TCEQ recommends D/FW area be designated a priority groundwater management area (PGMA)

If you remember one thing, it’s this: whiskey is for drinkin’, and water’s for fightin’. Many of you are probably completely unaware that water wars have already started in the Dallas-Fort Worth area. At stake is what the TCEQ (Texas Commission on Environmental Quality) estimates to be around $740,000 in annual revenues from a new tax to be levied on Metroplex area water well production.

TCEQ staff has recommended that Collin, Cooke, Dallas, Denton, Ellis, Fannin, Grayson, Hood, Johnson, Montague, Parker, Tarrant and Wise counties should be designated as a Priority Groundwater Management Area (PGMA, pronounced “pig-ma”) because the TCEQ has determined that this area is expected to experience, within the next 25 years, critical groundwater problems, including shortages of surface water or groundwater, land subsidence resulting from groundwater withdrawal, and contamination of groundwater supplies. The report was filed with the Office of the Chief Clerk of the TCEQ on June 26, 2007. The contested case hearing was held in May, 2008. At that hearing, there was general agreement that the area probably qualifies as a PGMA, and so we expect that part of the decision to formally designate this area as a PGMA.

The goal of designating an area as a PGMA is to quickly create groundwater conservation districts (GCDs) in the PGMA so that 100% of the land area in the PGMA is regulated by a GCD. GCDs can impose water well production limitations (i.e. limit the “rule of capture”), design water production limitations to prefer certain uses of water over others, and adopt water well spacing requirements. Most GCDs finance their operations by levying a tax on well production within its boundaries. Additionally, county commissioners courts of counties in a PGMA can impose groundwater availability requirements on developers in areas where platting is required, in order to prevent current or projected water use from exceeding the safe sustainable yield of the county’s water supply.

The TCEQ has recommended the creation of one super-regional, fee-funded GCD for Collin, Cooke, Dallas, Denton, Ellis, Fannin, Grayson, Hood, Johnson, Montague, Parker, Tarrant and Wise counties, with each county appointing one member of the GCD board of directors. The TCEQ estimates that this super-regional GCD could generate approximately $740,000 annually from water well production fees and taxes to finance its operation necessary to protect the Trinity and Woodbine aquifers. It specifically suggests that this super-regional GCD:

1. quantify groundwater availability, and quality and understand aquifer characteristics;

2. identify groundwater problems that should be addressed through aquifer- and area-specific research, monitoring, data collection, assessment, and education programs;

3. quantify aquifer impacts from pumpage and establish an overall understanding of groundwater use through a comprehensive water well inventory, registration and permitting program; and

4. evaluate and understand aquifers sufficiently to establish water well spacing regulations to minimize drawdown of water levels and to prevent interference among neighboring wells for the benefit of groundwater users in the area.

As one may surmise, there’s a bunch of expensive consulting in these tasks. The TCEQ prefers the creation of this one super-regional GCD because it would include the greatest areal extent of the Trinity and Woodbine aquifers experiencing supply problems and would be the most cost-effective.

As an alternative to the super-regional GCD concept, the TCEQ has suggested the creation of three muti-county, fee-funded GCDs, with two directors locally chosen to represent each county on the GCDs board. In this second scenario, the TCEQ recommends the following counties be grouped together:

Group 1 (Trinity aquifer outcrop): Montague, Wise, Parker, Hood and Cooke counties;

Group 2 (Northern): Grayson, Fannin, Denton and Collin counties;

Group 3 (Southern): Dallas, Johnson and Ellis counties

The TCEQ recommends that each of these three smaller GCDs also fund their creation and operation with fees on water well production similar to the first proposal.

Now for the “wars” part. The ability of a GCD to have the power to levy and collect a tax is not welcome everywhere in the Metroplex, to say the least, and some areas in this proposed PGMA don’t want to participate in it, perhaps because to do so may mean, practically, that they’d be subsidizing other areas. Or maybe current governments don’t want interference from yet another regulatory entity.

In any event, Tarrant County has already formed the Northern Trinity Groundwater Conservation District. Its boundaries are the same as Tarrant County’s boundaries, and since it is a non-taxing GCD, it became effective immediately upon the Governor’s signature, June 15, 2007. The Upper Trinity Groundwater Conservation District was also recently formed, and its confirmation election was held in November of 2007. It is now in the process of drafting its regulations which will affect Hood, Montague, Parker and Wise counties. It has the power to issue bonds and tax wells in its jurisdiction. In fact, this GCD is reportedly the only district in the state with any regulatory authority over water wells used for oil or gas production.

Further complicating the TCEQ’s suggestion of a super-regional GCD is the fact that the Collin County Commissioner’s Court passed a resolution on April 24, 2007, stating that Collin County will seek to form a one-county, non-taxing GCD if Collin County is included in a PGMA. The commissioner’s court still must act on this resolution if the TCEQ adopts its staff recommendation to include Collin County in a PGMA.

So much for the most efficient option of one, super-regional GCD. What we have instead are some players aggressively establishing and/or defending their turf from other areas of the state, and there’s a good reason why they are being aggressively proactive here. Those who form the larger-area GCDs, like the Upper Trinity GCD, are fighting perceptions that the GCD is designed to help one group of individuals more than others. In that case some people reportedly think it will help Wise County at the expense of others in the GCD. And so the wars begin and, once GCDs are formed, will continue. GCDs may be new to North Texas, but other areas of the state have years of history with GCDs, some good, some bad, often contentious.

Developers may get hit the hardest. In North Texas, development beyond existing city water supplies is typically supported by drilling water wells and using the groundwater. Once city water lines reach the areas, which could take years, the wells are plugged, pumps removed, and the water lines are connected to the city water supply. City water supplies typically come from reservoirs, a surface water supply.

Historically, moving developing areas from groundwater to surface water has not reduced groundwater use, because there is always more development. The result is that, in the entire state, the Edwards-Trinity (High Plains) aquifer (the Metroplex’s groundwater source) is projected to lose water the fastest. The graphs and charts in the 2007 State Water Plan showing this decline are very compelling.

Texas Water Code § 35.019 authorizes county commissioners courts of counties in a PGMA to adopt groundwater availability certification requirements in areas where platting is required, in order to prevent current or projected water use from exceeding the safe sustainable yield of the county’s water supply. The TCEQ can be expected to actively encourage counties in the PGMA area (Collin, Cooke, Dallas, Denton, Ellis, Fannin, Grayson, Hood, Johnson, Montague, Parker, Tarrant and Wise counties) to adopt and implement these new requirements on developers of new developments.

So, if you are a developer, you have a direct, vested interest in what sort of GCD or GCDs are created in these counties. Any water suppliers that still rely on groundwater production for their water supply, and their customers, may also take a direct hit if a GCD begins taxing the supplier’s water production. Oil and gas operators outside of Tarrant, Hood, Montague, Parker and Wise counties that use groundwater clearly have a direct interest. More tangentially but every bit as real, anyone who is concerned about the economic health of the Metroplex has a dog in this fight.

This begs the final question, what to do. First, don’t wait. For those of you in Hood, Montague, Parker and Wise counties, your fight has moved into the GCD. You need to protect your rights by participating in the rulemaking process of that GCD, and in the water source planning process of that GCD. Outside these counties, the GCD formation issue will be resolved either at the TCEQ or in the next regular session of the Legislature. The fight is to influence the design and creation of other GCDs in this area. Either way, you will want to obtain as much information as possible about others who are interested in these issues and who also plan to participate in the process. Identify your friends and your frien-emies. Cooperate with some, prepare to compete with others, or maybe do both at the same time. This is known as “co-opetition.”

And if you need or want legal assistance, please consider this firm. I have been in water wars (successfully), written and been published on water law subjects, given speeches on water law, and I keep up with developments in this area (for example, see my other website, www.texasH2Olaw.com). Also, please take a few moments to consider those you know who may be affected by this impending groundwater regulation/taxation, and forward this Email to them as well.

And always remember, as inspired by that philosophical band The Beastie Boys, “you gotta fight, for your right, to wah-ter.” Welcome to the party, North Texas.

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McTexLaw Email Newsletters are original writings of Mark McPherson, principal attorney of the firm.

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