Texas Parks and Wildlife Commission
Conservation Committee Meeting

Nov. 2, 2011

Commission Hearing Room
Texas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744

BE IT REMEMBERED, that heretofore on the 2nd day of November 2011, there came to be heard matters under the regulatory authority of the Texas Parks and Wildlife Commission in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters Complex, to wit:





      13                 COMMISSIONER FRIEDKIN:  First order of 

      14  business is the approval of the previous Committee meeting

      15   minutes from the August 24th, 2011, meeting, which have

      16  already been distributed.  Is there a motion for approval?

      17                 COMMISSIONER HIXON:  So moved.

      18                 COMMISSIONER SCOTT:  Seconded.

      19                 COMMISSIONER FRIEDKIN:  Made by

      20  Commissioner Hixon, seconded by Commissioner Scott.  All

      21  in favor?

      22                 (A chorus of ayes)

      23                 COMMISSIONER FRIEDKIN:  Any opposed?

      24  Hearing none, motion carries.  And at this time -- I

      25  better announce something before I -- so I don't forget

                   Sunbelt Reporting & Litigation Services


       1  you.  I would like to announce that Committee Item

       2  No. 4, regulation of mineral recovery for TPWD Lands and

       3  Committee Item No. 10, proposed land sale in Randall and

       4  Armstrong Counties sale of approximately 2,014 acres of

       5  Palo Duro Canyon State Park have been withdrawn at this

       6  time.

       7                 Committee Item No. 1, update on TPWD

       8  progress on implementing land and water plan.

       9                 MR. SMITH:  Thank you, Mr. Chairman and

      10  Commissioners.  A couple of things.  One, I'm proud to

      11  say you're the proud owners of a new state park site and

      12  that's a wonderful.

      13                 (A round of applause)

      14                 MR. SMITH:  It's a big deal and we're

      15  awfully excited for that to come to fruition and just

      16  want to thank all of you for your support.  Scott and

      17  Ted and Gene and others and The Nature Conservancy who

      18  worked so hard on the acquisition of that site are

      19  certainly to be commended.  A long time coming.  But I

      20  think that once you see that property, you'll certainly

      21  concur that it's every bit worth the wait.  Straddling

      22  the Palo Pinto and Stephens County line.  As y'all know,

      23  it's got just wonderful topography and a lot of

      24  diversity and a lot of potential as we go forward and

      25  really feel like it's going to make a great amenity to

                   Sunbelt Reporting & Litigation Services


       1  the State Park system.  Also, going to fulfill the

       2  promise that we made to the people of Fort Worth four

       3  years ago and I think that's a very important milestone

       4  for this Commission and this Agency as a whole and

       5  individuals and entities and foundations in Fort Worth

       6  that help fund this with the expectation that this was

       7  going to come to fruition.  So we look forward to

       8  celebrating that with all of you on site and something

       9  we want to plan is kind of a donor recognition event and

      10  kind of ribbon cutting to help everybody see kind of

      11  where their investments have gone.

      12                 Obviously, never ever would have been

      13  able to do this without the support of the private and

      14  public philanthropy that came forth from Fort Worth to

      15  make it happen and we're very, very grateful for that.

      16  So a nice milestone in your State Park system and just

      17  wanted to share that with all of you and thank you for

      18  your support and leadership.  We had a lot of bites out

      19  of that apple, and it's nice to see this one be done.

      20                 So the second thing that I want to share

      21  with all of you and certainly the discussion on some of

      22  the coastal fisheries matter, a little discussion on the

      23  Red Tide outbreak that we've had along the coast.  I

      24  think as all of you know, that's a naturally occurring

      25  phenomena on the Texas coast.  We typically see that

                   Sunbelt Reporting & Litigation Services


       1  alga bloom during the late summer and early fall,

       2  primarily though in the lower coast.  I think what's

       3  unusual about this or a couple of things.  One, its

       4  severity.  Secondly, the fact that it's persisted this

       5  long into the fall and beginning of the winter months;

       6  but also that really we're finding and our biologists

       7  and coastal fisheries are finding it from Galveston all

       8  the way down to Boca Chica and so it really expands the

       9  entirety of the coast.

      10                 Certainly, the added salinities in the

      11  bay are helping to amplify this.  You know, freshwater

      12  inflows into the bays are down appreciably and so we're

      13  seeing salinity levels in the bays and the mid and upper

      14  coasts that are, you know, twice their historic levels.

      15  And so, you know, certainly while you know most marine

      16  species can handle that, it is creating issues for

      17  oysters where we're seeing issues associated with

      18  increase in Vibrio, which you know is a parasite on

      19  oysters, oyster drill, which is a predator; but also

      20  this persistence of Red Tide.

      21                 And the accumulation of that in oysters

      22  can create a toxin that can be passed on to humans that

      23  eat infected oysters, neurotoxic shellfish poisoning.

      24  And so yesterday, you know, the commercial oyster season

      25  was supposed to open.  The State Health Services has

                   Sunbelt Reporting & Litigation Services


       1  closed oyster season along the coast for the foreseeable

       2  future and that's a big issue.  We haven't seen that in

       3  a long time.  It's an artifact of a Red Tide outbreak.

       4                 You know, we get asked a lot what's been

       5  the fish kill on the coast.  You know, I think our

       6  coastal fisheries biologists have estimated to date

       7  we've seen about 4 million fish that have been killed by

       8  the Red Tide event throughout the coast.  You know, the

       9  vast majority of those are striped mullet and sardines

      10  and so I'm certainly not trying to trivialize the impact

      11  there, but we haven't seen a big impact.  Recreational

      12  and important game fish, I think they constitute less

      13  than 1 percent of the dead fish that our biologists have

      14  seen.

      15                 And then also, we're not approximating

      16  near the number of fish kills that happened back in '86

      17  and '97, when we had upwards of 20 million fish and more

      18  die along the coast.  So obviously, cold weather helps a

      19  lot with helping to contain and harness Red Tide and

      20  hopefully we'll get some more of that soon and also some

      21  infusion of freshwater inflows into the bays.  But it's

      22  something that our coastal fishery biologists are

      23  watching very, very closely.  Recently completed an

      24  overfly of the coast to look at it and just wanted to

      25  let you know where we're going with that.

                   Sunbelt Reporting & Litigation Services


       1                 So, Mr. Chairman, with that I'll turn it

       2  back over to you.

       3                 COMMISSIONER FRIEDKIN:  Thank you.

       4  Appreciate it.

       5                 MR. SMITH:  Thank you.

       6                 COMMISSIONER FRIEDKIN:  Item No. 2,

       7  summary of conceptual design report for the Battleship

       8  TEXAS dry berth project, Scott Boruff and Rich.

       9                 MR. BORUFF:  Mr. Chairman, Commissioners,

      10  for the record, my name is Scott Boruff.  I'm the Deputy

      11  Executive Director for Operations.  I've got Mr. Rich

      12  McMonagle up here with me, who's the Director of the

      13  Infrastructure Division.  We're here today to brief you

      14  on the latest saga in the Battleship TEXAS project, and

      15  we're going to take a little bit of time to give a

      16  little bit broader background than we normally do.

      17                 Before I get started, I would like to

      18  give a great big staff welcome to Commissioner Jones and

      19  welcome him to the Texas Parks and Wildlife family.  One

      20  of the reasons we're going to give the Commission a

      21  little bit broader background today is to benefit

      22  Commissioner Scott and Jones, who have not had the

      23  benefit of working with the Battleship in their tenure

      24  here and so this is something that's been a part of the

      25  Agency a long time and we want you to be sure you

                   Sunbelt Reporting & Litigation Services


       1  understand the background.

       2                 The Battleship TEXAS was actually

       3  commissioned in 1914.  Had a very storied career in both

       4  World War I and World War II.  Was -- participated in

       5  the landings at Normandy, was part of the battles at Iwo

       6  Jima and Okinawa; so obviously had a very storied

       7  history in those two World Wars.  In 1948, it was

       8  provisionally transferred to the State of Texas, at the

       9  same time that the San Jacinto Battleground was

      10  celebrating its 112th anniversary.  The ship was

      11  directed by the State legislature then to be housed at

      12  the San Jacinto Battleground, right on the Houston ship

      13  channel there.

      14                 It was then in 1975 declared a National

      15  Engineering Landmark, and in 1976 was declared a

      16  National Historic -- or 1977, a National Historic

      17  Landmark.  The reason I tell you some of this history is

      18  that -- and the reason I said provisionally owned is

      19  because the Department of the Navy continues to have

      20  oversight in many bureaucratic regards of this

      21  particular iconic battleship.  It has to approve what

      22  goes on with the battleship.  So even though the State

      23  of Texas owns it, it does so under the auspices of the

      24  Department of the Navy and Mr. McMonagle can talk a

      25  little bit more about that later on if you're

                   Sunbelt Reporting & Litigation Services


       1  interested.

       2                 The battleship was ultimately conveyed.

       3  It originally was overseen by the State of Texas through

       4  a commission called the Texas Battleship Commission.

       5  That commission, more or less, had authority over the

       6  battleship up until 1983.  At that point, the

       7  Legislature sunsetted the Battleship Commission and

       8  moved the battleship under the jurisdiction of this

       9  Commission in 1983.

      10                 So that's kind of the background.  We've

      11  been involved with this battleship really since 1948

      12  because it was on our site, but we haven't had direct

      13  authority over it until 1983.  It's been sitting mostly

      14  in the mud and saltwater that entire time, so 65 or 70

      15  years in the mud and saltwater.  It does have, as I

      16  said, multiple chapters to the saga of trying to keep it

      17  afloat and trying to do the right thing by it.

      18                 This is kind of a 40,000-foot level

      19  picture for those of you that don't -- might not know

      20  where the battleship is.  As I said earlier, it's right

      21  outside of Houston on the Houston ship channel.  This is

      22  a conceptual design, photograph, or rendering that came

      23  out of a 2005 master planning effort which we

      24  participated in or we directed actually.  You can see

      25  where the Battleship TEXAS is moored there down on the

                   Sunbelt Reporting & Litigation Services


       1  lower left-hand side of this particular rendering.

       2                 This is a very complex site.  The reason

       3  I'm doing a little bit of this background is to let you

       4  understand that you can't really envision what's going

       5  on with the battleship without understanding the entire

       6  complex there and so this is the San Jacinto

       7  Battleground.  Obviously, a key iconic site for the

       8  State of Texas.  It's where Texas essentially gained its

       9  independence over Mexico.

      10                 We have two major projects going on in

      11  parallel out there.  The Visitor Center Project has been

      12  underway for a long time.  Many, many years.  I'm sure

      13  Mr. Bass can remember when we started that back in his

      14  tenure as the Chairman here.  We continue to move

      15  forward with that project, and then we also have the

      16  Battleship Project out there.  Probably one of the most

      17  complicating factors is this matrix.  I'm not going to

      18  spend a lot of time sharing with you what each one of

      19  these groups do, but I wanted you to understand the

      20  complexity.

      21                 Clearly, the Battleship TEXAS project has

      22  involvement and bureaucratic oversight in some regards

      23  from the Department of the Navy.  The battle -- I mean

      24  the visitor's center has similar federal oversight from

      25  the Federal Highway Administration because it's funded

                   Sunbelt Reporting & Litigation Services


       1  through a Federal Highway Administration grant.  And so

       2  we're dealing at this site with a lot of moving parts,

       3  with federal bureaucracy overlayed on top of State

       4  bureaucracy and then in the middle you'll see that this

       5  site also benefits from our -- as complexities from the

       6  fact that there are multiple interested parties out

       7  there.  Several of which this Commission formally

       8  recognizes.  The Governor has appointed an advisory

       9  board that gives us advice on this site.  We have at

      10  least three groups that are formally endorsed by the

      11  Commission who are, in one form or another, advisory

      12  groups or friends groups and then we have other

      13  constituents out there who have formed their own

      14  interested groups that may or may not share the agenda

      15  with some of the other groups and so there's a lot of

      16  moving parts.  There's a lot of complexity.

      17                 All these stakeholders don't necessarily

      18  always agree on which direction we're heading.  And so I

      19  wanted you to at least have that background to

      20  understand that before we tell you what the latest

      21  revision of the study that we have just completed is.

      22  And so before I let Rich move forward with this, the

      23  realities of this latest study, I would be glad to

      24  answer any questions.

      25                 This slide here is clearly just some of

                   Sunbelt Reporting & Litigation Services


       1  the applicable federal laws which we are required to

       2  comply with as we move forward and have, indeed, slowed

       3  these projects down.  Sometimes not to our satisfaction.

       4                 COMMISSIONER DUGGINS:  You might, for

       5  Dick and Bill's benefit, go into the State Legislative

       6  directive and the appropriation.  I'm not sure they --

       7                 MR. BORUFF:  We're going to do that in

       8  just a moment as part of the presentation, Commissioner,

       9  and then at the end, we'll be glad to take any questions

      10  if we leave any -- anybody confused.

      11                 This is the background I wanted -- I just

      12  wanted to set the background before we actually get into

      13  the current status of the battleship.  All right, I'm

      14  going to let Mr. McMonagle take it from here.

      15                 MR. MCMONAGLE:  Thank you, Scott.  Good

      16  morning, Commissioners.  As Scott mentioned, the State

      17  of Texas took control of the battleship in 1948.  And

      18  for the next several decades, the ship was in fine

      19  condition.  It had just come off active duty.  There

      20  really weren't any problems.  But by the mid 80s, the

      21  ship was approaching 40 years of sitting in the same

      22  place in the mooring position in the waters of the

      23  Houston ship channel and decay was starting to be seen.

      24                 So in 1988, the ship was towed to Todd's

      25  Shipyard in Galveston to have work done.  It was the

                   Sunbelt Reporting & Litigation Services


       1  first dry-dock period that the ship had since the State

       2  had taken it over.  As you can see, we spent a

       3  considerable amount of money and we were only able to

       4  replace 20 percent of the hull plating.  It certainly

       5  was not without excitement.  It took six hours to get

       6  the ship out of the slip, and then the transit was nine

       7  hours.  Those who participated talk about how water was

       8  coming in faster than it could be pumped out, and the

       9  ship made it into the dry dock with inches to spare.

      10                 Again, we spent a lot of money and it

      11  certainly had an impact on people, that this is

      12  something that we were going to have to do every 12 to

      13  15 years to maintain the ship and as time went on, this

      14  was only going to get more expensive and the risks were

      15  going to only increase.  So if we fast-forward a decade,

      16  by 2000, there were significant leaks in the ship and

      17  the ship was listing.  Again, the pumps could not keep

      18  up with the water that was coming in.

      19                 About this time -- and again, we're

      20  getting ready for our second dry berthing period -- and

      21  TPWD came up with the idea that a dry berth would be a

      22  better solution than continuing to tow the ship to

      23  Galveston.  At the same time, Todd's Shipyard had closed

      24  down and there wasn't a dry dock available in the ship

      25  channel anymore.  In 2005, TPWD hired Orion

                   Sunbelt Reporting & Litigation Services


       1  Construction, who prepared the grading dock preliminary

       2  feasibility study.  It was the first time that the idea

       3  of a permanent dry berth was looked at.

       4                 They gave an estimate of $34.5 million

       5  for a dry berth in 2005 dollars, plus or minus

       6  30 percent.  So we're talking about between 24 and

       7  $45 million is what they estimated back in 2005.  And

       8  based upon that, in 2007 TPWD's Legislative

       9  appropriation request requested money for the repairs to

      10  the TEXAS.

      11                 So moving on to Slide 10.  The

      12  80th Legislature did appropriate $25 million in general

      13  obligation bonds for repairs to Battleship TEXAS.  The

      14  appropriation stipulated that we could not touch that

      15  money until we had done a naval engineering assessment

      16  and provided them a project plan for the project.  Since

      17  we did not have the money, the Battleship TEXAS

      18  Foundation contracted with Proceanic Limited to do that

      19  assessment.  In two thousand -- I'm sorry.  Before I say

      20  that, the -- when we met -- first met with Proceanic, we

      21  provided them these three -- on Slide 11 -- these three

      22  requirements for the dry berth.

      23                 The first two speak to the fact that the

      24  ship is a historic artifact that is at an historic site,

      25  as Scott mentioned, so that we could not alter the

                   Sunbelt Reporting & Litigation Services


       1  nature or character of either of those.  And then the

       2  third requirement deals with our desire for a long-term

       3  solution, so --

       4                 COMMISSIONER FRIEDKIN:  What's a -- the

       5  reversible requirement, is that reversible as in...

       6                 MR. BORUFF:  You've got to be able to

       7  undo it.  You can't do any permanent damage to the ship.

       8  So whatever you do, you can't poke big holes in it and

       9  put new struts across it; so any projects under the

      10  National Historic Landmark Act have to be reversible.

      11  So, therefore, you have to be -- whatever you do with

      12  it, you have to be able to undo it.  Put the ship back

      13  in the water again.  That's --

      14                 COMMISSIONER FRIEDKIN:  So as an extreme,

      15  potentially be able to --

      16                 MR. BORUFF:  I think in theory, the idea

      17  would be at some point if you wanted to refloat the ship

      18  and move it somewhere else or set it up somewhere else,

      19  you would have to be able to do that.

      20                 COMMISSIONER FRIEDKIN:  But to have that

      21  ability.

      22                 MR. BORUFF:  Although, I think you're

      23  going to hear a different perspective once you hear the

      24  rest of the report; but in theory, that's what

      25  reversibility means under the National Historic Landmark

                   Sunbelt Reporting & Litigation Services


       1  Act.

       2                 MR. MCMONAGLE:  Exactly.  And we did

       3  discuss it, and I'll talk about it later.  We did put

       4  additional requirements on that reversibility that we

       5  may want to readdress.  In 2008, Proceanic published the

       6  concept development report.  They said that the ship was

       7  in a suitable condition to support itself out of the

       8  water in a permanent dry berth.  They did, however,

       9  recommend against towing the ship any considerable

      10  distance and, in fact, were not able to give us an

      11  actual cost for what it would take to be able to tow it

      12  extended distance because it was beyond the scope of

      13  their work.

      14                 They did say that the ship could be

      15  safely towed a limited distance in order to pull it out

      16  of its berth or put it back in the berth; but they

      17  defined a limited distance as 1 to 2 miles.  As well,

      18  Proceanic developed four dry berthing options and along

      19  with those options, they provided cost estimates that in

      20  2008 were 23 million to 36 -- a little over 36 and a

      21  half million dollars is what they estimated it at that

      22  time.

      23                 Based upon that Proceanic report, we then

      24  prepared our project plan for the dry berthing of the

      25  Battleship TEXAS, which was submitted to the Legislative

                   Sunbelt Reporting & Litigation Services


       1  Budget Board as required.  In March of 2009, the

       2  Legislative Budget Board approved the plan, approved the

       3  bond financing contingent that the ship be dry berthed

       4  at its current location.  And in that letter of

       5  approval, they also went on to express the intent of the

       6  LBB that the ship would be both safe and presentable to

       7  the public.  With receiving the funding, we went out

       8  looking, soliciting for a designer and in 2010, at the

       9  end of 2010, we selected and hired AECOM, which is a

      10  large and renowned engineering firm to be the designer

      11  for the dry berth.

      12                 Slide 14 is a list of the scope of

      13  services that we requested of AECOM.  And what these

      14  tasks really do are build upon the things that were done

      15  Proceanic.  So for example in Bullet 2, those studies

      16  and surveys are things that had not yet been done; but

      17  we needed that next level of detail to begin to uncover

      18  all of the challenges that would be part of this

      19  project.

      20                 In September of this year, AECOM

      21  submitted their report, the conceptional design report,

      22  to us; and really two highlights or two important areas

      23  within that report.  The first is about the ship's

      24  condition, and the second is their recommended dry

      25  berthing options and the associated estimated costs of

                   Sunbelt Reporting & Litigation Services


       1  those options.  So first, we'll talk about the ship's

       2  condition.

       3                 The upper spaces are in good condition,

       4  and it's really remarkable work that State Parks has

       5  done both in the restorative work and in their

       6  interpretive work in the ship's spaces.  Earlier this

       7  year, we had the Navy captain who leads the inactive

       8  ship program for the Navy tour the ship and he was most

       9  complimentary of the work that they have done on this

      10  ship, recreating the 1945 environment on the ship.  I'm

      11  sorry to say the lower compartments and the deeper you

      12  go in the ship, the condition deteriorates quite rapidly

      13  as you can see from the photos in Slide 17.  A lot of

      14  rust and a lot of wasting.

      15                 And the ship is in worst condition than

      16  it was in 2008, and I want to talk about two areas and

      17  what the impact is for us.  The first area on Slide 18

      18  is the blister tanks.  In the late 20s, the Navy added

      19  blister tanks to the sides of the hull of -- on each

      20  side of the ship.  The purpose was for protection

      21  against torpedoes.  They were attached right to the

      22  regular hull of the ship.  What has happened over time

      23  is that now holes have developed, there's water inside

      24  some of the areas of the tanks so it's holding water,

      25  and the structure that you can see in the drawing there

                   Sunbelt Reporting & Litigation Services


       1  has, in many places, deteriorated.  And the impact of

       2  this is that a tug will not be able to push up against

       3  the hull of the ship, so the ship can't be pushed by a

       4  tug.

       5                 Moving on to the next slide, as well

       6  there are problems with the ship's original structure.

       7  We've always been concerned about the structure of the

       8  ship in a way of maintaining the watertight integrity of

       9  the ship; but what AECOM has found is that the internal

      10  structure that supports the weight inside the ship, much

      11  like a building is supported by its structure, has

      12  deteriorated considerably, too.  Those places outlined

      13  in red are the places of greatest concern.  Especially

      14  in the middle of the ship, kind of down below -- you

      15  know, following down below the word "frame," are the

      16  large spaces that have the heavy equipment, the engines

      17  and the boiler rooms, and so there's great concerns

      18  about the ship's structure in holding all of the ship

      19  together.

      20                 Additionally, part of that structure

      21  creates the structure that goes up to the decks that has

      22  the bollards in which you attach lines to the ship and

      23  if that structure is not there, which it isn't in a lot

      24  of places, those bollards will just break right off.  So

      25  before I said we can't put tugs up against the ship to

                   Sunbelt Reporting & Litigation Services


       1  push it, we also can't attach lines to pull the ship; so

       2  there's a bit of a dilemma there.  So as last spring and

       3  winter as we began to find these discoveries, we began

       4  to have serious concerns about pulling the ship into the

       5  ship channel.

       6                 Our discussions with operators along the

       7  channel, they're greatly concerned about the ship

       8  grounding in the channel and obstructing the channel.  A

       9  billion dollars a day of economic activity goes through

      10  the Port of Houston operations; so needless to say,

      11  there's some concerns there and certainly some risks.

      12                 MR. BORUFF:  We ought to highlight the

      13  fact that we are not considering towing the ship.  I

      14  want to make that perfectly clear.  And, in fact, this

      15  engineering study has, you know, convinced us that

      16  that's the right thing to do.  So even though we use the

      17  word "tow" here a couple times, I think we're absolutely

      18  100 percent convinced now that towing the ship anywhere

      19  is out of the question.

      20                 MR. MCMONAGLE:  And that's exactly right.

      21  So we went back to AECOM and we asked them to discount

      22  any of their options that would cause us putting the

      23  ship into the ship channel.  So in their report, they

      24  proposed four options; and I'll go through those rather

      25  quickly if you want.  We can discuss them, but it's

                   Sunbelt Reporting & Litigation Services


       1  probably not necessary.  Each of these options will

       2  have -- I'm on Slide 20, for example, in Option 1

       3  there's a bulkhead that holds back the waters of the

       4  Houston ship channel.  It's in its current slip.  The

       5  bottom rendering shows the way that the berth will be

       6  constructed in that the ship will be moved forward to a

       7  temporary berth while the slip now is prepared.  In this

       8  option, water will be pumped in to raise the water level

       9  above the Houston ship channel, which will result in

      10  raising the ship about 5 feet higher than it is

      11  presently when it's in its final configuration.

      12                 Option No. 2 on Slide 21 is identical,

      13  except with the lack of pumping in the water to super

      14  flood.  The ship will end up 7 feet below where it is

      15  currently.  And Options 3 and 4 have that same

      16  elevation.  In Option 3, the berth will be excavated to

      17  the left of the ship and the problem with this option is

      18  that the most economical way to do it is to go through

      19  the ship channel rather than pushing it to the side; and

      20  so, therefore, we will not consider this option.

      21                 COMMISSIONER FRIEDKIN:  Which one is

      22  that?  I'm sorry.

      23                 MR. MCMONAGLE:  Option No. 3.

      24                 COMMISSIONER FRIEDKIN:  Three.

      25                 MR. MCMONAGLE:  Yes, sir.

                   Sunbelt Reporting & Litigation Services


       1                 COMMISSIONER FRIEDKIN:  Commissioner

       2  Jones.

       3                 COMMISSIONER JONES:  What's the

       4  difference in Option 3 and Option 2 as to what you have

       5  to do?

       6                 MR. MCMONAGLE:  In Option 3 -- in Option

       7  3, we're going to excavate to the side of the ship into

       8  land that's currently -- well, what's currently land.

       9  And then we would hope to be able to just slide the ship

      10  over; but because of the way the retaining wall and the

      11  bulkhead is going to be built, we have to actually pull

      12  it out into the ship channel and then push it back in

      13  and we thought that that was too great of risk.  Did

      14  that answer your question, Commissioner?

      15                 COMMISSIONER JONES:  I think so.

      16                 COMMISSIONER HIXON:  If you can't tow it

      17  or push it or pull it, how are you going to move it?

      18                 MR. MCMONAGLE:  Well --

      19                 COMMISSIONER SCOTT:  You're probably not.

      20                 MR. BORUFF:  We'll get to the punch line

      21  here in a minute.

      22                 COMMISSIONER HIXON:  Okay.

      23                 MR. SMITH:  Patience.

      24                 COMMISSIONER HIXON:  I wanted to make

      25  sure I wasn't missing anything.

                   Sunbelt Reporting & Litigation Services


       1                 MR. MCMONAGLE:  Option 4 is really just

       2  the opposite of Option 1, which is we would excavate the

       3  berth forward of the ship and then move the ship into

       4  it.  So as a summary, as I said, there were four

       5  options.  Really only three of them are suitable since

       6  those three do not require the ship to go into the

       7  channel.  The estimates from AECOM for these are between

       8  38.2 million and 49.3 million, and these estimates do

       9  not include repairs to the ship.  And at this point,

      10  we're not sure exactly what those costs to the -- of

      11  repairs are going to be.  We're going to have to match

      12  the repairs to what it is we're doing.  Meaning that

      13  we're not necessarily going to want to do all the

      14  repairs, only those that are necessary based on which

      15  dry berth is chosen.

      16                 At this point, we have been unable to

      17  determine even what the cost of determining those costs

      18  are.  The contractors have been hesitant to get involved

      19  up until this point.  So that kind of answers the

      20  question of Commissioner Hixon, which is there will be

      21  repairs.  If we decide we need to push the ship, there

      22  will be certain repairs that make it able to be pushed.

      23  If we need to pull it, we'll make those repairs; but

      24  only those repairs that are necessary.

      25                 So where do we go from here?  We have

                   Sunbelt Reporting & Litigation Services


       1  already informally asked AECOM to look at modifying some

       2  of the constraints we've put on them.  So, for example,

       3  in reversibility, yes, we'll -- we have to maintain the

       4  historic nature of the ship and not reverse that; but

       5  maybe the fact that we'll ask to be able to float the

       6  ship in the future, that the ship would somehow ever be

       7  moved in the future, maybe by easing some of those

       8  constraints we might be able to find some cost savings.

       9  So with those modified berthing solutions, they'll look

      10  at what repairs are necessary and what that berthing

      11  solution will cost and we need to find a combination of

      12  those two that will meet within our budget.

      13                 If there's no solution, no berthing

      14  solution, then we'll look at taking the -- right now,

      15  $28 million that we have to find those repairs that

      16  maximize the extension of the life of the ship.  As you

      17  can see at the bottom of the slide, we are scheduled to

      18  complete the project in spring of 2017.  Right now, this

      19  hold we're in making this decision, isn't going to

      20  significantly affect that.  There is though, as Scott

      21  mentioned, the federal clearances.  We've scheduled 24

      22  months.  Many have told us that that is very optimistic.

      23  It may sound long to you, but many have told us that's

      24  optimistic.  If we have -- if we run into problems

      25  during those clearances, for example, we're required to

                   Sunbelt Reporting & Litigation Services


       1  do an Environmental Impact Statement, we could add

       2  years.  An Environmental Impact Statement could add five

       3  years and a million dollars to the project.  So with

       4  that, I'll turn it back over to Scott.

       5                 MR. BORUFF:  Just to synopsize folks, I

       6  mean the bottom line is in all honesty, you know, the

       7  Legislature gave us $25 million in bonds, which were

       8  approved by the public.  The Battleship TEXAS Foundation

       9  committed to $4 million in funding.  So in total, we had

      10  $29 million that was dedicated for this particular

      11  project, but it was predicated on us doing an

      12  engineering study that told us what it was going to

      13  take.  We thought it would be a wise idea to come up

      14  with a permanent grading solution that took this thing

      15  out of the water so that we weren't having to go back

      16  every decade or so and spend 15 or $50 million or

      17  whatever it was and so that was our idea.

      18                 I think this latest study has dissuaded

      19  us from that belief that we're going to be able to do

      20  that.  We certainly are not going to be able do it for

      21  $29 million.  So we're going to have to go back to the

      22  drawing board now and see what we can do for the 28 or

      23  so million dollars that remains of the $29 million to

      24  extend the life of this ship.  There may be some other

      25  berthing options.

                   Sunbelt Reporting & Litigation Services


       1                 I mean one of the things we're actually

       2  talking with AECOM now is filling that berth with sand

       3  and having some kind of French drain system.  There

       4  again, this is totally unvetted with the engineering

       5  group yet; but those are the kind of ideas that we're

       6  looking at.  Whether we could do that for $28 million,

       7  we don't know.  And so in the worst case scenario, we

       8  believe that what we would do is go back and, on site,

       9  do as many repairs to that ship as we can with the

      10  existing funding that we have to extend its life out

      11  into the future.  We have briefed the Legislative

      12  leadership on this report and the comments that we were

      13  just making to you, they have heard; and we are moving

      14  forward and unless the Commission wants to direct us to

      15  do something different with asking AECOM to put their

      16  thinking caps on and come back with some ideas that are

      17  in budget.

      18                 COMMISSIONER FRIEDKIN:  Scott, if the

      19  constraint of reversibility, you know, is lifted -- and

      20  I know that's a big if -- how do we -- how do we think

      21  that may impact the costs?

      22                 MR. BORUFF:  Well, we think it could,

      23  Mr. Chairman.  How much?  We don't know.  I mean this

      24  idea of putting the ship in sand, which at first sounded

      25  a little unusual to us, actually the more you think

                   Sunbelt Reporting & Litigation Services


       1  about it, it does allow the work to be reversible.  I

       2  mean the fact is you don't have to go in there and

       3  damage the ship.  I mean one of the ideas that was

       4  floated at one time was filling it up with concrete and

       5  that's not very reversible.  And so there again, I don't

       6  think we have a clean answer for you.

       7                 We also have some questions we're going

       8  to be approaching the Navy with, I mean relative to the

       9  whole federal permitting process.  One of the reasons

      10  these four options that you saw were so extraordinarily

      11  expensive is they really require building two dry docks.

      12  One dry dock to move the boat into, the ship into; and

      13  then to build the permanent dry dock and move it back.

      14  So you're essentially building a $10 million temporary

      15  dry berth for this ship and then moving it back.  That's

      16  one of the reasons the cost is up near $50 million.

      17                 Well, when you do that you have impact on

      18  a culturally sensitive site, which requires all kinds of

      19  federal exercises to make sure that you're not

      20  negatively impacting cultural artifacts out there.  It's

      21  our belief that if we're just going to go back -- it may

      22  be our belief that if we're just going to go back and do

      23  repairs on site in the existing berth that has been

      24  disturbed since 1948, that we might not have to go

      25  through all those permitting requirements because we're

                   Sunbelt Reporting & Litigation Services


       1  not going to disturb any new land base.  Now, there

       2  again, there's folks that would argue both sides of that

       3  argument and we're not sure where the feds would fall

       4  out on that argument; but that may be a tactic we use to

       5  try to somehow limit the time frame because time is

       6  money.

       7                 And as Rich said, in the best case

       8  scenario it's about a two-year federal cycle.  In the

       9  worst case, it can be seven years.  So --

      10                 COMMISSIONER FRIEDKIN:  And these cost

      11  estimates are how old now?

      12                 MR. MCMONAGLE:  The last one, sir?

      13                 MR. BORUFF:  The last ones are --

      14                 MR. MCMONAGLE:  Just this month, last

      15  month.

      16                 COMMISSIONER FRIEDKIN:  Okay.

      17                 MR. BORUFF:  The reports were out last

      18  month, September.

      19                 COMMISSIONER FRIEDKIN:  So they've been

      20  adjusted.

      21                 MR. BORUFF:  And ironically, we did go in

      22  2007 to the Legislature, our first LAR request was for

      23  $51 million to just do the dry berthing and ship repair.

      24  So the number has hovered higher than $25 million for

      25  several years.  So I don't think it's realistic now

                   Sunbelt Reporting & Litigation Services


       1  given what we know to think that we're going to be able

       2  to permanently dry dock the Battleship TEXAS with

       3  $28 million.

       4                 COMMISSIONER JONES:  And you -- oh, I'm

       5  sorry.

       6                 COMMISSIONER FRIEDKIN:  No, go ahead.

       7                 COMMISSIONER JONES:  Just by virtue of

       8  comment, you know, you look at something like this

       9  particularly during the economic times we're living in

      10  right now, I wonder if that's the best use of our State

      11  funds given that unless what you do is more permanent,

      12  you're going to be right back here at some point in --

      13  count the years, I'm sure they can -- 10 years, 15

      14  years, doing the same exact thing.

      15                 MR. BORUFF:  Yes, sir.  And that's what

      16  prompted us to come up with this idea back in 2005 and

      17  2006, because we were looking at that.  We had the same

      18  discussion in front of the Commission then.

      19                 COMMISSIONER DUGGINS:  Well, I'll sort of

      20  follow up to Bill's comment.  What is the Legislative

      21  leadership?  What, if anything, do they offer on how

      22  we're going to cover the shortfall?  Because we clearly

      23  don't have enough money to get it done.

      24                 MR. BORUFF:  Well, we have briefed the

      25  Legislative leadership.  We did not ask for any more

                   Sunbelt Reporting & Litigation Services


       1  money.  We didn't think that was a prudent thing to do.

       2  We -- actually, there was language in a letter that was

       3  sent to us that said the intent of the Legislature was

       4  for us to use the $29 million and be done with it.  I'm

       5  paraphrasing, but their intent was clearly for us not to

       6  come back and ask for additional funds for the

       7  Battleship TEXAS.  So in trying to honor that intent,

       8  what we are doing is trying to figure out what we can do

       9  with that money to extend the life and it certainly

      10  won't be a permanent solution; but that is the direction

      11  from the Legislature is to go out and, you know, figure

      12  out what you can do with this $29 million and don't ask

      13  for more.

      14                 COMMISSIONER MORIAN:  May I ask a

      15  question?

      16                 MR. BORUFF:  Yes, sir.

      17                 COMMISSIONER MORIAN:  It's a little

      18  different angle.  Have you looked at what could happen

      19  to this ship?  While we're looking at 27 things about

      20  deadlines because I'm told that the repair people don't

      21  even like to go down below deck because you can stick

      22  your finger through the hull, a hull.  What would happen

      23  if we had a hurricane or another hurricane?  Have you

      24  looked at what could --

      25                 MR. BORUFF:  Yes, sir.

                   Sunbelt Reporting & Litigation Services


       1                 COMMISSIONER MORIAN:  What the impact to

       2  us, the Department, would be if that thing rolls over or

       3  sinks?  I don't know if it can sink if it's in the mud.

       4                 MR. BORUFF:  It's not going to sink much

       5  further.  Some people would argue it's already sunk and

       6  some would argue that it's not.  We've had that debate

       7  internally.  The point is it's sitting on the bottom of

       8  the ship channel.  It's in the mud.  The bottom -- I

       9  don't know -- 6 or 7 feet of the ship is buried in mud,

      10  saltwater.

      11                 COMMISSIONER MORIAN:  Did it float during

      12  Ike?

      13                 MR. BORUFF:  Oh, yes.

      14                 MR. SMITH:  Oh, yeah.  It sits on -- it

      15  sits on monopoles.

      16                 COMMISSIONER MORIAN:  Oh, it does?  It

      17  still is -- the hull is --

      18                 MR. SMITH:  Yeah.

      19                 COMMISSIONER MORIAN:  There's enough

      20  integrity for it to float?

      21                 MR. SMITH:  We had about a foot of

      22  clearance on the monopoles during Ike.

      23                 MR. BORUFF:  We've had discussions with

      24  the Navy about the most catastrophic outcome, which

      25  would be -- and by the way, in the last 12 years, since

                   Sunbelt Reporting & Litigation Services


       1  I've been here certainly, there have been several times

       2  where the ship has taken on so much water that it's

       3  started to list even though it's on the monopoles.  And

       4  so, you know, the staff and Parks and infrastructure

       5  have done a great job of rushing out there and putting

       6  more pumps to work and doing some temporary patches; but

       7  it's getting worse and worse.  And, you know, that was

       8  one of the reasons we thought we ought to get it out of

       9  the water and put it up on a permanent dry berth.  But

      10  having said that, I think the reality is we will

      11  continue to struggle with trying to keep that ship where

      12  it is and the longer we go without some permanent

      13  solution, the more likely it is to ultimately be right

      14  where it is until it has to be salvaged.

      15                 And that's what we're going back to the

      16  Navy to talk to them about because under the rules that

      17  the Navy imposes, it makes it very difficult for us to

      18  come up with creative solutions.  Particularly this

      19  reversibility issue.  I mean one of the things that

      20  we've talked about is possibly going in there and

      21  cutting some holes in the side of the ship and putting

      22  big braces up against it to keep it from listing over,

      23  but that's not reversible in the pure sense of the word.

      24                 COMMISSIONER MORIAN:  Are there any

      25  hazardous materials?  Has everything been taken off of

                   Sunbelt Reporting & Litigation Services


       1  it?

       2                 MR. MCMONAGLE:  No, sir.  In fact, we've

       3  continued to find -- just during this last inspection,

       4  found that there were charged canisters of, you know,

       5  high pressure air on the ship.  There continue to be

       6  things that are found.  When it went into dry dock, it

       7  turned out that there was several thousand gallons of

       8  jet fuel on board.  So there continue to be discoveries

       9  about what's on the ship.  Yes, there are hazardous

      10  materials on it.

      11                 MR. BORUFF:  And there are certainly

      12  areas --

      13                 COMMISSIONER MORIAN:  What exposure do we

      14  have?

      15                 COMMISSIONER FRIEDKIN:  Part of the --

      16  this reversibility constraint, coming back to that.  Who

      17  has -- who has imposed that on this?  I mean which

      18  agency or entity?

      19                 MR. BORUFF:  It's a federal requirement

      20  under the Navy and the -- whoever manages the National

      21  Historic Landmark Act.

      22                 MR. MCMONAGLE:  National Park Service.

      23                 MR. BORUFF:  National Park Service.  We

      24  can get a better answer for you, Mr. Chairman.  I don't

      25  know exactly.

                   Sunbelt Reporting & Litigation Services


       1                 COMMISSIONER FRIEDKIN:  I think that

       2  would be helpful to know.  And then I would just, at

       3  this point, obviously there's a lot of -- we've got a

       4  lot of variables floating around on this and I would

       5  just suggest that you continue to do the good work

       6  you're doing and work with AECOM and try to come up with

       7  the most -- the best solution possible given the

       8  constraints and the environment that we're in and

       9  continue to communicate with the Commission on it and

      10  see if we can drill down a little bit further on this.

      11                 MR. BORUFF:  Absolutely, yes, sir.  And

      12  back to Mr. Morian's question.

      13                 COMMISSIONER FRIEDKIN:  That's a good

      14  question.  What's the timeline on a decision process?

      15                 MR. MCMONAGLE:  I would expect AECOM will

      16  not come back to us until about April.  Although, you

      17  know, they've been floating -- no pun intended --

      18  different recommendations already.  But it's probably

      19  going to be about April before they can do their

      20  thorough study about costs and what options truly are

      21  viable.  So we have several months still.

      22                 MR. BORUFF:  There are -- I don't want to

      23  get into the weeds too much.  There are a lot of

      24  permitting exercises.  One of which we're engaged in

      25  right now, Section 106 permitting exercise.  We went --

                   Sunbelt Reporting & Litigation Services


       1  we started that exercise because we envisioned an option

       2  which now is not going to happen, so now we have to

       3  decide how and if we can get disengaged or whether it's

       4  appropriate to get disengaged from that particular

       5  permitting exercise.  A lot of folks don't want to do it

       6  anymore and some do.  So we will continue to keep you

       7  informed, and I'm sorry for the length of the briefing

       8  here.  It's just a very complex project that doesn't

       9  have a really good solution looking us in the face yet.

      10                 COMMISSIONER FRIEDKIN:  No, I think that

      11  was very helpful for all of us.  And I appreciate all

      12  your efforts.  You guys have put a lot of energy and

      13  work into it.  I just -- I'm having, frankly, a hard

      14  time getting around the variables and trying to circle

      15  back with something that gives you enough specificity to

      16  drive toward a solution; so I think we just need to take

      17  the next step and try to get a little further down on

      18  the final.

      19                 COMMISSIONER HUGHES:  I have one more

      20  question.  How many people visit the battleship

      21  annually?  Do we have any idea?

      22                 MR. BORUFF:  Yes.

      23                 MR. MCMONAGLE:  Somebody has visitation,

      24  but I don't.

      25                 MR. BORUFF:  We can get you that,

                   Sunbelt Reporting & Litigation Services


       1  Commissioner.  Sorry.  I don't have it right on the tip

       2  of my tongue here.  But it's a pretty significant --

       3  there is good visitation out there.  And really, it's

       4  pretty important relative to the mission.  We do bring a

       5  lot of children out there and interpret the history on

       6  that ship.  So it's something that's been, from a

       7  mission perspective, important to us.  It's just an

       8  unusual way for us to -- it's not like most of our state

       9  parks.  It's one of those --

      10                 COMMISSIONER HIXON:  How much of the ship

      11  can they actually be on?

      12                 MR. BORUFF:  Just the very upper

      13  sections.  Nobody, for the most part, goes down into the

      14  sections you saw the pictures of.

      15                 COMMISSIONER FALCON:  Has anybody thought

      16  of just trying to salvage the upper sections, and

      17  creating some kind of different option for the bottom

      18  part?

      19                 MR. BORUFF:  We've certainly discussed

      20  that, Commissioner, yes.

      21                 MR. MCMONAGLE:  And that, of course,

      22  brings in the reversibility aspect.

      23                 MR. BORUFF:  And that was not the

      24  direction we got from the Legislature, to be quite

      25  honest.  I mean we did go back to the Legislature with

                   Sunbelt Reporting & Litigation Services


       1  several of those kinds of options and this was back in

       2  2005, 2007; but we also let them know if that was what

       3  they wanted us to do, we were going to need some

       4  assistance with the feds in order to try to get past

       5  some of these other constraints that were applied to us.

       6  And at that time, the Legislature did what it did and

       7  gave us money and said let's move forward with hopefully

       8  a dry berth, which may not work now.

       9                 COMMISSIONER DUGGINS:  How engaged is

      10  our -- are our Congressmen and Senators on this and have

      11  we kept them posted and are they aware this thing could

      12  fall apart?

      13                 MR. BORUFF:  They're very aware,

      14  Commissioner.  They're very aware, and they know the

      15  tenuous nature of what's going on.  They've all -- in

      16  fact, at one point, we had one constituent group

      17  advocating to move the ship up to Galveston and give it

      18  to the Texas Navy.  All the Legislative leadership and

      19  the local legislators there signed on a letter saying we

      20  don't want that to happen, we want it to say where it

      21  is.

      22                 We've talked to them as recently as

      23  yesterday about the battleship and this latest round of

      24  information that we've gotten, so they're very engaged.

      25  Both at the federal and the state level, they know.  Kay

                   Sunbelt Reporting & Litigation Services


       1  Bailey Hutchison at one point went up and advocated for

       2  some additional funding at the federal level, but was

       3  not successful at that time and that was roughly four

       4  years ago.  So we believe the Legislature, particularly

       5  the Texas Legislature, but also the federal

       6  representatives and senators from that neck of the woods

       7  are totally in the loop.

       8                 COMMISSIONER DUGGINS:  Do they appreciate

       9  the seriousness of the situation?

      10                 MR. BORUFF:  I believe they do.  I think

      11  they understand the realities.

      12                 COMMISSIONER FRIEDKIN:  Any other

      13  questions for Scott or Rich?  Thank you both very much.

      14  Appreciate it.

      15                 Committee Item 3, request for storage

      16  lease, Anderson County, natural gas storage lease at Gus

      17  Engeling Wildlife Management Area, request permission to

      18  begin the public notice and input process, Ted

      19  Hollingsworth.

      20                 MR. HOLLINGSWORTH:  Chairman,

      21  Commissioners, good morning -- good afternoon.  My name

      22  is Ted Hollingsworth.  I'm with the Land Conservation

      23  Program.  This item pertains to a request for a lease

      24  for the storage of natural gas in a depleted gas

      25  formation under a portion of the Gus Engeling Wildlife

                   Sunbelt Reporting & Litigation Services


       1  Management Area.  Gus Engeling is in central East Texas.

       2  The site is almost 11,000 acres.  It's primarily

       3  bottomland hardwood forest.

       4                 The formation or the portion of the

       5  formation for which the lease requested is in the

       6  extreme southern part of the wildlife management area.

       7  Consists of basically two separate units that you can

       8  see in this map totaling about 547 acres.

       9                 Gas storage lease request is something

      10  new for us.  We have not done one in the past.  The

      11  General Land Office has not done one either.  Staff has

      12  done a lot of homework into what is involved.  There are

      13  about 20 in Texas already, gas storage facilities in

      14  depleted -- depleted gas formations.  Essentially, the

      15  purpose is these are coarse sand formations that have

      16  been depleted of gas in the past.  Right now, as you

      17  know, there's a lot of gas being produced in Texas.

      18  There's effectively a glut on the market.

      19                 These gas storage facilities allow gas to

      20  be pumped back into the ground at times when the supply

      21  exceeds the demand and then at times when the demand is

      22  greater or the supply is down, the gas can easily be let

      23  out of the formation and then placed on the market.  In

      24  the case of this particular request, none of those

      25  facilities, none of those injection nor extraction

                   Sunbelt Reporting & Litigation Services


       1  facilities would be on the wildlife management area.

       2                 This is simply a lease of a portion of

       3  that formation.  That particular formation is about

       4  9,000 feet deep where it passes under the wildlife

       5  management area, and the request is for a lease.  It's

       6  not a mineral lease, but it's basically a form of

       7  surface use lease that would allow them to pump gas in

       8  and take gas out of that depleted formation under the

       9  wildlife management area.

      10                 We've been discussing this with the

      11  applicant for about six months now.  Some of the

      12  conditions of that are that none of the facilities that

      13  would be constructed would be within a thousand feet of

      14  the wildlife management area.  The only impact to the

      15  wildlife management area would be that they need to come

      16  on and replug three decade's old abandoned gas wells to

      17  make sure that no gas can escape through those wells

      18  when they start pumping it back into the formation.

      19                 They would improve the roads.  There's

      20  actually short roads leading to those three sites.  The

      21  staff does use those roads to access the wildlife

      22  management area, and welcomes those roads being approved

      23  for that purpose.  There would be a small damage payment

      24  in association with them coming on site to replug those

      25  wells.  There would be an annual lease fee for those 547

                   Sunbelt Reporting & Litigation Services


       1  acres that we would collect in the form of goods and

       2  services.  They would contribute significantly to the

       3  operation of the Gus Engeling Wildlife Management Area.

       4                 And all the other strata above and below

       5  that 9,000-foot seam in which the gas would be injected

       6  and withdrawn, would still be available for lease should

       7  gas or oil or some other mineral be discovered in the

       8  future and should there be an interest in leasing those

       9  other formations.  This lease would only pertain to that

      10  narrow band around 9,000 feet.

      11                 We would propose to go out for public

      12  notice on this, solicit any comments, come back probably

      13  in January with a request for an action if you authorize

      14  us to proceed today.  And with that, I'd be happy to

      15  answer any questions you might have.

      16                 I would add that there are several

      17  hundred of these in North America.  Twenty in Texas.

      18  There is another class of gas storage facilities, and

      19  those are where gas is pumped into hollowed out salt

      20  dome formations.  It's a somewhat different process; but

      21  in Texas, there are 20 that are in depleted gas

      22  formations.  There are several hundred in North America.

      23  To date, there have not been any catastrophic incidents

      24  at any of these depleted field formations in Texas.  The

      25  track record for safety is very excellent with these.

                   Sunbelt Reporting & Litigation Services


       1                 They are pumped up to a pressure which is

       2  less than the pressure the native gas was in at the time

       3  it was removed from the formation initially.  So the

       4  history of that formation containing the gas is

       5  considered to be apparently, by the record, is a safety

       6  check on how much gas can be placed back in that

       7  formation at any given time.

       8                 COMMISSIONER DUGGINS:  Are there any

       9  questions or is there any discussion?  I have one.  What

      10  would be the term, proposed term, of this lease?

      11                 MR. HOLLINGSWORTH:  It would be a

      12  ten-year term.  It would be the same as any of our other

      13  leases.  And the company has proposed that in addition

      14  to the initial fee assessment or easement assessment,

      15  that that be increased annually based on the CPI.

      16                 COMMISSIONER DUGGINS:  And is there any

      17  early termination, proposed early termination?

      18                 MR. HOLLINGSWORTH:  It would be standard

      19  language, only in the event of a breach of the terms of

      20  the easement.

      21                 COMMISSIONER DUGGINS:  I guess my last

      22  question is how close would the operations be to the

      23  boundaries of the current WMA?

      24                 MR. HOLLINGSWORTH:  We have a

      25  representative from the applicant here today.  I don't

                   Sunbelt Reporting & Litigation Services


       1  know their latest engineering and placement plans, but

       2  he is here if you would like to address that question

       3  to -- the gentleman's name -- and he's with Sage Energy

       4  Partners -- is Larry Noble.

       5                 COMMISSIONER DUGGINS:  Mr. Noble, could

       6  you come up, please?

       7                 MR. NOBLE:  Yeah.

       8                 COMMISSIONER DUGGINS:  I don't know

       9  whether you heard my question, but how close to the

      10  current boundaries of the WMA would your operations be

      11  conducted and what types of operations would you be

      12  conducting at whatever that site is?

      13                 MR. NOBLE:  Okay.  The -- I noticed in

      14  your presentation, you had a thousand-foot minimum

      15  standoff; is that correct?

      16                 MR. HOLLINGSWORTH:  Yes, sir.

      17                 MR. NOBLE:  Well, yeah, we would want to

      18  be at -- in that thousand -- as close as we could.  We

      19  have to drill wells directionally and then we have a

      20  facility planned, also.  So it would probably be right

      21  on the borderline of that thousand foot.

      22                 COMMISSIONER DUGGINS:  And what kind of

      23  operations would you conduct at that facility?  Would it

      24  be trucks?  Would it be just pipelines and compressors?

      25                 MR. NOBLE:  It's mainly pipelines and

                   Sunbelt Reporting & Litigation Services


       1  compressors.  There's a -- there's already two gas

       2  storage facilities in the area, right there pretty much

       3  adjacent to the wildlife management area already.  This

       4  is a vessel.  It's called -- it's a salt dome is where

       5  this is located at and there's already two facilities

       6  already permitted and have been operating there for

       7  quite some time and they are the -- they are in the salt

       8  part of it.  We're going into a depleted formation,

       9  which is a little bit located to the sides of the salt.

      10  The salt dome comes up, and that's where they've got

      11  some storage right now.  They've got two big facilities

      12  there right now.

      13                 We're on the sides, on either side of

      14  those facilities.  And ours takes a little more acreage.

      15  Those facilities only take -- I don't know -- 100 acres

      16  or something like that, but -- and then there's also the

      17  Pinnacle Gas Treating Plant, which is located very close

      18  in there also to these operations.

      19                 COMMISSIONER DUGGINS:  How big would your

      20  proposed footprint be?

      21                 MR. NOBLE:  The plan itself would

      22  probably be around -- after all phases, probably 40

      23  acres, 40 or 50 acres.  Starting off it would be, you

      24  know, 10 to 15 acres probably.

      25                 COMMISSIONER DUGGINS:  And do your plans

                   Sunbelt Reporting & Litigation Services


       1  include soundproofing or some sort of sound buffer for

       2  the --

       3                 MR. NOBLE:  Well, yeah.  Your compressors

       4  will be --

       5                 COMMISSIONER DUGGINS:  Aren't they

       6  massive?

       7                 MR. NOBLE:  -- as quiet as we can make

       8  them.  Right.  They would be housed, and probably

       9  quieter than the current ones that are out there.

      10                 COMMISSIONER DUGGINS:  Anybody else have

      11  any comments?  Yes.

      12                 COMMISSIONER SCOTT:  Correct me if I'm

      13  wrong, I think you answered it; but just so that

      14  everybody is thinking along the line I am.  The two that

      15  are existing that are in the salt dome, those are a lot

      16  higher pressure than the ones you're talking about,

      17  right?

      18                 MR. NOBLE:  No, they're shallower.  I

      19  wouldn't think they would be any higher pressure at all.

      20                 COMMISSIONER SCOTT:  About the same

      21  pressure?

      22                 MR. NOBLE:  They would probably be

      23  actually may be in the lesser pressure because they're

      24  much shallower.  They're in the salt.  They've been

      25  hollowed out of the salt itself.

                   Sunbelt Reporting & Litigation Services


       1                 COMMISSIONER SCOTT:  Okay.

       2                 MR. NOBLE:  Where ours -- whereas ours is

       3  down below in the reservoir rock where the gas -- gas

       4  was discovered there in 1956, and these wells have

       5  produced up until -- I mean most of their gas was

       6  produced by the 80s or 90s, and they're basically in a

       7  depleted formation right now.  Very few wells remaining,

       8  if any, like the one producing all that.

       9                 COMMISSIONER SCOTT:  I'm fairly familiar

      10  with the facility down at (inaudible).  You know, those

      11  are pretty gigantic salt dome storages underground and I

      12  thought their pressure would have been -- but you're

      13  right.  You're down at 9,000 feet.

      14                 MR. NOBLE:  We're down at 9,000.  I think

      15  (inaudible) they go to around maybe 4,500 feet, so.

      16                 COMMISSIONER SCOTT:  Makes a difference,

      17  okay.

      18                 COMMISSIONER HUGHES:  Just out of

      19  curiosity, how many BCF do you plan on injecting and

      20  then withdrawing?  Do you know how many BCF?  A model?

      21                 MR. NOBLE:  Right, right.  Initially,

      22  it's about 20 BCF.  Now, we would have some expansions

      23  from there.  The reservoirs initially contained ran 100

      24  BCF.

      25                 COMMISSIONER HUGHES:  Okay.

                   Sunbelt Reporting & Litigation Services


       1                 COMMISSIONER DUGGINS:  If there's no

       2  further discussion, I'll authorize staff to begin public

       3  notice and input process.  Thank you very much.

       4                 Okay, Ted, acceptance of land donation

       5  for Orange County, 111 acres at the Tony Houseman

       6  Wildlife Management Area.

       7                 MR. HOLLINGSWORTH:  Chairman,

       8  Commissioners, my name is Ted Hollingsworth.  I'm with

       9  the Land Conservation Program.  This item and the next

      10  item are both closely related.  Back in May, the

      11  Commission authorized a 20-inch hydrogen pipeline to

      12  cross the Tony Houseman Wildlife Management Area and as

      13  compensation for both federal and state impacts and

      14  impacts to the wildlife management area, we've been

      15  working closely with The Nature Conservancy -- I'm

      16  sorry, with the Conservation Fund to identify tracts of

      17  land adjacent to the wildlife management area that could

      18  be added to the wildlife management area to, again,

      19  offset those long-term impacts to fish and wildlife

      20  resources.

      21                 The wildlife management area is right on

      22  the Texas/Louisiana border inside the city limits of

      23  Orange on the Sabine River.  And these lands come to us

      24  for two different reasons.  This 111-acre tract is

      25  partial compensation to Texas Parks and Wildlife for the

                   Sunbelt Reporting & Litigation Services


       1  easement itself.  The other acreage you will see is

       2  actually to comply with Federal Section 404 Wetland

       3  Regulations.

       4                 This will leave a balance with Parks and

       5  Wildlife of approximately $100,000 that's due and

       6  payable in goods and services for which will be used for

       7  restoration and for operations at the wildlife

       8  management area.  The subject tract, of course, is

       9  contiguous with the wildlife management area.  It's a

      10  good buffer.  It's the last remaining tract between a

      11  neighborhood and one of our boundaries.  Healthy

      12  habitat, suitable for hunting and fishing.  You can see

      13  the tract is bisected by I-10, but you can see both of

      14  those tracts are healthy habitat and do protect and add

      15  to the wildlife management area.

      16                 And staff does recommend that the

      17  Commission consider this motion tomorrow that the

      18  Executive Director should be authorized to accept the

      19  donation of approximately 111 acres of land adjacent to

      20  the Tony Houseman Wildlife Management Area for addition

      21  to the wildlife management area.

      22                 I'll be happy to answer any questions.

      23                 COMMISSIONER FRIEDKIN:  Discussion by the

      24  Commission?  Good.  Okay, no further discussion.  I'll

      25  place this item on the Thursday Commission meeting

                   Sunbelt Reporting & Litigation Services


       1  agenda for public comment and action.

       2                 Item 6, acceptance of land donation,

       3  Orange County, 218 acres at the Tony Houseman WMA.

       4                 MR. HOLLINGSWORTH:  Chairman,

       5  Commissioners, good afternoon.  I'm Ted Hollingsworth.

       6  This item is closely related to the previous item.

       7  Again, because of the nature of the pipeline, there were

       8  requirements to not only offset impacts to the wildlife

       9  management area and related fish and wildlife services

      10  of the wildlife management area, but also to satisfy the

      11  Clean Water Act in Section 404, thereof pertaining to

      12  impacts to jurisdictional water to the U.S., what we

      13  commonly call wetlands.

      14                 The 218 acres being added to the wildlife

      15  management area actually compensates or offsets impacts

      16  to approximately a 25-mile stretch of the pipeline.  We

      17  advised the applicant early on to work with the

      18  Conversation Fund because of the track record they have

      19  in locating conservation lands in Southeast Texas and

      20  the Conservation Fund was able to identify and work with

      21  adjacent landowners to acquire tracts that would

      22  satisfy, again, all of the wetland impacts in the

      23  Texas -- the Texas region of that line.

      24                 Like the previous tracts, these are

      25  contiguous with the wildlife management area.  One of

                   Sunbelt Reporting & Litigation Services


       1  them is almost an inholding.  This cleans up our

       2  boundaries significantly, adds some extremely healthy

       3  bottomland forest to the wildlife management area.  The

       4  land is suitable for hunting.  You can see the

       5  configuration in this map.  And as with the previous

       6  donation, you'll see a motion tomorrow to authorize the

       7  Executive Director to accept that donation.

       8                 And I'd be happy to answer any questions

       9  you might have.

      10                 COMMISSIONER FRIEDKIN:  Questions?

      11                 COMMISSIONER DUGGINS:  A quick one.  Who

      12  owns that finger that goes in above where you have

      13  subject 186 acres?  Who owns that?

      14                 MR. HOLLINGSWORTH:  Well, it's quite a

      15  few small privately owned tracts and you can't really

      16  tell from this picture; but there are already -- there

      17  are already some little homesteads.  There are homes on

      18  that property.  It's high ground.  It's the reason it's

      19  a different color.  Its uplands, and there's a

      20  residential area in there that's been there for decades.

      21                 COMMISSIONER DUGGINS:  And who owns the

      22  water that's just to the south of the proposed --

      23                 MR. HOLLINGSWORTH:  I think all of those

      24  water areas are actually old borrow pits for the

      25  construction of I-10.  That and the adjacent bottomland

                   Sunbelt Reporting & Litigation Services


       1  forest probably would be available and with all the

       2  pipeline activity going on down there and with our

       3  working relationship with those landowners and the

       4  Conservation Fund, you may see that one come -- you may

       5  see that one come in a future recommendation.

       6                 COMMISSIONER DUGGINS:  Thank you.

       7                 COMMISSIONER FRIEDKIN:  Help us through

       8  the subject tract on -- let me make sure that I get to

       9  the -- the one shows with the yellow border suggests

      10  that we already own that; is that...

      11                 MR. HOLLINGSWORTH:  We...

      12                 COMMISSIONER FRIEDKIN:  Is that a fairly

      13  accurate --

      14                 MR. HOLLINGSWORTH:  Yeah, we actually

      15  thought we did own it and when this wildlife management

      16  area was acquired, it was surveyed by TxDOT because

      17  TxDOT has been extracting wildlife credits to offset

      18  impacts from highway projects; but it was erroneously

      19  platted.  And so until the Conservation Fund actually

      20  hired a surveyor to carve out the tract for acquisition,

      21  that surveyor discovered then that there was this

      22  subject 30-acre tract that we thought we owned and did

      23  not.  And the owner -- the owner was not only a willing

      24  seller, the owner donated the tract to the Conservation

      25  Fund and it's now being donated to us.

                   Sunbelt Reporting & Litigation Services


       1                 COMMISSIONER FRIEDKIN:  Okay, thank you.

       2  Any other questions for Ted on this?

       3                 MR. HOLLINGSWORTH:  That was -- that was

       4  one of those that the -- all the descriptions until the

       5  most current round of surveys said, you know, go to the

       6  30-inch diameter gum tree with an X hacked into the

       7  bark -- no, literally, literally.

       8                 COMMISSIONER FRIEDKIN:  Yeah.

       9                 MR. HOLLINGSWORTH:  And then proceed from

      10  there to the, you know, 15-inch cypress tree with an X

      11  hacked into the bark.  And so we had actually, had two

      12  conflicting surveys is what it amounted to.

      13                 COMMISSIONER FRIEDKIN:  Understood, okay.

      14  So I'll place this item on the Thursday Commission

      15  meeting agenda for public comment and action.

      16                 Item 7, request for easement, Ward and

      17  Winkler Counties, water distribution pipeline easement

      18  at Monahans Sandhills State Park, Ted Hollingsworth.

      19                 MR. HOLLINGSWORTH:  Chairman,

      20  Commissioners, I'm Ted Hollingsworth.  I'm with the Land

      21  Conservation Program.  This is the second reading of

      22  this item.  You saw this item in August.  It is a

      23  request from the Colorado Municipal Water District to

      24  add a pipeline to an existing pipeline corridor that

      25  crosses the Monahans Sandhills State Park.  Sort of

                   Sunbelt Reporting & Litigation Services


       1  central West Texas.

       2                 A very unusual park.  These are inland

       3  sand dunes.  The park is located between Monahans and

       4  Odessa, basically.  One of our popular parks.  It's very

       5  interesting.  You can see the sand dune fields in this

       6  ariel photograph and the location of the water line

       7  corridor.  I call it a corridor because a 33-inch water

       8  line was placed in that location in 1971.

       9                 Big Spring, Odessa, which were the

      10  primary recipients of water, have grown in the meantime.

      11  The drought as exacerbated the complications of moving

      12  water to those urban areas and we have a request to add

      13  a 48-inch pipeline basically alongside the existing

      14  33-inch pipeline.  Staff is convinced there really is no

      15  reasonable alternative route for that pipeline except to

      16  use the existing corridor.

      17                 This one is a little bit unusual in that

      18  the park is operated under a 99-year lease from the

      19  Sealy & Smith Foundation of Galveston.  They feel very

      20  strongly about the park and have asked the staff of this

      21  agency to work with the staff of the water district on

      22  terms and conditions and a lease and compensation for

      23  the lease that best protects the State Park, the natural

      24  and cultural resources of the State Park and, of course,

      25  the operations and the public recreation of the State

                   Sunbelt Reporting & Litigation Services


       1  Park.

       2                 A 48-inch line across sand dunes is a

       3  very significant impact and so we've been working with

       4  the applicant for several months now on ways to minimize

       5  not just the structural impact, the impact of the

       6  geology and the sand dune fields, but also the impacts

       7  to wildlife and park operations and we feel like the

       8  applicant is working with us in good faith to do that.

       9  There are some constraints, obviously, on the number of

      10  methods that are available for putting a 48-inch water

      11  line into a sand dune field.

      12                 The Sealy & Smith Foundation is looking

      13  for us to draft that easement upon your authorization

      14  and I anticipate that they will then expect the water

      15  district to honor that easement and the surface use

      16  agreement and the surface use restrictions prepared by

      17  staff, again, upon your authorization for us to proceed.

      18                 Tomorrow, you'll see an action item in

      19  the form of a resolution.  I'd be happy to answer any

      20  questions you might have.

      21                 COMMISSIONER FRIEDKIN:  Ted, at the last

      22  meeting, if my memory serves me correctly, I think

      23  Commissioner Duggins and perhaps a few others had some

      24  questions that we kind of wanted to get our arms around,

      25  the potential impact and I think also possibility of

                   Sunbelt Reporting & Litigation Services


       1  water usage.  Did we -- am I confusing items?

       2                 COMMISSIONER DUGGINS:  No, I was just

       3  looking at the minutes.  That's exactly right.

       4                 COMMISSIONER FRIEDKIN:  Did we get some

       5  clarity on that?

       6                 MR. HOLLINGSWORTH:  Yes and no.  There's

       7  been a -- there's been -- just from my perspective,

       8  there's been a big disconnect between the water district

       9  and their consultants.  And last week we finally had the

      10  general manager for the water district and their

      11  consultants, their biological consultants, their

      12  cultural research consultants, and their engineers all

      13  came here last week and we sat down at the table and we

      14  walked them through the information we would have to

      15  have before we could even draft an easement.  We didn't

      16  have survey documentation.  The threatened and protected

      17  species information that they had provided was

      18  inadequate.  We did not have any engineering

      19  recommendations.  We just really had nothing to go on.

      20                 So we finally sat down with them last

      21  week and walked through the information we were going to

      22  have to have to proceed with drafting the easement.  We

      23  did not discuss the water issue.  I'm now on a good

      24  working relationship with the general manager for the

      25  water district and I will -- I will take that up with

                   Sunbelt Reporting & Litigation Services


       1  him this week and see if there's any possibility of that

       2  line providing the water needs of the park.

       3                 COMMISSIONER FRIEDKIN:  So timing on this

       4  though is -- it's an action item.

       5                 MR. HOLLINGSWORTH:  Well, but the action

       6  item authorizes the Executive Director to allow us to --

       7                 COMMISSIONER FRIEDKIN:  Right.

       8                 MR. HOLLINGSWORTH:  Right.  To forward a

       9  draft easement to the Foundation upon whatever point the

      10  Executive Director and staff are convinced that that's

      11  been negotiated in the best interest of the park.

      12                 COMMISSIONER FRIEDKIN:  Okay.  So I think

      13  given that schedule and the process, I think that's

      14  fine.  And, Ralph, maybe you can get involved in that

      15  just a little bit.

      16                 COMMISSIONER DUGGINS:  I was just saying

      17  to Karen what I would suggest is we -- tomorrow if the

      18  decision of the group is to approve or to go forward,

      19  that we include as a condition of the easement that we

      20  have the right to access the water.

      21                 MR. HOLLINGSWORTH:  I will try and make

      22  that call this afternoon.  I just honestly don't know

      23  with an engineering standpoint the feasibility of

      24  tapping into a 48-inch diameter line.

      25                 COMMISSIONER SCOTT:  That's pretty high

                   Sunbelt Reporting & Litigation Services


       1  pressure.

       2                 COMMISSIONER HIXON:  Is the Sealy & Smith

       3  Foundation a private foundation or a public foundation?

       4                 MR. HOLLINGSWORTH:  It's a private

       5  foundation.

       6                 COMMISSIONER HIXON:  Are they 501(c)(3)?

       7                 MR. HOLLINGSWORTH:  Yes, ma'am.  And they

       8  actually own -- they actually own about 10 miles of the

       9  pipeline route.  They own quite a bit of land contiguous

      10  with the State Park.  It's just that the State Park

      11  encompasses the best of the sand dunes.

      12                 COMMISSIONER JONES:  Do we have a current

      13  need for water at the park?

      14                 MR. HOLLINGSWORTH:  Well, we have an --

      15  excuse me.

      16                 COMMISSIONER JONES:  That's not being

      17  met?

      18                 MR. HOLLINGSWORTH:  No, we do not have a

      19  need that's not being met.  And what I do not know at

      20  this point is if that water that we use in the park

      21  comes from an on-site well or if it's supplied by a

      22  water provider.  I can find out this afternoon.

      23                 COMMISSIONER JONES:  That would be good

      24  information to know before we put conditions on it.

      25                 COMMISSIONER FRIEDKIN:  Yes, absolutely.

                   Sunbelt Reporting & Litigation Services


       1                 MR. HOLLINGSWORTH:  I will find that out

       2  today.

       3                 COMMISSIONER FRIEDKIN:  Okay.  Thanks,

       4  Ted.  Any other questions on this?  Okay.  I'll place

       5  this item on the Thursday Commission meeting agenda for

       6  public comment and action.

       7                 At this time, I would like to announce

       8  that pursuant to the requirements of Chapter 551

       9  Government Code referred to as the Open Meetings Act,

      10  Executive Session will be held at this time for the

      11  purpose of deliberation of real estate matters under

      12  Section 551.072, Texas Open Meetings Act, and seeking

      13  legal advice from the general counsel under Section

      14  551.071 of the Open Meetings Act.  We will now recess

      15  for Executive Session.  Thanks.

      16                 (Recess held for Executive Session)

      17                 COMMISSIONER FRIEDKIN:  Okay, we'll now

      18  reconvene the regular session of the Conservation

      19  Committee at 3:08 p.m.  Regarding Committee Item No. 8,

      20  Chaparral Wildlife Management Area Mineral Operations in

      21  La Salle and Dimmit Counties and Committee Item No. 9,

      22  Cameron County Land Matter, no further action is

      23  required.  This committee has completed its business and

      24  we will move on to the Finance Committee.

      25                 Commissioner Falcon, Chairman Falcon.

       1                    C E R T I F I C A T E

       2  STATE OF TEXAS   )

       3  COUNTY OF TRAVIS )

       4            I, Paige S. Watts, Certified Shorthand

       5  Reporter in and for the State of Texas, do hereby

       6  certify that the above-mentioned matter occurred as

       7  hereinbefore set out.

       8            I FURTHER CERTIFY THAT the proceedings of such

       9  were reported by me or under my supervision, later

      10  reduced to typewritten form under my supervision and

      11  control and that the foregoing pages are a full, true,

      12  and correct transcription of the original notes.

      13            IN WITNESS WHEREOF, I have hereunto set my

      14  hand and seal this Turn in date _____ day of

      15  ________________, 2011.




      19                             __________________________

      20                             Paige S. Watts, CSR, RPR
                                     CSR No.: 8311
      21                             Expiration: December 31, 2012
                                     Firm Registration Number: 87
      22                             1016 La Posada Drive
                                     Suite 294
      23                             Austin, Texas 78752
                                     Job No. 95402


                   Sunbelt Reporting & Litigation Services