Water Rights. What’s Now and What’s Next!

I’ve been lucky in that my experience from both a public and private perspective has provided me insights that are unique and applicable when adding additional water rights to your water production resources. I know where we’ve been over the past 35+ years; I see where we are now, and I can make educated predictions about what we’ll be dealing with in the future. We have much work to do.

Are We Heading for a Mad Max World?

Like oil, potable drinking water is a commodity and is becoming harder to find and develop. All of us in the water industry continually deal with and are confronted with increasing demand and decreasing supply. Whether these decreases are from drought conditions or increased growth and over-allocation of existing supplies, both create concerns in securing water for current and future demands.

Groundwater has been controlled in years past by the surface owner of the land, or what is recognized as the “right of capture”. Oil companies seeking water for oilfield fracking and production are challenging this long-standing law. In some cases, the water has been treated as a mineral and the challengers have been successful in claiming use and ownership of the water even though they did not own the surface rights.

Water Rights have become a valued resource and there appear to be no limits on where these may be regarding the end user. Typically, water rights were acquired near the end user, but today, water rights are being negotiated and acquired wherever they may be obtainable.

The Future of Texas Water

According to the Texas Water Development Board, Texas is projected to almost double its population by 2070.

Managing and securing sustainable water now and in the future falls on each city and city management group. City Management is the front-line leader in water acquisition, treatment and distribution. Managing this resource is a major component of all city governments. Systematic planning based on historical water use and projected population growth is the responsibility of each city. Equally important is providing adequate funding for infrastructure improvements to assure a safe, reliable water supply for their users. How is this achieved in a time and economy that has the uncertainties that we see and feel today? Oil prices have dropped and state and municipal budgets are feeling the crunch created by the loss of tax revenue from the oil and gas industry. Cities have seen substantial employment losses associated with the oil and gas companies. A close look at the reality of the situation reveals that as far as our infrastructure is concerned, nothing has changed except for more people and larger demands for water. The graph below from the Texas Water Development Board shows 2013 water demand versus population. Demand and population have only increased since then, and that trend will continue.

Types of Water Rights

Within Texas, there are two distinct types of Water Rights or Water Development: groundwater or State surface water. By State Water Law definition, groundwater occurs under the surface of the land, and can include percolating water and artesian water, but not the underflow of a surface water river or stream or the underground flow that is confined in channels such as a “confined aquifer”. Groundwater has a unique characteristic in that it is presumed to be percolating, and must be proven otherwise to be considered any other way. Artesian water is groundwater that is confined by an impermeable geological formation causing the path of least resistance to be upward once “tapped” or developed. Underflow is water that is directly connected to the flow of a stream or river and is typically flowing through the soil formations adjacent to the streams or riverbanks moving in the same direction of the surface water flow. As such, it is considered “water of the State” and governed by surface water rules.

Underground streams or rivers are further delineated by a defined water course, meaning the underground stream or river must have defined banks that form a geologically defined channel and it must flow. These are rarely, if ever, found in Texas and must be addressed on a case-by-case basis. In 35+ years of personal experience, I have never encountered such a subterranean stream in Texas.

Water Laws: How Did We Get Here?

English Common Law was the basis for current Texas Common Law for water use. This basis simply stated that the owner of the land had the right to pump unlimited quantities of water from under his land regardless of the impact that it might cause to his neighbor, known as the right of capture. Texas has implemented two important changes that limit common law on the landowner’s right of capture and use or groundwater:

  • The landowner cannot capture and use groundwater maliciously with the purpose of injuring a neighbor or use it in a manner that amounts to wanton and willful misuse of the resource.
  • The landowner cannot pump groundwater in amounts that will cause subsidence to occur on neighboring land.

How are Laws Enforced Locally?

Groundwater Conservation Districts (GCDs) and Subsidence Districts are the favored groundwater controls in the State. Because approximately 85% of the groundwater in the state is within a GCD or subsidence district, many GCDs and subsidence districts have promulgated rules for the development and production of groundwater. While the landowner currently owns the groundwater beneath his land, it is subject to the water laws of the State and to local GCDs and subsidence districts. The common law rule of capture cannot always be taken literally without first determining if the proposed well development is in a specific district and what those rules require. GCDs have set spacing rules for wells and production rules to provide conservation measures for groundwater in the State.

How Do We Move Forward?

In securing additional groundwater supplies, Municipalities, Water Districts, and Water Supply Corporations must be sure that all water rights, easements, development standards, and requirements are in place prior to securing the land. Because increasing water demands across the state have increased competition for this limited resource, careful planning and investigation of potential development areas must be undertaken with knowledgeable professionals to guide the purchase of these water rights. Compliance in legal, engineering land acquisition, hydrogeological investigations, and conservation must be fully vetted to secure any new water rights in Texas.