When Texas oil tycoon T. Boone Pickens proposed a massive scheme to acquire, market, and sell Texas groundwater, many water wonks began questioning if groundwater marketing is legal. (For the latest on the Pickens water scheme and its legal issues, see Dr. Michael Campana’s WaterWired blog.) Regardless of the merits of Pickens’ proposal, it raises the fundamental question of whether groundwater marketing is legal under the diverse state laws that apply to groundwater rights.
I was fortunate to work with a superb University of Michigan law student, Dean Baxtresser, who recently published an excellent note “Antiques Roadshow: The Common Law and the Coming Age of Groundwater Marketing” in the Michigan Law Review that provides a complete analysis of the legality of groundwater marketing in the United States. A short summary won’t do it justice, but here is the abstract:
“Groundwater law in the United States is ill suited to deal with the issue of groundwater marketing. As freshwater shortages become more common with increasing population and a warming climate, scholars and business people are touting water markets as the solution to conservation and distribution, as well as a source of hefty profits. T. Boone Pickens—the famous oil tycoon of Texas—has turned this concept into reality with his attempt to exploit the groundwater of the Ogallala Aquifer in the Texas Panhandle for thirsty Texas cities. Despite the looming water shortages, however, states have not adapted their laws to deal with the marketing issue. As a result, the legality of groundwater marketing like the Pickens Plan is currently decided by outdated laws that were never meant to deal with groundwater marketing. In general, groundwater marketing is only legal where the law permits off-tract use—an old distinction that bears no relationship to the policy issues that must be raised by state legislatures to seriously address upcoming severe water shortages. This Note examines the various legal doctrines in the United States governing groundwater and determines that, whether for or against water marketing, states should affirmatively address the policy issues presented by the potential of marketing by updating their laws so that they can deal with the new paradigm of high-value groundwater in a thirsty age.”
Baxtresser also takes aim at recent debates over using the public trust doctrine to guard against groundwater marketing:
“The current interpretation of the public trust doctrine has no bearing on the legality of groundwater markets in any given state. Based on the logic the courts have used to extend the doctrine, it is unlikely to be extended to groundwater without redefining what the doctrine protects (an unlikely proposition). Were the doctrine to apply to groundwater based on its effect on surface water, the legality of groundwater marketing would be unaffected. Were the doctrine applied to all groundwater, the legality would remain unaffected because of the unwillingness of courts to wreak economic havoc on groundwater users. As a result, states will be unable to rely on the public trust doctrine as a source of law that will decide the issue of groundwater marketing for them.”
So here’s the bottom line: The legality of groundwater marketing depends on common law doctrines that vary by state and were created long before massive groundwater water marketing was even possible. The public trust doctrine does not apply to groundwater and does not prohibit water marketing, at least as currently applied by courts. (I reached a similar conclusion regarding the public trust doctrine and groundwater in my recent article on bottled water). So whether you are for or against groundwater marketing, it’s clear that the issue should be addressed directly through state legislation that considers both private property rights and public interests in water resources, and not left to courts applying common law doctrines in ways never intended.