Accommodating Another Wrinkle in Texas Water Law? – Coyote Lake Ranch LLC v. Lubbock
On October 14, 2015, the Texas Supreme Court is set to hear a water rights case that could shake up water law in Texas. The Texas high court has agreed to hear
Coyote Lake Ranch LLC v. Lubbock, a case in which the plaintiff‑ranch argues that the accommodation doctrine should apply to restrict the City of Lubbock from drilling 80 water wells on the property because it would unreasonably disrupt its existing ranching activities. If the court reverses the Seventh Court of Appeals and finds that
the accommodation doctrine should apply to severed groundwater estates in Texas, such a ruling would add yet another layer of uncertainty to the already murky regulatory framework governing groundwater in Texas at a time when water availability and water security is of paramount importance for many.
The accommodation doctrine is a principle applied in oil and gas law that acts as a limitation on the access rights of mineral owners. The mineral estate is treated as dominant to the surface estate in Texas, meaning owners of the mineral estate may access those minerals using as much of the surface estate as
is reasonably necessary to produce oil or gas from the ground. The accommodation doctrine comes into play when the mineral owner’s access unreasonably interferes with certain surface uses. Surface owners can use the doctrine to require the mineral owner to accommodate pre-existing surface uses when possible.
Seventh Court of Appeals declined to apply the doctrine in the groundwater context, reserving such landmark rulings to the Texas Supreme Court or the Legislature. And such a ruling would not be far-fetched for the Texas high court, which has applied oil and gas concepts to Texas water rights in the past. In February
2012, the court issued its opinion in Edwards
Aquifer Authority v. Day, which held that landowners have an absolute vested property right to groundwater in place, just like oil and gas, and a constitutionally compensable interest in it. In May 2015, the Texas Supreme Court denied petitions to hear an appeal in Bragg
v. Edwards Aquifer Authority, a case in which the Fourth Court of Appeals held that the Edwards Aquifer Act permit program worked a constitutional “taking” of landowners’ property rights in groundwater (applying Day). Click here for more information on Day and Bragg.
Perhaps a more likely result is for the court to avoid the accommodation doctrine question altogether and decide the case narrowly on the language in the underlying deed granting the groundwater rights to the City of Lubbock. In 1953, a predecessor of Coyote Lake Ranch conveyed the groundwater estate in a
portion of its ranch to the City of Lubbock. The deed reserved the surface estate owner enough water “to carry on usual and normal domestic and ranching operations and undertakings upon said land,” and granted the City the “full and exclusive rights of ingress and egress over the lands” so that the City may “at
any time and location” drill and test water wells to investigate, explore, produce, and access the groundwater. The deed also conveyed a perpetual easement to transport the water and to use “all that part of said lands necessary or incidental to the taking of percolating and underground water and
the production, treating and transmission of water therefrom and delivery of said water” to the city water system. The court’s decision may turn on the specificity of the deed because such agreements have typically controlled exactly how producers access groundwater.
Should the Texas Supreme Court decide otherwise and apply the accommodation doctrine to severed groundwater estates, many water contracts less specific than the deed at issue could be undone. More than that, a ruling in favor of Coyote Ranch would muddy the groundwater rights landscape in Texas,
which is already fraught with uncertainty due to a vast number of local regulatory authorities (e.g.,
conservation districts) and differing rules.
If the Texas Supreme Court avoids the question of whether the accommodation doctrine applies, water contracts will continue to dictate the access rights to groundwater in Texas, in which case water sellers and buyers alike should carefully consider the language in the contract. Sellers in particular
should think about the existing surface uses of the land as well as any future uses they want to protect. The contract language must be explicit and provide the exact rights the seller intends to convey in a water sale.
Posted at 09/23/2015 2:25 PM