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 decision by an underground water district in court, but the odds are against you; state law requires the courts to give significant deference to decisions by districts.

One way districts block water-export schemes is through the concept of “historic use.” The idea is that a landowner’s right to pump water should be determined by the amount the owner has used in the past. A rancher who has grown hay, a crop that requires a lot of water, would have established a historic right to continue pumping enough water to grow hay. But a rancher who has used only enough water to fill stock tanks over the years and now wants to sell all of his water rights to San Antonio would not get permission to pump as much as he wants. The district’s regulations trump the rule of capture.

This is the crux of the battle that recently took place in Kinney County. When a group of landowners assembled by Water Texas got the idea to sell water to the San Antonio area, the district adopted historic-use rules based on the previous five years, during which the Water Texas group had pumped very little water. This excluded a time when the valley had thriving farms. The landowners protested that the district’s restrictive rules were arbitrary and without scientific basis regarding the amount of water available. In a letter to the state attorney general’s office, a landowner who had resigned from the board in protest over the rules charged nepotism and self-dealing by some board members. The dispute led to an out-of-court settlement in which the district agreed to extend its historic-use period.

A similar battle over historic use is taking place in northeast Hudspeth County near Dell City, a tiny farming area (for alfalfa and chiles) west of the Guadalupe Mountains. It sits over an aquifer—a rare renewable water source in the Trans-Pecos—that is fed by snowmelt from Ruidoso, New Mexico. The proximity of Dell City has attracted El Paso water planners, who envision building a pipeline from the area to their city someday. Two landowners negotiating to sell their water rights to El Paso were thwarted when the district adopted new historic-use rules to limit pumping, based on the previous ten years. Testifying before a legislative committee in El Paso, one of the hopeful sellers said that the rules will limit landowners who don’t irrigate to selling only 170 acre-feet of water to El Paso each year. Landowners who do irrigate will be able to export ten times as much water. This case is now in court; again, the claim is that there is plenty of water to go around and the restrictive rules are without scientific basis.

The third big water fight is over Rio Nuevo, several of whose partners have close ties to fellow Midlander Tom Craddick, the Speaker of the House. West Texans are up in arms over the proposal to lease a scarce state-owned resource to private interests, with the revenue going to the state’s endowment for public schools. Some critics have called for opening up the process to competitive bidding. Others say the proposal should not be allowed to go forward until a study determines the effect of massive pumping on springs in the region and on Big Bend National Park. Testifying at the El Paso hearing, Tom Beard, the chairman of the Far West Texas Water Planning Group, called the Rio Nuevo plan “the screwiest idea most people in far West Texas have ever heard.”

In some respects, however, the Rio Nuevo deal is not as great a threat to state water policy as the Kinney County and Dell City battles. The deal may never take place. El Paso is the only logical customer for the water, and it wants Dell City’s water, not Rio Nuevo’s. After an initial barrage of criticism, land commissioner Jerry Patterson, who has the ultimate say on whether to lease the land, has said the deal depends on Rio Nuevo’s finding a customer and on scientific evidence that pumping will not harm nearby communities. The project will also be subject to local groundwater regulations. But Patterson resists competitive bidding. At least he operates in the light of day and is accountable to the public and the Legislature. The same cannot be said for underground water conservation districts.

As the demand for water intensifies, the likelihood of shenanigans can only increase with it. The underground-water-district system of regulation, relying on people who lack the benefit of adequate scientific evidence and operate without oversight, is rife with the potential for self-dealing and bribery. The Legislature should change Texas law so that local boards are subject to the same ethical standards as boards that manage other areas of state government. And the decisions of the districts must be appealable to a state agency that has the expertise to determine whether a district’s decision was based on sound science. Otherwise, water won’t just be the easiest way to get rich in Texas. It will also be the sleaziest.