Category Archives: Quadvest

LSGCD Special Board Meeting November 16, 2018

We at the Side of Reason will continue to track the actions of the Lone Star Groundwater Conservation District. The board met Friday for a Special Session to certify the results of the recent election, swear in the new board and elect the new officers. State Representative Metcalf was present to do the swearing-in as was an aid for State Senator Brandon Creighton. The details of the meeting follow.

Just before the results of the election were certified, any present, outgoing board member had a chance to say a few words.

Scott Weisinger complemented GM Kathy Turner and her staff, praised the working relationships on the board, and indicated that the biggest challenge the board faces going forward is that ‘folks outside of the county have control over groundwater and Montgomery County needs its own voice.’ I assume but do not know for sure that he meant that the GMA14 sets desired future conditions for the aquifer that Montgomery County must support.

John Bleyl indicated that he enjoyed working with the board and he thanked the staff and warned the new board that they face a learning curve. Webb Melder said that the Groundwater Conservation District is an ‘ongoing chapter in his life’ and that we will ask each board member to ‘talk to the Lord’ and that there is much work to do. He praised Representative Metcalf who he said, “gave the district back to the people and took it out of the hands of appointed directors.” Gregg Hope thanked the staff and indicated that he loves Montgomery County very much.

The candidates were then sworn in by Rep. Will Metcalf and took their places at the front of the room for the next part of the meeting.

First, the board selected its officers. Each position only had a single nomination, and all were unanimous votes. Webb Melder was named president, Harry Hardman as Vice President, Stuart Traylor as Secretary and Jim Spigener as treasurer.

No decisions were permitted to be made at the meeting because no agenda items were previously set for today’s meeting. So, the board did what it could do: set future agenda items. The floor was opened up for comments for future agenda items. Melder asked many present by name to offer thoughts. He called on the new board members, LSGCD GM Kathy Jones, Representative Metcalf and Bob Harden, a water engineer who has been in the business for decades.

Rep. Metcalf declined to offer suggestions but indicated that he has ‘an open-door policy for the board.’ Kathy Jones, GM, suggested that the board be open to hearing presentation(s) about groundwater and indicated that the board will need to adopt a budget for 2019 as the previous board did not close on one. Jones also suggested an executive session for a briefing on the ongoing lawsuits. Hardman asked that they discuss an audit before closing on a budget. Larry Rogers and Melder want to review the bylaws. Larry Rogers suggested they do some sort of communication to the employees [editorial comment: presumably many believe their jobs are in peril]. Melder indicated that they will need to review the management plan, regulatory plan, and rules.

Melder then called on Bob Harden. Who is Bob Harden? As previously mentioned, he is an engineer who participated in a summit put on by Quadvest on September 11, 2018 entitled “Are We Really Out of Water? A Summit on the Future of Groundwater in Montgomery County.” He has testified in Austin for Senate Bill 1392 which seeks to amend the Texas Water Code to change the way aquifers are managed. The bill, among other things, eliminates 36.101c(3) which says that groundwater districts may make and enforce rules that “consider the public interest in conservation, preservation, protection, recharging, and prevention of waste of groundwater, and of groundwater reservoirs or their subdivisions, and in controlling subsidence caused by withdrawal of groundwater from those groundwater reservoirs or their subdivisions, consistent with the objectives of Section 59, Article XVI, Texas Constitution.” He is also on the board, which Webb Melder chairs, of the Texas Association of Groundwater Owners and Producers who offer the following services:

  • To increase the availability of professional expertise and information regarding groundwater production and associated private property rights
  • To promote substantive, non-partisan input on the impact of the groundwater production industry on the both the state’s future economic development and the ability to meet projected water needs
  • To facilitate the development of a groundwater policy that will address Texas’ water needs for the 21st Century
  • To facilitate development of infrastructure to move groundwater from point of source to point of need
  • To facilitate the creation of groundwater markets

Numbers four and five should jump off the page: moving groundwater from point of source to point of need and the creation of groundwater markets.

In his comments to the board, Bob called it a “remarkable day” in that replacing an entire board in one go hasn’t happened before, especially in a place like Montgomery County with a “mature groundwater condition.” He described some of his personal history in working with The Hickory Underground Water District and the city of San Angelo in 1992 (now I believe the Irion County Water Conservation District), and in the mid 1990s with the city of Amarillo. Then he mentioned that in the early 2000s he worked with Post Oak Savannah and Gonzalez Counties which were groundwater districts that had just formed and they had to create rules. Bob provided professional services to assist in the creation of their rules and specifically mentioned, ‘they have export programs [established] in those districts without litigation.’ He told the board that they are getting put into a frying pan with controversy and challenges. Other districts have worked through ‘stuff that allows districts to regulate without lawsuits’ as long as you are doing things fairly and impartially with science and monitoring.

It is interesting that Bob would mention a) exporting specifically and b) that he offers professional services to help right groundwater rules. We’ll have to wait and see if this current board hires Bob for this purpose. In the meantime, we did some cursory checking on the export programs in the rules of Post Oak and Gonzalez.

Post Oak: (from Section 8.1 “General Provisions for Transport”, ):

The District may not impose more restrictive permit conditions on the owner of a transport permit than the District imposes on existing in-district users of water. The District may impose a reasonable fee for processing an application under this Rule. The fee may not exceed similar fees that the District imposes for processing other permit applications.

The Post Oak Savannah fee schedule for production and transport of water is zero-point-eight-five cents per 1,000 gallons.

Gonzalez County Groundwater Conservation District (from Rule 15 “Exportation of Groundwater from the District” Sections B & F):

An export permit, as provided for herein, is not required if the export of water commenced prior to the November 26, 1997, the registered pumping capacity of the facility as of November 26, 1997 is not increased, and annual aggregate amount of water to be exported does not exceed 5,000-acre feet.

Permittees shall pay a fee to the District equal to 2.5 cents per one thousand gallons for the water exported from the District in the preceding month.

And what is the export and transport language from the Lone Star Rules (rule 9.3 “Groundwater Transport Fee”)?

The District shall impose a reasonable fee or surcharge, established by Board resolution, for transportation of groundwater out of the District using one of the following methods: (a) a fee negotiated between the District and the transporter; or (b) a fifty percent (50%) export surcharge in addition to the District’s water use fee for in District use.

50% is heavy relative to these two other districts. The baseline fee for water use is 10.5 cents per one thousand gallons and the export surcharge of 50% brings that to 15.75 cents per 1,000 gallons.

So at least we know that the rules that Mr. Harden apparently wrote for two conservation districts for export / transfer fees and restrictions that are significantly lower than those of the Lone Star GCD. In addition, we know that the extraction limits (64,000 Acre Feet per Year) forced a move to surface water for the GRP. Neither condition is conducive to creating a mining and transport business for groundwater in Montgomery County. If you want to monetize the aquifer, you must in a practical manner eliminate extraction limits and remove margin hits like transport fees. We speculated on this in our “Wargames” article.

Melder then closed by indicating that he wanted to look at “well spacing” and “well monitoring.”

As always we will continue to watch the actions of the board so that you have an opportunity to stay current should you choose to do so.

Update: The post link contains the month of “April” when it should have said “November.” The article does refer to the meeting on November 16th. 

Update December 11, 2018: Bob Harden approached me after the Lone Star Groundwater Conservation District Board Meeting and offered a correction to this story. Bob indicated that he played no role in writing the district rules of exportation (or any other rules) as referenced above. He indicated that he merely acted as an advisor to the boards.

Let’s Wargame: Growing a Private Water Utility When Constrained by Aquifer Regulations

In our podcast episode 4, “Hitchhiker’s Guide to Our Local Water Wackiness,” we gamed out how you might grow your revenues if you were a private water utility in a groundwater district that limits groundwater extraction. This is a hypothetical “wargaming” exercise but has been tested with people that definitely understand the landscape.

1. Own a significant matrix of wells over the largest aquifer in the state of Texas.

2. Lobby for legislation to move to an elected, rather than appointed, board for the Lone Star Groundwater Conservation District.

3. Start a 501(c)4 and work with the Tea Parties to promote candidates running on personal property rights, transparency, elimination of waste, and lower water bills – things right in the wheelhouse. Highlight the ineptitude, waste and incestuous relationships of the current board with a monopolistic surface water supplier.

4. Succeed in electing a new board that will elminate, reduce or fundamentally redefine extraction limits in the aquifer. Perhaps the board reduces or eliminates export fees. Ideally the board will drop its appeal in Conroe et al vs. LSGCD and effectively acknowledge that it cannot regulate “large-volume groundwater users to reduce how much groundwater they use annually.

5. Use the new extraction limits as proof that the SJRA surface water treatment plant was not necessary and that $400M of public bonds to build the plant were improperly issued.

6. Private operators withdraw from or reduce payments to the surface water GRP which goes, in part, to pay the principal and interest on the bonds.

7. SJRA sues the entities that exit the GRP and raises rates to those who remain to make up for the lost revenue and increased litigation costs. The Woodlands would likely take the brunt. This further agitates the voter base. Letters to state representatives are written.

8. Win a decision in the Supreme Court that the SJRA bonds were improperly issued. Create a a $400M public debt crisis for the Texas Legislature.

9. An investment group appears and offers to take over payments to the SJRA for the bond debt in exchange for water extraction rights. The Texas Legislature, behind a demanding voter base, passes legislation to reduce groundwater regulation in some meaningful way.

10. Create a groundwater supply footprint capable of supporting new developments and the exportation of water monetizing billions of dollars of water in the aquifer.

The President of Quadvest, a private water utility, is also the Chairman of Restore Affordable Water. Since it is a 501(c)4 and not a PAC, its contributors (investors?) will never be made public. Wouldn’t it be nice to know who, exactly, is supporting the efforts to elect candidates that may very well believe that the Lone Star Groundwater Conservation District uses “Junk Science” to set water policy (Hardman shared article on campaign page); used a massively incorrect recharge rate to set policy (Bouche comment); along with the SJRA is running a “fear and propaganda campaign” (Prykryl share on campain page)? Or a candidate that believes the SJRA is scaring “people into thinking we will fall into the ocean if we keep pumping groundwater” (Spigener on his campaign page)? And candidates that flat-out oppose regulations (Melder share on campaign page, Rogers in a MCTP vetting video)?

Restore Affordable Water has purchased airtime on Lone Star Radio. On October 9th, Simon had as his guest Mike Stoecker who is a “water ultility provider in the Montgomery County Area.” He has Simon’s confidence. In response to Simon’s question, “if you were on the board, what is the first thing you would do?” Mike responds, “I don’t know if I want to tell you that on the air because it would give away the gameplan.” To which Simon answers, “yep.” Here is the video but you have to slide to 47:45 to hear the exchange.

As president of Quadvest, Simon Sequeira owns (among other things) their corporate growth strategy. In addition, Quadvest’s corporate Vision Statement states the following:

By the year 2025, we will be serving no less than 100,000 customers with operational excellence. By the year 2035, we will be the First Choice wholesale and retail utility provider in Texas. First Choice means: First in employee and customer satisfaction; First Choice Partner for Developers, Engineers, and Lawyers.

It is safe to assume that Quadvest cannot achieve a vision like this without access to groundwater.

Vote as you wish… of course! No one in Texas will fault anyone for voting for personal property rights or economic growth. Just do it with your eyes wide open and know that you are not voting for your water bill to go down (we tackle that one in podcast episode 3).

You may want to stop and consider candidates that believe in local groundwater management, managing subsidence, protecting small well owners, regulating aquifer levels, controlling the cost of well development, and enabling the development of viable groundwater alternatives in the face of signficant population growth. Or not. But make it about that. Again, not your water bill.

Incidentally, Side of Reason believes that no matter what, phases 2, 3 and 4 of the SJRA surface water treatment plant must be delayed until a prudent time according to the water demands of the county. This action does not require a RAW slate.

Screenshots of cited information not otherwise linked above:

Episode 4: Hitchhiker’s Guide to Our Local Water Wackiness

Your water bill can’t go down measurably with a new LSGCD board, but could it go up? We explore that and analyze bigger issues that could be in play while a 501(c)4 organization, Restore Affordable Water, advocates for more limited water regulation in a Tea Party-driven county.