Exposing the misuse and abuse of the public commons

July 12 , 2010

T. Boone’s Oil & Water Law Don’t Mix

T. Boone Pickens’ water company repeatedly has urged the Texas Supreme Court in recent years to interpret Texas water law in a way that maximizes the value of Mesa Water’s liquid assets in the Panhandle and makes it harder to conserve this vital resource.¹ “Landowners own the percolating groundwater in place beneath their land,” Mesa argued in a February brief on the pending Supreme case Edwards Aquifer Authority v. Burrell Day. In a report favorably cited in Mesa Water briefs, the Texas Comptroller observed last year that ruling that plaintiff Burrell Day “has a vested ownership right in groundwater” potentially opens “the door to compensation for landowners if a groundwater district restricts their ability to withdraw groundwater.”² The apparent end game is to cripple groundwater conservation measures by subjecting regulators to “takings” claims (just as landowner Burrell Day is attempting to do). Nonetheless, Mesa argues that legally recognizing groundwater as private property would not exhaust water supplies or unleash a flood of takings claims since the state retains the power to reasonably limit groundwater extraction (in 2007 Pickens leveraged his own powers of eminent domain for his water schemes).³

Mesa wants the court to model Texas water law after state oil and gas laws. “Like oil and gas in place [lying beneath the ground], groundwater in place is private property,” Mesa argued in a 2006 brief in the Texas Supreme Court case Guitar Holding Co. v. Hudspeth County Underground Water Conservation District. “Decades ago, during the formative years of the Railroad Commission’s regulation of oil and gas, this Court handed down landmark decisions resolving conflicts between the State’s power to regulate the State’s natural resources of oil and gas and the rights of private owners of oil and gas. As this case illustrates, the Court inevitably will see very similar conflicts as the State's groundwater conservation districts promulgate and enforce rules regulating production and transportation of privately-owned groundwater.” In that brief, Mesa argued “there is no principled basis for distinguishing this Court’s holdings governing the State’s regulation of oil and gas from State regulation of groundwater.”

Many property-rights interests filed concurring briefs in the pending Edwards Aquifer Authority case.⁴ Other landowners and water-permit holders who favor conservation took the opposite view, arguing that there is no vested right in groundwater until it is extracted from the earth.⁵ Although Attorney General Greg Abbott has captured more Pickens’ campaign dollars than any other Texas official, his briefs in the Edwards Aquifer Authority case legally back the conservationists over the Pickens camp. Except where regulated by the Edwards Aquifer Authority or one of more than 90 other local groundwater districts statewide, Texas water law is governed by the “rule of capture.” This so-called “law of the biggest straw” lets landowners suck up unlimited amounts of groundwater—even to the point of exhausting their neighbors’ wells. If you can suck your neighbor’s water dry, Abbott argued, then landowners clearly have no vested right to their groundwater, preempting their takings claims.

Pickens’ proposal to simply apply oil and gas laws wholesale to groundwater contains a certain seductive appeal. Oil and water are both valuable, liquid resources that flow underground without regard to property lines. Since oil and gas law is well-established, adopting it as default water law would be relatively simple—at least on the front end. Yet water is much more mobile underground than is oil, making it exceedingly difficult to quantify how much water is beneath a tract of land at a given time. Moreover, as the Edwards Aquifer Authority pointed out, Texas oil law was not designed to promote conservation. In a May 2009 brief in the pending case, the aquifer authority wrote that Texas energy laws are geared toward extracting, selling and burning as many hydrocarbons as economically feasible. Although an octogenarian billionaire who lays claim to more than 65 billion gallons of aquifer water advocates applying this legal framework to water in a state with a booming, thirsty population, such a policy would be remarkably myopic.

To assess this Pickens Plan, Watch Your Assets graphed Texas’ population growth and petroleum production going back to T. Boone’s birth in 1928. The resulting graph shows that Texas’ population and petroleum production both grew congenially until the 1970s, when oil production plummeted while people production kept soaring. Applying such a framework to groundwater, as the wily wildcatter advocates, looks like undiluted lunacy.

1928: Thomas Boone Pickens, Jr. born in Holdenville, OK

2010: Pickens asks Texas Supremes to model water law after oil law

Having given $2,396,328 to Texas state candidates and political committees since 2005, Pickens need not rely on reason alone. His favorite candidates were Attorney General Greg Abbott and Governor Rick Perry, who appoints replacements when state judges do not complete elected terms. Pickens also contributed a total of $30,000 to three Supreme Court justices during this period.⁶

Pickens’ favorite state PAC is  Texans for Lawsuit Reform, which lobbies to curtail the civil justice system. This cause doesn’t stop plaintiff Pickens from filings lawsuits when his prodigious interests are at stake.⁷

Pickens’ Mesa Water sued the Texas Water Development Board in March over conservation rules that Mesa claims hurt its interests in Ogallala Aquifer groundwater.⁸  Under state law, 16 Groundwater Management Areas must adopt conservation plans by September 1, 2010. Regulators use these plans to determine how much of current groundwater supplies they want to preserve 50 years from now.⁹ Groundwater Management Area I encompasses all or part of four groundwater conservation districts in the Panhandle.¹⁰ In 2009 Groundwater Management Area I adopted its 50-year plan, which varies from preserving a low of 40 percent of the existing aquifer in some parts of its borders to preserving a high of 80 percent of the aquifer beneath Hemphill County, where rancher George Arrington has sold extensive water rights to Pickens’ company.

Mesa Water and Arrington protested to the Texas Water Development Board, arguing that it is unfair to set differing conservation targets for neighboring counties over the same huge aquifer. After the water board endorsed the plan in February, Mesa and Arrington sued the board in state district court in Austin. The suit alleges that the unreasonable, discriminatory plan will cause water to flow out from under Hemphill County to neighboring areas that allow greater aquifer exploitation, thereby draining the waters underneath Hemphill County. The plaintiffs allege that this regulatory scheme makes their water unmarketable and will drain up to 293 billion gallons of water from Hemphill County over 50 years.

Pickens likes to boil ideas down to homespun aphorisms. Here’s one: There are just three things necessary for life in Texas. One of them is water and the other two don’t matter. Granting water the legal standing of oil and gas would help Pickens make yet another fortune, even as it wreaks havoc on young and future Texans.

Some will rob you with a fountain pen.
- Woody Guthrie

“Watch Your Assets” is a Texans for Public Justice project.

Notes:

¹ See Mesa Water briefs in Edwards Aquifer Authority v. Burrell Day, City of Del Rio v. Clayton Sam Colt Hamilton Trust, and Guitar Holding Co. v. Hudspeth Co. Underground Water Conservation District.  
² “Liquid Assets: The State of Texas’ Water Resources,” Texas Comptroller of Public Accounts, February 2009.
³ See “T is for Taking: Did Texas Sell T. Boone Pickens His Own Powers of Eminent Domain?” TPJ’s Watch Your Assets, October 4, 2007.
⁴ These filers include the Texas Farm Bureau, Texas & Southwest Cattle Raisers Association, the Texas Wildlife Association and the Texas Landowners Council. The latter group neglected to mention that its general counsel, Amarillo attorney Marvin W. Jones, also submitted Mesa Water’s brief in the case. 
⁵ See briefs of the Alliance of Edwards Aquifer Authority Permit Holders and the Medina County Irrigators Alliance (represented by Chief Justice Wallace Jefferson’s old firm).
⁶ Chief Justice Wallace Jefferson ($15,000), Justice Phil Johnson ($10,000) and Justice Don Willett ($5,000).
⁷ “Lawsuit Foe Pickens Sues Bankrupt Bank,” Texans for Public Justice’s Lobby Watch, October 20, 2008.
⁸ Mesa Water, L.P. and G&J Ranch, Inc. v. Texas Water Development Board, D-1-GN-10-000819, 201st State District Court, Travis County. George Arrington owns G&J Ranch in Canadian, Texas.
⁹ Their so-called “desired future conditions.”
¹⁰ Part of High Plains Underground Water Conservation District No. 1 and all of Hemphill County Underground Water Conservation District, North Plains Groundwater Conservation District and Panhandle Groundwater Conservation District.