Proposed New Rules Shed Light on Future Water Projects

Updated, 6:22 p.m.:

The Texas Water Development Board’s release of draft rules Tuesday afternoon offered Texans a clearer sense of how the board will prioritize and fund competing water supply projects.

Though some potential issues remain unaddressed, the proposal provides guidelines for the point system by which the board will rank projects applying for an initial pool of $2 billion — funding approved by Texas voters in November. 

The draft rules include a boost to environmental groups, defining “conservation” in accordance with a previous state guide. Under the rules, a project’s effect on water conservation — including elements like water loss — potentially offers many more points than other criteria, including shovel-readiness and the applicant’s ability to repay a loan.

Legislative mandates to set aside 10 percent of funds for rural projects and 20 percent for conservation and reuse projects are considered “a floor and not a ceiling,” the rules state, as board members had previously signaled. The rules set forth a commitment to an “aggressive marketing and outreach program” to make sure that eligible projects in these two categories know to apply for funding.

Ken Kramer, former director of the Sierra Club’s Texas chapter, said in a statement that the draft rules’ considerations of conservation “appear to have hit the mark.” 

The proposed point system also gives considerable weight to projects’ rankings from regional groups, which already submitted their lists of prioritization to the state agency. 

The draft rules also note that the board will report the extent to which funded projects involve historically underutilized businesses.                  

The board announced that it will hold public hearings on the proposed rules in cities around the state on July 24, Aug. 13 and Aug. 21. It will also accept other public comments until Sept. 1.

Original story:  

The future of Texas' water supply will start to take shape on Tuesday afternoon when the Texas Water Development Board releases draft rules for funding major water projects over the next several decades.

Amid the continuing drought, voters approved Proposition 6 in November, authorizing the Legislature to provide the State Water Implementation Fund for Texas with $2 billion from the state's Rainy Day Fund.

The infusion of funds is intended to be self-sustaining, with the board only allowed to make loans instead of grants. But competition for the money will be fierce: The 2012 State Water Plan outlined $53 billion worth of potential water projects, such as pipelines and reservoirs.

The online release of the rules will offer clues for which projects will become top priorities. Though a law passed last year, House Bill 4, provides some parameters for the allocation of funds, the board has significant leeway to set its own standards. As required by law, 16 regional groups have submitted their own rankings of projects, but it is unclear how they will translate to the statewide prioritization process.

Though there is a board meeting on Wednesday, the draft rules won't be discussed by the board until the June 26 meeting at 8:15 a.m. 

Experts and industry leaders are eagerly anticipating the announcement.

“We’re anxious to see the details,” said Bill West, general manager for the Guadalupe-Blanco River Authority, which has three projects for which it hopes to receive funding. “The key to that competition will be the way the state crafts those rules.”

Here are some of the major questions that could be answered this week:

How will the board balance different prioritization factors?

HB 4 tasks the board with considering several factors in its prioritization of different projects. These include aiding large and diverse populations, balancing different regions and accounting for a large portion of the users’ water needs. But the directives leave plenty of room for interpretation, and the list contains some inherent tensions.

“The highlight-reel, superstar, big-summer-release part of this is the prioritization factors,” said Jeremy Brown, an energy research fellow at the University of Texas School of Law.

How, and how much, will the regional priority lists be taken into account?

The board is required by the law to consider how each project was ranked by its regional group. But it will likely have to reconcile differences among the 16 prioritization processes. And given the bill's vagueness, the degree to which the board might forgo regional recommendations in favor of its own rules is unclear.

What role will funding requirements dictated by law play in the process, and how will conservation be defined?

The Legislature urged the board to ensure 10 percent of funds for projects in rural areas and 20 percent for conservation and reuse projects. The delineation of those categories, though, remains an open question. Environmental groups are particularly focused on how the board will define conservation, which received attention at public meetings earlier this year.

Will the board incorporate considerations of environmental or economic impacts?

Left out of the law's prioritization factors list was any mention of a project’s impact on the environment and economy. So it is unclear whether the board will consider them. Meanwhile, feasibility and cost — two factors the law does identify — have yet to be fully defined.

What role will the advisory committee play?

This question will remain unanswered even after the rules are released. A new committee, which comprises a representative from the comptroller’s office, three members of the state Senate and three members of the state House, is tasked with reviewing the water fund and assessing the board's rules. The dimensions of the committee’s power are unclear: State agencies have domain over executive rulemaking, but could legislators assume a dual role by directing some of the process?

“There are some basic constitutional lines there, but that’s the official story,” said Mary Kelly, a principal at Parula, an Austin environmental analysis firm. “What goes on behind the scenes is always something different.”

Regardless of what plays out over the next few months, the list of projects is set to be finalized by Sept. 1, with loans first doled out in 2015.