The Texas Supreme Court ruled in favor of a Muleshoe ranch in its battle with the city of Lubbock over water rights in a 6-3 ruling in May of this year.
Issue: The accommodation doctrine, which means a lessee should regard landowners’ rights when using the land for industrial purposes has traditionally applied to oil-and-gas producers removing minerals from land, but the court determined it also applies to groundwater.
Injunction Issue: The city of Lubbock is happy with another outcome of the case, as the same court ruling stops an injunction that had kept Lubbock from accessing or developing underground water it had purchased in 1953 from prior surface owners.
Background: Coyote Lake Ranch has held a groundwater-use agreement with Lubbock since 1953. The deed allowed the 26,600-acre ranch to drill only one or two wells in each of 16 certain areas. The ranch sued Lubbock in 2012, after city staff began preparing the ground for plans to drill up to 80 new wells.
Ranch owners objected with concerns of a negative environmental impact. Ranch management testified mowing or removing vegetation to drill the wells would lead to erosion and hurt cattle grazing. They also claimed the drilling sites would create special risks for the lesser prairie chicken, a threatened species found in the area.
Lower Court: A judge in Bailey County’s 287th District Court granted the ranch a temporary injunction. The order temporarily prohibited Lubbock from mowing or otherwise damaging grass on the ranch, drilling any test holes or water wells without discussing potential impact with the ranch’s owners and building power lines to proposed well fields on the ranch.
Appeal: The city appealed to the Amarillo-based Seventh Court of Appeals. It claimed its deed allowed the proposed drilling, and the accommodation doctrine applies to minerals, not groundwater.
Appeals Court Ruling The appeals court ruled in favor of the city, reversing in June 2014 the trial court’s ruling. “Our research has yielded no case in which a Texas court has applied the accommodation doctrine to the groundwater context, and (Coyote Lake Ranch) has cited us to none”.
Supreme Court Ruling: The Supremes affirmed the appeal court’s temporary injunction reversal, but supported the ranch’s claim of its groundwater rights. It cited past cases in which the accommodation doctrine was applied more broadly than to minerals, including Edwards Aquifer Authority v. Day. In that case, the court determined a landowner owns the property’s groundwater in the same manner he or she owns its oil and gas.
The Coyote Lake Ranch ruling describes an important difference between water and oil and gas — water is renewable — but claims that should not be a factor in its ownership.
The court stated: “Common law rules governing mineral and groundwater estates are not merely similar; they are drawn from each other or from the same source.”
The temporary injunction, though, is unfair because it stops Lubbock from certain practices that are clearly allowed: “The temporary injunction denies the city its undisputed right to access groundwater. The temporary injunction also prohibits the city from erecting power lines, even though its deed gives it the express right to do so … An injunction ‘so broad as to enjoin a defendant from activities which are a lawful and proper exercise of his rights’ is an abuse of discretion.”
Bottom Line: The Supreme Court’s decision is a major victory for landowners across Texas. It was important to City representatives to point out that the City of Lubbock paid for the rights and obtained a deed with the signature of the Grantor.
