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Creighton rides wave of water priorities into 85th session

November 17, 2016

By: Andrew DuBois – The Courier

Brandon Creighton’s priority list for the upcoming legislative session could force sweeping changes within Montgomery County’s water authorities while creating ripple effects for similar districts across Texas.

The second-term Conroe senator, who won re-election Nov. 8, recently announced his comprehensive water agenda that focuses on transparency among water districts as well as what he termed “unfair rate increases for water.” Creighton’s initiatives stem from the local water wars that have resulted in legal battles involving the city of Conroe, Lone Star Groundwater Conservation District and San Jacinto River Authority, but they address common issues faced across Texas.

Among Creighton’s considerations in the 85th Legislature, which starts in January, are:

Whether additional conflicts of interest and ethics reform need to be addressed in the representation of the Lone Star Groundwater Conservation District and San Jacinto River Authority; whether some or all of the board members of LSGCD should be elected; whether the LSGCD board should add representation for private water purveyors; whether the SJRA representative should have voting rights on LSGCD; whether a moratorium on the remaining phases of the SJRA’s Groundwater Reduction Plan will affect any current litigation or taxpayer-supported bonds; whether more frequent sunset review and oversight over SJRA would increase transparency; and whether legislative solutions can directly lower water rates.

“In an area like Montgomery County, where jurisdictions overlap and interests compete, it may take legislative intervention to ensure we are keeping it fair and holding government accountable,” Creighton said.

The Conroe native provides a unique perspective on the issues facing all entities involved in the complex discussions and disagreements regarding water in Montgomery County. Creighton was an original board member of the LSGCD, serving from 2001-06 before being elected to the Texas House of Representatives. In his four terms in the House from 2007-14, one of his appointments was to the Natural Resources Committee. That carried over into his first session in the state Senate, where he served on the Agriculture, Water and Rural Affairs Committee.

As an eighth-generation Montgomery County resident, the 46-year-old Creighton understands how vital water resources are to supporting population and economic growth. With 15 years already invested in finding solutions, he believes that solving the problem starts with leadership not only at the state level, but locally, which is why he is zeroing in on the operations of the local water agencies.

Fair representation

Four of Creighton’s initiatives address the make-up of the Lone Star Groundwater Conservation District board and whether those positions should be elected or appointed. The 2001 enabling legislation for the LSGCD, which voters approved, called for an appointed nine-member board that includes: two appointed by Commissioners Court; one by the Montgomery County Soil and Water Conservation District board; one by the SJRA board; one by the Conroe mayor; one by the mayors of other cities within Montgomery County; one by The Woodlands Joint Powers Agency; one by the municipal utility district boards east of Interstate 45; and one by the MUDs west of I-45.

With approximately 100 groundwater districts throughout Texas, two-thirds are single-county districts (like the LSGCD, which falls solely in Montgomery County). Of those 66 districts, 56 have elected boards, while the other 10, including LSGCD, are appointed.

“Every entity has a seat on the (LSGCD) board, except Montgomery County has two to represent everybody,” said Creighton, who represented small cities as an original LSGCD board member. “If the entire board is not elected, then those two seats should be elected.

“There is a consensus (among local legislators) the Lone Star needs elected representation.”

That stance also received recent support from the Conroe City Council, which passed a resolution calling on the Texas Legislature to amend the governing law of the LSGCD to provide for elected board members.

“I look forward to working with you and all the stakeholders,” state Rep. Will Metcalf, R-Conroe, told the council members Oct. 26.

However, Lone Star Groundwater Conservation District General Manager Kathy Jones said the board structure was set up to ensure that regulated water providers have a say in groundwater regulation decisions. She also said public accountability lies with those making the appointments.

Jones, who also worked for a fully elected board with the Sandy Land Conservation District from 1990-2001, said Montgomery County “voters elect those officials who make those appointments” to the LSGCD board.

That is true for the county commissioners, mayors and municipal utility districts, but not for the SJRA.

Conflict of Interest

Currently, San Jacinto River Authority General Manager Jace Houston is the SJRA board appointee serving on the LSGCD board. SJRA board members are not elected either; they are appointed by the governor.

While the LSGCD has oversight over groundwater, the SJRA has handled both surface water and groundwater. Those dynamics could create a conflict of interest because increased groundwater restrictions may promote a greater need to purchase surface water, such as from Lake Conroe, which the SJRA manages.

“I understand the premise of them (SJRA) having representation; it’s a collaborative board,” Creighton said. “But do they need a vote? I’m not so sure they do. … Maybe an ex officio position.

“Why have someone in the business of selling surface water protect or limit our groundwater usage, or be on a board that determines that?”

However, Jones and Houston disagree, saying, if anything, the groundwater reductions have created more thoughtful efforts to access alternative water sources – both above and below ground.

“If I were serving on a board and couldn’t persuade a majority to agree with me on an issue, I can’t imagine going to my senator or representative and asking them to change the makeup of the board in a blatant attempt to force my opinion on the majority,” Houston said.

He emphasized the fact that the SJRA has no incentive to restrict groundwater use or sell surface water.

“Before this whole GRP (Groundwater Reduction Plan) ever started, one of our customers was The Woodlands Township. If we could keep delivering groundwater to them and nothing else, then we would,” Houston said. “There is no financial win or incentive to sell surface water, it’s a break-even. I’d rather sell groundwater. You just set your rates to cover whatever costs you have.”

For Creighton, the potential conflicts go far beyond representation on the water boards, such as law firms that help plan an infrastructure solution, then represent the entity in the sale of bonds for the project and make money coming and going.

That may incentivize the parties involved to push forward with entire phases of projects, whether or not they are needed.

Creighton points to the SJRA’s Groundwater Reduction Plan, which calls for $1.5 billion to be spent on water infrastructure over the next 40 years. Phase 1, the pipeline project to pump surface water from Lake Conroe to Conroe and The Woodlands, was completed at a cost of nearly $500 million.

“Phases 2, 3 and 4 are to spread that infrastructure all over the county,” Creighton said. “And that’s with no state and federal money – just true pumpage fees.

The initial project was funded through bonds, which members of the GRP are paying for through fees assessed by the SJRA.

However, Houston said the 40-year plan was provided because the LSGCD required a long-term plan to reduce pumpage rates.

“If Lone Star says we can pump more (ground) water, then that will delay the projects. … If the population doesn’t grow as fast, then that immediately delays it,” Houston said.

GRP & Fees

In the mid-2000s, the Lone Star Groundwater Conservation District started to create the framework for its groundwater reduction program. It called for a 30 percent drop in groundwater usage based on 2009 pumpage rates. The deadline for all large-volume groundwater users in Montgomery County to meet that reduction was Jan. 1, 2016.

There were 201 such LVGUs at the time. And in response to the LSGCD mandate, the River Authority developed its GRP to ensure plenty of water resources for the growing county. The plan was to create access to alternative water resources while ensuring that the participants, as a whole, dropped their pumpage to the mandated amount. The nearly $500 million first phase included the water treatment plant at Lake Conroe and pipelines to Conroe and The Woodlands.

In order to get the 201 LVGUs on board with the SJRA’s Groundwater Reduction Plan, legislation was proposed in 2009 requiring all LVGUs to enter the program. However, Creighton and Sen. Robert Nichols, R-Jacksonville, amended that bill to ensure it was not a mandate and the SJRA had to negotiate contracts with each LVGU. In the end, more than 150 of them joined the GRP.

That meant all participating entities would incur fees in order to pay for the half-billion-dollar project and related pumpage fees, because it would preserve some entities’ ability to continue getting all water resources from beneath the ground.

While water has been plentiful so far for participants, the fees assessed by the SJRA have sent certain entities to the boiling point, even though the SJRA provided a long-term fee schedule several years ago.

Fees for GRP participants started at 25 cents per 1,000 gallons in 2010 and gradually increased each year, hitting $2.32 in fiscal year 2016 for groundwater users, while surface-water users paid a little more at $2.51 per 1,000 gallons. The fee increases finally came to a head last summer when the SJRA, backed by its consumer review committee, issued fee increases to $2.50 per 1,000 gallons for groundwater users and $2.69 per 1,000 gallons for surface-water users.

For the city of Conroe, which is paying more than $800,000 a month in GRP fees to the SJRA, it was time to turn off the fee spigot. In August, the City Council issued a resolution refusing to pay the fee increase.

In response, the SJRA filed suit against the city claiming breach of contract. The River Authority alleges the city’s decision puts the SJRA and other GRP participants in immediate financial risk involving repayment of $400 million in debt to the state. The SJRA is seeking an expedited judgment.

“One thing we know is we have to have short- and long-term plans in place, and it has to be affordable. We are hearing from our constituents that affordability is a big issue,” said Creighton, who will look into the Legislature’s ability to lower water rates.

In addition, Creighton points out that his and Nichols’ amendment to the GRP enabling legislation that forced SJRA to negotiate with large-volume users created the opportunity to opt out and seek less expensive alternatives, such as through drilling to the Catahoula Aquifer, as some entities did.

Houston said the SJRA has tried to keep the fees affordable. But with a couple of the wettest springs in recent history, water demand decreased. After the SJRA ate up reserves to the tune of $3 million, the consumer review committee agreed it was time to raise rates to ensure expenses are paid and the reserve is kept intact.

Rights to Water

Originally filed in August 2015 against the LSGCD, Conroe’s lawsuit has been whittled down and now mainly focuses on voiding the water district’s rules and district regulatory plan.

The city believes the water district is acting beyond its legislative authority by putting down unlawful limits on groundwater production, infringing on property rights and that the boundaries of the district are based on political subdivisions, such as county lines, and not geographical boundaries.

The LSGCD maintains it is within its authority as stipulated by the Texas Water Code.

For the county’s legislators, it all comes down to property rights.

“The water belongs to the people, the groundwater.” Nichols said. “The surface water belongs to the state.

“There are conflicting issues. In 2009, the state said if you’re a property owner, you have a vested interest in the water beneath you. … The groundwater district was set up long before that.”

For Creighton, it’s striking an acceptable balance between property rights and government oversight.

“We voted … to make water a vested right,” he said. “Whether it’s Ozarka or the catfish farm, it showed that the ‘rule of capture’ is not what the Supreme Court ruled was right to manage such a valuable resource. That’s why you had 90-plus groundwater districts created in a short period.”

Statewide impact

Creighton believes all eyes in the water world are on Montgomery County concerning the litigation and his legislative talking points on the structure of water authorities.

“Many of the decisions will be powerful and have ripple effects across the state. … There are issues here that could have statewide implications,” said Creighton, referring to conflict-of-interest issues, how groundwater districts are established and boards formed, as well as the all-important property rights debate.

However, with the volatile litigation situation, he acknowledged that any policy change considered to be influencing the current cases would be opposed.

“Are we trying a case or working on litigation for the future?” Creighton said. “I do feel like I have issues here that can be addressed without influencing the case.”

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