Drilling Case Ruling So Broad
It Concerns Water Districts

AMARILLO — In what most water officials expected to be a narrow ruling, the Seventh Court of Appeals here this month came out with a broad decision that worries some water authorities.

In the case of the South Plains Lamesa Railroad Ltd v. High Plains Underground Water Conservation District, a company wanted to drill wells on its railroad right-of-way, a long and narrow strip.

This case is interesting," says Paul Terrill of Hazen and Terrill, an Austin law firm that has been involved in water and endangered species litigation in connection with the Edwards Aquifer of Central Texas.

The Seventh Court of Appeals in Amarillo says the High Plains Underground Water Conservation District approved the permit to withdraw groundwater, but adjoining landowners objected. The landowners filed a protest. The underground water district then revoked the permit. The permittees reapplied and satisfied some procedural concerns, but the permit was ultimately denied.

The permit was denied for several reasons, but the main reason, Terrill says, appears to be that they were taking what the groundwater district says was a disproportionate amount of water in relation to the size of the tract.

"The landowners apparently thought they were taking more than their fair share," Terrill says. "The ground water district thought they were taking more than their fair share, also."

The key to the case appears to lie in what rules were in effect at the time of the permit.

"What the court was saying here is that you can't deny a permit based on an actual concern if there is not a rule in place ahead of time," Terrill says. "In other words, you can't pass a rule afterwards and deprive somebody of that right if they met all the rules that were stated at the time of the application."

Changing the rules after the fact or holding a group to unspecified rules will not work in justifying the denial, or possibly approval, of a permit.

"What the Amarillo court of appeals said was that these people who applied for a permit from the High Plains Underground Water Conservation District had satisfied all of the High Plains district's rules as they as they were written at that time," Terrill says. "The Amarillo court of appeals said, essentially, 'look, these people applied and followed all of your rules as stated and you denied them for some other reason that wasn't stated in the rules.' They reversed the district court's ruling and essentially said these people are entitled to a permit."

But there is more here than whether the railroad company can drill a well.

"I think probably the most interesting part of the case," Terrill says, "is the discussion of the rule of capture."

The appeals court reaffirmed the rule that landowners have significant rights to groundwater, and they have the right to withdraw that groundwater from their property.

"What I take away from this case is that if there is not a specific rule passed by the groundwater district limiting groundwater pumpage based on proportionality, then the groundwater district is not going to be able to deny a permit based on well spacing or pump capacity or something of that nature," Terrill says.

The problem revolves around the rules in place when the application was made. C.E. Williams, general manager of the Panhandle Ground Water Conservation District, says all groundwater districts do not have the same rules. This could serve as a warning for some groundwater districts.

"High Plains district does not have any rules that require spacing from the property line," says Williams.

Panhandle Ground Water Conservation District does, Williams says, but there are districts other than the High Plains district that don't have such rules.

"That's the case with the North Plains district, too," Williams says. "They don't have any rules concerning property lines. They space from well to well, and they don't have anything on property lines."

The concern Williams has is that the decision seemed to be much broader than the problem.

"They seem to question whether a proportional amount is a legal or appropriate way of regulating groundwater," Williams says.

Instead of saying the water district erred and sending it back down, the appeals court appears to be questioning the procedures used by water districts.

"We have a real narrow problem here and a real broad opinion," Williams says.

"Don't be surprised if this ends up in the Texas Supreme Court," Terrill adds.