Texas Parks and Wildlife Commission
Conservation Committee Meeting

Nov. 5, 2003

Commission Hearing Room
Texas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744

BE IT REMEMBERED, that heretofore on the 5th day of November, 2003, there came on to be heard matters under the regulatory authority of the Parks and Wildlife Commission of Texas, in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters Complex, beginning at 1:00 p.m., to wit:

APPEARANCES:

THE TEXAS PARKS AND WILDLIFE COMMISSION:

• Ernest Angelo, Jr., Midland, Texas, Vice-Chairman
• Joseph B.C. Fitzsimons, San Antonio, Texas
• Ned S. Holmes, Houston, Texas
• Alvin L. Henry, Houston, Texas
• Peter M. Holt, San Antonio, Texas
• Philip Montgomery, Dallas, Texas
• Donato D. Ramos, Laredo, Texas
• Kelly W. Rising, M.D., Beaumont, Texas
• Mark E. Watson, Jr., San Antonio, Texas

THE TEXAS PARKS AND WILDLIFE DEPARTMENT:

Robert L. Cook, Executive Director, and other personnel of the Texas Parks and Wildlife Department

P R O C E E D I N G S

.... MR. MONTGOMERY: Are we waiving Chairman's Charges now until – is that what we decided this morning?

MR. COOK: Yes.

MR. MONTGOMERY: Okay. We've got Larry McKinney presenting water issues.

Larry?

MR. McKINNEY: Mr. Chairman and members, joining me today is Cindy Loeffler. For the record, I'm Larry McKinney, Senior Director for Aquatic Resources.

One of the things that we were asked to do is to give you a little bit of a briefing on water and where we are on the different issues. And you certainly have already covered a number of those topics this morning and can see where we're at.

But one thing that we thought we'd do is kind of give a brief overview for some of the new members on where we are on these issues. So let's kind of get started.

One thing about water when we talk about this state ‑‑ I think it's always a good thing to talk about. But Mark Twain had it right. He has a saying for everything. As he said, Whiskey's for drinking, and water's for fighting. And in Texas, that is certainly the deal.

I thought what we would do is give you a little background coverage. So I'll give you a little background coverage and then go into some of the specific actions and things that we're working on.

It doesn't take much of an effort in looking around the country in magazines and other things about what a topic this has grown to be, and I'll just put a few examples here. For example, in US News and World Report: "The Future of Water: Costly, dirty and scarce." Outside Magazine: "Water Crisis: America's most important resource is in big trouble, tapped out, tainted and taken for granted. And it's time to fight back, and here's how."

This is just a sampling of some of the articles. In Progressive Farmer: "The war over water. Cities want what farmers have, and that puts irrigation future in jeopardy." And in the National Geographic: "Earth's fresh water under pressure." So it is certainly in the popular press; it has transcended to that, and it's on a the top of a lot of folks' lists.

It certainly is the natural resource issue in Texas. You can't pick up a paper that doesn't have some water issue in it that we're looking at from all different perspectives. So that is there.

That interest certainly is not lost on our constituents. It never hurts to go back and look at how water dependent we are just in direct water dependence, the number of our constituents that – to which water and adequate water quality and water quantity are important.

It's not just numbers, of course; that translates for us into dollars, and not only dollars to support the Department in its conservation efforts, but dollars to the economy of the state, over $10 billion a year in economic benefits. And of course, water is the key to that – to those benefits and trying to maintain them. That's what we're dealing with.

That's not lost on our constituents. When we did our constituent survey a few years ago and asked what were the important environmental or resource issues, by a wide margin, almost 48 percent of those respondents said water was an important issue. And it was second only to, I don't know.

(Laughter.)

MR. McKINNEY: So –

MR. COOK: It's hard to beat, I don't know.

MR. McKINNEY: So maybe we have both, but – I don't know. But nonetheless, water – for those who did know, water was an important issue. And that's clear. And that has continued.

Scott Boruff last month attended a conference in Atlanta, Georgia, and represented the Department. He went, and it was a group called the Natural Resource Leadership Council, in which all of the departments on natural resources across the country and all states are represented. And he represented us there.

And he reported back that the Number 1 issue at that conference was water. Across the state, it was water. And of course, this council looks at big and broad conservation issues. And some of the ideas that they were bringing forward was that ‑‑ looking at how we can make better use of GIS types of technology and information – to put this information together to make water decisions.

And of course, they were looking at and wanted to look at broad ecosystem approaches. I will tell you that, you know, we're right there. We've had a number of projects in our GIS lab that's helping us bring all that information together. Scott just briefed you on a strategic planning effort that's looking at that level of information. So we're right in the mix, I think, of where we need to be.

Scott, I don't know if you wanted to add anything more to that.

MR. BORUFF: All states are looking at water. And this is not confined to us by any means.

MR. McKINNEY: It never hurts to go back and take a quick look at establishing why it's important. I guess Scott mentioned that. And when we look at Texas, it's a diverse place. From a biologist's perspective, it's a wonderful place to be. From a resource manager's position, it's a difficult one because of that diversity and a lot of challenges.

But the one thing that happens when you take away those characteristic flora and fauna that characterizes each of those regions, when you strip those away from the landscape, what you see is this: 15 major river systems, 11,000 streams, 80,000 miles of rivers. And the take-away points from that are two, really

One, water really binds that natural setting together. It's what connects them. In fact, in many places, riparian corridors and the wooded corridors along rivers may be the only thing that connects up blocks of habitat. And it's very, very valuable.

And the second take-home – and it's one that we don't talk about a lot, but it's certainly worth emphasizing – is that water is habitat. Mike Berger and I were talking the other day and talking about management issues and that type of thing, and were comparing notes. And of course, obviously, he works closely with the private land owners and that type of thing.

And if we look through it, it's – the kind of challenges that we face in working with wildlife and managing wildlife is going to be the same. We're going to face some – water is a habitat.

And we're going to see more in few moments about how – where water's going and who's going to be controlling water. And being able to work with it in that way is – we're going to face a lot of those same challenges in the future. So there's a lot of parallels there, but it's – something that is always important to remember is that it is habitat.

Well, this kind of defined the problem, and we tried to do it all in one slide. And I think this slide does it. What is the issue? And there is a real water issue. I never want to lose sight of that. We've got a tremendous challenge in making sure that we have enough water for Texas in the future: Enough water for our cities, for our industry, agriculture and the environment.

So it's a big challenge, and this is the challenge we're facing. We've talked about – it many times that we're looking at a population of about 40 million Texans in 2050, and we're right on that track. We are on track, and we will hit that if – with about twice as many Texans as we have today, which is kind of scary, but they're going to be there.

Those 40 million Texans are going to need about 20 million acre feet of water by that time. And today, when we look at our water supplies, we have about 18 million acre feet, ad a little less than half of it comes from surface water.

Now, if we don't do anything to meet those challenges, what we'll be looking at in 2050 is about 50 million acre feet of water available, most of – and the majority of it will be surface water. So we're going to be short several million acre feet of water.

And most of that – and that shortage is coming from groundwater depletion. We depend a lot on groundwater. and right now, we're mining groundwater in many places around the state, mining meaning that we're taking water out of the ground faster than it can be restored. So it's a mining deal, rather than a sustainable-type issue. So that's what happens.

So there's a real challenge that we have to face to try to solve it. And of course, our role in there is trying to make sure that as we make those decisions and move forward, we keep fish and wildlife and the environment as part of the – on that table.

And we're already seeing some of the limits of those water resources. We're seeing an increased number of health advisories. We're seeing our coastal waters closed to various shellfish harvests because they're handling the wastewater discharge loads and processing those.

We're seeing a number of – an increase in harmful algae blooms. We've had red tides and brown tides, and, of course, golden algae is another one we've been looking at. We just had a – as Mr. Cook told you this morning, we just had a meeting with folks about that. And there's a lot of issues related to it.

One thing that struck me as we were going through and listening to our experts from Europe and Canada and other places as they were talking about these long-term increasing trends in harmful algae blooms was that one of the things that has contributed to these blooms in their part of the world is more dams across rivers stopping those flows of rivers, cutting off silica supplies. So if you change the type of phytoplankton population to these dinoflagellates which cause these blooms, when you have less turnover in water and less flushing, when water sits in residents longer periods of time, when you have an increase in housing developments around these reservoirs that use septic tanks and have septic fields and those fields are leaking and increasing nutrients, these are the types of things that you see.

So we've got some challenges that we're already beginning to see as far as stressing those water resources. And of course, the example we always trot out as the poster child of it is the Rio Grande, which has problems on both ends. I would be – I'm happy to report to you right now that, actually, it is flowing. It has made it to the sea, and water is going through the canyons at this point. And we're lucky.

The main point I want to make here is that because we're beginning to reach the point where we're manipulating water and have to manage those waters on a large scale, that we're going to – as we have natural droughts, which we will have, and floods – but particularly droughts – we will be doing two things. One is that we'll be extending the duration of those natural droughts just because of how we manage water. Those droughts will become longer just because of our impact on them.

And so our concern is that we don't draw them out so far that they begin to have biological impacts, because these systems need – they need droughts just like anything else.

But the other thing that we're doing to our river systems en route is downsizing those systems. That's just the – we're downsizing them because the water's going to have to be diverted to other uses to meet that growing demand of population. So that's what's going to happen.

So we're having to deal with those kinds of issues. So it's going to be a big, big challenge for us, as we've all talked about. So the competition for water is going to be tremendous.

So let's talk for a moment. And I'm going to get Cindy to kick in here, too, on kind of what our setting is. And what's the playing field in which we're operating? I think a quick review of the regulatory setting is good to set that feel. For example, most of our water rights were issued prior to 1985 – the bulk of them, both in numbers and in quantity.

Primarily agriculture – as you might expect, those were the first permits that were issued some time ago. And none of those permits at that time had any provisions for environmental needs. And we have over 200 major reservoirs in Texas, and only a handful of them have flow releases and those types of things built into their permits to protect downstream rivers. So there's not much there.

We are a prior appropriation state, which basically means, that, first in line – you know, first in time, first in line. So that ‑‑ as we get into drought situations, the older the permit that you have, the more valuable it is because those are the ones that will be honored. So if you have junior permits, those permits will be the ones that are – that will be cut off in times when there's not enough water to meet everyone. That's a typical western water law type of approach.

But we also give our water permits in perpetuity. Once you have that water right, it's not really a property right, but it's pretty close to it; it is a right. And so making decisions and working in that system and making sure that the environment and fish and wildlife are taken care of is really important because once the decision is made, it's very difficult to go back.

Cindy, do you want to tell them about –

MS. LOEFFLER: The only thing I –

MR. McKINNEY: Cindy deals with it every day. And she really stays right on top of it.

MS. LOEFFLER: The only thing that I would throw in here is to keep in mind that what we're talking about here today is primarily surface water. So, you know, these things apply to surface water. Ground water – you know, I go around saying we have at least two different kinds of water in Texas, because ground water and surface water are handled so differently.

The only other thing I would add to Larry's points about this is not only are we only able to add special conditions to protect environmental things to the new permits, but, you know, we're seeing a decline or a drop-off in the numbers of permits granted.

You know, if you think about the drought of the '50s, response to that was building a lot of the major reservoirs that we have now. Well, you know, there's only a handful of major reservoirs that are being proposed and may or may not actually be built in the future. So our opportunities are limited with this mechanism.

MR. McKINNEY: So let's take a look for a moment at where we are as far as water availability. This is something that Cindy and I pulled off of TCEQ's internet site. It gives their version, using their water availability models, of how much water is available for permitting right now.

And my color is off; I wish it were a little bit more distinct, but the basic idea is, looking at the percentage of months flows are available to be permitted, red and tan mean basically there's not much available there and that's pretty well tied up. The green and the blue, or whatever that color is, means that there's more opportunity there for allocating water.

This is how they kind of look across the state. So you can get an idea of – from this of kind of how – what the water availability situation is across the state.

Go ahead.

MS. LOEFFLER: And something else to know about this particular map is that the Rio Grande – the modeling work there is not yet done, but I think we're pretty safe if we assume that there's also not water available – new water – in the Rio Grande. So that's not really tan; that ought to be black or something.

MR. McKINNEY: Maybe.

One of the things that I did do was to ask our staff in river studies to take this information because they – and I asked them some time ago if they could put this in some form that would be a little bit easier for us to look at to draw some biological references from, because this is just water availability, and it has no implication on what it means as far as biology. And they're a good group. And they have done that.

And so I wanted to kind of walk through that a little bit to give you a idea and show you what they came up with in trying to analyze, What's the biological implication of this map; What does this mean to us. And that's really what this is about.

So what they did is – they used the water availability information from TCEQ, and they came up with three types of flows in a river. And this is – of course, this graph here is for a year. And basically, they have – and this is how it's used by all the water agencies.

They developed statistics or numbers for all of our river systems that are called naturalized flows. Basically, what this means is this is their best approximation of what the flow in that river would look like if there were no dams, no withdrawals and no permits on them. And this is the – typically how – if you're going to grant permits and look at things – this is how all of our Agency looks at it. I mean you have to find kind of the base situation. So they call that naturalized flows.

And this is what the river flow would look like each month on an average without any withdrawals or changes.

Is that right?

MS. LOEFFLER: Right.

MR. McKINNEY: The next slide is current conditions, just basically, just looking – going out and looking at the hydro-graphs for what those flows are to date under normal conditions.

And then the third one is what the flows would look like if the water permits that exist in a particular water body were fully utilized, because if you have a water permit for 100,000 acre feet of water in some water bodies, for example, you may only be – a city may only be using 40,000, 50,000 or some number like that. And the rest of that permit is for anticipated growth or other activities. But they have a full legal right to take that 100,000 and go with it whatever they've got that right to do.

So at some point in the future, you can make the assumption – and it's really kind of a worst-case assumption – that if they used all that water, what would happen. And that's what that third number represents. So we've go a representation here of no impacts to as impacted as it likely could be to kind of, Here's what we think is an average.

So we used this information to come up with a simple, little series of red and yellow and green dots, which – basically, they look at a three-month period, any three-month period, in a year on a point on the river, in which the difference between the naturalized flows and the worst case scenario was greater than a 25 percent change, that got a red dot or a got a red signal.

If it was from – if the change in the river was from 10 to 24 percent, that's a caution. In other words, that's something we need to look at. And of course, if the alternation was less than 10 percent, it got a green.

This is the approach that TCEQ uses when they have no actual data when they're issuing a permit. It's called Line Smith. And in fact, our staff developed it some years ago as a way of trying to give TCEQ an idea of the biological impacts of a permit issuance when you have no data. And in a lot of cases, we just don't have the data. But this is – and so this is what they used. It has gone through hearings, and it has been validated in that way, so that's why they use this.

So they took this technique and applied it across the state on a number of areas. And so what – we found out that on 25 of the areas that they looked at, they had low impact. There was very little alteration going on. On 14, they had some medium concern and, on 33, highly altered streams.

So it gives an idea – it does two things. One, it tells us we've got a lot of opportunity here to do some good for fish and wildlife. About half the state, if you want to say it, is still in pretty good shape. So we can – as far as fish and wildlife are concerned, we've got some room to work with.

The second thing it tells us is that where we do have some concern, that's a place we need to focus on and use all of our tools to make sure that we take care of fish and wildlife. So it's a good little snapshot type of tool to use, and we're going to be using that with our regional planning groups and those types of things.

So that – I just wanted to kind of go through that with you, but I certainly can give you more detail if you wanted to do that at some point.

All of this is important because, basically – and it was alluded to this morning; Commissioner Fitzsimons talked about it – is our concern of seeing what is really this developing – what I would call this Oklahoma land rush of tying up as much water as possible through the future. That's what's happening. Water has finally turned that corner, and everyone recognized it as a valuable commodity and a limited commodity. And everyone's going after it.

Perhaps what started it was the SMIRF and some of these environmental permits. And certainly, we talked this morning about the status of those. But right behind them are a series of equally large water permits that are on the table from various river authorities and others.

And so trying to work through this system over this period of time is going to be very important for us as these permits go forward – and others – to make sure that fish and wildlife are part of that system. But it's going to be a heck of a challenge because in the next six, ten or 12 years, we'll tie – all of our available water up in the state we'll tie up into permits. And so it's going to be tough.

So what's our role in this? Well, one, of course, Parks and Wildlife has no regulatory authority in water permitting, and we don't – are not really in water planning. But we do have a well defined role in both to ensure that fish and wildlife are considered, and we come at it in four different ways. And I'm going to quickly summarize those, and then Cindy and I are going to take some time on it.

One and foremost is the science, sound science. That's the underpinning of everything we do here. It underpins our credibility and makes sure that we're on the table and know what we're doing. So sound science is fundamental to us.

In our land and water conservation plan – for those of you who have not looked at it, please do. I think it lays out for – it certainly lays out for us from a policy perspective the Commission's direction for what we should be doing with water. It's where we ought to be going, and that's there, and we obviously will look closely at that.

The SB 1, which started a lot this, regional water planning – the next round of regional water planning is beginning, and it's going to be critical for us from the environmental perspective. And Cindy's going to talk about that. And then, of course, an effective communication strategy to bring all this together is important, as well.

So we're going to just quickly go through a couple of these things. One is to talk about our freshwater inflow work. We've completed the work on the major estuaries. And after some hard work with the Board and TCEQ, we've come to at least an understanding that those studies are – I think our term of art here is – a benchmark of where we need to be and working from inflows and making recommendations on how to protect those estuaries.

A couple of issues or a number of issues are coming up with them. One is: As we've laid these recommendations out, you know, they've been challenged because it basically means if we're going to protect these estuaries, you do have to let water go into these bays. And we've got some numbers here that we think are what would be necessary to sustain their health. As with any science, it's going to be challenged. And if – any piece of science – from our perspective, it can always be improved. We can already think of ways to improve it, and we'd like to.

But at the same time, the TCEQ has a mandate to move forward. When they have a permit in front of them, they're going to have to make a decision and not put it off for two years or three years, or whatever; they're going to do it now, and they have to have some basis for moving forward.

And so we're having to try to do – go through this balancing act of trying to make sure that we put the best science possible forward, that we answer the legitimate criticisms of those folks who feel we could have done better. And we're going to try to do that. But in the end, as I've told some folks, really, to some extent in some areas, the basic point is that, in reality, some people just don't like the answers. I mean that's just what it amounts to.

It's – you know, you have to not – there's a point where – you reach where you can't talk about how we're going to do this, and you actually have to do it. And when you're talking about 2 million acre feet of water in Matagorda and 1.2- in San Antonio and 5 million in Galveston, that's a lot of water to send down a system when you have a lot – when you're trying to meet a future water need like we've been talking about.

So it's difficult. So there's – it's how we deal with that that's going to be important. And I think what Cindy's going to talk about next is the mechanism that's going to help us address that, we hope.

MS. LOEFFLER: Yes. Just to tack onto what Larry said, you know, when you add those numbers up for what we, the state, Parks and Wildlife and the Water Development Board, have identified as necessary to maintain the health of our bays and estuaries – you add those numbers up, and it is virtually the same amount of water as we've identified our people need. So to kind of put it on, you know, a scale, a comparison scale, of what we're talking about here, I think that helps.

Larry alluded to Senate Bill 1 and regional water planning. That's one of the activities that our staff at Parks and Wildlife are involved in and have been since about 1997, when this became law. And Senate Bill 1 – if you hear that thrown around in water circles, it's the water legislation from the 75th Legislature that basically took water planning and turned it into a grass-roots effort. Before, the state agencies, primarily Texas Water Development Board, developed water plans; now it's an effort that is directed to the regions.

And we've got the map of the regions up here. And just know that there are certain interests that have to be represented on these different committees. Parks and Wildlife has been named as a non-voting member for the regions, and so our staff do participate in these planning groups.

I think it's interesting to hear the discussions about how we're heading with our strategic planning in the Agency and trying to go across division lines and look at things more on a river basin approach. And it's very similar in a lot of ways to what's going on with water planning, where we have staff from different divisions, the fisheries divisions and wildlife and resource protection, that participate in this effort.

And these water plane regions are not that dissimilar from the basins that are being talked about. So I think that's good.

Our role in the whole water planning process is to provide technical data assistance and anything these regions need as they prepare their plans. This is very much driven locally. The state agencies in Austin are there to assist, but we're not there to dictate what they do. There are rules and certain minimum requirements that they have to adhere to, which is what we're going to talk about here, but they are very much regionally directed plans.

We are heading off into the second round of regional planning. And some of you may have seen the existing state water plan. The 16 regional plans are compiled into a state water plan, and this was done in the beginning of 2002 for the existing state water plan; however, these regional plans and then the state plan are updated every five years. So we're now in the beginning of the second round of planning.

One of the changes that we're quite interested in at Parks and Wildlife is a requirement that the regional plans now have to quantitatively address environmental impacts due to water management strategies. The first round of planning, it was pretty vague what the requirement was there. Some regions did a decent job of looking at environmental issues, including environmental flows, freshwater inflows and stream flows and that sort of thing. Other regions didn't get there.

So we are working now – as a matter of fact, next week, we'll start a series of meetings with the planning group of consultants that compile these plans where we will sit with them and work back and forth and have an open dialogue about what can be done to quantitatively address these issues and these plans. So we're pretty excited about that.

You know, one of the things that is unique about our role in water planning – versus Texas Water Development Board's or Texas Commission on Environmental Quality’s – is that we have roles in both planning and permitting whereas the other agencies pretty much do planning or do permitting. But we go across all lines.

And so one of the things that we want to help these regions with is to identify water management strategies, be it reservoirs, be it re-use, be it diversions from rivers and streams, to identify those strategies that are going to have fewer hurdles, if you will, to jump when they get to the permitting stage.

If a region is going down a road of looking at a project that it knowingly will have endangered species issues or will have some sort of habitat mitigation issue that might be very difficult to overcome, they should know that early on in the planning process. So that's one of the things that we're there to help with.

MR. McKINNEY: One of the things that has really helped us on this, I think, that I certainly want to mention now is that – and this was something that our former Chairman Armstrong helped initiate and, in fact, probably led the charge on. And that was bringing our three resource agencies, Parks and Wildlife, TCEQ and the Water Development Board, at the highest level, at the Commission level, and at the staff level to really focus on these issues.

And a lot of the activities that we are now able to do, as Cindy alluded to, we're – you know, the Board has asked us to step forward and really take over as much as we can handle in helping these regions do these environmental analyses. And the topic I'm going talk about in a minute also came out – instream flows – all of this came about and has been directed by the efforts of initially Chairman Armstrong. And now, Commissioner Fitzsimons is stepping in and providing that leadership, as is Bob Cook, of course, as the Executive Director of the Agency.

That has been tremendously useful. I mean Cindy and I have been in this business for a long time. And in reality, we've made more progress in the last couple of years as far as moving this along than I could imagine. And it's important that we do it. So I do appreciate that work in where we're going with it and that support.

Another area that we're working in from the science end that I just want to brief you on is an analysis of ensuring flow needs: How much water do we need to keep in our rivers to keep them healthy? The legislature last year mandated that we do for Texas rivers and streams the same thing we've done for Texas bays and estuaries, and we've launched into that.

One of the first things that we've done, again, from our – what we call the Big Six policy group – I don't know if there's a better name for it, but that's what we call it. But –

MS. LOEFFLER: I think the Tri-Agency is –

MR. McKINNEY: The Tri-Agency? Okay. Maybe it's the Tri-Agency.

MS. LOEFFLER: – the official name.

MR. McKINNEY: We call it the Big Six, but – it's just the Big Six to us. We don't call it the six-pack or anything like that.

(Laughter.)

MR. McKINNEY: But at any rate, one important lesson we learned from doing the bay and estuary studies is the importance of having an independent outside agency or entity, you know, validate your science, because we don't want to spend all of our time arguing science because that's just – that's a waste of everyone's time. And certainly, the first tactic of anyone who wants to block anything is to go argue science.

But we want to minimize or diminish that as much as we can. We did it to some extent in the bay and estuary studies, but not what we needed to, obviously, because we're dealing with that right now. So the first thing that we’re doing in these instream flow studies is – we went out and asked the National Academy of Science to come in and evaluate our procedures and how we're going to proceed with this. And they're in the middle of this right now, and it will take them about a year. We've had the first couple of meetings, and they've been very encouraging.

But when we get through with this process in the year, we'll have a stamp on that process that says this is the best science available, and the National Academy of Science says so. So then we can move forward and deal with, How do we do these types of things. So that's what we're in the process of doing right now. And I'm quite proud of all of our agencies in working together on that.

MS. LOEFFLER: You've heard about the environmental flow study commission in the legislative summary that Mr. Cook did earlier, and Commissioner Fitzsimons had some excellent questions. The way I like to think about this environmental flow study commission – and Larry just finished talking about the science, going out and doing the studies on how much water do these aquatic ecosystems need.

The environmental flow study commission is about, How do we ensure or provide or balance the needs of humans and the environment to be sure these systems are getting the water they need. The one thing I haven't heard said today is that one of the key requirements in this legislation that I think is really going to make the difference here is that they have to appoint a scientific advisory committee to advise them, obviously, on their – some of their deliberations in decision making and so on. And so I think that it's really going to be – you know, we really have some good potential for working out some of the difficulties that we've had, you know, be it anything from the instream use-type applications, like the San Marcos River Foundation application that was talked about, to, you know, special conditions on permits, like we do by and large.

Or – we haven't talked about the Texas Water Trust, you know, a mechanism that's out there for existing water right holders to take their water right and actually donate it and dedicate it to the environment. So that environmental flow study commission will be looking at the whole array of options that are out there – and possibly others that we don't know about – and preparing a recommendation report back to the legislature that's due in about a year, December 1, 2004.

So we're very hopeful that there will be some guidance and direction that will come out that will help us, you know, down in the trenches, you know, go about what we do day in and day out to try to protect these systems.

MR. McKINNEY: We really hope that they're successful. It's obviously very important to us for all the reasons we've talked about. As we went through the talk, you know, one of the points that we made is that we've had some options here in Texas. We're not in as bad of a shape as some places have been. We have some options where we can balance all these needs. We hope that we do that, because in those places around the world and around the country where they haven't, the cost has been and is huge economically.

In Florida, where they're now trying to restore the Everglades from the diversion of water from it, it's $12- to $14 billion to reconnect the Everglades to that natural system. The Mississippi River – to try to reconnect the Mississippi River to the wetlands, which it once fed and was diverted away from, a similar price tag, $8- to $12 billion.

The last estimate I had of what it would take for us to solve our water problems in Texas and to implement the water plan would be around $15- to $17 billion. So in other places around the country, they're spending that much money just to fix the problem that they didn't consider when they began their development projects. We don't have to do that here. We can balance those things.

And this environmental flow study commission really – is, hopefully, a tool that will help us do that. We have a big challenge in front of us, but we have some options that I hope that we'll take advantage of.

One of the ways in which we're trying to also tie all this together is with a communication strategy, working with Lydia's shop. And you know, they're – they are top-drawer. We've – our last entry – our PBS documentary has won a regional EMMY. The governor has asked that that video be given to every school, I believe, Mr. Cook, and distributed to every school.

MR. COOK: That's correct.

MR. McKINNEY: Our magazine, The State of Water, has won all kind of awards. The State of Bays hasn't been out long enough, but we know it will, too. So we've got a number of effective communication tools that we're laying out that message with and bringing all this together.

So I think we've got all the tools here on the table. And we're just looking for your support and guidance on how to make the best use of them over the next several years because – I've said this before – I think the next six or ten years will really tell the tale for us as far as water and fish and wildlife and where we're going to be.

And give us the direction of how we're going to be able to – how you all will be able in your – and those that follow you – how they'll be able to meet their responsibilities to manage the fish and wildlife and the recreational resources in the state of Texas. With that, Mr. Chairman and members, I think, unless –

MS. LOEFFLER: Yes.

MR. McKINNEY: Any questions or comments?

MR. MONTGOMERY: Questions?

MR. COOK: I'd just like to make a comment or two here, also. It's such an important issue not just for fish and wildlife. But every time we – I appreciate Doc's and Cindy's presentation here today. I mean we're not dealing with a bunch of crazies here. These are very common-sense people. And we know that industry, agriculture and municipalities, this water resource that we have is really kind of a closed cycle.

There's just so much water, and we can allocate it in a lot of different ways. We can waste it or we can use it wisely. So there are alternatives and things that we can do that would be very painless, quite frankly, that will go a long way, but it's getting that realization across.

As Doc mentioned, our information program – you know, we have dedicated and have already laid out the plans to dedicate one of our issues each year to this – one of our magazine issues each year, specifically the entire issue, to this water – the whole issue of water. In every issue, every one of the monthly issues that you look at, you'll see articles, information or presentations about water. Our video has been incredibly well accepted, very balanced. We will do that again.

And, you know, like this document – Cindy passed over it pretty quickly there. But these regional planning groups – we received some mixed signals last time this regional planning process went on. We kind of injected ourselves into the situation and got hit over the head or time or two. I have directed staff to be very involved this time.

We are not a voting member, and we recognize that. Everyone knows that. But I don't want that regional planning process to finish and have the folks on those committees say – ever say, I wish you had told us; I wish we had known. So in that light, we sat down with the water board and talked about this quantitative analysis. And we asked – well, I'll just tell you what it was.

We asked, Well, what do you expect. And the answer we got back was, Well, whatever they give us, that's what it will be. I mean The bottom line – that was the response. And we sort of said, Well, gee, we think it would be nice if it was a little more than just whatever it will be because we know that some of those groups really want to do this and do it right. They have leadership within that – within those regional planning groups in some cases that are very involved and very supportive and very reasonable and very sensible.

So the Water Board basically said to us, Well, if you all want to, you all can meet with these folks. And we said, Well, we'd be glad to. And that's the process we're fixing to start individually in sitting down with the consultants, with the planning groups themselves and the river authorities, and saying, Okay; Let's talk about how we can help; What are the issues, and what are you looking for.

So we're going to immerse ourselves in this issue, really. And we know we have the data that we have – Doc mentioned the ‑‑ this business about a benchmark of our B&E study. We're not ever going to be satisfied, just like anybody else won't be, that we've got the final answer, that we have – completely know what the answer is, and that's it.

There's always going to be the opportunity to improve the information that we have and to help people make better decisions. That's the task that we have, and we appreciate your help and your input.

MR. FITZSIMONS: Doc, could you tell us where we are in the – in my last meeting there, that Tri-Agency, I wasn't clear on where we are in the National Academy of Science's review.

MR. McKINNEY: Okay. The committee met in October. This is a group that – I'll back up just a little bit.

We went to the National Academy of Science and asked them to take this issue up, and they did. And they have formed a small working nucleus and came up with a list of independent scientists around the country that they would like to see on that committee. They brought them all together here in Austin in October and confirmed that the – that this will be the committee, and went through that process.

They started gathering up information and heard testimony from the agencies, from river authorities and others. And they kind of got themselves organized and really tried to define, What are we supposed to do here. And so we've been trying to help them define: Okay; Here's what we really need from you; We need to know that we're doing the best science possible; And if you have ideas on how we can do better tell us.

That's what we want from them, and I think they've taken that charge. And so now they'll go back, and they'll have another series of meetings. So at this point, they've kind of got themselves in the ground, they've defined the problem, they're going to start looking through all of our information and continue to work with our scientists. And they will go through a process of six or eight months of that evaluation, at the end of which they'll give us a report that says, Here's where we think you are.

MR. FITZSIMONS: On what date is the report due?

MS. LOEFFLER: They are to come back and meet again in Austin in January and then in April. And I believe the report is due soon after the April meeting.

MR. McKINNEY: Yes. I was thinking May or something like that.

MR. COOK: Yes. I want to say before the first of June.

MR. McKINNEY: Yes.

MR. FITZSIMONS: So we'll be in the instream – presumably, the first instream flow commission meetings when they ‑‑

MR. McKINNEY: I hope, yes, sir. If it's –

MS. LOEFFLER: Yes. There will be some overlap, yes.

MR. FITZSIMONS: Yes. and their charge is, to put it simply, to verify the scientific methodology of the instream studies.

MR. McKINNEY: And give us recommendations for changes if they deem there should be.

MR. FITZSIMONS: So it would be better out there –

MR. McKINNEY: Let us know.

MR. FITZSIMONS: – the – for the rest of the Commissioners that don't, you know, have to deal with this all the time. The two things that came to my mind in that first Tri-Agency meeting that I want to – Number One, beware of the people that are going to say, "Just give us a number; And then it's over," because there's never one number in any one of these bay or estuary systems to where you'd say, If you get this much, everything's fine, because, obviously, science – it's dynamic.

One of the issues that one of the people on that review committee said to me was, A number for what, to barely be on life support; Is that where you want your base right on the edge; Do you want them optimal; Do you want them in middle. So the point is you need to know where that continuum is so, you know, there's never – as you know, there are other agencies that want us to give them an exact number for how much water. And we have to avoid that trap. What you give them is what it takes to get different results.

And then, I guess, if there's any good news, it's that you'll be amazed by who our friends are in this process. It's often downstream industry because the need instream flows to dilute water pollution. We're going to – you know, they don't want to be the only ones putting anything in that river before it gets to them.

So it's not us against the world. A lot of coastal communities do recognize that it's their life.

MR. MONTGOMERY: Any more questions?

MR. RAMOS: Let me just share one comment. I head the task force at the Thousand Diamond. And the big issue there is water, as you all know. But I think it's a reality that the – on the Mexican side, the watershed to the Rio Grande has been impacted substantially. And I – it may be a combination of things. But one is the reality that perhaps our neighbor to the south has recognized the value of water.

So it seems to me that as we go into the future, we're not going to be able to depend on those watersheds any more. And that's creating some unique problems for the Rio Grand River.

MR. MONTGOMERY: Okay.

One comment myself is that I really compliment you on getting the National Academy to take this on. I think that's a real compliment to the integrity they perceive – that they would take it on and sign up for the process, because they don't do that lightly.

And, also, I hope – I know there has been discussion about our scientific review of the Department. We'll use that as a model to look at all the science we either commission or perform in house, because that – to me, that's the right level of peer review and of qualitative oversight that we ought to insist on for our own work and our own policy making.

MR. McKINNEY: I certainly agree. And a lot of credit goes to the Water Development Board and their staff who worked with the Academy of Science and others. They really helped push it. And of course, our own Chairman Armstrong was the one who said, We just need to do that.

It was an interesting response from the Academy on this, because they kept asking us, Well, where's the law suit; I mean what's the problem.

(Laughter.)

MR. McKINNEY: We're not trying to be – we're trying to get ahead of these groups. And they got really excited about it. So this may be one of the first times that they ever got a chance to sit down and look at something that wasn't driven by a law suit or something else – or some big regulatory deal.

MR. MONTGOMERY: Okay. Anything else?

(No response.)

MR. McKINNEY: Thank you, very much.

MR. MONTGOMERY: Okay. Thank you.

Ronnie Ray, Item Number 3, Oil and Gas lease Nominations

MR. BAUER: I'm Jack Bauer, Director of Land Conservation, and with me is Ronnie Ray, our acquisitions project manager. Because Eagle Mountain Lake has a lot of recent history with it for the potential sale, I'm here for that, if there's some old business. Ronnie will brief you on the oil and gas nomination.

MR. RAY: Thank you, Jack.

Mr. Chairman and Commissioners, this item for your consideration today would be a nomination for an offering of the lease of the mineral estate to the Board for Lease for Eagle Mountain Lake. Eagle Mountain Lake is a 400-acre undeveloped park property in Tarrant County near Fort Worth.

The background on this item. In April 2003, the Commission disapproved all proposals to sell this property and to have it purchased, and the staff was directed to evaluate the mineral estate of Eagle Mountain Lake. This evaluation has been completed with the assistance of the General Land Office, and it is recommended by staff that this mineral estate be leased; there has also been recommendations from two mineral developers that this also be put up for lease.

It has been determined that the total mineral acres owned by Parks and Wildlife is approximately 350 acres. There will be a restriction on this lease that will require that no entry be made onto Parks and Wildlife property for any oil production or development without Parks and Wildlife review and permission, and those areas will be limited to where activities can happen if it is granted.

The minimum bid for this would be $150 an acre. There will be a minimum 25 percent royalty, a $10-per-acre delay rental, a three-year term. There's a potential that we could expect bids higher than this, according to GLO.

I'd be glad to answer any questions.

MR. MONTGOMERY: Any questions?

MR. ANGELO: That's the most active gas play in the state and, actually, the largest gas-producing area in the state now, with 2,000 wells. It's amazing. It has reached ahead of any other single area or single field.

MR. MONTGOMERY: Ronnie, what can you come forward with tomorrow a little more specifically to ensure that we won't have a well on a site that would affect the value if and when we ever sell or exchange the property? Because I'd like to see you come forth with a restriction that's a little tighter than just that we're going to review where it goes.

I mean, specifically, can we limit this to only drilling off-site or to certain areas or perhaps executive director review and approval of where it goes? But I think we want to be very careful, as this is very valuable property.

MR. RAY: Right. And –

MR. MONTGOMERY: And its future's not clear, and the future ownership's not clear to me.

MR. RAY: Right. And we can do that. We have restricted completely off-site before. We did review this quite thoroughly with our parks resource people, and they were of the opinion that there are some areas in the uplands of this property that is not high-value habitat and that while it could be impacted, the impact could be kept to a minimum and it could possibly be developed safely.

MR. ANGELO: Mr. Chairman, I think that's important because the value of the minerals are going to be restrictive if you make them do offsite. This – while this is a big area with a lot of production, the economics of a good bit of it are such that if you had to go off-site and create a lot more expensive drilling situation, you might not be interested in it.

And yet, from our standpoint of the 25 percent royalty, there's a potential for a significant financial gain. So I think the language we've got there that requires a review but still makes it obvious to the potential buyer or leaser that they will be able to be on site if they come up with a reasonable proposal – I think that's the right way to go.

MR. COOK: We certainly agree with the concern . And, you know, we've talked about even possibly locating, you know, some one-acre sites in some specific location and getting with the potential bidders and GLO saying, Okay; We could make this acre, this acre and this acre and this acre your drill sites. And then they could go from there. So there's possibilities.

MR. MONTGOMERY: Commissioner Angelo's in the oil and gas business, and I'm in the real estate business. I just wanted to be sure –

MR. ANGELO: Well, I think this proposal right here is a good way to go because it does leave some flexibility, but it also leaves the control in the hands of Parks and Wildlife. So that – if we don't want to drill it and it's not acceptable, then you won't do it.

MR. MONTGOMERY: Bob, are you satisfied that, you know, a year or two out, when this actually happens, that it's going to the right level of review to be sure that we don't run into any diminution of the real estate value?

MR. COOK: Absolutely.

MR. MONTGOMERY: Okay.

MR. FITZSIMONS: Well, if –

MR. MONTGOMERY: We've got the procedure in there?

MR. FITZSIMONS: If the lease board accepts your recommended language and prohibited any entry except for that that's reviewed and approved – my question is, what's the spacing up there in –

MR. ANGELO: I'm not positive. I think it's about probably 160.

MR. FITZSIMONS: 160?

MR. ANGELO: I think so.

MR. FITZSIMONS: So the chance is pretty good that you'll have one then.

MR. BASS: It's approximately 60 acres of vertical wells and about 160 with horizontals – 160 to 200 with horizontals. They’re doing more horizontals.

MR. FITZSIMONS: So with vertical, you could have –

MR. ANGELO: A couple of wells.

MR. FITZSIMONS: Yes.

MR. RAMOS: A compromise may be what Bob suggested, and that is: Have the operator designate prospective drill sites in advance, to where you'll say, Okay; Here's the drill site –

MR. ANGELO: Then how come they don't know enough about it to do that right now? How come you're not going to know that ahead of time?

MR. FITZSIMONS: I've got a real basic question here. Where does the – unlike – this is unlike most of our minerals where we actually own – the Department owns the minerals rather than them being state minerals. What – is there a provision for where that revenue goes? Is it restricted in any way?

MR. BAUER: It will come in to our general revenue. We have – on some specific occasions, the Commission has directed where the revenue will go. We've done that at Sheldon, as you'll all recall. We –

MR. FITZSIMONS: Sheldon has production?

MR. HENRY: Well, not yet.

MR. BAUER: Not yet.

MR. HENRY: We're hoping.

(Laughter.)

MR. MONTGOMERY: For Henry Well Number 1.

(Laughter.)

MR. COOK: This property was bought with state park general revenue funds. And I believe our perception is it would ‑‑ if their income could be designated back to the Department, then it would go to the state parks function.

MR. ANGELO: And that's – to me, that's better than specifying it to a specific park or whatever, because it gives you a lot more flexibility on what to do with it. Now, I –

MR. FITZSIMONS: It would be restricted to 64? Is that the answer?

MR. COOK: I believe it would.

MR. ANGELO: And that’s fine. The key point to me is that we need to – this is a potentially valuable property from a mineral standpoint. We need to do everything we can to make the leasing of it as attractive as possible and encourage the development of it while, at the same time, protecting the value of the surface. And I think the language they've come up with will do that.

MR. MONTGOMERY: Okay. And –

MR. ANGELO: And it would still give us an opportunity to get an attractive lease on it.

MR. RAMOS: And I'm in agreement with that, especially if there's any drilling or production around this that might be draining this tract.

MR. ANGELO: It's not that close yet.

MR. RAMOS: It's not that close?

MR. RAY: No, sir. It's not that close. And just to the east of the lake, there's activity there, but it's not as strong as when you move off farther east. There's definitely interest in this area.

MR. MONTGOMERY: Okay. Any further questions? Is everybody happy with the approach?

(No response.)

MR. MONTGOMERY: If there are no further objections or discussion, without objection, I'll place this item on the Thursday Commission meeting agenda for public comment and action.

Thank you, both.

I don't believe there's any other agenda items for the Conservation Committee.

MR. ANGELO: So are you adjourning your Committee?

MR. MONTGOMERY: We'll adjourn the Committee unless there's anything else.

MR. ANGELO: Then if you will, pass the gavel, please, to Commissioner Henry. And we'll have the Outreach and Education Committee meeting.

MR. MONTGOMERY: Thank you, Mr. Chairman.

(Whereupon, this Conservation Committee meeting was concluded.)

C E R T I F I C A T E

MEETING OF: Texas Parks and Wildlife Commission
Conservation Committee
LOCATION: Austin, Texas
DATE: November 5, 2003

I do hereby certify that the foregoing pages, numbers 1 through 49 inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Ben Bynum before the Texas Parks and Wildlife Commission.

11/19/03
(Transcriber) (Date)
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731

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