At the moment, the water issues the Texas legislature appears likeliest to take up in its 2015 session involve groundwater. In exploring potential groundwater policies – whether aimed at brackish groundwater production, aquifer storage and recovery, or some other subject area – it will have to contend with an outdated governance regime that makes the sustainable management of groundwater difficult.
In July, the Seventh District Court of Appeals in Amarillo issued a decision in City of Lubbock v. Coyote Lake Ranch (CLR) that offers yet another reminder of the peculiarities of Texas groundwater law. In that case, the court held that the accommodation doctrine does not apply to groundwater because severed groundwater estates do not dominate surface estates in the same way that severed mineral estates do.
The case has its origins in a 1953 groundwater contract that conveyed groundwater rights from the owner of surface property in Bailey County, about 90 miles northwest of Lubbock, near the New Mexico state line. The contract entitled Lubbock “to full and exclusive rights of ingress and egress in, over, and on said lands, so that the Grantee of said water rights may at any time and location drill water wells and test wells on said lands for the purpose of investigating, exploring[,] producing, and getting access to percolating and underground water.”
In 2012 and 2013, Lubbock proposed a well field plan and began related testing and development. The surface estate had by that point fallen into the hands of CLR, which filed suit, claiming that plan violated the duty of care that the city owed under the accommodation doctrine. The trial court agreed and granted a temporary injunction.
On appeal, the Seventh District Court observed that the appropriateness of the injunction turned on whether the accommodation doctrine applied to groundwater. That doctrine is well established in oil and gas law. As the court explained, it requires that “where there is an existing use by the surface owner which would otherwise be precluded or impaired, and where under established practices in the industry there are alternatives available to the lessee whereby minerals can be recovered, the rules of reasonable usage of the surface may require the adoption of an alternative by the lessee.”
Whether the doctrine did in fact apply to groundwater was a novel question. CLR argued that it did and, as support, looked to Edwards Aquifer Authority v. Day, the 2012 Texas Supreme Court case that held that a governmental entity cannot take an interest in groundwater through regulation without providing compensation.
The Day decision did not discuss the accommodation doctrine, but it did spend several paragraphs drawing out the legal parallels between groundwater and oil and gas. If oil and gas law serves as a model for groundwater law, CLR argued, elements of oil and gas law such as the accommodation doctrine should be recognized as applying to groundwater.
The Seventh District Court declined to extend the oil and gas analogy in Day to the accommodation doctrine. It reasoned that the purpose of the doctrine is to protect a subordinate surface. But unlike a severed mineral estate, which is by law superior to a surface estate, a severed groundwater does not come with an implied right to use a surface estate to produce groundwater. Lubbock, for instance, was only using the CLR surface estate under its contractual rights.
Since the accommodation doctrine did not apply to groundwater, the court held that it could not enjoin Lubbock for failing to abide by that doctrine. It dissolved the district court’s preliminary injunction and observed that applying the doctrine would amount to a “change in the law” that could only be effectuated by the Texas Supreme Court or Legislature.