Edwards Aquifer Authority v. Day Case: Jesse J. Richardson, Jr. Summarizes and WaterWired Opines

Attorney Jesse J. Richardson, Jr., advisor to the Water Systems Council and an Associate Professor of Urban Affairs and Planning at Virginia Tech, kindly provided this summary of the recent Edwards Aquifer Authority v. Day case. He had no stake in the case.

Sure was great timing on his part. I was penning this blog when his email arrived.

Here are the electronic briefs. Download the decision (clearly written, by the way):

Download Day_vs_EAA_TX_Supreme_Court

Here is an article by Kate Galbraith in The Texas Tribune, another one by Colin McDonald in the San Antonio Express-News and lastly, an article by Chuck Lindell in the Austin American-Statesman (thanks to Gabriel Eckstein for the Lindell link; see his excellent comment below).

Now here is Richardson's excellent summary as a PDF and below that, text (note: emboldening is mine):

Download Edwards_Aquifer_Authority_v_Day_Summary_JJR

The long-awaited decision in the The Edwards Aquifer Authority v. Day was
released by the Texas Supreme Court on February 24, 2012.  The case revolves around the nature of water rights in Texas.  Day purchased property within the Edwards Aquifer Authority territory.  The authority was created a year before Day purchased the property, but did not become operational until 3 years later.  Authority rules require a permit for groundwater withdrawals.  The only exception involves wells producing less than 25,000 gallons per day for domestic or livestock use. 

Day filed an application for a permit to pump 700 acre-feet of water annually for irrigation based on historical use.  The authority “preliminarily found” that Day had established a beneficial use of 600 acre-feet per year and notified Day of the preliminary findings.  Day then had a well drilled at a cost of $95,000.  The authority then notified day that his application had been denied due to a failure to prove beneficial use.  Day protested and, after a hearing, an administrative law judge found that Day was entitled to pump 14 acre-feet of groundwater per year, based on proof of historical use in that amount. 

Day appealed to the district court, which found that Day had proven irrigation of 150 acres (about ½ of his original claim), but denied Day’s constitutional claims, including a takings claim.  The district court granted summary judgment to the authority on the takings claim.  Summary judgment means that no genuine issues of material fact exist- all facts are either agreed upon or clear from existing evidence.  Since only legal issues remain, the court needs no trial and can rule on the basis of existing law.

Day and the Authority appealed.  The court of appeals agreed with the Authority that Day was entitled to a permit for only 14 acre-feet per year.  In addition the court found that landowners have ownership rights in the groundwater beneath their property that is entitled to constitutional protection, and that Day’s takings claim should not have been dismissed.

The Texas Supreme Court held that land ownership includes an interest in “groundwater in place” that cannot be taken for public use without adequate compensation under the Texas Constitution.  In examining the validity of the takings claim, the court found that there was not enough evidence in the record to rule on the issue.  However, the court’s language shows some support for a finding that the regulation amounts to a taking.  The court then remanded the case to the district court for a trial on the takings claim.

This case is extremely important for those involved in water resources.  The case joins several other state supreme courts that have recently found that groundwater rights are legally recognized rights subject to constitutional protection.  In addition, the finding that landowners have a property right to groundwater “in place” is powerful.  This means that the landowner’s right is not merely a right to use, as has been found in other states, but the right to the groundwater beneath their property before it is withdrawn. Just a few years ago, many legal commentators asserted that regulation of water use could NEVER be a taking.   Now, state supreme courts have started to find that groundwater rights are powerful rights that are protected by the state and United States constitutions.  Although this case is binding only in Texas, the result will likely have implications across the United States.

Wow! That last paragraph is a blockbuster!

My take: For those (like me) interested in the judicious management of a common-pool resource like groundwater, this is a kick in the head. I don't have a dog in this show, and Texas will do what it likes with its groundwater, but for a state still grappling with a disastrous drought this does not bode well for groundwater managers.

I understand the sacred nature of landowners' rights, but coming from states (New Mexico, Oregon) where ownership of water is vested with the state or its citizens, I find that allowing someone to actually own the water and not simply the right to use the water is a recipe for dysfunctional water management, or none at all. 

Interesting to note that the EAA is a creature of the Endangered Species Act, which forced Texas to get serious about managing its groundwater, at least in the San Antonio area.   The cognizant legislation is the Edwards Aquifer Authority Act.

Those of you who know me are aware that I am not fond of using the ESA as a water management tool, but in the case of the Edwards Aquifer (my favorite aquifer, by the way, and included in my 1975 PhD dissertation),  it provided a much-needed impetus to manage groundwater better than had been possible without the ESA hammer. Maybe not much longer.

Interesting times ahead for groundwater management in Texas, and perhaps elsewhere as well. Come to think of it, maybe folks can get 'Texas groundwater management' listed under the ESA!

But there is a silver lining in all this: it's just more fodder for my Spring course on US Water Resources Management - how not to do groundwater!

"How can you look at the Texas legislature and still believe in intelligent design?" - Kinky Friedman

Comments

[Doran G. Williams]

I should have included another possibility:

That cites and water-hustlers will mount a strong effort to get the Texas Constitution amended in a way that will render Day less onerous. It is not difficult to talk Texas voters into amending our Constitution. In this case, the effort will pit urban voters -- with their grassy lawns of water-wasting plants and trees, and local water-wasting industries, such as car washes, and various non-essential manufacturing businesses -- against much fewer rural voters. I suspect it might take less than 6 years to get the Constitution amended.

[Doran G. Williams]

Three matters leap to mind upon reading Day.

One: How will the Supreme Court of Texas deal with future conflicts between adjoining land owners regarding extraction of water from a common pool or aquifer? The Court's approach till now has been couched in terms of a "right of capture." You can pump as much water from beneath Tract A as you wish, even though doing so draws down the water from beneath adjacent Tract B, causing the water beneath Tract B to migrate to Tract A and the pump located in the water beneath Tract A. In the past there has been no legal remedy for the owner of Tract B. He simply lost the water flowing to the pump beneath Tract A. But now, if that water is actually owned by the owner of Tract B, then the owner of Tract A is very likely to be required to pay for the quantity of water being removed from Tract B.

Second: We in Texas will start to see a more vigorous use by municipalites of the condemnation of underground water rights. The owners of the underground water coveted by a City will of course try to get a maximun price for the water. This is, of course, known as the market place at work. But cities in Texas, and the politicians those cities produce, really don't care about market place ideology when it comes to water. Cities will resort to condemnation, and rely upon a hand-picked panel, rather than the market, to determine what is a "reasonable" price. Betcha didn't know that so many Texas politicians and business people are really closet socialists.

Third: Somewhat contrary to the immediately foregoing "Second," Day may have some effect upon what the Texas Supreme Court will allow to happen under the rubric of the "public purpose" for which condemnation/right of imminent domain is supposedly exercised. After all, "the public" is usually just someone farther down the road, or down stream. So many of the public purposes for which property is condemned in Texas are really for a very limited constituency, and not for the public at large. In addition, it is common practice for the Legislature to cede to private businesses and semi-public agencies, the right to condemn land for pipelines. In Texas, getting the ownership of ground-water, or the right to exploit and pump it, is one thing. Getting it to market is another. In fact, if it were not for the grant of eminent domain to private businesses, many of the State's oil, gas, and water pipelines would probably not exist. Now, we should expect those pipes to be located in the existing rights of ways of the State's roads and highways. The Court should be expected to take a longer, harder look at these practices post-Day. There is no way to predict what the Court will do.

[Chris Brooks]

Thank you Prof. Jarvis. I think a unitization-type allocation regime provides an excellent opportunity to give the environment a seat at the table in developing allocation strategies. I may be misinterpreting what Prof. Eckstein was saying but I thought he might be advocating for environmental set-asides in aquifer management. If so I think there would be potential takings issues involved. He also highlights an important difference between petroleum resources and aquifer resources - which is that water left in the ground has unique values that oil left in the ground lacks. Those unique values can result in opportunities for market solutions to aquifer management problems created under the rule of capture, in my opinion.

[Rainbow Water Coalition]

But unitization is already applied to groundwater resources - the geothermally heated groundwater resources which are part of the commons. Utah and Oregon unitize geothermal resources. Utah attempted unitization of groundwater in the west desert. And Wyoming unitizes aquifers that are targets for storage of carbon.

Careful examination of unitization employed by the oil and gas industry reveals a goal that is collectively beneficial, and that indirectly included the "environment" given that one of the goals of slowing the "race to the pumps" was to preserve the physical integrity of the reservoir (also referred to as aquifer storage).

Why not make the "environment and ecological values" one of the "operators" in an unitization scheme? Japan considers groundwater private property, yet uses unitization concepts to protect the sustainability of sacred springs.

[Gabriel Eckstein]

Chris,
Yes, unitization for oil & gas has resulted in greater efficiencies. However, I would be very hesitant to apply the same scheme to ground water resources. As you note, unitization in the context of oil and gas has been implemented to prevent waste among the pumpers - in other words, it’s a mechanism to maximize pumping, management, and economic efficiency. I'm not sure that you have the same objectives for ground water. Proper management and efficient use of ground water focuses on conservation and sustainability. The Edwards is a good example of this where there is great environmental and ecological value in leaving the water in the aquifer. If the aquifer was unitized for purposes of production (along the lines of an oil/gas reservoir), where would environmental and ecological values come in? Moreover, how would sustainability be incorporated into the scheme?

[Chris Brooks]

Those are some excellent points made by Prof. Eckstein. I would like to add that there is another significant difference between oil/gas and water -- Texas instituted unitization of oil fields many years ago to prevent waste of the resource. By doing so they quantified the rights of the owners of those fields, allowing more efficient use of the resource and creating greater value to the owners. By leaving groundwater to the fate of the rule of capture they are ensuring similar waste and inefficiency as was occurring in the oil fields. Quantification of GW rights (as the EAA has done to my understanding) through a management regime that has an effect similar to unitization can lead to similar enhancements - a quick check of the value of water rights within EAA can show that pretty effectively.

[Gabriel Eckstein]

Hi, Michael.

Jesse's analysis is right on point. I would add, however, three additional thoughts. First, the analogy to oil and gas that the Texas Supreme Court used to justify its decision is very troubling. On page 25, the Court stated:

"To differentiate between groundwater and oil and gas in terms of importance to modern life would be difficult. Drinking water is essential for life, but fuel for heat and power, at least in this society, is also indispensable. Again, the issue is not whether there are important differences between groundwater and hydrocarbons; there certainly are. But we see no basis in these differences to conclude that the common law allows ownership of oil and gas in place but not groundwater."

What the Court is saying is that the differences between hydrocarbon resources and water are immaterial for the purpose of determining property rights.

While I agree that fuel is an important commodity in our modern life, I have great difficulty equating that import to water. Although there are multitude of alternatives for the former, there are none for water. Equating substitutable natural resources with the most fundamental and irreplaceable element of life, in my mind, is a flawed analysis and fundamentally bad policy. And using that analysis as a basis for applying equivalent property rights as between the two is a travesty of justice.

As a result, ground water in Texas is now private property - owned by the overlaying land owner. This raises the second point - the further bifurcation of the law of surface water from that of ground water in Texas. Surface water in Texas is owned by the state on behalf of its citizens; its use is subject to a permit system that is regulated by the state. By further enshrining private property rights to ground water resources, the Texas Supreme Court is further complicating water law in the state. Molecules of water are regulated under different regimes depending on where they are found - in a stream versus in an aquifer. This disparate treatment means that springs feeding rivers and lakes could be legally drained by the overlaying landowner, irrespective of the impact on downstream users and the environment. The Court's latest decision effectively makes this scenario even more realistic as landowners can now brandish the "takings" weapon against governmental restrictions on such actions.

Lastly, the result of this decision is certain to make water management in the state far more difficult and complex. Texas just endured its worst one-year drought this past year and worse are projected on the horizon; the state's population is expected to double in the next 40 years, while available water resources are actually expected to decline. How the state will be able to plan adequately for this parched future is now further jeopardized by the limitations that this decision places on state action related to ground water management.

I suspect that this decision will likely go down as one of the Texas Supreme Court's most significant decisions of recent years. And 40 years from now, it will be cursed by Texans who will have been cursed by this decision.

Best regards,

Gabriel