The Moral to the Story of the Dry Lake Granbury

I have been extremely intrigued by the ongoing fight between property owners around Lake Granbury and the Brazos River Authority (BRA).  I was prompted to write this blog post after reading this news article in the Texas Tribune: http://www.texastribune.org/2014/04/14/water-policy-divides-conservatives-and-republicans/

The property owners are trying to force the BRA to store a larger volume of water in Lake Granbury so they can use their boats and other water toys.  An empty reservoir also reduces the fair market value of their property, so they’re also angry that they still have to pay property tax on what hasn’t been highest-value lakefront property for a few years now.

But so far, in my opinion, they have not done the one thing they need to do to solve their problem, instead spending a lot of money on irrelevant efforts, and making statements that may hurt the stability of Texas more than they help.  However, this kerfuffle does give us an opportunity to understand how Texas surface water rights work in the real world, and there’s a moral to that story. So let’s take a look.

The BRA is an agency created by the Texas Legislature. Its purpose is to develop and manage the water resources of the entire Brazos River basin.  To that end, since its creation the BRA has paid money to buy water rights and build reservoirs.  The BRA is a self-funding agency. Its revenues from water sales pay all its expenses.

One of the reservoirs it built in the Brazos River was Lake Granbury, in Hood County Texas, circa 1969.  The BRA obtained the legal right from the State of Texas to impound up to 155,000 acre-feet of water in Lake Granbury, but as originally constructed it could only hold up to 129,011 acre feet of water.

The State of Texas owns all surface water in Texas, and holds it in trust for its citizens.  To obtain rights to use state water, one must obtain a permit.  Each permit is limited by a volume of water one can use.  Most permits also restrict what the water can be used for to uses stated in the permit.  These permits are “first in time, first in right” so, when there’s not enough wet water to match the paper water permitted, the most recent permit holders lose the right to water first.

For purposes of this dispute, these are the three critical terms in the BRA’s permits as they relate to Lake Granbury: (1) the date of the permit which establishes its relative seniority; (2) the volume of water authorized for use by the permit; and (3) the type of water use authorized in the permit.  The various water rights in Brazos River water owned by the BRA are in writing and filed of public record.  There is nothing secretive or mysterious about them.

The BRA holds two permits of interest here.  One permit authorizes the BRA to use 64,712 acre feet of water for municipal (that’s indoor household and office use), industrial, irrigation and mining purposes.  The date for this permit is July 23, 1964.  Then the BRA also holds a permit to use up to 10,000 acre feet of water for municipal purposes, 70,000 acre feet for industrial purposes, 19,500 acre feet for irrigation, and 500 acre feet for mining.  The date for these rights is February 13, 1964.  These rights total 164,712 acre feet of water per year, which is more than the 129,011 acre feet of water that may be in Lake Granbury at any point in time.

In this second permit, there is a special condition written into the permit.  It says “Owner [BRA] is also authorized to use the water impounded in Lake Granbury for nonconsumptive recreational purposes.”  But the BRA is not required, in either of these permits, to maintain a minimum volume of water in Lake Granbury.  Nowhere in state law is the BRA required to maintain a minimum volume of water in Lake Granbury.  Nowhere in state law is recreational use of water in a reservoir a higher priority use than another type of use.

This “first in time, first in right” system has been in place for a very long period of time.  Buyers and sellers of water rights, and their lawyers and consultants, have conducted due diligence on the value of water rights, and the need for more or less water rights, using this system.  Those who have played by the rules to obtain more valuable senior water rights, would be punished unfairly if the rules of the game were now changed to move “recreational use” up the priority ladder as compared to the permitted uses.

The only way to secure a minimum amount of water in Lake Granbury for recreational purposes is for those persons who desire a full lake to purchase, for cash, surface water rights in the Brazos River that are older than the rights held by the BRA. This would take acquring rights granted in or before 1963.  It may be necessary to purchase even older rights if someone else (non-BRA) has an older right to use Brazos River water.  But this sort of due diligence is feasible to complete.

Then, consider perhaps creating a non-profit entity whose sole purpose is to manage those water rights in a manner that maintains the most water possible in Lake Granbury for recreational purposes.  This may require TCEQ approval to change the use of the purchased water right to recreational use, but there is a well recognized process for such a change.  Then donate the rights purchased to that non-profit and enjoy the fuller lake.  When someone makes a call on a water right in the Brazos River in the future, defend against the call as allowed by law, to keep the least amount of water from leaving the lake.  There are plenty of issues to argue about within this first-in-time framework, but the framework itself cannot be up for negotiation every time it pinches someone.  The pinch is what creates order, predictability, and value.  The pinch is good for Texas.

The “Save Lake Granbury” property owners have a Facebook support page here: https://www.facebook.com/pages/Save-Lake-Granbury/143015725731806.  Interested parties in and around the lake must have some amount of money available to purchase water rights.  They already rounded up and paid $100,000 as an initial retainer for lawyers, with those lawyers saying this battle could cost up to $500,000.  They’d be a lot more likely to have water in their lake if they put that money toward buying water rights instead of paying lawyers.

There is no need to attack central planning, “Austin,” or politicians.  None of those attacks are relevant.  Surface water rights are private property.  The BRA permits clearly identify and define the BRA as “owner” of those rights.  People generally don’t want the government telling us what to do with our private property, Tea Party members in particular, so why would the rules be different for a quasi-private agency, that has purchased private property rights in the free market economy?  Why force any property owner to do something with its property it has never been required to do before?

The solution to the property tax problem created by no water in the reservoir, is to address the assessed value of the property used to calculate property taxes.  The lack of water in the lake is merely a fact, evidence to be used in a hearing to contest those assessed values.  It’s not the conclusion. The assessed value is the conclusion.  In relative terms the property’s assessed value is the dog to the tail of how much water is in the lake.  There is a well known process available to challenge assessed values.  Use it!

And before someone hurls a tomato or three at me, just know this.  My father in law lives on a lake, also managed by the BRA.  He has a boat dock, a boat and other water toys.  We love to enjoy the lake.  But we haven’t been able to get out on the lake the last few years because of the drought.  I understand the frustration this causes.  But trying to change the rules of the game isn’t the right solution.  Paying lawyers big bucks to try to change the rules of the game, with so little chance of success, makes even less sense to me.  Use the money to buy water rights.  Play the game the same as everyone else.

So let’s cut through to the moral of this story, and all those others like it across Texas.  These owners are mad, upset, frustrated, etc., because their expectations and perhaps assumptions that their lakefront property would always front a wet lake, have been dashed.  I get that, and I don’t intend any of this post to denigrate those feelings.  But people who want to purchase lakefront property should include in their due diligence, and factor into their purchase decision, the risk that the lake may dry up depending on drought and the other water rights in that river segment.  There are experts around Texas that can help you do this for whatever lake or river you are considering.  It should be the prospective purchaser’s decision to use them to then decide whether or not to purchase the lot, and to live with the consequences of that decision.

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