Source: https://www.yalelawjournal.org/forum/liquid-assets-groundwater-in-texas
Timestamp: 2019-04-20 22:29:06+00:00

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The challenge in the Day case arose under the Edwards Aquifer Authority Act (EAA Act). The plaintiffs challenged the denial of a permit to withdraw groundwater in excess of the historical amount determined by the EAA. The difference between the requested amount and the permitted amount was substantial. BurrellDay asked for a permit to withdraw seven hundred acre-feet of water, but based on a calculation of historical beneficial use, the EAA issued a permit for fourteen acre-feet. This disparity triggered Day’s claim of a taking. The Texas Court of Appeals upheld the EAA permit limiting withdrawal to fourteen acre-feet, but also held that “landowners have some ownership rights in the groundwater beneath their property . . . entitled to constitutional protection.”6 The reasoning of the appeals court is perplexing because the ownership interest being contested is almost completely dependent on the statutory exemptions under the EAA Act.
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.9 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.10 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.11 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.12 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.
Part II examines the various approaches to regulating groundwater, including those that create ownership rights for groundwater in place. Although hydrologists and geologists have long known that groundwater and surface-water resources are intimately interrelated, the law has consistently treated them as distinct. The politics of regulating a valuable resource that also has the potential to limit the future economic growth of Texas and California has narrowed the space available for reasoned policymaking.
Finally, in light of the Day case and the contest over the permissible reach of regulation, this Essay will consider alternatives for allocating both the value and utility of groundwater. Against the attempts to use groundwater management districts and other ownership regimes to solve the problems posed by water scarcity, the Essay will assess the possibilities that the current state of affairs leaves us.
The State of Texas has long characterized groundwater in three ways: (1) percolating, (2) underground river, or (3) underflow.15 At the same time, the law applies only two rules: one for percolating groundwater and the other for underground rivers or underflow. Under the Texas Water Code and the attendant case law, if groundwater is classified as “percolating,” it is subject to the rule of capture—if you pump it, you own it.16 If, however, the groundwater is characterized as an underground river or subterranean stream,17 or if the groundwater is considered an “underflow” of a surface watercourse, then the water would be governed by the law of prior appropriation.18 The characterization of a particular underground water source is subject to legislative determination. How groundwater is classified is, of course, critically important because it determines the ownership interests and the regulatory limits of the state.
Although the conservation amendment to the Texas Constitution gives the State the authority to establish conservation and reclamation districts, including groundwater conservation districts,21 the State was slow to establish groundwater districts. The delay resulted both from the political difficulties associated with the conflict over natural and political boundaries, and from the different characterization of the private interests in the water being regulated. If landowners believe they have a right to the groundwater in place, then any regulation will trigger a more searching inquiry into the acceptable constitutional limits of that regulation. Because groundwater, unlike surface water, is not part of the “waters of the state,” the regulatory starting point is both different and more limited.
The critical step in every system that has successfully made this transition from a riparian regime to a regime of regulated prior appropriation was to effectively assert state ownership over surface waters in a way that avoided liability for any reduced value that accompanied the elimination of riparian rights.25 While making some accommodations for preexisting rights, most states have managed the rationalization of water allocation schemes consistent with the physical conditions of the state. By making the surface waters “state waters,” the rights that are conveyed through a system of prior appropriation are both secure and subject to the regulatory reach of the state as conditions dictate, including prohibitions on use. Being clear about which waters are state waters and which are not is of signal importance because the distinction has crucial implications for both the constitutionally permissible regulatory reach of the state and for the private value of the real property to which the water rights attach.
The evolution of water rights in the arid West mapped the physical conditions of the geography and justified the maxim cessante ratione, cessat ipsa lex—when the reason for the rule ceases, so should the rule itself. But the parallel developments of the law governing surface water and groundwater were out of sync. For the most part, the potential problems that concerned courts and legislatures with regard to surface water eluded policymakers with regard to groundwater. As in Texas and California (as well as most other states in the West), there were questions about the quality of the property interest of the groundwater in place, the relationship of that interest to surface ownership, and the level of government that ought to be making the decisions about allocated rights.
The conservation amendment clearly gave the State of Texas the power to create groundwater conservation districts to manage the groundwater resource. The question behind its use, however, is whether the power is plenary—like the power to control the use of surface waters—or whether it is something less. The nature of the private interest in groundwater is necessarily the limiting factor in the background regulatory principles that are found in the common law.
The debate27 centers on how to resolve the tension between (a) the doctrine of absolute ownership of the resource in place that clearly articulates a property rule, and (b) the rule of capture that gives absolute ownership only to groundwater reduced to possession and that is only protected by a liability rule. The exercise of regulatory powers over groundwater must thread this conceptual needle.
The legislature was empowered by the conservation amendment to authorize the creation of groundwater conservation districts. In chapter 36 of the Texas Water Code (“Chapter 36”), the legislature both outlined the reason for the creation of groundwater conservation districts and authorized each district to construct rules consistent with the conservation and management of specific aquifers or groundwater districts.33 This approach suggests, of course, that “owners” of groundwater could be treated differently from one groundwater conservation district to another and even within the same district, depending on the conservation needs and physical limitations of the aquifer. Whether this distinction would constitute an unconstitutional regulatory burden on the landowners is unclear. However, there are suggestions that the conservation amendment and Chapter 36 did contemplate the power to issue these kinds of regulations. Before examining the extent of permissible Chapter 36 limitations, it would be useful to look at the most litigated groundwater conservation district and the one that was the specific subject of attack in the Day case.
The operation of the EAA was supposed to be relatively straightforward. The rights to the groundwater would be regulated in an orderly way that would enable the EAA to transition groundwater rights from the common law rule of capture to a fully permitted system of withdrawals. This was not unlike the animating impulse behind the transition of surface-water regimes from a riparian ownership system to the permitted prior-appropriation system. Temporary interim authorizations would give way to initial regular permits if landowners filed their permits in a timely manner. Although the interim withdrawals were not subject to permits, they did form the basis for determining historic “maximum beneficial use” that would be the baseline for the allowable withdrawals in the initial regular permits.39 Eventually, all historic users of groundwater would be integrated into the permit system, which would be limited to an aquifer-wide annual withdrawal cap.
The EAA had already survived both the facial attack of the Barshop case and the attack on the extent of its rulemaking powers to regulate withdrawals to prevent waste.48 But in addition to the cases arising under the EAA Act, the case of City of Del Rio v. Clayton Sam Colt Hamilton Trust had also become part of the background against which the dispute in Day would play out.49 The Hamilton Trust case was touted for its support of the claim that landowners have a property interest in the groundwater in place.
Because the Trust owned adjacent land, it maintained access to the water under the tract sold to the city and reserved the right as against the owner to remove the groundwater of the surface estate. What the Trust clearly could not do was prevent anyone else from taking the groundwater from under the tract conveyed to the city. Thus, the Trust owned the water as against the buyer if and only if the buyer tried to pump the water out from a well drilled on the conveyed parcel. It seems equally clear, however, that the Trust, despite the holding regarding absolute ownership, could not enjoin the nonwasteful pumping from off-site even if it drained the water claimed by the Trust.
Because the existing rules would give an effective monopoly to the grandfathered uses and would give them a stranglehold on the lucrative transfer market that was being driven by the needs of a growing El Paso, the plaintiffs argued that transfers were new uses and thus not subject to protection as existing or historic uses.58 This interpretation would put all transfer permits on the same legal footing.
The demand for water from El Paso and the creation of operating permits created greater tension among potential claimants of the groundwater. The new allocation structure combined a kind of correlative-rights regime with prior appropriation. A correlative-rights regime ties ownership of groundwater to ownership of the overlying land. It differs from absolute ownership only to the extent that it limits the share of groundwater a landowner can claim to a “reasonable” amount determined by surface acres owned. Prior appropriation protected the historic users, and the new operating permits were tied to surface acreage. Transfer permitswere available either to historic users (through validation permits) or to operating permit-holders (as new users). The total amount of water that could be withdrawn was limited by the water level in the aquifer. Although old and new permittees were eligible to get transfer permits, the historic users were guaranteed a more secure supply through the application of the logic of prior appropriation.
The Texas Supreme Court ruled that the new rules that only regulated the quantity of water withdrawn and without regulating the uses for which the water was withdrawn were invalid.61 The court uncoupled the transfer permits from the validation permits, thus placing all transfer permittees on the same footing. This decision does not completely eliminate the elements of either prior appropriation (as long as the water continues to be used for irrigation) or correlative rights; it merely shifts the power to larger landowners. Where the previous rules privileged use, the new regime suggests rights to groundwater based on surface land ownership. Whether this translates into rights to groundwater in place is unclear because correlative rights are not required. Of course, merely uncoupling the transfer permits from the validation permits does not completely shift the power to surface landowners, because the other rules relating to conservation still give preference to existing and historical uses where there are potential shortages that deleteriously affect the aquifer.
Against this murky background of contested groundwater rights and regulatory authority, the Texas Supreme Court in Day suggested that the limited purview of the EAA Act makes the regulatory scheme more vulnerable to challenge than the type of regulations at issue in Guitar Holding Co. The amount of groundwater that can be withdrawn under the EAA Act is based solely on the historic amounts of water that were put to beneficial use during the historic period and on the available water supply, but for the de minimis exceptions.62 A landowner could thus be denied all use of groundwater. That fact, according to the Texas Supreme Court, made all the difference.63 The crucial difference, apparently, is that the limitation created in the EAA Act amounts to forfeiture for nonusage.
Groundwater is not the only valuable incident of surface ownership. The subsurface rights we most commonly associate with surface ownership are those tied to mineral rights, which include oil and gas. Because of the tempestuous history of oil-and-gas exploration, this seemed to the Texas Supreme Court a likely place to begin the inquiry about the quality of the property interest in groundwater.66 As the court said in Day, “Whether groundwater can be owned in place is an issue we have never decided. But we held long ago that oil and gas are owned in place, and we find no reason to treat groundwater differently.”67 Yet the analogy is fraught with difficulties, and not merely because of the distinctive nature of the substances or the differing consumptive use of each.
The starting point for the analogy stemmed from a taxing case in which an oil-and-gas lessee argued that he was not liable for the ad valorem tax on oil in place because his interest was speculative and amounted only to a right to capture whatever oil or gas might be discovered.68 The claim was further buttressed by the argument that the landowner-lessor ought to be liable for the value of the oil or gas in place because it was part of the value of the land. The Texas Supreme Court concluded that the lessee’s interest was a severable interest in the realty that amounted to a defeasible fee in the same way that a lease to remove coal or other mineral might be.69 The interest in the mineral estate could be valued, at a minimum, at what the purchaser paid for it.
The discussion in that case included references to water as well as to hard-rock minerals that might be severed through a lease or other instrument. While in the ground, these minerals, and, by analogy, water, that might be severed, constitute some share of the value of the parcel as a whole and thus ought to be considered part of the realty. The leaseholder became the fee owner of the severed interest when he or she reduced the subject matter of the lease to possession. Nonetheless, the mineral interest had a value both as part of the real estate and as a separate interest.
Of course, this merely says that the value of a parcel of land includes all of the potential incidents of ownership. If you can demonstrate that there is groundwater available from your land, then that parcel is going to be more valuable than land that does not overlie an aquifer. Yet characterizing an inchoate interest as property does not necessarily follow unless there are correlative rights among surface owners.
A brief hypothetical illustrates this point. Imagine that owner A drills a well on his property lowering the water table such that owner B must now drill much deeper to remove any water that underlies his property. Imagine that B even has a producing well that dries up. Before the well dries up and before A drills his well, B sells his property to C. Part of the value of the parcel is the access to water. Nonetheless, C has no right to enjoin A or to get damages from A so long as A puts the water he removes to a legitimate beneficial use.71 The result would be completely different if the right to remove groundwater were contingent on the number of acres overlying the aquifer. In that case, each overlying landowner would have a right to a quantity of the groundwater consistent with the surface acreage owned. But as the case law in Texas has stated again and again, supported by legislation, groundwater is not regulated according to any correlative-rights regime, and there is no obligation of groundwater conservation districts to impose such a regime.
Although the rule of capture may not preclude the idea of ownership of groundwater in place, it certainly strips the idea of ownership of what we normally regard as important attributes of property. The important point to remember, however, is that—except for the cases concerning drainage and the operation of immunity from tort liability—the cases that foreground the property interest arise in the context of groundwater regulation where the access to groundwater is rationed in some way. Perhaps the federal constitutional case that actually grounds these claims is Goldberg v. Kelly72 rather than Penn Central.73 The next section addresses these arguments.
In many ways, the question of the quality of the ownership interest in groundwater in place only has any resonance in situations where the state or one of its subdivisions applies an allocation or rationing scheme. Of course, that is what management and conservation are all about. The management plan and the concern for “desired future conditions” drive the rules.74 Like the conversion to prior appropriation, moreover, concern for protecting existing users plays an important role in determining what the rationing system will look like. Despite the language in the Texas Water Code stating that “[t]his section does not . . . require that a rule adopted by a district allocate to each landowner a proportionate share of available groundwater for production from the aquifer based on the number of acres owned by the landowner,”75 such an allocation is the effective result of the Day holding. Because of the limit created by the combination of the historic use criteria and the total withdrawal cap in the EAA Act, it is likely that some landowners will be restricted to close to zero permissible withdrawal. But unless the court holds that the domestic and livestock exemptions are sufficient to preserve the constitutionality of the EAA Act scheme, some provision will have to be made to permit withdrawals in excess of the cap or outside the historic use limitation, or the EAA will have to pay to prevent pumping.
The Texas Supreme Court determined that the landowner has a “constitutionally compensable interest in groundwater.”76 It is a property interest that has no private dimension other than protection through trespass. Although it is severable and valuable as an incident of real-property ownership, any private action that would arise to protect it would be in contract. There is no right to possess and no right to exclude other than through the policing of boundaries. Through the creation of a groundwater management district, the rules become the measure of the property interest of the landowner.
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 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 nontortious 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.
Because of the relationship between surface and groundwater supplies, the capacity to regulate withdrawals consistent with the overall water needs of the state is critical.
Likewise, California is not immune to these stresses. The largely federally financed aqueduct that brings water from the north to the thirsty south and the restoration of the Sacramento-San Joaquin River Delta will continue to put pressure on surface-water supplies. There is currently a ballot initiative pending in San Francisco to remove the Hetch Hetchy Dam, which supplies the bulk of the drinking water for San Francisco.80 If that water supply goes away, it will have to be generated from other sources.
The overallocation 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. 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. While the Texas Supreme Court in Day suggested the model of oil and gas as the appropriate one to use for groundwater, that can only be a first approximation. The nonsubstitutability of water as compared to oil and gas, the different consumption patterns, and the relationship between groundwater and surface water all suggest real, not conceptual, limitations to a full-bodied adoption of the oil-and-gas model.
The question of which ownership regime will govern is complex both because of the fact that the various approaches that have been tried across the country offer competing models and because of the web of expectations that have been allowed to develop under conditions of legal uncertainty. The law could, of course, merely ratify those expectations and, by doing so, avoid the kinds of constitutional challenges raised in Day. Alternatively, it could begin to construct the legal architecture and permitting system that takes most of the sting out of the changes in expectations. The EAA Act is an example of that approach, and the preservation ofde minimis exemptions is another. Nonetheless, Day and the cases that trail in its wake suggest that this is not enough.81 Many commentators suggest that a clear private-property regime in groundwater is not only more efficient but also more fair with respect to developed expectations.82 The private-property response for making efficient use of a commons is an old argument, but it does set out clear boundaries on government regulatory authority as well as provide a basis for water marketing. But the treatment of surface water and the conversion from a riparian system to a system of prior appropriation provides an alternative model. It is one that fully protects private interests in water while setting up a well-regulated and monitored system of allocation. The system accounts for the kinds of uses and the physical limitations of the resource. It also provides a baseline and framework for planning that respects the ways in which water is a resource different from virtually any other, with its centrality to human life and well-being.
Water management has provided lessons throughout our history. In the early days of the Republic, water power was crucial to the economic welfare of the region, a fact that gave rise to the mill-dam acts.83 From those states in the West, vested quasi-governmental powers in irrigation districts ensured that water would be used most productively. Because of its unique status and centrality to human welfare, water has always been treated differently. Groundwater is not sui generis. Perhaps the roiling conflicts over ownership only put an exclamation point on the quotation that is commonly attributed to Mark Twain: “Whiskey is for drinkin’, water is for fightin’.”84 Let us hope that the fight will be fought fairly.
Gerald Torres holds the Bryant Smith Chair in Law at the University of Texas at Austin. He served as Deputy Assistant Attorney General for the Environment and Natural Resources Division of the U.S. Department of Justice and as Counsel to the Attorney General during the Clinton Administration.
Preferred citation: Gerald Torres, Liquid Assets: Groundwater in Texas, 122 Yale L.J. Online 143 (2012), http://yalelawjournal.org/forum/liquid-assets-groundwater-in-texas.
Edwards Aquifer Auth. v. Day, 369 S.W.3d 814, 817 (Tex. 2012).
Edwards Aquifer Auth. v. Day, 274 S.W.3d 742, 756 (Tex. App. 2008).
Id. at 753-56 (citation omitted).
Irrigation Act of 1917, ch. 88, 1917 Tex. Gen. Laws 211.
Tex. Const. art. XVI, § 59.
See Coffin v. Left Hand Ditch Co., 6 Colo. 443 (1882).
See Edwards Aquifer Auth. v. Day, 369 S.W.3d 814, 832-33 (Tex. 2012).
See Edwards Aquifer Authority Act of 1993, ch. 626, 1993 Tex. Gen. Laws 2350.
16 U.S.C. §§ 1532-1544 (2006).
See Edwards Aquifer Auth. v. Day, 274 S.W.3d 742, 748-49 (Tex. App. 2008) (citations omitted).
925 S.W.2d 618, 626 (Tex. 1996).
A usufruct is a right to use a thing provided you do not consume or alter the utility of the thing.
Edwards Aquifer Auth. v. Day, 369 S.W.3d 814, 822-23 (Tex. 2012).
See Bragg v. Edwards Aquifer Auth., 71 S.W.3d 729 (Tex. 2002).
269 S.W.3d 613 (Tex. App. 2008).
Hous. & T.C. Ry. Co. v. East, 81 S.W. 279 (Tex. 1904).
Hamilton Trust, 269 S.W.3d at 618.
Edwards Aquifer Auth. v. Day, 369 S.W.3d 814, 833-37 (Tex. 2012).
263 S.W.3d 910, 914 (Tex. 2008).
Guitar Holding Co., 263 S.W.3d at 915.
Edwards Aquifer Auth. v. Day, 369 S.W.3d 814, 835-36 (Tex. 2012).
See Tex. Water Code Ann. § 36.002 (West 2012).
Day, 369 S.W.3d at 823.
Tex. Co. v. Daugherty, 176 S.W. 717 (Tex. 1915).
See Tex. Water Code Ann. § 36.108 (West 2012).
Edwards Aquifer Auth. v. Day, 369 S.W.3d 814, 838 (Tex. 2012).
See Farzad Mashhood, Current Drought Pales in Comparison with 1950s ‘Drought of Record,’ Austin Am.-Statesman, Aug. 4, 2011, http://www.statesman.com/news/news/local/current-drought-pales-in-comparison-with-1950s-d-1/nRdC5 (“As part of the state’s recovery, . . . Texas needed to build a network of reservoirs to protect against future droughts . . . . From 1957 to 1970, workers built 69 dams . . . . In addition, underground aquifers were tapped as important resources from the future. From 1947 to 1957, groundwater use increased fivefold . . . .”); see also Nat’l Climatic Data Ctr., 20th Century Drought, Nat’l Oceanic & Atmospheric Admin., http://www.ncdc.noaa.gov/paleo/drought/drght_history.html (Nov. 12, 2003) (discussing the severity of the 1950s drought).
Austin, Texas, although on the edge of the aquifer, is not in a groundwater conservation district, nor is it subject to the rules of the Edwards Aquifer Authority (EAA). The Barton Springs/Edwards Aquifer Conservation District includes a good part of south Austin, but does not extend north of the Colorado River (Lady Bird Lake), and thus does not regulate the wells that have been drilled in those parts of Austin referenced in the text.
Cf. Baldwin v. Cnty. of Tehama, 36 Cal. Rptr. 2d 886, 888 (Ct. App. 1994) (holding that “state law, while regulating aspects of groundwater, does not wholly preclude county regulation”).
California’s importance in setting national water law policy is enormous. See M. Rhead Enion, Under Water: Monitoring and Regulating Groundwater in California, Emmett Center on Climate Change & the Env’t (July 2011), http://cdn.law.ucla.edu/SiteCollectionDocuments/Centers%20and%20Programs/Emmett%20Center%20on%20Climate%20Change%20and%20the%20Environment/Pritzker_01_Under_Water.pdf.
See Hous. & T.C. Ry. Co. v. East, 81 S.W. 279, 281 (Tex. 1904) (“[T]he owner of the soil is at liberty to dig therein and take away the percolating water for any legitimate purpose of his own . . . .”).
See FPL Farming Ltd. v. Envtl. Processing Sys., L.C., 351 S.W.3d 306, 314 (Tex. 2011) (finding that the rule of capture does not insulate a landowner from tort liability arising from migrating water from an injection well); Coastal Oil & Gas Corp. v. Garza Energy Trust, 268 S.W.3d 1, 15 (Tex. 2008) (finding that the natural gas under a tract of land was subject to drainage from a well on the adjoining tract); see also Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089, 1092 (1972) (“Whenever someone may destroy the initial entitlement if he is willing to pay an objectively determined value for it, an entitlement is protected by a liability rule.”).
(2) do not affect the existence of common law defenses or other defenses to liability under the rule of capture.
(c) Nothing in this code shall be construed as granting the authority to deprive or divest a landowner . . . of the groundwater ownership and rights described by this section.
(3) require that a rule adopted by a district allocate to each landowner a proportionate share of available groundwater for production from the aquifer based on the number of acres owned by the landowner.
Tex. Water Code Ann. § 36.002 (West 2012). I will discuss this statute in detail in Section I.B and Part II infra, but I note that it creates a limited property right and may even permit the conversion of the rule of capture into a correlative-rights system.
See Day, 369 S.W.3d at 820, 824-25. Note that the opinion does not establish a negligence standard; it cites the statutory mention of negligence. See id. at 832.
See Thomas V. Cech, Principles of Water Resources: History, Development, Management, and Policy 27-28 (3d ed. 2010).
See infra Section I.B. For example, the EAA Act was designed to protect a particularly vulnerable aquifer that serves a large part of the population of central Texas and lies beneath one of the most valuable areas of the state.
[w]ater in sand, soil, and gravel below the bed of the watercourse, together with the water in the lateral extensions of the water-bearing material on each side of the surface channel, such that the surface flows are in contact with the subsurface flows, the latter flows being confined within a space reasonably defined and having a direction corresponding to that of the surface flow.
30 Tex. Admin. Code § 297.1(55) (2012).
Groundwater in Texas is specifically excluded from the definition of state water and is subject to the rule of capture as modified by the various groundwater conservation districts across the state; it is also subject to the constitutional limitations outlined in the Day case. Groundwater is defined as “[w]ater percolating below the surface of the earth.” Tex. Water Code Ann. §§ 35.002(5), 36.001(5) (West 2012); see 31 Tex. Admin. Code § 356.22(3) (2012).
See Bartley v. Sone, 527 S.W.2d 754, 760 (Tex. Civ. App. 1974). Note that the current definition of groundwater neither explicitly excludes nor explicitly includes subterranean streams or underground rivers. Tex. Water Code Ann. § 36.001(5) (West 2012).
Tex. Water Code Ann. § 11.021(a) (West 2012) (noting that all underflow is the “property of the state”).
For a brief statement of this doctrine, see Wyoming v. Colorado, 259 U.S. 419, 460-62 (1922), which summarizes the history of prior appropriation in the American West.
Under the riparian principle, all landowners whose property is adjoined to a natural waterway or body of water have the right to make reasonable use of the water. Of course, riparianism has many complications and variations, but “reasonable use” riparianism is the most common modern version. See, e.g., Restatement (Second) of Torts § 850A (1979).
Tex. Const. art. XVI, § 59 (1917); Irrigation Act of 1917, ch. 88, 1917 Tex. Gen. Laws 211; see State v. Valmont Plantations, 346 S.W.2d 853 (Tex. Civ. App. 1961) (holding that Spanish and Mexican land grants have no pertinent riparian irrigation rights), aff’d, 355 S.W.2d 502 (Tex. 1962).
See Irrigation Act of 1917, ch. 88, 1917 Tex. Gen. Laws 211; Tulare Irrigation Dist. v. Lindsay-Strathmore Irrigation Dist., 45 P.2d 972 (Cal. 1935) (explaining that limiting riparian rights to reasonable use was a valid exercise of the police power); In re Adjudication of the Water Rights of the Upper Guadalupe Segment of the Guadalupe River Basin, 642 S.W.2d 438 (Tex. 1982) (noting that the elimination of riparian rights was not unconstitutional). But see Franco-Am. Charolaise Ltd. v. Okla. Water Res. Bd., 855 P.2d 568 (Okla. 1990) (holding that a state law extinguishing future riparian uses was unconstitutional).
See Tex. Water Dev. Bd., Water for Texas: 2012 State Water Plan 163 (2012), http://www.twdb.state.tx.us/publications/state_water_plan/2012/2012_SWP.pdf.
The classic statements on the justifications for and limits of the Takings Clause are found in two justly famous essays: Frank I. Michelman, Property, Utility, and Fairness: Comments on the Ethical Foundations of “Just Compensation” Law, 80 Harv. L. Rev. 1165 (1967); and Joseph L. Sax, Takings and the Police Power, 74 Yale L.J. 36 (1964). See also Tex. Const. art. I, § 17(a) (“No person’s property shall be taken, damaged, or destroyed for or applied to public use without adequate compensation being made . . . .”).
While this Court has recognized that the “Fifth Amendment’s guarantee . . . [is] designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,” this Court, quite simply, has been unable to develop any “set formula” for determining when “justice and fairness” require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons.
Id. (alteration in original) (citation omitted) (quoting Armstrong v. United States, 364 U.S. 40, 49 (1960); Goldblatt v. Hampstead, 369 U.S. 590, 594 (1962)).
Tex. Water Code Ann. § 36.116(d) (West 2012) (“For better management of the groundwater resources located in a district or if a district determines that conditions in or use of an aquifer differ substantially from one geographic area of the district to another, the district may adopt different rules for: (1) each aquifer, subdivision of an aquifer, or geologic strata located in whole or in part within the boundaries of the district; or (2) each geographic area overlying an aquifer or subdivision of an aquifer located in whole or in part within the boundaries of the district.”).
See Darcy Alan Frownfelter, Edwards Aquifer Authority, in Essentials of Texas Water Resources 325, 328 (Mary K. Sahs ed., 2009) (“Historically, the Aquifer has been the sole source of water supply for the 1.7 million people living in the Aquifer region.”). Because the aquifer is a karst system, which typically designates a porous limestone structure, surface activity has a major impact on the condition of the water in the aquifer and unregulated withdrawals have a serious impact on water availability in central Texas, including surface water.
For historical data on water withdrawals from different counties and basins, the Texas Water Development Board provides a helpful tool to search and compare withdrawals over time, broken down by category. Historical Water Use Information, Tex. Water Dev. Board, http://www.twdb.state.tx.us/wushistorical/DesktopDefault.aspx?PageID=1 (last visited Oct. 15, 2012).
See City of San Antonio v. Tex. Water Comm’n, 392 S.W.2d 200, 212, 217 (Tex. Civ. App. 1965) (holding that the legislature regulates not the final users of water, but merely “the purposes for which a permit could be granted for the use of water,” after the Texas Water Commission denied San Antonio a permit to move water from one watershed to another).
See Lyn E. Dean, Domestic and Livestock Use—What Rights Does My Client Have Left?, 33 St. B. Tex. Envtl. L.J. 175 (2003).
The state undertook this reclassification in an attempt to prevent federal oversight through the Endangered Species Act. See McFadin v. Tex. Water Comm’n, No. 92-05214 (Tex. Dist. Ct. Oct. 2, 1992).
See Susana Elena Canseco, Landowners’ Rights in Texas Groundwater: How and Why Texas Courts Should Determine Landowners Do Not Own Groundwater in Place, 60 Baylor L. Rev. 491, 510-11 (2008).
Under district rules there were three kind of permitted users: “(1) statutorily exempt users, (2) existing and historic users, and (3) new users.” Id. at 914. The rules were changed in 2002 to define new permitted users: “(1) validation permits, (2) operating permits, and (3) transfer permits.” Id. Validation permits were designed to include all users who were legally withdrawing water prior to the adoption of the new rules. Users who were not irrigating were entitled to withdraw the maximum amount of water beneficially used during the historic period. Operating permits were withdrawals conditioned on surface land ownership. Because these were new wells, they were subject to the prior claims of holders of validation permits. Id.
In fact, section 36.113(e)(1) of the Texas Water Code requires that restrictions on new permits be applied uniformly. Tex. Water Code Ann. § 36.113(e)(1) (West 2012).
A reading of the rules in Guitar Holding Co., however, suggests that landowners there are also at risk of being denied access to groundwater.
This is one reason the Penn Central test is predicated on “distinct investment-backed expectations.” Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978). The Constitution would protect vested property rights as well as persons who had materially changed their position in reliance on a specific property rule.
See Jacqueline Lang Weaver, Unitization of Oil and Gas Fields in Texas: A Study of Legislative, Administrative, and Judicial Policies 201-02 (1986); see also Day, 369 S.W.3d at 823-32 (using the oil and gas analogy).
See, e.g., Sipriano v. Great Spring Waters of Am., Inc., 1 S.W.3d 75 (Tex. 1999); Hous. & T.C. Ry. Co. v. East Co., 81 S.W. 279, 280 (Tex. 1904). This hypothetical is derived from these cases.
Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978); see also Charles A. Reich, The New Property, 73 Yale L.J. 733 (1964). One of the brilliant insights of Professor Reich is that government-created interests, whether largesse or otherwise, not only benefit the recipient, but also in important ways may limit the power of the state to restrict those interests without providing some form of due process.
See George H. Ward, Water Resources and Water Supply, in The Impact of Global Warming on Texas 1, 11 (Jurgen Schmandt, Gerald R. North & Judith Clarkson eds., 2d ed. 2011).
See S.F., Cal., Proposed Ordinance, Water Sustainability and Environmental Restoration Planning Act of 2012 (Feb. 29, 2012), http://www.sfgov2.org/ftp/uploadedfiles/elections/candidates/Jun2012/Jun2012_TheWaterSustainabilityandEvironmentalRestorationPlanningAct2012.pdf.
See, e.g., Hearts Bluff Game Ranch, Inc. v. State, No. 10-0491, 2012 WL 3800186 (Tex. Aug. 31, 2012) (asserting an inverse-condemnation claim against the U.S. Army Corps of Engineers for their denial of a mitigation banking permit where Texas had identified the land as potential site for a reservoir); Bragg v. Edwards Aquifer Auth., 71 S.W.3d 729 (Tex. 2002) (allowing plaintiffs to make a takings claim against the EAA maintaining that the denial of a permit was a confiscation under article I, section 17 of the Texas Constitution).
See, e.g., Bill Provencher & Oscar Burt, A Private Property Rights Regime for the Commons: The Case for Groundwater, 76 Am. J. Agric. Econ. 875 (1994).
See, e.g., Smith v. Agawam Canal Co., 84 Mass. (2 Allen) 355, 357 (1861) (giving priority to the first dam and permitting flooding of upstream landowners).
There is much dispute over the authenticity of this quotation, and, although it has been attributed to Twain, no reliable source has been definitively identified.

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