Topic: Water Rights

Water Rights

Pape Partners and Texas’ New Water Rights Jurisdiction

Pape Partners Overview

In May 2022, the Texas Supreme Court handed down an important jurisdictional clarification in Pape Partners v. DDR Family Properties, involving a dispute between two private parties over the ownership of surface water rights in McLennan County.[1] The court found that the Texas Commission on Environmental Quality (TCEQ or Commission) does not have jurisdiction over disputes involving conflicting claims to the ownership of surface water rights.[2] Rather, state district courts properly have jurisdiction over cases involving water rights ownership.[3]

In arriving at this holding, the court began with the fundamental constitutional rule that a “district court has subject-matter jurisdiction to resolve disputes unless the Legislature divests it of that jurisdiction.”[4] In particular, the court noted that “historically, ‘the power to determine controverted rights to property’ has been ‘vested in the judicial branch.’”[5] Conversely, the court followed the presumption that administrative agencies can only exercise jurisdictional powers that the legislature has conferred on them in “clear and express statutory language.”[6] Therefore, because DRR argued that TCEQ had exclusive jurisdiction over water rights adjudication, the court utilized a two-pronged test of statutory interpretation to determine whether TCEQ has exclusive jurisdiction: there must be either (1) “an express grant of exclusive original jurisdiction to the agency,” or (2) a “pervasive regulatory scheme” that indicates a legislative intent to grant the agency “the exclusive means of remedying the problem.”[7]

In applying this test, the court looked at the language of TCEQ’s enabling statute in chapter 5 of the Texas Water Code, first analyzing the plain text of the statute.[8] Section 5.013 of the enabling statute grants TCEQ jurisdiction over “water rights adjudication,” which is not defined or ever mentioned again after this section.[9] The court then looked to the Water Rights Adjudication Act, noting that the legislature used “water rights adjudication” as a term of art to describe the Commission’s process of issuing water rights permits.[10] The Commission’s process has some elements of judicial process—gathering facts and data, holding hearings in contested cases, making final determinations, and considering applications for rehearing.[11] However, the Commission “files with the [district] court its final determination and all the evidence presented” and the statute mandates that the court “determine all issues of law and fact independently of the commission’s determination.”[12]

Hence, the court found that nothing in the TCEQ enabling act or the Water Rights Adjudication Act grants exclusive jurisdiction to TCEQ.[13] Indeed, TCEQ itself argued in an amicus brief that “water rights adjudication” was a term of art relating to the “‘Commission’s issuances of certificates of adjudication’ that entail the [C]ommission’s ‘determining the amount of use, place of use, purpose of use, point of diversion, rate of diversion, and where appropriate, the acreage to be irrigated.’”[14] The notion of “water rights adjudication” was simply an “administrative record-keeping function.”[15]

Conclusion

The Supreme Court in Pape Partners found that TCEQ has no jurisdiction over surface water rights and confirmed that the Texas judiciary has such authority. Future surface water rights disputes will only be adjudicated through the state judiciary.

Emily Rogers is the Managing Partner of Bickerstaff Heath Delgado Acosta LLP and represents public and private clients in water rights, water quality, utility, and environmental law matters.

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.

Adam LaFleche is a 2L from Newton, Massachusetts. He attended George Washington University and joined TELJ in his spring semester of 1L. Adam is interested in environmental law and especially ESG and hopes to transition into sustainable energy financing after he graduates in 2024. 

Water Rights

Mississippi v. Tennessee: A Watershed Decision in State Water Rights

Introduction

            In Mississippi v. Tennessee,[1] the states of Mississippi and Tennessee disagreed about what rights each state had to the groundwater resources of the Middle Claiborne Aquifer. Mississippi filed an action against Tennessee and, in a novel argument, claimed that Tennessee’s pumping of the groundwater in the Aquifer amounted to a tortious taking of groundwater owned by Mississippi.[2] The United States Supreme Court held that Mississippi did not own the groundwater; rather, the Aquifer’s water resources were subject to equitable apportionment between the states.[3] 

Facts

The Middle Claiborne Aquifer is a large freshwater aquifer that underlies eight states, including Mississippi and Tennessee, both of which rely on this water resource daily.[4] Groundwater pumps draw water to the surface, where the water is transported to consumers.[5] The Aquifer is a main source of water for the City of Memphis which, through its utility, draws about 120 million gallons of water per day from Memphis’s more than 160 groundwater wells.[6] All of the wells are drilled straight down and located within Tennessee’s borders, but importantly, some are near the Tennessee-Mississippi border.[7]

Pumping groundwater creates a cone of depression that lowers water levels around the wells. This phenomenon can be controversial when the wells are close to state borders, because the wells—while themselves entirely within state borders—can lower water levels across state lines.[8] Here, Mississippi argued that the City of Memphis’s pumping activities “altered the historic flow of groundwater within the Middle Claiborne Aquifer.”[9] Specifically, Mississippi alleged that Memphis’s groundwater pumping substantially lowered water pressure and decreased groundwater drawdown in the parts of the Aquifer located in Mississippi near the Mississippi-Tennessee border.[10] Mississippi did acknowledge that 30–60 feet of water per year flowed naturally through the Aquifer from Mississippi to Tennessee, but Mississippi contended that Memphis’s pumping “substantially hastened this existing flow.”[11] As a result of the pumping in Tennessee, Mississippi asserted that it was forced to drill deeper wells “and use more electricity to pump water to the surface.”[12]

Rather than filing an original action seeking equitable apportionment—the usual judicial remedy for the apportionment of the shared water resource—Mississippi claimed that the doctrine did not apply because it had a sovereign ownership right to the groundwater beneath its borders.[13] Mississippi therefore sought leave to bring an original action against Tennessee on the basis that Memphis tortiously took “hundreds of billions of gallons of high-quality groundwater owned by Mississippi.”[14] Mississippi sought $615 million in damages.[15] Mississippi also contended that equitable apportionment does not apply to groundwater use.[16] 

Legal Background and Question

            Equitable apportionment is a judicial remedy that seeks to fairly allocate a shared water resource between two or more states, based on the idea that states have an equal right to reasonable use of shared water resources.[17] The United States Supreme Court has applied equitable apportionment to interstate rivers, streams, river basins, and in situations where groundwater pumping has affected the flow of interstate surface waters.[18] Since the Court had never answered the question of whether equitable apportionment applies to interstate aquifers, this case was a matter of first impression.[19] The question in this case, then, was whether equitable apportionment of an interstate aquifer is “‘sufficiently similar’ to past applications of the doctrine to warrant” the application of equitable apportionment.[20]

The Court’s Analysis

            The Court unanimously held that equitable apportionment of the Aquifer was sufficiently similar to past applications such that it warranted application in this case.[21] The Court asserted three primary reasons for its holding.

First, the Court noted that the Aquifer is multistate in character.[22] The Court had only applied equitable apportionment in the past to interstate water resources, and this case unquestionably involved an interstate water resource.[23] Mississippi did not contest the scientific consensus that the “‘Aquifer is a single hydrogeological unit’ spanning multiple states.”[24] 

Second, the Court observed that the groundwater in the aquifer “flows naturally between the states.”[25] This again rendered the aquifer similar to the Court’s past applications of equitable apportionment, which all involved water that flowed naturally across state boundaries.[26] Mississippi argued that the aquifer’s water flow was distinguishable from that of the past applications of equitable apportionment because the aquifer flows “extremely slow[ly].”[27] The Court remained unpersuaded, observing that it had applied equitable apportionment to water resources that sometimes run dry.[28] The Court also stressed that while the speed of the water’s flow may be slow, the volume of the water flowing totaled more than “35 million gallons of water per day, and over ten billion gallons per year.”[29] Thus, the speed at which the aquifer flows failed to distinguish the aquifer from the water resources to which the Court normally applied equitable apportionment.[30]

Lastly, the Court pointed out that the City of Memphis’s pumping activities affected the aquifer underneath Mississippi.[31] Pumping water from the aquifer within Tennessee’s borders reduces groundwater pressure and drawdown miles into Mississippi.[32] “Such interstate effects are a hallmark of [the Court’s] equitable apportionment cases.”[33] For the three reasons stated above, the Court held that the groundwater in the aquifer is subject to equitable apportionment.[34]

Mississippi insisted that it holds “sovereign ownership of all groundwater beneath its surface, so equitable apportionment ought not apply.”[35] The Court disagreed, explaining that while states own the land and waterbeds within their borders, this ownership does not extend to the “flowing interstate waters themselves.”[36] The Court also commented that if states could exercise jurisdiction over all of the groundwater underneath the state, then upstream states could pump aquifers dry and leave downstream states without water.[37]

Mississippi also urged that Tarrant Regional Water District v. Herrmann supported Mississippi’s argument that equitable apportionment should not apply.[38] In Tarrant, the Supreme Court interpreted a compact that two states had negotiated concerning the states’ rights to a water resource.[39] The Tarrant Court did not consider whether equitable apportionment applied in that case, because the dispute was solely governed by the contract.[40] Accordingly, the Court explained that Tarrant was inapposite.[41]

The Court recognized that Tarrant did support the rule that states “may not physically enter another to take water in the absence of an express agreement,” but that was not at issue here—the City of Memphis’s wells were undisputedly within Tennessee’s borders.[42] That some of the aquifer’s water began in Mississippi did not affect the analysis; just as river water may originate in another state, so too may groundwater.[43] While “[t]he origin of an interstate water resource may be relevant to the terms of an equitable apportionment . . . . that feature alone cannot place the resource outside the doctrine itself.”[44] Since Mississippi and Tennessee did not have a contractual agreement about their respective rights to the groundwater, and Tennessee was pumping water in its own state, no rule in Tarrant supported Mississippi’s argument that equitable apportionment should not apply.[45] 

In sum, the Court held that the groundwater in the Middle Claiborne Aquifer was subject to equitable apportionment because it the aquifer was sufficiently similar to the water resources that are customarily subject to equitable apportionment. The Court dismissed Mississippi’s complaint.[46]

Implications for State Water Rights

            As climate change prompts governments to pay closer attention to the use and conservation of water resources, this decision has important ramifications for state water rights. This case appears to stop states from attempting to pump important groundwater resources dry: If Mississippi were able to assert ownership over all of the groundwater within its state borders, then it is in Mississippi’s interest to use as much of that groundwater as possible, lest Tennessee endeavor to do the same. This, of course, would not be a conservation-conscious practice. Equitable apportionment aspires to ensure that states fairly share and preserve water resources. But as the Court noted in this case, states seeking judicial enforcement of equitable apportionment must show real and substantial injury, which is a high bar.[47]

            This ruling also may inspire states to adopt interstate compacts concerning groundwater resources. Because of the cost and difficulties involved in obtaining judicial enforcement of equitable apportionment, a proactive compact is an attractive option for states looking to secure long-term rights to interstate groundwater resources. Predictable judicial enforcement makes compacts reliable and financially prudent. Indeed, the Court in this case explicitly distinguished Tarrant on the grounds that Tarrant was a question of contractual interpretation.[48] The market forces underlying the negotiations of such compacts also give assurance that groundwater resources will be used efficiently by the states that are parties to the compact.

Graham Rex is a rising 3L from Raleigh, North Carolina. He studied Philosophy at the University of North Carolina-Wilmington, and he joined TELJ during his 1L year. Graham wants to practice nonprofit environmental law after law school and he is clerking at Earthjustice in Denver, Colorado this summer. 

Emily Rogers is the Managing Partner of Bickerstaff Heath Delgado Acosta LLP and represents public and private clients in water rights, water quality, utility, and environmental law matters.

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.

Water Rights

Brazos River Auth. v. City of Houston, 628 S.W.3d 920 (Tex. App.—Austin 2021, pet. filed)

 Background 

This case arose over a dispute from the right to construct and operate a reservoir on Allens Creek.[1] The City of Houston sued the State of Texas and the Brazos River Authority (“BRA”), seeking to block the implementation of a new law that would force the City to sell its water rights in the proposed Allens Creek Reservoir to the BRA for up to $23 million by the end of 2021.[2] Specifically, the site of the proposed reservoir is a tract of about 9,5000 acres located in Austin County near the confluence of Allens Creek and the Brazos River.[3] This site was designated “a site of unique value for the construction of a dam and reservoir on Allens Creek” and “that construction and development of the Allens Creek Reservoir project” would be “in the public interest and would constitute a beneficial use of the water.”[4]

For over two decades, the City and the BRA have jointly held a water-appropriation permit authorizing them to construct the reservoir and to use the impounded water.[5] In 2019, however, the Texas State Legislature passed House Bill (H.B.) 2846, which instructed Houston to enter into a contractual agreement with the BRA to transfer its entire interest in the proposed reservoir, including its permit rights, to the Authority.[6] H.B. 2846 was intended to encourage development of the reservoir by transferring the City’s entire interest in the reservoir and all rights to the BRA.[7]

        Houston responded by suing the State of Texas and the BRA, asserting that H.B. 2846 is invalid on multiple grounds.[8] The district court granted declaratory relief, finding that H.B. 2846 is “unconstitutional, void, and unenforceable” because it violates the Texas Constitution’s prohibition of retroactive laws, local or special laws, and the forced sale of government property.[9] In a separate order, the district court sustained Houston’s evidentiary objections in part and overruled them in part.[10] The State and the BRA appealed the decision.[11]

 The Third Court of Appeals’ Decision and Discussion

The Texas Third District Court of Appeals upheld the lower court’s decision to protect the City of Houston’s interest in the unbuilt reservoir by striking down a state law and declaring it unconstitutionally retroactive based on its impairment of Houston’s water rights.[12]  

First, the appellate court discussed why H.B. 2846, as a later-enacted and more specific statute, controls regardless of a conflict with the Local Government Code.[13] Next, the court examined the constitutional challenges to H.B. 2846 and elaborated on its conclusion that there was a failure to demonstrate an overriding public interest in violating the water rights of the City in the unbuilt reservoir.[14] Despite a presumption that the statute was valid, the court construed H.B. 2846 “as a whole” to determine that it had retroactive effect.[15] Thus, the analysis turned to whether the law was unconstitutionally retroactive.[16]

The City argued the law is unconstitutional in part because it violates prohibitions on retroactive laws and on forced sales of municipal property that have a public use.[17] On the other hand, the BRA argued that H.B. 2846 is in the public interest because it is necessary to discharge the legislature’s constitutional duty to conserve the state’s natural resources.[18] In its decision, the appellate court relied on the three-factor test established in a 2010 Texas Supreme Court decision, Robinson v. Crown Cork & Seal Co., to review whether a statute violates the state’s constitutional prohibition on retroactive laws under the following factors: (1) the nature and strength of the public interest served by the statute; (2) the nature of the prior right violated by the statute; and (3) the extent of the impairment.[19]

Although the court agreed that constructing the reservoir is in the public interest, concerns regarding the law remain unaddressed and, according to the majority, “nothing in the record supports a conclusion that H.B. 2846 resolves these concerns.”[20] The conclusion is bolstered by the fact that H.B. 2846 itself does little to advance construction of the reservoir without further action from the Legislature or the Commission.[21] Ultimately, the majority determined the legislature lacked justification to retroactively apply the state statute to Houston’s interest in the unbuilt reservoir because the legislation served a minimal public interest while having a significant impact on Houston’s settled property rights.[22] Therefore, even though H.B. 2846 could serve a compelling interest, the court concluded the statute was unconstitutionally retroactive in balancing the law’s “purpose against the nature of the prior right and the extent to which the statute impairs that right.”[23]

In affirming the trial court’s judgment and granting declaratory relief, the court found H.B. 2846 to be “unconstitutional, void, and unenforceable.”[24] However, dissenting Justice Melissa Goodwin said that the legislature’s action should carry a presumed constitutionality and require Houston to demonstrate the need to strike down the law.[25] Justice Goodwin points to the City of Houston’s failure to do so, and questioned Houston’s proof of its vested water rights in the reservoir because it received permits for the project’s development decades earlier but failed to move forward on construction.[26] Additionally, although Justice Goodwin admits to the questionable policy reasons behind the legislation, her dissent notes that the law’s constitutionality should be evaluated, rather than its policy.[27]

Implications of the Decision

This court’s decision restores the City of Houston’s interest in the Allens Creek reservoir project and affirms the state prohibition against retroactive statutes. This decision appears to be an obstacle to the legislature’s ability to take away rights and property from a city and transfer those interests to another governmental entity. This decision could be used in the future to prevent the legislature from using its powers to require the involuntary transfer of property from a city to another governmental entity. The court’s application also reinforces the Robinson factor test established by the Texas Supreme Court and provides insight into the courts’ decision-making process on issues involving the constitutionality of retroactive statutes.[28]

It remains to be seen how durable this finding, and its implications, will be—the State of Texas and the BRA filed petitions for review with the Texas Supreme Court on October 15, 2021.

Carlo Lipson is a second-year student at the University of Texas School of Law. He joined TELJ in the Spring of his 1L year, and has enjoyed being a part of the journal and learning about the many current environmental law issues and policies. Carlo is from San Francisco, attended undergrad at the Claremont Colleges outside of Los Angeles, and is planning to return to California after law school.

Emily Rogers is the Managing Partner of Bickerstaff Heath Delgado Acosta LLP and represents public and private clients in water rights, water quality, utility, and environmental law matters.           

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.

[1] Brazos River Auth. v. City of Houston, 628 S.W.3d 920 (Tex. App.—Austin 2021, pet. filed).

[2] Id. at 925.

[3] Id. at 923.

[4] Id.; Act of May 22, 1999, 76th Leg., R.S., ch. 1291, § 1.01, 1999 Tex. Gen. Laws 4426, 4426 (S.B. 1593).

[5] Brazos River Auth., 628 S.W.3d at 922.

[6] See id.; See Act of May 16, 2019, 86th Leg., R.S., ch. 380, § 1, 2019 Tex. Gen. Laws 688, 688 (H.B. 2846).

[7] Brazos River Auth., 628 S.W.3d at 924.

[8] Id. at 925.

[9] Id. at 922.

[10] Id. at 925.

[11] Id.

[12] Id. at 936.

[13] Id. at 927; See Tex. Loc. Gov’t Code Ann. §§ 272.001(a), 552.020 (West 2019).

[14] Brazos River Auth., 628 S.W.3d at 936.

[15] Id. at 928.

[16] Id.

[17] See id. at 928.

[18] See Tex. Const. art. XVI, § 59(a); See Brazos River Auth., 628 S.W.3d at 929.

[19] Id. at 929; see Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126, 145 (Tex. 2010).

[20] Brazos River Auth., 628 S.W.3d at 930.

[21] Id. at 931

[22] Id. at 936.

[23] See id. at 931.

[24] Id. at 936.

[25] See id. at 937.

[26] Id. at 930.

[27] See id. at 945.

[28] See id. at 929.

Water Rights & Utilities

Delivery Credit of Evaporated Water: Texas v. New Mexico

Introduction

On December 14, 2020, the United States Supreme Court resolved a six-year-long deliver-credit dispute under the Pecos River Compact between Texas and New Mexico.

The Court held that New Mexico’s motion seeking delivery credit was timely.[1] On the merits, it held that New Mexico is entitled to the delivery credit of evaporated water stored at the request of Texas.[2]

The Pecos River Compact

The Pecos River originates in New Mexico and flows south into Texas, emptying into the Rio Grande River.[3] To equitably apportion the Pecos River’s water use, Texas and New Mexico signed the Pecos River Compact in 1948,[4] and, one year later, Congress approved the Compact to “‘provide for the equitable division’” and “‘remove causes of present and future controversies.’”[5] The Compact determines the amount of water that New Mexico has to deliver to Texas annually using an inflow-outflow method.[6] After some early disputes, in 1987 the Supreme Court issued a decree setting out the states’ rights and appointed a disinterested River Master to make the calculations.[7] Later, the Court integrated the River Master’s Manual as part of its amended decree and required the River Master to abide by the Manual when making the calculations.[8]

The Current Dispute

The current case’s dispute is rooted in a tropical storm that caused heavy rainfall in the Pecos River Basin in the fall of 2014.[9] The rain filled Red Bluff Reservoir in West Texas, just south of the New Mexico border.[10] In November, Texas’s Pecos River Commissioner wrote to his counterpart in New Mexico, requesting that New Mexico store Texas’ portion of the flow until Red Bluff Reservoir was ready to take it.[11] The New Mexico commissioner agreed and explained that the water “belongs to Texas” and that “‘[e]vaporative losses . . . should thus be borne by Texas’”.[12] Before the correspondence, the Bureau of Reclamation ordered New Mexico to hold the water in the Brantley Reservoir for safety concerns.[13] The flow was finally released to Texas in August 2015 and significant water had evaporated.[14]

The River Master did not calculate the water loss in his preliminary report but outlined a procedure for resolving this dispute.[15] According to the procedure, either state could file a motion to the River Master if they could not reach an agreement on a joint proposal.[16] In 2018, New Mexico filed a motion because negotiations between the states eventually broke down.[17] The River Master granted delivery credit for New Mexico, and Texas quickly moved for Supreme Court review, invoking the Court’s original jurisdiction.[18]

The Arguments of Texas and New Mexico

Texas argued that New Mexico forfeited the right to object to the River Master’s 2015 calculations by failing to follow the Manual’s deadlines, and that the River Master lacked authority to retroactively modify past reports without both states’ consent.[19] Texas claimed that the River Master erred in applying equitable tolling and in permitting New Mexico’s untimely request because the Manual deadlines are jurisdictional.[20]

Texas also argued that only limited circumstances under the Compact allow apportionment of evaporative losses occurring in New Mexico: under Article VI, the water is “unappropriated floodwater” or under Article XII, for consumptive use by the federal government when storing water “for use in” Texas.[21] Texas reasoned that because the water was not constructively held for use in Texas, Article XII does not apply.[22] Because the River Master decided the water was not unappropriated floodwater, Article VI does not apply.[23]

New Mexico argued that the equities weigh heavily in New Mexico’s favor.[24] It alleged that because the Court had “inherent authority to manage its amended decree” and the River Master’s authority was derived directly from the Court, he was empowered to take actions necessary to fulfill his duties, including adjusting deadlines and adopting procedures to address novel accounting issues.[25] A narrow interpretation of the River Master’s functions would defeat both the purpose for which the River Master was appointed and the Compact’s aim to promote interstate comity.[26] New Mexico argued that its motion was timely because it relied on the River Master’s devised procedure.[27] New Mexico further argued that “the plain language of the Compact, Amended Decree, and Manual” required Texas to bear the loss, and the record supported the River Master’s determination.[28] It framed the remedy it sought as a “one-time credit,” which was not a retroactive modification of the Manual but a correct application of equitable tolling doctrine.[29]

The Court’s Decision

The Court agreed with the River Master’s determination and denied Texas’s motion for review.[30] The Court disagreed with Texas’s first argument that the request was untimely.[31] It reasoned that because Texas had not objected to the River Master’s negotiation procedure, “it cannot run away from the procedure it agree[d] to.”[32] The Court ruled that the amended decree’s objections’ deadlines are not jurisdictional.[33]

On the merits, the Court agreed with New Mexico and the United States that the water was stored in New Mexico at Texas’s request.[34] The Court looked at the text of § C.5 of the Manual, which states:

If a quantity of the Texas allocation is stored in facilities constructed in New Mexico at the request of Texas, then . . . this quantity will be reduced by the amount of reservoir losses attributable to its storage, and, when released for delivery to Texas, the quantity released less channel losses is to be delivered by New Mexico at the New Mexico-Texas state line.[35]

The Court found that the stored water was part of the “Texas allocation” because the water would have flowed across the state line and counted toward Texas’s allocation but for the storage at Texas’s request.[36] The Court also found that New Mexico stored the water, clarifying § C.5 does not purport to define “stored” any way other than its ordinary meaning. The Court further found that Texas made the storage request.[37] In conclusion, the Court held that the text of § C.5 and the record evidence of the states’ correspondence established that the delivery credit should be granted to New Mexico.[38]

Justice Alito concurred in part and dissented in part.[39] He agreed that New Mexico did not forfeit any objection to the 2014 report but thought the River Master did not have the authority to change the amended decree.[40] He would have vacated and remanded the case because the relevance of Texas’s request for storage and New Mexico’s agreement with that request was unclear.[41]

Conclusion

The Court based its judgment on the Manual’s text and the correspondence between the Texas and New Mexico Pecos River Commissioners. It left some questions unaddressed. In the footnotes, the Court listed aspects of the River Master’s decision that were left unaddressed, which limited the case’s precedential value:[42] The Court did not reach the question of whether the River Master will have the authority to alter the amended decree. As Justice Alito pointed out, this may be inviting future problems. Moreover, the Court did not rule either on issues related to “unappropriated floodwaters” in the Complaint’s Article III or “consumptive use of water by the United States” in Article XII, leaving the interpretation of specific Compact terms open.

The case’s precedential value was further limited by the fact that a River Master was involved. For cases without the appointment of a River Master, the case does not provide much guidance for water-right lawyers.

Emily Willms Rogers is the Managing Partner of Bickerstaff Heath Delgado Acosta LLP and represents public and private clients in water rights, water quality, utility, and environmental law matters.

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.

Zhu Wen is a second-year student at The University of Texas School of Law and Staff Editor of the Texas Environmental Law Journal.

Water Rights

Groundwater Permitting

Introduction

Under Texas law, a person’s property rights include ownership of groundwater beneath his or her property.^[1] A recent Fifth Circuit case concluded these property rights are subject to Fifth Amendment takings claims.^[2] In Stratta v. Roe, the Fifth Circuit reversed and remanded a district court’s dismissal of a landowner’s claim that a groundwater-conservation district (GCD) violated the Constitution’s Equal Protection and Takings clauses by allowing a city to drain groundwater from underneath the landowner’s property without compensation.^[3]

Stratta v. Roe

The Brazos Valley Groundwater Conservation District (BVGCD) is a state political subdivision that manages, protects, and conserves water resources within its jurisdiction.^[4] Both the Texas Constitution and the Texas Water Code provide for such GCDs,^[5] which create groundwater-management plans regulating water production and conservation, govern water use, study water quantities flowing into and out of aquifers, and minimize waste.^[6] Under this authority, BVGCD created new rules in December 2004 governing landowners’ groundwater production.^[7] Through spacing requirements and production limitations, BVGCD regulates the amount of water landowners can withdraw from a well.^[8] The rules differentiate between existing wells, new wells, and wells with historic use^[9]  and regulate groundwater pumpage apply in each category.^[10] For instance, the rules cap the amount of allowable production for new wells based on a formula that calculates the number of contiguous acres required to be assigned to the well site.^[11]

Almost a week after BVGCD’s new rules took effect, the City of Bryan drilled a well on a 2.7-acre land tract located less than 3,000 feet from appellant Fazzino’s property.^[12] The city applied for a permit to operate the well at a groundwater-production rate of 3,000 gallons per minute (gpm).^[13] Under the currently-enacted rules, the city would have been required to own a 649-acre tract to pump water at that rate from a “new” well.^[14] However, BVGCD classified the city’s well as an “existing” well—one for which drilling or significant development began before the effective date of the rules^[15]—and conditionally granted the permit, authorizing production of 4,838 acre-feet annually at the requested rate.^[16] BVGCD later reissued an identical conditional permit in 2013, despite the fact that there was no growth of city acreage around the well and even though, before the rules took effect, the well at most existed “in the form of ‘significant development,’ at least on paper.”^[17] Had the city’s well been classified as a “new” well, the rules would have capped the well’s maximum allowable production at over fifteen times less than what the conditionally-granted permits allow.^[18]

BVGCD created the new rule’s spacing and production requirements to minimize “the drawdown of the water table and the reduction of artesian pressure, to control subsidence, to prevent interference between wells, to prevent degradation of water quality, and to prevent waste.”^[19] However, as the new rules do not apply to the city’s well, they do not operate to protect Fazzino from the potential threat of dissipation from the city’s pumping; as water comes from a well, it creates a cone-of-depression impact, and Fazzino’s property is within the city well’s anticipated cone of depression.^[20] Fazzino filed a complaint challenging BVGCD’s designation of the well as an “existing” or “historical use” well, but the State Office of Administrative Hearings found that he did not have standing to assert such a claim.^[21] Therefore, in an effort to “offset” the production, Fazzino applied for a permit to operate the well on his larger piece of property at the same groundwater-production rate as the city.^[22] BVGCD twice denied Fazzino’s request, citing insufficient acreage—Fazzino owned 26 contiguous acres, but like any “new” well owner, he must own or control 649 acres to support production at the requested 3,000 gpm rate.^[23] Fazzino then sued BVGCD and its directors under 42 U.S.C. § 1983, alleging violations of the Equal Protection and Takings clauses.^[24]

Jurisdictional Objections

Eleventh Amendment Immunity

First, the Fifth Circuit held that the district court erroneously concluded that BVGCD is an arm of the state and immune from suit in federal court under the Eleventh Amendment.^[25] A court looks to six factors identified in Clark v. Tarrant County to determine whether a governmental agency qualifies for Eleventh Amendment immunity.^[26] The first Clark factor considers whether state statutes and case law view the agency as an arm of the state.^[27] The Fifth Circuit held that a GCD is a political subdivision rather than a state agency, and most political subdivisions are not entitled to this immunity.^[28] Because one of Eleventh Amendment’s goals is to protect state treasuries, the second Clark factor considers the source of the entity’s funding.^[29] The Fifth Circuit concluded that GCDs lack any meaningful financial relationship with the Texas treasury—weighing against immunity.^[30] The third Clark factor considers the entity’s degree of local autonomy.^[31] While GCDs have broad authority to make and enforce rules,^[32] the Texas Water Development Board and the Texas Commission on Environmental Quality provide assistance,^[33] and the Texas Water Development Board must approve local groundwater management plans.^[34] A state auditor^[35] and the state legislature also occasionally audit GCDs’ operations.^[36] The Fifth Circuit reasoned that all these facts considered together “at most merely offset each other.”^[37]

The fourth Clark factor considers whether the entity deals mostly with local rather than state problems.^[38] The fact that an entity deals with local problems suggests that it is not an arm of the state.^[39] Because GCDs can exercise their authority only within their territorial boundaries, the Fifth Circuit reasoned this factor weighed against granting immunity to BVGCD.^[40] The Fifth Circuit set aside the fifth and sixth Clark factors, considerations of whether the entity has authority to sue and be sued in its own name and its right to hold and use property, because all parties and the district court agreed they weighed against granting immunity.^[41] The Fifth Circuit thus concluded that the district court erred in dismissing the landowners’ action for lack of jurisdiction in this regard.^[42]

Ripeness for Adjudication

Second, the Fifth Circuit concluded that, contrary to the district court’s findings, Fazzino’s takings claim was ripe for adjudication.^[43] The district court had relied on Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, a case recently overturned by the Supreme Court, in its dismissal of Fazzino’s takings claims as unripe.^[44] The Fifth Circuit reasoned that not only had Fazzino already pursued available administrative remedies, but the Supreme Court had also held that a property owner can bring a federal-court claim at the time he or she suffers a violation of Fifth Amendment rights, and a landowner is said to have suffered such a violation when the government takes his or her property without just compensation.^[45]

Abstaining under Burford

Third, the Fifth Circuit concluded that the district court abused its discretion when it decided to abstain under Burford.^[46] Burford allows a federal court to dismiss cases presenting “difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar” or if “its adjudication in a federal forum ‘would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial state concern.’”^[47] A Burford analysis involves five considerations.^[48] Fazzino’s claims allege constitutional violations, satisfying the first consideration—whether the cause of action arises under federal or state law—in favor of federal jurisdiction.^[49] The second consideration involves “whether the case requires inquiry into unsettled issues of state law or into local facts.”^[50] The district court reasoned there was an unsettled issue in state courts pertaining to the applicability of Texas oil and as common law to GCDs’ regulations.^[51] However, the Fifth Circuit reasoned that the Texas Supreme Court has already settled that landowners own the groundwater beneath their properties and that such ownership “may be enforced in takings law and under doctrines of equal protection.”^[52]

Because Fazzino asked that BVGCD either apply its rules equally to landowners or give landowners just compensation, the Fifth Circuit reasoned his lawsuit “poses little threat to the general state interest,” the third Burford consideration.^[53] The fourth consideration involves the state’s need for a coherent policy, here regarding groundwater regulations.^[54] Because GCDs are “decentralized” and “fragmentary” to enforce their own rules in their local areas, the Fifth Circuit concluded Fazzino’s lawsuit does not threaten a coherent policy.^[55] Lastly, the Fifth Circuit reasoned that the fifth consideration involving the presence of a special state forum for judicial review did not apply because state courts review GCD decisions.^[56]

Merits of the Case

The district court dismissed Fazzino’s takings and equal protection claims because it concluded “they rested on unsettled questions” regarding the application of oil and gas law to a landowner’s rights in groundwater beneath his or her property.^[57] However, the Fifth Circuit concluded that the law is settled enough for Fazzino’s claims to be heard because such a formulation of his claims “is at too high a level of generality.”^[58]

Takings Clause

The Fifth Circuit recognized that Fazzino’s property rights “constitute whatever he has that BVGCD may not constitutionally ‘take’ without compensation.”^[59] The Texas Supreme Court in Edwards Aquifer Authority v. Day held that a landowner’s property rights, subject to takings claims, include ownership of the groundwater beneath his or her land.^[60] Indeed, the Texas Water Code specifies that nothing in the code can be “construed as granting the authority to deprive or divest a landowner . . . of the groundwater ownership and rights” described in the section.^[61] It requires groundwater districts, like BVGCD, to consider many factors in permitting groundwater production, including the effect on the supply and other permit holders.^[62] Thus, giving groundwater owners their fair shares involves more than considering surface area.^[63] Fazzino claimed BVGCD “took” his groundwater without compensation when it allowed the City of Bryan to drain water from an area far outside its surface ownership, including the surface area of Fazzino’s property.^[64] The Fifth Circuit reasoned it to be the task of the district court to assess whether BVGCD’s groundwater regulation scheme resulted in a “taking” of Fazzino’s interest.^[65]

Equal Protection Clause

The Fifth Circuit concluded that Fazzino’s property rights provide “the baseline by which to determine whether he has been treated ‘unequally’ by the district vis a vis the City’s permit.”^[66]  The Texas Water Code requires GCDs like BVGCD to consider groundwater ownership and rights and to develop rules that are fair and impartial.^[67] Indeed, one of the purposes of groundwater regulation is to afford fair shares to owners in common reservoirs.^[68] Fazzino alleged that BVGCD unequally applied its new rules by exempting the City of Bryan from the production limit’s surface-area formula while enforcing it against Fazzino, resulting in what the Fifth Circuit considered “dramatic” results.^[69] Fazzino also alleged that BVGCD had no rational basis for treating him differently, implying the disparate treatment resulted from the relationship between BVGCD board members and the City of Bryan.^[70] A class-of-one equal protection claim like this involves “whether the plaintiff was ‘intentionally treated differently from others similarly situated’” and “whether there was a ‘rational basis’” for the difference.^[71] Because Fazzino sufficiently alleged disparity and intentional conduct, the Fifth Circuit reasoned the allegations’ substance needs to be tested by discovery and further proceedings, and it reversed the dismissal.^[72]

Emily Willms Rogers is the Managing Partner of Bickerstaff Heath Delgado Acosta LLP and represents public and private clients in water rights, water quality, utility, and environmental law matters.

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.

Rachel C. Nipper is a third-year student at The University of Texas School of Law and Managing Editor of the Texas Environmental Law Journal.

By Emily Williams Rogers, Kimberly Kelley and Patrick Maloney

Water Rights

Texas Flood-Controlled Reservoirs

Introduction

Houston is located at the junction of the Buffalo Bayou and the White Oak Bayou, which drains into the Galveston Bay. As a result, Houston has a history of flooding and is familiar with flooding hazards. In response, Congress created flood control measures with the Rivers and Harbors Act of 1938.[1] Through this Act, the U.S. Army Corps of Engineers (the Corps) built both Addicks and Barker Dams and connected them to the Buffalo Bayou as part of an extensive flood control effort.[2] The purpose of the program was to protect Houston as it existed at the time the law passed, namely downtown Houston and the areas nearby.

The city originally purchased substantial amounts of land upstream of the dams to create reservoirs to hold flood water.[3] While the Corps acquired a significant amount of upstream land, it acquired less than initially planned, meaning that “the dams were designed to contain more water than the acquired land could hold.”[4] The Corps diminished its land requirements based off a large 1935 storm, although the  risk of a more significant storm was considered—approximately the size of Hurricane Harvey—that could occur once every fifty years.[5] However, the Corps expected that the rural areas surrounding the reservoirs would stay rural, therefore mitigating the potential risk posed by flooding.[6] Despite the Corps’ original expectations, rapid urbanization ensued, and by the late 1970s, the area upstream of the reservoirs were no longer rural.[7]

 In 2017, Hurricane Harvey unexpectedly poured an average of thirty-four inches of water on Houston in four days.[8] The Corps followed its mandate and protected downtown Houston. Thus, the area upstream of the dams experienced significant flooding, causing extensive property damage.[9] According to the Corps, the dams functioned properly and per their original purpose.[10]        

Upstream Addicks and Barker Takings Claims

With the wave of litigation against the Corps that followed, the cases were split between the upstream properties and the downstream properties.[11] This article analyzes upstream property owners’ cases who successfully argued that the Corps is liable for taking. Interestingly, the claims court found the downstream property owners did not own a protected property interest and therefore could not recover.  

Takings derive from the Takings Clause of the Fifth Amendment, which states that “private property [shall not] be taken for public use without just compensation.”[12] The Takings Clause holds the government liable for negatively affecting the value of private property in exchange for a public purpose. There are two, layered elements to a takings analysis. The first element is whether the plaintiff has a property interest within the meaning of the Fifth Amendment.[13] The second element is whether the government’s action amounted to a compensable taking of that interest.[14] 

Property Interest

The court began its analysis by noting that the homeowners own private property without flowage easements, ultimately concluding that the plaintiffs maintained a property interest within the meaning of the Fifth Amendment.[15] The Corps provided three reasons why the homeowners do not hold compensable property interests, all of which the court rejected. First, the Corps argued that under Texas law, it has the right to mitigate floodwaters.[16] The court disagreed, explaining that the law the Corps cited was an exception for the specific circumstance of constructing or maintaining levees, not for consciously diverting water onto private property.[17]  Second, the Corps argued that the upstream homeowners purchased their property after the dams’ construction and therefore, cannot argue that they should be free from flooding.[18] The court disagreed, noting that this argument is more appropriate for analyzing the homeowners’ reasonable investment-backed expectations.[19] Third, the Corps argued that under the Flood Control Act of 1928, the homeowners’ right to compensation is limited. Again, the court disagreed, maintaining that the Flood Control Act did not override the Constitution’s requirement that the government compensate when it takes private property for public use.[20] With this analysis, the court established that the plaintiffs maintained a vested property interest under the Fifth Amendment.[21]

Takings

Whether government action requires compensation for taking requires considering six elements articulated by the Supreme Court in Arkansas Game and Fish Commission v. United States.[22] The factors include (1) time and duration, (2) intent, (3) foreseeability, (4) character of the land, (5) reasonable investment-backed expectations, and (6) severity.[23] The court addressed all factors except for the “character of the land.”

The time factor is highly weighted. When the taking is permanent, then a taking is virtually conclusive.[24] The court shot down the Corps’ argument that its actions only temporarily took the homeowners’ properties since the floodwater dissipated within days.[25] Instead, the court concluded that the Corps’ history with the dams, including construction, maintenance, and operation, demonstrates that the Corps took a permanent flowage easement.[26] The court reasoned that ever since the dams’ construction, the Corps’ actions subjected the upstream homeowners to the “probability” that the Corps will induce flooding.[27] That is, the time and duration does not mean the duration of the flooding; rather it involved the government’s permanent right to inundate the property with floodwater. But the court did not address the fact that the homeowners purchased their property after the construction of the dams.

The court cited precedent holding that in “the flooding context, ‘property may be taken by the invasion of water where subjected to intermittent, but inevitably recurring, inundation due to authorized government action.’”[28] Flooding by means of flood control is defined as a taking when the government retains the right to flood it in the future, since reserving such a right is more than an “isolated invasion.” [29] It is essentially a flowage easement.[30] The Corps responded by arguing that each upstream property was repairable, and therefore, the damage was temporary.[31] Even if the properties are repairable, however, the court countered that the likelihood of a similar event in the future is determinative.[32] Some properties required months for repairs due to structural damage; furthermore, the fact that the owners can repair the property to its previous condition is irrelevant in a severity analysis, especially when the Corps may flood the property again.[33]

Intent is defined as whether the Corps intended to occupy the homeowners’ property without authority or excuse, meaning that intent to occupy is sufficient without requiring intent to create a taking.[34] The court drew on the Corps’ failure to purchase the proper amount of land to affect the dams’ original design requirements.[35] Even though the Corps knew it did not have enough land upstream of the dams to prevent flooding for a storm the size of Harvey, it also knew that a storm the size of Harvey was probable.[36] Moreover, even though the Corps knew that if a storm like Harvey would occur, it never strayed from the primary objective to prevent downstream flooding.[37] The Corps’ decision to prevent downstream flooding, then, showed its intent to use the upstream homeowners’ properties for flood control because it knew a storm like Harvey would occur.[38]

The bulk of the court’s decision lies in its foreseeability analysis. Whether an invasion of private property is the foreseeable result of government action addresses whether the government intended to invade as the “direct, natural, or probable result of an authorized activity,” and not invasions incidental or consequential injuries from an action.[39] The distinction between intent and foreseeability is that the foreseeable result may not have been intended, but an action cannot be intended without being foreseeable.[40] As noted above, the court found intent, and therefore the taking was foreseeable.[41]

The court rejected two of the Corps’ important arguments. First, the Corps argued that the foreseeability analysis should focus on the time the Corps constructed the dams.[42] The Corps’ argument here focused on the fact that it could never have anticipated the vast urbanization that would occur in the late 20^th century, and that while the upstream flooding was possible, it was not the “direct, natural, or probable result.”[43] The court responded by saying that foreseeability “should not be so constrained” because foreseeability is an objective measurement.[44] The court asked, “would an objective person reasonably foresee that the actual results which occurred would have been the direct, natural or probably results of the government’s actions? Whether the Corps subjectively foresaw the results may bear on objective foreseeability, but it is not the only consideration.”[45] The court eventually concluded that measuring the date of foreseeability is irrelevant because the Corps objectively should have known that the water would invade private property.[46] Moreover, the Corps’ ongoing operation and modification of the dams occurred even as the possibility of flooding increased.[47]

The second notable argument focused on the extent of damages. The Corps argued that “the claimed losses were not the direct, natural, or probably result” since the Corps could not have anticipated the urbanization upstream of the dams.[48] Instead, the Corps said it should not be liable for damages to businesses and homes that did not exist in the 1940s.[49] The court cast the Corps’ argument aside and stated that unforeseeable urbanization is irrelevant.[50] Instead, the court focused on the fact that the Corps should have foreseen that when it did not purchase all of the required by the original project’s design, it effectively guaranteed a taking of private property via flooding easement.[51]

Two factors are relevant to investment-backed expectations. First, the expectation must be objectively reasonable.[52] Second, the court must consider the extent that the Corps’ action interfered with reasonable expectations.[53] The court concluded that the homeowners’ expectations were reasonable, and notice does not immunize the government. Further, the court said that even if the various forms of notice were sufficient, the Corps did not show that the homeowners were aware of the scale of the risk.[54] Whether the Corps’ action interfered with reasonable expectations, the court concluded that the degree of interference was substantial.[55] Importantly, the court also noted that after Harvey, the Texas Legislature passed a statute mandating disclosure if a property is located in a reservoir.[56] An interesting question is whether such a disclosure would bar future claims of this sort by upstream homeowners.

Conclusion

The potential ramifications of this case are significant. In a world where the government necessarily has limited resources requiring it to make incremental decisions, this case appears to hold the government liable for the ripple effects of decisions made generations ago that were considered reasonable by the Corps at the time. The fact that the Corps knew at all times that it would need to flood private property eventually appears to be central to the court’s decision.  The fact that landowners may have had notice of the potential for flooding was equally unpersuasive, with the court noting that the government cannot escape liability by simply notifying the landowner of a potential taking. The court reserved the question of damages for later proceedings. 

Emily Williams Rogers is the Managing Partner of Bickerstaff Heath Delgado Acosta LLP and represents public and private clients in water rights, water quality, utility, and environmental law matters.

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.

Patrick Maloney is a third-year student at The University of Texas School of Law and Articles & Notes Editor of the Texas Environmental Law Journal.

By Emily Willms Rogers, Kimberly Kelley, and Rachel C. Nipper

Water Rights

Groundwater Permitting

Introduction

Under Texas law, a person’s property rights include ownership of groundwater beneath his or her property.^[1] A recent Fifth Circuit case concluded these property rights are subject to Fifth Amendment takings claims.^[2] In Stratta v. Roe, the Fifth Circuit reversed and remanded a district court’s dismissal of a landowner’s claim that a groundwater-conservation district (GCD) violated the Constitution’s Equal Protection and Takings clauses by allowing a city to drain groundwater from underneath the landowner’s property without compensation.^[3]

Stratta v. Roe

The Brazos Valley Groundwater Conservation District (BVGCD) is a state political subdivision that manages, protects, and conserves water resources within its jurisdiction.^[4] Both the Texas Constitution and the Texas Water Code provide for such GCDs,^[5] which create groundwater-management plans regulating water production and conservation, govern water use, study water quantities flowing into and out of aquifers, and minimize waste.^[6] Under this authority, BVGCD created new rules in December 2004 governing landowners’ groundwater production.^[7] Through spacing requirements and production limitations, BVGCD regulates the amount of water landowners can withdraw from a well.^[8] The rules differentiate between existing wells, new wells, and wells with historic use^[9]  and regulate groundwater pumpage apply in each category.^[10] For instance, the rules cap the amount of allowable production for new wells based on a formula that calculates the number of contiguous acres required to be assigned to the well site.^[11]

Almost a week after BVGCD’s new rules took effect, the City of Bryan drilled a well on a 2.7-acre land tract located less than 3,000 feet from appellant Fazzino’s property.^[12] The city applied for a permit to operate the well at a groundwater-production rate of 3,000 gallons per minute (gpm).^[13] Under the currently-enacted rules, the city would have been required to own a 649-acre tract to pump water at that rate from a “new” well.^[14] However, BVGCD classified the city’s well as an “existing” well—one for which drilling or significant development began before the effective date of the rules^[15]—and conditionally granted the permit, authorizing production of 4,838 acre-feet annually at the requested rate.^[16] BVGCD later reissued an identical conditional permit in 2013, despite the fact that there was no growth of city acreage around the well and even though, before the rules took effect, the well at most existed “in the form of ‘significant development,’ at least on paper.”^[17] Had the city’s well been classified as a “new” well, the rules would have capped the well’s maximum allowable production at over fifteen times less than what the conditionally-granted permits allow.^[18]

BVGCD created the new rule’s spacing and production requirements to minimize “the drawdown of the water table and the reduction of artesian pressure, to control subsidence, to prevent interference between wells, to prevent degradation of water quality, and to prevent waste.”^[19] However, as the new rules do not apply to the city’s well, they do not operate to protect Fazzino from the potential threat of dissipation from the city’s pumping; as water comes from a well, it creates a cone-of-depression impact, and Fazzino’s property is within the city well’s anticipated cone of depression.^[20] Fazzino filed a complaint challenging BVGCD’s designation of the well as an “existing” or “historical use” well, but the State Office of Administrative Hearings found that he did not have standing to assert such a claim.^[21] Therefore, in an effort to “offset” the production, Fazzino applied for a permit to operate the well on his larger piece of property at the same groundwater-production rate as the city.^[22] BVGCD twice denied Fazzino’s request, citing insufficient acreage—Fazzino owned 26 contiguous acres, but like any “new” well owner, he must own or control 649 acres to support production at the requested 3,000 gpm rate.^[23] Fazzino then sued BVGCD and its directors under 42 U.S.C. § 1983, alleging violations of the Equal Protection and Takings clauses.^[24]

Jurisdictional Objections

Eleventh Amendment Immunity

First, the Fifth Circuit held that the district court erroneously concluded that BVGCD is an arm of the state and immune from suit in federal court under the Eleventh Amendment.^[25] A court looks to six factors identified in Clark v. Tarrant County to determine whether a governmental agency qualifies for Eleventh Amendment immunity.^[26] The first Clark factor considers whether state statutes and case law view the agency as an arm of the state.^[27] The Fifth Circuit held that a GCD is a political subdivision rather than a state agency, and most political subdivisions are not entitled to this immunity.^[28] Because one of Eleventh Amendment’s goals is to protect state treasuries, the second Clark factor considers the source of the entity’s funding.^[29] The Fifth Circuit concluded that GCDs lack any meaningful financial relationship with the Texas treasury—weighing against immunity.^[30] The third Clark factor considers the entity’s degree of local autonomy.^[31] While GCDs have broad authority to make and enforce rules,^[32] the Texas Water Development Board and the Texas Commission on Environmental Quality provide assistance,^[33] and the Texas Water Development Board must approve local groundwater management plans.^[34] A state auditor^[35] and the state legislature also occasionally audit GCDs’ operations.^[36] The Fifth Circuit reasoned that all these facts considered together “at most merely offset each other.”^[37]

The fourth Clark factor considers whether the entity deals mostly with local rather than state problems.^[38] The fact that an entity deals with local problems suggests that it is not an arm of the state.^[39] Because GCDs can exercise their authority only within their territorial boundaries, the Fifth Circuit reasoned this factor weighed against granting immunity to BVGCD.^[40] The Fifth Circuit set aside the fifth and sixth Clark factors, considerations of whether the entity has authority to sue and be sued in its own name and its right to hold and use property, because all parties and the district court agreed they weighed against granting immunity.^[41] The Fifth Circuit thus concluded that the district court erred in dismissing the landowners’ action for lack of jurisdiction in this regard.^[42]

Ripeness for Adjudication

Second, the Fifth Circuit concluded that, contrary to the district court’s findings, Fazzino’s takings claim was ripe for adjudication.^[43] The district court had relied on Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, a case recently overturned by the Supreme Court, in its dismissal of Fazzino’s takings claims as unripe.^[44] The Fifth Circuit reasoned that not only had Fazzino already pursued available administrative remedies, but the Supreme Court had also held that a property owner can bring a federal-court claim at the time he or she suffers a violation of Fifth Amendment rights, and a landowner is said to have suffered such a violation when the government takes his or her property without just compensation.^[45]

Abstaining under Burford

Third, the Fifth Circuit concluded that the district court abused its discretion when it decided to abstain under Burford.^[46] Burford allows a federal court to dismiss cases presenting “difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar” or if “its adjudication in a federal forum ‘would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial state concern.’”^[47] A Burford analysis involves five considerations.^[48] Fazzino’s claims allege constitutional violations, satisfying the first consideration—whether the cause of action arises under federal or state law—in favor of federal jurisdiction.^[49] The second consideration involves “whether the case requires inquiry into unsettled issues of state law or into local facts.”^[50] The district court reasoned there was an unsettled issue in state courts pertaining to the applicability of Texas oil and as common law to GCDs’ regulations.^[51] However, the Fifth Circuit reasoned that the Texas Supreme Court has already settled that landowners own the groundwater beneath their properties and that such ownership “may be enforced in takings law and under doctrines of equal protection.”^[52]

Because Fazzino asked that BVGCD either apply its rules equally to landowners or give landowners just compensation, the Fifth Circuit reasoned his lawsuit “poses little threat to the general state interest,” the third Burford consideration.^[53] The fourth consideration involves the state’s need for a coherent policy, here regarding groundwater regulations.^[54] Because GCDs are “decentralized” and “fragmentary” to enforce their own rules in their local areas, the Fifth Circuit concluded Fazzino’s lawsuit does not threaten a coherent policy.^[55] Lastly, the Fifth Circuit reasoned that the fifth consideration involving the presence of a special state forum for judicial review did not apply because state courts review GCD decisions.^[56]

Merits of the Case

The district court dismissed Fazzino’s takings and equal protection claims because it concluded “they rested on unsettled questions” regarding the application of oil and gas law to a landowner’s rights in groundwater beneath his or her property.^[57] However, the Fifth Circuit concluded that the law is settled enough for Fazzino’s claims to be heard because such a formulation of his claims “is at too high a level of generality.”^[58]

Takings Clause

The Fifth Circuit recognized that Fazzino’s property rights “constitute whatever he has that BVGCD may not constitutionally ‘take’ without compensation.”^[59] The Texas Supreme Court in Edwards Aquifer Authority v. Day held that a landowner’s property rights, subject to takings claims, include ownership of the groundwater beneath his or her land.^[60] Indeed, the Texas Water Code specifies that nothing in the code can be “construed as granting the authority to deprive or divest a landowner . . . of the groundwater ownership and rights” described in the section.^[61] It requires groundwater districts, like BVGCD, to consider many factors in permitting groundwater production, including the effect on the supply and other permit holders.^[62] Thus, giving groundwater owners their fair shares involves more than considering surface area.^[63] Fazzino claimed BVGCD “took” his groundwater without compensation when it allowed the City of Bryan to drain water from an area far outside its surface ownership, including the surface area of Fazzino’s property.^[64] The Fifth Circuit reasoned it to be the task of the district court to assess whether BVGCD’s groundwater regulation scheme resulted in a “taking” of Fazzino’s interest.^[65]

Equal Protection Clause

The Fifth Circuit concluded that Fazzino’s property rights provide “the baseline by which to determine whether he has been treated ‘unequally’ by the district vis a vis the City’s permit.”^[66]  The Texas Water Code requires GCDs like BVGCD to consider groundwater ownership and rights and to develop rules that are fair and impartial.^[67] Indeed, one of the purposes of groundwater regulation is to afford fair shares to owners in common reservoirs.^[68] Fazzino alleged that BVGCD unequally applied its new rules by exempting the City of Bryan from the production limit’s surface-area formula while enforcing it against Fazzino, resulting in what the Fifth Circuit considered “dramatic” results.^[69] Fazzino also alleged that BVGCD had no rational basis for treating him differently, implying the disparate treatment resulted from the relationship between BVGCD board members and the City of Bryan.^[70] A class-of-one equal protection claim like this involves “whether the plaintiff was ‘intentionally treated differently from others similarly situated’” and “whether there was a ‘rational basis’” for the difference.^[71] Because Fazzino sufficiently alleged disparity and intentional conduct, the Fifth Circuit reasoned the allegations’ substance needs to be tested by discovery and further proceedings, and it reversed the dismissal.^[72]

Emily Willms Rogers is the Managing Partner of Bickerstaff Heath Delgado Acosta LLP and represents public and private clients in water rights, water quality, utility, and environmental law matters.

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.

Rachel C. Nipper is a third-year student at The University of Texas School of Law and Managing Editor of the Texas Environmental Law Journal.