The Edwards Aquifer Authority v. Day.

The case involved the state’s groundwater “Rule of Capture” and pitted landowners’ rights to groundwater resources underlying their property against the Edwards Aquifer Authority’s right to regulate the use and withdrawal of those groundwater resources. Ultimately, the Court held that ownership of land includes a property interest in the underlying groundwater “in place” and that such a right cannot be taken through state action without adequate compensation. In 1994, R. Burrell Day and Joel McDaniel purchased more than 380 acres overlying the Edwards Aquifer in Central Texas. Their intent was to use the property for farming and cattle ranching. Te year prior the Texas legislature created the Edwards Aquifer Authority (“EAA”), a governmental agency, to manage the Edwards Aquifer. The EAA was created in response to a lawsuit to protect endangered species living in springs emanating from the aquifer, and within the karst aquifer’s matrix. Thus, the EAA was authorized to establish permitting requirements and other restrictions for withdrawals of groundwater from the aquifer. Day filed an application with the EAA for a permit to pump 700 acre-feet of groundwater annually for irrigation. Basing its decision on historical use, the EAA denied Day’s application. Following a series of protests, discussions, and hearings, an administrative law judge concluded that Day was entitled only to pump 14 acre-feet of groundwater per year. Day appealed that decision to the Texas District Court. Day argued, in part, that in denying his permit, the EAA had taken his property without compensation in violation of the Texas Constitution. While it denied his constitutional claims, the District Court determined that the EAA’s assessment of Day’s water entitlement was flawed and remanded the case for a new calculation. Both Day and the EAA appealed the decision. The Texas Court of Appeals affirmed the EAA’s assessment and ruled that Day was only entitled to pump 14 acre-feet of groundwater per year. However, it also found that landowners have a property right in underlying groundwater resources that is constitutionally protected against “takings” by the state and that Day’s takings claim could proceed. Upon appeal to the Texas Supreme Court, the chief issue presented was whether an overlying landowner owns the underlying groundwater “in place,” or whether ownership of the groundwater vests only when the groundwater has been captured through pumping. The Texas Supreme Court held that under the Texas Constitution, ownership of land includes a property interest in the underlying groundwater “in place” and that such a right cannot be taken through state action without adequate compensation. In reaching its conclusion, the Court drew on the law of oil and gas whereby property rights in underlying hydrocarbons in situ have long been the accepted rule. While the Court found that groundwater in Texas was subject to constitutional protection against governmental takings, it ruled that the record was inadequate to show that Day had actually suffered such a taking requiring compensation. Hence, it remanded the case to the District Court for a trial on the takings claim