1. Legal and Institutional Issues Affecting Aquifer Storage Recovery in Texas Edmond R. McCarthy, Jr. Jackson, Sjoberg, McCarthy & Wilson LLP www.jsmwlaw.com

2. What Is ASR?  Injection of water into an aquifer through a well bore for temporary storage and, subsequently, recovering the water through the same or an other well bore.  Hybrid – using a settling basin to allow the water to percolate into the aquifer for temporary storage and, subsequently, recovering the water through a well bore.

3. Current Texas Law does not define “ASR”

4. Related Texas’ “legal definitions”   30 TAC §297.1(5) Aquifer Storage and Retrieval Project - A project with two phases that anticipates the use of a Class V aquifer storage well, as defined in '331.2 of this title (relating to Definitions), for injection into a geologic formation, group of formations, or part of a formation that is capable of underground storage of appropriated surface water for subsequent retrieval and beneficial use. …

5.   30 TAC § 331.2(8) Aquifer storage well-- A Class V injection well used for the injection of water into a geologic formation, group of formations, or part of a formation that is capable of underground storage of water for later retrieval and beneficial use.

6. ASR vs. Aquifer Recharge  “Intent” is the critical distinction between Intent to “Store” vs. Intent to “Recharge” Intent to “Store” vs. Intent to “Recharge” Storage contemplates plans to recover Storage contemplates plans to recover the injected water for beneficial use the injected water for beneficial use Recharge may or may not include plans Recharge may or may not include plans to recover and beneficially use the water to recover and beneficially use the water

7. Why ASR vs. Alternatives?  Conservation  New Reservoirs  Groundwater  Reuse  Cloud Seeding  Out of state importation  Desalination

8. Legal History of ASR in Texas  Late 1980s UGRA files for ASR “storage”  1995 – Court of Appeals upholds UGRA permit  1995 – Legislature enacts HB 1989 codifying the use of ASR for surface water

9. UGRA‘s Permit  Large conventional reservoir  Substantial impacts to Hill Country habitat  Significant permitting & construction time  Substantial cost - $35M (1990 dollars)  ASR – 1 acre pad site  ASR – minimal impact to habitat  ASR – 5 years including court appeals  ASR – $7M including court appeals

10. Court decision – key points - ASR storage incidental to beneficial use - Change in character/Ownership issues do not effect beneficial use - Inability to control water not an automatic flaw if recoverability can be shown - City ordinance and well location helped - Evidence demonstrated beneficial use possible - Water is “fungible” – same molecule rule

11. HB 1989 - Authorized surface water to be stored using ASR (Texas Water Code §§11.153- 11.155) - Encouraged “pilot projects” around the state - Required compliance with affected GCD - Required cooperation with affected GCD - Required any agreement with GCD to be incorporated into water rights permit

12. Legal Status of ASR in Texas Surface water storage using ASR authorized Groundwater storage using ASR authorized Either type storage requires: - UIC Compliance – Class V Injection Wells Wells - GCD Compliance (where applicable) - GCD Compliance (where applicable)

13. Legal Constraints in Texas  Which set of “Water Laws” apply? - Surface Water – Chapter 11, Water Code - Groundwater – Chapter 36, Water Code - A combination of both

14. Key Legal Issues (Where Surface or Groundwater Related)  Ownership Rule of Capture Rule of Capture  Protection Rule of Capture/GCD Rules/Self-help Rule of Capture/GCD Rules/Self-help  Recoverability Waste/Economic Loss Waste/Economic Loss  Liability Trespass/Pollution Trespass/Pollution

15. Surface Water Related Legal Issues  State owned surface water requires a permit or an amendment: - Regular Permit - §11.121 - Regular Permit - §11.121 - Seasonal Permit - §11.137 - Seasonal Permit - §11.137 - Temporary Permit - §11.138 - Temporary Permit - §11.138 - Term Permit - §11.1381 - Term Permit - §11.1381  Ownership & Protection (condemnation power)  Scalping/Over drafting Issues

16. Groundwater Related Legal Issues  GCD jurisdiction – comply with rules Permits to produce Permits to produce Permits to inject Permits to inject Permits to recover Permits to recover Spacing Spacing Storage & % Recovery (“toll” provisions) Storage & % Recovery (“toll” provisions) Protection by GCD Protection by GCD Ownership Ownership

17. Recommendations - Legal  Authorizes “scalping” permits  Require GCDs to draft rules to enhance ASR development  Ownership should be a non-issue  Metering in and out key  Paying the Piper – recharging the aquifer  Alternative ASR implementation Hybrid forms – see El Paso Hybrid forms – see El Paso Wastewater Reuse Wastewater Reuse

18. Summary & Conclusions ASR provides a water development opportunity that can maximize potential beneficial use, while minimizing ASR provides a water development opportunity that can maximize potential beneficial use, while minimizing (i)impacts to the environment (ii) evaporative losses (iii) time associated with project development (iv) cost associated with project development

19. Statutory Changes  Expand Chapter 11 beyond Pilot Projects  Authorize waste water reuse ASR  Amend Chapter 36 to recognize ASR  Address Ownership/Protect issues

20. Legal and Institutional Issues Affecting Aquifer Storage Recovery in Texas Edmond R. McCarthy, Jr. Jackson, Sjoberg, McCarthy & Wilson LLP www.jsmwlaw.com