Saturday, April 13, 2024

Louisiana could sell water to other states, but at what cost?

by BIZ Magazine

By Wes Muller, Louisiana Illuminator

Louisiana is receiving little to no cash for a natural resource scarce in many western states: water. For more than half a century, the state has given away much of its water to private industry and sold the rest without knowing its actual value.

The issue was the focal point of a Louisiana Legislative Auditor’s report presented Thursday at a meeting of the state’s Water Resources Commission. The public board proposes legislation to regulate and conserve the state’s freshwater resources, including underground aquifers and surface sources such as lakes, rivers and streams.

Auditor Gina Brown told commissioners that researchers have called on state authorities to develop a comprehensive water management plan since 1956. Other states want to purchase Louisiana’s water, yet numerous aquifers and water basins across the state are experiencing decreases in their supply, Brown said. 

During the 2020-2021 fiscal year, industrial users – particularly oil and gas companies that use water for hydraulic fracturing – requested to withdraw 1.54 trillion gallons of surface water at a rate of 15 cents per 1,000 gallons, Brown said. That usage figure only covers companies that voluntarily pay for the water and report how much they use as part of an agreement with the state Department of Natural Resources (DNR). 

Despite Louisiana’s Constitution prohibiting the state from donating things of value, the DNR program is voluntary. Only 87 entities have active agreements to pay for surface water withdrawals. The money, which totaled just over $300,000 last fiscal year, goes into DNR’s Aquatic Plant Control Fund. Among other findings, the audit report recommends the agreements become mandatory.

In more than a third of the agreements, companies pay nothing for the water. They instead provide an economic impact statement that says their business is a thing of value for the state. The rest pay no more than 15 cents per 1,000 gallons of water — a rate cap Louisiana lawmakers adopted in 2014 based on the price the Sabine River Authority charged at that time for water from the Toledo Bend reservoir, which straddles the Louisiana-Texas border. 

In contrast, Texas charges $4.50 per 1,000 gallons of that same Toledo Bend water, Brown said, pointing out the 15-cent rate cap hamstrings Louisiana from adjusting the price to account for market demand or inflation. The audit recommends legislation to remove the cap. 

Surface water can be regulated by the state unlike groundwater from aquifers, which are typically on private property. The Department of Natural Resources can only limit the amount of groundwater pumped out if a particular area becomes a concern. According to the audit, groundwater and surface water are interconnected because when the availability of surface water decreases in areas prone to drought, it increases the reliance on groundwater. 

Multiple studies stretching back six decades have urged Louisiana authorities to develop a statewide water management plan to determine the amount of groundwater and surface water available and its fair market value, Brown said. Over the years, lawmakers have passed various pieces of legislation to develop such a plan, but several barriers remain. 

The problem with determining a proper fair market value is the lack of data and the absence of a water code in state statutes. According to the audit report, legislators passed a resolution in 2014 asking the Louisiana State Law Institute to draft comprehensive laws that integrate all of Louisiana’s water resources. The Law Institute, which is still working on those recommendations, noted that good water management is dependent on good data on the condition and uses of water, according to the report.

In a post-meeting interview, Commissioner Benjamin Malbrough likewise said the primary barrier in developing a plan is the state’s lack of data. 

“There’s been a lot of talk on this commission about how do we manage our surface water and groundwater resources, and you really can’t do that until you know how much surface water and groundwater you have,” Malbrough said. 

The audit underscores that water-related data collection in Louisiana is fragmented among different entities. Louisiana works with the U.S. Geological Survey and the Louisiana Department of Transportation and Development to maintain a water resource monitoring network that measures high-water points in lakes and rivers, groundwater levels and stream flow.  

There are only 453 monitoring sites as of 2021, down from 960 in 1980. Just 32 of those sites are for surface water. 

The audit notes that the Louisiana Watershed Initiative is working on regional models, primarily to manage flood risk. Once completed, the models will be helpful in creating a statewide water management plan.

In the meantime, the Legislative Auditor recommends legislation to incorporate key parts of the anticipated water code or from the Regulated Riparian Model Water Code — a template issued by the American Society of Civil Engineers in 2004 — rather than waiting for the Law Institute to complete its recommendations.

Brown said the Department of Natural Resources has only two staff members who work on the Surface Water Management Program in addition to their other job duties. As a result, the department is unable to monitor compliance with the terms of the voluntary agreements. 

The report notes that funding for the DNR’s water monitoring program could come from a percentage of usage fee revenues, though that would require legislative approval. DNR’s leaders, who agreed with each of the audit’s recommendations, said they plan to request that funding. 

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