                               ATTORNEY GENERAL OF TEXAS
                                            GREG        ABBOTT




                                                 April 15,2009



The Honorable Jim Pitts                                Opinion No. GA-0708
Chair, Committee on Appropriations
Texas House of Representatives                         Re: Whether the Edwards Aquifer Authority may
Post Office Box 2910                                   promulgate rules prohibiting certain permits or
Austin, Texas 78768-2910                               contracts with recharge facilities constructed prior
                                                       to September 1, 1993 (RQ-0737-GA)

Dear Representative Pitts:

        The Medina Lake Dam, owned by Bexar-Medina-Atascosa Counties Water Control and
Improvement District No.1 ("BMA"), was built in 1912 to impound water for irrigation purposes
and is now in need of approximately $10 million in repairs. 1 Waters in the Medina Lake Dam
system have recharged the Edwards Aquifer for decades, perhaps since the system's inception. 2
Your predecessor related that BMA has never received compensation for the recharge it contributes
to the aquifer, and that BMA believes the Edwards Aquifer Authority (the "EAA") should assist in
funding the necessary repairs to ensure that the dam is able to continue recharging the aquifer.
Request Letter at 1.

        BMA contends that the EAA could assist in funding the repairs to the dam by issuing to the
BMA recharge, storage, and recovery permits. BMA Brief at 7. BMA explains that such permits
would allow BMA to recharge and store water in the aquifer, and entitle BMA to subsequently
recover an amount of water calculated to be available as a result of the recharge attributable to the
dam. Id When the water is withdrawn under the recovery permit, it could then be sold to users,
generating funds for the repair ofthe dam. Id Alternatively, BMA suggests, the same result could
be achieved by a contract between the EAA and BMA. Id The request letter asked about the EAA's
authority under the Edwards Aquifer Act (the "Act,,)3 to promulgate rules that restrict granting such


         ISee Request Letter at 1 (available at http://www.texasattorneygeneral.gov);BriefonbehalfoftheBMA.to
Honorable Greg Abbott, Attorney General of Texas, at 5-7 (Oct. 6,2008) (on file with the Opinion Committee)
[hereinafter BMA Brief].

        2BMA Brief at 5--6; Brief on behalf ofthe Edwards Aquifer Authority (the "EAA"), to Honorable Greg Abbott,
Attorney General of Texas, at 5 (Oct. 21, 2008) (on file with the Opinion Committee) [hereinafter EAA Brief].

        3See Act of May 30,1993, 73d Leg., R.S., ch. 626,1993 Tex. Gen. Laws 2350; as amended by Act of May 16,
1995, 74th Leg., R.S., ch. 524, 1995 Tex. Gen. Laws 3280; Act of May 29, 1995, 74th Leg., R.S., ch. 261, 1995 Tex.
Gen. Laws 2505; Act of May 6, 1999, 76th Leg., R.S., ch. 163, 1999 Tex. Gen. Laws 634; Act of May 25,2001, 77th
                                                                                                     (continued...)
The Honorable Jim Pitts - Page 2                      (GA-0708)



permits or entering into contracts for recharge facilities, such as Medina Lake Dam, that were
constructed prior to September 1, 1993, the Act's effective date. Request Letter at 2; see also EAA
Act § 4.02 (establishing the Act's effective date). The request letter also asked about the EAA's
authority to define the phrase "unreasonably deny" as it appears in section 1.44 ofthe Act concerning
recharge-and-retrieval contracts with political subdivisions. EAA Act § 1.44(b); Request Letter
at 2.

         Concerned about likely increases in withdrawals of water from the aquifer and the potential
effects of droughts, the Legislature promulgated the Act creating the EAA to provide for the
management and regulation of groundwater withdrawals in order to sustain diverse economic and
social interests dependent on water from the aquifer. Barshop v. Medina County Underground
Water Conservation Dist., 925 S.W.2d 618, 623 (Tex. 1996); see also EAAAct § 1.01 (stating that
a regional management district is "required for the effective control of the resource to protect
terrestrial and aquatic life, domestic and municipal water supplies, the operation of existing
industries, and the economic development of the state"). To achieve its purpose, the Act mandates
an aquifer-wide cap on non-exempt withdrawals, which was initially established at 450,000 acre feet
per year. Barshop, 925 S.W.2d at 624; EAA Act § 1.14.4 The Act further provides that no water
may be withdrawn from the aquifer without a permit issued by the EAA, with exceptions not
pertinent here. EAA Act § 1.15(b). The Act requires this permit system to generally favor historic
existing users. Id §§ 1.15-.16; see generally Braggv. Edwards Aquifer Auth., 71 S.W.3d 729,731
(Tex. 2002).

       The Act creates the EAA as a "conservation and reclamation district, . . . a governmental
agency and a body politic and corporate." EAA Act § 1.02(a). It has all the powers and duties of
an authority created under article XVI, section 59 of the Texas Constitution, including authority
under chapter 36 of the Water Code. 14. § 1.08(a). 5 The Act gives the EAA the powers "necessary



         \ .. continued)
Gen. Laws 2505; Act of May 6, 1999, 76th Leg., R.S., ch. 163, 1999 Tex. Gen. Laws 634; Act of May 25,2001, 77th
Leg., R.S., ch. 1192,2001 Tex. Gen. Laws 2696; Act of May 27,2001, 77th Leg., R.S., ch. 966, §§ 2.60-.62, 6.01-.05,
2001 Tex. Gen. Laws 1991,2021-22,2075-76; Act of June 1,2003, 78th Leg., R.S., ch. 1112, § 6.01(4), 2003 Tex.
Gen. Laws 3188, 3193; Act of May 23, 2007, 80th Leg., R.S., ch. 510,2007 Tex. Gen. Laws 900; Act of May 28, 2007,
80th Leg., R.S., ch. 1351, §§ 2.01-.12, 2007 Tex. Gen. Laws 4612, 4627-34; Act of May 28, 2007, 80th Leg., R.S., ch.
1430, §§ 12.01-.12,2007 Tex. Gen. Laws 5848, 5901-09 (hereinafter the EAA Act or the Act).

          4As enacted, the aquifer-wide cap on permitted withdrawals was established at 450,000 acre feet annually
through December 31, 1997 and at 400,000 acre feet thereafter. Act of May 30, 1993, 73d Leg., R.S., ch. 626, §
1.14(b)-(c), 1993 Tex. Gen. Laws 2350,2360. In 2007, the statute was amended to provide that permitted withdrawals
may not exceed or be less than 572,000 acre feet, being the sum of all regular permits issued or those for which an
application had been filed and issuance by the EAA was pending on January 1,2005. Act of May 28,2007, 80th Leg.,
R.S., ch. 1351, § 2.02, 2007 Tex. Gen. Laws 4612, 4627; Act of May 28,2007, 80th Leg., R.S., ch. 1430, § 12.02,2007
Tex. Gen. Laws 5848, 5902.

        5The EAA Act's grant of authority expressly includes chapters 50, 51, and 52, Water Code. EAA Act § 1.08(a).
The Legislature repealed chapter 52 of the Water Code in 1995, placing many of its provisions in chapter 36. See Act
                                                                                                       (continued...)
The Honorable Jim Pitts - Page 3                        (GA-0708)



to manage, conserve, preserve, and protect the aquifer and to increase the recharge of, and prevent
the waste or pollution of water in, the aquifer." Id § 1.08; see also TEx. WATER CODE ANN.
§ 36.0015 (Yemon 2008) (stating purposes of groundwater districts). The Act requires the EAA to
"adopt rules necessary to carry out the authority's powers and duties." EAA Act § 1.11 (a). See also
TEx. WATER CODE ANN. §§ 36.0115 (stating that the state's preferred method of groundwater
management is through rules developed, adopted, and promulgated by a water district in accordance
with chapter 36), 36.101 (a) (authorizing a groundwater district to make and enforce rules including
rules to provide for conserving, preserving, protecting, and recharging ofthe groundwater for certain
purposes). The Act also grants the EAA broad authority to enter into contracts. EAA Act
§ 1.11(d)(2). More specifically, section 1.44(a) of the Act authorizes the EAA to contract with any
political subdivision of the state to provide for "artificial recharge" ofthe aquifer for the subsequent
retrieval of the water by the political subdivision, and states further that the EAA may not
unreasonably deny a request for such a contract. Id § 1.44. Retrieval under such a recharge and
retrieval contract is not subject to the aquifer-wide cap. Id § 1.44(d).

        The EAA has adopted rules to implement the Act, 6 including rules related to aquifer recharge,
storage, and recovery projects. EAA Rules §§ 711.240--.272 (subchapter 1). The EAA's recharge
rules authorize an entity to obtain a permit to construct or modify an aquifer recharge facility or a
recharge and storage project, and a recharge recovery permit allowing an entity to recover water
previously recharged and stored in the aquifer. Id §§ 702.1(6), (51), 711.240--.272. rThe rules
provide that the EAA will not issue a permit for aquifer recharge "for any structure, facility, or works
constructed prior to September 1, 1993." Id. § 711.245(aV But the rules allow the EAA to issue
permits for a facility constructed prior to September 1, 1993 ifthe facility is modified to increase the
amount of recharge. Id § 711.245(b).

       Your predecessor's first question was whether the EAA has authority to adopt rules that deny
recharge, storage, and recovery permits for recharge facilities built before September 1, 1993.
Request Letter at 2. Because EAA rules do not deny such permits to recharge facilities that will
increase or augment the volume of its recharge beyond historic recharge levels, EAA Rules




          5( ... continued)
of May 29, 1995, 74th Leg., R.S., ch. 933, §§ 2, 6,1995 Tex. Gen. Laws 4673, 4679, 4701. Chapter 36 applies to "any
district or authority created under Section 52, Article III, or Section 59, Article XVI, Texas Constitution, that has the
authority to regulate the spacing of water wells, the production from water wells, or both." See TEx. WATER CODE ANN.
§ 36.001(1) (Vernon 2008). Thus, a court has held, "[b]ased on the plain language of the statute, ... that Chapter 36
of the Water Code applies to the [EAA]." InreEdwardsAquifer Auth., 217 S.W.3d581, 588 (Tex. App.-SanAntonio
2006, orig. proc.).

         6See Edwards Aquifer Authority Rules (rev. July 22, 2008), available at http://edwardsaquifer.orglpdfs/
ruleslFinal_Rules.pdf (last visited Apr. 13,2009) [hereinafter EAA Rules].

         7See also EAA Rules §§ 702.1(88) (defining "historic recharge" as annual recharge estimated to occur due to
natural features and artificial structures or facilities constructed prior to September 1, 1993); 711.247 (stating that
recharge and storage permits and retrieval permits will not be granted for historic recharge).
The Honorable Jim Pitts - Page 4                 (GA-0708)



§ 711.245(b), the inquiry may be restated as whether the EAA has the authority to promulgate rules
that prohibit recharge, storage, and retrieval permits for a facility built before September 1, 1993,
that does not undertake to increase or augment its historic recharge.

        As a political subdivision created under article XVI, section 59 ofthe Texas Constitution,
the EAA has only those powers expressly granted by statute and those necessarily implied as incident
to the express powers. Harlingen Irrigation Dist. Cameron County No. 1 v. Caprock Commc 'n
Corp., 49 S.W.3d 520,536 (Tex. App.-Corpus Christi 2001, pet. denied); see also Tri-City Fresh
Water Supply Dist. No.2 v. Mann, 142 S.W.2d 945,946 (Tex. 1940) (holding that a fresh water
supply district "may exercise only such powers" as the Legislature has expressly delegated to it "or
which exist by clear and unquestioned implication"). As discussed above, the Act requires the EAA
to "adopt rules necessary to carry out the authority's powers and duties." EAA Act § l.ll(a). The
powers expressly granted the EAA include the powers necessary "to increase the recharge of ...
the aquifer." Id § l.08(a) (emphasis added); TEx. WATER CODE ANN. § 36.1D1(c) (Vernon 2008)
(authorizing groundwater districts "to make and enforce rules, including rules ... to provide for
conserving, preserving, protecting, and recharging" groundwater sources). The EAA itself may
"own, finance, design, construct, operate, or maintain recharge facilities," but only "if the recharge
is made to increase the yield of the aquifer," among other requirements. EAA Act § 1.45 (emphasis
added). Other provisions ofthe Act concern recharge projects "to be constructed," indicating new
or additional recharge. Id § l.11(f)-(f-2). But the Act is silent about recharge from facilities in
existence at the time of the Act's passage, and no provision requires the EAA to take specific action
with respect to such recharge facilities.

        The EAA' s recharge rules generally provide that the EAA will not issue a permit for aquifer
recharge "for any structure, facility, or works constructed prior to September 1, 1993." EAA Rules
§ 711.245(a); see also EAAAct § 4.02 (establishing September 1,1993 as the Act's effective date).
The rules contain an exception, however, allowing permits for such existing facilities that are
modified to increase the amount of recharge. EAA Rules § 711.245(b). The stated purpose of the
EAA's recharge rules "is to promote the augmentation and management of waters recharged into the
Aquifer." Id § 711.241. In furtherance of this purpose, the EAA recharge, storage, and retrieval
permit rules seek to distinguish between recharge facilities that will add to or increase the recharge
ofthe aquifer and existing facilities that will merely continue historic recharge. Id §§ 702.1 (6), (51),
711.240-.272. Thus, given the EAA' s authority to "adopt rules necessary to carry out its powers and
duties," including particularly the "power to increase the recharge of the aquifer," a court would
likely conclude that the Act authorizes the EAA to promulgate rules prohibiting recharge and
withdrawal permits for recharge facilities that were constructed prior to September 1, 1993 that will
not increase the amount of the facility's recharge.

        The request letter also asked about the EAA's authority to promulgate rules that limit its
contracts with political subdivisions for recharge facilities constructed before September 1, 1993.
Request Letter at 2. Section 1.44 of the Act authorizes the EAA to enter into cooperative contracts
with political subdivisions to recharge water into the aquifer and to recover the measured amount
actually injected or artificially recharged, less certain amounts to account for spring discharge and
EAA compensation. EAA Act § 1.44(a), (c)-(d). Similarly, section 711.269(a) of the EAA rules
The Honorable Jim Pitts - Page 5                          (GA-0708)



authorizes the EAA to enter into a cooperative contract with a political subdivision that would allow
the political subdivision to recharge and store water in the aquifer and subsequently recover the
water. EAA Rules § 711.269. The rule further provides that such an interlocal contract "is deemed
to be an Aquifer recharge and storage permit and a recharge recovery permit" which, according
to BMA and the EAA, makes such a contract subject to the September 1, 1993 limitations. Id
§ 711.269(b).8 In effect, the request letter asks whether section 711.269 of the EAA rules is
consistent with section 1.44 of the Act in that the rule does not to apply to a political subdivision
owning a facility, such as a dam, that does not take measures to increase the facility's historic
recharge or otherwise add new recharge.

         Section 1.44 of the Act provides in part:

                            (a) The authority may contract with any political subdivision
                   of the state under Chapter 791, Government Code, to provide for
                   artificial recharge of the aquifer, through injection wells or with
                   surface water subject to the control of the political subdivision, for
                   the subsequent retrieval of the water by the political subdivision or its
                   authorized assignees for beneficial use within the authority.



                           (c) The political subdivision causing artificial recharge ofthe
                   aquifer is entitled to withdraw during any 12-month period the
                   measured amount of water actually injected or artificially recharged
                   during the preceding 12-month period, as demonstrated and
                   established by expert testimony, less an amount determined by the
                   authority to:

                               (1) account for that part of the artificially recharged
                   water discharged through springs; and

                                  (2) compensate the authority in lieu of users' fees.

                          (d) The amounts of water withdrawn under this section are
                   not subject to the maximum total permitted withdrawals provided by
                   Section 1.14 of this article.

EAA Act § 1.44.


           8See BMA Brief at 19 (stating "if interlocal contracts are deemed to be permits, and if permits for recharge
facilities constructed prior to September 1, 1993, are prohibited, then interlocal contracts with these facilities may also
be deemed prohibited"); EAA Brief at 9 (stating that because the interlocal cooperative contracts are deemed to be a
recharge and storage permit and a retrieval permit, and such permits are not available for facilities constructed prior to
September 1, 1993 that are not altered after that date, "logically the [EAA] could not enter into an interlocal contract for
this historical recharge").
The Honorable Jim Pitts - Page 6                    (GA-0708)



         In construing a statute, courts strive to discern and give effect to the Legislature's intent.
20801, Inc. v. Parker, 249 S.W.3d 392, 396 (Tex. 2008). Courts derive legislative intent from an
act as a whole, not from isolated portions. Id. Also, courts construing a statute consider, among
other things, a statute's objectives and the consequences of a particular construction. Crown Life
Ins. Co. v. Casteel, 22 S.W.3d 378, 383 (Tex. 2000). The language of section 1.44, when viewed
in light of the Act as a whole, indicates that it was intended to authorize contracts for new recharge-
and-retrieval projects, not to entitle a political subdivision to begin claiming existing recharge
attributable to a facility constructed prior to the Act's passage. Section 1.44, subsection (a)
authorizes a contract with a political subdivision ''to provide for" recharging water into the aquifer
that may subsequently be retrieved, suggesting a contract for recharge that was not yet occurring.
EAA Act § 1.44(a). Such a reading is bolstered by section 1.44, subsections (c) and (d), which
entitle a political subdivision to subsequently retrieve and use an amount of water comparable to the
amount of recharge it has provided by contract, without regard to the aquifer-wide cap on
withdrawals. Id § 1.44(c), (d). If section 1.44 is read to apply only to new or increased recharge,
then the provisions allowing a political subdivision to subsequently retrieve such recharge without
regard to the aquifer-wide cap should have little or no adverse effect on the level of water in the
aquifer or on the rights of permit holders subject to the cap. If, however, section 1.44 were
interpreted in a manner that authorized a political subdivision to begin reclaiming the historical
recharge associated with an existing facility without regard to the aquifer-wide cap, it would
negatively affect the amount of water available for allocation under the statutory permit system. 9 In
light of the Act's purpose of managing groundwater withdrawals to sustain diverse interests
dependent on the aquifer, sections (c) and (d) indicate that section 1.44 was not intended to entitle
a political subdivision owning an existing facility to begin retrieving the recharge it had historically
provided. See EAA Act § 1.01; Barshop, 925 S.W.2d at 623.

        The EAA has taken the position, through its rules, that recharge-and-retrieval contracts
are not authorized or required for recharge facilities that will not increase recharge. EAA Rules
§§ 711.247, .269. The stated purpose of the rules forrecharge-and-retrieval contracts, as well as for
recharge and storage permits and retrieval permits, is ''to promote the augmentation and management
of waters recharged into the Aquifer." Id. § 711.241. As explained above, the EAA has authority
to promulgate rules necessary to implement its powers and duties. EAA Act § 1.11. The Act
expressly grants the EAA powers "necessary to manage, conserve, preserve, and protect the aquifer
and to increase the recharge" of water in the aquifer. Id. § 1.08. see also TEx. WATER CODE ANN.
§ 36.0015 (Vernon 2008) (stating that groundwater districts are created to "provide for the
conservation, preservation, protection, recharging ... of groundwater and groundwater reservoirs").
As a result, a court would likely conclude that the EAA's powers to conserve, preserve, and protect
the aquifer and to increase its recharge support a rule that limits cooperative recharge-and-retrieval
contracts under section 1.44 to political subdivisions that will provide new or additional recharge.




         9The annual recharge due to the Medina Lake Dam system has been estimated in amounts ranging from about
37,000 to over 60,000 acre-feet. See BMA Brief at 6; EAA Brief at 4-5.
The Honorable Jim Pitts - Page 7                   (GA-0708)



         It has been suggested that the EAA rules block funds that BMA needs to make necessary
repairs, and if the repairs are not made, aquifer recharge will inevitably decline. to Generally, courts
do not consider the efficacy and wisdom ofa governmental agency's rules. See Pickens v. Tex. R.R.
Comm 'n, 387 S. W.2d 35, 45 (Tex. 1965) (stating that "it is not the function of the Court to substitute
itself for [an administrative agency exercising delegated authority] in determining the wisdom or
advisability of a particular order"). Moreover, the argument raises questions about the facts
supporting such rules that are appropriate for judicial determinatiOll. but which cannot be resolved
by an attorney general opinion. See Guitar Holding Co. v. Hudspeth County Underground Water
Conservation Dist. No.1, 263 S.W.3d 910,917 (Tex. 2008) (holding that challenges to a local
groundwater conservation district's rules are generally reviewed under the substantial evidence rule,
although district authority is reviewed de novo); Tex. Att'y Gen. Op. No. GA-0459 (2006) at 3--4
(fact questions cannot be investigated and resolved in an attorney general opinion).]

         The final question asked is whether the EAA is authorized to "narrowly define (or define at
all)," the phrase "unreasonably deny" that appears in section 1.44 of the Act. Request Letter at 2.
Section 1.44(b) provides that the EAA "may not unreasonably deny a request to enter into a
cooperative contract under this section if the political subdivision agrees to" certain conditions.
EAA Act § 1.44(b). The question asserts that the EAA has "narrowly" defined the phrase in section
711.269(d) of the EAA rules, which provides that a denial is unreasonable if the board fails to
authorize a contract that has been negotiated, reduced to final form, and complies with the Act and
EAA rules. Request Letter at 2 (citing EAA Rules § 711.269(d».

         The Act does not define the phrase "unreasonably deny" or any comparable terms. While
the EAA's construction of the Act is subject to de novo review by the courts, Bragg, 71 S.W.3d at
734, that standard of review necessarily assumes the EAA has authority to construe the Act in the
first instance. Id. Under the EAA's authority to enforce the Act and to promulgate rules necessary
to implement the Act, the EAA may include its interpretation of undefined terms in its rules as
necessary in order to implement the Act. EAA Act § 1.11 (a)-{c). Accordingly, a court is likely to
conclude that the EAA may include its construction of undefined terms in its rules, subject to de
novo review by the courts.

         Although the request letter characterizes section 711.269(d) of the EAA rules as a "narrow"
definition of the phrase "unreasonably deny," it is not entirely clear that the subsection attempts to
define the phrase or, if it does, that it has defined the phrase narrowly. Request Letter at 2. The
subsection describes a set of circumstances that constitute an unreasonable denial. EAA Rules
§ 711.269(d). The subsection does not suggest that a denial cannot be deemed unreasonable for
other reasons. Moreover, the rule's requirement that a contract request comport with the Act and
EAA rules is supported by the EAA's express authority to enforce compliance with the Act and its
rules. EAA Act § 1.11 (a)-{c). By requiring a contract to comply with the rules, the subsection does
not purport to preclude a challenge to a denial that is based on another rule or part of a rule that is
itself invalid. Thus, a court would likely conclude that the EAA has the authority under section
1.11(a)-{c) of the Act to promulgate section 711.269(d) of the EAA rules.


       IOReply Brief filed on behalf of the B~, at 1-2 (Jan. 22, 2008) (on file with the Opinion Committee).
The Honorable Jim Pitts - Page 8             (GA-0708)



                                      SUMMARY

                      A court would likely conclude that the Edwards Aquifer
              Authority may promulgate rules prohibiting recharge and withdrawal
              permits for or contracts with recharge facilities that were constructed
              prior to September 1, 1993, that will not increase the amount of the
              facility's recharge. A court would also likely conclude that the
              Edwards Aquifer Authority has authority to promulgate a rule
              providing that the denial of an interlocal contract under certain
              circumstances is unreasonable.




ANDREW WEBER
First Assistant Attorney General

JONATHAN K. FRELS
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

William A. Hill
Assistant Attorney General, Opinion Committee
