Q&A with Representative Lyle Larson and former Senator J.E. "Buster" Brown

Representative Lyle Larson represents Texas House District 122 1. As the Chairman of the House Natural Resources Committee, he is the state’s leader on water policy issues in the Texas House. Former Senator J.E. “Buster” Brown posed these questions to Chairman Larson, and what follows is a very interesting conversation.

Brown: First of all, tell us about yourself — where you live, what you do for a living and about your prior public service.

Larson: I was born and raised on a farm in San Antonio, and currently live in northern Bexar County just outside the city limits. Directly after graduating from Texas A&M University, I worked first for Nalco Chemical Company and subsequently for Johnson & Johnson, distributing surgical equipment. For the last 30 years, I've owned and operated a small business that sells identification card manufacturing equipment, and owned and operated a business that puts on farming, ranching, and hunting expos. At age 30 I was elected to San Antonio City Council, where I served two terms and got my feet wet in water policy during the Edwards Aquifer wars of the 1990s. I then served as a Bexar County Commissioner for 12 years, before being elected to the Texas House in 2010

Brown: In general, what do you see as the major water issues for the upcoming Session?

Larson: If drought conditions persist into March, there could be real interest in advancing legislation to ensure the availability of water supplies. Based on the proceedings at the Public Utility Commission (PUC) over the past 24 months and deliberations within the water industry, reforming the process by which wholesale water rates are challenged and undermined at the PUC merits additional direction by the Legislature. Understanding there are diverse opinions on this issue, we need to make sure that contracts are not invalidated by state agencies where large water projects and the state's credit rating are at stake. We also look forward to moving forward the discussion on setting Desired Future Conditions, groundwater-surface water interaction,

and other issues as well.

Brown: Rural areas of Texas continue to provide food and fiber for Texas and, in some cases, the world. How does Texas’ future water supply guarantee that continued production?

Larson: It's critical that we continue to grow food and fiber as close as possible to the population centers as we can. The balancing of water needs in the rural areas with the growing demand in urban areas is critical for the growth and sustainability of Texas and the country as a whole. Bottom line: we can’t cannibalize all the water for the urban areas at the expense of the rural areas because it would be counter to the entire state's interests and the global food supply.

Brown: Do you see any “new” water sources on the horizon for Texas?

Larson: There are several ways to add "new" water to the state's inventory: through enhanced science and regulatory reform that puts more of the state's existing groundwater and surface water resources on the table for development, through technological advancements that allow for the reuse of previously unusable water, or through importing water from outside the state's boundaries from the Gulf of Mexico or a neighboring state. With the growth projection for the state, the development of "new" non-traditional water sources like seawater desal, oilfield water, and interstate water sales are inevitable and simply a matter of time. As with any project, this will be based on demand, the cost of the developed water relative to the next cheapest source, leadership by a local

entity to have the willingness to sponsor a project, and state leadership to support local efforts. Some examples of creating new water through regulatory reform include putting additional brackish groundwater supplies on the table for development (84R HB 30 and 86R HB 722) and more surface water supplies on the table for development if the water will be used for an aquifer storage and recovery or aquifer recharge project (86R HB 720). We've seen a lot of interest from public and private entities on the Gulf Coast for seawater development, and eventually they will reconcile the cost of treatment and the environmental issues.

The extreme drop in the price of oil has underscored the extreme variability in the availability of produced water from the oilfield, and therefore the challenge with relying on it as a long-term water supply. However, as the industry recovers and we see greater production in the future, there will be merit in looking at how to treat and reuse this supply of water where it makes the most sense: first back into the oil production process and then, once health, safety and environmental concerns are satisfied, for other ag, industrial, instream flows, and other uses. Unfortunately, a Friday night football mentality has gotten in the way of water deals with the states of Oklahoma and Louisiana. Having spoken with legislators and other stakeholders in both states, I can say that we're much closer with Louisiana at this point. There's been renewed interest recently by folks in Texas and Louisiana to cut a deal on a Toledo Bend water sale and pipe the water west to the I-35 corridor and serve the entities in between.

Brown: What do you see as the greatest challenges for Texas rural water utilities?

Larson: The greatest challenge for rural water utilities, as with many rural institutions, is the nature of the business model as the state continues to grow. Having lived nearly my entire life in the San Antonio area, and having served in local government for much of my adult life, I experienced many of these challenges firsthand - navigating everything from land use to water service to annexation issues as the city grew to encapsulate what was once rural land. The property I grew up on, which was once on the outskirts of the city, is now in a central part of town. There's a Little Caesar's right where our family's roping arena used to reside. In many ways, the challenges rural water utilities face as the state's urban areas continue to grow are part of a larger conversation about managing and adapting to an urbanizing world. In the water world, the rubber meets the road with TRWA members. Rural water utilities have the opportunity and obligation to plan for and provide water service to large swaths of land with a customer base that is more spread out. This requires greater capital costs relative to their rate bases compared with many of their municipal utility counterparts, and being prepared for future development without always knowing when and how water will be needed. It creates challenges when cities that are also trying to grow encroach on rural service areas and want to serve those customers.

Having worked for multiple sessions on CCN issues, one positive aspect I've seen is a greater willingness to for rural utilities and developers to both do a better job of communicating with one another about water planning and development plans, respectively, to preempt some of these conflicts.

Brown: In particular, what do you see as the most important issue for customers of rural water utilities?

Larson: Existing customers want access to safe, affordable water. Water is a basic need, which was further underscored during the pandemic. Customers need to be able to access supplies without pressure issues contamination, or boil water notices as a matter of basic health. Developers, who bring future customers, want the cheapest, and often closest water supply.

Former Senator J.E. “Buster” Brown served in the Texas Senate for two decades, Chaired the Senate Natural Resources Committee and authored SB1 and SB2.