Edwards Aquifer Auth. v. Bragg

• Decision Date: 13 November 2013
• Docket Number: No. 04–11–00018–CV.,04–11–00018–CV.
• Citation: 421 S.W.3d 118
• Parties: The EDWARDS AQUIFER AUTHORITY, and Roland Ruiz in his official capacity as General Manager of the Edwards Aquifer Authority, Appellants/Cross Appellees v. Glenn and JoLynn BRAGG, Appellees/Cross Appellants.
• Court: Texas Court of Appeals

421 S.W.3d 118

The EDWARDS AQUIFER AUTHORITY, and Roland Ruiz in his official capacity as General Manager of the Edwards Aquifer Authority, Appellants/Cross Appellees

v.Glenn and JoLynn BRAGG, Appellees/Cross Appellants.

No. 04–11–00018–CV.

Court of Appeals of Texas, San Antonio.

Nov. 13, 2013.

Ken Slavin, Deborah Clarke Trejo, Mark N. Osborn, Kemp Smith L.L.P, Austin, TX, for Appellant.

J. Ken Nunley, The Nunley Firm, LLP, Boerne, TX Christian J. Ward, Yetter Coleman LLP, Schuyler Marshall, Thompson & Knight L.L.P., Paul M. Terrill, III, Hazen & Terrill, P.C., Ryan Parker Bates, Austin, TX Andreq J. Aelvoet, Hondo, TX, for Appellee.

Sitting: CATHERINE STONE, Chief Justice, SANDEE BRYAN MARION, Justice, REBECA C. MARTINEZ, Justice.

OPINION

Opinion by: SANDEE BRYAN MARION, Justice.

In an opinion and judgment dated August 28, 2013, we reversed the trial court's judgment and remanded for further proceedings consistent with our opinion. On September 26, 2013, appellees filed a motion for rehearing. We deny the motion; however, we withdraw our opinion and judgment of August 28, 2013, and issue this opinion and judgment in their place.

This appeal presents numerous issues regarding the regulation and permitting of the limited water resources within the Edwards Aquifer region of South Texas. Appellants Glenn and JoLynn Bragg are commercial pecan growers who were denied a water permit for one of their pecan orchards and granted a limited permit for another of their pecan orchards. The Braggs successfully sued Edwards Aquifer Authority (“the Authority”) and Roland Ruiz in his official capacity as General Manager of the Authority for an alleged taking of their property and obtained a judgment awarding them damages.

The Authority and Ruiz now appeal asserting: (1) the Braggs sued the wrong party because the State's mandate of the Authority's actions precludes a takings claim against the Authority; (2) the Braggs' claims are barred by the statute of limitations; (3) no compensation is owed for any taking of the Braggs' Home Place Orchard; (4) the trial court incorrectly determined the amount of compensation owed for any taking of the Braggs' D'Hanis Orchard; (5) the Authority's permitting decision did not cause a taking of the Home Place Orchard or the D'Hanis Orchard; and (6) if it prevails, it is entitled to attorney's fees. In their cross-appeal, the Braggs contend the trial court erred (1) in calculating the compensation owed to them on both takings claims and (2) by concluding the Authority's denial of their permit applications did not amount to per se or categorical taking. We conclude the trial court properly determined the implementation of the Act resulted in a takings of the Braggs' property. However, because the trial court erred in quantifying the compensation owed to the Braggs, we reverse and remand.

BACKGROUND

The Braggs own two properties that are located over the Edwards Aquifer. In 1979, the Braggs purchased the sixty-acre Home Place Orchard, which is their homestead and a commercial pecan orchard. Soon after purchasing the property, the Braggs cleared the land and planted 1,820 pecan seedlings. In 1980, the Braggs drilled an Edwards Aquifer well and installed an irrigation system on the Home Place property. In 1983, the Braggs purchased the forty-two-acre D'Hanis Orchard, which since 1979 had been planted with 1,500 pecan trees and is a commercial pecan orchard. Initially, the D'Hanis trees were adequately irrigated from shallow, non-Edwards Aquifer wells on neighboring property. Eventually this water source became inadequate and the Braggs obtained a permit to drill an Edwards Aquifer well from the only regulatory authority in existence at the time, the Medina County Groundwater Conservation District. The Braggs completed this well on the D'Hanis property in 1995.

In 1993, the Texas Legislature enacted the Edwards Aquifer Act (the “Act”) to manage the aquifer and to sustain the diverse economic and social interests dependent on the aquifer. Act §§ 1.01, 1.06; ¹Barshop v. Medina Cnty. Underground Water Conservation Dist., 925 S.W.2d 618, 623–24 (Tex.1996). To carry out its conservation mandate in the face of anticipated increases in withdrawal of water from the aquifer and the potentially devastating effects of a drought, the Legislature created the Edwards Aquifer Authority. See Act § 1.02; Barshop, 925 S.W.2d at 623–24;see also Edwards Aquifer Auth. v. Chemical Lime, Ltd., 291 S.W.3d 392, 394 (Tex.2009). The Authority is a conservation and reclamation district authorized by Texas Constitution articleXVI, section 59, and is “a governmental agency and a body politic and corporate,” and a “conservation and reclamation” district and a political subdivision of the State of Texas. Barshop, 925 S.W.2d at 624;see Act § 1.02. The Act empowers the Authority to implement a comprehensive regulatory scheme to control and manage the use of the Edwards Aquifer, and regulate groundwater withdrawals from the aquifer. See Act §§ 1.11, 1.14; Barshop, 925 S.W.2d at 624. The Legislature also directed the Authority to manage groundwater withdrawals from the aquifer by a permit system.² Act § 1.15. The Authority is responsible not only for permitting groundwater use but for “protect[ing] terrestrial and aquatic life,” specifically, “species that are designated as threatened or endangered under applicable federal or state law.” Id. §§ 1.01, 1.14(a)(7).

In the Act, the Legislature established an aquifer-wide cap on water withdrawals by nonexempt wells of 450,000 acre-feet of water per year through 2007 and 400,000 acre-feet per year thereafter. Id. § 1.14(b), (c). It authorized the Authority to review and increase the cap if after appropriate study, implementation of water management and drought planning strategies, and consultation with state and federal agencies, the Authority determines that additional water is safely available from the aquifer. Id. § 1.14(d); see Barshop, 925 S.W.2d at 624. The permit system established by the Legislature gives preference to “existing users,” which the Act defines as people who have withdrawn and beneficially used underground water from the aquifer on or before June 1, 1993. Act § 1.03(10); Barshop, 925 S.W.2d at 624. Under the Act, the Authority may grant initial regular permits (“IRPs”) only to existing users who properly file a “declaration of historical use,” and who can establish, by “convincing evidence,” beneficial use of underground water withdrawn between June 1, 1972, and May 31, 1993. Act §§ 1.16(a), (b), (d).

The Act entitles an existing user to a permit allowing the user to withdraw an amount of water equal to the user's maximum beneficial use of water without waste during any one calendar year of the historical period, unless the aggregate total of such use throughout the aquifer exceeds the 450,000 acre-foot cap.³Id. § 1.16(e). If this occurs, the Legislature has directed that the Authority proportionately adjust the amount of water authorized for withdrawal under the permits to meet the cap. Id. This downward adjustment is limited in two circumstances: (1) an existing irrigation user must receive a permit of not less than two acre-feet a year for each acre of land the user actually irrigated in any one calendar year during the historical period; and (2) an existing user who operated a well for three or more years during the historical period must receive a permit for at least the average amount of water withdrawn annually during the historical period. Id. Subject to certain restrictions, permitted water rights may also be sold or leased. Id. §§ 1.22, 1.34.

Although legislatively decreed to become effective on September 1, 1993, due to several lawsuits, the Act did not become effective until 1996. See Chemical Lime, Ltd., 291 S.W.3d at 393 (“As it happened, the Authority began operations the day we issued our opinion [in Barshop ] and thus became effective.”). The Act allows existing users to “apply for an initial regular permit by filing a declaration of historical use of underground water withdrawn from the aquifer during the historical period from June 1, 1972, through May 31, 1993.” See Act § 1.16(a). The application requires applicants to “[s]tate the amount of Edwards Aquifer water that you claim as your maximum beneficial use without waste during any one calendar year of the historical period (June 1, 1972 through May 31, 1993) in acre-feet....” The Braggs applied for IRPs for their Home Place and D'Hanis orchards in which they specified their use of groundwater for 1996; a period well after the end of the historical period. For the Home Place Orchard, the Braggs claimed as their maximum beneficial use 228.85 acre-feet of water, and they stated in the application the following: “Well also supplies water for house use. Irrigation water is used to water the pecan orchard and the Historical Use should not be applicable because trees require more water each year as they reach maturity.” For the D'Hanis Orchard, the Braggs claimed as their maximum beneficial use 193.12 acre-feet of water.

As a result of their use of water during the historical period of 1972 through 1993 on the Home Place Orchard, the Braggs were granted a permit for 120.2–acre feet of Edwards Aquifer water per year. Because the Braggs had no historical use on the D'Hanis Orchard, that permit application was denied. On November 21, 2006, the Braggs sued the Authority for an alleged taking of their property and for violation of their federal civil rights. The suit was removed to federal court, where the federal court dismissed the Braggs' civil rights claims and remanded the takings claims back to state court.

In state court, the Braggs moved for a partial summary judgment on liability for the takings claims. The Authority also moved for a partial summary judgment on various legal issues. The trial court denied the Authority's motion and granted the Braggs' motion, concluding the...