Emerging Water Rights Issues Lynn Sherman International Rights of Way Association Hot Topics in Real Estate and Eminent Domain Seminar September 8, 2006 Lynn Sherman lsherman@winstead.com

“He’s just as full of (expletive) as a Christmas turkey. I promise you.” Harvey Everheart General Manager, Mesa Underground Water Conservation District, quoted in the San Antonio Express News, August 13, 2006

ALMOST ON PAR WITH 50’S DROUGHT Developed Supplies Per Capita TODAY

Water Development Timeline POPULATION DOUBLES IN 2050 UNPARALLELED GROWTH NEEDED SUPPLIES EXISTING SUPPLIES DECREASE BY 20% DEVELOPED SUPPLIES make more blue 1950’s DROUGHT DAM BUILDING ERA 1960’s-1980’s FUTURE “NO DEVELOPMENT” PERIOD 1980’s to Date

of the municipal demand “if a drought occurs in 2050, almost half (43 percent) of the municipal demand could not be satisfied by current sources.” Water for Texas – 2002 (“The State Water Plan”), TWDB, January 2002, p. 2

Where will the water come from? Most rivers are fully or over appropriated Where will the water come from? Most good reservoir sites are gone Reservoir permitting is much more difficult Bays and estuaries need protection

So, what is available? groundwater

Worldwide Source: USGS

Groundwater transfers are not a new phenomenon. TODAY, 55% of Texas’ population depends upon groundwater for its drinking water supply. “Ground Water’s Rule in Texas’ Economic Vitality,” Nat’l Groundwater Assoc., www.ngwa.org

Where will groundwater transfers come from? and groundwater is owned Private landowners Where will groundwater transfers come from? Why? Because 95% of Texas is privately owned and groundwater is owned by the landowner

…and now for some legal theory…

The Bundle of Sticks

Who owns the groundwater stick ? (i.e., the groundwater under a parcel of land)

? God NO (with all due respect)

? mankind ? womankind NO

The Federal Government Here comes the Tax Man ? The Federal Government NO

The State NO

who owns the groundwater under a parcel of land? So, who owns the groundwater under a parcel of land?

The Landowner or his or her Transferee

“Rule of Capture” Gives a Vested Property Right to the Landowner is a Misnomer. Even If There Is No Water Well

It is not a willy-nilly aberration , but the culmination of over 1600 years of legal precedent.

Can the “Rule of Capture” be modified? YES , but only through the exercise of the State’s police powers and not without constitutional “takings” implications.

Let’s go to the books!

Edwards Aquifer Authority Act (Act of May 30, 1993, 73d Leg. , R. S Edwards Aquifer Authority Act (Act of May 30, 1993, 73d Leg., R.S., ch. 626, § 1.07, 1993 Tex. Gen. Laws 2350, 2356) “The legislature intends that just compensation be paid if implementation of this article causes a taking of private property . . . in contravention of the Texas or federal consitution.”

H.B. 803 78th Legislature (Act of May 28, 2003, 78th Leg., R.S., ch. 1032, 2003 Tex. Gen. Sess. Laws 2979, now codified at Tex. Prop. Code Ann. §§ 21.021& 21.0421) Authorizes political subdivisions to condemn land for the purpose of “acquiring rights to groundwater.” Defines groundwater as “property apart from the land” Requires payment to landowners for property rights in groundwater that are taken

What is the cost?

“Water is more valuable than oil; water is life.” Mohamar Ghadafi

1,000 gallons of water $13,000 ≈ most expensive (Source: Wine Spectator, April 30, 2003) $11,280 = evian (@ 82nd and Quaker) gallons of water $1.83 = City of Lubbock tap water

Implications

Source: USGS