Can a Texas groundwater district amend a historic-use permit to change the purpose or place of water use?

Plain-English summary

Groundwater in Texas is managed largely by local groundwater conservation districts, which Water Code chapter 36 gives broad authority to regulate, conserve, and protect groundwater through rules and permits. When a district adopts rules limiting how much groundwater can be produced, it may preserve "historic or existing use," meaning the production that an owner can document during a relevant past period, to the maximum extent practicable. The question put to the AG was what a district can and cannot do when an owner wants to amend one of those historic-use permits.

The dispute arose from the Texas Supreme Court's 2008 decision in Guitar Holding. The Kinney County Groundwater Conservation District proposed new rules for amending historic and existing use permits, and landowners disagreed about how far Guitar Holding reached. Some read it to lock a historic-use permit to its original purpose; others read it narrowly, as only about whether water moved out of the district counted as a new use. A Texas House committee chair asked the AG to sort this out.

The AG concluded that Guitar Holding is not limited to out-of-district transfers. As the Supreme Court later restated in Edwards Aquifer Auth. v. Day, a district's discretion to preserve historic or existing use is tied to both the amount and the purpose of the prior use. So changing the purpose of the water produced under a historic-use permit is a new use, even when the water stays inside the district. Whether a given amendment application has to be handled as a new-use application turns on the facts, and that determination is for the district to make in the first instance, subject to judicial review.

On the second question, the AG concluded that a district may accept an owner's surrender of part of the right to produce under a historic-use permit while keeping protection on the remainder, and the owner can then seek a new permit for the released portion by meeting the same requirements as anyone else. But the AG cautioned that a district cannot use a single hybrid application to give a historic-use holder a leg up on the new-use portion. Chapter 36's uniformity requirements mean new-use requests have to be treated the same whether they appear in an amendment application or a fresh permit application.

Currency note

This opinion was issued in 2018. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant for those who asked

The legislator who requested the opinion: The AG concluded that under Guitar Holding, a change in the purpose of water use under a historic-use permit is a new use even inside the district, that whether an amendment must be treated as a new-use application is a fact question for the district subject to court review, and that a district may accept a partial surrender of historic-use rights but must apply its new-use rules uniformly.

Groundwater conservation districts (as the opinion described their role): The opinion placed the fact determination, whether to treat an amendment as a new-use application, with the district in the first instance, while making clear that chapter 36's uniformity requirements bar rules that advantage historic-use holders seeking new-use approval over other new-use applicants.

Landowners and permit holders: The opinion explained that a historic-use permit is tied to both the amount and the purpose of the prior use, so a purpose or place change is a new use; a holder may surrender part of a historic-use right and apply for a new-use permit on the released portion under the same requirements as any other applicant.

Common questions

Does Guitar Holding apply only when water leaves the district?
No, the AG concluded. Although the facts in Guitar Holding involved out-of-district transfers, the Supreme Court did not limit its holding to those facts, and a purpose change inside the district is still a new use.

Can a historic-use permit be amended to change the purpose or place of use?
A change in purpose makes it a new use, the AG explained. Whether the district must treat the amendment application as a new-use application depends on the particular facts and is for the district to decide first, subject to judicial review.

Can an owner give up part of a historic-use right and keep the rest protected?
Yes. The AG concluded a district likely has discretion to accept a surrender of a portion of the right while maintaining protection on the remainder, and the owner can seek a new permit for the released portion.

Can a district give historic-use holders an edge when they ask for a new use?
No. The AG concluded chapter 36's uniformity requirements likely preclude district rules that give a historic-use holder an advantage on new-use approval that other new-use applicants do not have.

Background and statutory framework

Chapter 36 grants a district broad authority to manage, conserve, and protect groundwater through rulemaking and permitting (Tex. Water Code §§ 36.001-.457; Guitar Holding Co. v. Hudspeth Cty. Underground Water Conservation Dist. No. 1, 263 S.W.3d 910, 912 (Tex. 2008)). District rules should protect property rights and balance conservation and development to meet the state's needs (Tex. Water Code § 36.0015(b)), and a district may adopt rules limiting groundwater production according to specified criteria (§ 36.101(a)). When it adopts such rules, a district may preserve historic or existing use to the maximum extent practicable consistent with its management plan and permitting requirements (§ 36.116(b); § 36.1071; § 36.113). Chapter 36 defines evidence of historic or existing use in terms of groundwater beneficially used without waste during a relevant period set by district rule (§ 36.001(29)). A district may impose more restrictive conditions on new permit and amendment applications to increase use by historic users if the limitations apply uniformly, bear a reasonable relationship to the management plan, and are reasonably necessary to protect existing use (§ 36.113(a), (c)(3), (e)).

In Guitar Holding, the Texas Supreme Court held that a district's discretion to preserve historic or existing use is tied to both the amount and the purpose of the prior use, so groundwater historically used for irrigation that is transferred out of the district no longer qualifies for a historic-use permit and must be treated as a new use applied uniformly (263 S.W.3d at 912-18). The Court reiterated that reasoning in Edwards Aquifer Auth. v. Day, 369 S.W.3d 814, 836 (Tex. 2012), confirming that both the amount of water and its purpose are normal terms of a production permit and of any permit preserving historic or existing use.

Citations

Statutory provisions:

• Tex. Water Code §§ 36.001-.457; 36.001(29); 36.0015(b); 36.101(a); 36.1071; 36.113(a), (c)(3), (e); 36.116(b)

Cases:

• Guitar Holding Co. v. Hudspeth Cty. Underground Water Conservation Dist. No. 1, 263 S.W.3d 910, 912 (Tex. 2008)
• Edwards Aquifer Auth. v. Day, 369 S.W.3d 814, 836 (Tex. 2012)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0216
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2018/kp0216.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

September 26, 2018

The Honorable Tracy O. King Opinion No. KP-0216
Chair, Committee on Agriculture and Livestock
Texas House of Representatives Re: Whether a groundwater conservation
Post Office Box 2910 district may amend a historic or existing use
Austin, Texas 78768-2910 permit in specific circumstances
(RQ-0217-KP)

Dear Representative King:

    You ask about a groundwater conservation district's authority to amend a historic or

existing use permit in specific circumstances. [1] To provide context for your questions, we begin
by reviewing the groundwater permitting scheme in chapter 36 of the Water Code.

    Chapter 36 grants a district "broad authority to manage, conserve, and protect groundwater

resources through rulemaking and permitting." Guitar Holding Co. v. Hudspeth Cty. Underground
Water Conservation Dist. No. 1, 263 S.W.3d 910, 912 (Tex. 2008); see generally TEX. WATER
CODE §§ 36.001-.457 (chapter 36). District rulemaking should "protect property rights [and]
balance the conservation and development of groundwater to meet the needs of this state." TEX.
WATER CODE § 36.0015(b) (stating districts' purpose). To that end, a district may adopt rules that
limit groundwater production according to specified criteria. Id. § 36.101(a). When a district
adopts such limiting rules, it "may preserve historic or existing use [2] . . . to the maximum extent
practicable consistent with the district's management plan" and permitting requirements. Id.
§ 36.116(b); see also id. §§ 36.1071 (requiring a district to adopt a groundwater management plan),
36.113 (stating permit requirements).

    Districts must require permits for all "drilling, equipping, operating, or completing of wells

or for substantially altering the size of wells or well pumps," except when statutes provide
otherwise. Id. § 36.113(a). A district may require a permit or permit amendment application to
state "the nature and purpose of the proposed use and the amount of water to be used for each
purpose." Id. § 36.113(c)(3). Also, a district may prohibit permit holders from changing how they
withdraw or use groundwater unless the district approves the change in a permit amendment. Id.
§ 36.113(a), (c)(3). Section 36.113 authorizes a district to require applicants for new permits to
meet more restrictive requirements than holders of a historic use permit if applied uniformly:

            The district may impose more restrictive permit conditions on new
            permit applications and permit amendment applications to increase
            use by historic users if the limitations:

                   (1) apply to all subsequent new permit applications and
                   permit amendment applications to increase use by historic
                   users, regardless of type or location of use;

                   (2) bear a reasonable relationship to the existing district
                   management plan; and

                   (3) are reasonably necessary to protect existing use.

Id. § 36.113(e).

    In Guitar Holding, the Texas Supreme Court considered the permissible scope of the

exception that a district's rules may make for historic or existing uses. Guitar Holding, 263 S.W.3d
at 912. The groundwater conservation district in that case granted three types of permits: (1) a
validation permit for historic users, (2) a new operating permit, and (3) a permit to transfer water
out of the district. Id. at 914. The validation permit for historic or existing uses gave the owner
the right to produce according to the amount of irrigation that occurred during a prior period but
without regard to the applicant's proposed use of water to be produced. See id. The rules allowed
both historic use permit holders and new operating permit holders to obtain another permit to
transfer the water they had a right to produce out of the district, although the holder of a new
operating permit had no guarantee of water availability. Id. Some owners argued that the statutory
requirements for a historic or existing use permit limited the amount of production but did not
restrict the proposed use of water to be produced. Id. at 915. The Court concluded otherwise,
explaining that under the statutes, "[a] district's discretion to preserve historic or existing use is
. . . tied both to the amount and purpose of the prior use." Id. at 916. The Court decided that under
the statutes, when groundwater historically used for irrigation is transferred out of the district, it
no longer qualifies for a historic or existing use permit, and the transfer must be treated as a new
use subject to the requirements applicable to all new uses. Id. at 917-18. Because all new uses
must be treated uniformly, the Court concluded that the district rules unlawfully gave preferential
transfer rights to holders of historic or existing use permits. Id. at 918.

    You state that when the Kinney County Groundwater Conservation District proposed new

rules for amending historic and existing use permits, various landowners filed responses
disagreeing about the scope of the Court's decision in Guitar Holding. Request Letter at 4. You
inform us that some landowners contend that the opinion "restricts the authorized use of a historic
or existing use permit to its historical purpose of use." Id. Others argue, you tell us, that Guitar
Holding concerned only "whether groundwater transferred out of the district was a new use
requiring a new permit," and that the opinion does not resolve whether a historic or existing use
permit may be amended to allow other in-district uses provided the historic volume of production
remains unchanged. Id. (emphasis omitted).

    In light of this dispute, you ask: "Following the Supreme Court's ruling in Guitar Holding,

can a 'historic or existing use' permit be amended to change the purpose of use or place of use?"
Id. at 1. Although the particular controversy in Guitar Holding involved out-of-district transfers,
the Court did not limit its holding to those facts. A later opinion by the court reiterated:

           In Guitar Holding Co. v. Hudspeth County Underground Water
           Conservation District, we rejected the argument that a district's
           discretion in preserving "historic or existing use" was limited to the
           amount of water permitted. Rather, we said,

                   the amount of groundwater withdrawn and its
                   purpose are both relevant when identifying an
                   existing or historic use to be preserved. Indeed, in the
                   context of regulating the production of groundwater
                   while preserving an existing use, it is difficult to
                   reconcile how the two might be separated. . . . [B]oth
                   the amount of water to be used and its purpose are
                   normal terms of a groundwater production permit
                   and are likewise a part of any permit intended to
                   "preserve historic or existing use." A district's
                   discretion to preserve historic or existing use is
                   accordingly tied both to the amount and purpose of
                   the prior use.

Edwards Aquifer Auth. v. Day, 369 S.W.3d 814, 836 (Tex. 2012). Thus, under Guitar Holding, a
change in the purpose of the proposed use of water to be produced under a historic or existing use
permit is a new use, even if the new use would occur within the district. See generally Guitar
Holding, 263 S.W.3d at 912-18. Whether a district must treat an application for an amended
permit as an application for a new-use permit will depend on the particular facts and is a matter
for the district to determine, in the first instance, subject to judicial review. See id. (holding that
applications to transfer linked to an existing-use permit were nevertheless applications for a new
use); TEX. WATER CODE § 36.113 (stating a district's authority to approve permits and permit
amendments).

    You also ask whether it is "permissible to amend a permit for 'historic or existing use' to

authorize a different purpose of use or place of use but remove the historic use protections for the
portion of the permit authorizing a different purpose of use or place of use[.]" Request Letter at

1. The answer depends on the kind of amendment or permit that you contemplate. A district has
   broad regulatory powers within the bounds of its discretion as circumscribed by the statutes.
   Guitar Holding, 263 S.W.3d at 912. Its discretion includes the authority to promulgate "rules
   limiting groundwater production . . . to provide for conserving, preserving, protecting, and
   recharging of the groundwater . . . or prevent waste." TEX. WATER CODE § 36.101(a). A court
   would likely conclude that a district has sufficient discretion to accept an owner's surrender of a
   portion of the right to produce under a historic or existing use permit, while maintaining protection
   on the remainder. And a holder could qualify for a new permit for the released portion by meeting
   the same requirements that any other owner must satisfy to obtain a permit for a new use.

   You suggest, however, that you envision a single hybrid application that, while maintaining
   

   historic or existing use protections for a portion of the owner's rights to produce, seeks approval
   of a new use for the remainder. Request Letter at 4-5. A district must apply its new-use
   requirements uniformly to all requests for new uses, whether the request appears in an application
   to amend a historic or existing use or in an application for a new use permit. See Guitar Holding,
   263 S.W.3d at 918. Therefore, a court would likely determine that the uniformity requirements in
   chapter 36 of the Water Code preclude district rules that would give an advantage to a historic or
   existing permit holder who seeks new use approval that is not available to other new use permit
   applicants. See id.; TEX. WATER CODE § 36.113(e).

                                 SUMMARY
   
                 Under the Texas Supreme Court's opinion in Guitar Holding
         Co. v. Hudspeth County Underground Water Conservation District
         No. 1, a change in the purpose of the proposed use of water to be
         produced under a historic or existing use permit is a new use, even
         if the new use would occur within the district. Whether a district
         must treat an application for an amended permit as an application
         for a new-use permit will depend on the particular facts and is a
         matter for the district to determine, in the first instance, subject to
         judicial review.
   
                  A groundwater conservation district may accept a surrender
         of a portion of rights to groundwater under a historic or existing use
         permit and allow the holder to retain the remaining rights not
         surrendered. A holder of a historic or existing use permit who
         surrenders a portion of rights subject to the permit may seek a new
         permit for a new use. A court would likely determine that the
         uniformity requirements in chapter 36 of the Water Code preclude
         district rules that would give an advantage to a historic or existing
         permit holder who seeks new use approval that is not available to
         other new use permit applicants.
   
                                        Very truly yours,
   
                                        KEN PAXTON
                                        Attorney General of Texas
   

JEFFREY C. MATEER
First Assistant Attorney General

BRANTLEY STARR
Deputy First Assistant Attorney General

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

WILLIAM A. HILL
Assistant Attorney General, Opinion Committee

[1] See Letter from Honorable Tracy O. King, Chair, House Comm. on Agric. & Livestock, to Honorable Ken Paxton, Tex. Att'y Gen. at 1 (Apr. 5, 2018), https://www.texasattorneygeneral.gov/opinion/requests-for-opinions-rqs ("Request Letter").

[2] Chapter 36 defines "[e]vidence of historic or existing use" as "evidence that is material and relevant to a determination of the amount of groundwater beneficially used without waste by a permit applicant during the relevant time period set by district rule that regulates groundwater based on historic use." TEX. WATER CODE § 36.001(29).