Whiskey’s for Drinking, Water’s for Fighting, and Waste is for Getting Rich

The water woes of the American West are a story as old as Westward Expansion itself. Once termed “the Great American Desert”, by US Army civil engineer Stephen Long, the arid land west of the Mississippi river has been transformed by agriculture and federal investments in water projects. Far from the lawlessness of the Wild West itself, a legacy of careful governance has long overseen allocation of precious water resources— a legacy now at a crossroads.

 

In the American West, water is guaranteed "first in time, first in right" under a doctrine known as prior appropriation, according to the National Sea Grant Law Center. Rights to water are based on the age of the claim, with the most senior claimants being granted priority access. Unlike riparian water law, water rights are not bound to property ownership. Users must establish beneficial use, or “the use of the amount of water which is economically necessary for a permitted purpose, when reasonable intelligence and reasonable diligence are used in applying the water to that purpose” under Chapter 11 of the Texas Water Code. Once beneficial use is established, water claims may persist as long as the use itself does, barring egregious inefficiency. As the Texas Public Policy Foundation explains, Texan water law utilizes a dual system in which the prior appropriation doctrine is applied to all surface water rights, while groundwater claims are conferred with property ownership. This system is relatively straightforward, with existing water sources largely spoken for. But in an era of technological innovation, water in the West no longer comes only from its rivers and the sky, but also a surprising source: oil and gas companies. 

 

On June 27, 2025, the Texas Supreme Court ruled in its highly-anticipated Cactus Water Services, LLC v. COG Operating, LLC that produced water, a byproduct of oil and gas extraction, belongs to the party holding the mineral lease rather than the property owner. This is because, the ruling explains, produced water is not legally water. As the case stood, landowners attempted to enter into produced water leases with Cactus Water Services arguing that produced water present on their lands was part of the traditional groundwater ownership held under the surface estate. COG Operating disputed this activity, arguing that since produced water was a byproduct of oil and gas exploration and Cactus Water Services lacks the processing capacity held by experienced industrial facilities, landowners entering a produced water lease in addition to the mineral interest leases that had enabled COG extraction were in fact interrupting the terms of mineral extraction laid out in the more senior lease. COG Operating alleged during the case that it had no interest in obtaining any value from the produced water, yet the implications of this ruling render produced water a treasure masquerading as waste. 

 

In his 1986 book “Cadillac Desert”, author Marc Reisner delivers a profound assessment: “In the West, it is said, water flows uphill toward money”. With this ruling, that statement has never been more true. According to the American Geosciences Institute, produced water originates in the difficult-to-reach subsurface water in rocks that also bear oil or gas. Prior to being pumped to the surface alongside oil or gas, this water would, ostensibly, be considered groundwater. Oil and gas companies are now enabled to essentially double-dip, with a mineral interest lease conferring access to the contaminated byproduct. Contaminated or not, however, produced water is capable of holding immense value. Texas House Bill 49 protects oil and gas companies from any liability incurred by selling or using produced water for any beneficial use, opening up the potential for this waste product to be used to meet agricultural needs. Oil and gas companies may profit from both fossil fuels and the sale of increasingly scarce water. Agriculture, however, is not where the profit ends. The Texas Tribune on July 1, 2025  revealed that produced water is often rich in lithium. While Cactus Water Services, LLC v. COG Operating did not settle the ownership of potential lithium deposits in produced water, the inclusion of produced water in the mineral estate makes it reasonable to project that any lithium present may too be considered an aspect of the mineral estate. The outlook has never been sunnier for fossil fuel companies: as Inside Climate News reveals, Texas is increasingly investing in lithium extraction from subsurface brines in an attempt to match international competition. Not only can extractive industries double their investment by profiting from both fossil fuels and water reuse, but they may be sitting on a metaphorical goldmine of critical minerals. 

 

The commercial potential of produced water introduces two implications for both Texan landowners and the broader American public. For property owners with mineral leases in the state of Texas, those interested in retaining rights to produced water on their land must include such language in their contracts. Texas A&M Agrilife Extension explains that landowners interested in produced water who include mineral lease reservations for the substance should be prepared to deal with potential costs, liabilities, and repercussions of doing so. Despite its potential profitability, the high investment cost for individuals will likely reduce the number of produced water disputes in the near future. Processing or extracting from produced water requires advanced equipment typically only held by industrial interests. The more wide-ranging implication of this byproduct lies in its potential for agricultural use. Amy Hardberger, Director of the Center for Water Law and Policy at Texas Tech University School of Law, wrote in the Duke Environmental Law and Policy Forum that the potential introduction of hydrocarbon contaminants into livestock via drinking water or feed crops poses uncertain risks to human health. A rapid adoption of produced water for agricultural purposes without adequate research or regulations risks exposing American consumers to harmful compounds. Furthermore, the use of produced water for crop irrigation degrades soil microbiomes and reduces future crop yields, according to the journal Science of the Total Environment. Produced water is an opportunity, but it is also an uncertainty. Increasing water scarcity should not encourage hasty uptake of an untested solution such as produced water. Cautious exploration is needed before this waste product can truly be lauded as the new frontier of water in the American West.

 

Texas is not alone in attempting to identify a solution to pervasive water shortages across the Western U.S. After sustained droughts and recent historic lows in the snowpacks critical to supplying the West with water, CBS News indicates that a grave period of wildfires and water shortages may be awaiting American communities. A solution is needed, yet an increased reliance on produced water is not it. Solving the water crisis of the West should not carry with it a host of environmental uncertainties, lest the cost of greening the desert far eclipse its utility. Produced water remains an opportunity, but one that should be used for innovation, not complacency.