A legal battle in Texas pits investor Kyle Bass’ companies against a groundwater conservation district over access to valuable East Texas groundwater.
DALLAS — In Texas, water is the new oil.
It is becoming more scarce, more valuable and now pitting neighbors, lawmakers, and Dallas investor Kyle Bass against one another.
The dispute over who has the right to access billions of gallons of East Texas groundwater has now moved to federal court.
Two companies tied to Bass, Redtown Ranch Holdings LLC and Pine Bliss LLC, are suing the Neches and Trinity Valleys Groundwater Conservation District and its board members. The companies claim the district illegally imposed a moratorium that blocks them from seeking permits to explore and develop groundwater beneath two ranches in Anderson and Henderson counties.
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The lawsuit, filed July 7 in the Eastern District of Texas, describes the case as a civil rights and property-taking dispute. It seeks a court order lifting the moratorium or requiring the district to compensate the companies for what they argue is an unconstitutional taking of their property.
“The point of the lawsuit was that the government under our state and federal Constitution cannot take your property without compensating you for it,” attorney Jeffrey Tillotson, who represents Bass’ companies, told WFAA.
Groundwater district pauses new permits
The groundwater district adopted the temporary moratorium May 21. It stops the acceptance and processing of new nonexempt drilling, operating, and water-transfer permit applications while the district updates its rules and management plan.
According to the lawsuit, the moratorium is scheduled to remain in effect through Oct. 1 or until the district approves its rule changes, whichever occurs later.
The moratorium includes exceptions for some pending applications, permit renewals, replacement wells, and other actions that would not increase groundwater production.
Bass’ companies argue those exceptions were written in a way that leaves them as the only applicants effectively blocked from moving forward. The lawsuit alleges the moratorium was aimed specifically at Redtown Ranch and Pine Bliss.
Tillotson said the larger issue is whether Texas landowners have the right to access the groundwater beneath their property.
“The main legal principle here for people is that you own the water under your land and have since the state was founded, and it’s in our Constitution,” Tillotson said. “So he has the right to that water.”
WFAA reached out to the Neches and Trinity Valleys Groundwater Conservation District for comment but did not receive a response.
Applications call for 43 wells
Redtown Ranch and Pine Bliss submitted applications to drill a total of 43 wells across two East Texas ranches.
Redtown Ranch covers about 7,200 acres, primarily in Anderson County. Pine Bliss includes roughly 4,300 acres in Henderson County, according to the federal complaint.
Tillotson said the proposed wells are exploratory and intended to determine the location and amount of groundwater beneath the properties.
“This is just to explore, to see what water is there,” Tillotson said. “He can’t pump it out. He can’t sell it to anyone.”
Tillotson said drilling an exploratory well and obtaining permission to pump water are separate steps. He said the companies would have to use the information collected during the exploratory process to file another application stating how much groundwater they want to pump.
“I do want to point out that this is not to start pumping water,” Tillotson said. “That comes only after you drill your exploratory wells, find out what you’ve got, and you make an application then to pump water.”
Opponents question whether wells of the proposed size are necessary only to study the aquifer.
The applications list 16-inch well casings and varying pumping capacities. One application lists a potential capacity of 1,300 gallons per minute, or more than 683 million gallons a year.
State Rep. Cody Harris, R-Palestine, said a typical test well is about 2 inches in diameter.
“Mr. Bass said, ‘No, no, no, don’t worry. These are just test wells. We just want to go and find out how much water is there,” Harris said. “Well, you don’t need a 16-inch casing well size to go down and figure out how much water is there.”
Tillotson said the number and size of the proposed wells reflect the amount of land being surveyed, not the amount of water the companies would eventually be allowed to pump.
“One explanation and one reason why you have these many wells being drilled is you’re looking all over to see where the water is, what water is underneath your property,” Tillotson said.
Concerns about neighboring water supplies
Harris agrees that groundwater is a private property right, but said that right becomes more complicated when pumping on one property affects water beneath surrounding land.
“Anyone should be able to access the water that is underneath their ground,” Harris said. “The problem arises when you start stealing your neighbor’s water.”
Harris said the amount of water involved could lower groundwater levels far beyond the proposed well fields.
“He’s going to be taking water out from underneath his neighbors, going 50, maybe 100 miles away from the center of those well fields,” Harris said. “That’s how much water we’re talking about here.”
Harris said the moratorium does not target Bass and gives the groundwater district time to determine how much water can safely be removed. He said conservation districts have a legal responsibility to ensure their rules protect the long-term condition of the aquifers they oversee.
Harris also said he plans to pursue legislation that would give neighboring landowners a clearer right to sue if large-scale pumping removes water from beneath their property.
“If someone tries to take your water out from underneath you, you should be able to sue for that taking,” Harris said.
Residents protest proposed drilling
Residents have packed public meetings to oppose the proposed wells. Many rely on the same aquifer for their homes, farms, ranches and businesses.
“If this goes through, we will not have water to survive here,” one resident said during a previous public meeting. “You will kill the communities. You will kill these counties.”
Tillotson disputes claims that Bass’ plans would drain the region’s groundwater supply. He said the companies have not drilled the proposed wells or pumped any water and therefore cannot be responsible for existing problems with neighboring wells.
“We have not started drilling or pumping any water,” Tillotson said. “So it’s impossible for what we’re doing to have drained anyone else’s water because we haven’t done anything.”
Tillotson acknowledged Bass could eventually seek permission to sell the water. He said Texas landowners are allowed to use their property and natural resources for economic benefit, subject to the state’s regulatory process.
“You are allowed under our Constitution to draw some of that water,” Tillotson said. “You can use it for yourself. You can use it for a business on your property, and you can sell it.”
The lawsuit asks the court to temporarily and permanently block the district from enforcing the moratorium against Bass’ companies. It also seeks compensation, damages, legal fees and other relief. The complaint does not specify how much money the companies are seeking.
At the heart of the case is a question that could affect landowners across Texas: Whose property rights prevail — Bass’ or his neighbors’?