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Texas
Agriculture Archive
July 4, 2003
Water Leases
Be Careful How You Write Them...
The law as it pertains to groundwater leases may not be concrete, but one thing is crystal clear: A groundwater lease needs to be written carefully to protect everyone—and everything—involved. That's according to speakers at a Texas A&M University conference on buying, selling and exporting groundwater.
More than 400 landowners, geologists, engineers, bankers, groundwater district officials and other interested individuals gathered to hear information on groundwater leases, sales and exports. The event was presented at the George Bush Presidential Conference Center and by teleconference from locations in San Angelo, Amarillo, Uvalde, El Paso and Vernon.
Groundwater is critical for sustaining the Texas economy and lifestyle, said Dr. Ronald Kaiser, a professor of water law and policy with Texas A&M University and the Texas Agricultural Experiment Station.
An estimated 60 percent of the water used presently in Texas is groundwater, he said. Agriculture uses 80 percent of that groundwater, while 20 percent goes to municipal and other uses.
The state's population growth from 9 million in 1950 to 20 million today to an estimated 40 million in 2050 is expected to deplete even more of the state's groundwater supplies, he explained.
"Cities need to protect themselves from times of drought," Kaiser said.
To do so, they have increasingly been turning to groundwater. This means that cities are turning to rural areas and to landowners with proposals to lease or sell their water and move the water to cities.
And groundwater violates the rules of gravity, he said. "It runs uphill to cities, it runs uphill to money, and it runs uphill to politicians," Kaiser said.
No standard form of groundwater lease exists, said Ned Meister, director for commodity and regulatory activities with the Texas Farm Bureau.
"We recognized the law in this area was still developing," when the Farm Bureau began drafting a model lease for its members who are landowners, he said.
Groundwater rights are interests in real property, Meister said, and lessees probably have their own lease forms that protect their rights. In writing a lease, Meister said several assumptions are made:
•A lessor is one of several landowners in an area that overlies an aquifer with sufficient fresh water that would satisfy long-term requirements of a substantial user of the resource.
•One or more lessee groups will be attempting to acquire rights to the groundwater.
•A landowner has a reasonable amount of bargaining power and will spend time to negotiate with a prospective lessee.
Under Texas law, the state owns the surface water, while landowners own the water beneath their land, said Doug Caroom, a water lawyer in Austin.
Caroom said in the absence of a groundwater district, the rule of capture for groundwater applies. That states, "Texas landowners can pump unlimited quantities of water from beneath their land, without liability or harm to surrounding landowner wells."
However, to protect groundwater, state legislators passed legislation which allowed for the creation of groundwater districts by voters.
"You've (as voters) created these," Kaiser said.
Landowners, cities and districts can expect continued involvement of the legislature in groundwater issues and regulation, he said. Cities will continue to look to groundwater as an inexpensive source of water, and landowners, if the water is leased properly, can look to it as added income.
Sandra Burns, a water attorney and mediator in Dallas, said groundwater leases should meet the owners' needs to protect the surface while capturing and profiting from what is below the surface, or the groundwater. Groundwater leases should be scrutinized carefully to make sure everyone is treated fairly and the water is protected, she said.
Burns gave landowners some tips for negotiating a groundwater lease:
•Fair is a range. In other words, don't narrow the options too much.
•Be cooperative, but don't let your guard down.
•To avoid appearing arbitrary, express a rationale for your position.
•Making concessions will trigger the law of reciprocity.
•Don't get greedy.
•Read the language carefully and be sure you understand what you are signing.
Pick an attorney carefully, she said. Historically, water rights attorneys have specialized in surface water. However, one set of laws applies to surface water and another applies to groundwater, and an attorney who knows about one won't necessarily know about the other.
She suggested landowners interested in leasing or selling their water form a group and hire a local attorney, and that attorney can call experts for specifics and training.
