1. Helping communities flourish Texas: A New Model for Environmental Flow Protection Robert R. Puente Interim President/CEO San Antonio Water System FLOW 2008 Instream Flow Council 07 October 2008 San Antonio Water System

2. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 1 The Importance of Environmental Flow Protection Protection of instream flows and freshwater inflows to bays and estuaries is key to successful water management and planning. The population of Texas is expected to more than double between the years 2000 and 2060, growing from about 21 million to about 46 million. The demand for water in Texas is expected to increase by 27 percent, from almost 17 million acre-feet of water in 2000 to 21.6 million acre-feet in 2060.

3. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 2 As we face increasing competition for limited water supplies, we must ensure that adequate river flows are maintained to support fish and wildlife, freshwater inflows to bays and estuaries, recreation and coastal economies. Texas law expressly recognizes the importance of maintaining the biological soundness of our states rivers, lakes, bays and estuaries. This recognition has evolved in recent decades through different legislative directives. Recently, this evolution has produced a shift in our legal framework from permit-by-permit consideration of environmental flow needs to the development of flow regimes for each basin in the state.

4. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 3 Environmental Flows and Permit Conditions In meeting human water needs through water use permits, the Legislature requires certain environmental protections. Since 1985, Texas law has required the Texas Commission on Environmental Quality (Commission) to assess the effects of water use permits on: –Freshwater inflow needs for bays and estuaries –Existing instream uses –Water quality –Fish and wildlife habitat The Commission uses special permit conditions to implement these requirements.

5. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 4 Legislation: SB 2 In water rights permitting process, preference is for site-specific data to determine if permit conditions are needed. In most cases, however, the Commission relies on desk-top procedures to establish default environmental flow targets. Senate Bill 2 (2001) established the Texas Instream Flow Program. Recognition that decisions about water management should take into account the best site-specific science available. Comprehensive data collection and evaluation program jointly administered by the Commission, the Texas Water Development Board and the Texas Parks and Wildlife Department, similar to an earlier Bay and Estuary Program. The program will determine flow conditions necessary to support a sound ecological environment in Texas rivers and streams.

6. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 5 SB 2 (cont.) National Academy of Sciences review and Technical Overview completed. In study design phase to determine how studies will be conducted; agency collaboration with workgroups of stakeholders and members of the public; must complete priority basin studies by 2016. Study planning underway in Brazos, Sabine, and San Antonio river basins. These studies will play an important role in providing accurate and long- range information not only for water rights permitting and the development of environmental flow standards, but for regional and state water planning and management.

7. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 6 SB 3 While SB 2 requires specific instream flow studies in certain basins, SB 3 (2007) establishes a process whereby environmental flows are protected through the adoption of basin-wide standards in each basin in the state, rather than current permit-by-permit consideration of flow needs. The environmental flow provisions of SB 3 represent a multi-session effort by legislators, state and local agencies, and various stakeholders to identify a more comprehensive approach to environmental protection in the permitting process.

8. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 7 SB 3: Impetus for Change In 2003, the Commission denied applications for instream flow permits by the San Marcos River Foundation (SMRF) and other groups concerned about growing consumptive needs in Texas rivers. –The Commission found that it did not have express statutory authority to consider permits specifically for instream flows, rather they were authorized to place environmental conditions on consumptive water rights. –Applicants appealed the Commission decision to state district court. –Implications for both water development and environmental interests generated much debate and brought the issue to the legislative forefront.

9. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 8 Permit-by-permit conditions provide piecemeal environmental protection; more comprehensive approach needed. More participation by stakeholders in environmental flow program; opportunity for local issues and solutions to be developed. Consensus that long-term science-based standards would bring certainty to both water development and environmental interests. Pending legal action (SMRF application and others) combined with upcoming permit applications for major water projects put pressure on the Legislature.

10. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 9 SB 3 (2007) was the culmination of work by two study commissions. – Study Commission on Water for Environmental Flows (2003-2004) – Environmental Flows Advisory Committee (2005-2006). Study commissions reports based on a proposal developed by a stakeholder group made up of water suppliers, environmental interests, business organizations and other water permit holders. Study commission reports formed the basis of environmental flow provisions enacted by the 80 th Legislature in SB 3.

11. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 10 Provisions of SB 3 Comprehensive process that will set environmental flow standards for every major river basin in the state. Environmental flows includes both instream flows and freshwater inflows necessary to maintain health and productivity of river and bay systems. This new process is overseen by a statewide Environmental Flows Advisory Group made up of legislators and state agency representatives appointed by the Governor, Lieutenant Governor and Speaker of the House of Representatives. The advisory group will conduct hearings and study policy implications of balancing consumptive needs and environmental needs in water rights permitting and enforcement and report progress to the Legislature every two years.

12. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 11 SB 3 (cont.) The advisory group has also appointed a statewide Texas Environmental Flows Science Advisory Committee to serve as an objective scientific body to assist the advisory group and coordinate with local science teams. For the purpose of developing flow recommendations, the advisory group has divided the state into geographical areas reflecting the various river basin and bay systems. Each area will have a stakeholder team reflecting a diverse group of interests in the basin as well as a separate science team made up of experts with special knowledge of the particular basin. Each science team will recommend an environmental flow regime, or schedule of flow quantities needed to ensure a sound ecological environment, based on the best available existing science.

13. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 12 SB 3 (cont.) The stakeholder group will then consider the science team recommendations, taking into account other water management considerations and develop their own separate set of recommendations. After receipt of both science-only and science and policy combined recommendations, along with input from the state advisory group, the Commission will adopt environmental flow standards through a public rulemaking process. In adopting flow standards, the Commission will also determine the amount of unappropriated water, if any, to be set aside for those standards.

14. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 13 SB 3 (cont.) The process will occur in a priority order set up in the legislation and a time-frame has been established for each step of the process. For a system not included in the priority order, the advisory group will establish a schedule. Once the process is completed, the Commission must apply the environmental flow standard, including any set-asides, for the purpose of determining environmental flow conditions in the permitting process. Limited re-opener provision allows environmental flow permit conditions to be adjusted if needed to comply with later-adopted environmental flow standards. The re-opener only applies to permits issued beginning September 1, 2007 and is limited to a maximum increase in pass-through or release requirement of 12.5%.

15. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 14 SB 3 (cont.) Upon completion of their work, each stakeholder group, with the assistance of their science team, must prepare a work plan that is approved by the statewide advisory group. The plan will address adaptive management issues, including periodic review of environmental flow standards to occur at least once every 10 years. Work plans will identify uncertainties that can be addressed in future studies, including those mandated by the SB 2 Instream Flow Program. The Commission must take stakeholder work plans into consideration in altering an environmental flow standard or set-aside through future rulemaking.

16. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 15 Limitations of SB 3 While SB 3 does establish a new method of establishing environmental flow regimes, it does not guarantee adequate water will be available to meet those regimes. In adopting flow standards, the Commission will establish a set-aside below which water cannot be permitted. In some river systems, however, unappropriated water is not sufficient to meet environmental flow standards, meaning permits have been granted taking most of the water, especially during dry periods. In these basins, SB 3 calls for the exploration of market approaches, both public and private, to fill the gap, including the donation or voluntary purchase of existing rights.

17. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 16 Water Trust SB 1 (1997), an omnibus water planning bill, created the Texas Water Trust to hold water rights dedicated to environmental needs, including instream flows, water quality, fish and wildlife habitat, or bay and estuary inflows. –Water rights amended to include instream use (expressly recognized in SB 3) –Water rights may be held for a term or in perpetuity –Mechanism for converting water rights for environmental purposes through voluntary participation by water right holders. There are currently three water rights in the Water Trust – two in the Rio Grande Basin and one in the Guadalupe Basin. To further use of the trust, funding for water right purchases and exploration of economic incentives are needed.

18. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 17 SB 3: A Model Collaborative Process SB 3 is precedent setting legislation, representing one of the most comprehensive processes for environmental flow protection in the nation. Passage of the environmental flow provisions in SB 3 represent a monumental effort by state environmental agencies, legislators, environmental organizations, water suppliers and industry groups. The effort was successful because of several key factors. –Legislative recognition of the importance of a sound ecological environment for our rivers –The involvement of diverse stakeholders committed to resolution –A willingness to compromise, e.g. continuation of permitting with re-opener clause until applicable flow standards adopted.

19. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 18 Collaborative Process (cont.) –While the process established by SB 3 may seem complicated, effective participation is key to stakeholder buy-in. The legislation recognizes that each region has unique characteristics and needs and provides a mechanism for local communities to be directly engaged in the decision-making process. –Upon full implementation, this new law will present a model for water resource management that balances consumptive and environmental needs.

20. Texas: A New Model for Environmental Protection San Antonio Water System 07 October 2008 Page 19 Websites For information on the SB 2 Texas Instream Flows Program, see http://www.twdb.state.tx.us/InstreamFlows/index.html http://www.twdb.state.tx.us/InstreamFlows/index.html For information on the Environmental Flows Advisory Group, see http://www.tceq.state.tx.us/permitting/water_supply/water_rights/eflows/group.html http://www.tceq.state.tx.us/permitting/water_supply/water_rights/eflows/group.html

21. Helping communities flourish Texas: A New Model for Environmental Flow Protection Robert R. Puente Interim President/CEO San Antonio Water System FLOW 2008 Instream Flow Council 07 October 2008 San Antonio Water System