                                                                                ACCEPTED
                                                                            01-15-00374-CV
                                                                 FIRST COURT OF APPEALS
                                                                         HOUSTON, TEXAS
                                                                       7/27/2015 5:40:09 PM
                                                                      CHRISTOPHER PRINE
                                                                                     CLERK




                    NO. 01-15-00374-CV                      FILED IN
                                                     1st COURT OF APPEALS
                                                         HOUSTON, TEXAS
               In the Court of Appeals for the
                                                     7/27/2015 5:40:09 PM
              First District   of Texas — Houston    CHRISTOPHER A. PRINE
                                                             Clerk

     THE UPPER TRINITY REGIONAL WATER DISTRICT,
    AND THE TEXAS COMMISSION ON ENVIRONMENTAL
                         QUALITY,
                                      Appellants,
                                 v.
           NATIONAL WILDLIFE FEDERATION,
                                      Appellee.


         ON APPEAL FROM THE       l26TH DISTRICT    COURT
                  TRAVIS COUNTY, TEXAS

                 BRIEF OF APPELLEE

                     Myron J. Hess
                     State Bar No. 09549415
                     Annie E. Kellough
                     State Bar No. 24074517


                     NATIONAL WILDLIFE FEDERATION
                     44 East Ave.,     200
                                      Ste.
                     Austin, Texas 78701
                     Telephone: (512) 610 — 7754
                     Facsimile: (512) 476 — 9810
                     hess@nwl'.or2
                     kellou2haC1nwl‘.or9

                     Att0n1eysf0rAppellee National Wildlife Federation


ORAL ARGUMENT REQUESTED
                                           TABLE OF CONTENTS

TABLE OF CONTENTS                     ...........................................................................................       ..   2
INDEX OF AUTHORITIES                       ......................................................................................       ..4

STATEMENT REGARDING ORAL ARGUMENT                                                ................................................            8




                                                              ~
                                                                                                                                        ..



STATEMENT OF THE CASE                          ..................................................................................       ..   9
ISSUES PRESENTED                  .............................................................................................    ..   12
STATEMENT OF FACTS ............................................................................                                    ..   13
 A.   The District submitted an application to TCEQ for Water Use Permit No.
         5821 for the construction of Lake Ralph Hall and for an interbasin transfer of
         water from the Sulphur River Basin to the Trinity River Basin ................. .. 13
  B.     The Parties       participated in a contested case hearing at State                              Ofﬁce of
         Administrative Hearings.                 ............................................................................    ..    13
  C.     TCEQ granted the District’s application for Water Use Permit No. 5821... 15
  D.     District Court detennined that TCEQ erred in granting the District’s permit
         due   to lack     of compliance with Water Code Section 11.085                                   (l)(2).   ........... ..      15
SUMMARY OF THE ARGUMENT                                 .......................................................................    ..   17
ARGUMENT          ............................................................................................................     ..   21
  A.     Standard of Review: ....................................................................................                 ..    21
  B.     TCEQ erred by approving issuance of the permit in the absence of a water
         conservation plan meeting the explicit statutory prerequisites of Section
         11.085 (l)(2) of the Water Code. ................................................................                        ..    23
       1.    Section 11.085 (l)(2) establishes an unambiguous and stringent
             prerequisite to approval of an interbasin transfer ................................... .. 23

       2.    TCEQ ignored the plain language of Section                            11.085 (l)(2) and allowed
             the District to choose what levels of conservation and efﬁciency to
             include ..................................................................................................... .. 28
       3.    Report 362          is   not an adequate test for compliance with Section 11.085
              (l)(2)   ........................................................................................................    ..   31
       4.    The Region C Water Plan conservation recommendations do not justify
             reliance on Report 362 or demonstrate compliance with Section 11.085
              (l)(2)   ........................................................................................................    ..38
                                                                2
  C.      TCEQ erroneously approved the District’s application even though the
          District has not demonstrated that  has implemented its water conservation
                                                                 it

          plan as required by Section 11.085 (l)(2) of the Water Code ..................... .. 43
  D.      TCEQ erred in determining that the District’s water conservation plan
          includes the       means for implementation and enforcement required by TCEQ’s
          rules ............................................................................................................. 49   ..


  E.      TCEQ erred in determining that the District’s water conservation plan
          includes the required basis for the development of its ﬁve-year and ten-year
          targets for water savings in accordance with TCEQ’s rules ....................... .. 57

  F.      TCEQ’s        errors prejudiced           NWF’s substantial               rights within the           meaning of
          Section 2001.174 (2) of the Government                            Code .......................................... 60     ..


PRAYER       ...................................................................................................................    ..   64
CERTIFICATE OF COMPLIANCE ........................................................................ 65                               ..


CERTIFICATE OF SERVICE ................................................................................. ..66


References to the administrative record will be AR, Vol. No., Item, Page number(s).
                                          INDEX OF AUTHORITIES
Cases


City of El      Paso   v.    Public    Util.   Comm ’n,        883 S.W.2d 179 (Tex. 1994)                      ................   ..22


City of El      Paso   v.    Public Utility Commission of Texas, 839 S.W.2d 895 (Tex.App.                                              —
Austin 1992)        ....................................................................................................   ..22,   56

City of Marshall         v.   City of Uncertain,           206 S.W.3d 97 (Tex. 2006) ...................... ..24

City of San Antonio v Pollock,                 284 S.W.3d 809 (Tex. 2009) ................................ ..46


City of San Antonio            v.   City of Boeme, 111             S.W.3d 22 (Tex. 2003) ...................... ..24

City of San Antonio            v.   Pollock,    284 S.W.3d 809 (Tex. 2009) ............................... ..52

Dallas Ry.        & Terminal Co. v. Gossett, 294 S.W.2d 377 (Tex.                                 1956) ................... ..46


Duncan-Hubert           v.    Mitchell,    310 S.W.3d 92, 101 (Tex.App. — Dallas 2010)                                     ....... ..53




Flores v. Employees Retirement System of Texas, 74 S.W.3d 532 (Tex.App.—Austin
2002, pet. denied) ................................................................................................... ..59


Hamamcy v.         Texas State Bd. of Medical Examiners, 900 S.W.2d 423 (Tex. App.                                                 -

Austin 1995)        ..........................................................................................................    ..54


Jelinek    v.   Casas, 328 S.W.3d 526 (Tex. 2010)                        ......................................... ..45,     52,   60

Johnson      v.   City of Fort Worth,           774 S.W.2d 653 (Tex. 1989) ............................... ..39


Lone Star R. V. Sales v. Motor Vehicle Bd. of Tex. Dep ’t of Transp., 49 S.W.3d 492
(Tex. App.—Austin 2001, no pet.) ........................................................................ ..62

                                                                  4
Mclntyre         v.   Ramirez, 109 S.W.3d 741 (Tex. 2003)                          ..............................................   ..24


Nadaf v. Texas Comm '1: on Environmental Quality, No. 04-13-00068-CV                                                     (Tex. App.
2014) ......................................................................................................................        ..2l



Old Am. County Mutual Fire Ins. Co.                          v.   Sanchez, 149 S.W.3d 111 (Tex. 2004) ...24


R.R.   Comm           '1:   v.   Rio Grande Valley Gas Co., 683 S.W.2d 783 (Tex. App. Austin
1984)     ......................................................................................................................    ..61



Reliant Energy, Inc v. Public Util. Comm ’n, 153 S.W. 3d 174 (Tex. App — Austin
2004, pet. denied) ................................................................................................... ..22


Rogers    Texas Ba’. 0f Architectural Examiners, 390 S.W.3d 377. (Tex. App. —
            v.

Austin 2011) .......................................................................................................... ..46


State of Texas’ Agenciesand Institutions of Higher Learning et al v Public Utility
Commission of Texas et al, No. O3-11-00072-CV (Tex. App. — Austin 2014) ..... ..22

Texas A.B. C.               v.   Top of the Strip, 993 S.W.2d 242 (Tex. App. — San Antonio                                   1999).
..........................................................................................................................   ..47,   54

Texas Health Facilities                 Comm ’n v.       Charter Medical-Dallas,                   1116.,   665 S.W.2d 446
(Tex. 1984), ............................................................................................................ ..62


Texas Water Development Board v. Ward Timber, 411 S.W.2d 554 (Tex.App.—
Eastland, 2013) ...................................................................................................... ..60


Texas Workers’ Comp. Comm ‘n v. Cont'l Cas. Co., 83 S.W.3d 901 (Tex. App. —
Austin 2002) .......................................................................................................... ..33


United Sav. Ass’n of Tex. v. Vandygriﬁ‘, 594 S.W.2d 163 (Tex. Civ. App.—Austin
1980) ................................................................................................................ ..61, 62
Statutes


Tex. Gov’t Code Ann. Section 2001.174(2) .................................................... ..22, 60


Tex. Gov’t Code Section 2001.172                   .......................................................................    ..2l



Tex. Water Code Section 11.085 ........................................................................... ..39


Tex. Water Code Section 11.085                  (a)   .....................................................................   ..   17


Tex. Water Code Section 11.085 (k)(2)(c) ............................................................ ..39


Tex. Water Code Section 11.085                 (l)(2)     ..........................................................   ..passim


Tex. Water Code Section 11.085 (v)                    .....................................................................   ..17


Tex. Water Code Section 11.1271                   (a)   ...................................................................   ..25


Tex. Water Code Section 11.1271 (e)                     ............................................................   ..passim


Tex. Water Code Section 11.134 (b)(4)                      ................................................................   ..26


Tex. Water Code Section 16.053 ........................................................................... ..38


R01‘?-°>



30 TAC Chapter 288 .................................................................................. ..26, 50, 59

30 TAC Section 288.5           ...............................................................................   ..26, 52,         60

30 TAC Section 288.5 (l)(B)               ....................................................................   ..20, 58,         64
30   TAC Section 288.5 (1)(H)              .........................................................................   ..passim


30   TAC Section 295.9          ...............................................................................   ..26, 50,   59

30   TAC Section 297.18 (d)(2)              ........................................................................   ..passim


Tex. R. App. P. Section 38.1(e) ............................................................................... .. 8


Tex. R. App. P. Section 44.1              (a) ............................................................................ ..61
                   STATEMENT REGARDING ORAL ARGUMENT
        Appellee agrees with Appellants’ requests for oral argument. This case involves

interpretation of a statutory provision of the      Texas Water Code, Section 11.085(l)(2),

that   is   a matter of first impression in the Texas courts. There are significant nuances

and    intricacies of the statutory requirement, as well as Appellant    TCEQ’s application

of it in the context of other water conservation requirements, and oral argument would

aid the Court in     making   its   decision in this precedent-setting case. See Tex. R. App.

P. 38.l(e)
                                     STATEMENT OF THE CASE

           This appeal by the Texas Commission on Environmental Quality (“TCEQ”)

and the Upper Trinity Regional Water                District (the “District”)   comes     to this   Court

from the Honorable Scott Jenkins of the               126"‘ District   Court of Travis County after

his issuance of a Final              Judgment, on March      6,   2015, reversing and remanding

TCEQ’s        decision, as     it   relates to the application   of Section 11.085    (l)(2),   granting

Water Use Permit No. 5821               (the “Permit”) to the District   on October 2, 2013.‘ Judge

Jenkins did not reach issues not governed by Section 11.085                     (l)(2),   ﬁnding those

issues     moot   in light     of his reversal. The Permit as granted allows the District to

construct and        impound water           in a   proposed reservoir, Lake Ralph Hall, for

recreational use        and authorizes the District        to divert     and use the water via an

interbasin transfer authorizing the District to transfer water             from the reservoir in the

Sulphur River Basin—the basin of origin—to the Trinity River Basin—the receiving

basin.     The Texas     Legislature, in 1997,       imposed speciﬁc additional review           criteria


and prerequisites for authorization of such an interbasin transfer through

amendments         to Section 11.085         of the Water Code. This case involves the               first


interpretation in a contested case context of              one of those prerequisites, found in




'
    AR,   Vol. 11, Item 151.
Section     11.085(l)(2)    of the Water Code, which imposes additional water

conservation requirements for interbasin transfers.

         This case focuses on         TCEQ’s    failure properly to   implement the      explicit


statutory   and regulatory water conservation prerequisites for granting the permit,

including the interbasin transfer sought by the District. Although Appellee disputed

various issues related to environmental impacts of the proposed project during the

agency proceeding, those issues are not raised on appeal.

         The contested case hearing on         the merits of this matter occurred before the

State Office of Administrative Hearings               (“SOAH”) from January     15-25, 2013.2

Administrative      Law   Judges (ALJS) Kerrie Jo Qualtrough and Pratibha           J.   Shenoy

prepared a Proposal for Decision recommending that the Commission approve the

application and issue the Permit.“         NWF         ﬁled exceptions to the Proposal for

Decision“ and a Motion for Rehearing5 in response to the decision by the                  TCEQ
Commissioners       to grant the application.“


         The   district court ruled that   TCEQ       failed properly to   implement the high

statutory standard        imposed under the Water Code for the review of water

conservation plans before authorizing interbasin transfers. While                  NWF      also




1
  AR,   Vols. 23-25, Items 374-382.
3
  AR,   Vol. 10, Item 133.
4
  AR,   Vol. 10, Item 134.
5
  AR,   Vol. 11, Item 143.
“AR,    Vol. 11, Item 151.

                                                 I0
challenged    TCEQ’s       failure to   comply with     its    rules establishing requirements for


water conservation plans for water right applications regardless of whether an

interbasin transfer   is   involved, the district court determined those claims to be        moot

as a result of the reversal of TCEQ’s decision            on the interbasin   transfer issues.   The

District Cou1’r’s   Judgment of March        6,   2015,   is   ﬁnal and appealable. The Supreme

Court of Texas ordered        this   case transferred on April 21, 2015 from the Third Court

of Appeals.




                                                   1]
                                     ISSUES PRESENTED

        Pursuant to Rule 38.2(a) of the Texas Rules of Appellate Procedure,            NWF
objects to TCEQ’s     and the District’s characterization of the issues presented      in this


appeal.    NWF identiﬁes the following issues in this appeal:
1.   Did   TCEQ err in its interpretation and application of Texas Water Code Section
     1l.O85(l)(2)    in     ﬁnding      the     District’s   water   conservation   plan   and

     implementation satisﬁed statutory requirements?

2. Is there substantial      evidence to support      TCEQ’s   determination that the District

     demonstrated that      it   has implemented a water conservation plan that will result

     in the highest practicable levels        of water conservation and efﬁciency achievable

     within the District’s jurisdiction as required by Texas Water              Code Section

     l1.085(l)(2)?


3.   Is there substantial   evidence to support TCEQ’s determination that the District’s

     water conservation plan complied with the requirements of Sections 288.5

     (1)(B) and (l)(H) of TCEQ’s rules?
                                       STATEMENT OF FACTS
      A. The District submitted an application to TCEQ for Water Use Permit
         No. 5821 for the construction of Lake Ralph Hall and for an interbasin
         transfer of water from the Sulphur River Basin to the Trinity River
            Basin.

            In 2003, the District ﬁled an application with           TCEQ    for   Water Use Permit

No. 5821.7 In         its   application, the District sought the right to construct    and maintain

a   dam and reservoir along the North             Sulphur River, a tributary of the Sulphur River

in   Fannin County, Texas. The District applied for the right to impound up to 180,000

acre-feet of state-owned water in this reservoir (Lake               Ralph Hall) and    to divert   and

put to beneficial use up to 45,000 acre-feet per year of that water, of which 34,082

acre-feet per year          is   available   on a ﬁrm   basis. Additionally, the application     sought

authorization of an interbasin transfer allowing the transfer of up to 45,000 acre-feet

of water per year of the impounded water, from the reservoir located in the Sulphur

River Basin,         to the Trinity    River Basin where the bulk of the District’s customers

are   and where the District asserts much of the water would be put                to beneﬁcial use.


      B.    The Parties       participated in a contested case hearing at State Office of
            Administrative Hearings.

            TCEQ received many requests for a contested case hearing on the District’s
application, including a            number from individuals} The hearing           requests of   NWF,
the   Town      of Flower Mound, and the Texas Conservation Alliance were granted by


7
    AR,    Vol. 1, Item 1.
8
    AR,    Vol. 2, Item 27.

                                                        13
the   TCEQ Commissioners” and those parties, as well as several individuals, all were
determined to be affected persons and granted party status in the contested case

hearing,” along with the Executive Director of              TCEQ     and the       TCEQ   Office of

Public Interest Counsel.      NWF submitted a hearing request in order to protect                 its


substantial rights, including the rights of its        members,"   that   would be   affected.   The

individual parties withdrew their requests prior to the hearing on the merits,” while

the   Town of Flower Mound, the Texas Conservation Alliance and NWF participated

in the full evidentiary    SOAI-I hearing from January 15-25, 2013.”                   During    this


hearing,   NWF    provided evidence on and raised a number of issues, including

challenges to the adequacy of the District’s water conservation plan and                          its


implementation of that plan.

        ALJs   Kerrie Jo Qualtrough and Pratibha            J.   Shenoy issued a Proposal        for

Decision and the parties were allowed the opportunity to                    tile   exceptions and

responses.“     The ALJs submitted        their   response to the exceptions to the         TCEQ
Commissioners.'5




9
 AR, Vol. 5, Item 68.
'0
  AR, Vol. 5, Item 70.
" NWF identiﬁed members owning        land within the footprint of the reservoir that would be
inundated if the reservoir were built and who shared NWF’s organizational concerns. See AR,
Vol. 5, Item 64.
'3
   AR, Vol. 5, Items 59-62, 71; Vol. 6, Item 83.
‘3
   AR, Vol. 23, Items 374-376; Vol. 24, Items 377-379; and Vol. 25, Items 380-382.
"‘
   AR, Vol. 10, Item 133.
*5
   AR, Vol. 11, Item 144.
                                                  14
     C.   TCEQ granted the District’s application for Water Use Permit No.
          5821.
          The Commissioners voted to grant the application and issue the Permit at their

September 24, 2013 public hearing.” The order approving the application was

issued     on October     2,   2013 and mailed      to the parties    on October           10,   2013.”

          NVVF      timely ﬁled a Motion for Rehearing of this matter on October 31,

2013.”      TCEQ made no ruling on the Motion for Rehearing and it was overruled by
operation of law on         November 27, 2013.” NWF timely filed its                       Original Petition in

this   matter on     December 26, 2013.

     D. District Court determined that TCEQ erred in granting the District’s
        permit due to lack of compliance with Water Code Section 11.085 (l)(2).
          Judge Scott Jenkins, for the 126th District Court of Travis County, held that

TCEQ had not met statutory requirements                    before issuing the permit authorizing an

interbasin transfer under              Water Code Chapter 11.085                  (l)(2)    and reversed and

remanded         that portion     of the Final Order back to        TCEQ. NWF’s             appeal also raised

the issue of       TCEQ’s        failure to   comply with    its   rules regarding water conservation


plans even in the absence of an interbasin transfer. However, based on the ruling that

TCEQ had not complied with Section                  11.085     (l)(2), all    other claims were           deemed

moot. The District Court’s Judgment of March                   6,   2015,    is   ﬁnal and appealable. The



'6
   AR,    Vol.   26, Item 384.
” AR,     Vol.   1l,Item 151.
'3
   AR,    Vol.   11, Item 148.
'9
   AR,    Vol.   11, Item 150.

                                                      I5
Supreme Court of Texas ordered   this   case transferred on April 21, 2015 from the

Third Court of Appeals.




                                         16
                             SUMMARY OF THE ARGUMENT
          This case presents the     first   consideration in a contested case hearing context

of the requirements of Section 11.085               (l)(2)   of the Water Code, which allows for the

granting of an application for an interbasin transfer” only upon satisfaction of what

is   by   far the   most stringent water conservation language            in   Texas law. Pursuant      to


that provision,      TCEQ is only allowed to grant an application involving an interbasin
transfer if the applicant has       developed and implemented a water conservation plan

that will result in the highest practicable levels of water conservation                 and efficiency

achievable within the applicant’s jurisdiction.                TCEQ    applied that requirement in a

manner that deprived         the statute of   its   plain    meaning and of any     practical effect.

          All water right applications are subject to a requirement for the development

of a water conservation plan, which must include quantiﬁed conservation goals and

measures      to achieve those goals.    Those plans must provide for a reasonable              level of

water conservation. The plain language of Section 11.085                   (l)(2)   imposes additional,

and very       stringent,   water conservation requirements for applications involving

interbasin transfers such as the        one    at issue here. In      2003, the Legislature directed

TCEQ,       in partnership   with the Texas Water Development Board, to develop model



2°
   As set out in Section 1 1.085 (a) of the Water Code, an interbasin transfer involves taking or
divening water from one river basin in the state and transferring the water to any other river
basin. As provided by Section [1.085 (V), some interbasin transfers are exempted from most of
the requirements of Section 11.085. The transfer at issue here does not qualify for that
exemption.

                                                       17
conservation programs that suggest best                 management         practices, also     known   as

BMPs,      for achieving the highest practicable levels of water conservation                        and

efficiency achievable.      TCEQ       has not done so and has not developed rules or

guidance interpreting Section 11.085          (l)(2).


         Instead,   TCEQ   relied   on another document developed by a volunteer task

force for a different purpose to guide         its   application of that statute.        It   did so even

though the task force, on which the Executive Director of TCEQ sewed, expressly

stated that the     document, known as Report 362 or the            BMP Guide, was not intended
as a regulatory     document and not intended          to   infomi compliance with the interbasin

transfer water conservation requirement. Instead,                   it    is   intended as a resource

describing    commonly used     best    management practices             for water conservation     from

which users are encouraged            to   pick and choose components to incorporate in

developing routine water conservation plans and recommendations. Report 362                          is   a

voluntary guide that includes a single, multi-component best                     management      practice

designed for wholesale water providers like the               District.


         Relying on the voluntary nature of the document,                 TCEQ allowed the District
to pick    and choose components of that single best management practice                       to include


in its   water conservation plan. The District provided no explanation or justification

for failing to include various      components of that BMP in its plan. Indeed, the District

did not even retain a water conservation expert to help                           it   develop a water


                                                  18
conservation plan to comply with that stringent criterion. Moreover, the water

conservation plan does not specify the level at which various conservation measures

are to be included. Thus, for example, the District’s          program      to   provide irrigation

system evaluations includes no indication of the level of effort or amount of

evaluations proposed to be undertaken.“ In effect, under                TCEQ’s       approach, an

evaluation of a single irrigation system         is   credited the   same   as an evaluation of

10,000 irrigation systems in assessing compliance with the “highest” practicable

levels of water conservation           and efficiency achievable. Despite the statutory

directive,   TCEQ never attempted to determine the highest practicable levels of water
conservation and efficiency achievable within the District's jurisdiction or the

adequacy of the    District’s plan to   accomplish those     levels.


       TCEQ      also failed to review the District’s implementation of                  its   water

conservation plan, as required by Section 11.085             (l)(2).   The only review of        the

adequacy of actual implementation was undertaken by              NWF’s       water conservation

expert,   who determined    that the   implementation reports available from the District

did not indicate implementation of key components of the plan and certainly did not

document implementation demonstrating            that the plan “will result” in the highest


practicable levels of water conservation and efficiency achievable.              The record is also



3‘
  AR, Vol. 18, Item 239 at p. 13, Section 5.8. Actually, the plan describes what an evaluation
“could" consist of rather than a commitment to any actual program. Id.

                                               19
devoid of evidence demonstrating the level                     at   which the water conservation plan will

be implemented       in the future.


        The    District’s water conservation plan also fails to                         comply with even             the

limited explicit water conservation requirements that are applicable for                                   all     water

right applications. First, the District’s plan fails to provide                               any description or

explanation of a means for enforcement, which                         is   a speciﬁc requirement of TCEQ’s

rules   and   critically   important for successful implementation. Second, although the

District’s plan     does include numerical goals to be achieved,                         it   fails to   provide the

explanation of the basis for the development of those goals that                                   is    required    by

TCEQ’s      rules   and   is   necessary to evaluate the reasonableness of the goals.

        TCEQ’s       treatment of Section 11.085 (l)(2) deprives that provision of any

independent meaning and               is    arbitrary   and capricious and an abuse of discretion. In

addition,     TCEQ’s ﬁndings of compliance                     with Section 11.085            (l)(2),   and 30     TAC
§§288.5 (1)(B) and (l)(H) are not supported by substantial evidence.                               A key question
in this appeal is    whether the Legislature’s explicit prerequisite                      to the granting          of an

interbasin transfer will be given meaningful effect.                        TCEQ, in its decision process in
this matter,     rendered       it   ineffectual. In addition,             TCEQ       failed to follow       its    own

regulations      regarding           contents     of water           conservation        plans     accompanying

applications for water rights, resulting in a decision that                      is   arbitrary    and capricious,

an abuse of discretion, and            is   not supported by substantial evidence.


                                                          20
                                         ARGUMENT
A. Standard of Review:


         The scope of judicial review of a     state      agency decision          in a contested case is


as provided       by the law under which review            is   sought."     If,    as   is   true here, the

underlying statute does not prescribe the standard of review, the substantial evidence

rule applies.    The “Texas Water Code does not define                 the scope of judicial review of

a decision of the       TCEQ, and       thus [the court] review[s] under the ‘substantial

evidence’ standard.” Nadaf v. Texas        Comm     '11   an Enviromnental Quality, No. 04-13-

00068-CV        (Tex. App. 2014). According to the substantial evidence standard, the

court:




      (2) shall reverse or   remand   the case for further proceedings if substantial


      rights   of the appellant have been prejudiced because the administrative

      ﬁndings, inferences, conclusions, or decisions            are:


                 (A) in violation of a constitutional or statutory provision;

                 (B) in excess of the agency's statutory authority;

                 (C)   made through unlawful procedure;

                 (D) affected by other error of law;



33
     Tex. Gov’t Code Section 2001.172

                                               21
               (E) not reasonably supported          by   substantial evidence considering the


               reliable   and probative evidence      in the record as     a whole; or

               (F) arbitrary or capricious or characterized              by abuse of discretion or
                                                                  99]]
               clearly unwarranted exercise of discretion.

       For purposes of evaluating the existence of substantial evidence under Texas

law, “in conducting a substantial-evidence review, [the Court] must detemiine

whether the evidence as a whole        is   such that reasonable minds could have reached

the conclusion the agency       must have reached      in order to take the disputed action.”2“


       The Third    District   Court of Appeals      in Austin has elaborated     on the arbitrary

and capricious prong of review under Texas Government Code Section 200l.l74(2)

(F):


       “An agency’s    decision is arbitrary and capricious or results from an
       abuse of discretion if the agency: (1) failed to consider a factor that the
       legislature directs it to consider; (2) considers an irrelevant factor; or
       (3) weighs only relevant factors that the legislature directs it to consider
       but still reaches a completely unreasonable result. City of El Paso v.
       Public Util. Comm ’n, 883 S.W.2d 179, 184 (Tex. 1994). Other reasons
       an agency’s decision might be considered arbitrary is if its order denies
       parties due process of law or the agency fails to follow the clear
       unambiguous language of its own regulations. Reliant Energy, Inc v.
       Public Util. Comm ’n, 153 S.W. 3d 174, 199 (Tex. App — Austin 2004,
       pet. denied).”35



13
   Tex. Gov’t Code Ann. Section 2o01.174(2)
   City of El Paso v. Public Utility Commission of Texas, 839 S.W.2d 895, 905-6 (Tex.App. —
34

Austin 1992). Relevant portion afﬁrmed by City of El Paso v. Public Util. Comm ‘n, 883 S.W.2d
179 (Tex. 1994).
15
   State of Texas’ Agencies and Institutions of Higher Leanting et al v Public Utility Commission
ofTexas et al, 450 S.W.3d 615, 625 (Tex. App. — Austin 2014).
                                                22
B.    TCEQ erred by approving issuance of the permit in the absence of a water
      conservation plan meeting the explicit statutory prerequisites of Section
      11.085 (l)(2) of the Water Code.
         1.   Section 11.085 (l)(2) establishes an unambiguous and stringent
              prerequisite to approval of an interbasin transfer.

         TCEQ     imperrnissibly translated the explicit, and unambiguous, statutory

prerequisite to approval of an interbasin transfer into a standardless exercise,

allowing the District to pick and choose water conservation measures to include in

its   water conservation plan without requiring            it   to justify those decisions or to


demonstrate that the plan would result in the required levels of water conservation

and efficiency.“ TCEQ’s decision           to   approve the application was not supported by

substantial evidence,      was   arbitrary      and capricious, an abuse of discretion and

otherwise not in compliance with law.” The plain language of Section 11.085                  (l)(2)


of the Water Code establishes a stringent, mandatory prerequisite for approval by

TCEQ of an interbasin transfer, such as the one at issue here:

      “The commission may      grant, in   whole or    in part,   an application for an interbasin
      transfer only to the extent that:




3‘
   Various water conservation plans were submitted by the District. The most recent one, and the
one on which the District primarily seeks to rely, and the only one in effect at the time of the
hearing, is the 2012 plan. AR, Vol. 18, Item 239. The District also submitted a 2009 Water
Conservation Plan as part of its application. AR, Vol. 18, Item 236. The 2012 plan is the version
that comes closest to meeting statutory and regulatory prerequisites and this brief addresses the
adequacy of that plan except to the extent that specific references to the 2009 plan are indicated.
NWF‘s arguments of inadequacy apply to both versions of the plans and also to earlier versions
referenced in the application.
37
   This issue was raised in NWF’s Motion for Rehearing at pp. 3 — 8, pp. 9 — 10 (FOF 383-384,
FOF 438-439). 1313. 10 -13 (FOF 441-448), pp. 13 — 15 (COL 20,       COL
                                                                      27 — 29, COL 32-33).
                                                  23
      (2) the applicant for the interbasin transfer has prepared a drought contingency
      plan and has developed and implemented a water conservation plan that will
      result in the highest practicable levels of water conservation and efﬁciency
      achievable within the jurisdiction of the applicant.”

          There are no    TCEQ    rules or guidance interpreting this provision.“               As     the

Texas Supreme Court has          directed, each    word should be given       effect according to


its   plain meaning. City of Marshall      v.   City of Uncertain,     206 S.W.3d   97, 105 (Tex.

2006)(“We look first to the plain and ordinary meaning of the statute’s words.” citing

Mclntyre      v.   Ramirez, 109 S.W.3d 741, 745 (Tex. 2003)). Every word            is   to   be given

effect. Id. (citing    Old Am. County Mutual Fire Ins. Co.        v.   Sanchez, 149 S.W.3d 111,

115 (Tex. 2004) and City of San Antonio           v.   City of Boeme, 111   S.W.3d 22, 29 (Tex.

2003)).

         The Merriam-Webster online          dictionary deﬁnes practicable as “capable of

being put into practice or of being done or accomplished.”29 Similarly, the online

Merriam-Webster thesaurus defines “achievable” as “capable of being done or

carried out.”"‘°     Although the definitions of the two terms are very            similar, in the



 AR Vol. 25, Item 380 (hearing transcript for Jan.23, 2013) at p.l633, line 14 — p. 1634, line 2.
38

TCEQ has adopted a rule that basically restates the statutory requirement. 30 TAC §297. 18
(d)(2) provides, in relevant part: “the applicant for the interbasin transfer has prepared drought
contingency and water conservation plans meeting the requirements of Chapter 288 of this title
(relating to Water Conservation Plans, Drought Contingency Plans, Guidelines and
Requirements) and has implemented a water conservation plan that will result in the highest
practicable levels of water conservation and efficiency achievable within the jurisdiction of the
applicant."
29
     Merriam-Webster, http://www.merriam—webster.corri/dictionary/practicable    (last visited   July
26, 2015).
3°
     Merriam-Webster, http://www.merriam—webster.conilthesaurus/achievable      (last visited   July
26, 2015).

                                                  24
context of the statute, they each have independent effect. Taken as a whole, Section

11.085     (l)(2) establishes that   an acceptable water conservation plan must include

measures that are designed to result       in the highest levels           of water conservation and

efficiency which are capable of being accomplished—i.e., highest practicable.

However, an applicant may be able          to    show   that   it   is   not required to include in      its


plan every practicable measure or to include them at the highest level                              if    it



demonstrates that a measure or level        is   not capable of being done or carried              out—

i.e.,   achievable—within the jurisdiction of the applicant.

          The   plain language of the provision also requires              more than a showing       that


such a plan has been developed. There must also be a showing that the plan has been

implemented and       that the plan as   implemented         will result in achieving the requisite


levels of conservation     and efficiency. The     statute     does not purport to require that the

highest practicable levels of water conservancy and efﬁciency achievable must have

already been reached before an application              is   granted.      The   plain language does,

however, require a showing, given the existing, and ongoing, implementation of the

plan, that those levels    yvﬂ be accomplished.

          The   statute   imposes that stringent water conservation and efficiency

performance standard as an additional requirement over and above                        less stringent


water conservation requirements that apply more broadly. Section 11.1271                     (a)   of the

Water Code requires        that all applicants for a water right, regardless of           whether an


                                                 25
interbasin transfer         is   involved, must formulate and submit a water conservation plan

and adopt reasonable water conservation measures. In addition, Section 11.134

(b)(4)   of the Water Code provides that a water right application can only be granted

if the   applicant provides evidence that             it   will use reasonable diligence to avoid        waste

and achieve water conservation.                 TCEQ has adopted rules to implement those basic
water conservation requirements.“ As explained by Mr. Gooch, the District’s water

conservation expert witness, rather than imposing substantive standards, the rules

implementing those two provisions, with                     lirrrited   exceptions, primarily require only

that   water conservation plans must address certain issues instead of imposing a

speciﬁc substantive standard for water conservation measures or efﬁciency that must

be met.” The plain language of Section 11.085                       (l)(2)   stands in sharp contrast to the

general requirements for “reasonable” measures and “reasonable” diligence.

         In order to give independent              meaning      to Section 11.085 (l)(2), a standard for


a water conservation plan that is              much more stringent than reasonable diligence must

be enforced. In derogation of that clear legislative directive,                        TCEQ    granted the



3'
     Those   rules are   found   in   30 TAC Chapter 288 and Section 295.9. The Chapter 288      rules
speciﬁcally applicable to wholesale water providers such as the District are found in Section
288.5. Chapter 288 requirements are also expressly made applicable, through 30 TAC Section
297.18 (d)(2), to applicants seeking an interbasin transfer.
33 “I
      believe that the 2009           UTRWD
                                      Water Conservation Plan addresses each of the issues that
are speciﬁed   in the applicable TCEQ rules, and I believe the District’s plan therefore satisﬁes
TCEQ’s requirements.” AR, Vol. 18, Item 11 (Direct testimony of Tom Gooch) at p. 68, line 4 -
p. 69, line 15. As discussed further below, Mr. Gooch was unable to point to any basis for
asserting that requirements had been met for a description of enforcement mechanisms or for the
basis of numerical goals.

                                                           26
District’s application for         an interbasin transfer based on a water conservation plan

that fails to satisfy the rules       governing even that reasonable diligence level of water

conservation and that fails to comply with the plain language of the statute.                             TCEQ
did so       by    relying, at the District’s behest,        on a document called the Water

Conservation Best Management Practices Guide (also                     known       as the    BMP Guide or
Report 362), which          is   a voluntary guidance document designed for use outside of

the regulatory context to inform the              development of routine water conservation

programs. Based on the language of Report 362,                 TCEQ allowed the District to pick
and choose measures from Report 362                to include in its plan,        without justifying the

exclusion of measures or the extent to which measures are included.                            TCEQ relied
on Report 362 instead of adopting            rules or producing the           model water conservation

plans the Legislature directed          TCEQ to develop to help inform the implementation
of Section 11.085         (l)(2)   and without making a reasoned evaluation of the highest

practicable levels achievable.

           The    District also failed to undertake a review        of the highest practicable levels

achievable, failing even to retain,         among    the   many technical experts working on the

application, a water conservation expert to help               it   develop      its   water conservation

plan and program.“          The    District did retain a water conservation expert to testify in




33
     AR,   Vol. 23, Item 374 (hearing transcript for Jan. 15, 2013) at   p.   44, line 12   — p. 47,   line 14.

                                                    27
defense of        its    plan and water conservation program after                       it   was developed.“ He

acknowledged             that    he did not evaluate potential additional conservation measures

the District might undertake              beyond those included            in   its    water conservation plan.”

           2.   TCEQ ignored the plain language of Section 11.085 (l)(2) and
                allowed the District to choose what levels of conservation and
                efficiency to include.

           The Legislature’s          intent in establishing a strong requirement                 is   reﬂected both

in the     language chosen to deﬁne the              test   and   in its decision to          make compliance an

explicit prerequisite to approval of                an application. In amending Section 11.085 in

1997, the Legislature imposed a signiﬁcant review process for interbasin transfers.

However, most subsections of Section 11.085                             direct    TCEQ         to consider various


factors in reaching a decision about                whether       to   approve an application.             By contrast,
in   Subsection         (1)   the Legislature   imposed two explicit prerequisites to approval. Only

the second of those—Subsection (l)(2)—is at issue in this appeal.

           Subsection 11.085           (l)(2)   imposes a three-part            test. First,    the applicant         must

have prepared a drought contingency plan, which imposes measures                                      to   reduce water

use during drought conditions over and above the water conservation and efﬁciency

measures that are              in effect at all times.   Compliance with               that   drought contingency

component          is     not challenged in this appeal. Second, the applicant must have

developed a water conservation plan strong enough                                that, if     implemented,       it   will


34
     AR,   Vol. 24, Item 377 (hearing transcript for Jan. 18, 2013) at            p.   863, line 23   — p. 864, line 4.
35
     AR,   Vol. 24, Item 377 (hearing transcript for Jan. 18, 2013) at            p.   889, line 23   — p.890, line 3.
                                                            28
$11;    in the highest practicable levels             of water conservation and efficiency

achievable within the applicant’s jurisdiction. The third component requires the

applicant to demonstrate that        it   has implemented the water conservation plan in a

way   that will result in the highest practicable levels             of water conservation and

efficiency achievable.     The issue of inadequate implementation of the District’s water

conservation plan    is   addressed under heading C, below.

       As acknowledged by TCEQ’s water                 conservation witness,         TCEQ    has not

adopted any policy or guidance that informs the interpretation of the water

conservation requirements for interbasin transfers.” That               is   true   even though the

Legislature, in 2003, expressly directed        TCEQ, in partnership with the Texas Water
Development Board,         to   “develop model water conservation programs for different

types of water suppliers that suggest best            management     practices for achieving the

highest practicable levels of water conservation and efﬁciency achievable for each

speciﬁc type of water supplier.” Section 11.1271           (e),    Water Code." Although such

model programs might not deﬁne precisely what                 is   required to      comply   in   each



 AR Vol. 25, Item 380 (hearing transcript for Jan. 23, 2013) at p.1633, line 14 — p. 1634, line 2.
36

TCEQ has adopted a rule that basically restates the statutory requirement. 30 TAC §297.l8
(d)(2) provides: “the applicant for the interbasin transfer has prepared drought contingency and
water conservation plans meeting the requirements of Chapter 288 of this title (relating to Water
Conservation Plans, Drought Contingency Plans, Guidelines and Requirements) and has
implemented a water conservation plan that will result in the highest practicable levels of water
conservation and efficiency achievable within the jurisdiction of the applicant."
37
   That requirement was imposed in H.B. 2660, Chapter 688, 78"‘ Legislature Regular Session
2003. The agencies were directed to complete that task by September I, 2004. Id. at SECTION
6.

                                                 29
particular    circumstance,            they     would provide relevant guidance regarding

conservation plans speciﬁcally designed to result in the highest practicable levels of

water conservation and efficiency achievable.

       In the absence of the              model conservation programs required by Section

11.1271    (e)    or other guidance deﬁning compliance with 11.085                    (l)(2),   TCEQ
erroneously relied on Report 362, which was prepared by a volunteer Water

Conservation Implementation Task Force (“Task Force”) in response to an entirely

different legislative directive            and for a different purpose, as establishing the

standard.”       As      the attorney representing the Executive Director in this matter

explained to the          TCEQ commission when             he was asked about   NWF’s     contention

that Report   362        is   not appropriately used as the guide for highest practicable levels

of water conservation and efﬁciency achievable: “if that guide                  isn‘t that,   then one

doesn’t exist.        It is    the only statement,    by either   this   Commission   or the    Water

Development Board,               that directs   any form of best management practice for water
                  ”-19
conservation




33
   Senate Bill 1094, enacted in 2003, established the Water Conservation Implementation Task
Force and charged it with six enumerated duties and directed it to “develop a best management
practices guide for use by regional water planning groups and political subdivisions responsible
for water delivery service" and to make a ﬁnal report. Although developed by the Task Force,
Report 362 was published by the Texas Water Development Board.
39
   AR, Vol. 26, Item 384, CD recording of TCEQ Sept. 24, 2013 Agenda Session. An unofficial
transcript of that portion of the agenda session is included in the Appendix.

                                                      30
        Simply    put,        he   is   correct:   no guide      for highest practicable levels of water


conservation and efficiency achievable exists because                        TCEQ failed to implement the
explicit directive of Section 11.1271 (e) of the                   Water Code and has not adopted rules

or other guidance elaborating on the requirements of Section                          1   1.085   (l)(2).   However,

that failure   does not        make Report 362 an              acceptable substitute, and          it   was   arbitrary

and capricious and an abuse of discretion for                        TCEQ      to   apply a voluntary guide

developed for an entirely different purpose                      in the   manner done        here.      There simply

is   no defensible construction of the language of Section 11.085                                          (l)(2)   that


countenances allowing an applicant to pick and choose which reasonably available

measures to include and                   at   what   level without requiring a justification for the


decisions in terms of the impact on the levels of water conservation and efficiency

that   would   result.   NWF has not argued that Report 362 is irrelevant to the inquiry,
but, rather, that   it   is   not sufficient as a       test   of compliance.

        3.    Report 362           is   not an adequate test for compliance with Section
              11.085   (l)(2)

        In 2004, the          Task Force expressly addressed                 the appropriateness of using

Report 362 in the        way       TCEQ has chosen to do: “The Task Force understands that a
question has arisen as to               how the BMP Guide might relate              to the   water conservation

criteria to   be used by           TCEQ in reviewing and acting on applications                         for interbasin

transfers of surface water.                    The Task Force       is    not attempting through the                BMP


                                                          31
Guide or the water conservation                  targets or goals to    make   that deterrnination.”“°    The

Task Force also explained                  that “[t]he   BMP Guide is not a regulatory document.”"'
Both the Executive Administrator of the Texas Water Development Board                                at   the

time (Kevin Ward) and the Executive Director of TCEQ at the time (Glenn Shankle)

were members of the Task Force                     that      concluded Report 362 was not intended to

serve as the water conservation criterion for approval of interbasin transfers or as a

regulatory document.“

             The Legislature           also signaled   its   intention that Report   362 would not be an

appropriate substitute for the                model water conservation programs required under

Section 11.1271                 (e).   The development of Report 362 was mandated by                      the

Legislature pursuant to S.B. 1094, which                      was reported as enrolled on May 6, 2003.43

On May 30, 2003, H.B. 2660, which added Section                         11.1271   (e) directing   TCEQ and

4°
  AR, Vol. [9, Item 269, (Special Report) at pp. 17-18. TCEQ, in its brief, at p. 31, cites to a
portion of an updated version of Report 362, which was developed after the hearing and is not in
the record, contending that the successor entity to the Task Force has conﬁrmed the connection
between Report 362 and H.B. 2660. Even if it were in the record and could be considered, the
revision does not actually indicate anything about Report 362 addressing the requirements of
Section 11.1271 (e), or highest practicable levels of water conservation and efﬁciency, or
interbasin transfers. The Task Force charge discussed in the update, as it relates to Report 362,
comes from S.B. 1094. In addition, that introduction accompanies a revised version of Report
362, including a revised           BMP
                                for wholesale water providers, and not the version considered in
the hearing. The relationship between H.B. 2660 and S.B. 1094 is discussed in the text
accompanying footnotes 43 and 44.
4'
      Id.   Item 269   at p. 15.
"3
      Id.   Item 269    75 and 77.
                       at pp.
      S.B. 1094, 2003 Leg., 78(R) Sess. (Tx. 2003), available at
‘*3


http://www.capitol.state.tx.us/tlodocs/78R/billtext/pdf/SB0lO94F.pdf#navpanes=0. Date
reported enrolled available at
http://www.capitol.state.tx.us/BiIlLookup/Actions.aspx?LegSess=78R&Bill=SB 1094.

                                                             32
TWDB to develop those model conservation programs, was reported as enrolled.“
If the Legislature      had intended         that       Report 362 could be used to deﬁne highest

practicable levels of water conservation and efficiency achievable, there                      would have

been no reason       to enact Section        11.1271       (e).   Acceptance of TCEQ’s interpretation

would impermissibly deprive Section 11.1271                          (e)   of independent effect. Texas

Workers’ Comp.        Comm   '11   v.   Cont'l Cas. C0., 83       S.W.3d 901, 905 (Tex. App. — Austin

2002) (Statutes are interpreted by considering the entire                      statute,   not just disputed

provisions. Disputed provisions are to be considered in context, not in isolation.

Courts consider such things as the circumstances under which the statute was

enacted, former statutory provisions on the                        same or    similar subjects, and the

consequences of a particular construction when interpreting                     statutes.   We do not give
one provision an interpretation             that   is   inconsistent with the other provisions of the

act.)(Intemal citations omitted)

          NWF’s     water conservation expert, Chris Brown, served as one of the

consultants drafting Report 362,45 and he testified that the consultants involved in




44
     H.B. 2660, 2003 Leg., 78(R) Sess. (Tx. 2003), available at
http://www.capitol.state.tx.us/tlodocs/78R/biIltext/pdf/HB02660F.pdf#navpanes=O. Date
reported enrolled available at
http://www.capitol.state.tx.us/BillLookup/Actions.aspx?LegSess=78R&Bill=HB2660.
‘*5
    AR, Vol. 22, Item 357 (direct testimony of Chris Brown) at pp. 1 1-12. Contrary to the
District’s negative characterization of Mr. Brown's qualiﬁcations, not only was he chosen to
help write Report 362 but he has worked extensively on water conservation issues in Texas both
in developing and directing water conservation programs for the San Antonio Water System and
as a consultant for a number of water suppliers. In addition, his more recent work in California

                                                          33
that process             were never directed    to identify the highest practicable levels          of water

conservation and efﬁciency achievable.“ That testimony                          was undisputed. He also

testified that,           although relevant as a starting point for identifying potential water

conservation measures, the best                  management       practices in Report          362 do not

represent the highest practicable levels of water conservation and efficiency

achievable because,               among other things, Report 362 represented an effort to achieve

consensus of the Task Force members in identifying widespread practices commonly

used      in   2004 that might be considered for voluntary implementation. Mr. Gooch, the

District’s water conservation witness,              acknowledged      that     he knew of no language       in


H.B. 2660, S.B. 1094, or in Report 362 indicating that the best management practices

in     Report 362 are adequate              to achieve the highest practicable levels               of water

conservation and efﬁciency achievable.“ Because of the purpose for which                              it   was

prepared, Report 362 heavily stresses              its   voluntary nature, allowing users to pick and

choose measures              to   implement.   TCEQ compounded the error of relying on Report
362 as a substitute                 for determining the highest practicable levels of water


conservation and efficiency achievable by using that voluntary aspect to excuse the

District’s failure           even    to incorporate in its    water conservation plan         many of      the




includes signiﬁcant involvement in development and implementation of water conservation
plans, including bestmanagement practices (BMPS). Id. at p. 6, line 13 — p. 10, line 6.
46
      Id. at   p   14.
      AR,   Vol. 24, Item 377 (hearing transcript for Jan. 18, 2013) at        915, lines 3 — 13.
‘*7
                                                                          p.

                                                         34
relevant measures          recommended         in   Report 362 or to justify their exclusion. Relying

on Report 362          in this   manner deprives      the term “highest” in Section 11.085 (l)(2) of

meaning. The arbitrariness of relying on Report 362                         to   deﬁne   the standard for

regulatory compliance with the highest practicable levels of water conservation and

efficiency achievable            is   further illustrated    by the   explicit   acknowledgement    in the


Report that “[t]he           BMPs        are not exclusive of other meaningful conservation

techniques that an entity might use in formulating a state-required water

conservation plan.”“8

           The     plain language of Section 11.085 (l)(2) precludes the use of a voluntary


approach that defers to an applicant to pick and choose what level of conservation

to provide, particularly          an approach that does not require the applicant to justify           its


decision to omit potentially applicable measures.                     TCEQ’s     use of Report 362 in this

manner deprived            the plain language of Section 11.085 (l)(2) of practical effect.


TCEQ never actually evaluated the h_ig@ practicable levels of water conservation
and efficiency achievable within the                    District’s jurisdiction, as the Legislature


directed      it   to do, to see if the District’s plan       met   that standard. Instead,    TCEQ just
looked      at     Report 362 and reviewed the recommended measures in the Region                       C
Water Plan.” However, as discussed below, many of                           the conservation measures




43
     AR,   Vol. 22, Item 368, (excerpt from Report 362),       at p. 4.
49
     AR,   Vol. 25, Item 380 at p. 1638, line 2 — 24.

                                                        35
included in those two documents actually are missing from the District’s plans,

without justiﬁcation.

        Not only did    the District fail to provide        any justification for                its   failure to


include   many of the measures         listed in   Report 362 or the Region             C Water Plan, as
discussed below, the enforcement component essential for showing even a

reasonable diligence level of water conservation                 is   missing. That          component              is


mandated by TCEQ’s            rules    and also called for         in     Report 362.50 Mr. Brown

characterized the District’s water conservation plan as                  weak explaining          that   it   lacks

speciﬁc programs for the District’s customers to implement, lacks speciﬁcity,                                 is   not

adequately funded and        that,    because, in   many   instances,        it   merely encourages                its


customers to take various measures, the measures are unenforceable and can’t be

counted on.“ There      is   only one best management            practice—BMP 2.14—in Report

362   that is directed specifically at wholesale water providers like the District.                            The

consideration of Report 362 in the hearing focused on that single                       BMP.           BMP 2.14
has numerous subpans and the District’s water conservation plan                            fails to      include

many of the measures         called for in those subparts. Although drafted as voluntary

guidance, the   BMP notes that “[t]o implement this BMP, the following elements and


5°
  30 TAC Section 288.5 (l)(H). Report 362 also recommends the adoption of penalties as a
means to enforce implementation. AR, Vol. 22, Item 368, (Exh. NWF 9; excerpt from Report
362), at p. 79, in Item 4.
5'
   AR, Vol. 22, Item 357 (direct testimony of Chris     Brown)   at p.   22 — p. 29,   line 5.

                                                   36
strategies should       be included” and then          lists   speciﬁc content,”      much of which        is


missing from the District’s plan. The District provided no justiﬁcation for those

omissions. For example, Item 2 of              BMP 2.14, on page 79, references the need for a
plan to include quantiﬁed five and ten—year targets and the basis for the development

of those targets, which are also referred to as goals. Although the District’s plan does

include such goals, as      its   water conservation witness acknowledged, the basis for the

development of the ﬁve and ten-year goals                  is   missing from the District’s plans.”

Item 4 in   BMP 2.14 indicates the wholesale agency should consider developing and
adopting some form of penalties for non-compliance with the requirement that                              its


wholesale customers implement adequate water conservation plans.                                No    such

penalties, or similar        compliance incentives, are identiﬁed or discussed                       in the


District’s plan.”


       Item 6     in   BMP 2.14 has six subparts. Mr. Gooch testiﬁed that with respect to
subpart   6.c.,   which    refers to   development of procedures for calculating program

savings, costs and beneﬁts, he didn’t                  know     if   the District   had the referenced

procedures.” With respect to           6.d.,   which   relates to conservation incentive activities


such as pooling funds to purchase ultra-low-ﬂush                       toilets,   he didn’t   know   if   the




53
   AR, Vol. 22, Item 368 (excerpt from Report 362), at p. 78, in Item C.
53
   AR, Vol. 24, Item 377 (hearing transcript for Jan. 18,2013) at p. 919, line 24 - p. 923, line 25.
54
   AR, Vol. 24, Item 377 (hearing transcript for Jan. 18,2013) at p. 924, line - p. 925, line 2.
                                                                                       1
55
   AR, Vol.24, Item 377 (hearing transcript for Jan. 18, 2013) at p. 928, line 25 — p. 929, line 3.
                                                    37
District coordinated         any conservation incentive activities.“ Regarding item            6.f.,   he

didn’t     know about any rebates and stated that he wasn’t sure what a retroﬁt program
was.57 Mr.         Gooch   also indicated he didn’t       know    if   copies of progress reports of

BMPs implemented by wholesale customers were collected in accordance with item
F.4).58     Nothing in the      District’s water conservation plan addresses            any of those

issues.     Mr. Brown also testiﬁed about other aspects of               BMP 2.14 that are missing
from the         District’s plan.”


           4.    The Region C Water Plan conservation recommendations do not
                 justify reliance on Report 362 or demonstrate compliance with
                 Section 11.085      (l)(2)

           TCEQ      also sought to justify    its   reliance   on Report 362 by referring      to the


water conservation discussion in the regional water plan for Region C.5° That effort

was supported by          District’s    water conservation witness, Mr. Gooch,         who   served as

the project        manager   for the consultant      team involved      in   developing the Region     C
plan and as the person primarily responsible for developing the language of the



56
             929, lines 4-7.
     Id. at p.
5*
             929, lines 8-16.
     Id. at p.
5“
   Id. at p. 929, line 2l—p. 930, line 1.
59
   AR, Vol. 22, Item 357 (direct testimony of Chris Brown) at p. 23, line 1 — 21 (additional
missing aspects include guidelines for customer ordinance components, speciﬁc reporting
requirements, and a schedule and scope for the programs that are included).
6°
   Region C is the region in which both the proposed reservoir, which is proposed to be built in
the Sulphur River Basin, and the District's service area, which is primarily in the Trinity River
Basin, are located. The Administrative Law Judges took official notice of the 201 1 Region C
Water Plan, which was the current plan at the time of the hearing. The basic statutory provision
creating the regional water planning process is Section 16.053 of the Water Code. Section 16.053
(a) provides a general overview of the charge to regional water planning groups in developing
regional water plans.

                                                     38
plan.“    The language of the Region              C Water Plan stating the contention that Report
362     fulﬁlls the directive of Section 11.1271 (e)                        of the Water Code matches Mr.

Gooch’s testimony.“ However,                   that   is   an issue of statutory interpretation, which           is


a question of law, not one of            fact.   See Johnson           v.   City of Fort Worth,     774 S.W.2d

653, 656 (Tex. 1989). Accordingly, neither the Region                                C   Water Plan nor Mr.

Gooch’s testimony            to that effect    have probative value on the             issue.


         The    Legislature, in another subsection of Section 11.085, expressly dictated

the role of water conservation            recommendations               in the relevant regional      water plan

when TCEQ          is   considering an interbasin transfer of water. Section 11.085 (k)(2)(c)

of the Water Code directs the Commission,                        when determining whether to           authorize

an interbasin transfer, to consider factors in the relevant regional water plans

addressing “proposed methods and efforts by the receiving basin to avoid waste and

implement water conservation and drought contingency measures.” (Emphasis

added)“

         Thus, the adequacy of recommendations of the Region                              C   Water Plan about

proposed methods and levels of                    efforts to       avoid waste and implement water

conservation and drought contingency measures throughout the receiving basin                                  was


     AR, Vol.                                                                    p.933, line 20 — p. 934, line 21.
6'
                24, Item   377 (hearing transcript for Jan.      18,   2013)   at
61
     AR, Vol.   22, Item   368 (Section 6 of 201 1 Region        c Water     Plan) at p. 6.47: “The TWDB     and
TCEQ have addressed this [Section     1.1271 (e)] requirement by preparing
                                           I                                  Report 362,  TWDB
the Water Conservation Best Management Practices Guide.” Mr. Gooch stated the same opinion.
AR, Vol. 18, Item 218 (direct testimony of Tom Gooch) at p. 79, lines I — 9.
"3
   Region C is the proposed receiving basin for this interbasin transfer.

                                                            39
    one of the factors the Commission was required to consider                        in   reviewing whether

    the application should           be granted. In directing              that review, the Legislature


    recognized that     it   may    not be appropriate to allow state—owned water to be taken

    from another basin         if   the receiving basin         is   allowing water to be wasted or                 is


    otherwise not implementing adequate water conservation and drought contingency

    measures. However, that              is    a separate consideration from whether the drought

    contingency plan and the water conservation plan developed by the                                     and
'




                                                                                              District,            its


    implementation of that plan, meet the requirements of Section 11.085                       (l)(2).    Neither

    the   Water Code nor any          TCEQ          rule indicates that a regional water plan            is   to   be

    looked to in defining what levels of water conservation and efficiency would be

    adequate to meet the requirements of Section 11.085                   (l)(2).   And, regardless, the        test


    used must give     full effect to the statutory          language.

            A   comparison          of        the   Region      C     Water   Plan     water    conservation

    recommendations          to the District's water conservation plan does serve to further


    illustrate the failure     of the District’s plan to comply with Section 11.085                           (l)(2).


    Although merely including            all    of the water conservation measures recommended in

    the   Region   C   Water Plan             in the District’s      water conservation plan would not

    demonstrate compliance with that standard?“ the complete absence of some



    6‘
      There has been no showing that the conservation measures recommended in the Region C
    Water Plan are sufficient to result in the highest practicable levels of water conservation and
    efficiency achievable within any particular entity’s jurisdiction. For example, the plan merely

                                                           40
measures     that are   recommended          for implementation              by other water suppliers,    or, at


minimum,       the absence of a justification for excluding such measures, does further


demonstrate that the plan        falls     short of one that will result in the highest practicable

levels of water conservation              and efficiency achievable. Under any reasonable                   test


for compliance with that statutory standard, the failure to incorporate widely

recommended measures, or show why they                                are not appropriate for inclusion,

represents a fatal      ﬂaw. The     District’s water conservation plan fails to include                 two of

the specific water conservation              measures—a coin-operated                   clothes washer rebate

program and landscape        irrigation restrictions——that are                 recommended      in the   Region

C Water Plan      for implementation                by a   large   number of water        suppliers across the

region.    The   vast majority of those water suppliers are not seeking to authorize

interbasin transfers of water and are not subject to the heightened water conservation


standards of Section 11.085 (l)(2)              .




         The 2011 Region C Water Plan recommends two                            tiers   of water conservation

measures applicable for municipal use, which                            is   the predominant type of use

currently supplied       by the      District        and one of three types of uses requested for

approval in the Permit that          is   the subject of this lawsuit.“          As Mr. Gooch testified on


listscertain conservation measures and does not specify the levels at which measures would need
to be implemented. The plan also acknowledges that water conservation measures were studied
only at the regional level and that more detailed studies for individual suppliers might indicate
different results. AR, Vol. 22, Item 368 at p. 6.49. Again, that individualized review of highest
practicable levels achievable   is   missing.
“5
     AR Vol 22, Item 367 (excerpt from 201           1   Region   C Water Plan) at pp. 6.47-6.49.
                                                           4-1
behalf of the District, the 2011 Region                    C Water Plan recommends a “basic” tier of
seven conservation measures for each municipal entity that has a demand greater

than supply and has a gallons-per-capita-per-day use greater than 140.“ Other than

educational programs and a conservation rate structure, the basic                                   tier consists   of

measures that quantify savings anticipated from implementation of legal

requirements that are imposed under existing law without action by the water

supplier.“

           The “expanded”          tier   of ﬁve measures, which includes items requiring more

effort     by the water supplier,         is   recommended for 145 out of 277 water user groups.“

One of the measures             included in that      tier is   a coin-operated clothes washer rebate

program designed             to get    more    efficient   washers installed           in   commercial laundries.

As Mr. Gooch acknowledged,                      the District’s water conservation plan has                   no such

rebate     program and he         is   not aware of any reason that            would prevent         it   from having

one.“ Mr. Brown,             NWF’s water conservation             expert,      conﬁrmed          the absence of   any

rebate programs in the District’s plan; explained the importance of rebate programs,

as part of a financial assistance program, in achieving effective water conservation;


and indicated the           critical role      wholesale water providers can play in implementing




6°
     AR Vol. 24, Item 377 (hearing transcript for Jan.          18,   2013)   at pp.   881-84.
67
     Id.
68
     Id. at p.   885, lines 7 -15.
                 885, line 19 — p. 886, line
69
     Id. at p.                                  9.

                                                           42
them.7° Rebate programs are one of the speciﬁc elements listed in                              BMP   2.14 in

Report 362.7‘

           A second measure included in that expanded tier of the 2011                   Region    C Water
Plan       is   landscape irrigation restrictions. Although the District’s 2012 water

conservation plan does “urge”               its   customers to include time of day and day of week

landscape watering strategies in their water conservation plans, the District has not

made landscape            irrigation restrictions a required              component of   its   conservation

plan." That        is   true   even though the District         is   contractually obligated to implement

a water conservation program that                    is at least      as stringent as the City of Dallas’

program, which does include mandatory time of day and day of week restrictions.”

C.    TCEQ erroneously approved the District’s application even though the
                     demonstrated that it has implemented its water
      District has not
      conservation plan as required by Section 11.085 (l)(2) of the Water Code.

           A    second prerequisite established             in Section 11.085 (l)(2)     for granting an

application for an interbasin transfer               is   that the applicant   must have implemented     its


water conservation plan             in a   way    that will result in the highest practicable levels     of

water conservation and efficiency achievable within the jurisdiction of the applicant.


7°
     AR, Vol. 22, Item 357 (direct testimony of Chris Brown) at p. 23, line 6 — p. 24, line 19.
7'
     AR, Vol. 22, Item 368 (excerpt from Report 362) at p. 79.
    This is an instance in which there is a slight difference in the District’s 2009 and 2012 water
71'


conservation plans. The 2009 plan “encourages” customers to implement a voluntary time of day
landscape watering “guideline." AR, Vol. 18, Item 236 (2009 WCP) at p. 10. The 2012 plan
“urges” customers to implement a voluntary or mandatory time of day and day of week
landscape watering “strategy.” AR. Vol. 18, Item 239 (2012 WCP) at p. 12.
13
    AR, Vol. 22, Item 357 (direct testimony of Chris Brown) at p. 34, line 19 — p. 36, line 17.
                                                           43
TCEQ erroneously concluded that requirement had been met. The decision was not
supported by substantial evidence, was arbitrary and capricious, an abuse of

discretion,   and contrary    to   law."

        The record does not include           substantial evidence to support a    ﬁnding   that the


District has actually      implemented       its   conservation plan at the required level. Indeed,

the record indicates that the only review of implementation               was   the one undertaken

by    NWF’s    water conservation expert,              who   indicated that the District had not

implemented a water conservation plan                  that will result in the highest practicable


levels of water conservation             and efﬁciency achievable. After reviewing available

information, he concluded that implementation reports prepared by the District                   fail


to   show implementation           of,   among     other things, technical assistance programs,

rebate programs, and landscape water conservation programs.                 He also indicated that

expenditures by the District are inadequate to support programs at the levels needed

to   comply with Section 11.085           (l)(2) 75


        The   District’s   water conservation witness, Mr. Gooch, testiﬁed              that,   with

respect to implementation, he only reviewed the content of the District’s water

conservation plan and did not review the District’s implementation of its plan, other




7‘
   This issue was raised in NWF’s Motion for Rehearing at pp. 3-4, 5-6, p. 7 (FOF 339, 342,
384), p. 10 (FOF 385, 435, 438-439), p. 11 (FOF 443), p. 12 (FOF 447), p. 13 (FOF 45]) and pp.
13-15 (COL 27-29, COL 32-33).
75
   AR, Vol. 22, Item 357(direct testimony of Chris Brown) at p. 29, line 8 - p. 36, line 21.
                                                      44
than      any implementation speciﬁcally indicated                        in     the     conservation       plans

themselves.” Both the 2009 and the 2012 plans are in evidence” and neither

includes signiﬁcant information about implementation that has occurred,                             much      less

information adequate to support a determination that the District’s implementation

will result in the highest practicable levels of                     water conservation and efficiency

achievable.

          Mr. Gooch also testiﬁed          that   he did not review the District’s contracts with              its


customers or the water conservation plans of those customers." Accordingly, he has

no basis        to support        an opinion about the adequacy of implementation                       to satisfy


Section     1   1.085   (l)(2),   and his broad statements      to the effect that the District         complied

with the statute do not constitute probative evidence that the District has

implemented a water conservation                  in   compliance with that requirement. See,                e.g.,


Jelinek    v.   Casas, 328 S.W.3d 526, 536 (Tex. 2010)                 (“’[i]f   no basis for the opinion       is


offered, or the basis offered provides                 no support,   the opinion    is   merely a conclusory

statement and cannot be considered probative evidence, regardless of whether there

is   an objection”).       TCEQ argues” that, by failing to object during the hearing, NWF
waived its arguments that the conclusory testimony of Mr. Gooch does not constitute




7°
     AR, Vol.   24, Item 377 (hearing transcript for Jan. 18, 2013) at p. 895, line        3-line 17.
                18, Item 236 (2009 WCP) and Vol. 18, Item 239 (2012 WCP).
77
     AR, Vol.
7“
     AR, Vol.   24, Item 377 (hearing transcript for Jan. 18, 2013) at p. 895, line        3-line 17.
79
     TCEQ Brief at p.    17.

                                                          45
probative evidence. However, regardless of whether               it   was objected   to,   conclusory

testimony does not constitute evidence of any probative value. City of San Antonio

v Pollock, 284 S.W.3d 809, 816 (Tex. 2009)(“this Court has held that such

conclusory statements [made by experts] cannot support a judgment even when no

objection   was made     to the statements at trial”) (citing     Dallas Ry.   & Terminal Co.             v.


Gossett,    294 S.W.2d 377, 380 (Tex. 1956)(“It            is   well settled that the naked and

unsupported opinion or conclusion of a witness does not constitute evidence of

probative force and will not support a jury ﬁnding even                  when admitted without

objection.”)); see also,    Rogers v. Texas Bd. 0fArchitectural Examiners, 390 S.W.3d

377. 389-90 (Tex. App.          — Austin 2011)(“The             Engineers’ affidavits, even               if


unchallenged, are insufficient on their face to support judgment in the Engineers’

favor because they are conclusory,         i.e.,   they consist of conclusions unsupported by

facts. It is   well settled that the naked and unsupported opinion or conclusion of a

witness, including an expert witness, does not constitute evidence of probative force

and will not support a judgment even when admitted without objection”)

       NWF      is   not seeking to strike that testimony.        The    relevant question      is       not

whether    NWF can object now that the testimony should have been excluded from
the record.    The testimony   is in   the record, but conclusory statements         by Mr. Gooch

that the District‘s plan    complies with the requirements of Section 11.085                (l)(2)   ,   do




                                                   46
not have probative value on the issue of the adequacy of implementation because he

had no basis   for that testimony.


       TCEQ     also argues“ that        NWF       was required           to speciﬁcally include its


complaint about conclusory testimony in                its    Motion for Rehearing. However, as

noted above,   NWF is not seeking to correct an error regarding the admission of the
evidence, but, instead, an error in reaching a decision that                 is   not supported by the

evidence.   NWF     speciﬁcally, and clearly, put              TCEQ     on notice    in its   Motion for

Rehearing that it was challenging the sufﬁciency of evidence                  to   support speciﬁcally

identiﬁed ﬁndings of fact and conclusions of law related to the adequacy of

implementation of the District’s plan to satisfy Section 11.085                       (l)(2).   That was

enough. See Texas A.B. C.     v.   Top of the    Strip,      993 S.W.2d 242, 245-46 (Tex. App. —

San Antonio 1999) (noting adequacy of motion for rehearing that referenced speciﬁc

ﬁndings of fact as not being supported by substantial evidence and as arbitrary and

capricious).   NWF was      not required to brief            its   legal arguments in   its   Motion for

Rehearing. See   id. at   245 (noting   that a   motion for rehearing need not comply with

pleadings and practice of court      trials).


      Similarly,    TCEQ’s    water conservation witness acknowledged his belief that

no review of implementation had been done as part of the agency’s processing of the




WTCEQ Brief at p.   18.

                                                  4?
application.“ That also                   is   consistent with the conclusion in the                     TCEQ    staff


memorandum            entitled “Technical            Review of Water Conservation Plan” which

states: “I_f    UTRWD implements all elements of its water conservation plan, then staff
believes that the highest practicable level of conservation for                                      UTRWD    @     be

achieved.““ (Emphasis added). The staff                       memorandum             notes the         need—even    to


meet        that impermissible reformulation of the statutory test                       which       substitutes “can”

for “will”—for the District to ensure implementation                            by   its      customers through     its


contracts.”        No    enforcement mechanism for ensuring that implementation                                     is


reﬂected       in the   memorandum              or in the record. That         TCEQ           staff determination   on

implementation           is    not adequate to support a ﬁnding of compliance with the

implementation requirement in Section 11.085                      (l)(2).      Nor does         the testimony of the

District’s General            Manager, Mr. Taylor, indicate compliance.“ The plain language

of the statute requires that the District must have developed and implemented a plan




8'
        Vol. 25, Item 380 (hearing transcript for Jan. 23, 2013) at p. 1660, line 4 — line 10; see
      AR,
also id. at p. 1651, line 12 -23.
33
   AR, Vol. 22, Item 353 (TCEQ Memorandum, Technical Review of Water Conservation Plan)
at p. 8.
83
      Id.
3"‘
      As
      indicated by      TCEQ
                           in its Brief, at pages 20-21, the District’s General Manager also
testified.He did indicate that the District has certain water conservation measures it implements.
NWF   does not dispute that. However, he was not offered or qualiﬁed as an expert witness on
water conservation and did not offer testimony about the adequacy of those measures or the
District's implementation to comply with Section H.085 (l)(2) or any other regulatory
requirement. The District's brief includes statements about implementation that NWF's counsel
was not able to verify in the record. See District brief at p. 8 at 31 and     FN
                                                                              37 and            FN
accompanying       test, p.   25   at   FN 69 and accompanying   text,   and   p.   28   at   FN 84 and accompanying
text.

                                                         48
that will result in the highest practicable levels of water conservation                       and efﬂciency

achievable within        its   jurisdiction as a prerequisite to approval of the application.


Without a demonstration of adequate implementation, there                                 is   no basis   for

determining the District’s water conservation plan, even                      if   it   were otherwise an

adequate plan, will result          in   anything more than a document taking up space on a

shelf.


         There   is   not substantial evidence to support a ﬁnding that the District has

implemented       its   water conservation plan in a way that will result                      in the highest


practicable levels of water conservation and efficiency achievable. Mr.                          Brown, the

only expert to review actual implementation, testified that the District has not

undertaken the required implementation.

D.   TCEQ erred in determining that the District’s water conservation plan
     includes the       means    for implementation      and enforcement required by
     TCEQ’s rules.
         The record does         not support   TCEQ’s    determination that the District’s water

conservation plan meets the requirements of agency rules related to demonstration

of a means for enforcement.” That determination                  is   not supported by substantial

evidence and     is   arbitrary   and capricious.

         TCEQ’s mles           require that a water conservation plan for a wholesale water

supplier, regardless of         whether an interbasin transfer        is   requested,     must include “a


85
  This issue was raised in NWF’s Motion for Rehearing        at p.2, p. 3, p. 7, p.     9 (FOF 335), and pp.
13-14 (COL 20, 27-29, and 32-33).

                                                    49
means        for implementation      and enforcement, which       shall   be evidenced by a copy of

the ordinance, rule, resolution, or tariff, indicating ofﬂcial adoption of the water


conservation plan by the water supplier; and a description of the authority by which

the water supplier will        implement and enforce the conservation              plan.’’“   Compliance

with that requirement           is   a speciﬁc prerequisite to issuance of a permit.87              The

District’s plan        does include a resolution reﬂecting the adoption of the plan” and

notes that the District’s contracts with           its   customers reference water conservation

and include language to the effect that customers agree to cooperate in implementing

water conservation.” That language does appear to address a potential mechanism

for implementation of the plan, although only in a cursory fashion.                  However, nothing

in the plan provides the required discussion             of enforcement or describes the authority

by which         the plan will be enforced if that cooperation            is   not forthcoming.   TCEQ
argues that the plan’s language calling for customer’s to adopt and enforce water




3°
      30   TAC § 288.5 (1)(1-r).
37
      30   TAC Section 295.9 provides that an application which doesn‘t meet the requirements      for
water conservation plans set out in that section is incomplete and shall not be considered by the
commission. Paragraph (2) provides that applications for wholesale water providers, like the
District, must include a water conservation plan meeting the requirements of 30 TAC Chapter
288 of TCEQ’s rules. 30 TAC Section 297.18 (d)(2) also expressly requires applicants for
interbasin transfers to comply with the provisions of Chapter 288.
‘*3
   AR, Vol. 18, Item 236 (2009 Water Conservation Plan) at Appendix D and Item 239 (2012
Water Conservation Plan) at Appendix D. Although those resolutions note that the Executive
Director is directed to implement and enforce the respective plans, there is no description of the
enforcement mechanism or authority.
39
   AR, Vol. 18, Item 236 (2009 Water Conservation Plan) at Sections 4.4 and 7 and Item 239
(2012 Water Conservation Plan) at Sections 4.4, 5.7, and 6.

                                                   50
conservation plans satisﬁes the requirement.” However, that                   is   a circular argument.

It is   the District’s obligation to ensure enforcement.            The   District has not    shown   that


it   has a mechanism for ensuring that          its   customers adopt adequate plans and enforce

them. The plan has no information on                  how    the District will enforce a requirement

that    its   customers develop and enforce adequate plans.

          The shortcoming        is   not merely a technical failure to describe in the plan an

actual enforcement        mechanism        that exists. Neither the District’s      General Manager,

Mr. Taylor,“ nor        its   water conservation witness, Mr. Gooch,” were able to identify

or describe any mechanism to enforce implementation of the water conservation plan

other than the District “working with"                 its   customers.   BMP      2.14 in Report 362

includes a recommendation that wholesale water providers like the District consider

developing and adopting penalties for customers that don’t comply.” Mr. Gooch

indicated that he did not see any language addressing penalties for noncompliance

in the District’s     water conservation plan and that he was unaware                if   the District has

such penalties.”       He     also testified that he did not      know    the nature of the District’s




9°
     TCEQ Brief at p. 27.
9'
     AR Vol. 24, Item 374 (hearing transcript for Jan.  15, 2013) at p. 61, line 9 — p. 63, line 16.
             24, Item 377 (hearing transcript for Jan. 13, 2013) at p. 844, line 1 1 — p. 845, line 22;
91
   AR, Vol.
p. 848, line 10 - line 25; p. 923, line 23 — p. 926, line 8.
93
   AR, Vol. 22, Item 368 (excerpt from Report 362) at p. 79, Item 4. Report 362 does not deﬁne
what types of penalties are recommended and various types of negative incentives, such as
contractual provisions providing for surcharges for failure to comply, could, arguably, serve the
purpose. However, the District’s plan has no such mechanisms.
9“
   AR, Vol. 24, Item 377 (hearing transcript for Jan. 18, 2013) at p. 924, line 1 — p. 925 line 2.
                                                      51
authority to enforce the plan.” Mr.                  Gooch was not             familiar with the District’s

contracts with           its   customers or even       if      the District actually reviews the water

conservation plans of its customers.” Mr. Brown,                       NWF’s water conservation expert,

did review enforcement and testified that he was not able to determine that the

District does       any enforcement of its water conservation program and                        that his   review

did not indicate effective implementation by                            its   customers.”    TCEQ’s water

conservation witness testiﬁed that he doesn’t                     know what happens         if   a customer of

the District fails to          implement the water conservation plan.”

             The record does        include conclusory opinions from Mr.                    Gooch       averring

compliance with the requirements of Section 288.5. However, because, as discussed

above, Mr.         Gooch was unable         to provide      any basis for testifying about compliance

as    it   relates to   enforcement of the conservation plan, those opinions do not constitute

probative evidence on that point, regardless of whether the testimony was objected

to.   See Jelinek, 328 S.W.2d          at   536   (“’[i]f   no basis for the opinion        is   offered, or the

basis offered provides no support, the opinion                    is   merely a conclusory statement and

cannot be considered probative evidence, regardless of whether there                                        is   an

objection”‘)(citing City of San Antonio              v.   Pollock,     284 S.W.3d 809, 818 (Tex. 2009),




95
     AR,   Vol. 24, Item 377 at p. 898, line 23 — line 25.
     Id. at p. 876, lines 6 — 20.
96
97
     AR, Vol. 22, Item 357 (direct testimony of Chris Brown) at p. 31, line 16 — p. 33, line 16.
93
     AR   Vol. 25, Item 380 (hearing transcript for Jan. 23, 2013) at p. 1662, line 18 — line 21.

                                                          52
other citations omitted), See also Duncan-Hubert                           v.   Mitchell,    310 S.W.3d 92, 101

(Tex.App.          — Dallas 20lO)(“Bare,         baseless opinions will not support a judgment even

if    there   is   no objection       to their   admission in evidence,” citations omitted).                     TCEQ
argues       that,   by   failing to object during the hearing,             NWF waived         its   arguments that

the conclusory testimony of                 Mr. Gooch does not constitute relevant evidence.”

However, regardless of whether                   it   was objected       to,    conclusory testimony does not

constitute evidence of any probative value. Contrary to the arguments of                                    TCEQ and
the District, the relevant question                   is   not whether         NWF   can object           now   that the


testimony should have been excluded from the record. The testimony                                   is   in the record,


but    it   has no probative value in supporting the decision.

            TCEQ      also argues‘°° that             NWF    was required          to speciﬁcally include its


complaint about conclusory testimony in                          its   Motion for Rehearing. However, as

noted above,         NWF is not seeking to correct an error regarding the admission of the
evidence, but, instead, an error in reaching a decision that                           is   not supported by the

evidence.          NWF         speciﬁcally, and clearly, put           TCEQ       on notice    in its      Motion for

Rehearing that            it   was challenging    the sufﬁciency of evidence to support speciﬁcally


identiﬁed ﬁndings of fact and conclusions of law related to demonstration of

compliance with Section 288.5 (l)(H) of the agency’s                              rules.    That was enough. See




9”
     TCEQ Brief at p.          17.
I00
      Id_

                                                            53
Texas A.B. C.        v.   Top of the Strip, 993 S.W.2d 242, 245-46 (Tex. App. - San Antonio

1999) (noting adequacy of motion for rehearing that referenced speciﬁc ﬁndings of

fact as not being supported               by substantial evidence and         as arbitrary     and capricious).

NWF was not required to brief                 its   legal   arguments    in its   Motion for Rehearing. See

Id. at      245 (noting      that a     motion for rehearing need not comply with pleadings and

practice of court trials).

            The   District argues”“ that, in order to raise issues about                      compliance with

Section 288.5 (l)(H)               ,   NWF was required to challenge the 2004 determination by
the Executive Director of                TCEQ that the District’s application was administratively
complete and the agency ﬁndings related                          to that earlier determination.      NWF put
TCEQ on notice in the Motion for Rehearing and in the Original Petition that NWF
was challenging compliance with Section 288.5 (l)(H)                               .   That was sufﬁcient.'°2

NWF could also have challenged ﬁndings about the                              administrative completeness

determination             made by       the Executive Director in         2004 but       it   would have been

pointless and there           is   no requirement     to    have done   so.




'0'
      District’s Brief at    pp 31-34.
"32
      The   District cites   Hamamcy v.
                                    Texas State Bd. of Medical Examiners in support of its
argument but that case dealt with a Motion for Rehearing which “stated, in its entirety, that
‘[t]he presentation of the discussion at the hearing will be done from the charts of the patients
and from the records on ﬁle with the Board.”’ 900 S.W.2d 423, 425 (Tex. App.—Austin 1995,
writ denied). That stands in sharp contrast to the Motion for Rehearing in this case which cited
speciﬁc ﬁndings and conclusions and clearly stated the contention of a lack of substantial
evidence to support the determination of compliance with Section 288.5 (l)(H).

                                                            54
       The   District’s   argument also       is    inconsistent with    TCEQ’s review        of the

application and with the testimony of         its   witnesses.    TCEQ staff only performed its
technical review'°-l of the     adequacy of the      District’s   water conservation plan in 2011

and included the    District’s   2009 water conservation          plan, the   most current available

at the time,     in the   review for purposes of evaluating compliance with the

requirements of various agency rules, including Chapter 288, and of various

provisions of the Water Code, including Section 11.085304                      The   District’s water


conservation witness relied on the 2009 Plan and the 2012 Plan in asserting

compliance with the requirements of Chapter 288"”                    NWF also referenced       in its


Original Petition,'°6 Section 297.18 (d)(2) of TCEQ’s rules as an independent basis

for requiring compliance with Chapter         288 requirements for an application involving

an interbasin transfer of water.

       Moreover, there     is   nothing   in the   language of the second sentence of Section

295.9 that purports to limit the requirements in that Section solely to the

determination of administrative completeness. Administrative completeness, which



'03
    The difference between an administrative review and a technical review is that an
administrative review is a check-off level review of whether various components are included
and the determination of adequacy is part of the technical review, which is also called the
substantive review. AR, Vol. 25, Item 380 at p. 1640, line 14 through p. 1641, line 1 1.
'°“
    AR, Vol. 22, Item 353, at pp. 1-2.
“J5
    AR, Vol. 18, Item 218 (direct testimony of Tom Gooch), at p. 67, line 19 — p. 69, line 18. The
2012 plan is discussed beginning at p. 85 of that exhibit. Rule references in Mr. Gooch’s
testimony are incorrect because of a rule change made before the hearing. Thus, for example,
what Mr. Gooch refers to as Section 288.5 (1)(I) is actually 288.5 (1)(H).
'06
    Original Petition at p. 9 (Error No. 3).

                                                   55
is    determined by the Executive Director of                     TCEQ,       is   only one step of the review

process and             TCEQ’s        rules'°7 require that     water conservation plans supporting an

application must be subject to review and approval by the agency’s commission,

which, in the case of a contested application, only occurs                              when     the proposal for

decision         is   presented to the commission for            its   consideration.

            Similarly, as noted above,           TCEQ’s         witness     was unable     to   provide any basis

for a determination of adequate enforcement authority.                                The agency’s      technical

review          memorandum on             water conservation           is   devoid of any discussion about

enforcement authority or compliance with Section 288.5 (l)(H) 3°”

            More        specifically, the relevant water conservation plan                 is   in the record   and

there      is   no description        in that plan   of authority by which the District will enforce             it.



In light of that,            no testimony could provide an adequate basis                   in the   record for a

reasonable mind to conclude that the conservation plan does include the required

means of enforcement or description of enforcement                            authority.   See City of El Paso

v.    Public      Utility    Commission, 839 S.W.2d 895, 905-06 (Tex.App. — Austin 1992)

(“In conducting a substantial evidence review,                              we must    determine whether the

evidence as a whole              is   such that reasonable minds could have reached the conclusion

the    agency must have reached               in order to take the disputed action”).             Testimony that




'°7
      30   TAC §288.3O (3)
'08
      AR, Vol.        22, Item 353.

                                                           56
the plan has a description of enforcement authority or that                            it   complies with that

requirement            when    the plan itself is in the record         and lacks   that discussion   does not

provide an adequate basis                    to   allow a reasonable mind to conclude that the

requirement            is   met. Furthermore, the District’s witnesses testiﬁed that the only

enforcement mechanism the District currently employs for customers                                who do   not

comply       is   to   work with them.

            There simply         is   not substantial evidence to support a ﬁnding of compliance

with 30       TAC Section 288.5 (l)(H)             .




E.    TCEQ erred in determining that the District’s water conservation plan
      includes the required basis for the development of its five-year and ten-
      year targets for water savings in accordance with TCEQ’s rules.
            The record does not support                    a determination that the District’s water

conservation plan provides the required basis for the development of the mandated

ﬁve-year and ten-year conservation                     targets.'°°   The TCEQ determination that the plan

complies with applicable requirements of the rules                         is   not supported by substantial

evidence and           is   arbitrary   and capricious.

            Pursuant to       TCEQ’s       rules, a    water conservation plan for a wholesale water

supplier      must include            “specific, quantiﬁed       ﬁve-year and ten-year targets for water

savings including, where appropriate, target goals for municipal use in gallons per



'09
      The                       water conservation plan to provide the required basis for its
            failure of the District’s
savings targets is addressed in NWF’s Motion for Rehearing at p. 8 (FOF 332-334), p. 10 (FOF
435), pp. 13 (FOF 448) and pp. 13~vl4 (COL 20, 27-29, 32-33).

                                                            57
capita per day for the wholesa1er's service area,                   maximum acceptable water loss, and
the basis for the       development of these goals.” 30                TAC Section 288.5 (1)(B). Those
rules apply regardless of                      whether an application for an interbasin transfer               is


involved.        As evidenced by Mr. Gooch’s                 testimony, the District’s plans are lacking

in    any explanation of the basis for the development of the goals.‘ '° For example, the

District has not explained                 why the   starting points, in gallons per capita per day, for


its   2009 and 2012 plans vary signiﬁcantly, with                     the starting point for per capita use

in the    2012 plan being shown                  as higher than the    2009   plan, hardly an    endorsement

of the effectiveness of                  its   water conservation.‘ " Mr. Gooch suggested that the

variation probably           is   due     to the difference in     whether a wet year or a dry year was

used as the starting point, but acknowledged that he didn’t see the basis for the

numbers      in the plan.
                              '   ‘2




          Regardless of the basis for the starting point, both the plan and the record are

devoid of any explanation of the basis for the development of the goals.‘ '3                            TCEQ is

"0 AR, Vol. 24, Item 377 (hearing transcript for Jan.
                                                        18, 2013) at p. 920, line 6 — p. 923, line 22.
In later testimony, as pan of the Applicants’ rebuttal case, Mr. Gooch noted that the starting
point for average per capita use per day is described in the 2012 plan as being based on Region C
Water Plan projections. However, he indicated that he did not know how it was actually
calculated and further conﬁrmed that he did not know how the indicated reduction in per capita
use—the goal—was calculated. AR, Vol. 25, Item 380 (hearing transcript for Jan. 23, 2013) at p.
1845, line 7 — p. 1847, line 25.
'” Id.
'53
      AR, Vol.   24, Item   377 (hearing       transcript for Jan. 18, 2013) at p. 921, line 7 — p. 923, line 9.
"3
      TCEQ argues that NWF              did not preserve this error in its Motion for Rehearing. TCEQ      Brief
        However, NWF’s
at p. 24.                              Motion for Rehearing, with respect to FOFs 332 and 334, sufficiently
put TCEQ on notice of its contention that the basis              for determining the District’s goals   were
reasonable was missing from the record.

                                                            58
required to follow          its   rules.    Flores   v.   Employees Retirement System of Texas, 74

S.W.3d 532, 542 (Tex.App.—Austin 2002,                          pet. denied).


           That   is   not just a minor detail. Other than a speciﬁc goal for percentage of

unaccounted for water, the measures                  in the District’s     water conservation plan are not

quantiﬁed except through the per capita target goals. For example, there                                       is     no

quantiﬁcation of          how much          public education will be provided.‘            '4
                                                                                                Indeed,   TCEQ’s

water conservation witness testiﬁed                       that, for     example   for a public education


campaign, the agency does not “have a mechanism                          in place to evaluate their       program

as adequate or not,               you know, from            their water conservation plan.”"5                   That

quantiﬁcation, and an explanation of its basis,                   is   a speciﬁc requirement for any water

conservation plan, especially for one that purports to be adequate to result in the

highest practicable levels of water conservation                             and efﬁciency achievable.

Compliance with the           rules    is   also a speciﬁc prerequisite to issuance of a                 permit.”

Even   if   the measures included in the District’s plan did include the full universe of

measures that might be needed                   to   reach the highest practicable levels of water




"4 AR, Vol.
            18, Item 239 (2012 WCP) at pp. 10-11.
"5 AR, Vol. 24, Item 380 (hearing transcript for
                                                 January 23, 2013)              at p.   1649, line 5 —   p.   1651,
line 17.
"6 30 TAC Section 295.9 provides that an application which doesn’t
                                                                       meet the requirements for
water conservation plans set out in that section is incomplete and shall not be considered by the
commission. Paragraph (2) provides that applications for wholesale water providers, like the
District, must include a water conservation plan meeting the requirements of 30 TAC Chapter
288 of TCEQ’s rules. In addition, 30 TAC Section 297.18 (d)(2) also imposes that requirement
for applications involving interbasin transfers.

                                                           59
conservation and efficiency achievable, establishing a sufﬁcient amount or level of

effort associated with those                measures   is   essential for a reasoned determination of


whether the statutory standard has been met. The record                            is   devoid of any basis for

determining that the level of effort called for in the District’s water conservation

plan   is    sufficient to      meet the    statutory test.


          Other than conclusory statements about compliance with Section 288.5, which

do not constitute probative evidence because they lack a reasoned basis,                            there   is   not

evidence to support those targets. Because Mr. Gooch was unable to provide any

basis for that opinion as              it   relates to the inclusion        of the required basis for the

development of the ﬁve-year and the ten-year targets,                      it   does not constitute probative

evidence on that point. See Jelinek, 328 S.W.2d                     at   536.


F.   TCEQ’s errors prejudiced NWF’s substantial                           rights within the       meaning of
     Section 2001.174 (2) of the               Government Code
          The      District argues that         NWF    has failed to demonstrate prejudice to                    its


substantial rights in accordance with Section                    2001.174       (2) of the   Texas Government

Code. Basically, the District appears                       to   contend that       NWF       does not have a

substantial right to a decision                made    in    accordance with governing statutes and

rules.‘     '7
                 There   is   limited precedent, but the cases addressing the issue, like the ones




"7 Although not construing Section 2001.174, in Texas Water Development Board v. Ward
Timber, 41 I S.W.2d 554, 568 (Tex.App.—Eastland, 2013) the court recognized the right of the
parties appealing the agency decision “to have the Board follow the statute and its own rule

                                                         60
cited   by the     District, indicate that the relevant test is              one of determining     if   the error

complained of actually detrimentally affected the appealing                           party.   For example,      in


R.R.    Comm      '1:   v.   Rio Grande Valley Gas Co., 683 S.W.2d 783, 789 (Tex. App. Austin

1984), the court determined that the exclusion of evidence, even assuming the

exhibits should have been admitted, did not prejudice the appellee because the

evidence did not address the speciﬁc issue in dispute.                        What emerges from a review

of cases addressing               this issue is a results-based        approach, which looks at the extent

to   which the alleged error               likely affected the       outcome of the agency decision         to the


detriment of the appealing party. That                       is     also consistent with Rule of Appellate

Procedure 44.1 (a),"8 establishing the standard for reversible                            error. If the error


complained of                is   likely to    have affected the agency decision adversely to the

complaining party, then the                   test is satisfied.


         The cases            cited   by   the District illustrate that approach. In United Sav.           Ass ‘n

of Tex.    v.    Vandygriﬂ, 594 S.W.2d 163 (Tex. Civ. App.—Austin 1980), the court

notes that the appealing party,                  who   participated in the hearing to oppose the            name

change of a competitor savings and loan, had not shown harm                               in claiming      it   was

error for the decision to delay for a year the effective date of the                           name change      the


"8   TRAP 44.1, Reversible Error in Civil Cases,                    Standard for Reversible Error. Nojudgment
                                                             (21)

may be reversed on appeal on the ground that the trial court made an error of law unless the court
of appeals concludes that the error complained of:
        (1) probably caused the rendition of an improper judgment; or
        (2) probably prevented the appellant from properly presenting the case to the court of
                appeals.

                                                             61
appealing party opposed.            The   court, in interpreting the question of prejudice of


substantial rights, determined that because, if anything, the appealing party

benef1ted"° from the delay, “[e]ven               if   the   Commissioner exceeded         his statutory


authority,   we    find    no substantial        rights     of United Savings prejudiced by the

Commissioner’s delay of the effective date of the order.”                    Id. at 172.


       In   Lone Star R.V. Sales          v.   Motor Vehicle Bd. of Tex. Dep’t of Transp., 49

S.W.3d 492, 500 (Tex. App.—Austin 2001, no                      pet.), the   court determined that the

appealing party was not prejudiced by the failure of the agency to grant                            it   a

continuance when      it   had not actually asked for a continuance and had been provided

ample opportunity          to   make   its     arguments.”° Those two cases stand for the

unremarkable proposition that errors which beneﬁted the appealing party or did not

actually affect the        outcome or otherwise cause              ham       to the appealing party’s


presentation of its case        do not demonstrate prejudice         to substantial rights.   The other

case cited by the District, Texas Health Facilities                  Comm ’n      v.   Charter Medical-

Dallas, Inc., 665     S.W.2d 446, 452 (Tex. 1984), merely quotes                        the language of

Section 2001.174 (2) without interpreting or applying                 it.




"9 “If anything,  United Savings should beneﬁt from postponement, which allows a longer period
in which to disassociate itself in the public mind from the name ‘Southwestern Savings.” United
Sav. Ass 'n afTex., 594 S.W.2d at 172.
'3” “Lone
            Star does not point to a single argument that it was not permitted to fully make either
in its own exceptions or in argument to the Board. Finding that the purpose of the rules—to
ensure a fair, just, and effective adjudication of the parties’ rights—was served, and that no
prejudice to Lone Star's substantial rights occurred, we overrule its ﬁrst three issues." Lone Star
R. V. Sales, 49 S.W.3d at 500.

                                                       62
       NWF,   like   any party          to   a contested case hearing, has the right to have a

decision rendered in compliance with applicable law.                 If,   as the District   Court found,

TCEQ   failed to   comply with Section 11.085              (l)(2) in   making     its   decision,   NWF’s
substantial rights   were prejudiced by           that failure   and the agency’s decision must be

reversed. That also    is   true    if,   as   NWF contends,      the decision    is    not supported by

substantial evidence. This         is     not a situation where     NWF is       complaining about a

procedural or evidentiary ruling and a serious question exists about whether the

ruling actually affected the            outcome or prejudiced NWF’s             rights.   As an     affected

person and party to the hearing,             NWF was entitled to a decision made in compliance
with applicable rules and statutes and               TCEQ’s      failure to follow controlling          law

resulted in substantial     harm to NWF. Each error complained of by NWF affected the

agency decision adversely          to   NWF in a substantial way.




                                                     63
                                                   PRAYER
            TCEQ’s     decision in this matter to grant the District‘s application                      is   not

supported by substantial evidence,            is   arbitrary      and capricious, an abuse of discretion,

and contrary        to law.   Accordingly,    NWF respectfully requests that this Court affirm
the decision of the District Court or, if the District Court decision                        is   not afﬁmied,

reverse the decision of TCEQ based on                   its   failure to   comply with     the requirements

of 30       TAC Sections 288.5 (1)(B) and (1)(H).‘2‘


                                                    Respectfully Submitted,



                                                    /s/   Myron J. Hess
                                                    Myron J. Hess
                                                    State Bar No. 09549415
                                                    Annie E. Kellough
                                                    State Bar No. 24074517

                                                    NATIONAL WILDLIFE FEDERATION
                                                    44 East Ave.,     200  Ste.
                                                    Austin, Texas 78701
                                                    Telephone: (512) 610 — 7754
                                                    Facsimile: (512) 476 —- 9810
                                                    hess@nwf.org
                                                    ke1lougha@nwf.org

                                                    COUNSEL FOR APPELLEE NATIONAL
                                                    WILDLIFE FEDERATION


'3'
      The   District Court did not reach those issues   because      it reversed the agency decision for a

failure to    comply with   the requirements of Section       1   1.085 (l)(2) of the Water Code.

                                                        64
                        CERTIFICATE OF COMPLIANCE


I   certify that this Brief of the Appellee, National Wildlife Federation,    complies with

the word-count limitations of Tex. R.        App.     P. 9.4(i)(2)(B),   because   it   contains

12,835 words, excluding any parts exempted by Tex. R. App. P. 9.4(i)(1).




                                                /s/   Myron J. Hess
                                                MYRON HESS   J.
                           CERTIFICATE OF SERVICE

By my signature below, I certify that on this 27th day of July 2015, a true and correct

copy of the foregoing Brief of Appellee was served upon the parties identiﬁed below

by electronic   service.




                                               /s/   Myron J. Hess

                                               Myron J. Hess



Lambeth Townsend
Jason Hill
Elizabeth P. Hernandez
Lloyd, Gosselink, Rochelle   & Townsend
816 Congress Ave., Ste. 1900
Austin, Texas 78701
ltownscnd@lglawﬁrm.com
ihill@l2luwl'irm.com
chernande/,@lglawlirmcom
Attorneys for Upper Trinity Regional Water District


Cynthia Woelk
Ofﬁce of the Attorney General
Environmental Protection Division (MC—O66)
P.O. Box 12548
Austin, Texas 78711-2548
Cvnlhia.Woe1k@toxasaltorncvgencralgov
Attorney for Texas Commission on Environmental Quality




                                          66
                           TABLE OF APPENDICES


Appendix   1:   Technical Review of Water Conservation Plan, Texas
                Commission on Environmental Quality, February 15, 2011.

Appendix   2:   Unofﬁcial transcript of portion of Agenda Item 1, Texas
                Commission on Environmental Quality Commissioners
                Meeting — September 24, 2013; full recording is available   at
                AR, Vol. 26, Item 383.
Appendix   3:   S.B. 1094, 2003 Leg., 78(R) Sess. (Tx. 2003).

Appendix   4:   H.B. 2660, 2003 Leg., 78(R) Sess. (Tx. 2003).

Appendix   5:   Statutes


                      Tex. Gov’t Code Section 2001.172

                      Tex. Water Code Section 16.053   (a)


Appendix   6:   30 Tex. Admin Code Section 295.9
Appendix   1
               Texas Commission on Environmental Quality
                                                     INTEROFFICE    MEMORANDUM
               To:               Ronald Ellis, Project Manager                            Date: February 15, 2011
                                 Water Rights Permitting Team
                                 Water Supply Division

               Thru:             Christopher Loft,   Team Leader
                          5 i ‘i "ResourceProtection Team
                                 Water Supply Division

                        /65      Scott Swanson, Senior Water Conservation Specialist
                          0  \\\ Resource Protection Team
                        /(,\“)   Water Supply Division

               From:             Kristin   Wang, Senior Water Conservation   Specialist

                     K V‘)       Resource Protection Team
                                 Water Supply Division
                       1/5’ I’
           ,   Subject:          Upper   Trinity Regional   Water District (UTRWD)
                                 WRPERM5821
                                 CN 60063 9272
                                 Technical Review of Water Conservation Plan

               Upper  Trinity Regional Water District (UTRWD or applicant) seeks authorization to construct
               and maintain a dam and reservoir (known as Lake Ralph Hall) with a maximum capacity of
               180,000 acre-feet of water and a surface area of 8,500 acres on the North Sulphur River, Sulphur
               River Basin, Fannin County, Texas for in-place recreation purposes and to divert and use not to
               exceed 45,000 acre—feet of water per year from Lake Ralph Hall at a maximum diversion rate of
               205 cfs (92,000 gpm) for municipal, industrial, and agricultural purposes. The application also
               requests authorization to overdraft the reservoir as part of a system operation with existing
               UTRWD supplies. Applicant requests to use the water in Collin, Cooke, Dallas, Denton, Fannin,
               Grayson, and Wise Counties within the Sulphur River and Trinity River Basins and requests an
               interbasin transfer (IBT) of water from the Sulphur River Basin to the Trinity River Basin.

               The applicant    required to provide evidence that the amount of water appropriated will be
                                 is

               beneﬁcially used, i.e., effectively managed and not wasted pursuant to Texas Water Code
               (TWC), Section 11.134(b)(3)(A). Also, the applicant must provide evidence that reasonable
               diligence will be used to avoid waste and achieve water conservation pursuant to                 TWC
:“""T1T1374(b‘)(‘¢)."l‘o’provi‘cl‘e' that evi‘dence,‘the‘applieantmtsrsubmirawvaterconservationrplanrin-——-—
              accordance with Title 30, Texas Administrative Code (TAC), Chapter 288. In applications where
              a new appropriation of water is requested, the technical review includes an analysis of whether
              the requested appropriation is reasonable and _necessary for the proposed uses in accordance with
              TWC 11.134 and 30 TAC 297.50. In applications where an IBT is requested, the technical
                                                                   I




                                                                                                     6r0wV‘-   Eii"   5
                                                                                                                                TAC
                we
review considers water conservation          efforts in accordarice"vvith the requirements                              of 30
297.13 and       11,085..                                                      .




The purpose of this technical review is to:

(1) determine whether reasonable water conservation goals have been set;
(2) determine whether the proposed strategies can achieve the stated goals;                      _
                                                                                                         .




(3) determine whether there is a substantiated need for the water and whether the amount to be
     appropriated is reasonable for the proposed use;
                                                                   '




(4) determine whether the application meets the requirements of 'l."WC_ 1l.085(k) and (1) for
    lBTs; and
                                                                               ’

                                                                                         I"
                                                                                                                         -




(5) determine whether the water conservation plan addresses a water supply needjn a manner
    that is consistent with the state water plan and the relevant approved regional water plan


If these criteria are met,     tlieii‘  considers this _suf_ﬁcier_1t      tohéonclude that the
applicant will avoid waste and achieve water conservation. This teélinrcal ieiiiew forms a basis
for permit conditions and limitations as provided by TWC 11.134 and 1l.08'$.

U'I'RWD’s water right application was received on September 2, 20-03.            submitted a-
2002 water conservation plan, additional information in 2004, and an amended plan in 2005. In
2009,      UTRWD submitted an updated water conservation and drought contingency plan.
WATER CON§ERVATION GOALS & S'I'RA’I'BGlE§
_UTRWD’s    plans were ﬁrst reviewed in accordance with 30 TAC 288. As a wholesale water
                                                                                                     I
                                                                                                                    _
                                                                                                                                 .




supplier,     UTRWD does control the operation of its water supply, treatment, and transmission
system and can take direct action to                  the efficiency otﬂre system. UTRW'D_’s
average unaccounted for water has been approximately three percent (3%) and
rneastnes all raw water diversions using meters with an accuracy of plus or minus two percent
(2%).

The following goals and       strategies   have been outlined by   UTRWD
                                                                       '
                                                                           '
                                                                                   for        water conservation and
include:


      1.    F ive-year and10-year conservation goals of 175 gallons per capita per day (gpcd).
      2.   Maintain unaccounted-_for water in the system below ten percent (10%) annually.
      3.   Meter and record water deliveries and sales with a minimum accuracy of plus or minus
           two percent (2%).
                                                            '




      4.   Maintain programs for leak detection and repair, and water loss accounting.
      5.   Raise public awareness of water conservation and encourage responsible public behavior
           (Public Education Program).
                                                                                                             '




      6.   Reuse and recycling of reclaimed wastewater.

Staﬁ‘ determined that the overall water conservation strategies provided in the                                  UTRWD’s water
conservation plan are reasonable and can achieve the stated goals.

                                                     2
WATER NEED
Based on the 2009 water conservation plan,     UTRWD currently provides wholesale treated water
service to nineteen    members and customers     (serving    more than twenty-ﬁve communities)       in
Denton and Collin Counties. U'I'RWD’s planning area includes the communities          currently served
plus additional portions of Grayson, Wise, and Cook Counties.

UTRWD purchases raw water from the City of Dallas and City of Denton out of Lewisville Lake
and Ray Roberts Lake. Further, UTRWD has a contract for raw water ﬁom Lake Chapman in the
Sulphur River Basin and a permit to reuse water transferred from Lake        Chapman to the     Trinity
River Basin.

According to the 2006 Region C Water Plan, UTRWD currently supplies treated water to users
in Denton County, and a small amount to users in Collin County. UTRWD also provides direct
reuse for irrigation in Denton County. The total existing supplies can provide between 25,200
and 42,200 acre-feet per year from 2010 to 2060.

Considering losses associated with treatment and distribution,       UTRWD  needs to develop an
additional 7,000 acre-feet per year of raw water supplies by 2010 to meet projected demands and
an additional 122,000 acre-feet per year by 2060.      UTRWD will also need to develop additional
treatment and distribution capacity to serve the growing demands of its current and future
customers.

The recommended water management          strategies listed in   Region   C Water   Plan for   UTRWD
include the following:
                                                         -




          Conservation
          Additional supplies from Dallas Water Utilities (DWU) under current contract
      '




          Lake Chapman indirect reuse
          Additional supplies fromDWU     linked to lake Chapman reuse
          Lake Ralph Hall
          Indirect reuse of return ﬂows from Lake Ralph Hall
          Marvin Nichols Reservoir
          AdditionalDWU      supplies
          Oklahoma water
          Water treatment plant and distribution system improvements




                                                  In
                                                                                    Table 1
                                                                                                       '




                                           Recommended Wate r Management Strategies for
                                               Upper Trinity Regional Water District
                                                                      .




                                                                      (acre-feet per year)

                 Source                                   2010                      2020                    2030             2040
                                                                                                   '
                                                                                               '




                                                                                                                                                                  2050                              2060_
 Current Supplies                                                                                                                         .


 Lake Chapman                                             14,068                    13,335                  13,602           13,369                                    13,136                       12,905
 DWU                    .

                                                          10,317                    11,041                  14,453           19,367                   .
                                                                                                                                                                       23,134                       27,463
 Direct Reuse                                         ,
                                                                397                      397                   397              397                                          397                              397
                                    "-
 Total Existing                                           25,232                    25,773                  23,957           34,133
                                -




                                                                                                                                                                       42,217
                                                  -




                                                                                                                                                                                                    41,265
                                                                                                                                                  -




                                                                                                                                                      ,                                         _




 Water Management Strategies                                                                                                                                                                          "
                                                                                                                                              '                                i
                                                                                                                '
                                                                                                                                                      '                            '




 Conservation;                                             .    350                  3,070                  _   4,93_3        7,196                                     9,643               ,
                                                                                                                                                                                                    -11,762
 Additional Supplies from
 DWU (Under Current
                                                                 ,.
                                                                                           _
                                                                                                       __
                                                                                                                                                          .             _-             ..
                                                                                                                                      _
                                                                                                                                                                                                     __           _




                                                               1,000                 1,000                      1,000         1,000                                23,295                           27,336
 Contract)‘                 ,        _
                                                                          -


                                                                                                                    ,
                                                                                                                        .




 Lake Chapman               Indirect
                                                               3,441                 3,301                      8,161         3,021                                     7,332                        7,743
 Reuse
                                                                                                                                                                                                          I




 Additional       DWU                                      5,627                     5,534                      5,441         5,343                                     5,254                        5,162
                                                                                                                                                                                                              .




 Supplies (Reuse)                                                                                                                                             _




 Lake Ralph Hall                                                                    29,600                  29,600           29,600                                29,600                           29,600
Additional Indirect Reuse                                                           17,760                  17,760           17,760                                    17,760                       17,760
Marvin Nichols Reservoir
                                                                                     '




                                                                                                           17,500            35,000                                35,000                           35,000
Additional        DWU
Supplies                                                                                                                                                               '2’2-O0                       6’o00
Oklahoma Water                                                                                                                                                                                      15,000
T"“’l S“PP“°‘ °f
                                                                               '



                                                          15 ’ 913                 65 ’ 265                 34,395          103 925                               130 634                       155 ’ 413
 Strategies                                                                                                                    ’                                   '     ’


Tm‘ SIIPPIIES                                             41,200                   91,039              113,351              133,053                               172,351                       196,673
P°“‘°”      “DWU S“PP13’                                   5,627                    5,534                       5,441         5,343                                12,690                           15,266
from Reuse
Total   from Conservation
& Rem                                                     15,315                   35,562                  37,192            39,222                               43,372                            53,423


                        & Reuse                       33.4%                        39.1%               32.3%                23.4%                             233%                              27.2%
Project      Demands                                      31,769                   56,353                  30,904           109,456                               136,932                   155,331
13°55“     i.“   .T’°“‘““*”‘              and
                                                           1,533                    2,313                       4,045        '5,473                                    6,347                         7,792
  l'ﬂ.|2lS!.'n1SS10l1

Surplus                                                    7,343                   31,363                  23,402            23,123                               29,072                            33,055
*saurce:   2006 Region                   C Water Plan (Volume                 1,   Table 4E.14. pages 413.40-4E.41)
                                                                                       4
Table 1 shows the recommended water management strategies for UTRWD’s water supply
development. Conservation savings from UTRWD’s existing and potential customers is
projected to reach 11,762 acre-feet per year by 2060. As shown in Table 1 above, 29,600 acre-
feet per year of the yield from Lake Ralph Hall (32,940 acre-feet) has been listed as a
recommended supply strategy to help UTRWD meet projected water demands for the next 50-
year planning period.

ALTERNATIVE WATER MANAGEMENT STRATEGIES
The 2006 Region C Water Plan also indicates that if any            of the projects identiﬁed in the
recommended plan are not implemented, UTRWD             may wish to pursue alternative strategies. The
following alternative water management strategies are recommended for UTRWD:

       Toledo Bend Reservoir
       Wright Patrnan Lake
       George Parkhouse Reservoir (North)
       George Parkhouse Reservoir (South)
       Lake Texoma
       Additional reuse

INTEEASIN TRANSFER CONSIDERATIONS
Review of the [BT request     is based on the projected water needs for the basinof origin and
receiving basin for the 50-year  planning period. The Sulphur River Basin is the basin of origin
and the Trinity River Basin is the receiving basin for the proposed Lake Ralph Hall Project.         A
comparison of the total available supplies to projected demands for the Sulphur and Trinity River
Basins is shown in Table 2, which is based on the information provided in the 2006 Region C
Water Plan. From the table, the Sulphur River Basin shows a surplus of water, while the Trinity
River Basin is projected to have shortages during the 50-year planning period.

                                                 Table 2
       Difference in Total Available Water Supply and Total Water Demand by Basin
                                 Shown as Surplus or (Shortage)
                                         (   acre-feet per year)
                                                             -




 River Basin         2010          2020               2030         2040          2050         2060

 Sulphur             222,104        209,476            198,260       187,562     177,332     161,760
 Trinity          1,065,986         722,172           451,588        177,387   (145,550)   (535,830)
‘source: 2006 Region C Water Plan (Volume I,     Table 4C.5, page 4C.19)                                 .




Projected shortages in the Trinity River Basin will reach 145,550 and 535,830 acre-feet per year
in 2050 and 2060, respectively. The plan indicates that the IBT request from this project can help
meet the water demands for Trinity River Basin during the 50-year planning period and meet the
overall water   demands for the region                                                               .
The economic     impacts‘ "of -new reservoirs (including Lake Ralph Ha1l)_ were discussed and
considered in  the'2006  Region C Water Plan (Volume 1). The plan indicates that new reservoirs
can stimulate the rural economy through new recreational business and local improvement. The
2006 Region C Water Plan also includes a preliminary analysis of the impacts of not meeting the
projected water demands. The analysis indicates that a_ severe drought occurring in a single year
would reduce the projected 2060 po'pula'tion, employment, and income trends. Further, the plan
indicates if no additional Viiater supplies are developed, Region C will face substantial shortages
in water supply over the next several decades. This information is presented in Appendix Q of
the Region C Water Plan. For municipal uses, the ecoiiomic impacts by counties (for example
Fannin and Denton), and distribution of regional impact among major river basins (Sulphur and
           were considered.
                                                                                                '




Trinity)

Based on the 2006 Region C Water Plan, UTRWD' plans to" provide 10% of the yield from Lake
Ralph Hall for use in southern Fannin County. The Gity of. Ladonia uses the Trinity Aquifer as
their current water supply. According to the 2006 Region C Water Plan, Ladonia will have water
shortages throughout the 50-year planning period. The recommended water management
strategies to meet their needs include water conservation, overdraﬂ of the Trinity Aquifer with
new wells, and purchase of water from       UTRWD    (Lake Ralph Hall). The City of Ladonia’s
projected population, total projected water demand, current supply, and water management
strategies are summarized in Table 3.


                                                        Table 3
                            Water Planning Summary for City of Ladonia
                                                                                    _




                                        (acre-feet per. year)

                                                        2010                  2020           2030    2040           2050    2060
 Projected Population                                   l‘,-500                1,600         2,000   2,200          2,500   3,000
                                            '




 Projected Municipal Water‘       Demand        '

                                                    -



                                                             545                    577       715      779      ,    379    1,055
 Current Available Water Supplies
                                                             276               _

                                                                                   276        276      276           276     276
 (Trinity Aquifer)
 Water Management Strategies
 Water Conservation — Basic Strategies                           16                     27     40       50            64      85
 Water Conservation - Expanded
                                                                 0                       2      5           6          6        8
 Strategies     .




Ralph Hall Reservoir                                             0                 558        709      754           914    1,140
                              '

                                    -




Overdraﬁ Trinity Aquifer (New Wells)                     254          '


                                                                                     0          0           0          0        0
 Total Water        Management Strategies                270                       587        754      810           984    1,233
                                                         V




 Total Supply Less Projected Demand                 0                     '
                                                                                   "286       315      307           381     434
‘source: 2006 Region C Water Plan (Volume II’, Appendix"                      V.   Table V-1, page 64 ofI12)

With the Trinity Aquifer as the only current water supply, Ladonia will have a maximum need of
779 acre-feet per year during the 50-year planning period. The City’s water needs can be
                                                             6
supplemented by the Lake Ralph Hall project, which can provide Ladonia with 558 to 1,140
                          ﬁom 2020 to 2060. Therefore, the Lake Ralph Hall project will
acre-feet of water per year
                            by providing additional water supply to City of Ladonia.
beneﬁt the Sulphur River Basin

As previously shown in Table 2, the Trinity River Basin will have water shortages during the 50-
year planning period. Many water user groups in Denton County receive water supplies from
UTRWD.     Table .4 summarizes population projections, water demand projections, currently
available supplies,and water needs for Denton County. Demon County will have projected water
needs of 24,753, 113,311, and 256,411 acre-feet per year in 2010, 2030, and 2060, respectively.

                                            .      Table4
                                  Population and  Water Planning Summary
                                             for Denton County
                                     (water quantiﬁes in acre-feet per year)

                                  2010          2020           2030             2040         2050       2060
 £°P.“‘“?‘°“                      720,064       953,668       1,184,744_       1,392,575   1,610,447   1,870,472
   rojecnons
 :Va?°”.3e“‘““d                                 212,211        263,594
                                  162,003                                       307,951     353,300     406,700
   rojectrons
                                                                           _




 g1‘:;;°1‘i‘;lS’A”“1“b1°          137,250       142,695        150,233          153,531     155,652     150,289
 WaterNeed                         24,753      69,516       113,311         154,420       198,148       256,411
‘source: 2006 Region       C   Water Plan (Volume 1, Tables 2.1, 2.2. 3. 7 & 4.4.2, page: 2.8, 2.19, 3.13& 4A.5)

UTRWD     is a signiﬁcant water supplier in this area in conjunction with other region water
providers such as Dallas Water Utilities, City of Denton, North Texas Municipal Water District
(NTMWD), and Tarrant Regional Water District (TRWD). In the 2006 Region C Water Plan, 26
Denton County water user groups list “additional               UTRWD
                                                            watef’ as one of the recommended
water management strategies to meet their water demand projections.

Many UTRWD members use groundwater for a porﬁon of their water supply. In Denton      County,
groundwater resources are very limited, and current groundwater use from the Trinity and
Woodbine aquifers exceeds the estimated reliable long—tenn supply based on groundwater
availability (2006 Region C Water Plan). Therefore, water suppliers in Denton County need to
increase their use of surface water supplies. Based on U'I'RWD’s 2009 water conservation plan,
one of the key purposes of the regional Surface Water Supply and Wastewater Treatment
Program is to avoid further draw-down of limited ground water resources, and to make surface
water available for ﬁttther growth.

                               _C'Waﬁ‘PlEnI’U'I'RWD’1REﬁ'ds"tTuﬁnsport'90Vi6f”tlie‘L3]?
./3;cc?317din_g_to_?l1_e“2‘0_0_6'Ke7g‘ioE

Ralph               Denton
         Hall yield to      County. Thus, the project will beneﬁt the receiving Trinity River
Basin by providing water to Denton County mainly for municipal purposes. In addition, the IBT
water can be used for Collin, Cooke, Dallas, Denton, Grayson, and Wise Counties within the
Trinity River Basin for municipal, industrial, and agricultural purposes.
                                                          7
UTRWD submitted an economic analysis, “The Economic Impact of Lake Ralph Hall“ with the
water right application.               states that construction of Lake- Ralph Hall will bring
recreational and other beneﬁts to the Sulphur River Basin. The report details the costs and
beneﬁts to Fannin County (in the basin of origin), and Denton County (in the receiving basin}
from the construction of Lake Ralph Hall. The report shows that the beneﬁts of the proposed IBT
outweigh the costs to both the area'in and around Fannin Cormty and the area in and around
                 A
Denton County. net present worth analysis of these costs and beneﬁts was performed for the
period from 2004 through 2036. Based on the analysis, the net present worth of beneﬁts to basin
of origin is $147 million and the net present worth of beneﬁts to receiving basin is $18 billion.

The 2006 Region    C Water Plan identiﬁed a set of waterconservaﬁon strategies that will result in
the highest practicable level of conservation and efﬁciency achievable as required for lBTs under
TWC    11.085. The Region C Plan’s recommended water conservation strategies include a basic
package that includes lo_w-ﬂow plumbing-ﬁxture rules, public and school education, waterlluse
reduction due to increasing water prices, water system audit, leak detection and repair, pressure
control, and Federal residential clothes washer standards. Reuse of treated wasfewater efﬂuent
has been identiﬁed as one of the strategies for an expanded water conservation package.
UTRWD      has included the identiﬁed water conservation strategies in its water conservation plan
and included a model water conservation plan for its members and customers. In order to comply
with TCEQ conservation rule requirements,     UTRWD     is required to submit a water conservation
implementation report every ﬁve years. The implementation report must include: (a) the. list of
dates and descriptions of the conservation measures implemented; (b) data about whether or not
targets in the plans are being met; (c) the actual amount of water saved; and (d) if the targets are
not being met, an explanation as to why any of the targets are not being met, including any
progress on that particular target.                         '
                                                                              -




As   a wholesale public water supplier,   UTRWD 'will   develop and"-implement wholesale water
contracts that include applicable water conservation and drought contingency requirements. In
addition, one of the _slIaté'gies identiﬁed‘ by the Water Conserveition Task Force Best
                                               '




Management Practices ('l3MP) Guide               Report 362), Wholesale Agency Assistance
Programs   BMP  (BMP 2.14), is exclusively applicable to wholesale water suppliers.   UTRWD   has
included elements of the wholesale    BMP  in its conservation plan. If       UTRWD
                                                                                  implements all
elements of its water conservaﬁon plan, then staff believes that the highest practicable level of
conservation for  UTRWD      can be achieved. By preparing a drought contingency plan and
preparing and implementing a water conservation plan that will result in the highest practicable
levels of water conservation and eﬁciency within its jurisdiction, and if         UTRWD  ensures
through contracts that its customers develop water conservation plans that implement the
recommended strategies listed in the approved Regional Water Plan, the application can meet the
requirements of  TWC  1I.085(l)(2).


CONSISTENCY WITH STATE AND REGIONAL WATER PLANS
The Lake Ralph Hall Project is listed as one of the recommended water management strategies      in
the Region   C Water   Plan and the current State Water Plan and         is one of the major water
conveyances proposed by the planning group. This application     is   consistent with 2006 Region C
                                                   8
Water Plan and 2007      State   Water Plan.

SUMMARY
The  application has been evaluated and determined to meet technical review requirements in
TCEQ    rules and applicable statutes. Staﬂ‘ determined that the listed conservation goals and
strategies in UTRWD’s water conservation plan can achieve the highest practicable levels of
water conservation and emciency in UTRWD’s service area

The application is consistent with the approved January 2006 Region C Water Plan and the 2007
State Water Plan because the Lake Ralph Hall project is listed as one of the recommended water
management strategies for UTRWD in both plans.

RECOMMENDATIONS
Staff recommends that, if the application      is   granted, the following water conservation language
should be included in the permit:                               _




Permittee shall implement water conservation plans that provide for the utilization of those
practices, techniques,  and technologies that reduce or maintain the consumption of water,-
prevent or reduce the loss or waste of water, maintain or improve the efﬁciency in the use of
water, increase the recycling and reuse of water, or prevent the pollution of water, so that a water
supply is made available for future or alternative uses. Such plans shall include a requirement
that in every wholesale water contract entered into, on or after the effective date of this permit,
including any contract extension or renewal, each successive wholesale customer develop and
implement conservation measures that can result in the highest practicable levels of water
conservation and eﬁciency in order to comply with 'I'WC 11.085 (1)(2). If Permittee authorizes
the resale of water by a customer, then the contract for resale must have water conservation
requirements so that each successive wholesale customer in the resale of the water will be
required to implement water conservation measures.
Appendix 2
                                              Unofﬁcial Transcript
                                   Texas Commission on Environmental Quality
                                              Commission Meeting
                                               September 24, 2013

             TCEQ Docket No. 2012-0065-WR; SOAI-I Docket No. XXX-XX-XXXX.                    Consideration of
             the Administrative Law J udges' Proposal for Decision and Order regarding the application of
             Upper Trinity Regional Water District for Water Use Permit No. 5821 to construct and maintain
             a dam and reservoir (Lake Ralph Hall), on the North Sulphur River, Sulphur River Basin, in
             Fannin County for in-place recreational purposes and to divert and use not to exceed 45,000
             acre-feet per year from the perimeter of the proposed reservoir for municipal, industrial, and
             agricultural purposes. The Applicant requests an authorization to transfer water from the
             Sulphur River Basin to the Trinity River Basin, for use in portions of Collin, Cooke, Dallas,
             Denton, Fannin, Grayson and Wise Counties. The Commission will also consider timely public
             comments, timely related ﬁlings, exceptions and replies. (James Aldredge, Ron Ellis)


             Commissioner Dr. Bryan Shaw: Thank you. Any questions at this time? Thank you.        If you   have
             questions of ED if you want to go ahead and jump in there it'd be great.
MI-I




             Commissioner Toby Baker: Well I’d just love to hear your thoughts about what Mr Hess
             presented, I, I'm, uh, based on the record and what I read in the PF D I don’t know if I agree with
             them and I'm wondering if you could just speak a little bit more about the water conservation
0\U‘l-I393




             plan and how you ended up where you are.
             James Aldredge: Certainly, certainly. The legislature in 2003 I believe it was directed the
\Dm\l        Commission and the Water Development Board to jointly develop — and this is codiﬁed in the
             water code, and I’m going to paraphrase, I don’t have it right in front of me but it was to develop
             best management practices, designed for the highest practicable level of water conservation and
             efﬁciency achievable within the jurisdiction of an individual water supplier. A couple of years
             after that, the Water Development Board, after a review process by the Water Conservation Task
             Force, published Report 362, which is titled Best Management Practices Guide for Water
             Conservation. Upper Trinity Regional Water District's conservation plan incorporates, not every
             best management practice, but a signiﬁcant amount of them, and at least components of each of
             the individual best management practices that are published there; and the argument that
             National Wildlife Federation has made, and they had witness testimony to this effect at hearing,
             is that that guide is not intended to be the guide for best management practices for the highest
             practicable level of water conservation and efﬁciency achievable. The ED takes exception to that,
             if that guide isn’t that, then one doesn’t exist. It is the only statement, by either this
             Commission, or the Water Development Board, that directs any form of best management
             practice for water conservation. In that light, we believe, after our review of their water
             conservation plans, there have been repeated iterations of them, that they have consistently met
             what is required of them under Section 11.085 of the Water Code, the inter-basin transfer
             section, which, that's the standard: highest practicable level of water conservation and efﬁciency
             achievable. Further than that, we have to remember that Upper Trinity Regional Water District
             is a wholesale water provider. They don't make contracts with the end users of water. They have
             a limited scope of customers, all of their customers are retail water providers. The standards
             that they have to meet under Section 288.5 of our rules, which is the rule for wholesale water
             providers, they've met it; there is nothing in there about building into their supply contracts
             requirements that the retail water supplier customers then have to turn around and meet some
             particular level of efﬁciency. There are rules precisely for what retail water suppliers must do in
33   their individual water conservation plans, and the Executive Director reviews those, and they
34   are subject to Executive Director approval. So we're conﬁdent that the highest level of water
35   conservation and efﬁciency achievable within U'I'RWD’s jurisdiction will happen as a result of
     the plan that they’ve developed. And we’re pretty conﬁdent in that and we would recommend
37   that you, that you ﬁnd the same and in doing so issue the permit.

38   Commissioner Toby Baker: Thank you for that and that’s sort of howl understood it and I
39   wanted to just make sure that I was understanding it correctly, that the issue that they’re
4o   presenting is sort of that they’re saying that Report 362 isn’t the standard, and I agree that there
41   is no standard if we don’t go there. So thank you for that, it was enlightening, thanks.
Appendix 3
                                                                                                S.B. No. 1094



                                                                         AN ACT
                                 relating to the creation of a task force to evaluate matters
                                 regarding water conservation.
                                        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

      O\.DCl7~lO’|UI-b|dI\)§-‘
                                        SECTION      1.    DEFINITION.    In this Act, "task force" means the
                                 water conservation implementation task force created under Section
                                 2 of this   Act.
                                        SECTION      2.    WATER CONSERVATION IMPLEMENTATION TASK FORCE.
                                 (a)   The Texas Water Development Board shall select members of the
I-‘
                                 water conservation implementation task force to represent the
D-‘        I-‘
                                 following entities and interest groups from applicants recommended
I-‘
           M                     by the following entities and interest groups:
H          (.1
                                               (1)        Texas Commission on Environmental Quality;
H 1)                                           (2)        Department of Agriculture;
H ul                                           (3)        Parks and Wildlife Department;
H G‘                                           (4)        State Soil and Water Conservation Board;
H ~l                                           (5)        Texas Water Development Board;
I-'        C!)
                                               (6)        regional water planning groups;
I-‘
           LD                                  (7)        federal agencies;
NO                                             (8)        municipalities;
N                I-4
                                               (9)        groundwater conservation districts;
N NI                                           (10)        river authorities;
Nu                                             (11)        environmental groups;
Nh                                             (12)        irrigation districts;
                                                                                                             S.B. No. 1094
                                               (13)            industries;
                                               (14)            institutional water users;
                                               (15)           professional      organizations       focused         on    water
                              conservation; and
                                               (16)           higher education.
      °\Dm\IU\Ulcb|aJ|\l|-'




                                       (b)     The            executive      administrator    of      the     Texas       water
                              Development Board or the administrator's designee is the presiding
                              officer of the task force.
                                       SECTION           3.    DUTIES OF TASK FORCE.          The task force shall
H                             review,        evaluate,              and   recommend optimum levels           of    water use
I-‘        D-'
                              efficiency and conservation for the state by:
I-‘
           M                                   (1)            identifying,      evaluating,     and      selecting         best
H In                          management practices for municipal, industrial, and agricultural
Hb                            water uses and evaluating the costs and benefits for the selected
I-
              |J'I
                              best management practices:
I—'        OI
                                                (2)           evaluating       the    implementation               of     water
I-'           ‘I
                              conservation strategies recommended in regional and state water
D-‘           an              plans;
I- \.D                                          (3)           considering the need to establish and maintain a
NO                            statewide public awareness program for water conservation:
Iu                  I-                          (4)           evaluating the proper role,           if      any,    for   state
NM                            funding         of         incentive         programs   that    may        facilitate         the
|\)
                    u         implementation of best management practices and water conservation
M                uh           strategies;
M U!                                               (5)        advising the Texas Water Development Board and the
M 0!                          Texas Commission on Environmental Quality on:
I0                     ~l
                                                              (A)     a standardized methodology for reporting and
                                                                                                     S.B. No. 1094
                         using per capita water use data;
                                                   (E)    establishing per capita water use targets and
                         goals,     accounting           for     such     local    effects     as     climate        and
                         demographics; and
’a\Dm~lU\U'|-‘>1-INI-‘                             (C)    other possible uses as appropriate; and
                                        (6)        evaluating the appropriate state oversight and
                         support of any conservation initiatives adopted by the legislature.
                                  SECTION     4.    ASSISTANCE OF STATE AGENCIES. The task force may
                         request the assistance of state agencies, departments, or offices
                         'to   carry out its duties, including necessary staff support.
5-‘
               H                  SECTION     5.    PUBLIC MEETINGS.            The task force may hold public
I-'
              N          meetings as needed to fulfill its duties under this Act.
H             La!
                                  SECTION     6.    BEST MANAGEMENT PRACTICES GUIDE; REPORT.                         Not
5-‘
             A           later than November             1,    2004, the task force shall develop a best
9-‘           U‘
                         management practices guide for use by regional water planning
|-'           GI         groups and political subdivisions responsible for water delivery
H             ~l
                         service and shall make a final report to the lieutenant governor,
I-'
              In         the speaker of the house of representatives, and the legislature
H \D                     evaluating the issues described in Section                   3   of this Act.
NO                                SECTION     7.    EXPIRATION OF ACT AND AEOLITION OP TASK FORCE.
MH                       This Act expires and the task force is abolished on January                         1,    2005.
NM                                SECTION B.        EFFECTIVE           DATE.       This     Act     takes        effect
M to                     immediately if it receives a vote of two-thirds of all the members
M J)                     elected to each house, as provided by Section 39, Article III, Texas
Iu ul                    Constitution.         If this Act does not receive the vote necessary for
M 5"                     immediate effect, this Act takes effect September                      1,   2003.
                                                          S.B. No. 1094




       President of the Senate                Speaker of the House
        I   hereby certify that 5.3. No. 1094 passed the Senate on
April 22, 2003, by the following vote:      Yeas 31, Nays 0.



                                            Secretary of the Senate
        I   hereby certify that S.B. No. 1094 passed the House on
May   6, 2003,   by the following vote:   Yeas 143, Nays 0, two present
not voting.



                                            Chief Clerk of the House

Approved:


                 Dat E



              Governor
Appendix 4
                                                                                                11.13.    N6. 2660



                                                                     AN ACT
                             relating      to   the    establishment      of    minimum    levels        of   water
                             conservation in water conservation plans.
                                    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
                                    SECTION           Section    11.1271,      Water                amended by
      O\0m\lU\U|ﬁlJf\-I}-'




                                                1.                                     Code,   is
                             amending Subsection       (c)   and adding Subsections (d), (e), and             (f) to
                             read as follows:
                                    (c)     Beginning May       1,   2005, all water conservation plans
                             ﬂuired        under this section must include specific,                 quantified
I-‘
                             S-year and 10-year targets for water savings.              The entity preparing
I-'    I-‘
                             the plan shall establish the targets.               Targets must include goals
D-‘
       N                     for water loss programs and goals for municipal use in gallons per
|-'      (Al
                             cagita per day.
5-‘    .I>
                                    (d)     The commission and the board jointly shall identify
|-'    U!
                             Eantified target goals for water conservation that water suppliers
I-‘    0"                    and   other    entities may use as guidelines in preparing water
I-‘    \I
                             conservation plans.         Goals established under this subsection are
0-‘
       In                    not enforceable reguirements.
I-‘
       W                            (e)     The commission and board jointly shall develop model
MO                           water conservation programs for different types of water suppliers
N      I-‘
                             that suggest best management practices for achieving the highest
MM                           practicable levels of water conservation and efficiency achievable
Nw                           for each specific type of water supplier.
MD                                  (f)     The commission shall adopt rules establishing criteria
                                                                                         H.B. Na. 2660
                         and deadlines for submission of water conservation plans, including
                         any required amendments,             and for     submission of implementation
                         reports.
                               SECTION     2    .     Section 15.106, Water Code, is amended by adding
                         Subsection    (17-1)       to read as follows:
S\Dﬂ1\Id\U|ahhlI\-ll-'




                               (b-1)     Beginning May         1,   2005, all water conservation plans
                         required under this section must include specific, quantified
                         5-year and 10-year targets for water savings. The entity preparing
                         the plan shall establish the targets.              Targets must include goals
                         for water loss programs and goals for municipal use in gallons per
ll                       capita per day.
12                             SECTION      Section 17.125, Water Code, is amended by adding
                                           3.

13                       Subsection (b-1) to read as follows:
14                             (h-1)     Beginning May         1,   2005, all water conservation plans
15                       required under this section must include specific, quantified
16                       5-year and 10-year targets for water savings. The entity preparing
17                       the plan shall establish the targets.              Targets must include goals
18                       for water loss programs and goals for municipal use in gallons per
19                       capita per day.
20                             SECTION 4.   Section 17.277, water Code, is amended by adding
21                       Subsection (b-1) to read as follows:
22                             (b-1)     Beginning May         1, 2005,   all water conservation plans
23                       required under this section must include specific, quantified
24                       5-year and 10-year targets for water savings. The entity preparing
25                       the plan shall establish the targets.              Targets must include goals
26                       for water loss programs and goals for municipal use in gallons per
27                       capita per day.
                                                                                           H.B. No. 2660
                                   SECTION       5.   Section 17.857, Water Code, is amended by adding
                             Subsection (b—1) to read as follows:
                                   (17-1)      Beginning May    1,   2005, all water conservation plans
                             required under this section must include specific, quantified
s\.DlD~lO\ll|-bl:-Il\-ll-'




                             5-year and 10-year targets for water savings. The entity preparing
                             the plan shall establish the targets.           Targets must include goals
                             for water loss programs and goals for municipal use in gallons per
                             capita per day.
                                   SECTION       6.   Not   later than September   1,   2004,   the Texas
                             Commission on Environmental Quality and the Texas Water Development
1-‘             I-‘
                             Board shall take the actions necessary to comply with Section
I-‘
                IU           11.1271, water Code, as amended by this Act.
|-'
                 In                SECTION       7.   (a)   This Act takes effect immediately if it
I-'
                ah           receives a vote of two-thirds of all the members elected to each
I-‘
                 U'|
                             house, as provided by Section 39, Article III, Texas Constitution.
I-‘              O‘          If this Act does not receive the vote necessary for                immediate
 H               xl
                             effect, this Act takes effect September 1, 2003.
I4               U)
                                   (b)        The change in law made by this Act to Section 11.1271,
I-'
                 0           Water Code, applies to a holder of an existing permit, certified
MO                           filing,   or certificate        of adjudication as described in Section
M                  I-4
                             11.1271(b)   ,   Water Code, regardless of whether the permit, certified
MM                           filing, or certificate of adjudication is obtained before, on, or
N La                         after that date.
MD                                 (c)        The changes in law made by this Act to Sections 15.106,
N Ul                         17.125, 17.277, and 17.357, water Code, apply only to applications
M                  U‘        for financial assistance filed with the Texas Water Development
 N                  «I
                             Board on or after the effective date of this Act.
                                                      H.B. Na. 2660



    President of the Senate              Speaker of the House

      I certify that H.B. No. 2660 was passed by the House on May 2,
2003, by the following vote: Yeas 126, Nays 0, 2 present, not
voting.



                                         Chief Clerk of the House

      I  certify that H.B. No. 2660 was passed by the Senate on May
28, 2003, by the following vote: Yeas 31, Nays 0.



                                        Secxetaxy of the Senate

APPROVED:
                    Date




                  Governor
Appendix 5
7/27/2015                                                                   Taras Law - Govemrnent Code- Sec. 2001.172. Scope 0fJudcld Review.




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Texas Laws - Government Code
Sec. 2001.172. Scope Ofiudicial Review.


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§ 16.053. Reglonal Water Plans,             TX WATER § 16.053



  Vernon's Texas Statutes and Codes Annotated
        Water Code (Refs 8: Annos)
          Title 2. Water Administration (Refs & Annos)
             Subtitle C. Water Development
                   Chapter 16. Provisions Generally Applicable to Water Development (Refs & Annos)
                     Subehapter C. Planning

                                                                 V.T.C.A.,   Water Code § 16.053

                                                                 § 16.053. Regional      Water Plans

                                                                   Effective:   September     1,   2011
                                                                             Currentness


(a)   The regional water planning group             in   each regional water planning area shall prepare a regional water plan, using an existing
state   water plan identiﬁed in Section l6_051 of this code and local water plans prepared under Section |6.054 of this code as a
guide,      if present, that   provides for the orderly development, management, and conservation of water resources and preparation
for and response to drought conditions in order that sufficient water will be available at a reasonable cost to ensure public health,
safety,     and welfare, further economic development; and protect the agricultural and natural resources of that particular region.



(b)   No later than      September    1,   1998, the board shall designate the areas for which regional water plans shall be developed,
taking into consideration such factors as river basin and aquifer delineations, water utility development patterns, socioeconomic
characteristics, existing regional         water planning areas,          political subdivision boundaries, public          comment, and other factors the
board deems relevant. The board             shall   review and update the designations as necessary but                 at least   every five years.



(c)   No later than 60 days        after the designation           of the regions under Subsection         (b), the   board shall designate representatives
within each regional water planning area to serve as the                     initial   coordinating body for planning.   The initial coordinating body
may     then designate additional representatives to serve on the regional                         water planning group. The initial coordinating body
shall designate additional representatives if necessary to ensure adequate representation                               from the    interests   comprising that
region, including the public, counties, municipalities, industries, agricultural interests, environmental interests, small businesses,
                            nvcr authorities, water districts, and water utilities. The regional water plarming group shall maintain
electric generating utilities,
adequate representation from those   interests. In addition, the groundwater conservation districts located in each management

area, as deﬁned by Section 36.001, located in the regional water planning area shall appoint one representative of in groundwater
conservation district located in the management area and in the regional water planning area to serve on the regional water
plarming group. In addition, representatives of the board, the Parks and Wildlife Department, and the Department of Agriculture
shall serve as ex oflieio members of each regional water planning group.




(d)    The board shall provide guidelines for               the consideration of existing regional planning efforts by regional water planning
groups.    The board shall provide guidelines                for the fonnat in   which infonnation        shall   be presented   in the regional   water plans.



(e)   Each regional water planning group                 shall   submit to the development board a regional water plan that:



      (1)   is   consistent with the guidance principles for the state water plan adopted                     by the development board under Section
      16 05 I (d);
Appendix 6
7/27/2015                                                          Tamas Administrative Code


   <<Prev Rule                                                                                                                  Next Rule>>
                                       Texas Admmlstrative Code
   TITLE 30                          ENVIRONMENTAL QUALITY
   PART     1                        TEXAS COMMISSION ON ENVIRONMENTAL QUALITY
   CHAPTER 295                       WATER RIGHTS, PROCEDURAL
   SLJECHAPTER A                     REQUIREMENTS OF WATER RIGHTS APPLICATIONS GENERAL
                                     PROVISIONS
   DIVISION        1                  GENERAL REQUIREMENTS
   RULE §295.9                       Water Conservation and Drought Contingency Plans



   An application relating to the appropriation or use of state water must include water conservation and
   drought contingency plans meeting applicable requirements contained in this section. An application not
   accompanied by such plans is not administratively complete and shall not be considered by the
   commission, unless expressly exempted by this section. The water conservation plan must demonstrate
   that reasonable diligence will be used to avoid waste and achieve water conservation in order that
   appropriated waters will be beneﬁcially used for the authorized purposes. Conservation means those
   practices, techniques, and technologies that will reduce the consumption of water, prevent or reduce the
   loss or waste of water, maintain or improve the efﬁciency in the use of water, increase the recycling and
   reuse of water, or prevent the pollution of water so that a water supply is made available for future or
   alternative uses for the beneﬁt of the public health, safety and welfare, and of the environment.

    (1) Applications to appropriate or to use water for municipal use, industrial or mining use, or
   agricultural use, including irrigation use. The water conservation and drought contingency plans
   submitted with an application to appropriate or to use state water for municipal use, industrial or mining
   use, or agricultural use must be submitted in accordance with the guidelines set forth in Chapter 288 of
   this title (relating to Water Conservation Plans, Drought Contingency Plans, Guidelines and
   Requirements).

    (2) Applications to appropriate or to use water by wholesale water suppliers.      water conservation planA
   submitted with an application to appropriate or to use state water by a wholesale water supplier must be
   submitted in accordance with the guidelines set forth in Chapter 288 of this title.

    (3) Applications to appropriate or to use water for any other purpose or use. A water conservation plan
   submitted with an application to appropriate or to use state water for any other purpose or use shall
   include a water conservation plan providing information where applicable about those practices,
   techniques, and technologies that will be used to reduce the consumption of water, prevent or reduce the
   loss or waste of water, maintain or improve the efficiency in the use of water, increase the recycling and
   reuse of water, or prevent the pollution of water.

     (4) Applications toamend existing water rights. An application to amend an existing water right for
   any of the following reasons must be accompanied by water conservation and drought contingency plans
   in accordance with the applicable provisions of this section:


       (A) to increase the amount of the appropriation;

       (B) to extend the tenn of the appropriation;

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7/27/2015                                                        Texas Adrninistrative Code

     (C) to change the place of use, unless the request is to expand the amount of acreage to be irrigated
   adjacent to the existing, authorized irrigated tract without an increase in the appropriation; or

     (D) to change the purpose or use of the appropriation (a conservation plan to change the purpose or
   use of an appropriation need only address the proposed change in purpose or use; however, the
   executive director may require an applicant to submit a water conservation plan which addresses the
   applicants entire water uses and/or appropriations).

    (5) Exemptions to the requirement to submit water conservation plans. Applications to impound water
   for in-place use only, for emergency use in accordance with §295.91 of this title (relating to
   Requirements for Application for Emergency Water Use Permit) and for temporary use of water in
   accordance with §295.61 of this title (relating to Additional Requirements for Applications for
   Temporary Permits) are exempt from having to submit a water conservation plan pursuant to this
   section. However, all water right holders must exercise reasonable diligence to avoid waste and achieve
   water conservation so that the right to use state water is limited to the amount which is being or can be
   beneficially used for the authorized purposes but not to exceed the amount speciﬁcally appropriated.



   Source Note: The provisions of this §295 .9 adopted to be effective           May 28, 1986, 11 TexReg 2324;
   amended to be effective May             3, 1993, 18   TexReg 2558', amended to be effective February 21, 1999, 24
   TexReg 969; amended to be effective                August 15, 2002, 27 TexReg 7149


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