Limited by Day Decision, Texas Will Have to Move Toward Correlative Rights Regime for Groundwater

In the past few years, the drought in Texas has created urgency in the market for privately controlled water.  Postcard fliers are slipped under front doors in residential neighborhoods announcing deals: “$6/foot—No Water—No Pay.” The Supreme Court of Texas did its part, too. In the long-awaited case of Edwards Aquifer Authority v. Day, the court decided that, “land ownership includes an interest in groundwater in place.” Those who can are making the most of that holding by tapping the groundwater and claiming it as their own.

Day signaled a transformation of the groundwater regime. But in doing so, these changes have sown confusion about the capacity of the state to regulate natural resources, while ignoring the science that ought to drive policy decisions. As more landowners drill for water, Texas risks depleting our groundwater resources unless our policy makers implement a different groundwater management system that places a priority on preserving our resources.  Assessing the current state of groundwater in Texas and proposing a system of correlative rights may be the best approach to manage groundwater following Day.

Groundwater in Texas – The Rule of Capture at Work

Texas is conventionally considered a “rule of capture” state with regard to groundwater. Although sometimes referred to as an “absolute ownership regime,” the rule of capture means that, if you can reduce the groundwater to possession, it is yours. This right is not unlimited, and the water is protected from your neighbor’s usurpation by a liability rule while it is in the ground. That is, your neighbor can pump water from a well on his land, and as long as he does not commit a trespass, his possession of the groundwater is protected even if he injures your capacity to use the groundwater. Yet the water is protected by a property rule against the state, although the extent of that property right remains in doubt. What this distinction seems to mean is that the state probably cannot prohibit all withdrawals of groundwater. But, as evidenced by the drilling rigs sprouting up around town, this much is clear: you own the groundwater you pump, so long as you do not negligently remove the water or exceed the amount you can beneficially use. That is the rule of capture at work.

The irony, of course, is that the wells only nominally produce unregulated water: they do not create a new source of it. The water that comes out of the ground is linked, sometimes directly and sometimes indirectly, to the water that comes out of the tap. But if you drill a well and put up a sign indicating that you are watering your lawns, shrubs, and trees with well water, you can keep your estate as green as you want—drought and your neighbors be damned.

Looking to the Future: A Correlative Rights Regime

The over-allocation of surface-water rights and the continued population growth in both Texas and California mean that groundwater will play an ever-increasing role in slaking the thirst of these states. As more landowners claim the water beneath their land as their own, groundwater management becomes increasingly difficult. What the decision in Day has done is to suggest that some form of correlative rights will have to emerge in order to manage the competing demands of overlying landowners. This is especially true once the infrastructure for water marketing is fully in place.

The Texas Supreme Court opined that a strong public interest in conserving groundwater, even when the resource is limited, does not justify placing the burden on a few landowners. Instead, it must be shared by the public. Of course, it is a truism of takings jurisprudence that the state cannot extract a public benefit at the expense of a few private owners, but such a prohibition does not solve the problem of scarcity.

The only way for the Edwards Aquifer Authority (EAA) to achieve the result suggested by the court in Day is to apply the total cap on withdrawals from the aquifer on some kind of pro rata basis. This would entail a restriction on preexisting permit holders and grant to landowners a right to withdraw groundwater in excess of the de minimis amount or to be compensated for the loss of value associated with the limit. Although this interpretation places the EAA in a difficult position, especially if permits based on historic uses are determined to be vested rights, it can only be understood as the imposition of a correlative-rights regime. Because the EAA, like other groundwater conservation districts, can regulate well size and spacing, it effectively regulates withdrawals that would be non-tortious but damaging to neighboring landowners. Thus, the rule of capture is supplanted by the permitting system, and in its place is a regulated rule of absolute ownership that is managed like a system of correlative rights.

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