Landowners’ appeal of denial of party status in End Op contested case hearing
Environmental Stewardship and three individual landowners (collectively, Landowners) have filed an appeal in State District Court in Bastrop, TX. They are asking State Judge Carson Campbell to reverse state Administrative Law Judge Michael J. O’Malley’s (ALJ) denial of standing to the Landowners to participate in the End Op contested case hearing that was held on February 11, 2013 (Contested Case Hearing).
Landowners are requesting the right to protest the negative effects of End Op’s proposed pumping of 46,000 ac-ft per year on their groundwater property rights. Under state law, landowners own the groundwater in place under their land.
Prior to Aqua’s contested case hearing with End Op, Aqua reached a settlement with End Op that should have made the hearing unnecessary. Instead, the ALJ allowed End Op to create a self-serving official record without any objections. If and when a hearing is held with Landowners as a party, the Landowners’ cases — and the official record — would not be restricted or limited by Aqua and End Op’s settlement agreement that preceded the (sham) Contested Case Hearing. The Landowners would dispute End Op’s uncontested evidence on which Judge O’Malley based his recommendation that Lost Pines should grant the full 46,000 ac-ft per year permit. His denial of party status to Landowners, the issues that came before him in the Contested Case Hearing, and his handling of those issues are very important. His decision, based on one-sided End Op evidence, essentially will affect all landowners’ private property rights in their groundwater. The Landowners want to address these issues in their own hearing.
Landowners (Andrew Meyer, Bette Brown, Darwyn Hanna and Environmental Stewardship), having exhausted all administrative remedies, filed an appeal in Bastrop District Court on February 20, 2015 (Cause No. 29,696). Landowners assert that the Lost Pines Groundwater Conservation District (District) improperly and unfairly erred in denying them party status and the District’s decision should be reversed (see Landowners’ Petition for Judicial Review, Press Release, Initial Brief, Motion for Rehearing to Lost Pines GCD).
Summary of Landowners’ Arguments
The District’s contention that Landowners must demonstrate use of the aquifer and own wells in the aquifer that End Op intends to pump — the Simsboro — is contrary to the fundamental nature of the property interest they hold. Under state law, all landowners own the groundwater beneath their land as real property — and therefore, a valuable asset and valuable component of their overall property value. If there are multiple aquifers below their land, or multiple formations of a single aquifer, the landowner owns the water in each aquifer or formation, whether or not the landowner is currently producing any groundwater. Therefore, Landowners in the End Op case possess absolute ownership rights to groundwater in the Simsboro aquifer. That aquifer is, in effect, a common pool that End Op seeks to draw from. As such, Landowners are entitled to protect their rights to a fair share of that pool, and they are entitled to protect themselves against damage to their groundwater and to the common pool that is the Simsboro aquifer. Furthermore, End Op and all other pumpers in the aquifer have a responsibility to all landowners in the pool to protect the pool for other users.
Landowners contend that the District’s decision to deny them the right to challenge End Op’s application was premised on an analysis that improperly failed to recognize the significance of the Landowners’ absolute ownership of the groundwater beneath their property. Landowners also argued that their interests were distinguishable from the interests of the general public, but the ALJ disagreed asserting a landowner must have an active well in the target aquifer to gain party status. (See Landowners’ Initial Brief, ALJ Order #3, and District’s Order denying Status).
Landowners cite the Texas Supreme Court’s 2012 decision in Edwards Aquifer Authority v. Day where the Court applied oil and gas law to resolve a number of groundwater issues, including ownership in place. The Supreme Court recognized that rights to groundwater under a landowner’s land are akin to the ownership of oil and gas resources. The Day court noted that landowners had the same right to exclude others from groundwater beneath their property, excepting ordinary drainage, as they do concerning oil and gas. (See EAA v. Day).
Additionally, as with oil and gas, landowner rights include a reasonable opportunity to produce a fair share of groundwater in place, and a landowner has privilege against other landowners in the common pool to take groundwater by lawful operation. Further, each landowner has duties not to exercise his/her rights in a way that injures the common source of supply (in this case, the Simsboro and communicating aquifers), and each owner has rights that other landowners not exercise their privileges of taking in such a way as to injure the common aquifer.
Notably, this regulatory allocation of the common resource (aquifer) plays an important role in the regulation of groundwater as well. The Day court recognized that some landowners wish to produce oil and gas to the limit, while others desire to keep their oil and gas in the ground and develop it in lesser quantities. In the oil and gas context, it is the Railroad Commission that serves as the expert to equitably balance the interests of different landowners. In the groundwater context, it is the role of groundwater districts to serve as experts, resolve the conflict of interests between not only landowners who want to product the groundwater they own “to the limit” versus other landowners who wish to keep their groundwater in the ground, but also non-commercial uses, sustainability, and environmental considerations.
Applying these same principles in this Landowners’ case leads to the conclusion that the District’s decision to deny Landowners’ request for party status was contrary to the Texas Water Code, the District’s rules and the Texas Supreme Court decision in the Day case. Accordingly, the District’s decision was in violation of the Water Code and the District’s own rules, violated the Landowners’ due process rights, and wrongfully impaired Landowners’ property rights. (see Landowners’ Initial Brief, Districts’ Reply Brief, End Op’s Reply Brief, and Landowners Reply Brief).
Landowners, out of an abundance of caution in legal procedure, filed multiple cases that were consolidated under Cause No. 29,696 on May 25, 2016 (see District Judge’s Order #1). The filings also raised a question of jurisdiction which Landowners and Defendants agreed to abate until the District has made a final ruling on End Op’s permit application (see District Judge’s Order #2). The appeal remained pending when the District acted on End Op’s permit on September 21, 2016 (See Districts Order Approving Permits). Prior to Lost Pines making its final decision on End Op’s permit application, the District held a meeting on the permits on June 15, 2016, and received written comments until July 13, 2016. Environmental Stewardship provided oral comments at the District meeting and written comments detailing our concerns with the permit application and the impacts on the Colorado River and the Carrizo-Wilcox Aquifer Group. (See Environmental Stewardship’s comments to Lost Pine on the impact of the requested permits on the Colorado River and Carrizo-Wilcox Aquifer Group (2016)).
Current Status (2/1/2017)
Subsequent to Landowner, District, and End Op’s filings, the Texas Supreme Court ruled on May 27, 2016 in the case of Coyote Lake Ranch, LLC (Petitioner) v. The City of Lubbock (Respondent) finding that it is appropriate for other aspects of oil and gas law to be applied to groundwater. In this case the Court found that the “accommodation doctrine” of oil and gas law extends to groundwater estates. In so doing, and having applied oil and gas law to yet another groundwater case, the Texas Supreme Court has further confirmed that it is appropriate to apply oil and gas laws and principles as has been done by the Landowner’s in their Initial Brief.
Upon the District’s action to approve End Op’s (now Recharge, LP) operating and transport permits, Landowners motioned on September 27, 2016 for a rehearing of both the denial of party status and the approval of the operating and transport permits, and as an alternative, requested written findings of facts and conclusions of law to further exhaust administrative remedies before Lost Pines Groundwater Conservation District. In its motion, Landowners assert that the District erred in granting End Op’s permits. Landowners’ motion asserts that 1) granting of the requested authorizations was the product of the District’s erroneous decision to deny Landowners’ hearing requests, 2) granting the requested permits results in a violation of the applicable desired future conditions, 3) that the District failed to consider whether granting of the permit impacts existing groundwater or surface water resources or existing permit holders, and 4) the permits provide insufficient mitigation measures. Items 2 and 3 above lay out Environmental Stewardship’s arguments regarding environmental impact on the Colorado River and other aquifers that communicate with the Simsboro aquifer. (See Landowners’ Motion to Lost Pines for Rehearing or Findings & Conclusions).
Upon failure of the District to grant the Landowner’s motion for rehearing, having exhausted all administrative remedies with the District, Landowners’ returned to 21st Judicial District Court on November 4, 2016 with a petition for judicial review in Bastrop County. (See Landowners’ Petition for Judicial Review (2016).
- Landowners (Plaintiffs) seek an order
- reversing Lost Pines decision denying Plaintiffs party status to a contested case hearing before the State Office of Administrative Hearings (“SOAH”), specifically Docket No. 952-13-5210, and
- reversing the order granting the applications of End Op, LP (“End Op”) for well registrations, operating permits and transfer permits to produce water from the Simsboro aquifer on land within Lost Pines district of Bastrop and Lee Counties.
- In the alternative, Plaintiffs seek a trial on End Op’ s application to determine if the application should be denied based on Plaintiffs evidence of impacts and arguments on the violations of Texas law. In other words, as in historic agency decisions that affect constitutionally protected interests or rights, including property rights, those individuals with such protected interests and rights must be afforded the opportunity to protect their rights and interests through trial-type proceedings in court if they are not provided that opportunity in the agency process.
- Plaintiffs oppose the quantities of water approved for production and seek remedies to the impact of pumping
- on their groundwater and their ability to produce, save and conserve groundwater, and
- on flows in the Colorado River.
COURT FILINGS & BRIEFS:
Landowners & Environmental Stewardship motions and briefs (key documents in bold)
- Landowners’ Petition for Judicial Review (2014)
- Landowners’ Press Release (2014)
- Landowners’ Initial Brief (2016)
- Landowners’ Reply Brief (2016)
- Environmental Stewardship’s comments to Lost Pines on the impacts of the requested permits on the Colorado River and Carrizo-Wilcox Aquifer Group (2016)
- Landowners’ Motion to Lost Pines for Rehearing or Findings & Conclusions (2016)
- Landowners’ Petition for Judicial Review (2016)
Lost Pines Groundwater Conservation District motions and briefs
- District’s Response to Petition (2014)
- District’s Plea to the Jurisdiction (2015)
- District’s Order Denying Party Status (2015)
- District’s Reply Brief (2016)
- District’s Order Approving Operating and Transport Permits for End Op (2016)
End Op (intervener) motions and briefs
- End Op’s Response to Petition (2014)
- End Op’s Plea to the Jurisdiction (2015)
- End Op’s Reply Brief (2016)
21st Judicial District Court
- Judge’s Order #1 – Unopposed Order to Consolidate (2016)
- Judge’s Order #2 – Agreed Order to Abate (2016)
State Office of Administrative Hearing (SOAH)
Texas Supreme Court Rulings