Texas Parks and Wildlife Commission
Conservation Committee Meeting

Nov. 1, 2006

Commission Hearing Room
Texas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744

BE IT REMEMBERED, that heretofore on the 1st day of November, 2006, there came to be heard matters under the regulatory authority of the Texas Parks and Wildlife Commission, in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters Complex, to wit:

APPEARANCES:

THE TEXAS PARKS AND WILDLIFE COMMISSION:

THE TEXAS PARKS AND WILDLIFE DEPARTMENT:

P R O C E E D I N G S

COMMISSIONER FITZSIMONS: Mr. Montgomery.

COMMISSIONER MONTGOMERY: Okay. Thank you.

The Conservation Committee ‑‑

COMMISSIONER HOLT: We've got to go back now.

MALE VOICE: Wait, wait, wait, wait.

COMMISSIONER HOLT: We're not doing Land and Water ‑‑

COMMISSIONER MONTGOMERY: Moving at the speed of cyberspace ‑‑ in cyberspace ‑‑ okay.

MALE VOICE: On it.

COMMISSIONER MONTGOMERY: The Conservation Committee. Everybody see it? The first item is approval of previous meeting minutes. We have a motion from Commissioner Bivins, second from Friedkin. All in favor aye.

(A chorus of ayes.)

COMMISSIONER MONTGOMERY: Any opposed? (No response.) We got through that one.

Item Number 1, Bob Cook, the Land and Water Plan Update.

MR. COOK: Thank you, sir.

COMMISSIONER MONTGOMERY: It's a tough group today, Bob.

MR. COOK: A couple or three items that I want you to know about in our Conservation Committee area. In October we started out 25 new cadets in our 52nd Texas Game Warden Cadet Academy. And we are currently under way with plans for a capital campaign for the new Texas Game Warden Training Center up in Hamilton County. And you'll be hearing more about that in the next few months.

The second item, our TPWD Forensic Laboratory had received national accreditation and is fully operational now. We completed the transfer of Bright Leaf State Natural Area back to the Austin Community Foundation effective September 1, 2006, and we successfully completed the transfer of the Lake Houston State Park to the City of Houston effective August 25, 2006.

As of October 1, 2006, Coastal Fishery staff began executing a four-year $3.2 million Hurricane Disaster Relief Grant to restore damaged oyster beds and shrimp grounds caused by Hurricanes Katrina and Rita. The grant will be used for three purposes, to map bottom habitats in Galveston Bay and Sabine Lake to establish a post-hurricane baseline; second, to use the mapping information to prioritize which oyster beds to restore with available funds; and, finally, remove debris from oyster beds and shrimp grounds caused by the hurricanes.

Thank you, sir.

COMMISSIONER MONTGOMERY: Okay. Any questions for Bob?

(No response.)

COMMISSIONER MONTGOMERY: All right. Item Number 2, Sand and Gravel Program, Bob Sweeney.

Okay, you're on.

MR. SWEENEY: Good morning, Commissioners, Mr. Cook, I'm Bob Sweeney with the Legal Division, and with me today is Rollin MacRae of the Inland Fisheries Division, and we are here to brief you about Parks and Wildlife Department regulation of sand and gravel disturbance in navigable waters.

And we're briefing you partly because this is an important program of the Department, but partly because, as Commissioners, you may come to be directly involved in one of these permitting matters down the road. It doesn't happen often, but it is possible. I'll tell you more about that as we go along.

This is a program that has been in Texas law for a long time, 1911 is when the original statute regulating this matter was enacted. And the principal of the law is that folks who disturb or remove materials from navigable waters should compensate the state for the effects that they're causing on fish habitat. At one time, royalty payments were a very important source of Department funding, particularly when oyster shell disturbance was an element of this program. Today there is no commercial oyster shell removal anymore.

Today the program is found at Parks and Wildlife Code, Chapter 86, and in 31 Texas Administrative Code, Chapter 69. It's jointly managed by Legal, Inland Fisheries, and Law Enforcement Divisions. It applies to the beds of navigable waters between grading boundaries, or below tide water limits if it's saltwater. And we rely fairly heavily on the General Land Office Chief Surveyor for determinations related to navigability and grading boundary when those are necessary to determine whether our jurisdiction is called into the matter.

This slide summarizes what kinds of royalties we are receiving. In recent years, I would say, on average, we received between $400- and $500,000 a year in royalty payments. The royalty amount is 20 cents per ton, or 8 percent of the selling price of the material, which ever is more. By law, those revenues must be deposited into Fund 9 and at least three-quarters of the proceeds must be used for fish hatcheries.

Not all disturbances of sedimentary materials in navigable waters require a Parks and Wildlife Department permit. There are lots of exemptions. Disturbances authorized by a General Land Office lease or easement, disturbances for navigation purposes, and the rest that you see on this list.

Parks and Wildlife divides its permitting activities into two general categories, individual permits for large commercial disturbances over 1,000 cubic yards, and general permits for disturbances of under 1,000 cubic yards. Sometimes we get applications for general permits where we believe that the sensitivity of the area to be disturbed requires deeper examination, we'll require those to be considered as individual permits, as the rules allow. This slide regarding individual permits goes through the requirements and the general characteristics of individual permits. This one deals with general permits.

When we receive these applications, our staff reviews them for ecological factors, and effects on navigation and hydrology. A lot of times, our jurisdiction overlaps with that of other agencies, depending on the nature of the project that's being undertaken. Sometimes that's the Army Corps of Engineers, sometimes that's FEMA when there are flood plain implications, sometimes at TCEQ when there are water pollution implications or water rights implications for the projects that require the disturbance or removal of sedimentary material.

All right. We talked about the possibility that permitting matters might, at some point, come before you as Commissioners to decide. On all of these applications, General or Individual, there's the possibility that an interested person, including the applicant, could ask for a contested case hearing. This agency doesn't handle very many of those, but it is possible that this could arise.

These are governed by the Administrative Procedure Act. If a matter goes to contested case hearing, it becomes a situation where, as Commissioners, you will be sitting as judges. And, therefore, ex parte communications have to be avoided. In order words, if an interested party or the applicant were to contact you about the matter, that is something that you would appropriately refer to staff to deal with, to preserve your ability to decide the case on the basis of the record and the facts that are presented before you when you're sitting as Judges. In the years that I've been here, which is now nearly seven, I have never seen one of these actually come before the Commission, but we have started down that road on several occasions, and have had to advise the Commission that contacts of this nature had to be screened.

If this were to occur, an Administrative Judge would make a recommendation, the Parks and Wildlife Commission, you, would make the final decision as to whether the permit should be issued or not, and what conditions it should contain, and your decision would be appealable to District Court.

The folks who don't comply with the law and regulations are subject to criminal prosecution. Generally they are Class C misdemeanors. Also, there are some fairly powerful civil remedies that are available. Penalties of up to $10,000 per day, plus restitution for the value of the materials taken, or the resources damaged are the civil remedies that are available.

And, Commissioners, that's all I have today. I'm available for any questions.

COMMISSIONER BROWN: Refresh my memory. How do you make that determination on what is a navigable stream and what's not.

MR. SWEENEY: There are ‑‑ the most popular, the most commonly used test is in the Natural Resources Code, and that says ‑‑ that statute that's been on the books for 170 ‑‑ since 1837 has been in the law ‑‑ it says that if it averages 30 feet in width from the mouth up is navigable. And it doesn't matter, according to the Courts, whether it actually has water in it all the time. It could be dry much of the time.

So there are two other tests that are less commonly used. One is whether the waterway is navigable in fact. It could be narrower than 30 feet, but if there's some indication it's been used in commerce or for recreations historically, that may be navigable in fact. And the third is, if it's a perennial stream that was part of a Spanish or Mexican Land Grant prior to the creation of the Republic of Texas, those stream beds are also owned by the state because the state took over those rights from the Governments that it succeeded. So, but usually the 30-foot rule is what we end up applying.

COMMISSIONER MONTGOMERY: Other questions? Donato?

COMMISSIONER RAMOS: I noticed in 2004 there was a dramatic spike ‑‑

MR. SWEENEY: Yes.

COMMISSIONER RAMOS: ‑‑ in the revenues. What did you attribute that to?

MR. SWEENEY: I believe that is because we audited an operation in 2004 and they'd been underpaying. And so those numbers probably spiked that year because they paid all their back royalties when their permit was renewed at that time.

COMMISSIONER FITZSIMONS: Okay. And then it leveled off, so you've got ‑‑

MR. SWEENEY: It leveled off.

COMMISSIONER FITZSIMONS: Okay.

MR. SWEENEY: I think that's right.

COMMISSIONER RAMOS: Yes, these permits that you issue, are they time sensitive, in other words, like for two weeks, or a month, or a year? Or are they in perpetuity for a fixed term, or typically how ‑‑ what's the length of time on the permit?

MR. SWEENEY: We are allowed, by our regulations, to issue a permit for no longer than three years. We sometimes issue them for shorter periods.

COMMISSIONER RAMOS: So I guess what I'm trying to determine is whether the revenues are flat because we have not been able to escalate the royalty on it, or is it just the nature of the beast, as you might say?

MR. SWEENEY: There are significant barriers to entry, and one of them is part of our regulations that would require an extensive study of the impact on erosion and the sand budget in the Gulf of Mexico, if streams that have not historically been mined for sand and gravel, were put into this program. Therefore, most of the operations are now on the Lower Brazos, and that is ‑‑ there's ‑‑ it would be difficult, if not impossible, for folks to permit other streams in the state for commercial purposes.

COMMISSIONER FITZSIMONS: And who bears the cost ‑‑ go ahead ‑‑

COMMISSIONER RAMOS: ‑‑ and one final question. Are the royalties ‑‑ if we were to go back for eight years, for example, or ten years ‑‑

MR. SWEENEY: Yes.

COMMISSIONER RAMOS: ‑‑ would the royalty amount be pretty much the same, or has it escalated with time?

MR. SWEENEY: I would say it would be pretty much the same. I think that's been ‑‑ that number hasn't changed very much for ‑‑

COMMISSIONER RAMOS: And is that ‑‑

MR. SWEENEY: ‑‑ quite a while.

COMMISSIONER RAMOS: ‑‑ because of the market conditions, or ‑‑ I mean, have we thought of maybe escalating the royalty percentages?

MR. MacRAE: The last time the Commission changed the price of the material was about 10 years ago, and it was in response to actually a challenge from the General ‑‑ Commissioner of the General Land Office, who said we were giving away state material, and so a study was done to see what the market price was, for instance, materials that are taken from private sources rather than ours, and also what the General Land Office was charging for sand off of other state lands. And it settled back down to about that 20 percent, or ‑‑ I mean 20 cents a ton or ‑‑

COMMISSIONER RAMOS: Eight percent.

MR. MacRAE: ‑‑ 8 percent of the price at the gate, after it's gone over the scale.

COMMISSIONER RAMOS: And we've had it there for 10 years?

MR. MacRAE: For 10 years. It was originally set at four cents a ton 80 years ago, or something like that.

COMMISSIONER RAMOS: And the reason I say that is because if you looked at materials in the private sector, they keep escalating, and we may be staying behind, as you might say ‑‑

MR. MacRAE: The sale price for oyster shell escalates every six months, based on the Consumer Price Index, but that's never been done with sand or gravel.

COMMISSIONER RAMOS: — need oyster shell.

MR. MacRAE: Right.

COMMISSIONER HOLT: Every six months?

MR. MacRAE: They review the Consumer Price Index every six months and as it's gone up ‑‑

COMMISSIONER FITZSIMONS: Is that subject to Commission action?

MALE VOICE: Yes, that's what I was going to ‑‑

MR. SWEENEY: It would require the Governor's approval, as well as ‑‑ I believe it is Commission ‑‑

MR. MacRAE: The Commission sets it and then it goes to the Governor's Office for approval.

MR. SWEENEY: Right. That's how the royalty amount gets changed.

COMMISSIONER RAMOS: What is surprising to me is, irrespective of the fact that the royalties are down and it is still flat, it would seem to me that if the royalties were down and the price was down, as compared to the private sector, you'd see a spike in it, but you're not seeing that. But you're saying it because it's so hard to get the permit.

MR. SWEENEY: There are some barriers to entry, but what operators tell us is that a lot more people have been ‑‑ who have been in this business historically, have been put out of business by the river than by any aspect of regulation. And there's enormous amount of removal, commercial removal of sand and gravel just back from a berm, you know, on the edge of a river, and that's where, you know, 99 percent of the material that is used in construction is, I believe, you know, coming from. And less, much less that comes from within the river, from the state property.

MR. MacRAE: All of our permitees to be in the river also have adjacent upland pits that they pull most of their material from, and so the river is sort of a target of opportunity. And local opposition when ‑‑ those were all big ranches and nobody even knew they were there, now every time somebody comes in for a permit, there is opposition because it's increasingly ‑‑ it's the area southwest of Houston, and it's all subdivisions around them. And they think they're ugly and noisy and they don't want them in their ‑‑

MR. COOK: We hear a lot of ‑‑

MR. MacRAE: ‑‑ neighborhoods.

MR. COOK: ‑‑ we hear a lot about muddy water.

COMMISSIONER HOLT: And it's mostly from the Lower Brazos.

MR. COOK: Bob, would it be ‑‑ would the Commission like for staff to look into this price issue and come back to you in a meeting or two with a recommendation, or some feedback. We can go out to the public and find out what's going on, and what we might do? Would that be ‑‑

COMMISSIONER FITZSIMONS: I think just do a side by side comparison with the oyster shell pricing. And obviously pointing out that there are other costs associated with being our lessee, in excess of the royalty there's the regulatory cost, and the environmental compliance burden.

Who carries the burden of the cost of the environmental study on the permit?

MR. MacRAE: The applicant does.

COMMISSIONER FITZSIMONS: Okay. All right.

MR. MacRAE: Although they're allowed to credit that cost back against their payments to us.

COMMISSIONER FITZSIMONS: Oh, really.

MALE VOICE: So it's really us.

COMMISSIONER FITZSIMONS: I would ‑‑ yes, then I would include that as part of your analysis. I missed that important point.

MALE VOICE: Yes, that's a good idea.

COMMISSIONER FITZSIMONS: Now who has jurisdiction over the upland pit that's associated with most of these river ones ‑‑

MALE VOICE: Nobody.

COMMISSIONER FITZSIMONS: Nobody?

MR. MacRAE: There is a regulation that was passed about 12 or 14 years ago after the school bus down in the Valley went into a pit, that requires a berm, if you were in a certain distance of a public road. But other than that, there's no regulations requiring, you know, restoration of the land, or anything else.

COMMISSIONER RAMOS: We may also look at some more audits. Apparently when we did an audit it was ‑‑

COMMISSIONER MONTGOMERY: We'll just take them one at a time. (Pause.) Any other questions? (No response.)

What are the ‑‑ are these permits issued or requested for anything other than excavation of sand and gravel?

MR. SWEENEY: No, sir.

COMMISSIONER MONTGOMERY: It's the only purpose.

MR. MacRAE: You mean for mining, or ‑‑

COMMISSIONER MONTGOMERY: Yes, we're talking about just about mining permits. There's no other ‑‑

MR. MacRAE: Yes, like pipeline crossings, or other, you know, in falls ‑‑ intakes, out falls, just clearing out areas that have been buried ‑‑ where the stream bed's been buried by flood. We've seen a lot of those in the last few years in the Hill Country where the whole landscape has wound up in the river bed of the Guadalupe, or the Nueces, or the Frio. And so traditional swimming holes ‑‑

MR. COOK: That's a good point. We'd get ‑‑

MR. MacRAE: ‑‑ fields ‑‑

MR. COOK: ‑‑ a lot of those, you know, where someone was ‑‑ there's been a dam, you know, that's been in place there for 50 years, you know, and it comes a big rain and it just levels out with gravel, you know, and they want to re-establish their swimming hole, you know.

COMMISSIONER HOLT: Are you supposed to get a permit?

MR. COOK: Yes.

(Pause.)

COMMISSIONER MONTGOMERY: Excuse me. Commissioner Parker's got ‑‑ let's go through this. Commissioner Parker's up.

(Pause.)

COMMISSIONER MONTGOMERY: Commissioner Parker has the floor ‑‑

(Pause.)

COMMISSIONER PARKER: Like if a pipeline installer is going across private land, but he comes to a creek that is 30 feet wide, or in excess of 30 feet wide there, then does he have to get a permit to excavate that creek bottom to lay that pipeline?

MR. SWEENEY: Yes, sir. And sometimes they avoid that necessity by either drilling underneath and never going through the creek bed, or putting it over. But if he does lay it in the creek bed, yes, and disturb the bed, and that's a permitting activity under general ‑‑

COMMISSIONER PARKER: What sort of a investigating action do you have on ‑‑ like do pipeliners normally come to you and say, hey, I've got to get ‑‑ fix me a permit, I'm going to cross Charlie Creek down there? But how many of them do you reckon do not come to you and get it, just go ahead and start putting their pipeline in?

MR. SWEENEY: I sure don't know how many don't comply. We certainly ‑‑ I think the quality companies and consultants out there are ‑‑ do their homework and they know that they have to do this.

COMMISSIONER PARKER: Any sort of investigative ‑‑ do we have any sort of investigative process to determine whether or not those guys are taking advantage of something out in the East Texas Piney Woods that nobody's going to see this pipeline getting through and they go ahead? Because there are a lot of pipelines going in East Texas right now because of the resurgence of the gas exploration.

MR. MacRAE: We've been getting a lot of calls over the last ‑‑ I'd say increasingly over the last three to five years relative to that. We check them ‑‑ frequently just send them to the General Land Office to find out whether the General Land Office feels that that is a qualified stream, a navigable stream. And a lot of times they come back and say, yes, we need a permit to cross this creek, and that creek, and that creek.

Pipelines are often not a big problem with crossings because we have a common interest. They don't want their pipeline to be eroded out and exposed, and we're looking for stable bed and banks. And so we ‑‑ our interest is frequently common there in restoring the stream bed to the best possible condition with pipelines. They're actually less of a problem than a lot of other kinds of projects. But we are getting a lot of calls and we ‑‑

COMMISSIONER PARKER: Because I'm getting a lot of calls up in East Texas, you know, private land owners, hey, this guy's out here, he's telling me he's going to put a pipeline across my property, and it's going to be going across creeks, what the heck. I tell him to call 389-4802 in Austin.

MR. SWEENEY: The Law Enforcement Division, the Game Wardens, our enforcement are armed for detecting issues out there, complaints and that sort of thing, and taking the first look at what might be a permitted activity, or a violation.

COMMISSIONER MONTGOMERY: Commissioner Holmes got it first.

COMMISSIONER HOLMES: Do the pipelines typically go under the navigable streams, or do they just go across them?

MR. MacRAE: The larger streams, in the last ‑‑ again, increasingly, over the last 15, 20 years, they have preferred to bore under when they could because it puts their pipeline down into good hard substrate where they don't have to worry about the banks. Just making that cut in the bank often destabilizes it enough to no matter what they do, it will start to eat into it. And so a lot of pipelines on the Brazos and Lower Colorado, in the 80's and 90's, had to go in with massive projects to try to stabilize the banks of those unstable rivers to keep their pipelines from being exposed.

COMMISSIONER HOLMES: And when they do go under, is there any ‑‑ either rule or rule of thumb as to how far under the bottom of the bed?

MR. MacRAE: We don't have one. I mean, it's usually based on geotechnical considerations. They want to get down into a hard durable substrate and I would say that most of those are going 10 or 15 feet below the bed of the stream, just so that they never have to worry about that ever eating in their pipe.

COMMISSIONER MONTGOMERY: What is our history of approvals versus denials?

MR. SWEENEY: I can't recall denial in my time at the agency of an individual permit application. We have declined issue, I would say, something less than 10 percent of the general permit applications that we've received. Is that a fair amount?

MR. MacRAE: I was going to say, some of those in the Hill Country where somebody wanted to take a rock saw, or jack hammers, or something, and hammer into the rock stream bed, for instance that one that popped up in Blanco County, where there was actually a local prohibition against doing anything like that. Most of the ones that we might deny at some point wind up with the applicant pulling out because of local opposition, or because of staff concerns, they say, well, if it's going to be, you know, some kind of ecological issue, I just won't do it.

COMMISSIONER MONTGOMERY: What percentage would you say of the applicants end up ‑‑

MR. MacRAE: Pretty small ‑‑

COMMISSIONER MONTGOMERY: ‑‑ going back?

MR. MacRAE: Pretty small. Less than 5 percent maybe.

COMMISSIONER MONTGOMERY: When there's a denial, do we publish the rationale for denial? Or how do we communicate that?

MR. SWEENEY: I think Rollin is correct that if it reaches that point, that ‑‑ the point of actual formal denial after a hearing process, but I think ‑‑ I can't recall any that have actually ‑‑ and it is required in the rules that if we deny, that we have to voice our reasons. But typically we encounter more of the situation where folks understand what's going to happen, so they decide to cease pursuing it.

COMMISSIONER MONTGOMERY: From the date of application, do we have any policy regarding the timeliness of our response to an applicant?

MR. SWEENEY: The general permit is interesting because it, in fact, if we don't do anything in 30 days, they're good to go. And it's one of the few permitting programs ‑‑

COMMISSIONER MONTGOMERY: It's deemed approved?

MR. SWEENEY: That's right. So we have to act within 30 days. The individual permit is not like that. It requires ‑‑ and there's fairly extensive notice required, including mailed notice. So that ‑‑ there is no outside limit as to how long that can take.

COMMISSIONER MONTGOMERY: We have ‑‑ I remember we have the right to ‑‑ the staff has the right to move to an individual permit if they deem it appropriate.

MR. SWEENEY: That's right. Or, of course, as occasionally happens on a general permit, someone requests a contested case hearing. That's going to take it off the 30-day track, but it is an expedited streamlined process.

COMMISSIONER MONTGOMERY: Yes, I don't know how the other Commissioners feel, I'd like to have some kind of policy related to timely response. I think people are entitled to that regulatory matter. I understand those can be very complex; it may not be simple, but it sort of puts an applicant with a contentious case in limbo potentially.

MR. SWEENEY: Once the contested case request is made, we are in the position of referring it to the State Office of Administrative Hearings, and the scheduling and the fate of that, the timing of that, is really out of our hands. If it is ‑‑ if a contested case hearing is requested. We don't ‑‑ we no longer have the ability to say, oh, this has to happen by such-and-such ‑‑

COMMISSIONER MONTGOMERY: How does that ‑‑

MR. SWEENEY: ‑‑ date.

COMMISSIONER MONTGOMERY: ‑‑ work, do we still have an involvement at that point?

MR. SWEENEY: We are the ‑‑ we are a participant in that hearing. We are ‑‑

COMMISSIONER MONTGOMERY: We no longer control the agenda.

MR. SWEENEY: Right. It has to go through that. It becomes a matter governed by the Administrative Procedure Act at that point, if a contested case hearing ‑‑

COMMISSIONER MONTGOMERY: It deals with the timing and everything?

MR. SWEENEY: Right. They're going to control the ‑‑ you know, when the hearing occurs and how long for discovery and all those kinds of things.

COMMISSIONER MONTGOMERY: Last question. How do we handle the concept of consequentiality with respect to the evaluations we make, the consequential impact of some of these things versus the other, perhaps more technical grounds, when we make a denial, or an approval, do we ‑‑ how do we evaluate consequentiality, or ecological impact, or the resource impact?

MR. MacRAE: I'm not entirely sure I understand. I mean, we're looking at the ecological sustainability of the system, and we would look at situations such as, is it going to cause local or downstream erosion, could it stimulate head cutting in the stream bed. We want ‑‑ we really want these to be more in the line of restoring the system, especially on these smaller ones.

The larger ones, the major study that was done by the Bureau of Economic Geology and the U.S. Geological Survey, was aimed at determining both local erosional and depositional impacts, as well as the sediment budget to the Coast. And that lengthy study determined that those commercial operations, as they'd been practiced on the Lower Brazos, did not have an effect, unless it was actually ameliorative, at least in the short term, and reduce the erosion against the opposite bank by pulling back the point bar.

COMMISSIONER MONTGOMERY: So is it our policy if it's a consequential impact upon the system as opposed to on the immediate location?

MR. MacRAE: Both.

COMMISSIONER MONTGOMERY: And how do we weigh the two?

MR. MacRAE: We're looking for no significant impact. I mean, the statute actually requires the Department Commission to find that there be no significant impact on fish-inhabited waters, rivers, channels, creeks, bars, islands, navigability, any of those factors. And so we're looking for as close to zero as possible, and certainly not anything that we would tolerate that would be of significant impact in the stream, or on adjacent properties.

COMMISSIONER MONTGOMERY: How do we generally define significant I guess I'm trying to understand.

MR. MacRAE: That's that beautiful word that's used in all the environmental regulations that ‑‑ we hope that it would be something that would be self-restoring. For instance, when you have these operations on the Lower Brazos, it's the major example that the river is capable ‑‑ if they stopped work tomorrow, the river is capable in the next two or three flood events of recreating the situation as it was before they started.

COMMISSIONER MONTGOMERY: So I might have a temporary impact, but it's ‑‑

MR. MacRAE: Right.

COMMISSIONER MONTGOMERY: ‑‑ it will be mitigated naturally.

MR. MacRAE: In fact, they're re-dredging bars now that have been dredged out four or five times in the last 20, 25 years.

COMMISSIONER MONTGOMERY: Anybody else have any questions?

(No response.)

COMMISSIONER MONTGOMERY: Thank you all very much.

Okay. Item Number 3, Land Sale, Briscoe County, Caprock Canyons Trailway. Corky Kuhlmann is making the presentation.

MR. KUHLMANN: Good morning. For the record, my name is Corky Kuhlmann with the Land Conservation Program. This is a land sale at Caprock Canyons Trailway. It's ‑‑ the trailway is, as you all know, about 64 miles in the Panhandle of Texas. This particular item is in Briscoe County, actually in the city limits of Quitaque, due to a mutual misunderstanding between park staff and an adjacent landowner that the landowner built part of his house on the trailway.

The area we propose to sell is a 50-foot-wide section. The trail is 200 foot wide in that area, so it will leave us 150 foot of trail. The price that was arrived at was ‑‑ there were no comparable sales in the area. I can ‑‑ people are letting their lots go for back taxes, much less putting them up for sale, so I went to the appraisal. The tax appraisal added 50 percent to the tax appraisal and came up with the $680. You can see the little strip ‑‑ the magenta section is the adjacent landowner, and the little red polygon is what we plan on selling, with the green being the trailway.

COMMISSIONER MONTGOMERY: Is that ‑‑

MR. KUHLMANN: Sir?

COMMISSIONER MONTGOMERY: Is that it?

MR. KUHLMANN: Yes, sir.

COMMISSIONER MONTGOMERY: Any questions? We've seen this before?

MALE VOICE: Yes.

MR. KUHLMANN: Yes, sir.

COMMISSIONER MONTGOMERY: Okay. If there's no further questions, then I will place this item on the Thursday Commission Meeting agenda for public comment and action.

Committee Item Number 4, Land Donation, Bastrop County, Bastrop State Park. Also Corky Kuhlmann.

MR. KUHLMANN: Again, for the record, Corky Kuhlmann. This is a land donation at Bastrop County, Bastrop State Park. It's 265 acres. The red polygon to the north is the 265 acres. It has some highway frontage on 21, it has over a mile in common with the State Park. This donation would require no extra help or cost to the State Park and would be managed by the State Park with the existing personnel. And the only terms and conditions would be to accept the donation of 265 acres.

COMMISSIONER MONTGOMERY: Any questions?

(No response.)

COMMISSIONER MONTGOMERY: Okay. If there is no further discussion by the Commission, I'll place this item on the Thursday Commission Meeting agenda for public comment and action.

Item Number 5, Nominations for Oil and Gas Lease. Corky Kuhlmann.

MR. KUHLMANN: The authority for leased mineral rights on the Parks and Wildlife land lies at the Board of Lease at the GLO. The Board of Lease has traditionally honored the recommendations of this Commission. We have four nominations this time, Cottle County; Harrison County; Somervell; Cameron. Caddo Lake State Park, the whole park has been nominated; Dinosaur Valley, 1387 acres being the whole park has been nominated; Matador Wildlife Management Area, a 200-acre tract out of the whole has been nominated; and Resaca de la Palma, 160 acres out of the whole has been nominated.

I'd like to say I've had some public comment for the first time about the nominations at Caddo Lake and Dinosaur Valley. I had quite a few people e-mail me voicing concern over having drilling in Dinosaur Valley State Park. When I responded to them that it was no surface occupancy and there would be no drilling in Dinosaur Valley, they were okay with it.

There was one gentleman at Caddo Lake that brought up a good point. Even though Caddo Lake ‑‑ Caddo Lake's a small park, and even though we recommend no surface occupancy, it doesn't stop somebody from leasing a five-acre tract adjacent to them and then putting a drilling rig right on the fence line. And so you might have a trail, or a campground here, and then right across the fence, 100 feet away, have them drilling.

COMMISSIONER FITZSIMONS: For 25 days.

COMMISSIONER HOLT: Yes, exactly. Well, you can't stop it anyway.

MR. KUHLMANN: Well, you might could stop it, because them leasing in the Park would give them sufficient acreage to do pooling, or directional drawing underneath, make it feasible to do.

COMMISSIONER HOLT: Oh, yes, but the way you can stop it is not okay ‑‑ not allowed.

MR. KUHLMANN: Right.

COMMISSIONER HOLT: We don't want to do that.

COMMISSIONER RAMOS: The other option is don't lease and let them drain our gas.

COMMISSIONER HOLT: Like I said ‑‑

COMMISSIONER FITZSIMONS: The alternative is drainage, and that's not a good alternative.

MR. KUHLMANN: Yes, sir.

COMMISSIONER HOLT: And as you said, going back to ‑‑

MR. KUHLMANN: But the recommended terms and conditions, no surface occupancy, the $150 minimum rate, 25 percent royalty, 10-acre delay rental and a three-year lease.

COMMISSIONER BROWN: And where's the income go?

MR. KUHLMANN: The income from the ‑‑ if it's a state park, it goes to Fund 64, it goes straight to state park, and if it's a WMA, it goes over to 09, directly to the Wildlife Fund.

COMMISSIONER HOLT: And where do these numbers come from, are they ‑‑

MR. KUHLMANN: This number actually is just ‑‑ if you figure the acreage up for lease, the $150 minimum. The ‑‑ and you'll hear a little bit in a minute about something we hope to do, and actually in a case like this, the lease period ‑‑ or the nomination period, the bid period, has ended for all of these sites. And then I will go to a meeting on Monday at the GLO to recommend that they do accept or not accept the bids that they've got.

COMMISSIONER HOLT: So this is what you're calling minimum?

MR. KUHLMANN: Yes, sir.

COMMISSIONER HOLT: Yes. So it could be much ‑‑ or higher or much higher, for that matter.

MR. KUHLMANN: In this case, they were a lot higher.

COMMISSIONER HOLT: Yes, I thought they would be. Okay. That's what we're talking about. Okay.

MR. KUHLMANN: Yes, sir.

COMMISSIONER MONTGOMERY: Any further questions for Corky?

(No response.)

COMMISSIONER MONTGOMERY: Okay. Any other discussion?

(No response.)

COMMISSIONER MONTGOMERY: Okay.

MR. KUHLMANN: Thank you.

COMMISSIONER MONTGOMERY: I'll place this ‑‑ if no further questions, I'll place this item on the Thursday Commission Meeting agenda for public comment and action.

Now we've got Item Number 6, Commission Policy, Delegation of Authority to Executive Director for Oil and Gas Lease Nominations with No Surface Occupancy. Ann Bright.

MS. BRIGHT: Good morning, Commissioners. I'm Ann Bright, General Counsel. And I wanted to talk to you about something that if the Commission is okay with this, we'll present it to you tomorrow for adoption, and it's actually a policy change, not a rule change.

As Corky just went over, the Board for Lease for Parks and Wildlife lands, which is actually administered through the General Land Office, they're authorized to lease our property for mineral exploration and production. And they've traditionally honored the Commission recommendations.

As the previous discussion demonstrated, these minerals can provide an important source of revenue for Parks and Wildlife, especially on our state parks, at the same time preserving the natural resource value of our parks is critical to our mission. As a result, we usually request off-site drilling.

The Board for Lease meets four or less times a year, and their meetings don't always coordinate with the Commission's meetings. So one of the things we'd like for you to consider is a policy to delegate to the Executive Director the authority to approve these nominations when there are two conditions that are met. One is there's no surface occupancy. Secondly is when the royalty is at ‑‑ the royalty and any payments are at least what's consistent in the industry. And this would be the policy.

The reason for this is really just pure revenue. This summer, I think, you probably all realized that the oil prices went up significantly. And so if you can act in a way that is coordinated with the Commission ‑‑ excuse me ‑‑ the Board for Lease meetings, then there's always the possibility that these can occur more quickly. And then this would be the recommended resolution and the recommended motion. And I'd be happy to answer any questions.

And then also, I should say Corky and Ted ‑‑ Corky Kuhlmann and Ted Hollingsworth, who actually deal with the GLO, are here and they can probably talk a little bit more about that actual process.

COMMISSIONER MONTGOMERY: Ann, could we ‑‑ let me ask one question please ‑‑ could we add to that that the executive director would report on ‑‑

MS. BRIGHT: Absolutely. Absolutely. That's a very ‑‑ absolutely.

COMMISSIONER MONTGOMERY: ‑‑ so the Commission's aware of what the actions were?

MS. BRIGHT: Absolutely.

COMMISSIONER MONTGOMERY: Commissioner Parker, you had a question?

COMMISSIONER PARKER: Who is the Board for Lease?

MS. BRIGHT: You know, it's ‑‑

COMMISSIONER PARKER: Are they ‑‑ is ‑‑

MS. BRIGHT: ‑‑ it is ‑‑ it's made up of, I think the General ‑‑ the Commissioner of the General Land Office. There's a representative from Parks and Wildlife, I believe, that is on the Board for Lease. And I'm not sure who all else is on there.

COMMISSIONER PARKER: Who is our representative?

COMMISSIONER HOLT: Who would be ‑‑

MR. COOK: I usually designate our Land Conservation ‑‑

MALE VOICE: Corky.

MR. COOK: ‑‑ like Jack Bauer, or Corky, as our representative.

MS. BRIGHT: And there are actually several Boards for Lease. There's one for the Department of Corrections, there's one for University lands, and this one just deals with Parks and Wildlife lands. And I think they all have a similar composition.

COMMISSIONER RAMOS: Ann ‑‑ and I'm trying to find ‑‑ here's the rest of it right here ‑‑ here it is ‑‑ can you put up the resolution for lease?

MS. BRIGHT: Yes.

COMMISSIONER HOLT: It's on your ‑‑

MALE VOICE: Right there.

COMMISSIONER RAMOS: Let's see, the only issue that I have, at the end of the second quarter, as it says, "And that the payments to TPW are consistent with or higher than payments customary in the industry." And I would only point this out ‑‑

MS. BRIGHT: Sir ‑‑

COMMISSIONER RAMOS: ‑‑ that the industry statewide ‑‑ no, if the industry standard for the state may be X number of dollars below this, why this particular area where we're leasing may be totally different, so ‑‑

MS. BRIGHT: So should we change that to the area?

COMMISSIONER RAMOS: Well ‑‑

COMMISSIONER FITZSIMONS: I mean, the difference between the Trans-Pecos and the Barnett Shale is a difference between $50 and $10,000 an ‑‑

COMMISSIONER MONTGOMERY: It's the market conditions in the area.

COMMISSIONER RAMOS: In the area. That's what I was going to suggest. In the area as compared to the industry, because the industry is widespread, and the area may be not consistent with the industry.

COMMISSIONER FITZSIMONS: Yes. And that's lessor's interest, not the industry. The industry ‑‑

COMMISSIONER RAMOS: Yes, like to pay you a lot less than the lessor's interest.

MS. BRIGHT: We're counting on some of your expertise in this area, so we appreciate this.

MR. KUHLMANN: Can I speak to that?

COMMISSIONER MONTGOMERY: Sure, yes.

MR. KUHLMANN: When these new nominations go to the General Land Office, they are in tune with what is going on in the specific area. And they know what it's been leasing for, and when it says $150 minimum is an industry standard, when they look at Dinosaur Valley, they jack that figure way up as a minimum bid. It doesn't stay at $150 for Dinosaur Valley, it goes up to where a minimum bid of what's going on in the area.

MS. BRIGHT: So we will make this change, because I do think that's more accurate.

COMMISSIONER HOLT: It doesn't hurt.

COMMISSIONER RAMOS: Yes, it doesn't hurt. Right. I think it would clarify it. Right.

MS. BRIGHT: Absolutely.

MR. KUHLMANN: Mr. Patterson ‑‑ or Commissioner Patterson is real good about getting all he can.

COMMISSIONER HOLT: He should.

COMMISSIONER RAMOS: But it might put Bob in a position where, you know, the industry standard is $350 and the area standard is $150, and he may be ‑‑

MS. BRIGHT: And one of the ‑‑ I'm sorry.

COMMISSIONER RAMOS: ‑‑ struggling with that.

MS. BRIGHT: One other thing ‑‑ and that's a really good change, and we'll make that before the presentation tomorrow.

COMMISSIONER RAMOS: Okay.

MS. BRIGHT: Also, the ultimate decision in all of these matters is really with the Board for Lease. I mean, the role here is to make recommendations, and like I said before, they are very good about honoring our recommendations, and especially with the no service occupancy.

COMMISSIONER MONTGOMERY: Any further questions?

(No response.)

COMMISSIONER MONTGOMERY: Okay. If there's no further discussion, I'll place the item on Thursday's Commission Meeting agenda for public comment and action.

Maybe we ‑‑ I show Executive Session ‑‑ you want to recess, or do you want to wait?

COMMISSIONER FITZSIMONS: We can recess ‑‑

COMMISSIONER MONTGOMERY: Yes, okay. So we're going to recess, hand the gavel over to Commissioner Parker for Infrastructure. We'll re-adjourn later for Executive Session.

You're on.

COMMISSIONER PARKER: So we're going to go ahead and do Infrastructure right now?

COMMISSIONER MONTGOMERY: We're going to do Infrastructure.

(Whereupon, a recess was taken.)

COMMISSIONER MONTGOMERY: We will now recess for Executive Session. Therefore, I'd like to announce that pursuant to requirements of Chapter 551, Government Code, referred to as the Open Meetings Act, the Executive Session will be held at this time for the purpose of deliberation on real estate matters under Section 551.072 of the Texas Open Meetings Act, and the purpose of discussing pending litigation, and the purpose of seeking legal advice from General Counsel under Section 551.071 of the Open Meetings Act.

We're adjourned ‑‑ we're recessed into Executive Session.

(Whereupon, the Conservation Committee Meeting recessed for Executive Session, to reconvene later this same day, Wednesday, November 1, 2006.)

COMMISSIONER MONTGOMERY: We will now resume the regular Conservation Committee. Item Number 7, Proposed Land Sale, Travis County, Austin Game Warden Academy property.

Ted Hollingsworth, you're on.

MR. HOLLINGSWORTH: Good afternoon, Commissioners. I'm Ted Hollingsworth with the Land Conservation Program. I'm here to update you on an inquiry we've had regarding the sale of the Austin Game Warden Academy. It is from another public entity. Funds from the sale of the Game Warden Academy would be used to develop the PAL Ranch Game Warden Academy in Hamilton County.

The subject tract is 4.2 acres. It is not serving our Game Wardens as it should be because of its small size and location. It is on 50th Street in town; it is adjacent to the University of Texas campus. Staff would like to proceed to negotiate with this other public entity on the following terms: that the sale be at or above appraised value; that Parks and Wildlife would have the option of leasing the property back for three years to facilitate our transition into the new Academy facilities; and that $700,000 of the sale proceeds is authorized for use to develop the new Game Warden Academy.

Staff is requesting authority to proceed to finalize that contract. If the contract is finalized to the satisfaction of the Executive Director, to post public notice to solicit public comment, and return to you at a future Commission meeting to request that you give us the green light to close on the transaction.

COMMISSIONER MONTGOMERY: Thank you, Ted.

Any questions or discussion? (No response.)

COMMISSIONER MONTGOMERY: If there's no questions or discussion, I'd like to ask staff to begin the public notice and input process.

Any other business before the Conservation Committee?

(No response.)

COMMISSIONER MONTGOMERY: Okay. I'll yield the floor to new Chairman Friedkin.

(Whereupon, the Conservation Committee Meeting was concluded.)

C E R T I F I C A T E

MEETING OF: Texas Parks and Wildlife Commission, Conservation Committee

LOCATION: Austin, Texas

DATE: November 1, 2006

I do hereby certify that the foregoing pages, numbers 1 through 40, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Stacey Harris before the Texas Parks and Wildlife Commission.

11/10/06

(Transcriber) (Date)

On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731


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