Last year a divided Waco Court of Appeals decided that a district court properly dismissed a dispute between private parties over the ownership of certain water rights for lack of subject matter jurisdiction. The trial court ruled, and a majority of the court of appeals concurred, that the TCEQ had exclusive jurisdiction to determine the ownership of water rights and that plaintiffs failed to exhaust their administrative remedies when they failed to pursue an administrative appeal of the agency’s determination. Justice Gray’s dissent took the opposite view: the courts have exclusive jurisdiction to adjudicate ownership of water rights, whereas the TCEQ’s jurisdiction stops at tracking recorded ownership.
No doubt noting the split on the court of appeals, SCOTX has accepted review in Pape Partners, Ltd, Glenn R. Pape, and Kenneth W. Pape v. DRR Family Properties, LP and Louise W. Champagne (No. 21-0049). The dispute arose from a 2014 land purchase, in which the Papes acquired irrigation water rights recognized by the state in certain certificates of adjudication (COAs). The sellers had previously obtained a judgment under the Texas Water Rights Adjudication Act affirming their authorized use of permitted water for irrigating an additional 250 acres that was subsequently purchased by the defendant, DRR. When the Papes attempted to record their acquisition of the irrigation water rights, TCEQ notified DRR and other potneitally interested landowners that they may own an interest in those rights. DRR responded by filing its own change of ownership form. TCEQ ultimately determined that DRR owned a portion of the rights and changed its records to reflect that ownership.
The Papes unsuccessfully sought to overturn the TCEQ’s decision but did not file an administrative appeal. Instead, they filed suit in district court seeking a declaration that they owned all the water rights on the purchased tract, including the 250 acres at issue. They also asserted claims against DRR for trespass to try title, adverse possession, and to quiet title. DRR moved to dismiss for lack of subject matter jurisdiction, arguing that the Papes should have filed an administrative appeal and exhaust their remedies before filing suit. The trial court granted the motion. The Papes appealed.
The court of appeals affirmed over Justice Gray’s dissent. In short, the court of appeals ruled that the Legislature, by virtue of Art. 16, § 59, Texas Constitution, and various provisions of the Texas Water Code, vested TCEQ with exclusive jurisdiction over all matters concerning water rights as part of a “pervasive regulatory scheme.” Consequently, the Papes failure to pursue a statutory remedy before filing suit deprived the district court of jurisdiction. In response to the Papes’ alternative claim that delegating such authority to TCEQ violated the separation of powers clause (Art. 2, § 1), the court of appeals noted that Art. 16, § 59, which grants the Legislature general authority to “pass all laws that may be appropriate” to the conservation and development of natural resources, including water resources, specifically gives the TCEQ the authority to determine ownership of water rights even though the legislative scheme does not explicitly provide for that. In his dissent Justice Gray pointed out that the TCEQ is simply not set up to determine ownership and title disputes between private parties. Otherwise, the agency would have to get involved in all manner of litigation to establish chain of ownership, such will contests, adverse possession cases, contract disputes. When the Legislature, according to Justicde Gray, granted TCEQ with authority over the “adjudication” of water rights, it simply meant the authority to “regulate the conservation of . . . surface water . . . by determining the amount of use, place of use, purpose of use, point of diversion, rate of diversion, and in the appropriate situation, included the acreage to be irrigated.”
This case will undoubtedly attract significant attention across the board. SCOTX has scheduled oral argument for March 24 at 9 a.m.