There's a lot of opinion in the U.S. Court's of Appeals' opinion in Stratta v. Roe, No. 18-50994 (May 29, 2020). Yes, the court reversed the district court's dismissal of a takings claim. But most of the opinion is devoted to the question of whether a Texas water conservation board -- an agency whose mission is to regulate surface water uses -- may take advantage of the State of Texas's 11th Amendment immunity (no, held the court). We recommend that part of the opinion to you, federal courts junkies.
But there's a couple of takings gems in there also. The case involved a challenge by a property owner who was (allegedly) treated by the water conservation board less generously than an (allegedly) similarly-situated municipality, resulting in the owner's inability to make use of its groundwater rights. (In short, a Pennsylvania Coal claim, where instead of coal being required to be left in the ground, it was water.) The district court dismissed for failure to state a claim and for lack of jurisdiction (the 11th Amendment issue).
After concluding that the owner's claims against the water conservation board are not barred by the State of Texas's federal court immunity, the court made short work of the district court's Williamson County dismissal. The Fifth Circuit rejected the conclusion that the takings claim was not ripe because the owner had not sought compensation via a state law inverse claim in a Texas court. Knick, and all that. Slip op. at 19-20. The Fifth Circuit also concluded that the board had made a final determination.
The court also reversed the district court's Burford abstention conclusion. For those of you who don't offhand recall the doctrine, Burford abstention is a comity doctrine, where the federal court declines to exercise jurisdiction because there are "difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case at bar." Slip op. at 21. That's a mouthful of mostly mushy concepts, but in the end, the Fifth Circuit concluded that the issues in the case (Texas water rights, federal constitutional takings and equal protection rights) mean no abstention:
The BVGCD is no Texas Railroad Commission, and the federal court should not have abstained from the constitutional issues raised by Fazzino. The claims do not delve into unduly complex issues of state law, the state concerns that are implicated are not overriding in light of the remedy sought, no state law would be usurped by a federal decision, and statewide processes or regulatory regimes would not be disrupted. The district court abused its discretion in deciding to abstain under Burford.
Slip op. at 24.
Having disposed of the procedural roadblocks, the court made short work of the failure to state a claim dismissal. The district court concluded that the plaintiff had not plausibly pleaded that it owned property because Texas law is "unsettled." The Fifth Circuit first noted that the water conservation district's argument on this issue was "a bright red herring." Slip op. at 24-25. The court held held that groundwater rights are "property" under established Texas law (Edwards Aquifer Auth. v. Day, 269 S.W.3d 814 (Tex. 2012)):
Fortunately, Texas law is not unsettled as to the landowner’s basic rights. The Texas Supreme Court plainly held in Day that a landowner’s property rights include the ownership of groundwater in place beneath his acreage, and such ownership right is subject to takings claims. The court stated at the outset that it would decide “in this case whether land ownership includes an interest in groundwater in place that cannot be taken for public use without adequate compensation guaranteed [by the Texas Constitution]. We hold that it does."
What is “unsettled” about Day’s interpretation of the common law and statutory rights of groundwater owners? Indeed, it is BVGCD, not Fazzino, that would “unsettle” Texas law by asking the federal court essentially to reconsider Day and dramatically reduce the constitutional rights of landowners to the groundwater in place.
Slip op. at 25-26 (quoting Day, 369 S.W.3d at 817).
Although it may be "challenging" to "assess, as the state supreme court did in Day, whether the groundwater scheme effectuated by BVGCS's Rules promulgated in December 2004 has resulted in a taking of Faxxino's interest," slip op. at 27, "[t]hat this task my be challenging is not the same as concluding it is infeasible."
In short, it might be hard, but not legally impossible: go litigate your takings claim, property owner.
Stratta v. Roe, No. 18-50994 (5th Cir. May 29, 2020)
