A landmark ruling by the Texas Supreme Court last month that landowners own groundwater "in place" will benefit shale producers by facilitating the sale of the water, according to Kathleen Hartnett White, a distinguished senior fellow and director at the Texas Public Policy Foundation in Austin, TX.
"I think the decision is a benefit to shale because it will make it easier for landowners to sell water to users like shale producers. It's not a sea change, but it answers a key question" on water rights, White said.
The court decision resolves an issue that has been unsettled for 100 years. It clarifies that a landowner owns the surface water rights and can sell the groundwater to someone else, she said. Since the case involves only a state issue, she said she doesn't foresee the decision being appealed to the U.S. Supreme Court.
White said the ruling would have been important even if Texas was not going through a drought and wasn't a leading developer of shale gas.
In the Feb. 24 opinion, the Texas high court ruled that a landowner owns the groundwater under his land "in place" as a property right that cannot be taken for public use without just compensation guaranteed by the Taking Clause of the Texas Constitution.
"We decide in this case whether land ownership includes an interest in groundwater in place that cannot be taken for public use without adequate compensation guaranteed by...the Texas Constitution. We hold that it does," the Texas Supreme Court said. "We affirm the judge of the court of appeals and remand the case to the district court for further proceedings."
The decision is likely to have wide-ranging effects for landowners' rights in Texas, according to White. But she doubts the decision will have ramifications in other states.
The lawsuit was brought by two landowners, Burrell Day and Joe McDaniel. They challenged the regulation of Edwards Aquifer Authority, which they said had denied them the use of the groundwater below their lands and that it had amounted to a taking of private property without just compensation.