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FEB-28-199S 08:35 KOGOJSEK 2. ASSOCIATES 303 831 1888 P. 06 February 1994 Page 7 from the Edwards Aquifer (see "Texas Regulates the Edwards Aquifer:' w.S' July J993). Under the act, the Board was mandated to prepare this report. The legislative intent of the bank is to "facilitate the transfer of water and water rights among willing buyers and sellers throughout the sute." The Board has the authority to conduct the bank using negotiations, sales and purchases of water and water rights, authorization of registries, provision of information. and preferential treatment for transfers of conserved water. Rights holders are allowed to deposit up to 50 percent of a Water right in the bank with no threat of cancellation for non-use for at leas! ten years. The bank may charge an administntive'.fee of up to $500 to cover its expenses, although political subdivisions are exempt from fees. Draft rules for the operation of the bank were submitted to the register for publication on March 18, 1994. and were considered and approved by the Board on April 21, 1994. The bank became operational on May 13 oflast year. By the end of 1994, the bank had 8 contacts from interested parties, but none of these inquiries. had resulted in any deposits of water or water rights into the bank. The report reviews some of the potential barriers slowing the emergence of water markets in Texas. These include: . The concentration of ownership of water rights - one percent of rights holders control 95 percent of the state's surface water. This concentration reduces the number of potential participants in water marketing. . Water marketing infonnation is no! widely available to potential sellers and buyers. There is no single place where people wiShing to supply water and those wishing to acquire water may find out about transfer opportUnities. . The state lacks a conveyance system capable of transferring water among .regions. Therefore, transactions among basins or regions must be structured around complex exchanges of different types of water. The Trans- T ex!s Water Program is currently evaluating conveyance as well as other supply alternatives. But other conditions for emerging water markets - most importantly, opportunities for transfers from low-valued agricultural uses to higher-valued uses supporting metropolitan development .- are present. To speed the development of water marketing in Texas, the report recommends several changes in law and policy: . The Legislature should consider amending the Water Code to clarifY and lessen liability concerns of water sellers about long-term obligations resulting from short-teJlll transfers. Areas where increased certainty may be needed include: how environmental flow needs will be determined, how future ., diversion amounts will be authorized, what standards will be used to evaluate interbasin transfers, how transfers of nuisance species will be managed, and what standards will be used to evaluate the effects of transfers on other rights holders. . Allow the deposit of more than 50 percent of a water right in the bank. create more watennaster divisions related to watersheds, and, for non-bank transfers, provide greater assurance that engaging in water conservation will not jeopardize water rights. . ClarifY environmental flow requirements by river basins, basin segments, and watersheds. The repon, therefore, places the responsibility for the nelCt significant actions onto the Legislature, which will be in session this year. WATER JNTEU..IGENCE MONTHLY Published by Stralel:OJl, Inc. 1.0.Bol 'U, a..._... C"",1711 1'119) 01-4"3