1. Commercial Webinar Series 1 hour presentation Questions will be answered at the end. For technical questions, call 800-263- 6317.

2. Commercial Webinar Series Water Rights Presented by Charles Porter, Real Estate, Water Rights, and Construction Expert Kinski Leuffer, Associate Counsel Mark Lehman, Vice President of Governmental Affairs July 19, 2012

3. Outline Overview of Texas Water Law –Definitions –History –Recent Developments Water Today The Future Legislative Update

4. I. Overview Definitions: –What are water rights? A legal right to use the water of a natural stream or water furnished through a ditch or canal, for general purposes, such as irrigation, mining, power, or domestic use, either to its full capacity or to a measured extent during a defined portion of the time.

5. I. Overview Definitions –Groundwater water percolate below the surface of the earth; not state owned; and the rights belong to the landowner TWC § 36.001(5)

6. I. Overview Definitions –Groundwater When put or allowed to sink into the ground, water appropriated loses its character and classification as storm water or floodwater and is considered percolating groundwater. TWC § 11.023(d).

7. I. Overview Definitions –Surface water the water of the ordinary flow, underflow, and tides of every flowing river, natural stream, and lake, and of every bay or arm of the Gulf of Mexico, and the storm water, floodwater, and rainwater of every river, natural stream canyon, ravine depression, and watershed in the state TWC § 11.021(a)

8. I. Overview Definitions –Diffused surface water water on the surface that has not yet entered a watercourse rain runoff water left in upland areas after a flood recedes Kaiser, R. (2005). Who Owns the Water: A Primer on Texas Groundwater Law. Texas Parks and Wildlife Magazine, July 2005.

9. I. Overview Definitions –Who’s property is it? Groundwater  property of the landowner. TWC § 36.002(a). Surface water  property of the state. TWC § 11.021(a). Diffused surface water  belongs to the landlowner until it enters a natural watercourse.

10. I. Overview Definitions –What are groundwater rights? Groundwater rights entitle the landowner to drill for and produce the groundwater below the surface, subject to limitations by districts, without causing waste or malicious drainage of other property or negligently causing subsidence. TWC § 36.002(b)(1).

11. I. Overview Definitions –What are surface rights? Rights acquired under the laws of this state to impound, divert, or use state water. The right to use surface water may be acquired by appropriation. TWC §§ 11.002(5) and 11.022.

12. I. Overview History –Groundwater 1904 - TX adopts common law rule of capture 1949 - Groundwater districts created

13. I. Overview History –Rule of capture  allows the owner of land to pump as much water as he desires from under his property Houston & Texas Central Ry. Co. v. East, 98 Tex. 146, 81 S.W. 279 (1904) (East).

14. I. Overview History –Groundwater Conservation District (GCD) A district that has the authority to regulate the spacing of water wells, the production from water wells, or both.

15. I. Overview History –How many GCDs are there? Currently, there are 99 GCDs in Texas: 96 confirmed and 3 that are yet to be confirmed by voters through local elections. –Where are they located? http://www.twdb.state.tx.us/mapping/doc/maps/gcd_only_8x 11.pdfhttp://www.twdb.state.tx.us/mapping/doc/maps/gcd_only_8x 11.pdf

16. I. Overview History –What if the area is not covered by a GCD? The rule of capture applies.

17. I. Overview History –Surface water TX applied the doctrine of riparian rights The Irrigation Act of 1889 and 1895 – - Led to appropriative rights The 1913 and 1917 Irrigation Acts – - TX adopts permit system 1931 Wagstaff Act – - Ranking of preferred water uses

18. I. Overview History –Surface water 1957 Cancellation statutes – - cancellation of water rights for nonuse 1967 Water Rights Adjudication Act

19. I. Overview History –Riparian rights A riparian water right entitles the owner of property adjacent to a watercourse to make reasonable use of water.

20. I. Overview History –Appropriation System “First in time, first in right” rule water must be beneficially used prohibited diversion or impounding that damages the property of another by the overflow of the water secured by filing a sworn statement with county clerk

21. I. Overview Current Permit system –A permit may be obtained if: the unappropriated water is available: the use does not conflict with existing water rights; and the use is not detrimental to the public welfare. –Permit exemptions are found in Section 11.142 of the Texas Water Code. TWC § 11.134

22. I. Overview Recent Developments –Edwards Aquifer Authority v. Day The Texas Supreme Court held that landowners own the groundwater in place beneath their property that cannot be taken for public use without adequate compensation Edwards Aquifer Authority v. Day, --- S.W.3d ----, 2012 WL 592729 (Tex., Feb. 24, 2012)

23. Water Today

24. The Future

25. Legislative Update

26. Resources Water Rights for Texas Agents –TREC Course #: 04-00-064-24518. –4 hours of MCE credit Texas Commission on Environmental Quality (TCEQ) –http://www.tceq.texas.gov/agency/water_main.htmlhttp://www.tceq.texas.gov/agency/water_main.html Texas Water Development Board –http://www.twdb.state.tx.us/http://www.twdb.state.tx.us/ Environmental Protection Agency (EPA) –http://water.epa.gov/http://water.epa.gov/

27. Questions For questions, please contact: –Charles Porter - charlp@stedwards.educharlp@stedwards.edu –The Legal Hotline 512/480-8200

28. Conclusion Thanks for your participation in our 2 nd commercial webinar! Future Webinar Dates (4 scheduled) –March 28, 2013 –May 23, 2013 –July 25, 2013 –October 24, 2013 Give us your feedback!