In a unanimous decision, the Texas Supreme Court has held that “land ownership includes an interest in groundwater in place that cannot be taken for public use without adequate compensation.” Edwards Aquifer Auth. v. Day, No. 08-0964 (Tex. 2/24/12).
The case involved the Edwards Aquifer Authority, authorized by the Texas Legislature in 1993 to regulate water in the Edwards Aquifer, which stretches across central Texas from Bracketville (120 miles west of San Antonio) to Austin. It provides water for 2 million people, including residents of San Antonio and smaller cities. The Edwards Aquifer Authority Act requires permits for all withdrawal of water from the aquifer except “for wells that produce less than 25,000 gallons a day for domestic or livestock use.”
The law establishes a preference for existing users (those who withdrew and beneficially used underground water from the aquifer on or before June 1, 1993) and their successors. It also provides that “[a] user’s total annual withdrawal allowed under an ‘initial regular permit’ (‘IR P’) is calculated based on the beneficial use of water without waste during the period from June 1, 1972, and May 31, 1993.” Beneficial use is defined as “the use of the amount of water that is economically necessary for a purpose authorized by law.”
In 1994, petitioners purchased 381 acres over the aquifer, intending to raise oats, peanuts and cattle. In 1996, when the authority began taking applications, they applied for a permit to pump 700 acre-feet of water from an existing well for irrigation. According to their IR P application, petitioners’ predecessors had irrigated 300 acres using a well on the property. In 1999, petitioners amended their petition to drill a new well and spent $95,000 drilling the well before receiving the authority’s approval. In 2000, the authority denied the application, finding that withdrawals during the historical period “were not placed to a beneficial use.”
Petitioners then sought administrative review, and the authority determined that they should be entitled to an IR P for 14 acre-feet of water per year. Petitioners appealed to the district court and sued the authority for taking their property without compensation in violation of the Texas Constitution. The district court ruled for the petitioners on the issue of the permit, finding that the authority should have found beneficial use of groundwater to irrigate 150 acres but rejected the takings claim. The appeals court reversed the district court on the takings issue as well as the beneficial use finding and reinstated the 14 acre-feet permit. The parties then appealed to the Texas Supreme Court.
According to that court, while the Edwards Aquifer Authority was authorized to deny petitioners’ request for a permit to withdraw 700 acre-feet of water from the aquifer each year, the permit’s denial constituted a taking. The court remanded the case to the district court for a determination of whether petitioners were entitled to compensation. Rejecting arguments that groundwater is not subject to ownership under the rule of capture and that a landowner could not claim any specific amount of water because the aquifer is constantly changing, the court ruled that groundwater rights are due constitutional protection, “whatever difficulties may lie in determining adequate compensation for a taking.”