*Editor's note: This story has been updated with a statement from the Texas Commission on Environmental Quality.

A state appeals court has sided with farmers, ranchers and other longstanding water rights holders in a Brazos River case with widespread implications for future water battles in drought-prone Texas.

Upholding a lower court’s ruling, the 13th Court of Appeals in Corpus Christi on Thursday ruled that Texas cannot give special treatment to cities or power generators over more “senior” water rights holders on parched rivers  – even if the state declares it necessary to protect the “public health, safety and welfare.”

As it stands, the decision would require some cities, power generators or others with more “junior” river rights to pay up or go thirsty when severe drought strikes.

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The Texas Farm Bureau, which challenged a Texas Commission on Environmental Quality policy giving cities preferential treatment in certain water squabbles, applauded the ruling.

“It’s a clear win for private property rights,” said Regan Beck, assistant general counsel for the group.  “The rules that TCEQ is trying to promulgate would really do away with the priority system as we know it.”

The TCEQ said it was "disappointed" in the decision and planned to appeal it to the Texas Supreme Court. 

Prioritizing access for cities and power plants is "essential for public health, safety and welfare throughout the state, especially during these times of record drought," Terry Clawson, its spokesman, said in a statement.

The case — set in motion after Dow Chemical asserted its rights to Brazos River water — centers on whether Texas regulators may grant exceptions to the state’s longstanding ‘first-in-line, first-in-time’ surface water rights regime.

The giant chemical manufacturer is by far the largest water user on the Brazos, which also supplies farmers and ranchers, cities and other industries along its 900-mile stretch from northwest Texas to the Gulf Coast. It also holds the oldest water rights, giving the company priority over all others.

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Dow first set up shop in Freeport in 1940 to extract magnesium from seawater. Since then, its Gulf Coast operations have grown rapidly, and the Brazos supplies the company with the 100,000 gallons of freshwater per minute it needs to operate. 

But years of drought and rapid growth along the river have strained the river's supplies.

In mid-2009, the Brazos was flowing at just 50 cubic feet per second, less than half the speed required for Dow’s smallest pump to pull the water the company needed out of the river – an unprecedented condition.

Dow issued a series of priority calls beginning in 2009 asserting its “senior” right to divert water from the Brazos River — and force “junior” water rights holders to curtail their use. It was the first time the TCEQ had received such a request, and it took the agency weeks to respond.

Dow had the right. But by the time the TCEQ determined it several weeks later, the company said it was too late. Junior water rights were suspended that summer, cutting off mostly farmers and ranchers from using about 46 billion gallons of water, but no additional water flowed down to Dow’s pumps.

Dow argued that by law, the TCEQ should have cut off even more water users than it did; in the interest of public health and safety, the agency elected not to force junior users like municipalities and power plants to cut back. In 2012, the agency formally adopted new drought rules giving priority to those junior users.

The Farm Bureau agreed with Dow and sued the state. A Travis County district judge ruled in its favor in June of 2013.

In its appeal, TCEQ argued that the judge misinterpreted the law that authorized the agency rules, and said the agency has the authority to police public health and safety.

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The Corpus Christi court disagreed.

“None of the statutes or the constitutional provision cited by TCEQ give the agency the general authority to suspend water rights after they have been issued,” Thursday's ruling said. “While we recognize TCEQ’s authority to manage and regulate the state’s scarce water resources, such authority must not exceed its express legislative mandate.”

Brad Castleberry, a water rights attorney with Lloyd Gosselink Law Firm, said the decision puts the state’s rules in flux and may be another step towards a market-based approach to managing water amid drought.

But he noted that there are other methods of dealing with water disputes, and priority calls are a last-ditch option.

For instance, the state recently appointed a water master to the lower Brazos basin – someone to interact daily with river users like farmers and manufacturers and require them to report their water use in real time. But even that move was hotly contested. 

“Hopefully, the water master can balance the interest of the water rights, so we don’t have to deal with priority calls,” Castleberry said.

If that doesn’t work, and a local government with junior rights is left dry?

Beck said the answer is simple.

“If it’s something that’s for the public,” he said, "the public can pay for it.”