PROPOSITION 6 / SWIFT FUND
PROPOSITION 6 / SWIFT FUND
BY LORIE WOODWARD CANTU
It’s no secret. Texas is running out of water.
In response, the 83rd Texas Legislature moved to encourage the development of new water supplies throughout the state by funding the State Water Plan. To do this, the Legislature, during the regular 2013 session, passed two bills and a Senate Joint Resolution establishing a funding framework and the opportunity to bring the issue to the voters.
Last November, in the midst of one of Texas’ longest running droughts, voters approved Proposition 6. With 73 percent of the vote, citizens gave the Legislature permission to transfer $2 billion from the State’s Rainy Day Fund to the State Water Implementation Fund for Texas (SWIFT), which had been created through the passage of HB 4. SWIFT, a low-interest loan program, can be used to finance rural water projects, projects related to conservation and reuse, and projects in communities and cities of all sizes.
“SWIFT is designed to provide an additional funding source for water projects that have been identified as important at the local level. Nothing more and nothing less,” said Con Mims, executive director of the Nueces River Authority, chairman of the Region L Water Planning Group and a member of the TWA Water Advisory Committee. “SWIFT is not, in my opinion, a threat to private property rights.”
With that said, though, the projects under consideration can—and eventually will—have implications for private landowners across the state. As regional water planning groups begin prioritizing water projects as part of the SWIFT process, some see it as reminder of the need for landowners to be aware of and engaged in water planning.
Water projects, whether they involve building reservoirs and desalinization plants, or developing well fields with pipelines, have the potential to impact private property through the need for acquiring easements or land. When a project is undertaken for the “public good,” the use of eminent domain is always a possibility.
Region J Water Planning Group Chairman Jonathan Letz, who is also a Kerr County Commissioner and a member of the TWA Water Advisory Committee, said, “When it comes to property rights, no single project will make everyone happy. Some property owners may benefit from the development, while others may not. That’s why it is so important for people to get engaged at the regional level, so they will know what is going on in their own backyards.”
As an extreme example, Letz said there is likely to be a vast difference in opinion between a landowner whose land is submerged to create a reservoir and one who ends up owning valuable shoreline property after the creation of the same reservoir.
STATE WATER PLAN AND REGIONAL WATER PLANNING GROUPS
In response to the 1950s Drought of Record, the Texas Legislature created the Texas Water Development Board (TWDB) to develop water supplies and prepare plans to meet the state’s future water needs. The TWDB published State Water Plans sporadically until 1997, when the passage of SB 1 established a new water planning process based on a “bottom up,” consensus-driven approach.
The responsibility of coordinating the water planning process rests with 16 Regional Water Planning Groups (RWPG) representing 16 water planning areas, covering the state.
“The RWPGs are the logical and easiest places for landowners to get plugged into the water planning process,” said Mims. Landowners interested in finding their RWPG can go to the Texas Water Development Board website (www.twdb.texas.gov), click on “Surface Water” and then “Regional Water Planning.” On the Regional Water Planning page, there is a link to an information sheet, “Regional Water Planning in Texas” that provides a map of all the RWPGS and their boundaries.
The RWPGs, each have about 20 members, speaking for a variety of interests, including: agriculture, industry, environmental, public, municipalities, groundwater districts, river authorities, water utilities, counties and power generators.
Letz said, “RWPG meetings are public meetings, but very few members of the general public attend. Those who are in the room have their voices heard and, as a result, have a very big impact on the proceedings.” In a proactive move, the Texas Wildlife Association is working to enlist its members to monitor the proceedings of their local RWPGs and report back to the association, keeping the leadership abreast of developments of interest or concern across the state, Letz said.
With the passage of SB 1, the Texas Water Development Board was charged with preparing a State Water Plan every five years. The Plan, which is a dynamic document that anticipates the changing water conditions and needs in Texas 50 years into the future, incorporates information provided by the RWPGs. Currently, RWPGs have finalized the 2011 Regional Water Plans, which have been incorporated into the 2012 State Water Plan, and are drafting the 2016 regional plans, which are due to the TWDB by May 1, 2015.
Mims said, “In order to be eligible for any of the water loan programs operated by the TWDB or to qualify for a surface water permit, water development projects must be designated as ‘recommended’ in the regional water plan. This means that most of the major projects under consideration in any given area are part of this plan.”
Notable exceptions are private water marketing proposals where the corporate officers believe it’s beneficial to “fly under the radar” until the project has gained momentum, he said. “Even then, the entities agreeing to purchase the water, generally want the project to be placed in a regional water plan at some point if state funding or surface water permits are needed,” he said.
The 2012 State Water Plan contains approximately 3,000 recommended water development projects with a total estimated price tag of $53 billion. The SWIFT Fund contains $2 billion, with 10 percent dedicated to rural (including agricultural) water projects and 20 percent for water conservation or reuse. Obviously, priorities will have to be set.
HB 4, the legislation that enabled the SWIFT Fund’s creation, also outlined the three-step prioritization process that is underway now. First, the HB4 Stakeholder Committee, made up of the 16 RWPG chairmen, undertook the statutory charge of creating uniform standards for prioritizing water development projects at the regional level.
“We knew from the legislation that any standards that we came up with had to be uniform and replicable by other people,” Letz said. “To achieve that we could not let subjectivity enter in.”
As a result, while the regional chairs agreed that water projects can affect private property rights, the environment and the economy, the committee did not include them as scoring criteria because of the subjectivity of the issues, Mims said. Instead, in his opinion, these will be dealt with as part of the permitting process that projects will have to undergo before their completion. Letz anticipates private property rights, the environment and the economy will added in a later iteration of the regional prioritization criteria once planners determine the best way to incorporate additional information that is important in the final decision.
Instead, the chairs focused their attention on five minimum statutory requirements provided by HB 4:
- The decade in which the project will be needed;
- The project’s feasibility, including the availability of water rights for project purposes and the project’s hydrological and scientific practicability;
- The project’s viability, including whether the project is a comprehensive solution with a measurable outcome;
- The project’s sustainability, taking into consideration the life of the project;
- The project’s cost-effectiveness, taking into consideration the expected unit cost of the water to be supplied.
The HB 4 Stakeholder Group then prioritized the criteria, giving additional weight to those items that they felt were very important in ranking projects. For instance, the decade of need, which is an indication of when an area might be out of water, was weighted highest.
While the current system is a good start, Stakeholder Committee members anticipate that it will be refined over time as flaws are revealed through use.
“We were required to take cost-effectiveness into consideration,” Letz said. “As a result, projects with a lower cost receive a higher ranking than those with a big price tag. This makes sense, but it also creates a potential problem. Conservation projects are less expensive than projects that require new science such as desalinization, so conservation projects rank higher overall. Conservation is very important, but we also need to try experimental technologies as well because they may hold the very solution we need in the future.”
In addition, HB 4 provided the Stakeholder Group a very short timeline to complete the regional prioritization criteria. The group began meeting in early September 2013 pushing to meet the statutory deadline of December 1, 2013.
“We chose not to have public participation at our meetings, because we didn’t feel we had time for it,” Mims said. Instead, the committee members sought comment from their respective planning group members and technical consultants, making it important that interested landowners get involved in the two remaining steps of the SWIFT Fund prioritization process.
The RWPGs must provide a final prioritization of their recommended water management strategies for their 2011 Regional Water Plans to the TWDB by September 1 and then turn their attention to prioritizing the projects in their 2016 plans. As examples, Region J, which represents six counties in the Edwards Plateau, has approximately 20 projects in its 2011 plan and expects that number to more than double in its 2016 plan, as general projects are made more specific to meet criteria. Region L, which represents 21 counties in South Central Texas, is considering 329 projects in its 2011 plan and expects that number to remain constant for 2016.
Letz said, “While it is tempting to dismiss the prioritization process as a bureaucratic exercise, the implications of these rankings may be far-reaching. The SWIFT Fund is just one source of money for water projects, designed to leverage money from other sources. It is very possible that a project’s SWIFT ranking could influence its eligibility for other funding.”
While the RWPGs are busy prioritizing their projects, the TWDB, working in Austin, will be shaping how the SWIFT funds will be allocated. By March 1, 2015, the TWDB will adopt rules for establishing a point system for its use in prioritizing water projects and allocating the SWIFT funds. They expect to be completed ahead of schedule.
As the rules are developed, the TWDB will offer ample opportunity for public input. Organizations such as the Texas Wildlife Association will be monitoring the rulemaking process closely. During this process, important terms such as “rural,” “agriculture,” and “conservation” will be defined.
“It’s been said that in life ‘the devil is in the details,’” Letz said. “In the public policy arena, it could be said that ‘the devil is in the definitions.’” Also, the rulemaking process should consider private property rights, particularly as they relate to eminent domain and just compensation, he said.
“I feel it’s very important that private property rights be considered during the rulemaking process,” Letz said. “If any projects require acquisition of property, the property owners should be justly compensated.”
The TDWB, with the input of the SWIFT Advisory Committee that includes six legislators and the State Comptroller, will also have to tackle the big elephant in the room: competing regional needs. (TWA’s Vice President Emeritus David K. Langford, a long-time participant in local, regional and state water planning, noted that the SWIFT Advisory Committee could also play a pivotal role in prioritization process, depending on how its members interpret their charge. “In my opinion, landowners and organizations would be wise to include the Advisory Committee members in their communication and outreach efforts,” he said.)
Mims said, “I assume that dealing with competing needs will be a fundamental consideration in TWDB’s rulemaking for SWIFT funding. It is the elephant in the room. Texas is a big state. Each region’s challenges are different. Reconciling them is going to be a challenge in and of itself.
He continued, “With that said, though, remember the SWIFT Fund is just an additional source of money. If a project has high local support, it will get built with or without SWIFT funding. Major cities with strong bond ratings may undertake projects on their own. Landowners, wherever they are, just need to be aware of what is going on around them.”
LAKE MARVIN NICHOLS: WHEN TWO WORLDS COLLIDE
Author’s Note: Water planning in Texas can be complicated, detail-oriented and sometimes tedious, but never unimportant. The issues surrounding the proposed construction of Marvin Nichols Reservoir in northeast Texas demonstrate why landowners and citizens cannot afford to ignore the process. It is a scenario that is likely to be repeated across the state as our population continues to increase along with demand for water, causing urban and rural Texas to clash. It raises a lot of questions, including: How do we balance the growing demand for water with a growing demand for food, shelter and energy? In our quest for more water, how do we conserve the ecosystems that are integral to the water cycle? They all depend on the same open space, productive land—and that Texas is losing faster than any other state in the nation.
Northeast Texas is home to cattle ranches, poultry farms, hardwood forests and a surplus of water. Its rural character and natural resource based economy are not attracting people into Region D, the 19 counties within this Regional Water Planning Group, nearly as fast as they are into nearby urban areas.
Dallas-Fort Worth is home to a lot of thirsty people. In fact, it is estimated that the 16 counties within Region C, the Regional Water Planning Group covering the Metroplex, will need an additional 1.7 million acre-feet of water per year over the next 50 years to meet the growing demand.
To meet its growing thirst, Region C (Metroplex), home to several of the fastest growing counties in the state, looked to northeast Texas for answers, proposing to develop projects in Region D (Northeast Texas) that would meet 28 percent of the Metroplex’s water needs. The majority of this new water would come from the proposed Marvin Nichols Reservoir, which is sited for the Sulphur River Basin, downstream of Chapman Lake and Lake Ralph Hall. The plan calls for flooding about 72,000 acres of land, mostly private property, and home to the aforementioned agriculture and timber industries as well as oil and gas development. A pipeline will carry the water from its origins approximately 170 miles to its users. Its price tag is approximately $3.4 billion.
The plan’s opponents predict a 10 percent – 20 percent loss of jobs, which will hit the timber industry particularly hard. They also decry the loss of bottomland hardwood forests, an increasingly rare habitat in Texas. Hardwood bottomlands are wooded wetlands, an ecologically diverse ecosystem that has been reduced by 75 percent over the past 200 years. The proposed reservoir will submerge almost 30,000 acres of hardwood bottomlands, which could prompt the federal government to require the acquisition or take of up to 750,000 additional acres to mitigate the original habitat loss. Opponents characterize the plan as a “land grab, where East Texans lose control of 900 square miles, an area roughly the size of Dallas County.”
Opponents maintain that the reservoir is larger than necessary and Metroplex users should try harder to conserve water, making the most of what they have. The fact that in a list of state’s 40 largest cities, four of the state’s five highest per capita water users are in the Metroplex is often mentioned.
Proponents of the plan counter that their citizens are decreasing water use by 10 percent to 15 percent a year, but that conservation alone is not enough to provide the water necessary to fuel one of the state’s – and the nation’s – most important economic engines.
In 2006, Region D (Northeast Texas) opposed the inclusion of Marvin Nichols in the State Water Plan because it was needed by Region D and created an interregional conflict. In 2011, Region C (Metroplex) again included it as a “recommended” water strategy. Recently, a both a District Court and the 11th Court of Appeals, confirmed that an interregional conflict existed and remanded the case to the Texas Water Development Board for resolution.
In early April, the TWDB Board Executive Administrator issued a preliminary recommendation that, if adopted by the full board, would allow Region C (Metroplex) to include the Marvin Nichols Reservoir in their regional plan and proceed with feasibility studies and would require Region D (Northeast Texas) to withdraw its formal opposition and consider the conflict resolved. The Board scheduled two public hearings for April and accepted public comment until May 2. A final decision is expected soon, but was not available at press time, so the impact remains to be seen