Texas-wide Repercussions on Groundwater Regulation

This is the last post in a 3-part series on "Landowners Prevail in Dispute with Regulators Over Ownership of Underground Water."

Edwards Aquifer does not necessarily portend a parade of litigation, but it likely portends a re-evaluation of how groundwater is allocated to interested stakeholders.

In light of the Supreme Court’s analysis in Edwards Aquifer, the legislature may re-draft existing regulations for the ninety-six Groundwater Conservation Districts.

 The Supreme Court decision indicates that a landowner’s fair share should be determined under a more flexible totality-of-the-circumstances test rather than the current historical use requirement. A revised permitting process may be necessary to protect the interest of newcomers to the permitting process, that is, landowners who do not have an existing permit and may be unable to establish historical use.

Notably, the Texas Railroad Commission (RRC) regulates some of the groundwater used in oil and gas operations in the state. The RRC issues drilling permits to oil and gas operators to drill an injection water supply well, that accesses more saline or brackish water, not fresh water.

When a fresh water well is drilled, other regulations may apply, such as Chapter 36 of the Texas Water Code which governs Groundwater Conservation Districts. Chapter 36 contains exemptions and exceptions for certain activities.

More information regarding regulation of water supplies used in oil and gas activities may be found on the RRC website at http://www.rrc.state.tx.us/barnettshale/wateruse.php. Demand for more water continues to escalate, and the recent Texas drought has only exacerbated the scarcity of water supplies for all interested stakeholders.

Because the Supreme Court ruled that landowners have a property interest in the groundwater and state regulators must compensate landowners for unjustifiable “takings,” the legislature is likely to revisit existing regulations to ensure landowners receive their reasonable fair share. 

Revised regulations could lead to a re-allocation of available water under existing permits.

As the legislature, the courts, and the various stakeholders weigh in on the process, the only constant on the horizon is that the status quo is likely to change.

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.