to the leased groundwater were not addressed. It is unclear whether the lessee owes royalties on leased produced groundwater. If they do not owe royalties, it is unclear how the parties should account for any profit or loss realized from the beneficial reuse or disposal of the produced groundwater. Finally, it is unclear whether any implied covenants are due to the lessor with respect to the management of water, given that the leases do not expressly address this issue ( Id . at 6-7). V. Conclusion The Supreme Court of Texas has ruled that produced water and water are not one and the same. Produced water is incident to the production of oil and gas in hydraulic fracturing; therefore, granting the right to produce hydrocarbons necessarily encompasses the right to produce and
manage the resulting waste. Cactus Water Services, LLC v. COG Operating, LLC relies on longstanding practices in the oil and gas industry, the current statutory scheme, and a lack of express reservation or exception in the Leases. However, as discussed, the Court makes it clear that this holding does not prohibit surface owners from reserving water incidentally and necessarily produced with hydrocarbons. Rather, the Court instructs surface owners that such a reservation must be express. With recent technological advances in the recycling of produced water for reuse in industrial processes and irrigation of non-food crops and the questions presented in the Concurring Opinion, this likely is not the last time you’ll see produced water making a splash in Texas courts. Authors: Baylee Pearce and Isabel Huntsman
Murky waters: Wading through Texas law and the future of produced water
Texas produced water has transformed from waste to valuable resource following the Supreme Court's Cactus Water Services v. COG Operating decision clarifying ownership rights. New regulations promote reuse and disposal alternatives as drought conditions worsen and disposal wells face increased scrutiny. This shift drives innovation in water recovery, reuse technologies, and lithium extraction, making adaptation speed crucial for operators seeking competitive advantage.
v. COG Operating, LLC , No. 23-0676 (Tex. June 27, 2025), ruling that under the typical deed or lease language conveying oil and gas rights, produced water is a part of the conveyance, even though not expressly addressed. While Cactus v. COG aligned with existing industry practices, it likely signaled the beginning of a broader wave of legal disputes over the ownership and use of produced water. This Article will explore the history of produced water as a byproduct of oil and gas production and examine Texas’ growing water challenges. This Article will also discuss the potential for extracting valuable minerals from produced water and highlight emerging alternative uses for this once-overlooked resource.
I. Introduction
Texas produces more than just oil and gas. Every day, millions of gallons of produced water are generated as a byproduct of oil and gas production. Once viewed strictly as a waste product, produced water is now at the center of a growing conversation about resource recovery, sustainability, and innovation. Adding to the ongoing discussion, the Texas Supreme Court issued a landmark decision in June in the case of Cactus Water Services, LLC
II. Background
The concept for fracking itself dates back to 1862 but was not popularized
23
G rowth T hrough E ducat i on - J uly / A ugus t / S ept ember 2025
Made with FlippingBook - PDF hosting