THE ROUTE INTO THE WILDERNESS southeast of El Paso does not, at first glance, give the impression of a road to riches. A dirt track crosses a cattle guard and heads into the desert, just a few steps from Interstate 10. A cold wind is hurrying out of the west, but the waist-high creosote brush is so rigid that it takes no notice. The brutal climate has bleached most of the color from its leaves, so that what is left is the most godforsaken hue of green imaginable.
The last thing that would occur to someone driving down this desolate road, where the only other sign of civilization is an occasional beer bottle or discarded tire, is that people would covet this parched land for its water. But they do. It is part of the largest tract of state-owned land in far West Texas. A Midland-based company called Rio Nuevo, Ltd. has a controversial proposal on the table to lease state lands in the region—around 355,000 acres in all—from the General Land Office, after which the company will drill for water and, if it can find a buyer, sell it for profit. And Rio Nuevo is not alone. Throughout West Texas, and as far east as Interstate 35, water is at last fulfilling the mid-twentieth century prophecy that it will be more valuable than oil—the most precious commodity, and the easiest way to get rich, in Texas.
If the Texas Legislature had known about this barren land way back in 1840, it might have had second thoughts about adopting the common law of verdant England regarding underground water. It's called the rule of capture, and it means that a landowner can pump as much water as he wants for whatever purpose he desires. In the patois of waterspeak, a water well is known as a straw in the ground, and the biggest straw will gulp the most water. The problem is that some straws can be very big indeed. In 1991 a catfish farm over the Edwards Aquifer swallowed 43 million gallons a day, enough to provide for the needs of a town of 195,000 people. Four years later, Ozarka tapped into Roher Spring, in Henderson County, west of Tyler, as a source for bottled water, overcoming a lawsuit and fierce local opposition.
Today the biggest straw belongs to Texas cities, more and more of which will be in dire need of water by 2030. That sounds like a long time, but it takes many years to find a new source of water and to be able to deliver it to homes and businesses. Ideally, a city would like to have a dependable fifty-year supply of water. Few do. The fast-growing area in Dallas's far northern suburbs will need more water within ten to twenty years. El Paso, San Antonio, and the northeast Austin suburbs all face the prospect of shortages. Lubbock is in competition with farmers and ranchers for water from the Ogallala Aquifer. The border is in a pickle because Mexico isn't fulfilling its obligation to release water into the Rio Grande. Crisis creates opportunity, which is why water entrepreneurs have suddenly appeared on the scene.
Although the proposed water deals take many different forms, they share a common framework. Some city needs water. Someone would like to sell water to that city. And wherever that water is, some local interests would like to prevent the water from being sold so that it can stay right where it is. The obvious question is, Who gets to decide?
Two obvious answers come to mind. One is the marketplace. But if you trust the market to allocate a scarce resource by bringing buyers and sellers together, the folks with little straws won't be able to protect their water from the folks with big straws. The second answer is the state: Let an agency decide whether a deal is in the public interest, much as electricity and telephone issues are overseen by the Public Utility Commission. But Texans who own their underground water, thanks to the rule of capture, will never accept a state agency telling them what to do with it.
So the correct answer is: neither of the above. Instead, lawmakers created a device called the underground water conservation district, which has the power to regulate the pumping of water within its territory. A county can choose to set up a district, or a district can be created by the Legislature; either way, it's usually run by a locally elected board. Now, you might ask, why would landowners (typically farmers and ranchers) voluntarily give up their right under the rule of capture to pump all the water they want and allow their taking of water to be regulated? It's not hard to guess: because they usually end up controlling the district. Most of the time, it's not their own pumping that they are worried about; it's the guy with the big straw—a city that buys a ranch, as El Paso has done near Valentine and Van Horn, or the speculator who buys water rights, or a broker who assembles a group of landowners, as an Austin-based company called Water Texas did in Kinney County outside Brackettville, with the idea of selling water to the San Antonio area.
Since these districts (currently 88 in number) are the instruments chosen by policymakers to protect the state's most valuable resource, you might expect them to have enough money and expertise to manage the water. On the other hand, this being Texas in 2004, maybe you wouldn't—and you'd be right. Most districts have very little money and no expertise at all. Well, then, surely their decisions must be subject to review by a state agency or a court, right? Nope. Districts must file a management plan, which state officials can only rubber-stamp. Otherwise, the state has no oversight. Districts are even exempt from state ethics rules, such as prohibitions against nepotism, and some have taken advantage of the omission. You can challenge a