SAWS Application for Bed-and-Banks Permit Highlights Tension in Having Dual Surface Water and Groundwater Regimes

The San Antonio Water System (SAWS) has developed a creative legal strategy for improving the ecology of the San Antonio River and San Antonio Bay: indirectly reusing groundwater-derived effluent not by re-diverting for municipal uses but by running it down to the coast as an  an instream flow.

This strategy – which still requires Texas Commission on Environmental Quality (TCEQ) approval – spotlights the mounting importance of reuse in Texas and the tensions inherent in a water rights system that regards groundwater and surface water as legally distinct forms of property.

San Antonio Reuse

Water utilities have historically preferred to abandon their effluent and dissociate themselves from it.  A January 22 Texas Tribune article about the SAWS plan explains: “Martin Rochelle, a water lawyer for the Austin-based firm Lloyd Gosselink, said that in the past, water suppliers preferred not to have ownership of the wastewater once it left a sewage treatment plant, ‘because my gosh, when you dirty [a river] up, you want no liability.’ Today, he said, ‘the opposite is true.’”

San Antonio in particular has become a national leader in reuse, recycling wastewater for landscape irrigation, power generators, and industrial users.  Most famously, SAWS maintains the flow of the San Antonio River through the downtown River Walk with treated effluent.  But deliberately reusing effluent for environmental ends represents a novel tactic.

On December 30, 2013, SAWS filed an application with TCEQ for a bed-and-banks permit.  In the application, SAWS states that its Clean Water Act permits entitle it to discharge up to 233 million gallons per day (the equivalent of 261,000 acre feet per year) of treated effluent into the San Antonio River and its tributaries.  SAWS requests permission to indirectly reuse all of the discharge derived from groundwater – which, over the past 5 years, has accounted for about 90 percent of the water supplied to SAWS customers.

Of this, SAWS proposes to reuse 50,000 acre feet, less carriage losses, “solely for instream use as defined in 30 [Texas Administrative Code (TAC)] 297.1(25), in Bexar, Wilson, Karnes, Goliad, Refugio, and Calhoun Counties.”  It proposes to reuse the remainder of its effluent – which could be up to 211,000 acre feet per year – for “municipal, agricultural, industrial, mining, and instream use” in the same counties.  So while the proposal has important environmental implication, it is not aimed solely at achieving environmental goals.  That said, it is the set-aside for instream reuse that raises the most novel legal issues.

Map of San Antonio River Basin
San Antonio River Basin


Bed-and-Banks Permit Application

SAWS is seeking a permit under Texas Water Code § 11.042(b).  That section authorizes water rights holders to discharge groundwater-derived effluent and divert it again downstream if they receive a bed-and-banks permit from TCEQ.

It provides: “A person who wishes to discharge and then subsequently divert and reuse the person’s existing return flows derived from privately owned groundwater must obtain prior authorization from the commission for the diversion and the reuse of these return flows.  The authorization may allow for the diversion and reuse by the discharger of existing return flows, less carriage losses, and shall be subject to special conditions if necessary to protect an existing water right that was granted based on the use or availability of these return flows.  Special conditions may also be provided to help maintain instream uses and freshwater inflows to bays and estuaries.  A person wishing to divert and reuse future increases of return flows derived from privately owned groundwater must obtain authorization to reuse increases in return flows before the increase.”

Several elements of this statute stand out: (1) a permit may only be issued for return flows “derived from privately owned groundwater”; (2) the permit is for indirect rather than direct reuse; (3) water subject to a bed-and-banks permit must be “subsequently diverted”; (4) TCEQ may impose “special conditions” to protect existing water rights based on return flows; and (5) TCEQ may also impose “special conditions” to maintain instream flows and freshwater inflows.

Groundwater and Surface Water

Texas water law grew up around the mistaken understanding that surface water and groundwater are distinct.  By the time hydrologists learned better, separate property rights regimes had evolved for surface water and groundwater.  Water lawyers, water planners and others readily acknowledge that having dual systems is not particularly efficient and can yield undesirable policy results.  All the same, property rights and administrative bureaucracies rest on this framework; it cannot be easily changed.

In brief, groundwater is subject to the rule of capture.  Surface water is owned by the state.  Water providers may obtain rights to use surface water – usufructuary rights – but may never own the water outright.

Direct and Indirect Reuse

There are two types of reuse – direct and indirect.  Through direct reuse, a water provider recycles the water within its system, without discharging that water to a state watercourse.  Through indirect reuse, a water provider discharges into a state watercourse and subsequently diverts, though the water that is diverted will by then be a mixture of the discharged water and other stream flow.

In Texas, a water provider may directly reuse groundwater-derived effluent as much as it wants.  It may generally do the same with surface water-derived effluent unless the terms of its right to that surface water specify otherwise.

Indirect reuse is more complicated.  If a water provider discharges effluent that originated as surface water into a state stream, the provider is deemed to have relinquished the water.  To divert and indirectly reuse that water, the water provider must obtain a new surface water right.  The right will be subject to the same priority rules as other surface water appropriations and as the most recent, will be the most junior – meaning the most vulnerable in times of shortage or drought.

If a water provider discharges effluent that originated as groundwater into a state stream, the provider will be deemed to have relinquished the water unless it obtains a bed-and-banks permit under TWC § 11.042(b).  The legislature enacted § 11.042(b) in 1997, as part of the landmark water bill S.B. 1.  Prior to that, groundwater owners had a common law right to transport unused groundwater through state waterways but not used groundwater.  City of San Marcos v. Texas Commission on Environmental Quality, 128 S.W.3d 264 (Tex. Ct. App. 2004) (finding that, under pre-S.B. 1 law, a city could not indirectly reuse groundwater-derived effluent without obtaining both a bed-and-banks permit and a new surface water appropriation permit covering the water to be diverted).

Section 11.042(b) created the somewhat incongruous situation in which water can physically act as surface water and legally be considered groundwater.  If a water provider discharges effluent into a stream according to a bed-and-banks permit, the effluent will blend with surface water and flow with surface water and yet be subject to groundwater laws.

Flow Chart of Reuse Law in Texas
Texas Reuse Law


In its § 11.042(b) application, SAWS explains that it is seeking a permit only for groundwater-derived effluent, which currently represents about 90 percent of all SAWS effluent.  (Specifically: “For the past five years water supplied to SAWS customers was composed of 90.35% groundwater, 4.86% surface water resulting from interbasin transfers, and 4.79% surface water from within the San Antonio Basin.”)

Although SAWS would ordinarily have to apply for an appropriative right to divert surface water, it contends that it does not have to do so when diverting groundwater-derived effluent under a bed-and-banks permit.   “Furthermore,” SAWS writes, “for authorization to reuse groundwater based return flows, it is appropriate to include a provision in the permit stating that the groundwater based return flows authorized to be conveyed via the bed and banks of a state watercourse do not have a priority date and are not subject to priority calls from senior water rights.”

In other words, by laying claim to its groundwater-derived effluent, SAWS is trying to create a new right to surface water without obtaining a new surface water right.  This new right would have a kind of super-priority: it would trump even the most senior surface water rights and presumably exist at parity with similar § 11.042(b) rights.

SAWS finds authority for this interpretation in a 2006 TCEQ order finding that “with regard to bed and banks authorization applications that request authorization to divert and reuse return flows derived exclusively from privately owned groundwater that, based on Water Code Section 11.042(b), such applications do not involve state water.”

(Along these lines, a thought experiment: if stream levels were so low that they could not satisfy all § 11.042(b) rights – let alone all surface water appropriative rights – would the rule of capture, which ordinarily applies only to groundwater, apply to the competing § 11.042(b) rights to groundwater-derived effluent?)

Subsequent Diversion

Under Section 11.042(b), a water provider may obtain a bed-and-banks permit “to discharge and then subsequently divert and reuse” effluent.  The Texas Water Code and TCEQ regulations use the term “divert” countless times but do not define it.  An ordinary meaning – as plucked from an online dictionary – is “to change the direction or use of (something).”  This meaning raises a question: How water can be “diverted” while still serving as an instream use?  How can it change direction while still being left to run its natural direction?

In its application, SAWS proposes a diversion point, at the mouth of the San Antonio Bay.  (Specifically: “Latitude 28.478113 N, Longitude 96.862426 W, also bearing S. 23.723611 E, 289.70 feet from the Northwest corner of the Joseph Farquhare Original Survey, Abstract No. 67, in Calhoun County, Texas.”)


Satellite image of Texas coast
SAWS’ Proposed Diversion Point


Setting the diversion point that far downstream would ensure the instream flow runs the full length of the basin and reaches the bay.  But the SAWS application does not explain the specific method it would use to “divert” the water.  Absent a legislative tweak or a clever reading of Section 11.042(b), SAWS may have to build some sort of diversion mechanism for no reason other than to satisfy that element of the statute.

Existing Water Rights

If a water provider discharges effluent, the effluent becomes a part of the stream, supplementing existing flows, and running downstream, where it will be available for other water users with surface water rights to appropriate.

Reuse complicates this picture, though the manner in which it does so depends on the nature of the reuse.  If a water provider directly reuses water, that water may continually circulate through a water system and never reenter a watercourse.  If a water provider indirectly reuses water, the water reenters a watercourse, but perhaps only temporarily.

In either case, the downstream water rights holders who depend on higher stream flows to satisfy their appropriations will be worse off (from a water supply perspective) than they would have been if the water provider had simply discharged and not reused.  The reason, of course, is that there will be less water to go around.

The SAWS permit application creates a unique situation because the utility intends to “reuse” groundwater-derived effluent by allowing it to run to sea rather than by diverting it for further municipal uses.  The water would physically remain in the stream but would be legally classified as reused groundwater, despite being in a river.  And it would be off limits to the downstream appropriators who had access to that same water in the past.  The net effect of the § 11.042(b) permit would be to change the legal character of a significant volume of instream flows without changing its physical character.

In its application, SAWS acknowledges that TCEQ may attach special conditions to a § 11.042(b) permit to protect existing water rights.  But it “requests that such a special condition be included only in the event that the TCEQ identifies specific existing water rights that expressly provide that the right was issued based on the use or availability of SAWS’ return flows.”  SAWS recognizes only three such rights.

Instream Flows and Freshwater Inflows

Over time, the freshwater flows to San Antonio Bay have diminished.  The bay ecology has deteriorated and a nonprofit environmental organization – The Aransas Project – has sued TCEQ (and the Guadalupe-Blanco River Authority) over alleged harms to the endangered whooping crane, in a case now awaiting a decision from the Fifth Circuit.

Image of whooping crane standing in shallow water
The endangered whooping crane

The SAWS permit would create a set-aside for instream uses, which TCEQ defines as “[t]he beneficial use of instream flows for such purposes including, but not limited to, navigation, recreation, hydropower, fisheries, game preserves, stock raising, park purposes, aesthetics, water quality protection, aquatic and riparian wildlife habitat, freshwater inflows for bays and estuaries, and any other instream use recognized by law. An instream use is a beneficial use of water. Water necessary to protect instream uses for water quality, aquatic and riparian wildlife habitat, recreation, navigation, bays and estuaries, and other public purposes may be reserved from appropriation by the commission.”  30 TCEQ 297.1(25).

Because of this set-aside, the SAWS permit proposal has the potential to help the bay and, in its public relations messaging, SAWS has framed the permit in that light.  On January 16, the utility put out a press release with the headline: “SAWS Asks State to Allow its Reclaimed Water to Flow to Gulf Coast – Permission would support in-stream uses and benefit endangered whooping crane.”  The press release notes that “[a]dditional future quantities of effluent would also be protected to meet future in-stream and municipal needs” but otherwise focuses on the set-aside and does not mention that the water subject to the set-aside accounts for less than a fifth of the effluent which SAWS seeks authority to reuse.

Whether the permit does end up helping the environment will depend on how water use under the permit compares to the water use that would have occurred if SAWS had not received the permit.  Section 11.042(b) authorizes – but does not require – TCEQ to attach “special conditions … to help maintain instream uses and freshwater inflows to bays and estuaries.”  Under this authority, the agency could construct conditions that ensure the permit does not have a negative net environmental impact.  (Of course, the concerns behind these conditions would probably be at odds with those behind the conditions protecting the existing water rights dependent on SAWS return flow.)

The ultimate verdict may hinge in large on part on what SAWS chooses to do with the bed-and-banks water not subject to the set-aside: the more of that water that SAWS puts to instream uses, the likelier it will be that San Antonio Bay will benefit.

The San Antonio Express-News reported, in its coverage of the permit application, that “besides environmental reasons, SAWS also acknowledged that one day it may want to withdraw the water and sell it or pump it back to San Antonio for reuse, although SAWS officials said either option would be decades away.”  The proposed bed-and-banks arrangement may, consequently, offer more environmental benefits than in the long-run, when competing demands for the water may emerge.

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