The History of the Rule of Capture Doctrine in Texas, Part 2

pump3-300x200or – “When everybody owns everything, nobody will take care of anything.” Will Durant

GROUNDWATER MANAGEMENT AREAS – A STEP BEYOND GROUNDWATER CONSERVATION DISTRICTS

A principal problem underlying the 1949 and 1985 GCD amendments was the failure to recognize that the flow of groundwater is not controlled by political, but by hydrogeologic, boundaries. Furthermore, there was no requirement that GCDs overlying a common aquifer develop a cooperative set of management plans. In most cases, there was no evidence that GCDs intended to develop plans that would have led to co-operation or to minimal departures from the Rule of Capture (ROC). Most GCDs, in fact, seem to have been committed to preserving the doctrine under the guise of “local control.”

As noted above, many GCDs were formed on the basis of political— not hydrogeological — boundaries. Although the districts have been encouraged to work with each other to produce coherent management plans, prior to 2005, it was often the case that there was little interaction among the districts and that many GCDs pursued objectives which were not in sync with those of neighboring districts. To rectify shortcomings of the GCD system, the Legislature, in 2005, adopted House Bill 1763, which required joint planning among the districts within designated Groundwater Management Areas (GMAs) that cover all of the State’s major and minor aquifers. The Legislature specified that TWDB was to use aquifer boundaries or subdivisions of aquifer boundaries in its delineation of each GMA. TWDB proposed 16 groundwater management areas, with boundaries which reflect those of the major hydrogeologic areas. (Mace, R.E., R. Petrossian, R. Bradley, and W.F. Mullican, III, A Streetcar Named Desired Future Conditions: The New Groundwater Availability for Texas; presented at the 7th Annual The Changing Face of Water Right in Texas, State Bar of Texas, May 18-19, San Antonio, TX. Under the provisions of the 2005 law, representatives of GCDs are required to meet at least once every year to conduct joint planning and to review groundwater management plans and accomplishments in their respective GMAs. The intended long-term effect is to get GCDs to work together under rules which will lead to a better understanding of hydrogeological conditions and the availability of groundwater throughout the State. From this, it is expected that coherent sets of regional management plans will be developed to ensure that groundwater resources will be available to residents of Texas through the year 2060.

ECONOMIC IMPLICATIONS OF THE RULE OF CAPTURE  … A TRAGEDY OF THE COMMONS

Was anything ever to be gained by embracing the ROC as the principal groundwater doctrine of Texas? Two factors often cited in favor of the ROC are: 1. The ROC encourages economic development through maximum utilization of a source or sources of groundwater; and 2. The ROC entails minimal government involvement in the operations of water wells.  It should be noted that “maximum utilization” is not synonymous with “optimal utilization.” Microeconomic theory emphasizes optimal over maximum utilization.  Optimal utilization embodies the concept of economic efficiency, as measured by marginal cost/profit. Maximum utilization embodies neither.

With respect to the exploitation of nonrenewable natural resources (e.g. gold, oil, uranium), this is best explained by Harold E. Hotelling’s theory of the mine (The Economics of Exhaustible Resources, in The Journal of Political Economy, v. 39, pp. 137–175 (1931)), in which Hotelling postulates that optimal resource exploitation is achieved when the marginal profit of the last extracted unit is zero. Although Hotelling’s theory is most often applied to mining operations, it is reasonable to extend the theory to an exhaustible or potentially exhaustible resource, such as groundwater. With regard to the second point above, there is nothing in economics to suggest that unfettered exploitation of a natural resource such as groundwater is economically efficient or amounts to sensible resource management. With respect to groundwater, “minimal government involvement” might be required to prevent over-exploitation, depletion, contamination, and, insofar as groundwater can be considered to be a “public good,” promotion of the health, safety, and welfare of the public.

 

Spindletop
Spindletop oilfield

Factors which might be cited as reasons to amend or replace the ROC with a different groundwater rights doctrine are the following:

1. The potential for overproduction and depletion;

2. Inefficient use and devaluation of the resource; and

3. The ROC ignores the needs of future generations.

Points 1 and 2 are well-established consequences associated with the aggressive exploitation not only of water but of other natural resources that can be considered to form a commons (e.g., petroleum reservoirs, forests, rangeland).   A prima facie example of points #1 and #2 is found in the petroleum industry of Texas, particularly in the over-exploitation of early giant fields such as Spindletop (near Beaumont, Texas).  Discovered in January 1901, Spindletop (see photo on the right) attracted thousands of speculators and producers to Beaumont, Texas. Each producer sought to extract as much oil as possible from his small lease, under the assumption that other producers would drain “his” oil if he did not produce it first. The result was a proliferation of closely spaced drilling rigs, each producing from the same reservoir. The effect of the production frenzy was rapid depletion of reservoir pressure and rapidly decreasing output.  Initial production was as much as 100,000 barrels of oil per day, and total production in 1902 was 17,500,000 barrels (47,945 barrels per day).  By 1904, total production was 3,650,000 barrels   (10,000 barrels per day).  With regard to the production of oil at Spindletop:

Mineral rights to the oil under the leases worked according to the old English “rule of capture.” Under this principle, anybody who had property or a lease anywhere over the pool of crude had the right to suck it out of the ground as fast as he could.

and

With little understanding of the underground pressures of natural gas and water, the producers extracted too much oil too quickly. Water seeped into the reservoir. The flow of oil forced to the surface by pumps slowed to a trickle.

The original production area at Spindletop was reduced to a minor oil field by 1909.

Point #3 is a much-discussed and debated matter involving commitments of one generation to its successors. Given the opportunity to exploit aquifers, petroleum reservoirs, forests, and rangelands, it is reasonable to inquire whether the current generation has an obligation to generations yet to come to ensure that adequate resources will be available or that public lands will not be degraded from overuse.

DEFINITION OF A COMMONS 

A “commons” is any resource which is used as though it belongs to all. An aquifer would easily qualify as a commons. If anyone can use a shared resource simply because one wants or needs to use it, then one is exploiting a commons.  A commons can be destroyed by uncontrolled use.

Garrett Hardin described factors that underlie the destruction or degradation of a commons in his essay The Tragedy of the Commons .  (Refer to Science, Vol. 162, No. 3859, Dec. 13, 1968.)  Hardin’s essay is developed around a parable about the grazing of animals on open pastureland. The owners of the animals are motivated to increase their personal wealth by adding one head of stock at a time to their respective flocks. However, each animal added to the total stretches the carrying capacity of the land. The degradation attributable to each additional animal is small, yet if all owners pursue this strategy, the carrying capacity will be exceeded and the property severely damaged or destroyed. It is not necessary for all users of a commons to behave as described by Hardin. The destruction of the resource can occur if only one user attempts to dominate the commons.

Comanche%20Pool%201938

COMANCHE SPRING

The photo above is of the old pool at Comanche Spring (Fort Stockton, Texas), taken in 1938.  Comanche Spring was the third largest spring in Texas. It was also a source of irrigation water for at least 90 years, and a rare oasis in the semi-arid region of Trans-Pecos Texas. Average daily discharge was estimated to be 21 million gallons.  Comanche Spring ceased to flow more 50 years ago, after Clayton Williams, Sr. developed a well field to supply water to his crops.  Williams’ well field dried up the spring and captured the groundwater that had been used for decades to irrigate more than 6,000 acres of farmland near Fort Stockton. Comanche Spring stands out as a prime example of the destruction of a commons, as well as a basis for reasonable regulation of groundwater pumpage AND the assignment of well-defined and enforceable rights to groundwater in Texas.

One such example of damage to a commons involving the production of water is the matter of Comanche Spring, located at Fort Stockton, Texas (refer to the photo at the beginning of this post). Comanche Spring was a source of water for animals and humans, and the substantial discharge (estimated to be as much as 21 million gallons per day Mgd) made the spring a prime hunting ground for Indians and an ideal location for an army post and a stagecoach stop. The spring also provided water for irrigation, and, in later years, it was the site of a large pool in a municipal park. The spring, however, ceased to flow as a result of pumping to support irrigation, principally by one farmer. In A Primer for Understanding Texas Water Law,  Timothy L. Brown describes the facts and legal issues at the core of the matter.  The Comanche Spring case (Pecos County Water Control and Improvement District No. 1 v. Williams, 271 SW2d 503 (Tex.Civ.App–El Paso 1954, writ ref’d n.r.e.) is prominent in Texas water law. Brown’s account of the matter is reproduced below:

At Fort Stockton, Texas, there were large, prolific springs, named Comanche Springs. The springs provided a water supply for numerous irrigators in the Pecos County Water Control and Improvement District, which upon development, supplied water to irrigate over 6,000 acres.

Up gradient from the springs was land owned by Clayton Williams (Sr.) …. At the time the case arose, Texas was in the early stages of the Great Drought of the 1950s and Williams needed water for his crops. He developed a well field and began to pump water from the formation. The pumping resulted in drying up the springs, which cut off the water supply for the irrigators in the district. Litigation followed. The irrigators asserted that they and their predecessors had owned the location and flow of the spring and that they had used the water beneficially for ninety years. By virtue of this, they alleged, they acquired the right to be protected in the subsurface source of the water. They also plead in the alternative that if they did not own the source of the water supply, they were nevertheless entitled to a fair share of the source of supply. The gist of this argument was that they had a correlative right to the water. They also alleged that the spring was not fed by percolating groundwater, but rather by a well-defined underground stream in which they acquired rights by virtue of claims filed with the Board of Water Engineers. The remedy they sought was an injunction against Williams’ pumping.

Williams countered by filing exceptions to the plaintiffs’ petition. He asserted that the water was percolating groundwater and since no waste had been alleged, he was entitled to a judgment on the basis of the East case. He also asserted that the plaintiffs’ allegation about a well-defined underground stream was insufficient because the source, location, beds and banks and course of the so-called well-defined channel were not provided. The trial court sustained Williams’ exceptions. The irrigators appealed.

The El Paso Court of Civil Appeals affirmed the trial court judgment. The court held that Williams absolutely owned the water beneath his land and the plaintiffs had no correlative rights in it. As to the general allegation about the well-defined stream, Williams’ exceptions were well taken because there was no evidence to support the proposition. As to the failure of the spring when Williams pumped, that did not prove the existence of a well-defined underground channel.

On appeal to the Texas Supreme Court, the plaintiffs attempted to avoid the effect of the East case with an interesting argument. The argument was that the percolating groundwater referred to in the East case did not include water moving in well-defined underground strata. Percolating groundwater, according to modern hydrology, is divided into two classes: first, “diffused percolating water,” defined as slowly moving water which cannot be traced directly as the source of a natural stream, and, second, “percolating water feeding a natural water course,” defined as water which supplies a surface water stream. The former definition was what was used to define percolating groundwater at common law, so East did not apply.

The significance of this argument was, if the Supreme Court adopted the definitions, East would have been stripped of its significance. This is because the facts about most groundwater are known or subject to being known. Thus, once groundwater reached a known water sand, it would no longer be percolating water subject to private ownership as provided by East. This comports with the Attorney General’s earlier opinion.

The Supreme Court declined to take the case and did not write an opinion. By declining to take the case, we can only infer that the Supreme Court apparently rejected the proposition.

The Comanche Spring case stands out as an example of the destruction of a commons for several reasons:

  1. By 1954, hydrogeology had advanced enough since the formulation of Darcy’s law in 1856 that the fundamental principles of hydrostratigraphy and the flow of groundwater on local to subregional scales were well understood.
  2.  By 1954, the effects of pumping on water levels were not mysterious, many thanks to the work of hydrogeologists and civil engineers with the Water Resources Division of the United States Geological Survey.
  3.  Arguments that Comanche Spring was fed by “percolating water” (as understood in the East case) instead of “water moving in well-defined underground strata” (as made on appeal) were clearly absurd. All that was required to counter the claims of Williams’ attorneys was an investigation of the hydrostratigraphy of the area, measurements of water levels in wells between Williams’ property and properties downstream of the spring, and evaluation of drawdown and recovery from pumping tests.
  4. Williams’ pumping caused water levels to fall below the discharge point of the spring, and the lower water levels led to the cessation of discharge. This amounted to as much as 21 Mgd of captured flow to support Williams’ farm and to the loss of water to support irrigation on 6,000 acres that had been sustained by spring flow for many years. This effectively gave Williams a monopoly over a commons that had served a great many people for at least 90 years. 5. The cessation of flow also destroyed a rare water resource in west Texas and denied residents of Fort Stockton and the surrounding area the recreational and aesthetic equivalent of the springs of Balmorhea (Reeves County) or Barton Springs (Travis County).

I have not attempted to calculate the economic loss stemming from the destruction of what might be referred to as the Comanche Spring Commons. Suffice it to say that the losses were and remain significant, particularly in the form of lost agricultural production and incomes, and losses to the City of Fort Stockton associated with the recreational and aesthetic values of the spring. It is far easier to calculate economic damage caused by the loss of irrigation water, than it is to place a dollar value on the loss of a recreational and aesthetic resource to a city, such as Comanche Spring. Imagine Zilker Park and Austin without Barton Springs, and then ask yourself what is the value of the springs at the park to the City of Austin and to Travis County.

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