Ownership of Texas Surface Water

Ownership of Texas Surface Water

OWNERSHIP AND USE OF TEXAS SURFACE WATER

When is surface water “State Water” and when is a Permit required?

Surface water in the State of Texas is the property of the state. Although there are exceptions to this rule, generally speaking, the majority of surface water in the state is considered “state water” that can be made available for private and public use through a statutory appropriation process and the issuance of water right permit.

Under Texas’s statutory appropriation process, the state may grant precisely defined rights to specific users of “state water” evidenced by either a water right permit or certificate of adjudication. The right granted to each user of “state water” consists of a right to use a specific amount of water, from a specified body of water, by a diversion at a defined location, and for a specific use at a particular location. The issuance of water rights by the state allows individual landowners and entities to appropriate “state water” for municipal, agricultural, industrial, or other statutorily approved uses. In order to understand how the statutory appropriation process works, individuals and entities seeking to appropriate surface water for private or municipal use must first determine whether or not the water they seek to appropriate is “state water.” If the water is state water, the appropriation must first be approved by Texas Commission on Environmental Quality (the “TCEQ”).

1. A water right permit is required prior to the appropriation of “State Water.”

State water is defined by Section 11.021 of Texas Water Code as:

(a) The water of the ordinary flow, underflow, and tides of every flowing river, natural stream, and lake, and of every bay or arm of the Gulf of Mexico, and the storm water, floodwater, and rainwater of every river, natural stream, canyon, ravine, depression, and watershed in the state is the property of the state.

(b) Water imported from any source outside the boundaries of the state for use in the state and which is transported through the beds and banks of any navigable stream within the state or by utilizing any facilities owned or operated by the state is the property of the state.

Understanding the term “navigable stream” plays a significant role in determining whether or not surface water is state water. If the water is located within the banks of a navigable stream, more often than not the water qualifies as state water. The term “navigable stream” is defined by Texas civil case law and the Texas Natural Resource Code as a stream that retains an average width of thirty feet from the mouth, measured from cut bank to cut bank, in which water flows and has a “permanent source of supply.” Navigable streams are held by the state in trust for the public and are, therefore, subject to water appropriations for private and municipal water use.

When determining whether or not a stream is “navigable,” it should be noted that water does not necessarily need to be present or flowing year round in order to satisfy the “permanent source of supply” requirement. As an example of this application, the Texas Supreme Court in Hoefs v. Short, held that Barilla Creek, a stream that only flows one to twenty-two times per year, depending on rainfall, was a “navigable stream” subject to water appropriations because the term “permanent source of supply” did not take into account whether or not the stream was flowing year round but whether the water supply could be utilized for appropriation for agriculture and other beneficial uses (the utility of which being determined on a case by case basis); the key term being whether or not the water can be appropriated for a beneficial use. In applying the aforementioned definition to other applications, Texas courts have also found that for a water course to be considered a “permanent source of supply,” whether the water flow is intermediate or permanent, the water supply must be more than simply a low area in a pasture or a typical west Texas draw; the channel in which the water flows must be the result of flowing water over an extended period of time.

2. When is a water right permit not required for the use of surface water?

Although the definition of “state water” may seem to include all forms of surface water, whether located in a permanent water course or not, Texas does recognize some exemptions where circumstances may allow for the appropriation of surface water by a landowner without the need for a water right permit.

A. Diffused Surface Water Exception:

Diffused surface water is one such example where surface water can be appropriated for private use without the need for a water right permit. Water present on the surface of land that has not yet entered a navigable stream is called diffused surface water. Generally speaking, diffused surface water is rainfall runoff or flood water that has been trapped in upland areas after flood waters have receded. The best example of diffused surface water is rainwater that has been captured by a landowner in rainwater collection barrel adjacent to one’s land or home. Diffused surface water belongs to the owner of the soil; i.e., the property, until that water enters a navigable stream and becomes state water. Upon entry into a navigable stream, diffused surface water is legally transformed from the property of the landowner to public property.

B. Developed Water and Water Reuse Exception:

Developed water, or water that has already been made available for use through artificial means, such as imported surface water or groundwater pumped to the surface, can be reused by the owner of that water; i.e. the landowner, without the need for a water right permit. Put another way, water that has been legally reduced to the possession of the land owner and still remains in the physical control of the landowner can be subject to further sale or reuse by that landowner so long as the water does not escape the landowner’s control and does not rejoin a navigable stream. An example of this would be groundwater that is used by a landowner for a particular purpose on the surface, and, rather than allowing that groundwater to reenter a stream or runoff the property after it has been used, the owner recaptures the water and repurposes it for another beneficial use. Once the water escapes the owner’s physical control and rejoins a watercourse, his rights to that water terminate because the landowner does not own the corpus of the water, only the right of use.

The application of the “developed water” exception is becoming more and more applicable to water uses in the oil and gas industry, specifically the reuse of frac water in well drilling operations. Due to the ever decreasing sources of available freshwater for use by oil and gas operators in well drilling operations, many operators are developing ways in which water from one frac use can be repurposed, treated, and reused in other well operations. Not only does the reuse and recycling of frac water alleviate many of the issues associated with acquiring or purchasing freshwater in areas suffering from the effects of extreme drought, but repurposing water also alleviates the need to dispose of frac water in saltwater disposal wells; many of which are being scrutinized recently due to record increases in seismic activity in and around shale plays in north Texas.

C. Domestic and Live Stock Exception:

Surface water used for domestic and livestock purposes is generally exempt from state water rights administration. Section 11.142(a) of the Texas Water Coe states a person may construct a dam or reservoir up to two hundred acre-feet in capacity for domestic and livestock purposes on their property without obtaining a permit. A person who temporarily stores more than the maximum two hundred acre-feet allowed under §11.142(a) is not required to obtain a permit for the excess storage in the dam or reservoir so long as that person can demonstrate that no more than two hundred acre-feet of water has been stored in the dam or reservoir on average in any 12-month period. Put another way, a landowner’s exempt stock pond will not lose its exempt status in the event the stock pond temporarily exceeds two hundred acre-feet of water capacity due to heavy rains. Note, the “Domestic and Live Stock Exemption” allowed for in TWC §11.142 does not apply to commercial operations.

D.Fish and Wildlife Habitat Exemption:

Similar to the “Domestic and Live Stock Exemption” discussed above, TWC §11.142(b) also allows for the impoundment of up to two hundred acre-feet of water on a person’s property for fish and wildlife purposes so long as the property on which the dam or reservoir is to be constructed is a qualified “open-space land” as defined by Section 23.51 of the Texas Tax Code. Once again, this exemption does not apply to commercial operations, such as a fish farm.

E. Use of Exempt Water for Nonexempt Purposes – PERMIT REQUIRED:

If the owner of water in a dam or reservoir exempt under TWC 11.142(a) or (b) desires to use that water for a nonexempt purpose; e.g. commercial use, the owner must first obtain a permit to do so from the Texas Commission on Environmental Quality (the “TCEQ”). The owner may obtain a regular water right permit, a seasonal permit, or a permit for a term of years. An example of a use falling under this requirement would be the owner of a livestock stock pond under §11.142(a) who also wants to sell some of that water to oil and gas operators on adjacent properties for use in oil and gas development operations.

Gregory Klipp, Attorney at Law

October 2016

DISCLAIMER: The foregoing information is not legal advice and is general in nature and not applicable to all situations. The reader should not rely on these general statements and should consult with knowledgeable persons before taking any actions.

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