Oil and Gas Lawyer Blog
The Fifth Circuit Court of Appeals has held that a landowner has stated a judiciable claim against the Brazos Valley Groundwater Conservation District (BVGCD) for an unconstitutional taking of his groundwater rights. David Strata, et al. v. Jan A. Roe, et al., No. 18-60994. Fascinating facts.
Groundwater Districts were created by the Texas Legislature to manage production of groundwater. Most Districts cover one county. The BVGCD covers Robertson and Brazos Counties. There are nearly 100 Districts encompassing 72 percent of major and minor aquifers in the State. Each District adopts its own rules governing permitting of and production from water wells.
BVGCD’s rules create three categories of water wells: Existing Wells, New Wells, and Wells with Historic Use. Its rules are designed to “minimize as far as practicable the drawdown of the water table and the reduction of artesian pressure, to control subsidence, to prevent interference between wells, to prevent degradation of water quality, and to prevent waste.” The rules provide that Historic Use Wells are generally limited to producing the maximum amount of groundwater used before the effective date of the District’s rules. New Wells have a maximum allowable production based on the number of contiguous acres assigned to the well. When a water well is produced it creates a “cone of depression” in the aquifer – the more water withdrawn, the greater the cone of depression. The District’s rules establish a formula that calculates the amount of water that can be withdrawn from a well based on the number of acres assigned to the well. For example, a New Well producing 3,00 gallons per minute must have 649 continuous acres assigned the well – a circle with a radius of 3,003 feet. No other wells may be permitted in this 649 acres. The District’s rules define “Existing Wells” as those wells “for which drilling or significant development of the well commenced before the effective date of these Rules.” But the rules do not establish production limits for Existing Wells that have no established historic use.
On December 8, 2004, six days before the District’s rules took effect, the City of Bryan began drilling Well No. 18 on a 2.7-acre tract. It completed the well ten months later. The City applied to the District for a permit to operate Well No. 18 at a rate of 3,000 gallons per minute. The District granted the City a permit for an “Existing Well,” authorizing the City to produce 4,838 acre-feet of water per year at a rate of 3,000 gallons per minute. If Well No. 18 were a “New Well” under the District’s rules, the maximum allowable production on the City’s 2.7 acres would have been 192 gallons per minute.
Anthony Fazzino, one of the plaintiffs, owns 26 acres within 3,000 feet of the City’s Well No. 18 – within the area of its “cone of depression.” Fazzino filed a complaint with BVGCD asserting that Well No. 18 was not an Existing Well and had to comply with the production limitations imposed on New Wells. After a hearing before the State Office of Administrative Hearings, his complaint was dismissed. Fazzino then applied for a permit to drill a well on his 26 acres and pump 3,000 gallons per minute from his well. The District told him he could not produce that much water without assigning at least 649 acres to his well.
David Stratta, the other plaintiff, is a member of the board of BVGCD, and he objected to the District’s unequal application of its rules. He requested that the board include discussion of Well No. 18 at a meeting, but the Board refused. Stratta attended the meeting as a member of the public and requested time to address the Board about the issue, but he was prohibited from doing so.
Stratta and Fazzino then sued the District, claiming denial of their constitutional rights. Fazzino claimed that the District’s unequal application of its rules violated his right to equal protection and constituted a taking of his property interest in subsurface water beneath his land. Stratta alleged violation of his First Amendment rights. The District moved to dismiss Fazzino’s claims on the grounds that the District is an arm of the state that enjoys Eleventh Amendment sovereign immunity, Fazzino failed to exhaust state court remedies for his taking claim, and the court should abstain because Texas law is unsettled as to Fazzino’s property interest in groundwater. It moved to dismiss Stratta’s claims because his right to speak as a board member is regulated by the Texas Open Meetings Act.
In a lengthy opinion, the Fifth Circuit Court of Appeals held that the suit should not have been dismissed and remanded the case for further proceedings. It held that the District is not an arm of the State entitled to sovereign immunity, that Fazzino need not first exhaust state court remedies, and that Texas law is not uncertain as to Fazzino’s property interest in groundwater. He is entitled to sue the District for taking his groundwater and for denial of his equal protection rights, and the District should be required to respond to his claims. But it affirmed the district court’s dismissal of Stratta’s first amendment claims and held he was not a “member of the public” under the Texas Open Meetings Act and was not entitled to speak at its meeting.
In holding that Fazzino had stated a takings claim, the Court said:
Fortunately, Texas law is not unsettled as to the landowner’s basic rights. The Texas Supreme Court plainly held in [Edwards Aquifer Authority v. Day, 369 S.W.3d 814 (Tex. 2012)] that a landowner’s property rights include the ownership of groundwater in place beneath his acreage, and such ownership right is subject to takings claims. … Fazzino’s allegation is that by permitting the City of Bryan to drain water from an area with a 3003 ft. radius, far outside its surface ownership and including surface area of Fazzino’s property, the BVGCD has “taken” his groundwater in place without compensation. The task of the district court will be to assess, as the state supreme court did in Day, whether the groundwater scheme effectuated by BVGCD’s Rules promulgated in December 2004 has resulted in a taking of Fazzino’s interest.