Dallas investor Kyle Bass’ East Texas groundwater fight moved into federal court Tuesday, with two landowner entities tied to Bass filing a takings and civil rights lawsuit against an East Texas groundwater district and seven of its directors.
Redtown Ranch Holdings LLC and Pine Bliss LLC filed the 27-page complaint in the U.S. District Court for the Eastern District of Texas, Tyler Division. The lawsuit names the Neches and Trinity Valleys Groundwater Conservation District and board members Terry Morrow, Gary Douglas, Randall Chandler, Jimmy Terrell, Cody Rayburn, Danny Crossley, and Jeff Horton in their individual and official capacities.
The complaint contains only the plaintiffs’ allegations. A response from the defendants was not included in the case materials reviewed by The Dallas Express.
Lawsuit targets moratorium
The plaintiffs accuse the district of using a May 21 moratorium to block them from pursuing groundwater permits on their East Texas ranch properties.
“This is a civil rights action and a takings case,” the complaint says.
The lawsuit says the district adopted Resolution and Order No. 2026-001, titled “Declaring a Temporary Moratorium on Processing and Permitting New Non-Exempt Drilling, Operating, and Transfer/Transport Permit Applications,” on May 21.
The moratorium directs the district to “cease all activities related to accepting applications for any new non-exempt drilling, operating, and transfer/transport permits, or any amendments to such permits if those amendments would result in an increase in authorized groundwater production,” according to the complaint.
The complaint says the moratorium remains in effect “through October 1, 2026, or until final adoption of amendments to the Rules are approved by the Board, whichever occurs later.”
The plaintiffs allege the district used the moratorium as a targeted tool to prevent Redtown Ranch and Pine Bliss from developing groundwater beneath their own land. The lawsuit says the moratorium’s exceptions do not apply to them because a prior Sanderson Farms-related judgment purported to rescind earlier district action on their permit applications.
“This is not regulation. It is expropriation by administrative fiat,” the complaint says.
Private property fight
The case centers on whether the district violated the plaintiffs’ property rights by freezing permitting for new non-exempt groundwater applications.
The complaint says Pine Bliss owns about 4,355 acres in Henderson County and Redtown Ranch owns about 7,221 acres in Anderson and Houston counties. Both Anderson and Henderson counties are within the district’s boundaries, according to the complaint.
“Under Texas law, groundwater beneath the surface of land is owned in place by the owner of the surface estate as a constitutionally protected property right,” the complaint says, citing the Texas Supreme Court’s 2012 decision in Edwards Aquifer Authority v. Day.
Bass has argued that private landowners can help address Texas’ water shortage by exploring groundwater beneath their own property and potentially moving water to areas that need it, as previously reported by The Dallas Express.
Permit fight spans more than two years
The plaintiffs say they filed application packages in May 2024 for exploratory drilling permits and sought authority to drill 43 wells across the two ranches.
The district’s board found the applications “administratively complete” on April 17, 2025, issued orders on May 15, 2025, allowing the applications to move forward, and approved transferring them to the State Office of Administrative Hearings on June 19, 2025, according to the complaint.
The lawsuit says a separate Sanderson Farms action later purported to rescind the district’s prior actions and halt further processing. The plaintiffs were not parties to that case and are litigating through a Bill of Review to set aside that judgment, according to the complaint.
The new lawsuit alleges the district’s conduct violated the Fifth and Fourteenth Amendments, 42 U.S.C. § 1983, and the Texas Constitution. The plaintiffs seek declaratory relief, preliminary and permanent injunctions, just compensation, actual and consequential damages, attorneys’ fees, court costs, and a jury trial.
Provided by Dallas Express
