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Vol. No. 54-1 Water Rights

October 10, 2024

Water Rights

Texas Court of Appeals Puts Strict Limits on Groundwater Permit Challenges

Introduction

Water is a scarce resource in Texas. In fact, the Texas Water Development Board expects Texas’ water supply to fall by 11% between 2020 and 2070, while the state’s water needs are expected to rise by 87% in the same time.[1] This will create a water supply deficit of about 8.9 million acre-feet per year.[2] Every Texas resident has an interest in the distribution and availability of water resources. Often, those interests clash.

Water Regulation in Texas

Groundwater laws in Texas continue to evolve, and in many cases look quite similar to those that govern mineral rights such as oil and gas. The Rule of Capture, for example, grants ownership of groundwater to whoever acts to produce the resource.[3] In addition, the process by which a party obtains a permit to produce and export groundwater is a public process that requires public disclosure and allows interested parties to challenge the proposed permit.[4] Regional government organizations get their authority from the state to approve groundwater allocation and rights at a local level.[5] 

Groundwater Conservation Districts (GCDs) are a type of water-regulating government body. GCDs are districts with the authority to regulate various aspects of groundwater, including the spacing of and production from water wells.[6] The GCD in question in the cases below is a Middle Pecos Groundwater Conservation District, and it has rules regarding permitting for drilling, equipping, operating, or completing wells.[7] As part of its authority, the GCD issues two types of permits relevant to this case: (1) historic and existing use permits (H&E permits); and (2) production permits.

A party dissatisfied with the outcome of a water rights allocation decision can challenge the decision in court. However, as has been made clear in the Cockrell Investment Partners v. Middle Pecos Groundwater Conservation District cases, courts are reluctant to step in and make decisions in the place of government agencies. The Cockrell cases show the limits the courts have established concerning the kinds of water rights challenges they are willing to address, and the burden placed on any party who wants to proceed with a challenge.

Cockrell Investment Partners v. Middle Pecos Groundwater Conservation District

Background

In July 2017, Cockrell Investment Partners, L.P. (Cockrell) requested to obtain party status for two permits granted by the Middle Pecos Groundwater Conversation District (the District) to Fort Stockton Holdings, L.P. (FSH).[8] Cockrell owns a pecan orchard and has a permit from the District to use an annual production of approximately 15,000-acre feet of groundwater on its land for agricultural purposes.[9] Cockrell’s property is adjacent to the FSH property.[10]

In 2005, FSH obtained an H&E permit from the District for around 47,000-acre feet of annual water production for agricultural use.[11] In 2009, FSH sought to obtain a permit to produce and export approximately 47,000-acre feet for municipal and industrial use.[12] The District found this to be too much, and after much debate the District, FSH, and other relevant parties associated with FSH, reached a settlement. In April 2017, FSH modified its 2009 production permit application to ask for the production and exportation of approximately 28,000-acre feet of water.[13] FSH’s H&E permit was reduced by the amount granted in the production permit, to offset the demand for water. As such, the District approved two permits for FSH. The first permit reduced the amount in FSH’s historical and existing use permit, and the second permit granted FSH the ability to export and use around 28,000-acre feet of water per year.[14] 

Cockrell, which had not previously been involved in the proceedings, challenged the settlement during the hearing process and requested to be a party to the permit determination. The District rejected Cockrell’s challenge and request, reasoning that Cockrell had been given adequate notice of the proceedings and had requested party status too late.[15] Subsequently, the District granted both of FSH’s amended permits. Cockrell filed a Request for Reconsideration, to which the District had ninety-one days to respond.[16] Before the ninety-one days elapsed, Cockrell also sued in District Court challenging the District’s decision denying it party status—Cockrell also sought a remand of the permit applications for further proceedings.[17] 

Defendants filed pleas to the jurisdiction, alleging that “Cockrell lacked standing to participate in the permit hearings, to request a contested hearing, or to bring an appeal . . . [and that] Cockrell failed to show a waiver of governmental immunity as it failed to exhaust administrative remedies.”[18] The District Court granted the Defendants’ plea to the jurisdiction and dismissed the case. Cockrell appealed.

Cockrell I

The Court of Appeals affirmed the District Court’s decision.[19] The Court found that it lacked jurisdiction to hear the case because Cockrell had “fail[ed] to meet the prerequisite of having its motion for rehearing overruled at the district level whether by the district itself or by operation of law” since it had not exhausted all administrative remedies before filing suit.[20] The Court held that Cockrell was required to wait for the District’s ruling on the motion for rehearing, or wait for the statutory period of  ninety-one days to expire, before it could file suit.[21] Anything less did not amount to a full exhaustion of all administrative remedies.

Cockrell II

The Texas Court of Appeals withheld and superseded the holding in Cockrell II and  III. [22]

Cockrell III

FSH’s production and export permit for the approximately 28,000-acre feet of groundwater was set to expire in July 2020.[23] FSH sent a letter to the District as its application for the renewal of its permit, as the Texas Water Code allowed.[24] Almost as soon as FSH did this, Cockrell sent the District a written request for party status in any hearing related to FSH’s application for permit renewal.[25] The District denied Cockrell party status; subsequently Cockrell sued the District and FSH. The District Court granted FSH’s motion to dismiss Cockrell’s claims.[26] Cockrell appealed.

As in Cockrell I, the Court of Appeals affirmed the District Court. The Court held that Cockrell lacked standing to pursue a complaint on the District’s denial of party status, as it had in Cockrell I, because it had not exhausted all administrative remedies. Cockrell could challenge the District’s decision to grant a permit renewal in court, since it was required to show a waiver of governmental immunity prior to bringing a suit challenging a District decision, as the District was otherwise protected by governmental immunity.[27] The Court also dismissed Cockrell’s claim based on the Texas Uniform Declaratory Judgments Act (UDJA), finding that the UDJA does not waive the District’s government immunity on its own.[28]

Impact

The Court of Appeals’ rulings in the Cockrell cases show that Texas courts are reluctant to place themselves in a position to make or challenge a governmental body’s water rights decisions. The Court of Appeals emphasized the administrative processes already in place at the local level, and seemed to urge Cockrell, as well as any future plaintiffs, to focus their efforts on challenging water rights early in the process rather than in court. The Court seemed to take a strong position that it does not want to play the role of a water allocations expert for frustrated plaintiffs. Nevertheless, the burden placed on plaintiffs is high, and may put a greater burden on less politically able groups.

In addition, the Cockrell cases reveal the clashing interests of owners of adjacent lots, especially as the reality of water scarcity in Texas becomes a greater concern. The Cockrell cases show the tension and general debate surrounding an owner’s abilities to pump water and export or transport it out of a particular area for its use somewhere else. As more people move to Texas, and municipal need for water grows, this will place more pressure on property owners who have hitherto enjoyed a less restrained use of water, such as agricultural producers like the plaintiffs in Cockrell. Owners will have to think about the future of their water supply and prepare themselves to defend those interests before their local water authority early and robustly.

Kimberly Kelley is an attorney at Bickerstaff Heath Delgado Acosta LLP and practices in the areas of municipal, open government, water, and environmental law. She earned her undergraduate degree from Texas A&M University and graduated Texas Tech University School of Law, where she served on the editorial board of the Law Review.

Tiph Kugener is a 3L. She attended the University of Chicago and joined TELJ in her second year of law school. Tiph is passionate about the intersection of environmental law, energy development, and social justice. She is currently taking a semester to clerk at the U.S. Department of Justice and will be working in energy law in Houston after graduation.


[1]         Spencer Grubbs et al., Texas Water: Planning for MoreComptroller.Texas.Gov (Apr. 2019), https://comptroller.texas.gov/economy/fiscal-notes/2019/apr/tx-water-planning.php.

[2]         Id.

[3]         Sipriano v. Great Spring Waters of America, Inc., 1 S.W.3d 75, 75 (Tex. 1999).

[4]         Tex. Water Code Ann. § 36.014.

[5]         See generally id § 36.

[6]         Id. § 36.001(1).

[7]         Id. §§ 36.113(a), .114, .401–.418.

[8]         Cockrell Inv. Partners, L.P. v. Middle Pecos Groundwater Conservation Dist., No. 08-21-00017-CV, 2023 WL 2050024, at *3 (Tex. App.—El Paso Feb. 16, 2023, no pet. h.) [hereinafter Cockrell I].

[9]         Id. at *1.

[10]         Id.

[11]         Id.

[12]         Id.

[13]         Id. at *2.

[14]         Cockrell Inv. Partners, L.P. v. Middle Pecos Groundwater Conservation Dist., No. 08-21-00200-CV, 2023 WL 4424627, at *1 (Tex. App.—El Paso July 10, 2023, no pet. h.)

[15]         Id. at *3.

[16]         Id. at *7 (“A request for rehearing is deemed denied on the 91st day after the date the request is submitted. See TEX. WATER CODE ANN. § 36.412(e).”).

[17]         Cockrell I, 2023 WL 2050024, at *3.

[18]         Id. at *4.

[19]         See id.

[20]         Id. at *9.

[21]         Id.

[22]         Cockrell Inv. Partners, L.P., v. Middle Pecos Groundwater Conservation Dist., No. 08-21-00017-CV, 2023 WL 2050024 (Tex. App.—El Paso Mar. 8, 2023, withdrawn) [hereinafter Cockrell II].

[23]         Cockrell Inv. Partners, L.P., v. Middle Pecos Groundwater Conservation Dist., No. 08-21-00017-CV, 2023 WL 2050024 (Tex. App.—El Paso July 10, 2023, no. pet. h) [hereinafter Cockrell III].

[24]         Id. at *2.

[25]         Id.

[26]         Id. at *4.

[27]         Id.

[28]         Id. at *8.