My Mother has always stressed the importance of water conservation to my family. As long as I can remember she said “Water is the most precious resource and we are going to run out.” There is a case before the Texas Supreme Court that could dramatically change ground water rights in Texas. So, in this week’s column, I thought I might summarize what is happening.
In Texas, water rights depend on whether the water is groundwater or surface water.
Generally, Texas law has held that groundwater belongs to the landowner. Groundwater is governed by the rule of capture, which grants landowners the right to capture the water beneath their property. The landowners do not own the water but have a right only to pump and capture whatever water is available, regardless of the effects of that pumping on neighboring wells.
Surface water, on the other hand, belongs to the state of Texas. It can be used by a landowner only with the state’s permission.
Groundwater
Water found below the earth’s surface in the crevices of soil and rocks is called percolating water or, more commonly, groundwater. Texas groundwater law is judge-made law, derived from the English common law rule of “absolute ownership.” Groundwater belongs to the owners of the land above it and may be used or sold as private property. Texas courts have adopted, and the legislature has not modified, the common law rule that a landowner has a right to take for use or sale all the water that he can capture from below his land.
Because of the seemingly absolute nature of this right, Texas water law has often been called the “law of the biggest pump.” Texas courts have consistently ruled that a landowner has a right to pump all the water that he can from beneath his land regardless of the effect on the wells of adjacent owners. The legal presumption in Texas is that all sources of groundwater are percolating waters as opposed to subterranean rivers. Consequently, the landowner is presumed to own underground water until it is conclusively shown that the source of supply is a subterranean river.
The law with respect to ownership of subterranean rivers is not settled in Texas. Both stream underflow and subterranean rivers have been expressly excluded from the definition of underground water in Section 52.001 of the Texas Water Code.
The practical effect of Texas groundwater law is that one landowner can dry up an adjoining landowner’s well and the landowner with the dry well is without a legal remedy. Texas courts have refused to adopt the American rule of “reasonable use” with respect to groundwater.
Winds of change are blowing with regard to groundwater. The case of Cactus Water Services LLC v COG Operating LLC is now before the Texas Supreme Court. At the root of the case is who owns produced water. This case will determine whether or not produced water from oil and gas drilling belongs to the landowner.
Produced water is the water that is comes back up out of the well bore as the well is completed. Produced water is highly concentrated with salt and chemicals from the fracking process, thus making it harmful to fresh groundwater supplies as well as fields and pastures used for agricultral production.
Produced water must be handled carefully to make sure it does not spread out on the surface and leach or migrate back into the ground. That much salt on property will kill the grass for a long period of time. Thus, produced water has been a 100% waste product and almost all of it has been traditionally, injected back into deep formations through injection wells.
Technological advances have transformed produced water from a waste product into a potentially valuable resource. Therefore, now we have disputes over ownership of this water.
The importance of Cactus Water Services LLC v COG Operating LLC is that the Texas Supreme Court (TSC) will now decide whether this produced water belongs to the landowner or the oil and gas company. Over 14 briefs have been filed with the TSC from different entities. Some on behalf of the oil and gas companies and some on behalf of the landowners.
You don’t have to wait and see how the TSC answers this issue. You should be thinking ahead, particularly if you enter new oil and gas leases. These leases should have provisions clearly addressing the ownership of produced water and any associated royalties. Even if the TSC determines the oil and gas companies own the produced water, there is a way to contract in your oil and gas lease to ensure that you, the landowner, get a royalty and a revenue back.