## Facts

- Texas created the Edwards Aquifer Authority (EAA) and adopted a permitting scheme limiting withdrawals from the Edwards Aquifer based largely on historical use.
- Glenn and JoLynn Bragg, commercial pecan growers, owned and developed two orchards over the aquifer: the Home Place Orchard and the D’Hanis Orchard.
- The Braggs developed the orchards expecting to use groundwater beneath their land for irrigation as the trees matured.
- After the permitting program took effect, the Braggs applied for withdrawal permits for both orchards.
- The EAA denied the Home Place permit application for insufficient proof of qualifying historical use.
- The EAA granted the D’Hanis application only in a reduced amount, less than the Braggs claimed was needed for full commercial irrigation.
- The Braggs reduced orchard operations (including removing trees and cutting limbs) and purchased supplemental water, increasing annual irrigation costs by thousands of dollars.
- The Braggs sued the EAA and its general manager (official capacity), alleging the permit denial and limitation effected a compensable taking under the Texas Constitution.
- The trial court found a taking as to both orchards and awarded monetary compensation, using a methodology the EAA challenged on appeal.

## Issues

1. Whether denial and limitation of groundwater withdrawal permits under the Edwards Aquifer Act, as applied to the Braggs’ orchards, effected a compensable regulatory taking under the Texas Constitution.
2. Whether the EAA (and its general manager in his official capacity) was a proper defendant for a takings claim arising from the permitting decisions.
3. Whether the takings claims were time-barred, and when the claims accrued.
4. Whether the alleged taking was categorical/per se or instead a non-categorical regulatory taking requiring a Penn Central–type analysis.
5. Whether the trial court applied the correct measure of just compensation.

## Decision

- The court affirmed the trial court’s determination that application of the Act to the Braggs’ properties resulted in a compensable taking.
- The court rejected the contention that only the State could be sued and held the EAA could be liable for a taking arising from its permitting actions.
- The court held the claims accrued when the Act was applied through the specific permit denial/limitation, not at enactment, and therefore were not barred by limitations.
- The court declined to treat the permit denial/limitation as a categorical taking and analyzed the claim as a non-categorical regulatory taking.
- The court reversed the compensation award and remanded for recalculation because the trial court used an improper damages methodology.

## Legal Principles

- Landowners have a constitutionally protected property interest in groundwater in place beneath their land, subject to reasonable regulation.
- Regulatory-takings claims involving groundwater permitting restrictions are evaluated under a Penn Central–type framework, considering: (1) economic impact, (2) interference with reasonable investment-backed expectations, and (3) the character of the governmental action.
- A takings claim accrues when the regulation is applied to the claimant in a concrete, final way (such as a permit denial or material permit limitation), not necessarily when the statute is enacted.
- A governmental entity that administers and enforces a regulatory permitting scheme and makes the challenged permitting decisions may be a proper defendant in an as-applied takings claim.
- Just compensation for an as-applied regulatory taking is measured by the diminution in value of the regulated real property (here, the land as a commercial pecan orchard) comparing value with and without the regulatory restrictions, not by valuing “water rights” as a separable asset.

## Conclusion

The court held that the EAA’s denial of a groundwater permit for one orchard and significant limitation of a permit for the other, under a historical-use permitting regime, effected a compensable regulatory taking as applied to the Braggs; however, it reversed and remanded because the trial court did not calculate compensation by properly measuring the land’s before-and-after value under the restrictions.


Edwards Aquifer Auth. v. Bragg, 421 S.W.3d 118 (Tex. App.—San Antonio 2013)