About a year ago, Ken Daughtry awoke in the middle of the night in a cold, uncomfortable sweat.
His wife drove Daughtry, now 74, from their home in Elgin to a hospital in Round Rock. After a series of tests, a doctor told him the news: His blood pressure was high, and Daughtry ought to tamp down the tension in his life.
Daughtry, a retiree, knew what that meant: Step down from his role as an unpaid member of the board of the Lost Pines Groundwater Conservation District, by far the single greatest source of stress in his life.
The district, which regulates groundwater pumping in Bastrop and Lee counties, had been forced to make a series of tough decisions, before hundreds of people, about how much water groundwater developers ought to be allowed to pump and export west to the Interstate 35 corridor.
Those decisions often involve giving groundwater developers less than they requested. One such decision was met with a lawsuit: In March 2014, Forestar, a publicly traded real estate and water company, sued not only the district, but also each of the board members individually, holding them personally liable for the decision.
“The blood pressure was not going to get better,” said Daughtry, who had previously served as Elgin’s mayor and suddenly faced the prospect of paying damages out of his own pocket. “It was not worth it to me.”
In July, he stepped down from the board.
Fixit bill clears House and Senate
The Forestar strategy to sue board members not only in their official capacity, but also as individuals — a bit of legal chin music, according to attorneys not involved in the case — led to a legislative proposal that would have shielded board members from personal liability.
The proposal, House Bill 3163, is awaiting the governor's signature. At stake, said bill’s supporters, is whether qualified people will continue to volunteer for the difficult governing work of water districts and other boards, work that becomes all the more challenging as these volunteers are increasingly called upon to make high-stakes decisions that often pit local residents against deep-pocketed water development firms.
“If board members are held personally liable, how many people are going to volunteer for that board?” said Greg Ellis, an attorney who represents groundwater districts and is doing some work for the Lost Pines board.
Forestar is in mediation talks with the board, said Anna Torma, a spokeswoman for the company.
“Contrary to what some folks have claimed, Forestar was not trying to intimidate or harass individual board members,” company lawyer Edmond McCarthy said. “Forestar was trying to protect its constitutional property and due process rights and the property rights of its landowner lessors.”
In May, after outrage about the suit, Forestar dropped the individual capacity claim, said McCarthy, as “an olive branch.”
“We have to give some protection to men and women that serve on these groundwater conservation districts, in these very complicated situations,” Bastrop County Judge Paul Pape told lawmakers during a hearing for the bill in late April. Pape appoints half of the Lost Pines board members.
Pape said after Daughtry’s departure he interviewed five potential appointees, and they all said they were greatly concerned about the personal liability issue.
Pape said lawmakers should act to make sure board members “are protected from the oppressiveness and heavy-handedness and pushiness.”
‘A chilling effect’
Forestar had sought to pump up to 45,000 acre-feet of water from the Carrizo-Wilcox Aquifer a year, enough for about 180,000 households, and export it to growing Hays County. Fearing overpumping, the district board issued a permit for 12,000 acre-feet, a decision that was celebrated by many residents of Bastrop and Lee counties.
In its suit, Forestar has countered that the water it seeks would not harm that portion of the aquifer, which has more than 46 million acre-feet of recoverable water.
Mediation aside, the Lost Pines case could take years to resolve as the water developer and the groundwater district square off on factual disputes about the amount of water available and the process used to dole it out.
The bill, proposed by state Rep. John Cyrier, R-Lockhart, did not address the merits of the dispute; instead, it would have granted a director of a groundwater district immunity from lawsuits and immunity from liability for official votes and official actions.
At least one lawmaker — state Rep. Alfonso “Poncho” Nevárez, D-Eagle Pass — mused at a legislative hearing in April that protecting board members could give unscrupulous ones more leeway to make unethical or retaliatory decisions against their enemies.
Ellis said the legislation would not bar suits against board members if they are discriminating against applicants.
Attorney Ty Embrey, who represents groundwater districts, told lawmakers that the Forestar suit “just has a chilling effect on serving on these groundwater district boards. It’s an intimidation tactic. Some of the districts I’ve worked with have had a hard time talking people into serving on boards.”
Council or commission members in Austin and other major cities might face similar personal capacity suits, as rare as they are, but it’s a different proposition from sitting on a groundwater board in rural Lee County, said Jim Cousar, an attorney with Thompson & Knight who practices state and local regulatory law.
“The city of Austin has a law department with dozens of attorneys, a legal defense budget, and has the experience of being sued at least dozens of times a year,” he said. “They have a pretty good legal team and deep financial structure that can stand between an official and the suit.”
Daughtry says he has not had to pay lawyers to represent him — the Lost Pines district attorneys are taking care of that.
“We did nothing to deserve being sued personally,” he said. “We were just trying to do what’s right.”
CORRECTION: This story has been updated to correct that House Bill 3163 did not die at the end of the recent legislative session. Rather, it is awaiting the governor's signature.