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What is the Farm Bureau's Beef with Rural Water Utilities?

Posted By Trent Hightower, TRWA Assistant General Counsel and Morgan Johnson, Associate at McGinnis Lochridge , Tuesday, March 19, 2019
Updated: Wednesday, March 20, 2019

Texas Farm Bureau recently published an article in its monthly magazine entitled “The Public Wants Landowners’ Water,” in which it characterizes legislation promoted by the Texas Rural Water Association as “an unconstitutional water grab.”  This is simply not true.  The legislation, House Bill 2249 by Rep. Eddie Lucio, III, strikes a balance between the rights of landowners within a water utility’s service area and the obligation of utilities to provide adequate water supply to meet the demand of their landowner customers.


Groundwater conservation districts, or “GCDs,” are responsible for managing production from aquifers within their geographic boundaries by requiring permits for the production.  The law currently allows, but does not require, GCDs to take into account a utility’s service area when deciding how much water the utility is authorized to produce.  This makes sense considering the unique functions and legal obligations of water utilities.  A water utility is not your typical applicant for groundwater – utilities do not ordinarily own large amounts of acreage, and they are seeking water to serve all of their customers, including residences, businesses, and agricultural users.  Utilities produce water not for themselves, but on behalf of hundreds or perhaps thousands of their customers.  While the utility’s customers are free to drill a well on their own property, doing so is often cost-prohibitive.  Therefore, customers look to the water utility to provide the water since the utility is able to take advantage of economies of scale to produce the necessary water for its customers at a lower cost. 

 

Recognizing the unique nature of water utilities, many GCDs across Texas take a utility’s service area into account when issuing the utility’s groundwater permits.  For those GCDs, nothing would change if House Bill 2249 becomes law.  This bill would require all other GCDs that regulate by acreage and/or tract size and do not consider service area to consider the utility’s service area.  The bill does this while still ensuring that this requirement does not interfere in any way with a landowner’s right to obtain a permit or drill a well.  Without recognizing a utility’s service area, the acreage-based approach to permitting has devastating effects on rural communities.  With only a small amount of land owned by the utility for its well site, utilities in this type of permitting scheme are required to obtain additional land or water rights at a high cost that is then passed on to consumers.  Worse, when a GCD ties production to an applicant’s contiguous acreage, utilities can find themselves unable to fully utilize their wells if adjacent landowners are unwilling to sell their land or lease their water rights. 


To balance the interests of utilities, their customers, and landowners within their service area, House Bill 2249 includes several safeguards to ensure that water utilities are not over-permitted and that landowner rights are protected.  First, GCDs cannot consider any of the utility’s service area that does not overlie the aquifer.  Additionally, the utility would not receive credit for any acreage within its service area that is already subject to another permit, and the utility’s permit will be reduced annually to subtract acreage assigned to a landowner permit issued after the utility’s permit.  Under the bill, utilities are prohibited from interfering with or protesting landowners’ requests to obtain their own permits.

 

House Bill 2249 is a reasonable compromise to the complex issue of allocating a managed resource among competing interests while keeping water rates reasonable for rural communities and ensuring that landowners’ property rights are not restricted.  House Bill 2249 does not create an unconstitutional taking as the Farm Bureau asserts.  It does not take or constrain the landowner’s right to drill a well, use the water or encumber the water.  It only allows the utility to use the water to serve these same landowners.  Landowner rights are recognized and are superior to the utilities’ authorization to use the water.  Requiring these utilities to acquire groundwater rights from its landowner customers will unnecessarily result in huge rate increases.

 

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