legislature appears to mean ownership in place.
