In the Courts

Water Cases

Cockrell Inv. Partners, L.P. v. Middle Pecos Groundwater Conservation District (No. 23-0593, No. 23-0742) (Tex. Mar. 13, 2026).

The Texas Supreme Court held that the Texas Water Code’s 90-day exhaustion period only applies to a party of administrative proceedings before a groundwater conservation district. This decision consolidated two cases, Cockrell I and Cockrell II, which argued over which deadline applied for exhaustion of administrative remedies prior to appeal of a groundwater district’s permitting decision.

In 2017, after Cockrell’s neighbor leased its groundwater rights to Republic Water Company of Texas, LLC (“Republic”), Republic settled its permit application with the District. The court did not grant Cockrell party status because it treated the 2017 amendment as a continuation of the 2009 permit proceeding, a proceeding that Cockrell chose not to participate in. This continuation of the 2009 proceeding meant Cockrell’s deadline to become a party passed years earlier and seeking party status in the 2017 proceeding was ineffective. In 2020, when renewing the permit, Cockrell sought party status again, and the District denied the request.

Reversing the court of appeals decision, the Texas Supreme Court held that Cockrell’s challenge centered on Cockrell’s party status. Outlining the elements of waiving government immunity, Cockrell met the first element because it counts as a “person” under the Government Code’s definition and was dissatisfied with the District’s refusal to grant it party status. The second element did not bar Cockrell’s suit because subsection (b) only limits challenges for decisions on permit applications. Third, because Cockrell was not a “party,” Texas Water Code Section 36.412’s 90-day exhaustion window did not apply.

Cockrell requested reconsideration within 20 days of the District’s decision and waited 45 days before filing suit; the District’s inaction within those 45 days effectively denied Cockrell’s requests. Because Cockrell waited until after this denial to sue, the Court held that Cockrell properly exhausted its administrative remedies and the Court remanded both cases to the Eighth Court of Appeals. This case focused on a narrow issue related to administrative exhaustion under Section 36.412 and therefore leaves other issues like standing and failure to timely request party status under Chapter 36 for the Court of Appeals to address.

TCEQ v. National Wildlife Federation, No. 15-24-00050-CV, 2026 LX 105649 (Tex. App.—Austin [15th Dist.] Mar. 10, 2026, no pet. h.).

In 2008, the Guadalupe-Blanco River Authority (“GBRA”) applied for a water rights permit to divert up to 75,000 acre-feet of water per year along a 37-mile segment of the Guadalupe River[LK1.1] for municipal and industrial uses and with the option to store some of that water in off-channel reservoirs. The Texas Commission on Environmental Quality (“TCEQ”) granted the permit in 2020. Following a State Office of Administrative Hearings contested case hearing where the National Wildlife Federation (“NWF”) was a party, the TCEQ did not require GBRA to conduct additional site-specific assessments of fish and wildlife habitats under Texas Water Code Section 11.152. NWF sought judicial review, and the district court reversed.

The central dispute on appeal was whether TCEQ could rely on the environmental flow standards adopted for the Guadalupe River Basin under Section 11.1471 to satisfy and displace the otherwise applicable standards under Section 11.152 to assess the effects of the proposed diversion on fish and wildlife habitats. GBRA argued that once environmental flow standards exist for a basin, a site-specific Section 11.152 assessment is no longer required. NWF argued that the environmental flow standards replace Section 11.152 only to a limited extent.

After confirming that NWF had standing to sue because a member of NWF operated a seafood business on San Antonio Bay that depends on freshwater inflows from the Guadalupe River, the Court turned to the statutory interpretation question. Under Section 11.147(e-3), the adoption of an environmental flow standard relieves TCEQ of its duty under Section 11.152 only for the purpose of determining the environmental flow conditions necessary to maintain certain conditions, including “fish and aquatic wildlife habitats.” The Court held that TCEQ’s broader reading, that environmental flow standards categorically replace Section 11.152, would render much of subsection (e-3) superfluous and ignore the Legislature’s deliberate distinction between “fish and aquatic wildlife habitats” in subsection (e-3) and “fish and wildlife habitats” in Section 11.152. A site-specific Section 11.152 assessment is required where a proposed diversion could impact aquatic habitats for reasons unrelated to environmental flow or could impact non-aquatic wildlife habitats. Under Section 11.152, assessing effects includes the proposed appropriation site and potentially impacted habitats upstream, downstream, and adjoining the site. However, because the off-channel reservoirs were not themselves an appropriation and were not located at or adjacent to the diversion site, TCEQ did not err in concluding that a separate assessment of the reservoirs was not required.

The Court of Appeals held that while TCEQ did not commit an error of law in not requiring an assessment, it did prejudice NWF’s substantial rights. This is because none of TCEQ’s findings established that the impact of the diversions on aquatic habitat solely related to environmental flow conditions or that they would not impact non-aquatic habitat. The court affirmed the lower court’s reversal of the TCEQ Order and sent it back to TCEQ to show through fact and law whether site specific assessments of a proposed diversion’s effects on fish and wildlife habitats are required.

AIRW L.P. v. City of Georgetown, No. 15-24-00132-CV, 2025 LX 678341 (Tex. App.—Austin [15th Dist.] Dec. 30, 2025, no pet.).

A group of affiliated developers sought wastewater services for a 128-acre residential development just outside of the City of Georgetown’s city limits, but within its extraterritorial jurisdiction. After the City conditioned providing wastewater service on annexation of the developers’ properties within the City, AIRW applied to the TCEQ for a permit to build and operate its own wastewater treatment plant. TCEQ issued a draft permit and later granted the wastewater permit following a SOAH contested case hearing. The trial court reversed on regionalization grounds. On appeal, the Fifteenth Court of Appeals considered whether there was substantial evidence for TCEQ’s decision under its regionalization policy.

The TCEQ’s regionalization policy encourages the use of regional wastewater systems but allows exceptions where the applicant shows that an exception should be granted based on cost or other relevant factors. The central dispute was whether conditioning service on annexation constituted a denial and whether the projected cost of annexation justified a cost-based exception. The Court upheld the TCEQ’s determination that the permit complied with the regionalization policy, affirming TCEQ’s view that a city’s annexation-as-a-condition-of-service effectively operated as a denial of service, and holding that the cost exception independently supported the permit. The developers submitted reports and assessments from their engineering consultant and an independent appraiser showing that the City’s annexation requirement would reduce the residential properties’ value by approximately $20 million, while constructing their own facility would cost about $5 million. The Court held that the $20 million diminution was an opportunity cost the Commission could reasonably consider in applying the cost-based regionalization exception. The Court rejected the City’s argument that property values and zoning fell outside TCEQ’s authority when conducting regionalization policy analysis.

The Court also held that substantial evidence supported TCEQ’s determinations that the permit protected water quality, complied with antidegradation procedures for Tier 1 and Tier 2 waterways, protected human health, met applicable nuisance odor requirements, and was administratively complete. The Court reversed the trial court’s judgment and rendered judgment affirming the Commission’s order.

Alexander v. Woodlands Land Dev. Co. L.P., No. 01-22-00827-CV, 2025 LX 582656 (Tex. App.—Houston [1st Dist.] Dec. 16, 2025, no pet.).

In a negligence and gross negligence claim against Woodlands following the flooding of several homes, the court declined to create a new common-law duty. While foreseeability of negligence claims is an important factor, foreseeability alone does not create a duty. Thus, the fact that it may have been foreseeable that the homes could flood is not enough to impose a duty on the home builders. Further, the Woodlands also properly exercised reasonable care by hiring an engineering firm to record past flood levels and building their homes based on that plan. The trial court’s summary judgment in favor of Woodlands was proper.

Equinor Energy LP v. Lindale Pipeline, LLC, No. 24-0425, _ S.W.3d _, 2026 LX 16331 (Tex. Mar. 13, 2026).

A hydraulic fracking company did not breach its water supply contract with its water supplier by purchasing water from another supplier for use in its oil wells. Equinor Energy’s predecessor contracted with Lindale to finance the construction of a water pipeline in exchange for Lindale serving as the exclusive water supplier “on the Pipeline.” The contract specified that Lindale would be the sole provider and pumper of water “on the Pipeline,” but if Lindale was unable to provide water, then Equinor could use other sources. After Equinor acquired the predecessor company, it began purchasing water for its wells from other suppliers that used lay-flat hoses, rather than pipelines. Lindale sued Equinor for breach of contract arguing it had an “exclusive” right to supply all of Equinor’s water under the contract.

Reversing the court of appeals, the Court rejected Lindale’s argument that the purpose of the contract should be expanded to include providing water to the wells and held that the exclusivity clause unambiguously applies only to pumping operations “on the Pipeline.” The Court reasoned that the prepositional phrase “on the Pipeline” modified the nouns “provider” and “pumper,” not the wells themselves, and that the contract’s definition of “Pipeline” enumerated specific components like lateral lines and well-site appurtenances that did not include the oil wells. Although an attached map depicted the wells, the contract’s incorporation language limited the map’s role to describing the enumerated components rather than expanding them. Because the wells fell outside the scope of the exclusivity clause, Equinor was free to purchase water for the wells from third parties without breaching the contract.

Litigation Cases

United States v. Heppner, Cause No. 25 CR.503 (JSR), 2026 LX 51521, at *1 (S.D.N.Y. Feb. 17, 2026).

The Court summarized the issue in this opinion cogently: “whether, when a user communicates with a publicly available AI platform in connection with a pending criminal investigation, are the AI user’s communications protected by attorney-client privilege or the work product doctrine?” United States v. Heppner, Cause No. 25 CR.503 (JSR), 2026 LX 51521, at *2 (S.D.N.Y. Feb. 17, 2026).

The Court answered “no.” Id. Although this case specifically concerns criminal law, it noted two general truths: (1) generative AI is becoming more and more prevalent and common place across all human activity, and (2) case law surrounding the implication of such use is almost entirely absent across the nation. Id. Inevitably, federal and state Texas courts will need to rule on the discoverability and admissibility of user inputs into a generative AI program; and Heppner is at least one strong data point on how they will answer, and how clients may need to be advised moving forward.

The Heppner Court answered “no” for three reasons. First, the generative-AI tool—although used by Heppner purportedly to generate legal strategy—is not an attorney, does not owe fiduciary duties to the user, and is not subject to discipline. Id. at *7. Therefore, the user’s communications with it could not implicate attorney-client privilege nor the work-product doctrine. Id. Second, the user-AI communications were not confidential, based on the AI program’s own terms of use (i.e. “uses such data to ‘train’ Claude, and authorities”). Id. at *7–8. Lastly, the AI program itself disclaims it cannot provide legal advice when prompted. Id. at *10.

Heppner provides important guidance for practitioners and clients, although not binding on Texas courts. Should a client use AI to generate legal strategy or to input data, the client should ask several questions: what are the specific terms of use for this program? Am I doing this at the behest, knowledge, and request of counsel? These two questions may provide helpful insight to determine whether or not the client should proceed. But see Morgan v. V2X, Inc., Civil Action No. 25-cv-01991-SKC-MDB, 2026 LX 135629, at *10 (D. Colo. March 30, 2026) (holding—and explicitly distinguishing Heppner—the Federal Rules of Civil Procedure protected AI-generated results in preparation for litigation is protected under the work-product doctrine); Warner v. Gilbarco, Inc., No. 2:24-cv-12333, 2026 LX 61387, at *12 (E.D. Mich. Feb. 10, 2026) (ruling work product using AI-generated tools are protected because the information is not shared with an adversary, i.e. opposing party).

Olivier v. City of Brandon, 146 S. Ct. 916, 916 (2026).

In Olivier, a public preacher sought to challenge a city ordinance that prohibited him from preaching outside of a designated area at certain times near a local amphitheater. Id. at 922–24. He was previously convicted of violating the ordinance and filed federal suit challenging the constitutionality of the ordinance. Id. Critically for the Court, in his federal suit, Olivier only sought prospective relief and did not seek to overturn his previous conviction. Id. at 925. By doing so, he argued, and the Court agreed, he did not run afoul of the Heck bar, which prohibits a § 1983 claim to directly attack a previous conviction. Id. at 926. As such, “Olivier asked for only a forward-looking remedy— an injunction stopping officials from enforcing the city ordinance in the future—that his suit can proceed, notwithstanding his prior conviction.” Id.

The Court noted that the Heck opinion did have sufficiently broad-enough language, “where a judgment in favor of the plaintiff would necessarily [challenge the validity] of [the] conviction or sentence,” that could implicate Olivier’s suit. Id. at 934–35. Yet, the Court found the complaint’s language dispositive: “[b]oth the allegations made, and in the relief sought (injunctive), the suit is all future-oriented.” Id. at 935–36.

The Olivier Court is a critical reminder of the importance of strategy and language placed into a petition or complaint: by minimizing the focus and requesting narrower relief, a suit may proceed; otherwise it can prove fatal.

Galette v. N.J. Transit Corp., 146 S. Ct. 854 (2026).

The Court evaluated whether part of a transit system “is an arm of [a State] and thus entitled to the State’s sovereign immunity.” Id. at 864. The Court’s analysis is very fact intensive regarding the New Jersey Transit Corporation (“NJ Transit”). Id. at 865. However, the Court’s opinion does two important things: (1) it settled a split between two States’ highest courts and (2) sidesteps both States’ several-factor tests. Id. 865, 880–81. Instead, the Court applied its own analysis, and looked at how the state Legislature created the body (organizationally) and what powers it delegated to that body (i.e., sue and be sued, enter into contract, purchase property, etc.), whether the State was liable to the body’s debts and liabilities, and whether the state “meaningfully” controls the body. Id. at 880–82.

The main takeaway for state Legislatures, political subdivisions, and their created bodies is that the more independence and power that is granted, authorized, and delegated to a quasi-public body, the more that body risks losing sovereign immunity.

“In the Courts” is prepared by Stephen Malish in the Firm’s Districts, Water, and Litigation Practice Groups and Nathan Marroquin in the Firm’s Litigation Practice Group. If you would like additional information or have questions related to these cases or other matters, please contact Stephen at 512.322.5875 or smalish@lglawfirm.com, or Nathan at 512.322.5886 or nmarroquin@lglawfirm.com.