SAWS Moves to Declare LCRA in Breach of Contract

The San Antonio Water System (SAWS) Board of Trustees took action May 5 to declare the Lower Colorado River Authority (LCRA) in breach of the definitive agreement governing a water supply project that was expected to create up to 330,000 acre-feet of water for both agencies, including up to 150,000 acre-feet for San Antonio.

The resolution passed by SAWS was in reaction to LCRA Board actions in December 2008 that unilaterally pulled the plug on the project with SAWS after approximately $40 million of studies paid by the residents of San Antonio.

“Under our contract, LCRA doesn’t have the right to pull the plug on this project,” stated SAWS Chair Alex Briseño.

Contractually, SAWS is allowed to exercise an option to terminate the agreement with LCRA once every year, and this option requires repayment of half of all study costs to SAWS. However, the December 2008 LCRA actions have resulted in a failure to meet statutory requirements set forth in the 2001 legislation that was secured in partnership by both agencies and legislators in the LCRA basin as well as the San Antonio area. This project would not have been feasible without the legislative initiative.

“Prior to their December 2008 decisions, all statutory requirements were being met. Through their actions, they have abandoned 180,000 acre-feet of water for their basin which would have been created by the project, and we’ve lost at least 90,000 acre-feet of water on top of that,” said Robert R. Puente, SAWS president/chief executive officer.

Under a definitive agreement between the two agencies, the entire LCRA basin was set to gain 180,000 acre-feet of water for the Colorado River basin through the use of enhanced technology and innovative conservation efforts paid for by SAWS. The water system leads the nation in water conservation, and studies showed significant water savings could be achieved for the benefit of both regions.

The new supply of water for the Basin would have guaranteed higher lake levels in the Highland Lakes and enhanced downstream flow for agricultural irrigation and the environmental health of bays and estuaries. In addition, San Antonio was poised to receive up to 150,000 acre-feet of water for its long-range water needs. Recent study results indicated that amount would have been in the neighborhood of 90,000 acre-feet.

“We don’t understand how LCRA could contemplate giving it all up. Not only are we prepared to pay for the studies, but we would pay for new canal irrigation infrastructure, new technology, and a reservoir. The studies have even shown higher levels in the Highland Lakes,” noted Puente. “If I lived in their basin, I’d be concerned about how they would make up the loss of all that water, and how it would be paid for if this project does not proceed.”

Among the actions taken by LCRA in December 2008 was a decision that 50,000 acre-feet in the Highland Lakes would no longer be reserved for use with the project and the adoption of new long-term demand projections for the Colorado River basin.

“The contract does not allow the use of independent demand projections. LCRA has chosen to ignore a contractual requirement to use data submitted by Region K and on file with the Texas Water Development Board in 2001,” added Puente.

“We’ve attempted to salvage the project with them over the past several months, and most recently LCRA passed on an opportunity to reconsider their decisions. It’s extremely frustrating that they’ve played with public money this way and have chosen to place our region’s long-term supply at risk.” explained Briseño.

The project with LCRA has been included in the long-term water supply plans for SAWS and Region L. Most recently, the SAWS 2009 Water Management Plan lists the project as a long-range solution for growing demand.

“We’ve acted in good faith, paid our money on time, and complied with the terms of the contract for seven years. Now they have studies on our dime that benefit their basin, and the citizens of San Antonio have nothing. Our sincere hope is that we can salvage this project or come to a reasonable settlement for this breach that won’t require litigation,” added Briseño.

The contract calls for a process to resolve such disputes, but if a resolution is not reached, the matter could be taken to the courts. SAWS has retained Austin-based law firm George & Brothers, L.L.P. to handle the dispute.

Since 1992, San Antonio Water System has provided leadership in managing and developing water resources in the San Antonio region. Water and wastewater services are provided to over one million consumers in the San Antonio area.