On August 28, 2013, the Texas Fourth Court of Appeals held that groundwater permit restrictions imposed by the Edwards Aquifer Authority (the "Authority") on landowners constituted a regulatory taking. The landowners, Glenn and JoLynn Bragg, were commercial pecan growers who brought suit against the Authority after they were denied a water permit for one of their pecan orchards, and granted a limited permit for another orchard.

Applying the Texas Supreme Court’s recent opinion in Edwards Aquifer Authority v. Day, 369 S.W.3d 814 (Tex. 2012), the Court of Appeals observed that landowners have absolute title to the water in place beneath their lands. To reach its conclusion that a taking had occurred, the Court weighed factors set forth by the U.S. Supreme Court for assessing regulatory takings in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978): the economic impact on the Braggs caused by the groundwater regulations, the groundwater regulations’ interference with the Braggs’ investment-backed expectations, and the nature of regulation in general. The Court went on to determine that the proper compensation for the taking was the difference in the value of the Braggs’ land before and after the groundwater restrictions were applied to the orchards. The case was remanded to the trial court for a calculation of the damages. A copy of the court’s opinion is available here.