Uphold Dismissal of Groundwater Takings Claim, Group Says

By Lars-Eric Hedberg

Oct. 16 — A federal appeals court should uphold the dismissal of a takings claim made by Texas landowners after their groundwater applications were denied, an aquifer authority wrote.

In its Oct. 14 appellee brief, the Edwards Aquifer Authority urged the U.S. Court of Appeals for the Fifth Circuit to affirm, without oral arguments, the district court's dismissal of the landowners' due process, equal protection and takings claims.

“No action taken by the EAA in response to their late-filed permit applications violated their civil rights and limitations had already run on any takings claim caused by the Act’s earlier imposed restrictions on their property,” the authority wrote.

The Edwards Aquifer Act allowed existing users who had beneficially used water from the aquifer prior to June 1, 1993, to obtain an initial regular permit from the authority but only if they filed an application by Dec. 30, 1996.

The landowners filed their applications in March 2012, and the authority denied them in May 2014. They alleged in a state court lawsuit filed in August 2014 that the authority violated the Texas Constitution and the Fifth and Fourteenth Amendments of the U.S. Constitution and sought over $1 million in compensation and attorneys' fees.

District Court Granted Dismissal Motion 

The authority removed the case to the U.S. District Court for the Western District of Texas, which granted the authority's motion to dismiss for failure to state a claim (GG Ranch, Ltd. v. Edwards Aquifer Auth., 2015 BL 255526, W.D. Tex., No. 14-CV-00848, 6/2/15).

It held that the takings claims asserted by GG Ranch Ltd. and other plaintiffs began to run on the statutory deadline, Dec. 30, 1996, and are therefore time-barred by the state's 10-year statute of limitations. It also found that the landowners didn't allege they were treated differently from similarly situated groundwater users and the regulatory scheme doesn't violate due process rights.

Property Right Recognized in 2012 

In their Sept. 11 appellant brief, the landowners said that they have a property right to groundwater under Edwards Aquifer Authority v. Day, 369 S.W.3d 814, 2012 BL 51815 (Tex. 2012), where the Texas Supreme Court ruled that an overlying landowner has absolute title in severalty to the water beneath its land, subject to the common law rule of capture and the state's police power.

The landowners acknowledged that the relevant statute of limitations for a regulatory taking is 10 years, under state law. They argued, however, that they had no property right in groundwater until the Day decision in 2012, and the takings claim could not accrue until the authority denied their applications in 2014.

The landowners also argued that post-Day groundwater owners and oil and gas owners “are similarly situated for the purpose of an equal protection analysis.” Moreover, they claimed groundwater users outside of the authority's service area are treated differently, as well as historical and non-historical users, according to the brief.

As to their alleged due process violations, the landowners contended that once the authority denies an application there is no process in the Edwards Aquifer Authority Act to compensate landowners for their deprived property rights.

Right to Water Restricted 

The authority wrote in its Oct. 14 brief that the landowners' common law right to capture groundwater was restricted as of Dec. 30, 1996, and the limitations on their takings claim began to run at that time.

“Texas courts have held that a cause of action for an as-applied regulatory taking arising from the EAA Act is barred after the expiration of the ten-year period of limitations to acquire land by adverse possession,” the authority wrote.

Moreover, Day has no effect on the accrual of the statute of limitations, according to the authority. It did not create a vested property right; it recognized that right, meaning that the landowners had the ability to file a takings claim on Dec. 30, 1996.

As to the equal protection violation, the authority said that the landowners failed to show how the authority treated them differently from anyone else who applied for a permit or that the authority intentionally discriminated against them.

Fifth Circuit Urged to Affirm Dismissal 

Lastly, the authority wrote that the Fifth Circuit should affirm the dismissal of the due process claim on the ground that the act directed the authority to deny applications filed after the statutory deadline.

Glenn J. Deadman, San Antonio, and Taylor & Ruhnke PC, Hondo, Texas, represents the landowners.

Kemp Smith LLP, Austin and El Paso, represents the authority and Roland Ruiz, general manager for the authority.

To contact the reporter on this story: Lars-Eric Hedberg in Washington at lhedberg@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com