R. Gonzalez made a motion to adopt the Statement Required by Texas Water Code

Staff Report & Agenda Item Details

M. R. Gonzalez made a motion to adopt the Statement Required by Texas Water Code 36.1011(a)(2) To Adopt Emergency Rule. Motion seconded by Alvaro Mandujano Jr. Motion carried unanimously. President McGuairt made the following statement: NOW, THEREFORE, BE IT RESOLVED AND HEREBY ORDERED that: (1) The City’s six wells referred to under District Well Numbers 2005020403, 2005020404, 2005020405, 2005020406, 2005020408, and 2005020409 are hereby consolidated to allow the City with operational flexibility to withdraw up to 8,081.9 acre feet cumulatively from these six wells. (2) This order shall remain in effect while the District’s above-reference emergency rules are in effect and for as long thereafter as final rules are enacted and effective and applicable to address the City’s above-referenced emergency situation. Issued on the 21" day of June, 2016. Note: See the full Emergency Order — attachment C. PRODUCTION PERMIT AMENDMENT HEARING for PECOS SS LLC. I Call to order at 10:30 a.m. by President Jerry McGuairt. Applicant's representatives: Attorney Drew Miller Protestant to application: None Public Comment: None Assistant General Manager Ty Edwards presented the application to the Board. Application is seeking to amend production permit issued on March 17, 2015 and amended on April 7, 2016 with the Middle Pecos Groundwater Conservation District. Middle Pecos GCD Minutes for June 21, 2016 Page 4 The approved well system is approximately 2 miles north of Highway 67 and 1.5 miles west of Owego Rd, in Pecos County, Texas. The purpose of this Permit Amendment is to extend the time for compliance with the stipulation regarding the construction of a pipeline and the selling of water within 18 months. Pecos SS requests that a new stipulation be adopted which states as follows: Pipeline construction to one or more of the following counties (Upton, Reagan, Glasscock, Midland, Crane, Crockett, Ward, Reeves, and/or Loving Counties) shall be completed, and water shall be sold, within 18 months of the granting of this permit amendment. The application is administratively complete. Drew Miller: The amendment to the application is to extend the time for another 18 months, and requests a change that a new stipulation be adopted which states as follows: Pipeline construction to one or more of the following counties (Upton, Reagan, Glasscock, Midland, Crane, Crockett, Ward, Reeves, and/or Loving Counties) shall be completed, and water shall be sold, within 18 months of the granting of this permit amendment. The dramatic decline in the price of oil has considerably slowed the demand for water in the oil and gas industry. The delay is not that of Pecos SS LLC, but multiple hydrogeological analysis to define the source aquifer, multiple hearings, and market uncertainty in the worldwide market. Board: Several Board members stated that the prior application hearings specifically questioned the pipeline construction within 12 to 18 months and that water would begin to be sold in that time frame. Hence the special stipulation added to the permit application granted on March 17, 2015, and if the stipulations were not adhered to the permit would cease to exist. Drew Miller: We came to you optimistically in April and said we could do it in 18 months, and after taking a step back, we do not want to push it to the wire and need to come back in September. That is why we are here today asking for the amendment. ll Adjourn hearing and consider and/or act on Production Permit Amendment for Pecos SS, LLC. Jerry McGuairt adjourned the hearing at 10:52 a.m. John Dorris made a motion to deny the permit. Board Member Terry Whigham asked to make a statement. Summarized: We approved it in the beginning. They have been thrown a few curve balls, and need a little more time and we should grant the permit amendment. Motion was seconded by Weldon Blackwelder. Vote: 3 For. 6 Oppose. 1 Absent. 1 Position Vacant. Motion failed. Middle Pecos GCD Minutes for J

This motion is scored as RESTRAINS_GOVERNMENT (Impact Weight: 5.1/10). Under the Bastiat Liberty Watchdog Index, voting YES on measures that cap or reduce ad valorem tax burdens, expand taxpayer exemptions, retire debt early, enforce competitive bidding caps, or remove regulatory/zoning barriers to private property rights earns a positive Pro-Liberty score.