Water is an increasingly valuable commodity in Texas and is gaining prominence in real estate transactions. The ownership and use of water depends on location. Most surface water is owned by the state, while most underground water is privately owned and can be conveyed or reserved.
Source: Real Estate Center at Texas A&M University By: Judon Fambrough
Texas faces a water crisis. As demand rises and supply dwindles, the use and ownership of water weighs on the minds of politicians, developers, consumers, landowners and attorneys. In November 2013, Texas voters approved Proposition 6, a constitutional amendment allowing the removal of $2 billion from the state’s “rainy day fund” to finance water projects for the next 50 years. In the past, minerals played a key role in real estate transactions. Now, water shares the attention. Do landowners own or have the right to use the water located on and under their property? Where does water fit into scheme of property rights? The answer to these and other questions depends, for the most part, on location.
Texas recognizes four categories (or locations) of water, two on the surface and two in the ground. The two on the surface are diffused surface water and water in a watercourse. The two below the surface are percolating groundwater and water in an underground stream or lake. While the state owns most surface water, most, if not all, groundwater is privately owned.
Diffused Surface Water
Texas case law describes diffused surface water as moisture spread over the earth’s surface after a rainstorm or snowmelt, following no defined course. It retains this status as long as it does not reach a watercourse or natural impoundment such as a stream or lake, or has not evaporated or soaked into the ground. If diffused surface water is captured, it belongs to the landowner. Rain running off a roof exemplifies a good source of privately owned water.
Liability for diverting surface water onto another’s property varies. If diffused surface water is diverted and damages a neighbor’s property, the landowner is liable. However, if the water is in a watercourse, no liability arises. Location is critical
Water in a Watercourse
Texas owns the surface water in a watercourse. Case law defines a watercourse as a channel with a defined bed, visible banks and an intermittent flow (supply) of water. The channel can be reasonably defined and the flow seasonal. The bed and banks can be slight, imperceptible or even absent in some cases. The channel may be dry for long periods.Texas statutes relegate the ownership of water in a channel and other confinements to the state. Section 11.021 of the Texas Water Code (TWC) describes it this way: “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.
While landowners do not own this water, they have the right to use it for limited purposes. If a flowing stream is located on or abuts the property, landowners may use the flow for household and domestic purposes, including watering of livestock, according to a concept known as riparian water rights.
The basic principle of riparian use is that each owner has the right to use the water flowing over his or her land, in its natural current, without diminution or obstruction. The use must be beneficial and reasonable but may not inflict undue injury on downstream users.
Impounding Surface Water
Typically, landowners desire to impound the water in a stream or gully to create a pond or lake for livestock and/or recreational purposes. Because this water is state owned, is a permit required? The answer depends on the size of the proposed impoundment. A property owner may construct a dam or reservoir on his or her property without a permit as long as the normal storage capacity does not exceed 200 acre feet (Section 11.142,TWC). The water may be used for domestic and livestock purposes only. No commercial use is allowed without a permit.
Larger impoundments face more restrictions. Owners must meet the dam safety requirements specified in section 12.052 of the TWC unless the maximum capacity is less than 500 acre feet, the impoundment lies outside the boundaries of the corporate limits of a municipality and the county has a population of less than 350,000, among other things.
To make any commercial use of state water, either impounded or in a watercourse, requires a permit. Permitting is beyond the scope of this article except to say permits are based on prior surface owner? The answer depends on the wording of the reservation. Typically, the deed recites that the seller conveys the surface and reserves (retains) the minerals or oil, gas and other minerals
If groundwater is not mentioned in the reservation, then it belongs to the surface owner.
The rule of capture governs the production of percolating groundwater just as it does oil and gas. The rule permits the drainage of groundwater (and oil and gas) from underneath a neighbor’s property (and vice versa) as long as it occurs from a legal location. The legal location for groundwater depends on whether a groundwater district has jurisdiction.
If there is jurisdiction, the groundwater district dictates the minimum distance from a property line. Likewise, the groundwater district may impose pumping limits. If there is no groundwater district, there are no required distances from a property line for a water well location and no pumping limits. Production from a legal location does not shield the landowner from liability. Texas law still imposes damages if the drainage:
•negligently causes subsidence,
•causes waste or
•maliciously injures a neighbor.
Water in Underground Streams and Lakes
While all groundwater is presumed to be percolating and privately owned, groundwater located in an underground stream or lake belongs to the state. However, so far the presumption of percolating groundwater has not been overcome. Section 36.002 of the TWC supports this position with this language: “(T)he Legislature recognizes a landowner owns the groundwater belowthe surface of the landowner’sland as real property.” Taken literally, the statement precludes the state from ever owning any groundwater in an underground stream or lake. However, even though the groundwater may be privately owned, Section 36.002 goes on to say that the use of the groundwater is subject to a groundwater district’s well spacing and pumping limits.
Lisa E. Priest is a Palestine,Texas REALTOR® / Real Estate Agent with Picket Fence Realty, Inc.
You can call her via phone or text at 903-948-3343 or email Lisa@rentpalestine.com