As we move toward the end of 2025, we love to take a look back at some of the key agricultural law issues in Texas over the last 365 days. If you missed our nationwide year in review post, click here. So, what are some of the biggest ag law issues in the Lone Star State in 2025?
Photo by Anita Austvika on Unsplash
Texas Supreme Court Rules in Produced Water Case; Second Case Filed.
There is nowhere else to start but with produced water. The Texas Supreme Court decision in Cactus Water Services v. COG Operating answered an important question with regard to produced water in Texas. The Court held that when a mineral lease is in place, absent something in the agreement to the contrary, the rights to use produced water convey with the mineral rights. [Read more here and listen to a podcast episode discussing this case here.] Given the volume of produced water in Texas (estimates show 33 million barrels/day) and the concern over groundwater shortages in the state, this decision was extremely important for landowners and oil and gas operators alike.
In November, Cactus Water Services filed a second lawsuit against COG Operating related to produced water. This time, the claims involve allegations that COG sold rights to groundwater still in place before it was produced. This water, Cactus argues, is not owned or controlled by the mineral owner. The complaint was filed in the Texas Business Court in Harris County.
Proposed East Texas Water Project Draws Scrutiny, Hearings, and Litigation.
Speaking of groundwater, a proposed project in East Texas resulted in polarized views, extensive news coverage, contentious meetings, and even proposed action to change Texas groundwater law in the Texas Legislature. Dallas-based investor, Kyle Bass, owns ranches in East Texas where he plans to drill wells and potentially produce groundwater to sell to purchasers in and around the Metroplex. These proposals have resulted in public meetings, proposed legislative action, and lawsuits. Sanderson Farms filed suit against the Neches & Trinity Valleys Groundwater Conservation District seeking to prevent the district from approving the application. The two real estate entities owning the ranches have likewise sued the district seeking action on their proposed permits. While there are plenty of news articles to choose from, a couple to start with are here, here and here. Additionally, we discussed this topic recently on the Ag Law in the Field Podcast here.
Texas Supreme Court Rules on Pore Space Ownership
The ownership of pore space is another question that was unanswered under Texas law until 2025. In Myers-Woodward v. Underground Services Markham, the Texas Supreme Court held that, absent an agreement otherwise, it is the surface owner who owns the pore space beneath the land. [Read more about that opinion here and listen to a podcast episode discussing opinion here.] My favorite line from the opinion is: “Put more simply, despite its apparent complexity, much of this case boils down to the elementary observation that empty space is not salt.” With more and more projects aimed at storing substances like hydrocarbons in underground pore space, having a clear answer to who owns this space is important for Texas landowners and mineral producers alike.
New Laws Enacted in Legislative Session
Of course, there are a number of new laws that have gone into effect or will go into effect on January 1 coming out of the 2025 Texas Legislature. We did a podcast episode with our friend, J. Pete Laney on the key bills impacting agriculture. Highlights include SB 17 which prohibits certain foreign persons or entities from owning land, SB 261 prohibiting the sale of cell-cultured protein, SB 541 that expanded the Texas Cottage Food Law, and HB 43 that expands financing and programs offered by the Texas Agricultural Finance Authority.
These new laws have not been without legal challenge. With regard to the foreign ownership law, a federal judge in the United States District Court for the Southern District of Texas dismissed a challenge to the law after holding the plaintiffs lacked standing to challenge. [Read Opinion here.] Two California food companies have also challenged the constitutionality of the cell-cultured protein ban. [Read article here.]
State of Texas sues Xcel Energy over Smokehouse Creek fire.
This case was filed just under the wire to make our list. Last week, the State of Texas filed suit against Xcel Energy seeking over $1 billion in losses as a result of the Smokehouse Creek fire. Texas claims the fire–the largest in Texas history–was started as a result of Xcel’s failure to adequately maintain utility poles in the Panhandle. [Read Complaint here.]
