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Guitar Holding Company, L.P. v. Hudspeth County Underground Water

The water conservation district's transfer rules granted franchises to some landowners to export water while denying that right to others. As a result, the district's transfer rules exceeded the statutory authorization and were invalid. Texas Supreme Court, No. 06-0904.

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Argued December 5, 2007

The Texas Water Code generally delegates the management and control of groundwater production and use to local groundwater conservation districts, vesting them with broad regulatory powers. TEX. WATER CODE §§ 36.001-.304. When exercising these powers to limit groundwater production, local districts may protect existing wells and production by continuing “historic or existing use” to the extent possible under its comprehensive management plan. Id. § 36.116(b). The scope of this “historic or existing use” exemption and the extent to which a district’s rules may operate to preserve such use are at issue in this appeal.

The underlying rules here grandfather “historic or existing use” of groundwater in the district to an amount of water previously used during the relevant historic period without regard to the intended future purpose for that water. Thus, under the district rules, production from a grandfathered well, historically used to irrigate crops, can in the future be sold for transport out of the district as a preserved historic or existing use. The court of appeals upheld the district’s permitting scheme, concluding, in effect, that the district’s authority to preserve the “historic or existing use” of groundwater pertained only to the amount of water used in the past and not its purpose. 209 S.W.3d 146, 158-59. We conclude, however, that the amount of groundwater used and its beneficial purpose are components of “historic or existing use” and that the district thus exceeded its rule-making authority in grandfathering existing wells without regard for both. Accordingly, we reverse the court of appeals’ judgment and render judgment, declaring the district’s scheme for issuing permits for the transfer of groundwater out of the district invalid.

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