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TPW Commission

Work Session, May 25, 2016

Transcript

TPW Commission Meetings

TEXAS PARKS AND WILDLIFE COMMISSION

May 25, 2016

TEXAS PARKS AND WILDLIFE DEPARTMENT
COMMISSION HEARING ROOM
4200 SMITH SCHOOL ROAD
AUSTIN, TEXAS 78744

COMMISSION WORK SESSION & EXECUTIVE SESSION

COMMISSIONER FRIEDKIN: Good morning, everyone. This meeting a called to order May 25th, 2016, at 9:07 a.m. Before proceeding with any business, I think Mr. Smith has a statement to make.

MR. SMITH: I do. Thank you. Good morning, Chairman.

Public notice of this meeting of this meeting containing all items on the proposed agenda has been filed in the Office of the Secretary of State as required by Chapter 551 Government Code referred to as the Open Meetings Act. I would like for this fact to be noted in the official record of the meeting.

Thank you, Mr. Chairman.

COMMISSIONER FRIEDKIN: Thank you, Mr. Smith.

Next order of business is approval of the minutes from the previous Work Session held March 23rd, 2016, which have already been distributed. Do we have a motion for approval?

COMMISSIONER SCOTT: So moved.

COMMISSIONER FRIEDKIN: Okay, Commissioner Scott. Second, Commissioner Duggins. All in favor?

(Chorus of ayes)

COMMISSIONER FRIEDKIN: Any opposed? That motion carries.

Item No. 1, Update on TPWD Progress in Implementing the Texas Parks and Wildlife Department Land and Water Resources Conservation and Recreation Plan, Mr. Carter Smith.

MR. SMITH: Thank you, Mr. Chairman and Commissioners. For the record, my name is Carter Smith. Nice to be with everybody this morning. As the Chairman indicated, I just want to give a brief update on a couple of programs and going-ons inside the Department, make sure y'all are kept apprised of some of the wonderful things happening around the state and with our various divisions.

You know, as a point of departure, let me just say a few words about our Internal Affairs Team. As y'all recall at the last meeting, we indicated that we were on the hunt, so to speak, for a new Assistant Commander for our Internal Affairs and we had a great suite of very talented and qualified candidates for that position. And I'm very pleased to say that Game Warden Mike Durand was selected as our Assistant Commander.

I think I saw Mike in the back in the red tie. You can't hide back there, Mike. Nice try. Wave your hands.

We're excited about Mike joining the team in that regard. When he got out of the Game Warden Academy, he was stationed over in Val Verde County. Went back to the Game Warden Academy as a Lieutenant Instructor there for a couple of years and most recently has been a Captain down in Laredo and so we welcome Mike to the team. He's going to work great with Johnny and Brad and Jon and Patty. So please join me in welcoming him.

The next thing I want to share a few words it about and, you know, I think this is one of the great hallmarks of our natural resources related divisions and that's that real focus on applied science and management and how can we generate and utilize science to make the best possible decisions for our anglers and hunters and our fisheries and wildlife and I'm just very, very pleased that our Inland Fisheries Team and specifically several of our colleagues for the second year in a row, received the Best Scientific Paper Award from the Southern Division of American Fisheries Society.

And their area of research was one that's been of great interest to the Commission on Alligator Gar. As a study, as you can see, on the characteristics and conservation of trophy Alligator Gar population in the Middle Trinity River. It was led by a couple of scientists at the Heart of the Hills Research Station, Dave Buckmeier and Warren Schlechte and Nate Smith. They partnered with Dr. Ferrara out of Nicholls State, but also a professional fishing guide, Kirk Kirkland, who I think personally, Craig, tagged a little over 500 Gar to help make that project work. So it was a great collaboration with the user group. Again, another instruction from this Commission; and we're excited to see our colleagues recognized for their scientific prowess and particularly on a fish that this Commission has been keenly interested in.

Also — oh, go ahead, Vice-Chairman.

COMMISSIONER DUGGINS: Just a quick question. Did — did the proper conditions occur this spring for spawns, like last year —

MR. SMITH: For us to do a close on that? Yeah, Craig do you want to come up and talk a little bit about that? Sure.

COMMISSIONER DUGGINS: Just curious because last year we did the — took advantage of the temporary close during the spawn.

MR. SMITH: Yep.

COMMISSIONER DUGGINS: Seemed like we might do the same this year if it's not too late.

MR. SMITH: Craig?

MR. BONDS: Good morning, Commissioners. For the record, my name is Craig Bonds. I'm Inland Fisheries Division Director.

And, Commissioner Duggins, the conditions for — that we set last year for the emergency rule, were met; but only for a very brief duration. And so we were monitoring those river flows in the Middle Trinity very closely; but as opposed to last year where those conditions were met over several months, it only occurred for just a very brief several days this time. And last year, we had probably a record spawn. Very successful reproduction in that Alligator Gar fishery.

COMMISSIONER DUGGINS: Good.

MR. BONDS: So probably one of the best we've ever experienced. So I think the population is in good shape.

COMMISSIONER DUGGINS: Okay, thank you.

MR. SMITH: Thank you, Craig. Appreciate that.

Speaking of scientific contributions, I'll brag on Craig and his team one more time. At that same meeting, the Southern Division of the American Fisheries Society — which is, again, kind of that regional association of all the professional fisheries biologists and academicians that are working in this realm — our Inland Fisheries Team, along with Mississippi State and Georgia DNR were recognized for contributing the most scientific papers to the Southeastern proceedings on fish and wildlife. So, again, I think we're — they're taking that charge and have been, candidly, for a long time very seriously to produce the best possible applied science to help with y'all making decisions as we manage these important resources.

So kudos to our Inland Fisheries Team, Craig. Proud of all of our colleagues there.

Speaking of leadership and conservation, nice to be able to mention Jeff Raasch, wildlife biologist with our Wildlife Division that some of you may not have had a chance to meet yet. Jeff is really one of our big thinkers inside the Agency. He is known not only throughout the state, but across the country and internationally for his work on waterfowl and wetlands. He's a leader in the joint venture initiative putting together multistate, sometimes international related plans to help conserve waterfowl and water birds. He represents us in many national forums and just does a terrific job.

Jeff was honored at the North American Association of Fish and Wildlife meetings in the spring with the Partners in Flight Conservation Award, which is really an international award for conservation leadership. And so just wanted a second to brag on Jeff and how well he's representing the Agency, not only in the state, but across the nation and really the world.

Y'all have heard a lot about our leased programs, private lands leasing programs to provide public hunting access. You're certainly aware of all of the work that we have to promote public opportunities for fishing on the coast and on the lakes and reservoirs. What we probably haven't talked as much about is some of the work by our Inland Fisheries colleagues to help create more public fishing opportunities in some of our rivers.

And our Inland Fisheries Team launched a project in 2012 to lease private lands to provide access points for bank fishing and wade fishing and kayak fishing and canoe fishing. Started out with leasing seven sites on four rivers across the state. Thanks to an expanded partnership with the Texas Council of the International Federation of Fly Fishers and Keep Texas Beautiful and the support from U.S.D.A., they've effectively doubled that, creating 16 more public lease sites along rivers around the state from the Neches all the way over to the Nueces.

But it's not just about those public fishing opportunities. Also, there's a conservation education piece and there's a habitat restoration component, as well. So our fisheries biologists really try to tie that whole stewardship message together with projects and opportunities and look forward to seeing that growing and expanding in the future.

And so kudos to our team, Craig, for that important work.

That's just a shot of a happy angler. It looks a little bit like Craig Bonds. It may — it may be.

I think y'all are aware — I know you're aware of clearly the historic investments that — and appropriations we've received to help address our infrastructure issues across the state and not just in state parks, but certainly largely in state parks; and I want to talk a little bit about an initiative that our Communications Team has launched working with our State Parks and Infrastructure Teams called "Building a Brighter Future for State Parks" and it really is designed to herald the much needed infrastructure related improvements that we're going to be making across the system, you know, in advance of State Parks centennial that will be coming up very soon before we know it in 2023.

A lot of that work that we're going to be doing now is underground. It's water. It's wastewater. It's utility related stuff, but it's critical to be able to keep the parks open and our visitors safe.

But there are some aboveground things and we kicked off this "Building a Brighter Future" awareness campaign with a project that our Infrastructure Force Account Team concluded at Lockhart State Park and it's the renovation of the old CCC recreation hall. Beautiful old facility sitting up on a bluff overlooking a bunch of farm and ranch land there in Caldwell County. It's been used by generations of families for weddings and family reunions and gatherings. It's a very special place for that region and our Infrastructure Team just did a fabulous job of basically gutting the inside and redoing the bathrooms and the kitchen and the flooring and the ceilings and the access really from top to bottom. And we had a ribbon cutting ceremony with the Mayor and the Caldwell County Judge and other dignitaries and excited to be able to kick that off. Y'all are going to be hearing more about these opportunities as we go forward and want to encourage the Commission to try join us in places where we you can.

We've also had a chance to visit with y'all a little bit about the Farm and Ranch Land Conservation Program that has moved over to the Department from the General Land Office. I'll remind you that Commissioner Morian was appointed by Chairman Friedkin to serve as the chairman of this council, which is made up of leaders from the agricultural, the private lands, and the conservation communities. And the program is really all about acquiring by purchase voluntary conservation easements to protect working farms and ranches and all of the attendant values that come with that — water quality, water quantity, open space, wildlife habitat, all the things we care about as a state.

Chairman Morian has done a terrific job leading that program. We've had a lot of interest in it. They have awarded almost $2 million in grants to acquire seven conservation easements on over 15,000 acres. The $2 million in State dollars have been leveraged eight to one. So really good leverage for this program. And, again, it protected important ranch properties, farm properties in North Texas, West Texas, Central Texas, and the Gulf Coast and we're real excited about that and I want to turn it over to Chairman Morian and just see if we wants to say a few words about the program itself.

COMMISSIONER MORIAN: Well, it's just turned in to a very interesting project. We had wonderful committee, and we had some fantastic projects. We ran out of money before we could fund all the worthwhile projects; but hopefully it will grow, and we'll see this expand. I hope so, anyway.

MR. SMITH: Yeah, absolutely. Well, thank you, Chairman, for your leadership. We've gotten great feedback from the agricultural community on the progress to date and excited about where this is going in the future.

Last thing I want to share with the Commission and I — y'all have certainly heard me say that my perspective is that your Parks and Wildlife staff shines the brightest when times are the darkest and there is no doubt that when dark times befall our state, our State game wardens do just an extraordinary job in terms of disaster relief and emergency response and it oftentimes goes unnoticed and unheralded. I know all of you know how critical that work is and what it means to families and communities that have been impacted so hard by severe weather events.

And I just wanted to share with you a few of the statistics, some of the numbers behind these amazing stories and you get a sense of them here in terms of rescuing kids and families and pets and so forth. In the March flood events all over the state, but certainly very pronounced on the Sabine River over in Deweyville where the whole community had to evacuated, we deployed over 188 — 108 game wardens to help with emergency response. They participated in almost 150 search and rescues; 235 evacuations; 1400 welfare checks, just going around and checking on people in remote areas to make sure they were okay; 38 boat assists; and nine medical assists. Just absolutely extraordinary working in very, very dangerous and dynamic situations, to say the least.

In April, we had the big flood events in and around Houston primarily; but also in other parts of the state. Once again, our Law Enforcement Team rose to the occasion. We had a little over 40 game wardens deployed on emergency response, search-and-rescue teams, swift-water teams, etcetera. They participated and led 171 search-and-rescue related operations, 97 evacuations, 240 welfare checks, and also recovered the body of a deceased individual, as well. And so I just want to publically acknowledge that service which is so important to communities and the people around our state and when people need help, our folks come and be proud of that.

With that, Mr. Chairman, that concludes my Land and Water Report; and happy to answer any questions that you or the Commissioners may have.

COMMISSIONER FRIEDKIN: Thank you, Carter.

Any questions for Carter?

Thank you.

MR. SMITH: Thank you.

COMMISSIONER FRIEDKIN: Item 2 is a Financial Overview, Mr. Mike Jensen. Good morning.

MR. JENSEN: Good morning, Commissioners Chairman. I'm Mike Jensen, Administrative Resources Division Director. I have a briefing for you this morning to summarize the top three fee revenue streams for the Department, where we're at through April; the adjusted budgets; and an update on the strategic plan process and initial comments and briefing on the Legislative Appropriations Request.

If you recall, changed the format slightly back in March and I want to stick with that format today just so that you get a perspective looking backwards to see what the cyclical nature of our fee streams are. With State Parks, our strongest months are typically the summer months and spring break. And first six months accounts for about 39 percent of the revenue, and the last six months accounts for about 61 percent of the revenue. This is the prior fiscal year, just so you can see the cycle. In the past five years or so, July has typically been the best month. Spring break, the month of March, has been the second best month. And June has been the third best month and typically, those three months account for about a third of the revenue. And for this particular — for the end of the prior fiscal year, that's about 15.4 million.

During the course of a year, entrance fees account for about 33 percent of the revenue; facilities fees, 37 percent; concessions, 12 percent; park passes, 17 percent; and miscellaneous fees about 1 percent.

Here's where we are this fiscal year through April. The trends are fairly good. In fact, March, this spring break was a record month. It was 6 million, about 80,000, about a million more than the prior fiscal year; and the prior fiscal year was a very good month. And April is doing well. We only had two poor months, the months of October and November; but the months of September, January, February, March have been very good. April slowed down a little bit, but we're about to enter the summer months. So we're going to see where this revenue stream takes off.

Looking back at the prior four years, you can see that in current fiscal year, we're at 30.54 million. If you go back to fiscal year '12, we're about 40 percent — actually, 35 percent higher than that. That's about an 8 million swing in four years, which is very good. Compared to '13, we're about 19 percent ahead; '14, about 17 percent ahead. Compared to last year for the same period, about 11.4 percent ahead, which is 3.13 million.

The next slide gives you just the two-year comparison. You can see that we're at 30.54 million in fee revenues through April compared to last year, that was 27.14 million. So the receipts are up 11.4 percent, 3.13 million.

This slide shows you the variances. The entrance fees are up 16.3 percent, facilities are up 10.3 percent, concessions are up 22.1 percent, park passes are about even, and miscellaneous is down 12.2 percent; but that does not account for very much revenue. If you look down at the bottom of this slide, you can look at the visitation. Total visits are up 12 and a half percent, and paid visits are up about 14.4 percent. So you can see, again, revenues are ahead 11.4 percent, 3.13 million. With respect to visitation, if you look backwards, we're about — for paid visits, we're about 14 percent better than '15; about 20 percent better than '14; 16 percent better than '13; and about 22 and a half percent better than fiscal year '12.

COMMISSIONER DUGGINS: Mike, what's the difference between total — visits that's under total versus paid? I thought everybody had to pay.

MR. JENSEN: They allow school to come in for — well, Brent, do you want to come up and address that? You're better to address that than me.

MR. LEISURE: Yes, sir. Brent Leisure, Director of State Parks. Mr. Vice-Chair, we have a number of people within the visitor — total visitors of state parks that are not subject to fees and as Mike indicated, children that are 12 years or older are not — we count them in our total visitation counts, but they — but we don't collect a fee from them. It's — park entry is free.

COMMISSIONER DUGGINS: The reason I guess the difference is under total, those are people who are exempt from payment of the entrance fee?

MR. LEISURE: That's right. That's right. And in addition to children 12 and under, we also have seniors that have either a discounts or full free entry, depending on their age.

COMMISSIONER DUGGINS: Thank you.

MR. JENSEN: Boat revenue is another important source of revenue. It's a Fund 9 stream and the Fund 9 is the Game, Fish, and Water Safety Account that's used for most of the resource divisions to fund them. Looking back at the prior fiscal year, you can see about a 21.7 million total collection. That is compromised of sales tax. It's about 12 percent of the stream. Title fees are 20 percent, but the largest source are registration fees for boats. It's about 68 percent during the course of a year.

It's important to note that that sales tax, it's a small amount. On this slide, if you add all the sales tax up, for Parks and Wildlife that just reflects 5 percent of what's collected because statutorily, that's what we're allowed appropriation authority for our Department. The Department actually collected almost $54 million in sales tax for boat transactions the prior fiscal year, but we are only allowed to retain the 5 percent. The other 95 percent goes to the Treasury and General Revenue.

The boats, the first six months is a slower period, about 29 percent of the revenue comes in. The last six months, 71 percent of the revenue. The best months are about to happen, June and July; but April is typically a very strong month. Most of those months are about 13 and a half percent of the fees that are collected. If we look to where we are today in this fiscal year, you can see basically every month has been better than the prior fiscal year, with the exception of April; but April has historically always been a strong month. We didn't fall that far behind. September was a very strong month. It was 15 percent ahead of the prior year, 218,000. March was about 23 percent of the prior year. It was about 455,000. So year to date, we're 8.8 percent ahead, 984,000 ahead.

If we look at the prior four fiscal years through April, we had 12.146 million or 12,146,000. That's about 9 percent better than the prior fiscal year; 10 percent better than '14; 12 and a half percent better than '13; about 10 percent better than '12. A quick two-year comparison, you can see we're at 12.146 million compared to 11.162 million in fiscal year '15. That's 8.8 percent improvement, almost $1 million ahead.

And the variances are listed on this slide. You can see that sales tax is ahead 15.4 percent. Titles are up 12.4 percent. Boat registration fees are up 6.6 percent. And the bottom half of that slide shows you some volumes. The total registrations are up 7.1 percent. Out of that, new registrations are up almost 13 percent. Transfers are up almost 13 percent, and renewals are up 5 percent. Titles are up 12.2 percent. And as I mentioned before, the total sales tax year to date, we've collected 31.05 million; but the 5 percent that we retain is on this slide up at the top, 1.55 million.

And in March, we had mentioned to this Commission that each month, 15 percent of these fees are transferred into the State Parks Account. So, so far year to date, 1.67 million of this 12.146 million has been transferred into the State Parks Account.

License revenue has a much different cyclical trend than the state park revenue and the boat revenue. In fact, about 43 percent of the revenues come in when the license year begins at the end of August through September. You can see that's the — it makes it difficult to actually read some of theses slides. So I don't put the numbers in them because it would be so compressed because of that. The best month, of course, is September, followed by October and November; and that's due to hunting seasons.

But you can see the last half of the year, we do very well with fishing license sales. During the course of a year, you're going to have about 32 percent of the revenues as residential fishing. About 4 percent of the revenue is nonresident is fishing; 10 percent for residential hunting; 10 percent for nonresident hunting; and the combos account for about 34 percent of the revenue; other license types are 8 percent; and the lifetime licenses are about 1 percent.

Here's where we are year to date this fiscal year. You can see out of the 89.84 million, again, the best month is September; but on a month-to-month comparison, November was very good. We were ahead by 1.46 million that month. A lot of that was attributed to nonresident hunters coming to Texas to hunt. The month of February was exceptional. It was actually 48 — 48 percent higher than the prior year. Most of that was attributed to fishing sale — fishing license sales, 1.7 million ahead of the prior year. Again, most of the revenue was generated the first half of the year. The remainder this year is going to be primarily attributed to fishing license sales.

We're at 89.84 million through April. Compared to fiscal year '15, we're about 5.3 percent ahead; compared to license year '14, seven — 8 point — 8 percent ahead; about 10 percent ahead of license year '13; about 12 percent ahead of license year '12. We're 4.56 million ahead of the prior year, which is about 5.3 percent improvement.

And the variances are listed on this slide. If you combine fishing, resident and nonresident, we're at 14.4 percent ahead, which is 3.12 million. Combining resident and nonresident hunting, we're about half a percent ahead; about 84,000. Combination licenses are ahead 39 percent, 1.35 million. And I mentioned to you before, I've added this slide just for information. The lifetime licenses truly are not deposited in the Fund 9 Account. They have their own account. It only accounts for about 1 percent of the revenue. So it's not a big swing. But if there were ever a fee increase, you'd probably see a huge — like seven — six years ago when we had a fee increase, the lifetime licenses really spiked up. So I like to segregate that so you can see the impact to Fund 9 cash balances as opposed to growing the lifetime license endowment.

With respect to the budget, through February 29th, 2015, which was approved by the Commission at the last meeting, the budget was 593.66 million. We have four adjustments. The main one being federal and UB of 8,950,000. That includes 5.4 million for Land/Water Conservation funds; a million and a half for State wildlife grants, we call that SWG; wildlife restoration funding of about a million dollars; and sport fish restoration of 652,000.

The second line item represents appropriated receipts in UB of 685,000. The third line item is construction UB, which is unexpended balances movement forward. The final item is just trueing up the actual employee fringe and unemployment costs of 472,000. So our adjusted budget is 603.85 million.

Quick update on the strategic plan. The instructions were released in April, April 6, which was actually after the last briefing. Michael Goldsmith did brief this Commission about the strategic plan, and the instructions did change significantly. However, basically the strategic plan that the Legislature wants to look at, they want to look a 20 to 30 pages of what they consider the core portion of the plan, which has our mission, goals, and action plans and our action plans are tied to our performance measures that we have with the Legislative Budget Board and they're also tied to the Land and Water Plan.

And then there's this section called "Redundancies and Impediments," and they're looking at four primary things — those things that might impair competition. Those things that impose an excessive burden or regulatory costs. The third thing is anything that could result in economic inefficiencies, and the fourth item were those activities that are permitted by another — or that are performed by another agency. And this kind of ties into the concept of a zero-based budgeting where you look at things that are redundant and things that are inefficient, and I'll get to that in a later slide.

Today, an actual draft was released to the Executive Office to review of the strategic plan that complies with the instructions. Many of the supplemental items that are in the strategic plan were in prior versions and prior instructions. So those haven't changed. There will be a budget structure, performance measures with definitions. There's a HUB plan, a workforce plan, and there's a report on customer service that are historically included.

With respect to the Legislative Appropriations Request for the Department, since we have some new Commissioners here, this is what we will submit to Oversight, the Legislative Budget Board, which collects this on behalf of the Legislature and the Governor's Office. It highlights for them what our base budget is in this current biennium and the impact, if any, Rider provisions to our budget, how it increased it, and the impact of any legislation to our budget. The instructions have not been released yet. We expect those in June. Base reconciliation is due June 23rd. What that really does, it looks at this year actual expenses, where we're at; and it looks at where we expect our budget to be in '17. And if we get any limiting instructions from the Legislative Budget Board or the Governor's Office, then we factor that in, as well. So we'll turn that in according to the instructions in June.

The actual Legislative Appropriations LAR, the full submission isn't due until mid-August; and that due date will be published when they give us the instructions. And that's pretty — a pretty large project. It involves all the divisions working together so that we can allow the Legislature to compare our Agency apples to apples with other agencies. It's a pretty extensive project where we compare by strategy, by goal, and the different types of costs; and we use the strategic plan to help guide the LAR development.

I mentioned previously the concept of zero-based budgeting. All State agencies were invited to a briefing by Senator Nelson, who is a probable Chair for the Senate Finance Committee. They wanted to talk about how things were done in the past. I just mentioned to you the base reconciliation. That process is primarily driven by this first bullet that you see on here. That's a method of budgeting that the State uses. It's an increment — incremental method where basically you look a prior expenses as necessary and justified and you use that as a starting point for additions or deletions. And when we have this written document, the LAR submitted and we meet with the Legislature, the Legislature is also looking at — in its toolbox — program budgeting, performance budgeting. That's why our bill pattern has performance measures. Those things are built into it.

Historically, they haven't given a lot of focus to zero-based budgeting because if you can — if you look down below on the lesson from Georgia, it's extremely labor intensive. It's cost intensive. It's time intensive. So it's not practical to do a pure zero-based approach. So in their state what they learned, they limited the quantity of reviews to something that's manageable and they use a third party. They use their Governor's Office. Our State is going to probably use a combination of the Legislative Budget Board and the Governor's Office. And they established clear expectations.

Yesterday, they announced the 16 agencies that were being selected for this session; and our Agency is that not part of that list, which I'm pretty happy about. I hoping you're as happy as I am because it's very, very labor intensive. When we had a briefing from Georgia who does this, they admitted and they acknowledged that there is value to zero-based budgeting; but it may not always be reflected with cost savings or efficiency gains.

The way I look at this, the way the State's going to handle this, even if we're not part of this 16, they're going to take that approach during subcommittees and asking us to take a diaper deeve — a deeper dive when we present information. They're going to want to have more discussion and justification for our programs and how to measure those. So they — she — Senator Nelson was very clear that we're not just going to do what we've done in years when the budget has been good. You can't just have that incremental approach with some components of program or performance. We all have to be prepared for that deeper dive.

With that in mind as we approach staff, typically we'll submit our LAR. It's collected in a database from the Legislative Budget Board and then we'll have staff that work for Oversight, will meet with them in the fall — typically, September. We get an initial opportunity to state what we believe our base is and to talk about the different things that have been done for us. That gives us our first opportunity to acknowledge what the Legislature did for us. We can acknowledge the sporting goods sales tax and where we're at with that and the deferred maintenance; the local park grants, how we've awarded those out. We can state park operations. We can look at the Fund 4 — 64 appropriations for Palo Pinto planning and where we're at with the State Parks business system replacement and where we're at with minor repairs. We can look at what we've done with aquatic vegetation, what we've done with invasive species control; and we'll ask — we'll be asked about what we've done with Law Enforcement participating on the border. We'll be asked what we've done with the Battleship, where we are with the Texas Farm and Ranch Land Program, and many of the projects that are really outside the Treasury, the BP settlement funding. We do execute many things that are relevant to our Agency's mission, but those funds are really outside of the Treasury. So they're going — they always have keen interest in that. We have reporting requirements on all of those things. So we expect some adverse impacts on the biannual revenue estimate —

COMMISSIONER DUGGINS: Mike — Mike, before you move to that. Under the Fund 64, when you say State Park business system, is that the replacement of the reservation system —

MR. JENSEN: Yes, sir.

COMMISSIONER DUGGINS: — you're talking about?

MR. JENSEN: The current one we call TexParks. There's a solicitation out right now, a request for offers.

COMMISSIONER DUGGINS: Okay. I just wanted to make sure we focus on that.

MR. JENSEN: We're hoping we get great responses to that so that we can move forward. We have a very tight timeline on that one.

I think many of you are very astute business people. You're aware of oil and gas in Texas. So we're expecting a constricted legislative session. So it's — we're going to have to demonstrate good stewardship with what they've given to us in this biennium and be able to show them what we've done with it. We can't just show up saying, "Here's what we need." We need to proactively offer them strategies that are rational and logical, that make sense to Oversight to fulfill our mission.

As I mentioned, it's going to be tight. We have not received any limiting instructions so far. In prior years when it was tight, they would do a two and half percent reduction, 5 percent reduction, 7 and a half percent reduction during LAR preparation or during the months leading up to a legislative session. We have not received any instructions like that, but there's a possibility that we could receive instructions like that.

We have opportunities with the base reconciliation to look at some statutory changes. We look at where the cash is available. I'd mentioned on the boat fee report that each month we transfer 15 percent of that Fund 9 revenue into the State Parks Account. This may be an opportunity in this session to change that statute, just make it permissive. Instead of "shall" transfer, "may," so that we can retain those cash in Fund 9. Right now, there is a projected Fund 9 shortfall long term.

We can look at the lifetime license endowment. At the end of this biennium, it's projected to have a $28 million balance. There might be opportunities there to get a sponsor for bill to change the statute to be able to reach at least the revenue stream that we expect on an annual basis. It's anywhere from a million to 1.5 million per year that comes in. Or we could look at that for one-time opportunities for capital type purchases. We can look at some of our dedicated funds like the freshwater stamp fund, maybe open that up for very specific Inland Fisheries uses. We can look at method of finance opportunities when we do the base reconciliation. For example, you're aware that this biennium, the Department received general revenue for an aquarium. So there's authority in our budget that can be shifted based upon where the cash is.

These are strategic things that are currently in play that we're discussing. We can look at some of the local parks, had 1.25 that was in general revenue. That's authority in our budget that we can see where most strategically to place it. We have the planning portion for the Palo Pinto, 2.7 million that we're able to get appropriated to the Department. So that's authority in the budget we can look at. You had some local parks, Fort Boggy, about 500,000; Franklin Mountains. If that's not encumbered — if that is encumbered, we have authority to look at that we can shift; and we have some authority that we can look at with respect to our funding for capital.

So we have lots of opportunity, lots of discussion. We discussed these last week at a Department retreat with the different division directors. We talked about cash restraints. We talked about opportunities for statutory changes, and that was just the start of a discussion that's going to continue throughout the summer. We don't yet have the instructions for the LAR. When we do, I anticipate that Carter will be in regular communication with the Chair and Vice-Chair to get information out to each of you, Commissioners, as to where we are with the LAR because basically we've got to build the base. We understand we've been told that we can't just anticipate an incremental approach. We have to be prepared to justify our programs, justify the performance, the measures that we have, and be prepared to — when asked — to provide a zero-based type analysis.

To me, a zero-based type analysis is very similar to what the State does for sunset; but when the State does sunset review, they're just looking at policy. They're looking at statute. They never look at funding. So this kind of takes the next step. It looks at policy, statute, and ties it to funding. Are we doing what we need to do, or do we have the funds that we need?

This is the information that I have for you. Hopefully, it was helpful for you. If you have questions regarding the fee streams, strategic plan, or LAR, I'd be happy to try to answer them.

COMMISSIONER FRIEDKIN: Thanks, Mike.

Any questions for Mike?

Appreciate all your efforts. Appreciate it. Thank you.

Okay. Item 3 is Internal Audit Update, Ms. Cindy Hancock.

MS. HANCOCK: Good morning. For the record, I'm Cindy Hancock, Director of Internal Audit; and I'm here today to update you on the completion status of fiscal year '16 internal audit plan and ongoing or completed external audits.

Since my last update in March, we've not issued any reports. However, we're close to issuing several. The fuel card transaction audit is in the reporting stage, and we just received management responses. So that one will probably be issued next Tuesday. The data integrity audit of our boat registration and titling system has moved in reporting stage, as well as the grant audit.

The property audit is in the fieldwork stage, and we've started fieldwork on the travel voucher audit. The follow-up audit is ongoing throughout the fiscal year; and to report on the follow-up audit from March into April, of 14 internal audit recommendations we reviewed, six were implemented. Of the eight external recommendations we reviewed, five were implemented. This leaves five external and 22 internal recommendations in progress as of the end of April.

As far as any ongoing or closed external audits, the Department of Interior Office of Inspector General is conducting a U.S. Fish and Wildlife federal grant audit. This is ongoing. It's been ongoing for a long time. I think I've reported on this now for almost two years, but we still have not seen the final results of that audit. At any rate, that concludes my presentation. If there are any questions, I'd be happy to answer.

COMMISSIONER JONES: Couple of comments. Again, I want to highlight something. So there were, according to the audit report, three audits where the implementation date changed; but all of those related to the HR/IT issue, correct? I mean —

MS. HANCOCK: That's correct.

COMMISSIONER JONES: — all of those were related to the similar issues relating to HR and them trying to get the IT portion of the audit —

MS. HANCOCK: Correct.

COMMISSIONER JONES: — done?

MS. HANCOCK: Yes.

COMMISSIONER JONES: Okay. But as for everybody else, things that were implemented or that were asked to be implemented by a date certain, were actually implemented by those dates, right?

MS. HANCOCK: Yes.

COMMISSIONER JONES: What Mike said earlier is coming home to roost for next session because I think — I want to encourage everyone to continue doing what we do when the audit reports come out, when the implementations of those reports come out, we want to be able to justify what we're asking for and saying that we're taking care of the State's resources appropriately. And so this is a — it's a kudos to everyone in implementing the audit reporting issues; but it's also a heads up, let's be on our best game for the next several months because they're going to ask those questions: What are you doing with the resources and how are you monitoring them and making sure that you're using State resources appropriately? And this audit report indicates that we are doing that, and we are implementing the requirements set out in reporting issues that we spot during our audit reports.

MS. HANCOCK: And during the legislative session, which will start in January, I always caution management to put their implementation date in — out there in mind, thinking there's a lot of extra work that's required during the session. And so that takes up time and, of course, they would need more time to implement my recommendations. But so we'll go forward and see what happens, but I'm very pleased with what we've done so far.

COMMISSIONER JONES: Okay. As are we.

COMMISSIONER DUGGINS: Any other comments? Questions?

I want to thank Commissioner Jones for the special attention he pays to the audit function and working with you, Cindy. It's very helpful to have a very strong and keen set of eyes, as I said, paying special attention. Thank you very much.

MS. HANCOCK: And it's very appreciated. Thank you.

COMMISSIONER DUGGINS: Okay.

COMMISSIONER JONES: Y'all only have to put up with me for another eight more months. Y'all only have to put up with me for another eight or nine months; and then I'm done, so.

COMMISSIONER DUGGINS: That's not — I don't accept that. I'm not letting you get away.

Work Session Item No. 4, Briefing on Statutory Rule Review Process, Ann Bright, our General Counsel, please make your presentation.

MS. BRIGHT: Good morning, Commissioners. I'm Ann Bright, General Counsel. Hopefully, this will be the shortest presentation you hear all day. Every — we are required by the Administrative Procedure Act, it's a State law, to review all of our rules once every four years. It has to include an assessment of whether the reasons for the rules continue to exist. We're required to publish actually a rule review plan and then notice that we're reviewing the rules in the Texas Register and then after the review is completed, we either readopt, adopt with changes, or repeal the rule based on the review.

Usually, we do this in a three-meeting process. The first meeting, we'll notify the Commission that we're beginning the rule review process. This will probably occur through the Land and Water updates that Carter does. In the second meeting following the review, if there are any changes that we identify that need to be made in the rules, we'll request permission to publish those in the Texas Register. And in the third meeting after receiving public comment on those rules, we will request public — I mean, adoption and then basically adoption of the rule review.

This is the schedule. This is the schedule we've used for — although the dates are different, but it's essentially the same schedule we've used for a number of years. So we're going to begin this first — our first little bit of reviews with the Executive, Wildlife and Fisheries, Law Enforcement, maintenance reviews and design and construction. And that concludes my presentation, and I'm happy to answer any questions.

COMMISSIONER DUGGINS: No questions? Comments?

All right, thank you.

With regard to Work Session Item No. 5 on Nonresident Disabled Veteran Super-Combo Sunset Date, does any Commissioner have any questions or comments? If not, I'll place it on the Thursday Commission Meeting agenda for public comment and action.

Okay, that's what we'll do.

Work Session Item No. 6, Follow up on the Snake Harvest Working Group Report and Options, Mr. John Davis.

MR. DAVIS: Good morning, Commissioners. I can't tell you how happy I am to be here this morning. If you will remember last time this item was on the agenda, I woke up at 2:00 o'clock in the morning very sick; and so I'm just glad I didn't have a repeat of that this time. So very happy to be here and able to present this, not asking my division director to step in for me. For the record, my name is John Davis. I'm the Wildlife Diversity Program Director. I'll be presenting to you today the snake harvest working group results from the report that you received and some potential options for regulation.

Very quickly, I would like to go through some background, get to the results and the options as soon as possible. I know that you have seen much of this, but I would like to go through some things very quickly just to refresh everyone's memory. Gassing is the introduction of gasoline and/or the associated vapors into karst features, and I will talk a little bit more about karst features a little later in the presentation; but this is done to drive rattlesnakes from dens for collections.

There's been growing concern for the impact to rare species that are found in those karst features; and in March of 2013, the Department was petitioned to prohibit this means of take. A proposed rule was published in December of 2013. Public comment was taken. And in January of 2014, the Commission directed staff to establish the snake harvest working group.

This working group met December 2014 through September of 2015; and in January of 2016, the report was presented to you and the staff was directed to place this item on a future Commission agenda, which brings us to today. However, since January of 2016, there are two additional developments I need to make your aware of. There has been an additional petition received to prohibit gassing. It was received March 10th of 2016. This petition was from eight Texas residents, as well as the Center for Biological Diversity. There were a total of 1,667 signatures on that petition, all of which were from Texas.

Additionally, there was a letter received from the Wildlife Diversity Advisory Committee on April 28th of 2016. That has been passed along to you, and that letter encourages you to prohibit gassing. As a little bit more background, there were 12 members of the snake harvest working group. You can see them listed here. The Chairman was Dr. Eikenhorst. Many of you know him as the Private Lands Advisory Committee Chairman. There were two individuals representing wildlife society and wildlife association, two individuals representing landowner groups, one individual representing the Wildlife Diversity Advisory Committee, two individuals representing the herpetological community, and four individuals representing the community of Sweetwater, with one being a representative of the Jaycees, two being represented — representatives of the economic development community, and then finally one being a medical professional.

The working group was given seven charges. I won't go through all of these. I will just simply direct you to No. 7, which mentions the report that you have been given; and I'll move on so very quickly get to the results that can be found in that report. The next slide you will see very quickly is a very busy slide, and so you have a handout in front of you that you can refer to. If we need to come back to this — one of the things I do want to point out to you, if you notice at the top of this page, the member number is circled and what that tells you is any time you see numbers at the top of these columns, that is the actual member number and so any of the colors beneath that number represent the actual vote of that voting member.

You'll notice two slides ago I said there were 12 members, but now this number only goes to 11. The reason for that is these points of consideration you see listed here were developed in the final meeting and there was one individual that participated in the first meeting and then did not participate after that. So there were only 11 members participating at this time. Now, you'll notice that the points of consideration, there are 14 total and these points of consideration encapsulate all of the pertinent issues that have come to light in the couple of years we have been discussing this with stakeholders.

If you will allow me to clean this graph up, I'll go to the next graphic where I have removed the member numbers and I have grouped the responses by their — by other responses that are similar. So all the agrees are together, the undecideds are together, and the disagrees are together. And you'll notice I cleaned up the text on the left side, made it a little easier, leaving only the first couple of words just for you to see as a reference; and you'll also notice the points of consideration on the left are no longer in numerical order. They have been now arranged from the degree of consensus at the top being the highest and the bottom being the lowest consensus or no consensus in this case.

I will draw your attention to the orange line on your graph. That is the line above which there is a majority consensus on that point of consideration. Below that orange line, there is not a majority consensus on those points of consideration; and in this case, a majority consensus is 6 of 11 voters voting the same way. I would also like to draw your attention very quickly to two things because throughout this debate, there have been a couple of issues that have been brought up and one is people concerned about the success of the Sweetwater event. So I wanted to give you a sense for how this particular working group views that event and other events like it.

You'll notice the point of Consideration No. 1 reads as follows: Snake-themed events are long-standing traditions in some communities and provide social and economic benefit. And you will notice that was unanimously agreed upon by the group. They understand the value of these events to these communities. And having said that, you'll also notice quite a bit of support for Point of Consideration No. 11: Proactive efforts by the State and/or private landowners to reduce potential threats to populations of nontarget species are preferred to having those potential threats addressed through official policy implemented by the U.S. Fish and Wildlife Service.

And so with that, I'll move into the options that are found in those 14 points of consideration. They are listed here and summarized and we'll get into them in more detail. There are five total options. Obviously, No. 1, no action or the status quo is assumed always as an option. But there are four options that were tested in the points of consideration developed by the working group and then responded to in those points of consideration.

Summarized, the number two on the list here is to regulate the volume of gasoline used; No. 3 and 4 is to establish a defined season or defined region within which gassing is allowed; and then finally, the fifth one is a statewide prohibition. And to go into these with detail and look at the specific votes, we move to the next slide, which is Point of Consideration No. 7. It reads as follows: The potential threats to populations of nontarget species may be sufficiently addressed by placing restrictions on volume of gasoline used per den when collecting Diamondback rattlesnakes.

You'll notice the member numbers are back up. So the color of the cells beneath the number represent the actual vote of that member. There were six individuals that disagreed with this option, two individuals agreed, three individuals were undecided. The rationale behind this particular option assumes that limiting the amount of gasoline used should reduce the impact. However, sentiments expressed by those who disagreed with this option went as follows: Any gas is too much; nontarget species co-occur with snakes in dens and any amount of gas sufficient to drive snakes from dens is sufficient to harm or kill nontarget, thus not reducing the impact to those species; and then finally, enforcement would be impossible.

And that's a very strong term, so I would like to kind of unpack a little bit of the discussion. It was suggested that a cup of gasoline be set as the limit for per den. So the discussion went something like this: How would one know if a cup of gasoline has been introduced into a karst feature, first, without knowing the amount of gas in the sprayer before and after initiating the delivery? But more complex would be: How do you know if this particular opening of a den is the den and the opening ten feet down the ridge is the same den or a different den? And it's impossible to know that without essentially ripping the face of the mountain apart and trying to determine if those two openings are the same den or if they are not. So that is why there was a lot of discussion about the complexity of enforcement in that particular option.

The next option is Point of Consideration No. 8. It reads as follows: The potential threats to populations of nontarget species may be sufficiently addressed by establishing a defined season for gassing Western Diamondback rattlesnake dens. You will notice the voting record for this is exactly the same as the previous one, with six individuals disagreeing, two individuals agreeing, and three individuals being undecided. The rationale behind this option assumes that limiting the time of year that gassing is used should limit the impact. However, sentiments expressed by those who disagree with this option included any gas is too much; gassing is already a seasonal activity. It is done during the cold season with the peak months being January and February. That's when the rattlesnakes are in the dens and shortly before they come out. So it's already a highly seasonal activity. And then finally, nontarget species co-occurring in dens would continue to be harmed or killed, so the time of year is irrelevant.

The next option considered was Point of Consideration No. 9: The potential threats to populations of nontarget species may be sufficiently addressed by limiting gassing of Western Diamondback rattlesnake dens to specific geographic regions. You'll notice four individuals disagreed with this option, four individuals agreed, and three individuals were undecided. The rationale behind this option assumes that limiting the regions of the state exposed to gassing should reduce the impact. Again, however, sentiments expressed by those who disagreed included any gas is too much; it would only work if gassing is allowed in karst features or dens where rattlesnakes are found; and then, again, nontarget species co-occurring in dens would continue to be harmed or killed.

And to also unpack some of the nuance to this one, I feel a need to go into a little detail on karst. We've learned over the last year or two that many people don't completely understand what karst is. And so a karst is an irregular geologic region in which erosion has produced fissures, sinkholes, underground streams and crevices and/or caverns. And this can manifest on the surface as a small crevice that you can't get your hand into, or it may be as large as a cavern in which one could hold a musical concert if one so desired.

So having defined that, this is the map of the distribution of karst topography or karst features in Texas. It is in these karst systems that 26 federally listed karst invertebrates are found, as well as an additional 130 endemic species of karst invertebrates that only occur in Texas. And since Texas Parks and Wildlife Department often regulates things by county, I've overlaid the county map and then colored in those counties that would contain karst topography in our state. So essentially, this is the region where practitioners of gassing prefer to operate.

This is where the karst features are found. This is not to say gassing doesn't occur outside of this. There have been documented written records of people gassing burrows in our state. So it's not exclusively limited to this region; but the difficulty here is that gassing practitioners operate in the same regions where karst invertebrates are found. So trying to find a region where one is satisfied, but the other risk is reduced, would be very difficult.

Finally, Point of Consideration No. 10: The potential threats to populations of nontarget species may be best addressed by a statewide prohibition on gassing Western Diamondback rattlesnake dens. You can see six individuals agreed with that, four individuals disagreed, and one individual was undecided. The rationale behind this option assumes that a statewide prohibition would remove the impact of this practice on nontarget species. Again, however, sentiments expressed by those who disagreed, indicated this approach is uncompromising; this is government overreach that harm Sweetwater's economy; and the science continued to be questioned.

One thing, however, that was not questioned was an exception. There was strong support for an exception tested by Point of Consideration No. 13: If a regulatory action is considered, there should be no restrictions on methods of taking rattlesnakes near or around manmade structures or similar areas of human activity to ensure human safety. You can see two individuals disagreed with that statement and the sentiments expressed by those two individuals that disagreed included gassing is too dangerous to even allow around manmade structures and the phrase "no restrictions" could make people believe they can do things that are currently considered illegal, such as discharging firearms in the city limits.

After having gone through all of that, I go back to the summary of the options for you to consider; and I seek your guidance.

COMMISSIONER DUGGINS: Any comments?

MR. DAVIS: Yes, ma'am.

COMMISSIONER LATIMER: Going back to the overlay of carbonate aquifers — carbonate aquifers and the endangered species. Has any other Agency made any comments about this, like the Edwards Aquifer Authority or anyone else related to this on the impact of these activities?

MR. DAVIS: We have received numerous letters from different groups that have expressed their opinion on this particular practice. We have not received a letter expressing one way or the other from Edwards Aquifer. We have not. Yes.

COMMISSIONER DUGGINS: Anyone else have any questions or comments? Commissioner Morian.

COMMISSIONER MORIAN: I've got one question, but you don't address here. But this is just one method of collecting the rattlesnake?

MR. DAVIS: Yes, sir.

COMMISSIONER MORIAN: No one is proposing that this is going to stop people from collecting rattlesnakes. There are other ways to do it that don't involve gassing.

MR. DAVIS: Absolutely. And there have been several options that have been deployed — employed and/or deployed currently where folks are gathering significant volumes of snakes without using gas and I can go through a couple of those. First, probably most common now if individuals are not using gassing, if they have particularly learned that gassing reduces the efficacy of that den producing snakes in the future, which there are teams that have realized that, what they do is they take advantage of the Western Diamondback rattlesnake's behavior of coming out on warm days in February and sunning themselves at the mouth of the den. So this is a behavior that these animals do willing, if I can anthropomorphize. They do this on their own. They come out in en masse and they can be found at the mouth of the den and so there are individuals that know this, take advantage of that behavior, and while they are out sunning, they enter into a sleep-like state, kind of a trance, and so one can slip up on them and begin to just pick them up off the ground. That's one method and there are many people that have done that and gathered hundreds of pounds of snakes and turned them in to these snake events using that method.

There's another method that has been well documented. In South Dakota, there was a rattlesnake eradication program essentially for several decades. It started in the 30s and ended in the 70s and gentleman named A.M. Jackley perfected a snake trap. It is essentially a one-way door, a funnel trap that captures the animals as they come out to sun. You can use it in many ways. You can capture them going into the den, capture them coming out of the den. You can set them up in many different ways, but there are numerous examples through his work — and this has all been provided in the working group — but numerous examples in his work where he collected a hundred snakes at a time, sometimes he would collect 400 snakes out of a den. So volumes of snakes can be collected without using gasoline.

A third method that has been used inadvertently is creating artificial dens. There are many people that build artificial dens inadvertently. If you've ever built a shed on a cinder block and you put a skirt around it, you've essentially created an artificial den in time. So we get a lot of calls from people with snakes under their house, etcetera. So something could be constructed like that very cheaply and would be able to house snakes over winter and then you be able to just walk up to your artificial den and harvest it at will.

COMMISSIONER MORIAN: But there are people that are participating in the Sweetwater festivities that don't gas; is that correct?

MR. DAVIS: Yes, sir, that's correct.

COMMISSIONER MORIAN: Is that a — is it a significant percentage? Do you have any feel?

MR. DAVIS: No one can actually give an official number on that. There's just not an official number to know how many people are gassing and how many are not.

COMMISSIONER MORIAN: Okay, thank you.

COMMISSIONER DUGGINS: Anyone else?

I'd like to request that staff go to work on a proposal — a proposed rule and present that at the November meeting that would phase in a statewide ban on this to — when I to say "phase in," to take effect no sooner than two years from now and certainly in mind with — I think it's No. 13, that any proposal not in any way restrict a homeowner or a landowner's ability to protect around an improvement or to protect life and that sort of thing. And let's present that to the Commission to then consider whether or not to move forward and actually publish that for public comment.

I would like to see a proposed rule for us to look at in November; and then decide, as I said, whether the group wants to go ahead and put it out for public notice and comment.

MR. DAVIS: Yes, sir.

COMMISSIONER WARREN: I have one question. Are there any other nontoxic irritants that people experiment with?

MR. DAVIS: That's a great question. Are there any other nontoxic irritants that people have experimented? Nontoxic irritants, to me, is kind of, you know, I guess the operative term there. There have been many substances that have been tried — bleach and smoke and some other things. But the difficulty comes in when you understand the physiology of reptiles versus the physiology of essentially everything else. They are extremely resistant to — because of their low metabolic rate, because of their particular systems, they're extremely resistant to the immediate effects of anything that would be inhaled and things such as that.

So what we find is whatever you introduce into a chamber — in essence, an enclosed chamber — that essentially reptiles are the most resilient. And so if you have invertebrates in there, if you have birds, if you have mammals or any other thing in there, they are typically much more susceptible. So no one that I know of has found any kind of substance that could be introduced that would selectivity evict reptiles without doing damage or harm to other species.

COMMISSIONER DUGGINS: Okay. Thank you, John.

MR. DAVIS: Thank you.

COMMISSIONER MORIAN: But you're putting — you're suggesting — you know, let's be clear here. You're suggesting this is — comes back for November; is that —

COMMISSIONER DUGGINS: That staff would come back at the November meeting with a draft of a proposal that would phase in a statewide ban no earlier than two years from now and at that time, we would look at it, discuss it, decide whether to actually put out for public notice and comment and then vote on it thereafter.

COMMISSIONER MORIAN: Is November — I mean, why are we — do you want until November? Is it going to take the staff that long or...

COMMISSIONER DUGGINS: Well, we've got — August we've got a huge agenda, and it's a public meeting. I think we need —

COMMISSIONER MORIAN: Oh, we have August.

COMMISSIONER DUGGINS: — to give us time. And we're talking about something —

COMMISSIONER MORIAN: Yeah.

COMMISSIONER DUGGINS: — if it were passed — I mean, sorry, if it were put out for public notice and comment, it still wouldn't take effect for some time.

COMMISSIONER MORIAN: Okay, that's right. Thank you.

COMMISSIONER DUGGINS: All right. With regard to Work Session No. 7, Public Hunting Program, the Establishment of an Open Season on Public Hunting Lands and Approval of Public Hunting Activities on State Parks, does any Commissioner have any questions or comments? If not, I would like to place the item on the Thursday Commission Meeting for public comment and action.

Hearing none, that's what we will do.

Work Session Item No. 8 — I tell you what, let's — before we go to that, let's take a 15-minute break. It's 10:15. Let's come back at 10:30. Oh, sorry.

COMMISSIONER FRIEDKIN: That's fine.

COMMISSIONER DUGGINS: Do you want to — is that all right with you, take a 15-minute recess?

COMMISSIONER FRIEDKIN: Sure.

COMMISSIONER DUGGINS: Fifteen-minute recess.

COMMISSIONER FRIEDKIN: That's perfect.

(Recess taken)

COMMISSIONER FRIEDKIN: Let's go ahead and get — pick this up and get started again. Thank you. That was quick. Thank you.

Item No. 8 is Chronic Wasting Disease Response Update and Rules, Recommended Adoption of Proposed Rules, Mr. Clayton Wolf.

MR. WOLF: Mr. Chairman, Commissioners, Mr. Smith, my name is Clayton Wolf and I'm the Wildlife Division Director and with me this morning is Susan Schultz. She's with the Center for Public Policy Dispute Resolution. You may recall her presentation from last time. This morning, I'm going to go through the proposed rules for Chronic Wasting Disease; and first, the first thing I will do is hit a high level overview of those rules that are proposed in the Texas Register. They're a part of your exhibit there in your notebooks. And then after I've gone through that, Ms. Schultz is going to briefly describe the activities of the small stakeholder group and some of those conversations that have occurred since this last meeting and since the rules have been published in the Texas Register. And then at that point, then I will resume my presentation and basically responding to a lot of the comments and the recommendations of the stakeholder group. I will go through a list of proposed amendments that we're asking you to consider for adoption tomorrow. So with that I'll get started.

Of course, these activities this January started off with what we believe was the first of its kind, a CWD antemortem testing symposium that was down at Texas Disposal Systems; and we had quite a turnout, over 200 people there. On February 2nd in this room, we put together a meeting of a — what we called a large CW stake — CWD stakeholder group. This was a group of about 37 individuals appointed by Mr. Smith. All those individuals were also invited to the CWD antemortem testing symposium. So they got a — were with us as we learned about the current state of affairs and science on live animal testing.

And then from that large group, a subset of 15 — in addition, I was added to that group, as well as Dr. Susan Rollo with Texas Animal Health Commission — to total 17 members of the small stakeholder group and that was — those were the discussions that were facilitated by Ms. Schultz as we attempted to negotiate some common ground for the rules and it's that report that was the summary of those discussions that was the basis — the recommendations that became the basis for the rules that are published in the Texas Register.

And so first briefly, I'll cover some terms just to make sure that we're all on the same page. If you see the letters TAHC HCP, that means Texas Animal Health Commission Herd Certification Program; and an eligible mortality is the death of a deer that's 16 months of age or older, 12 months of age or older if you're in the Herd Certification Program. And then antemortem test is equivalent to a live animal test.

So just very briefly, you recall that right now the interim rules that deer breeding industry is operating by, we have a Transfer Category 1. That's the highest testing level, and those release sites — those corresponding release sites are called Class I with no testing. Transfer Category 2 is a moderate testing level in the pen, and the Class II release sites are moderate testing level — have moderate testing requirements. And then Transfer Category 3 are the breeding facilities with lower performance testing and they have the highest testing at the release sight and these include these herds that are trace herds under hold order from Texas Animal Health Commission.

And, of course, as I mentioned in March, the one aspect here that the deer breeding industry had mentioned to us was very important to them was their desire to either eliminate the release site testing altogether for all deer breeders or reduce that and so that was really a central theme in a lot of discussions with our small stakeholder group.

So let's talk about the regulations that are posed in — proposed in the Texas Register. We've kept the same nomenclature. So we have a Transfer Category 1 and that's the highest category, the category with the least risk. And we talk about four pathways to get there. So that's four pathways to get to a Transfer Category 1, whereby you would have no release site testing at the corresponding release sites. Transfer Category 2 is somewhat similar to our current rules, and then we'll talk about Transfer Category 3. But most of the discussion for the stakeholder group revolved around Transfer Category 1 and so in the proposed rules, we, again, are going to accept any fifth-year or certified herds as being qualified for Transfer Category 1. That's no change from the current rules.

But we also have proposed another pathway to get to TC 1 using postmortem testing, and that is if 80 percent of the eligible mortalities are tested each year for five consecutive years. And then two proposed pathways using antemortem testing, using live animal testing. One of those is to test 80 percent of the herd antemortem and 80 percent of eligible mortalities each year thereafter or 25 percent of the herd and 50 percent of the mortalities, but this would be repeated annually. And so that's the package of the four pathways in the Texas Register where a permitted deer breeder could get to Transfer Category 1.

Transfer Category 2 basically establishes a new floor for testing. Right now, the current minimum is 20 percent eligible mortalities and you can be movement qualified. This would establish a new floor of 50 percent eligible mortalities to be in Transfer Category 2, and then the corresponding release sites — this is kind of a mouthful — would have to test 50 percent of the harvested deer if no liberated deer in the harvest or 50 percent of the liberated deer in the harvest.

Now, for many folks we've talked to, that's kind of hard to wrap your mind around. You have to read it several times to understand it. And so what I'll tell you is later on in my presentation, we think — we're going to propose a remedy for this that's much simpler. So don't commit this to memory right now because we have a strategy we talked with our stakeholders about that would simplify our Class II release site testing rules.

And then Transfer Category 3 would essentially be those trace herds. That would be a herd that either received deer from or contributed deer to a CWD positive facility within a five-year period. And our proposed rules here are the same as they are in the interim rules. They would have to test all the mortalities in their breeding pen, all of the hunter-harvested deer, and also a minimum number which would be equivalent to the number of deer released and in addition, all these deer going to these sites would have to be tagged with a with an RFID tag or a National Uniform Ear Tagging System tag.

So some antemortem testing provisions that are in the proposal: Those are that a deer must be 16 months of age or older to be eligible to be antemortem tested, and that a deer introduced from another herd must have at least 16 months' residency in the herd to qualify for testing. And also in the proposal, a deer can be tested no more frequently than every three years. And later on, I'll talk about some suggested amendments to these provisions.

Postmortem testing substitution, this is a new twist and this is going to be a benefit to the industry. Right now, even under the interim rules, if someone doesn't meet the testing threshold to get at whatever level they're at, they either have to wait for more animals to die or they have to sacrifice animals to get there because we are only accepting postmortem tests. And so we are proposing in these rules that a deer breeder may substitute on a two-to-one basis an antemortem test for a postmortem test. However, no more than 50 percent of these postmortem tests may be substituted with antemortem tests. And I'll — I need to tell you a little bit about the basis for this.

As the stakeholders were talking about live animal testing, one thing that our — particularly our veterinary experts reminded us, is we don't want to abandon postmortem testing. We don't want to disincentivize postmortem testing. As you can imagine, if you're looking for a disease and a deer dies in your facility, it would be very important to get a test from the animals that have died in that facility and so we are very cognizant of trying not to disincentivize the collection of postmortem tests.

So in this case, for example, if someone has ten deaths and they're required, for instance, to produce 80 percent of those or eight tests, as long as they have four, they can replace the rest of those with live animal tests. The other four could be replaced at a two-to-one ratio.

Release site testing provisions, all breeder deer release sites must be high fenced. A harvest log must be — all deer harvested must be entered in a harvest log on site. And we have a definition for a liberated deer that's on the screen there before you and the purpose or the necessity of that definition is tied to our Class II release site testing and so when I talk about amendments later on, we're going to suggest that there not be a need for this definition.

Transition provisions, you know, we — in addition to looking going forward, we had to figure out how to crosswalk where everybody is right now and how to get them into this new set of rules and have it be workable for the industry. So we're — in the tran — in the proposal, we are proposing that Class II release sites that are compliance during this last hunting season that we had — the 2015-16 season — they will be reset back to Class I's. So as long as they played by the rules, they'll get a do-over, and they'll get to start over. And release sites that are not in compliance during the last season, would not be eligible as release sites until they had five years of testing compliance.

And then the other thing we're going to do — and I'll talk in great detail after Ms. Schultz's presentation — is consider antemortem and postmortem testing performance that has already occurred. You know, what we wanted to do was we know that folks are out there right now and they're doing live animal testing, anticipating something is coming. We wanted to give them credit for that. We also know that folks have done a great job of postmortem testing, and we want to give them credit for that. So we also have several formulas of how we're going to transition folks from the current state of affairs into these new rules.

As far as Deer Management Permit, a DMP facility that utilizes breeder deer from a TC 2 facility must conduct release site testing and the proposed provision is that they test 50 percent of the hunter-harvested deer on annual basis. As far as Triple T Permits are concerned, this is the trapping and moving of free-ranging deer, the proposal is for the trap site to submit 15 CWD samples from each trap site prior to permit approval and each deer transplanted must be tagged with an RFID tag. Those tag numbers would have to be reported to the Department, and Class II release site testing requirements would apply. And finally, the proposal is no trapping from breeder deer release sites.

As far as TTP Permits, remember these are permits that have a terminal destination and a lot of them are issued in urban areas, so the risk is not the same because the animals are all going to be euthanized and donated to charitable organizations. But we also propose that from each of the sites, that the permittee provide 15 samples; but those can be provided after the fact, so we can get some sampling from parts of the state where we might not otherwise sample. And if they fail to do that at the end of the reporting year, then they could potentially disqualify themselves from being a recipient in the future.

And so with that, I will turn it over to Ms. Schultz; and I'll let her describe to you the process of the stakeholders since our last meeting.

MS. SCHULTZ: Good morning, Commissioners. I'm Susan Schultz. I'm from the Center for Public Policy Dispute Resolution. I think my role this morning is to highlight some of the events that took place with the small stakeholder group. I facilitated that group; and as Clayton mentioned, we started with meetings back in February to negotiate some of the provisions that are now the basis of the proposed rules that are — have been published in the Texas Register.

And so we did that. We met, and then I filed my final report from that process back in April 19th. And since then, one of the — first of all, I have to commend both the staff of the Department and the small stakeholder members who are — have gone above and beyond trying to figure out a workable solution in these rules. And so on May 6th, we had a meeting to consider the actual draft language that now became the proposed rules and look at some of the — perhaps if there were inconsistencies or unintended consequences that occurred between — in the drafting of the language.

And so during that May 6th meeting, there certainly was discussion; and there were a few amendments that were proposed to fix some of those inconsistencies. And also at that meeting, TDA offered a more condensed testing model that departed from the options that were — that are now in the proposed rules. So before the small stakeholder group spent any time negotiating off of that, the Department asked for that offer to be put in writing, which it was and supported by other organizations such as DBC, EWA, and the North American Deer Farmers Association.

However, that offer was rejected and, in particular, TWA put down its concerns in writing; but nevertheless, the group wanted to go forward with some negotiations. And so we met again on May 16th and discussed the offer and the concerns and so some of the provisions that came out of that meeting were a negotiated solution and put down, again, sort of in draft language that the Department did and circulated to the small stakeholder group.

So in summarizing what happened at the May 16th meeting and the subsequent sort of e-mails that went back and forth to come up with new amendments and modifications, I circulated that to the small stakeholder group and then asked them to — whether or not they would support those amended provisions and some of them did and some of them didn't. So — and I have a list of those specifics in my report, as well; and so you have those before you, and I know that Clayton is going to go through the substance of that in a little bit later on.

One of the things I wanted to highlight, too, is some of the back-and-forth comments that have occurred since these meetings; and one of them was a concern that the initial meetings that we had with the small stakeholder group were somehow confidential or secret meetings. And I think this Commission, certainly from the presentations this morning, you're very familiar with having working groups of stakeholders that consider issues before proposed rules are drafted and see whether or not they can come to a common ground and some common understanding on those issues that would then allow the Department to come up with a perhaps better rule than they would have in a vacuum and that's pretty much what we did in this case. The small stakeholder groups represented different interests, both deer breeder industry, the wildlife associations, veterinarians, and other interests; and they all came to the table to negotiate and really discuss sort of the very fundamental issues that became part of these proposed rules and to talk about concerns when options were addressed, to see about resolving those issues; talk about their concerns, whether those were going to be workable options or not.

And so different stakeholders represented different interests and the meetings, I think, perhaps some of the confusion was that the group also agreed to some operating procedures and in those operating procedures, we had a provision that you are welcome to go back to your organizations, talk to your organizations about the issues that were discussed; but don't make any personal attributions about who said it. So that, as you all are aware, when you have negotiations, it's not very constructive to the negotiation process when you have, you know, sort of a he said/she said before the negotiations are final. So that's all that that was intended to address was the fact that just keep names out of it. You can — you know, some of your responsibility is to go back to your organization and make sure that they are aware of how you're negotiating and where the — what the negotiation status is so that you can bring back concerns from those organizations and see whether the group wants to address those concerns and how they wanted to address those concerns. But before — you know, before the negotiations are final, let's just keep names out of it; and so that's all that that was about. And certainly, you know, my reports are public documents and the — so I just wanted to address that.

COMMISSIONER DUGGINS: Before you move on, is it your understanding that each of the participants in the stakeholder meetings agreed to these operational prerequisites, such as the one you just described?

MS. SCHULTZ: They signed a document that said that.

COMMISSIONER DUGGINS: Each of the participants?

MS. SCHULTZ: Yes.

COMMISSIONER DUGGINS: Okay.

MS. SCHULTZ: And then TDA has personally asked me to present their offer from May 6th to the Commission. It's certainly not my role as a facilitator to do that, and the — and furthermore, as I explained before, I believe that that offer was put on the table, rejected, and it was superseded by the results of the May 16th meeting.

So I'm happy to answer any questions that you may have about the process.

COMMISSIONER FRIEDKIN: Any questions?

MR. WOLF: Thank you, Susan.

COMMISSIONER FRIEDKIN: Thank you very much.

MR. WOLF: And so with that, as Susan described, the stakeholder group stayed — continued in negotiations. And just to be fair, you know, there was — even during the early parts of the meetings, there was concern about the complexity of the rules. You know, there were some stakeholders urging simplicity; and oftentimes as we do when we're trying to accommodate numerous circumstances, we go down different pathways and things get more complex.

The offer that was laid out by TDA had a couple of elements that were attractive to the group. It added some significant — or it created some significant simplicity. There was some risk mitigation issues with disease in it and so that initiated these other discussions with, I guess, with folks clinging to the hope that we could come up with an even simpler model with these amendments; yet, have adequate risk mitigation when it comes to CWD.

And so what I'm going to present to you is a series of proposed amendments. Now, many of them have their basis in this last negotiated agreement by the majority of the stakeholders; but we also have been receiving a volume — large volume of public comment. Each of y'all have a binder, I think, that has all those public comments. I'm not going to go into all the detail. I will summarize some later.

But one thing I will tell you is that as we took all these comments, what we noted was really there were no new issues that were brought into the discussion and there were really no new parties. And so all the proposed amendments that I'm going to suggest to you are logical outgrowths from the proposed rule. As Susan said, one the things we set the meeting up for initially — yes, Chairman.

COMMISSIONER FRIEDKIN: Clayton, sorry to interrupt. Real quickly, with regard to some of these suggested TDA simplifications and suggested amendments, are you going to get to that at some —

MR. WOLF: Yes, sir. Yes, sir.

COMMISSIONER FRIEDKIN: Okay. All right.

MR. WOLF: I will.

So the first thing, the first order of business was we recognized that there was a conflict between two of our rules, more or less. So on the screen before you, again, I have the Class II release site testing requirements and the DMP release site testing requirements. And soon after that last conference call, my staff reminded me that we can have areas that are both DMP and Class II release sites. And so we were contemplating internally how to resolve this and we also recognized that folks were really having a hard time digesting the requirements that we had proposed for Class II.

And so working off the basis of the probability of detection for the Triple T rules, it was suggested maybe we look at a much simpler formula. And so what we suggested to the group was that in lieu of DMP testing requirements and Class II testing requirements, that all release sites test the first 15 deer harvested. Very simple. Very easy to understand. There was some discussions that followed.

Generally, folks saw this provision favorable; but there were a couple of key points. Some of those mentioned in the stakeholder group, but also some comments I received otherwise is that smaller sites would be providing a higher percentage of their harvest and that is true. However, even under the proposed rules, there would be a great disparity in harvest from sites, depending on whether someone — how many liberated deer someone shot or how many other deer someone shot and so there really is no — you know, no secret recipe that creates complete proportionality and yet is not hard to understand. And so — and then the other concern that was voiced was — or a recommendation, was that TPWD have some policies or procedures to accommodate special circumstances.

And by "special circumstances," what I'm referring to is, for instance, if you are a release site and you harvest ten deer, you would be required to CWD test those ten since it's within the first 15. And folks recognize sometimes things go wrong. You know, maybe you have a deer that's wounded, you don't retrieve; maybe the hunter gets away, didn't hear your instructions and you don't get a test and you've been putting forth a good faith effort to test, yet you didn't get 100 percent of them.

Kevin Davis, our Chief of Wildlife Enforcement, actually went back and looked at the general orders that our game wardens receive and really this — you know, this is a already covered. They — in their general orders, they're asked, you know, when they're enforcing fish and game laws to consider the totality of the circumstances. You know, understanding that really, you know, we're trying to get to enforcement by education and having people, you know, learn what the laws are and so there's plenty of discretion that is afforded our game wardens to consider those circumstances. Kevin did offer though that, you know, whether it's this rule, this proposed amendment, or any other, that as we — when we have the new rules adopted, that he would be willing to — he will prepare a memo kind of reinforcing some of those general orders and if necessary, providing more specific guidance. So I believe that we will be able to suitably address this concern when game wardens do run across those special circumstances where folks are making a good faith effort; but for whatever reason, are not able to get 100 percent of those samples. And I'll talk about this provision a little bit later when I get into the details of that last iteration of stakeholder discussions.

And so let's start with that. One of the aspects that was presented by TDA initially, it was subsequently supported by all the deer breeding trade organizations and it was really a simple aspect that a lot of the group liked — including the Department — was that after a certain point, there would be no release site testing. The problem that TWA and others had with that provision the way it was presented was that was going to occur immediately, and that was not going to be significant risk mitigation.

So the subsequent conversations and the last negotiated agreement that the majority of the stakeholders agreed with, basically is asking that — or is saying that after 2018-19, there's not going to be any release site testing. And I'll show this to you graphically here in a second.

The other simple component offered up by TDA, then subsequently officially supported by all the deer breeding organizations and also supported by the other stakeholder groups, was that all deer breeding facilities would test a minimum of 80 percent eligible mortalities on an annual basis. So very — very simple. Very simple. Very elegant. It's an appropriate level of testing; and so this was a component that was in that TDA proposal, the industry proposal, and survived that last iteration on the — of ideas, amendments that were talked about by the stake — that was agreed upon by the majority of the stakeholders.

One thing I will say is that when I start describing these in detail, no one is recommending a change to our TC 3 rules, the trace herds. And so when I make statements, it doesn't include any herd that is under a hold order by Texas Animal Health Commission. And also when I make other statements, it may not necessarily apply to facilities that are not in compliance with the regulations.

So let's look at this on a timeline first. Prior to August 18th, there was no release site testing. And so when the emergency and subsequent interim rules were adopted, we implemented release site testing and that created quite a bit of angst within the deer breeding industry. And so under our proposed rules in the Texas Register, that release site testing continues until this Commission chooses to make other changes.

With the amendments we are proposing, there would be release site testing in this interim period, in an interim period that's three hunting seasons; but then that would cease. And, you know, I talked about when the deer breeding interests rolled out this provision, they actually had suggested no release site testing earlier; but that was really the one — the crux of the issue the rest of the stakeholders had was we needed enough release site testing until the entire industry had tested at 80 percent mortality for some period of time and so that's why this interim period is very important to being able to eventually get to this very simple set of rules.

So some of the proposed amendments for the deer breeding facility testing requirements, as I said, 80 percent eligible mortality — testing of eligible mortalities and that would be for all facilities. And all facilities that were permitted for at least six months, must provide postmortem tests for at least 3.6 percent of the herd annually. And so I want to talk about this a second.

We do have deer breeding facilities that have been monitoring their deer for some time and are not reporting any mortalities and all the deer breeders that — or veterinarians in the business tell us that's not realistic. Yes, you can go for a year or two in smaller herds and not have mortalities; but eventually, you're going to have mortalities. And so the stakeholder group agreed that there needed to be a minimum number of tests provided.

Now, when you're talking in only a postmortem model, that can be problematic because if you don't have them, you have to create them. But because we have these postmort — or these postmortem testing substitutions, we believe that makes for a very good combination to address the issues where folks are not reporting any mortalities; but also they have some options other than sacrificing deer.

Yes, Vice-Chairman.

COMMISSIONER DUGGINS: Where did we come up with 3.6 as opposed —

MR. WOLF: So three point --

COMMISSIONER DUGGINS: — to five or four or some even number?

MR. WOLF: So 3.6 percent is 80 percent of the average mortality in deer breeding facilities. Four and a half percent is the average mortality and so — and, of course, some people can be above the average and some people can be below the average. So it was a 20 percent discounted figure off of what you would expect in your average deer breeding facility.

COMMISSIONER DUGGINS: But we're talking about simplicity. I think that number should be rounded off.

MR. WOLF: Okay.

COMMISSIONER DUGGINS: And I don't know how anybody else feels about it, but simplification is an important — Susan, do you — weigh in here. You're a facilitator.

MS. SCHULTZ: A facilitator, but not a subject matter expert. I will leave that to the Department.

COMMISSIONER DUGGINS: Okay. Well, I throw out for discussion that that number ought to be an even number and I don't suggest which way it should go necessarily. I just —

MR. WOLF: I believe — and unless Mitch taps me on the shoulder, I did look at some — I know the 4.5 percent was a figure that is dated and I believe the — some more recent or contemporary data, it would be closer to 5 percent. If I was going to make the suggestion, I wouldn't round down. If you clearly want us to have a whole number, my suggestion would be we would post 4 percent.

COMMISSIONER JONES: I don't know that the whole number will get you a whole number when you start figuring percentage of herd though, will it?

COMMISSIONER FRIEDKIN: It depends on whether it's a divisible even number.

COMMISSIONER JONES: Exactly.

MR. WOLF: Right. And so to that --

COMMISSIONER JONES: If you have a herd that's divisible by four or five, you're still going to come up with a percentage.

MR. WOLF: There still is rounding, and we do rounding right now. And so —

COMMISSIONER JONES: And by the way, I've just told you everything I know about math.

COMMISSIONER DUGGINS: I don't believe that.

MR. WOLF: But, yeah, to that point, when we use 3.6 percent, we don't come out with whole animals and so we do round up the whole animals to give a target for someone to meet. But I'm open to direction from the Commission on whether if — you know, whether we should — whether that should be 4 percent. I would not suggest taking it, you know, down below 3.6 percent if a whole number is important in this formula.

COMMISSIONER DUGGINS: I say that, I guess, unless the Chairman wants to go a different route. I would just say that's a tweak I would certainly recommend.

COMMISSIONER FRIEDKIN: Do we have a — do you have a distribution of herd size or for all —

MR. WOLF: We have some data. I might have to call upon Mitch to help this, but I do know that our — I'm going to do a little bit of guessing here, but our average herd size is relatively small. You know, 20, 30, 40 animals.

COMMISSIONER FRIEDKIN: Do we have --

MR. WOLF: Let's let Mitch — it looks like I may be straying off of the facts a little bit, so. No? Okay. 20, 30, 40, you know, that's the — the bulk of our deer breeders out there have relatively small herds. A lot of times we talk in examples of a hundred and a hundred plus. Those are really the minorities.

COMMISSIONER FRIEDKIN: And it's fairly normally distributed? A normal distribution, roughly?

MR. WOLF: That's my understanding, yes.

COMMISSIONER FRIEDKIN: Okay. So we're talking a herd impact of —

MR. WOLF: It actually may be skewed. I haven't looked at it on a histogram, but my guess is it may be skew — less skewed histogram, I believe, yes. Many more small herds than large herds.

MR. LOCKWOOD: And for the record, my name is Mitch Lockwood. I'm the Big Game Program Director, and I'm not going to offer much more help on this subject; but just to clarify, I would say the vast majority of the deer breeding facilities do have fewer than 100 deer in their facility. I don't remember the range that's in the 20 to 30 to 40 range; but certainly the vast majority, less than a hundred in their facility.

COMMISSIONER FRIEDKIN: Thank you.

Carry on for now.

MR. WOLF: Okay. And then — and so I think we've covered this topic adequately. Other proposed amendments, this would relate to release site testing. So in this newest model, what we're talking about is testing requirements for the next three hunting seasons. And to that point of trying to simplify what is required at these release sites, we propose that that be the first 15 deer harvested. These would be on Class II sites. I'll talk a little bit later. There is a — not everyone would be required to do release site testing in those — in that three-year period and I'll try to show that to you in a moment. And then other provisions, we're not suggesting any proposed amendments to. Things like the harvest log, harvest log requirements, how long you maintain that, and the type of information that goes into the harvest log.

So let's look at this on a timeline and let's go from the future and work our way back to current time. What we're looking at after July — or beginning July 1 of 2019 — and the reason I chose that date is that's when the new deer — the deer breeder permits renew. And so going forward, you have a very simple set of regulations. You're going to be movement qualified — in other words, you've tested 80 percent of your eligible moralities — or you are not movement qualified because you haven't. And that's a very simple, straightforward formula. Obviously, save and except any exposed or trace herds out there. And there would not be any release site testing. So that's the end goal, and that's the simple part.

Now, as we move toward this three-year period in the middle, this is the structure that we're talking about is a structure that needs to be in place until we get three years of release site testing and we can address our risk threshold. During that period, we would have TC 1, 2s, and 3s. We would also have herds that are not movement qualified. And in that time period, as I said, we would have release site testing requirements.

And then to be fair, the most complicated part of these amendments — and this was going to be whether we were doing this specifically to the rules in the Texas Register or any amendments — cross-walking individuals and getting those herds into this new framework is fairly complicated. The reason it's fairly complicated is we are really trying to accommodate everyone that has done a good job already. And so we're trying to anticipate people that have done live animal testing, people that have done a good job of mortality testing, and how we take them from where they are and move them into one of these categories and give them a pathway to TC 1 so that they don't have to release site test if they don't want to.

So we'll talk about that. We — in the — we're not suggesting any proposed changes as far as herd certification program, the fifth-year and the certified herds. We want to recognize those as the safer herds out there. And we also would propose that any herd that has tested 80 percent of the eligible mortalities in the immediately preceding five years, be able to move to TC 1. So beginning on the effective date of the rule, all the way to July of 2019, if you meet these two criteria, which are postmortem testing criteria, you could go to or maintain your TC 1 status and therefore, you wouldn't have to release site test.

So we have one pathway for herd level antemortem testing for folks to get here because we recognize that this is looking backwards and folks are looking for a formula to get there today and that would be to test 50 percent of the herd antemortem prior to May 15th, 2017. And we put the deadline in there because when staff looked at this, you know, something that was also attractive is the complexity of TWIMS, developing TWIMS and managing and maintaining and explaining TWIMS, if we had to build in a lot of components for live animal testing, it was going to be — it would be difficult to do and it would be difficult for people to learn, difficult to explain, and difficult to maintain. Under this provision what our plan is, if the Commission adopts, is we will handle these manually. So anybody that does the antemortem testing before May 15th, 2017, we're going to figure out a manual process, have the staff upstairs doing the calculations, and then they would — we would go into TWIMS and just set that level, as opposed to having these complex algorithms built in TWIMS to get there. And so — but we would not be able to sustain that kind of support for some time and we obviously don't want to spend a lot of time and effort building something in the application that's not going to have longevity to it. So essentially, a one-year window is what we're proposing for folks to get to TC 1 if they're not there already.

Now, in the proposed rules, right now there's a 25 percent testing scenario and we know that people have tested 25 percent and they're waiting to see what is going to happen. So a twist to this is we will allow someone to test 25 percent to go to TC 1 during this one-year window. They just have to make up the difference between that 25 and the 50 percent before May 15th. So starting on the effective date of the rule to May 15th, once they hit 25 percent, they're TC 1; but by May 15th, 2017, if they want to maintain TC 1, we need to have 50 percent of their herd has been tested live animal testing. And those — and that's — and those are provisions that are within that stakeholder — the last negotiated amendments that had the majority of the group agreeing with.

COMMISSIONER FRIEDKIN: I missed — I missed — yeah. On those three and four — you may want to reword one of them.

MR. WOLF: Okay.

COMMISSIONER FRIEDKIN: Otherwise, they look like the same thing with two different percentages unless I'm —

COMMISSIONER DUGGINS: I was just going to –

COMMISSIONER FRIEDKIN: They're very --

MR. WOLF: Okay.

COMMISSIONER FRIEDKIN: Just if we can clarify, that would be helpful.

MR. WOLF: Sure, sure.

COMMISSIONER FRIEDKIN: So that we see the distinction between the fourth point and the third point.

MR. WOLF: We'll drill down in a little more detail for tomorrow.

COMMISSIONER DUGGINS: So what you're — sorry. What you're suggesting is if a rule were adopted in August and took effect, when would you propose — when — I forgot. When is it proposed to take effect, if it were passed?

MR. WOLF: That's a good question. That's one of my last points is our — we would propose — of course, if it's adopted tomorrow — that the rule would take effect upon the launch of TWIMS, the new launch when all the application is built; but no later than August 15th. August 15th is when really deer breeding movement starts to escalate for the fall releases. Until then, it's pretty low. So no later than August 15th, but earlier if we can get TWIMS — once we get TWIMS redeployed.

COMMISSIONER DUGGINS: So if that scenario occurs, the rule is adopted tomorrow and it takes effect — per your example — August 15th, so if by September 30, a particular facility has tested 25 percent of their total herd, they're TC 1 without other complicating factors. They can become TC 1. But between that date and May 17 of next year, they will have to test an additional 25 percent of the herd to retain that status?

MR. WOLF: That's correct.

COMMISSIONER DUGGINS: Okay.

MR. WOLF: That's correct. And we'll take — if someone's done 50 percent now, you know, we're going to have submit the — you know, there are herds out there that have already done this. You know, if they submit that to us now, then basically they've met that requirement to maintain it into next year, assuming — assuming that they meet that 80 percent eligible mortality at the end of the year, as well, because that will apply to all herds. Every year, 80 percent of the eligible mortalities must be tested.

Other proposed transition amendments, these are actually particular requests from individuals. We'd propose that we would reset any 2016-17 release sites back to Class I if all originating sites — in other words, that's all the deer — all the sites that contributed deer, if they can test up by May 15th, then we're going to — we would propose to give them one year of basically — we would basically be retroactive and acknowledge that after the fact. So if I release deer to a site, I'm a TC 2. There's going to be testing requirements. But if by May 15th, if I test up to TC 1, those requirements will not continue into the future. And we also would propose to reset those release — 2016-17 release sites if all the breeder deer released on that site in that season are harvested and CWD tested. And those are just a couple of amendments to really address different business models out there that folks have brought to us. It would be a transition period only.

Postmortem testing substitution, the first bullet here is really not much different than what I presented to you before. Folks could still substitute on a two-to-one basis, as long as 50 percent of their requirement is met with postmortem tests. The difference is if they have no moralities; or in addition, if they have no mortalities, then it's simply a two for one. So, for instance, if I have a 100-deer herd and let's say it's 3.6 percent. We would expect four test results. If they do have — if they have no mortalities and they produce no test results, then we would — then we will need eight, two times — two times the — what we'd expect to see.

The thing about it is — and I'll remind you that we don't — we want to disincentivize people ignoring or not being diligent about getting mortalities; and so we have another provision here because we realized in some cases, folks are not going to hit that 50 percent threshold. And so we would also propose that if you don't — if 50 percent of your postmortem tests — if 50 percent of your requirement is not postmortem tests, you can still replace; but it's going to be a four-to-one ratio, and that essentially is in there to disincentivize folks from ignoring mortalities because they know they can make up with a two for one at the end of the season. You know, we want to really encourage them to get those mortalities. So it builds in a little bit extra testing if folks are not getting their mortalities in their pen and it also compensates for the lack of postmortem tests.

COMMISSIONER DUGGINS: I'm confused. So if a —

MR. WOLF: Let me go through an example. Would that be good?

COMMISSIONER DUGGINS: Well, let me ask this question and then do that. If a facility had 100 deer and four died, are you saying there's no requirement under this proposal to test any of those four mortalities?

MR. WOLF: No, sir. So if they had 100 deer and four died, then they would have to submit test results. In this case, if we'd use the 80 percent rule for four mortalities, they'd actually — if you round up, we'd have to get postmortem tests on all of them. But if they don't, if they don't get that, if we have postmortem tests on half of those, they could still meet that requirement by substituting on a two-for-one basis. Let me take it in a — if they have ten mortalities, they would be expected to give us eight, 80 percent.

COMMISSIONER DUGGINS: Not expected, required.

MR. WOLF: They are required. You're right. They're required to do that. If they give us four or more that are postmortem, then anything — then the difference — let's say they give us four. The other four that they did not capture, they could substitute on a two-for-one basis. So we would get eight antemortem tests. However, same scenario. Ten deer die. They have to give us eight, but they only got two of those animals postmortem. That means there's six missing samples out there and they're below the 50 percent threshold. So they would have to provide us 24 antemortem tests because that would be at a four-to-one ratio.

And so what this does is, is if folks are not actively pursuing their mortalities, this compensates for that lack of mortalities by testing a higher percentage of the herd antemortem because we really want to get our hands on those animals — would love to have tests off the animals that have died.

Yes, ma'am.

COMMISSIONER LATIMER: So the percentages of antemortem tested are based on the sciences that I heard during the live testing symposium or that you have to test a certain number of live animals in a — to get a reasonable certainty of finding CWD in a particular group. So that's based — your numbers are based on that science recommended?

MR. WOLF: Well, these particular numbers are more so based on a comparison of postmortem to live test. The example you're using would be the whole herd test. When someone does a whole herd test, those tables and probability of detections — in this particular case, the —

COMMISSIONER LATIMER: Post and antemortem?

MR. WOLF: That's right. Now, the science of it was the detectability. If you'll recall, for rectal tissue which is — of the tonsil tissue and the rectal tissue, which are the two live tissues, the least sensitive is the rectal tissue. And so it's 62 percent as good as a tonsil and the retropharyngeal lymph node and so the original two for one was to try to compensate for the fact that if they chose rectal, it's not as sensitive. So we need more samples.

COMMISSIONER LATIMER: Okay, thank you.

MR. WOLF: And I understand this is not —

COMMISSIONER SCOTT: Just — I'm just curious. Is there any differential between the cost of doing alive or dead?

MR. WOLF: Yes, there is. I know — I mean, for a postmortem sample, you know, a collector or person that's a deer breeder can — they can collect their own samples because it's not a surgical procedure. You have an animal that's dead and so you go through the Animal Health Commission program and you can collect your own samples. You submit them to the lab. I forget the lab costs. You know, 50 to $100 depending on head disposal. But if you're going to do antemortem testing, that is a surgical procedure; and my understanding is that a veterinarian is required to do that. Dr. Rollo with the Texas Animal Health Commission is here. If we get any deeper into veterinarian questions, we might ask her.

COMMISSIONER SCOTT: That's close enough. But I guess the reason I'm bringing that up is I thought that was the case. I wasn't sure. But that also is an incentive to get more of the dead animals tested because it's cheaper for them to do that test.

MR. WOLF: Very good point. That's a very good point. If they can get 80 percent of their tests postmortem going forward, then there's no need for antemortem tests, no need to call a veterinarian out.

COMMISSIONER MORIAN: I had one question.

COMMISSIONER FRIEDKIN: Commissioner Morian.

COMMISSIONER MORIAN: On your example, if you have ten mortalities, you're going to have to test half of them? I thought you would have to test just five of those.

MR. WOLF: So if you have ten mortalities, under this proposed amendment, 80 percent mortality testing is the requirement. So they would be required to test eight of those animals. Of those eight —

COMMISSIONER MORIAN: Okay.

MR. WOLF: Of those eight, half of them need to be postmortem tests if you don't want the — to have to do the four-to-one replacement.

COMMISSIONER MORIAN: Okay.

MR. WOLF: So it's essentially 40 percent when you do the math.

COMMISSIONER MORIAN: Yeah.

MR. WOLF: They would have to provide 40 percent postmortem to not do the four-to-one replacement. Okay?

Antemortem testing provisions, so a couple of changes based on comment. This was comment from the stakeholder group. The proposal in the Texas Register is that a deer could be tested no more often than every three years. The rational for that is we didn't want folks going to the same deer year after year and testing that deer. We wanted them to sample from within the herd. But folks did bring to us examples where a three-year cycle could be problematic and they may run out of eligible animals.

And so we're willing to go down to a two-year cycle on that so that an animal — that you just couldn't go back to an animal every year. You'd at least have to skip one year before that animal would be eligible for antemortem tests. And so that's a proposed amendment that makes sense and will better fit the business models out there.

Residency requirement, this one here in the proposed rules, we had proposed that a deer needed to be in a facility for 16 months to be eligible to be antemortem tested; and there are some valid reasons for that. But — and particularly Deer Breeders Corporation, during this whole process, I've been contacted numerous times by Deer Breeder Corporation with different models out there that — where individuals were not going to be able to live animal test because of this residency requirement. Through those processes, we were trying to develop rules work-arounds, maintain the residency requirement, but address that exception. And as Deer Breeders Corp. kept bringing me these exceptions, it became — they became — they convinced me more so and our staff that really the residency requirement was not worth what we would lose where people couldn't antemortem test.

And so we're proposing that there not be a residency requirement because that will be a barrier to many people being even eligible to live test and we would like for them to live test because that's going to give us more samples early. And so our proposal in response to this and in response to Deer Breeders Corp. persistence on this and some very valid reasons is, is we would recommend no residency requirement's necessary.

Noncompliant release sites, you'll recall in the proposed rule if you're not compliant in 2015-16, you have to make up that five years going forward. If the Commission chooses to adopt these amendments where we're doing three years of testing for the first 15, then we would suggest if you weren't compliant last year, that you have to test the first 15 deer for the next three years. So basically, everyone out — all the release site testing is the same moving forward. And if a site is not in compliance, they would be ineligible to receive DMP deer, Triple T deer, or breeder deer — DMP Permit, breeder deer, or Triple T deer until their release site testing requirements had been satisfied.

Other proposed amendments — and I alluded to this earlier — Triple T and DMP release sites, we would propose that they test the first 15 deer harvested through the 2018-19 season. So everyone that's doing release site testing, all of this ceases 2018-2019 and everybody is operating by the same formula.

And this one here was in response to a specific comment. We have a provision right now that says when a deer is released on a release site, it must have access to all the acreage on that site. And obviously, some folks have airstrips that are high fenced. They have orchards, food plots, yards, etcetera. And so we would just suggest, you know, that we make provisions to allow for these exclosures to exist, you know, for the protection of human life, agricultural products, ornamentals, etcetera.

And then finally the last, as I had already mentioned to the Vice-Chairman, we would propose that the effective date of the rule would be upon the launch of the updated TWIMS application; but no later than August 15th, 2016.

So public comment, this number is not exact. It's dynamic and changing, but the rough numbers right now in total count are 152 in support and 321 opposed. There are likely some duplicates in there. We haven't gone through and extracted the duplicates yet. Probably no more than 20, but just know that this is not entirely accurate; but it gives you an idea on the proportions on the comments right now and the volume.

You have your books in front of you with all the detail. I'm just going to quickly go through these and read them quickly, particularly for the audience so they know just some of the common themes out there for folks opposing the rules. Some that actually opposed, don't believe the rules go far enough. That's about 28 people that oppose the rules, but what they want us to do is be stricter. Some people think deer movement should be illegal; release site fencing should be higher than 7-foot; that released deer should be visibly marked, and I'll talk a little bit more on a letter we got from a group; testing is not as expensive as we claim in the preamble; that our rules conflict with Animal Health Commission rules; that we should require notification of adjoining landowners for CWD positive sites; that we're being unfair singling out one group or being discriminating; that these rules hurt the job and economy — hurts jobs and the economy; that they won't affect CWD or that CWD can't be contained; this is overkill, overreach, power grab.

We have a recommendation that we adopt the TDA recommendations and keep politics out of it; listen to the experts in the industry; test all free-range deer; that this is a waste of taxpayer money; that there should be no release site testing; that no Triple T release site testing, tagging, or log requirements if someone's receiving TC 1 deer; that CWD is a political disease; that we have an ulterior motive or agenda. Folks oppose and recommend we test everything, all breeder deer and hunter-harvested deer; that the State shouldn't force breeders to kill deer — which obviously, our antemortem substitutions will be able to address that — no Triple T release site testing; and that we allow live testing, which the proposal does allow for that.

Folks oppose because they believe that this will have a detrimental impact on property values, particularly Class III sites; that breeders shouldn't be regulated; that CWD is not contagious; and that other states have had CWD for centuries without a problem; that Triple T release sites should be able to gain Class I status; that release site test requirements should be the same as the interim rules; that the live window test — live test window should be eliminated.

We also received a form letter that was distributed by TDA and 52 of those came in at least as of a day ago and then an apparent form letter speaking to the Triple T rules. As far as organizations — and some of these organizations are also represented on our stakeholder group. But those that specifically oppose the rules include — the proposed rules include Texas Deer Association and as you heard from Ms. Schultz, they are — have been advocating for that May 6th version. Exotic Wildlife Association had the same comments. North American Deer Farmers Association also signed on to that; but each of you have been distributed a letter that we just received this morning from North American Deer Farmers and what I'll highlight is, is they continue their support for the May 6th proposal and so that's the one that the four industry trade organizations supported, but none of the other stakeholders supported. But if that is not acceptable to the Commission, then they would support this last iteration that come out of the stakeholder group and, of course, they give four suggested amendments to that.

We also got a letter from Representative Lyle Larson supporting that May 6th offer, if you will, from industry and opposing the adoption of the proposed rules. Organizations and individuals that have sent letters in of support, include the South Texas Property Rights Association, Texas and Southwestern Cattle Raisers Association, Texas Wild — those were independent letters. And then the rest of these that I'm going to read, all cosigned a letter. You have a copy in your binder and it's — there's quite a bit of material in there. But specifically emboldened in there, they also all recommend that the Agency bolster the identification requirements on breeder deer over and above the tattoo requirement upon release. And so those organizations on that letter include Texas Wildlife Association, the Archery Trade Association, Boone and Crockett Club, Hill Country Conservancy, National Wildlife Federation, Pope and Young, Quality Deer Management Association, Sierra Club Lone Star Chapter, Texas Ag and Land Trust, Texas Chapter of the Wildlife Society, and then there were ten individuals that also signed that letter. They were primarily veterinarians or past or current officers in Society for Range Management, Texas Chapter of the Wildlife Society, Wildlife Society. So Range, Wildlife, and veterinarians.

And then we also got a letter that was penned by Mr. Hammon and had — I think that's 43 landowners signed on supporting the regulations. And with that, that concludes my presentation. I'll be glad to answer any questions.

COMMISSIONER FRIEDKIN: Clayton, thanks.

Does anyone want to start? I have a lot of questions.

COMMISSIONER DUGGINS: Go ahead.

COMMISSIONER FRIEDKIN: Help me understand as we go back to — a little bit to the transition period on the blogs here, on the graphic, the proposed amendments where we go from current transition provisions to a simpler — much simpler — no release site testing norm that starts in July 1, 2019, correct?

MR. WOLF: Correct.

COMMISSIONER FRIEDKIN: When you say 2018-19, you're referring to that season obviously, right?

MR. WOLF: Right. So under this proposal, there would be release site testing for the 2018-2019 season, which ends February 28th. July 1 is when deer breeders get their new permit and so that's when they would be evaluated on their testing and then we would have a complete, clean break moving forward.

COMMISSIONER FRIEDKIN: Okay. Can you — I know this is difficult because it's — you know, we obviously don't want to get into the weeds too much on the stakeholder discussions; but if you can sort of elevate that discussion a little bit to what you gleaned as the major concerns with this period between now, with the transition provisions, and the ultimate simplified version and also, if you can throw in — I'd like to hear a little bit more about the scientific discussions that may have been had — that may have happened that establish this three-year waiting period versus a shorter, more compressed period.

MR. WOLF: Sure.

COMMISSIONER FRIEDKIN: So one question is: Complexity and why we need to deal with this level of complexity in the interim period, and the other is a term or timeframe consideration that's based on science?

MR. WOLF: Good questions. So if we go back to a couple of basic concepts that I think maybe I presented in March on probability of detecting the disease, if — the beauty in live animal testing is you can get a lot of samples, and it's about sample size. And so if you're looking at a one-year window and someone tests a lot of animals in their pen, live animal, their probability of detecting that disease is much higher than if they got all of their natural mortalities in that one year.

But if you also use — and the best model is a herd certification program. But if you use mortality testing and if you had a completely closed herd and you were getting all your mortalities, the nature of CWD — I mean, we assume — when you're going through this model, you're assuming that there's one animal there and you want to detect it. Well, in the first year with, you know, a hundred deer herd getting five mortalities, unless that CWD animal dies, then you're not going to get it. But with the nature of CWD and the incubation period, within five years if that animal is still there, it's going to die and if you are doing — if you're testing all or most of your eligible mortalities, you're going to find it.

So our models were not able to incorporate that; but it's, you know, intuitive that if that animal is still there and has the disease — and typically, that's really three to four years — you know, by then the animal is going to expire. If you're doing a good job of mortality testing, you're going to find it.

So the proposal that industry or the offer that industry laid out there for 80 percent mortality testing for everybody, on its face value, it had value; but it needed that time component because we have herds out there that have tested at 20 percent, 30 percent, 40 percent. We don't have that assurance right now. But under this proposal if you're movement qualified, the whole population — so even if you're trading with other folks, everybody would be doing 80 percent mortality testing.

So the notion is that as you get into year three or four, because everybody is playing by this high level, our probability of detecting the disease should be much higher. So that — so we had to figure out how to compensate for that without stifling industry. And so the — and so giving folks credit now for the enhanced testing that's taking place right now, the way to compensate for that was to catch those animals at the release site and it was a — you know, as many of these negotiations are, you know, there's give and there's take and this was the common ground for the majority of these stakeholders was we'll forget about release site testing, but we need to get — we need three years of enhanced testing and so we're going — the only other way to get it, if you're not going antemortem, is we've got to get it at the release sites. And so now the — you know, I guess the admitted potential flaw is we don't know — I mean, they're not necessarily required to harvest a deer that are released. But by going on a — by a three-year period, even if you're not harvesting the deer you released in subsequent years, you are harvesting deer that have been exposed to those released deer. So you should be able to pick it up.

As we move forward, let's say in the 2018-19 season, you know, what we're proposing just for new release sites is just one more year of release site testing; but that's in the context of the whole industry has already tested at 80 percent. And so the industry, as a whole, has mitigated to a degree the risk and so newer release sites at the end of that window would only have to test that last year.

Now, we don't have — you know, as far as assigning a probability of detection, when our — when our — when the staff in Inland and Coastal Fisheries were doing the probability of detection models, they gave us all the assumptions. Some of these assumptions don't fit, I mean, just to be fair; but they were the best tools we had for a relative comparison. One of those — one of those assumptions was it really didn't incorporate in a closed system, the incubation period of CWD; but the rational, particularly among our veterinarians that are on the small stakeholder group, you know, they felt like this was — you know, with their knowledge of the nature of the disease, that this was adequate risk mitigation; but that clearly through — I don't believe folks were going to go below a three-year period.

I mean, there was discussion of a four-year period and some back and forth; but three years in the context of what folks are already doing now and under the interim rules, folks felt those three years combined with what's going on now would — should greatly enhance our chances of finding the disease.

The other aspect is the incentive to live animal test. We believe — we hear that industry — that many just don't want to have their customers testing. And so that by testing half their herds — and if you'll think about this on a hundred animal herd, as we said, the mortality — average mortality rate — is about five animals. And so they would get five animals out of a hundred deer herd. Right now if they take the 50 percent antemortem approach, they're going to get 50 of those animals and we're going to get those tests to the lab this year and so that significantly increases our probability of detection in this first-year window. So it's one of the reasons we took the — we're proposing the residency requirement go out is we want that option to be available to as many people as possible because if, in fact, they don't want to release site test, we're going to be able to get a lot of samples soon.

COMMISSIONER FRIEDKIN: Okay. When you say that folks didn't contemplate — when you say "folks," do you mean the scientific community in that reference or —

MR. WOLF: So our modelers — are you talking about the modeling part and not —

COMMISSIONER FRIEDKIN: No. I'm talking about the three-year part, the interim between transition and what we ultimately get to in '19. You mentioned — unless I misunderstood, I think you mentioned that — you just said that folks didn't — didn't see any way to compress that from three years down. You're talking about the scientific modeling and the community and all the stuff they would suggest.

MR. WOLF: Right, right. And so those later discussions, we were not afforded the — I mean, this was — we were not afforded the ability to run, like, three-year models and put that out and so we really had to rely, for instance, on, you know, Dr. Eikenhorst, Walt Cook, you know, from Texas A&M to weigh in heavily on, you know, on the aspect of was three years enough. My sense though in all my conversations with everybody, in addition to the veterinarians, was that two years was not going to be acceptable. In fact, they had asked initially for four; and then decided to settle on three.

COMMISSIONER FRIEDKIN: Okay. And then — but for a TC 1 site, they would effectively be there — I mean, we've got, as you described, pathways to get to that.

MR. WOLF: Right.

COMMISSIONER FRIEDKIN: They would effectively be there immediately.

MR. WOLF: Correct. Folks may be there now with the tests they have banked. And the other simple part that's — simple is a relative term — but in that transition period is that 80 percent mortality testing, you know, would begin — you know, we would do that evaluation in the next period. So even in that — in those intervening three years, everybody would have to mortality test unless — 80 percent of their herd — unless they're in the herd certification program and that one stands alone.

COMMISSIONER FRIEDKIN: Okay. And, I mean, I can — I've got a few more; but if anyone wants to jump in on any of this, dive in.

COMMISSIONER JONES: Fire away.

COMMISSIONER FRIEDKIN: Okay. And so as you look at this and how it sort of developed through the stakeholder group — you know, literally through the course of the meetings — you guys have obviously looked at how to simplify this and what the impacts of simplification would be. Are there ways to simplify this interim period that don't have a negative, you know, scientific impact as far as we know on herd risk?

I mean, how could that — how could this interim process be simplified without a known negative impact on the overall risk of the herd?

MR. WOLF: Well, Chairman, I'm trying to think. I mean, we've been through so many iterations and discussions on simplification. Most of them that we've looked at and some are suggested — some are suggested in the North American Deer Farmers letter. They are simpler or accommodating, but they do compromise disease risk mitigation. And so, you know, given the many thoughts — and to be honest with you, I bet you there are some simplifications here that I could think of. I'll tell you — if there are some, typically what happens is it ends up excluding certain business models and that's those transition provisions, all those many transition provisions we're suggesting, which is not necessarily in the three-year window. You know, we've done that to try to accommodate folks.

So the general rule of thumb was you could simplify and have adequate disease risk mitigation; but more than likely then you are forcing everyone, you know, into a certain model. As opposed to as you grow more complex, providing a little more latitude to match the models that are out there; and I think that's kind of the balance we're at. I mean, you could — you know, you could require everyone do release site testing, which would be simpler if we just started now; but then what we would lose is we would lose all those folks that want to live animal test and all the effort that's been put into that and the importance of that is we can get that now, you know, and we get a lot of tests now. And so that is a complex — there is complexity that is the price to pay; but if we were to do away with that, we would lose that opportunity to better detect the disease right now if it is in other facilities out there.

COMMISSIONER FRIEDKIN: Okay. Can you just briefly speak to each of the four simplification recommendations that were in the letter that we got from —

MR. WOLF: Sure, sure. So I'll repeat those for everyone's edification. So the North American Deer Farmers' letter basically, again, reads that if the May 6th proposal is not a consideration, then they would advocated for the May 16th, which is the version I'm presenting, with — but they have other suggested amendments. And so one of those is to standardize the substitution rate just to two to one and we went into great detail, you know, where we want to really disincentivize folks ignoring mortalities. And as Commissioner Scott said also, you know, even the cost helps also create some disincentive; but that four-to-one ratio is to do that.

The second one, to grant TC 1 status to facilities for which valid CWD tests have been submitted for 80 percent of the mortalities over the most recently completed three reporting years. I know what the rational behind this is and the rational is when the entire industry has tested at 80 percent, after three years there won't be any release site testing. So why not do that looking backwards? And the answer is it's not in conjunction with release site testing. As we look backwards — as we take these next three years going forward, there's also release site testing associated with that 80 percent mortality. When we look backwards, we don't have those extra samples out there. So it weakens that model or the risk mitigation.

I'll jump to bullet four first — next because it also compromises risk mitigation and that is a —

COMMISSIONER FRIEDKIN: Sorry. No. 2, is that a significant issue with other stakeholders, like TDA?

MR. WOLF: That actually was never — it was never offered up to the stakeholder group.

COMMISSIONER FRIEDKIN: Okay.

MR. WOLF: This is the first time I've seen this one, this morning.

I'll go to bullet four next under the theme of compromised risk mitigation. The proposed amendment will be to test — the testing requirements for release sites that purchase deer or release deer from TC 2 facility be established and enforced on an annual basis during the transition period. What they're saying is you only have to test one year.

And so if you'll recall a couple of things here is people are not compelled to shoot the breeder deer that are released this year and so if they don't, then we need to get some samples from the associated herd; but we need enough time for exposure. And so for those releases this year, that is important to do that. Then obviously, you have the whole industry is moving forward as we go forward and so that reduces down to two years and one year; but in the initial years three years going forward, we need to get those animals that are exposed, particularly in an environment where not everyone has been doing 80 percent mortality testing.

So then the last — the third bullet there, all breeder facilities not quarantined or under a hold order, must have the opportunity to gain and maintain TC 1 status during the transition period. And so they are — I believe they are speaking to that three years' transition period. So when the offer was laid out there for this much simpler model, the first initial offer laid out by Texas Deer Association and then subsequently supported officially by the four trade organizations, it had a one-year transition period in it and that was — you know, particularly from our ability to manage this situation going forward, we realized, hey, we can manage this thing manually and yet build TWIMS — build a simpler TWIMS and maintain a simpler TWIMS going forward and so there was a cost-benefit analysis — rudimentary, if you will — but we saw we could handle it for one year manually.

What this proposal would be talking about would be introducing — I'm concerned about our capacity to manually do this for four year — for a four-year period. And so it really — it really takes the shine, if you will, off of that — off of that notion that, you know, after the effective date of this rule, the things that we manage in TWIMS are going to be relatively simple and we wouldn't — we would no longer be doing population level antemortem testing. So there's — I mean, there's clearly some capacity issues.

I'm not saying it's inconceivable that they could not be addressed; but in the totality of the package presented, that was initially presented, you know, we saw that as a benefit of, you know, really getting all hands on deck for a year, yet not really encumbering our TWIMS system with some complexity for the future when it's not going to be there, you know, in the years to come.

COMMISSIONER FRIEDKIN: Okay, thanks.

Anyone else?

COMMISSIONER DUGGINS: I have a question.

COMMISSIONER FRIEDKIN: Please, Commissioner Duggins.

COMMISSIONER DUGGINS: Clayton, did the group consider something — I'm going to describe something and I would like to know whether it was considered or not and if it was, I'd like to know why — or what the reaction was. For example, could you — and I'm going to arbitrarily pick this number. But could you say for herds with a total herd size under 50 — and that's my number, and it's arbitrary — say you've got to conduct a set number of antemortem tests, a numerical number, not a percentage or maybe it is a percentage or you — but I just say maybe it's five. If you're 50 deer and under, you've got to do an antemortem test on five. Again, that's an arbitrary Ralph Duggins' number — and then say if you have any pen mortalities, those have to be tested, all of them. And then for herds over 50, come up with some percentage of the herd that would have to be antemortem tested and, for example, consider maybe the first five pen mortalities have to be tested. And the reason for the differentiation is that in recognition that a smaller breeder may have less financial resources or pen facilities for it. But in the — I'm just am curious if something like that was considered or should be considered or is it ridiculous? I don't — I'm just throwing that out.

COMMISSIONER FRIEDKIN: Just considering impact mitigation —

COMMISSIONER DUGGINS: Yes.

COMMISSIONER FRIEDKIN: — on smaller breeders?

COMMISSIONER DUGGINS: Yeah.

MR. WOLF: So the notion of requiring antemortem tests from everyone, you know, at whatever scale — you know, the scale version — was really not — was not considered. I think the theme — I'll have to say the theme was provide options. You know, in the early discussions as we talked about antemortem, I remember conversations that said everybody is not going to want to test their whole herd. Everybody is not going to want to do this. And the fact of the matter is some facilities really are not built for that. I mean, antemortem testing is more conducive when you have working pens as opposed to where you have to go, you know, dart deer in your facility.

So requiring a minimum number of antemortem tests from everyone, even if it's kind of scaled based on herd size, was really not contemplated, I think. I think it's fair to say that we felt like for someone whose business model where they — where they're diligent and they can get all their postmortem mortalities, that's going to be a lot more economical for those operations and if they've been doing that, you know, with time, that is — that measures up to antemortem testing. I don't know if that answered your question or not. I mean, you may want —

COMMISSIONER DUGGINS: Well, if you had — for those in the business and had small herd sizes and did not want to do antemortem tested — testing, you could give them the option to continue with the hundred percent or some number of all mortalities if you didn't want to take advantage of the — for those who do want to do antemortem and some — I'm just trying to throw out —

MR. WOLF: Well, to --

COMMISSIONER DUGGINS: I'm trying to understand if something like that might be doable, and I'm not sure it is; but —

MR. WOLF: One theme that you hit on, I think we have discovered — maybe it's been offline conversations — is this — you know, everybody's capacity is different, depending on whether their hobby — they're in this for a hobby or they're brand new. I mean, and the resources vary. But if we look at the small operators using the percentage scale we have and we've — you know, I've talked with deer breeders on it — it's — you know, if in fact they do have to do some antemortem substitutions, it's a small number. Or if they want to do — you know, if they want to do half their herd. If they have 20 eligible aged animals and they want to get this 50 percent, that's ten animals and so I've had, you know, folks indicate, you know, that, you know, in the — you know, we — sometimes when we think about this, we're thinking about huge herds, 100, 200, 300 animals. The vast majority are much smaller and so the — using the percentage model, at least to some degree, addresses the smaller herds.

I'm not saying that just because you have a small herd you don't have the capacity to do it, but — or you don't have the financial resources to antemortem test, but at least the requirement is proportional as long as we're doing it on a percentage basis.

COMMISSIONER DUGGINS: Okay. One other question I had is I seem to remember in the papers that there was a criticism about the height of the fence. What is the proposed fence height that would be required for height?

MR. WOLF: The proposed fence height is seven feet. And I may need some assistance from Mitch or Todd or Ann; but my recollection is, is we have that provision. That's a standard that I believe is in the breeder statute, and so we have a precedent set for that. If somebody can help save me on this one because I'm fumbling a bit.

COMMISSIONER DUGGINS: Call in the lawyers.

MS. BRIGHT: I'm Ann Bright, General Counsel. It's my understanding that this height requirement is in other places in regulations. I don't recall just off the top of my head — and I can check on this — as to whether or not it is in statute. I believe, for example, the DMP statute does require a high fence. I don't recall if it specifies the actual height of the fence. So that's a long-winded way of saying I'm not positive.

COMMISSIONER DUGGINS: I think I would like to know that —

MS. BRIGHT: Okay. We can — we'll --

COMMISSIONER DUGGINS: — if there's something in the statute that sets it. And I don't know what the — use high fence very — I put it up once. But isn't there a standard height that's generally available? I thought it was eight feet. Yeah, Dick's — Dick's —

COMMISSIONER SCOTT: Eight feet.

MR. WOLF: Yeah. I mean, some of the comments we got, when you get the dimensions, you know, most of them are probably eight feet out there. I think the notion was is if we have some — if we have for some reason some, you know, oddball wire out there and folks have been using that to comply, that we're not going to require them to re-fence their facility if they were — if they did that, you know, pursuant to some of our previous rules; but we'll have to see what those previous rules were.

MS. BRIGHT: We'll check on that real quickly.

COMMISSIONER DUGGINS: Thank you.

COMMISSIONER FRIEDKIN: Commissioner Scott.

COMMISSIONER SCOTT: Just a quick comment on that, too. I mean, the difference to a deer between eight and seven feet, if they're getting chased, it doesn't make any difference. You know, if they really want to get out, if they've got that much pressure, they're going to clear an eight just as easy as a seven. So that's kind of a — to me, kind of a moot point really.

COMMISSIONER FRIEDKIN: Please.

COMMISSIONER LATIMER: I don't know what prior breeder deer, trap, transfer, all the rules were on ear tagging. It seems that we've received a lot of comments in the last week or so that that is a recommended requirement. So were there previous requirements and was — this may be a question for Susan — was there any discussion in the stakeholder's group requiring the ear tags on captive deer, for lack of a better term?

MR. WOLF: There was discussion, and so this is, you know, the — ear tagging of liberated breeder deer has been a hotly debated topic here and in downtown.

COMMISSIONER LATIMER: I'm new.

MR. WOLF: And there are statutory requirements. And so in statute by March 31st of every year, all the fawns — new fawn crop — has to have an ear tag applied and that ear tag has to have a four character unique — we call it a unique number. But it's a combination of numbers and letters. It's essentially a serial number for the deer and so that has to be applied to the tag and it has to go in the ear. Any deer that leaves that facility, when it leaves that facility it cannot leave without that tattoo also being applied inside the ear. And so when an animal leaves the facility, it should have a tattoo in its ear. If it's going to another deer breeding facility, sometimes they'll change out the tag. So that is a statutory requirement.

We — in the stakeholder group, to be honest with you, this is one of the topics that the stakeholders, as a group, agreed to disagree upon. There are folks that feel strongly that all liberated deer should have an external form of identification.

COMMISSIONER LATIMER: That were previously —

MR. WOLF: In the breeder pens. Right. We also do note that — and there was examples sent to us. It was our records that were obtained under an Open Records Request. But those tattoos can often be very illegible. And so if epidemiologists are conducting an epidemiological investigation and they want to trace the history of that animal, if they don't know the unique number, then that can be problematic.

And then on the flip side, you know, we have interests that feel strongly that liberated deer, at a minimum, should not be required to have ear tags on them. In fact, you know, there have been suggestions that the identification be supplanted with a microchip so that there's really no visible form of identification. But it's a very — there's a lot of polarity in that discussion.

COMMISSIONER LATIMER: But they have to be identified while they're in —

MR. WOLF: They have to be identified while they're in the pens and so every deer in a breeding pen, the fawns by their — by March 31, must have ear tags. So if you go there and you don't have a new fawn crop on the ground, everything should have an ear tag in it; and then when they leave that facility, they must be tattooed with that same number.

COMMISSIONER DUGGINS: Why is it — under the summary I have, we have — it states that for Triple T, you've got to have — I thought I saw it in here.

COMMISSIONER FRIEDKIN: RFID?

COMMISSIONER DUGGINS: You've got to have an RFID tag. Why do we require — why does staff require that for Triple T, but not propose to require it for breeder deer?

COMMISSIONER LATIMER: I guess that was really the gist of my question. When is it required? When is it not required?

MR. WOLF: So that one — and the application of ear tag — I mean, the premise is the same. It's identification of animals and tracking them. Right now, we do require that folks apply a tattoo to Triple T deer that are moved so that if we do have a disease event, we have some traceability. RFID tags are more — well, No. 1, for an — our prescription doesn't have individual animal identification. These are unique and they're easy to apply.

Probably the reason it's not as big an issue is because when folks are Triple T'ing, they are typically stocking places that have low deer numbers and those are not usually animals that are going to be available for harvest immediately. In the deer breeding world, there are some folks that operate by business models where the animals that they release will be shot that season and many of them would rather there not be a lot of ornaments, if you will, hanging on the deer or have the least conspicuous type identification.

So particularly for those folks that are releasing animals to be harvested soon or even a year or two down the road, that ear tag is a detraction to some of those business models. Whereas on Triple T, oftentimes — I mean, this is restocking; and so those animals usually are not subject to harvest. They're put out there to repopulate that landscape.

COMMISSIONER LATIMER: Okay, thank you.

COMMISSIONER DUGGINS: But I still don't understand why we're requiring the RFID tag for a Triple T for two reasons. One, we're not proposing to require it release of a breeder deer; but two, in order to qualify for Triple T, you've — both sites have already had to undergo the testing regimes. So we — or the testing — proposed testing protocols. So I don't see the reason to burden a release — a Triple T release site with that under those circumstances. Help me understand why we need to do that.

MR. WOLF: So the testing on both ends is not going to get — I mean, for any of these scenarios, whether it's Triple T or deer breeder, it will mitigate disease risk to some; but we're not guaranteed by any means that we haven't moved the disease. The probability of detection on a Triple T site for one year — and I can't remember the stats that we ran — but for that first 15, it levels out; but it's like 12 or 18 percent probability of detection, for example. It's way below 50 percent.

So there's no guarantee that we didn't — that we wouldn't inadvertently move a deer with CWD from one place to another. So if that deer does come up positive in another place, then a reliable form of identification that we can discern is preferred for disease tracking purposes. That's the — that is the issue with tattoos and breeder — and breeder deer. If we only have a tattoo to look at, we have to hope that the tattoo has been properly applied because if it's illegible, you know, it's — what will happen is, if you know the identification of that animal, you can go back to its facility of origin. If you don't know the specific identity of that animal, then you end up implicating a lot more facilities because everybody provided deer; but you can't trace back to one facility if that animal just got there and it has CWD.

So in some cases, it doesn't help. I mean, if the animal has been there a long time and CWD is there, then the individual animal identification may not be as important; but in some cases it can be. But it's reliable identification for trace-back purposes.

COMMISSIONER JONES: I want to ask a question that was —

COMMISSIONER FRIEDKIN: Is it related to this one?

COMMISSIONER JONES: Yes.

COMMISSIONER FRIEDKIN: Okay, perfect.

COMMISSIONER JONES: Yes. Real quickly, there was a mention — and I think I heard this before — of the chip. What's the — but I haven't heard what the downside is to using chip technology, which I know we use on dogs now for identification of dogs. Is there a downside to using it on deer?

MR. WOLF: So you're talking about the implant versus — you know, because the RFID has a chip in it, but you're talking about the implant. It's a microchip implant that goes under the skin.

COMMISSIONER JONES: As opposed to --

MR. WOLF: Right.

COMMISSIONER JONES: — the tag.

MR. WOLF: So it is a reliable form of identification. There — I have read some of the papers on it, and research is mostly in South Texas. Those chips are enclosed and I believe it's in glass and sometimes when those are put in, they can bust or break through time and not function. You know, just me thinking about that issue in the past, is if we don't — if we find a deer that has CWD and someone had let's say, for instance, put the chip between the shoulder blades. I've had folks tell me that's the best place to put it for it not to migrate. If a hunter kills a deer and the only form of identification it had was a chip that was between shoulder blades, that — likely, nobody preserved that chip. I mean, nobody knew to look for that chip.

And so that is one of the issues. I have also heard that those chips migrate. So if the microchip is in a visible RFID button tag and we have a positive, you've got to — you've got — you obviously know that deer came from somewhere else. If a chip is implanted in the animal and you can't tell whether the animal was born on that pasture or whether it was moved there, you don't even know whether, you know, whether you're talking about a deer movement issue or if this is off an animal that has been there before or was raised in the pasture.

So from a disease standpoint, you know, that is my biggest concern is being able to know that an animal had been moved and an animal was part of a transport, if the form of identification is so conspicuous that maybe — inconspicuous, that maybe the hunter was not even able to tell that.

COMMISSIONER FRIEDKIN: But the chip is picked up electronic —

MR. WOLF: You can read it, yeah. You — and we have deer breeders that use them. If you're just looking in the pen at reliability, applying — you know, applying microchips — I mean, we have some of them that they do that because it is much more reliable. They can set up a scanner and as those deer go under that bar, you have to get pretty close; but it will read them and so they can get their inventory and so there are some benefits to it.

I think the bigger question is once you get out there, you know, in the free range and in the wild is even knowing if that deer, you know, originated from other — some other place or not.

COMMISSIONER LATIMER: So they all need to be identified so during this transition period with antemortem testing and a deer can only be tested so many times within the timeframe, those deer definitely have to have some form of identification.

MR. WOLF: They all have to have a form of identification and our programmers are already, you know, sketching out how we would track that in the system; but that's done already, even with our postmortem tests.

COMMISSIONER LATIMER: Okay.

MR. WOLF: Essentially, each animal is going to have a testing record. And each deer breeder in our new TWIMS system, they have an inventory. They can pull it up online and each one is listed by that unique number and so if they test an animal and get a result, they would assign it to that animal number.

COMMISSIONER LATIMER: Okay.

MS. BRIGHT: If I can go back to the fencing quickly. We did a check. It's not actually in statute, the fence height. While there are requirements for high fences, the height is not specified in the statute. However, the deer breeder rules that we've been operating under, I'm assuming for many years, provide that the deer breeding facility has to be surrounded by a fence capable of containing deer, which is to be no less than seven feet in height. So that's the current rule for deer breeding facilities and I believe that that's the reason that we've traditionally expanded that to any other kind of facility that's required to be high fenced and those are regulatory.

So that, while — I guess I'm saying if there was a change here, it would have to be something that would probably be a different section that we might have to go back and come back to the Commission on because it would have implications for other regulations, as well. Am I making any sense? Okay.

COMMISSIONER FRIEDKIN: Thanks, Ann.

Going back quickly to the Triple T consideration. So we have Triple T sites, obviously, high fence and low fence?

MR. WOLF: Correct.

COMMISSIONER FRIEDKIN: So this would apply to low-fence-to-low-fence transfers in terms of ID?

MR. WOLF: It — the way it is proposed, it would apply to any Triple T movement of deer. So all the deer that are captured at one site, irrespective of whether there's a high fence or low fence.

COMMISSIONER FRIEDKIN: So if you're moving it from a free-range environment and you don't have particular suspicion that it's a CWD positive, you wouldn't have any reason to think that, right? Moving it to another location, what's the benefit of identifying that animal if you're moving it from one low fence to another?

MR. WOLF: It's not — the individual unique ID — of course, the tattoo, we've applied the tattoo for years. In a Triple T situation, I'd have to — I'm going to generalize some. But the unique animal identification is not as important as in a deer breeding situation because in a deer breeding situation, these deer travel through a lot of pens. Your average Triple T is trapping from one ranch and going to another ranch.

Now, that doesn't mean that you could have — you could have a Triple T for numerous years coming to a ranch and so knowing that cohort, but we handle that through the tattoos. So it's a very good form of identification, but it is a good point that the unique — a unique number for an animal is not as critical for Triple T because you're capturing all these animals that you assume were born and raised on that site. They weren't, you know, coming in and moving from other areas.

COMMISSIONER FRIEDKIN: So that's where I'm kind of circling back to Commissioner Duggins' point of the necessity of doing that.

COMMISSIONER DUGGINS: We don't require tattoos now for Triple T, do we?

MR. WOLF: Yes, sir. Under --

COMMISSIONER DUGGINS: How long have we been doing that?

MR. WOLF: That's been for many years. Really, probably since the advent of CWD when we started thinking about traceability. But my understanding is each — they're batch tattoos. And so all the animals from one site get the same — they're assigned a number so we know it was from that year from that ranch, but there's not unique numbers for each animal.

COMMISSIONER DUGGINS: Well, I don't think that's necessary on Triple T. I just — you've already got the testing protocol at the subsurface level, both at the trap site and the release site, and there's not — presumably, not a breeding facility involved in it. I think that particular provision ought to be stricken out on Triple T.

MR. WOLF: So just to be clear, so we'd — in our amendments tomorrow, we would propose that the RFID requirements for Triple T deer would be — would not be included — and I can't recall, Ann, if the tattoo is a permit provision or if it's in the rule?

MS. BRIGHT: We're going to have to check that because —

MR. WOLF: Okay.

MS. BRIGHT: Yeah, because the way the rules are structured — and this was — a lot of this was just a function of time. We have Triple T rules that have existed for a long time, just like we've got DMP rules and CWD rules. And so over time, we will go back and we will repeal those rules that no longer going to be affected, that are going to be superseded by these new rules. But to the extent that they don't conflict, some of these older rules are going to continue to apply and some of them are real basic like recordkeeping and report, when reports due, that sort of thing.

We'll need to check to see if there is another provision that is not opened up, that is a section that we are not proposing for adoption or amendment that addresses Triple T and that is not going to be superseded by these rules. I don't know if —

COMMISSIONER FRIEDKIN: I might be a little lost, as well. Clayton had a —

MS. BRIGHT: He had a look? Okay.

COMMISSIONER FRIEDKIN: Sorry.

MS. BRIGHT: I think we can do it, but I would like to be able — I'd like to look at those other requirements.

COMMISSIONER DUGGINS: If we can't do it, we could fix it at the August meeting.

MS. BRIGHT: Absolutely, absolutely.

COMMISSIONER MORIAN: Let me make a comment directly to that, though. I — I'm going to come from the other side. You know, detectability and traceability are so critical. Let's don't undo a tattoo situation that's already in the regs and nobody has complained about.

COMMISSIONER FRIEDKIN: We're talking about tattoo or RFID tags?

COMMISSIONER DUGGINS: About RFID.

COMMISSIONER FRIEDKIN: For Triple T. It's my understanding —

COMMISSIONER MORIAN: Just the RFID?

COMMISSIONER FRIEDKIN: Yes.

MS. BRIGHT: You're talking about the new requirements. Okay.

MR. WOLF: And that was going to be my --

COMMISSIONER MORIAN: It would still be — it would still be tattooed.

COMMISSIONER DUGGINS: I didn't realize it was tattooed; but if it, it is.

MS. BRIGHT: Okay. So we're talking about just the RFID tags.

MR. WOLF: Yeah, we're just talking about — well, that provision would not be added; but what we need to do, I guess, is I'm going to ask the Commission's direction here. But you don't have an issue with the tattoo requirement that's been in place for some time is — I mean, because I think some form of identification to the trap site is necessary for tracking purposes in the unfortunate case that we find a CWD.

COMMISSIONER FRIEDKIN: Oh, I'm sorry. I thought — Commissioner Latimer, did you have — oh.

COMMISSIONER LATIMER: No. You've — y'all have answered mine.

MS. BRIGHT: If it's just the new requirement in the new proposed rules, that's — yeah, we can absolutely fix that at adoption. I was getting confused, as well.

COMMISSIONER FRIEDKIN: Okay. So that is — yes, that's correct.

MR. WOLF: Okay.

COMMISSIONER FRIEDKIN: At this point --

MR. WOLF: It's clear.

COMMISSIONER FRIEDKIN: — we wouldn't — we're not contemplating getting rid of the tattoo requirement, just the RFID tag.

MR. WOLF: Just the RFID and RFID reporting. That's clear.

COMMISSIONER DUGGINS: Only on Triple T.

MR. WOLF: Only on Triple T.

COMMISSIONER FRIEDKIN: Okay. Other questions? Discussion? Any other — Clayton.

MR. WOLF: I do ask for one point of clarification on the 3.6 percent in — for tomorrow's adoption. I mean, I'm seeking a little bit of guidance on whether we're to round that or whether you would like for us to round that to a certain number or not.

COMMISSIONER DUGGINS: In the interest of simplification, I would recommend we go to four or five, just to have an even number. I just — but I don't feel strongly about it. I yield to the entire group, of course.

COMMISSIONER MORIAN: And all herds have to be divisible by four so Ralph —

COMMISSIONER FRIEDKIN: We can do four or we can do five if it's divisible by five —

COMMISSIONER MORIAN: Yeah.

COMMISSIONER FRIEDKIN: — evenly. That's the suggestion. Any opposition to that?

COMMISSIONER MORIAN: I do think you ought to make sure everybody is clear that it's — you round up, though.

MR. WOLF: Whatever — yes. Whatever the percentage we you use, we'd multiply it times their number of animals. There's probably still going to be some rounding that has to take place to give them the requirement of how many to test. So no matter what, rounding — there will be another iteration of rounding if they've got an odd number of animals in the pen.

COMMISSIONER FRIEDKIN: For most herd sizes, it wouldn't be a material impact in terms of the number animals, right?

MR. WOLF: That's correct.

COMMISSIONER MORIAN: You have to be under 27, roughly.

COMMISSIONER FRIEDKIN: Right. So that's — okay.

MR. WOLF: In many cases, the — you know, the 3.6 is — in there are a hundred animals, it's already rounded up to four, so.

COMMISSIONER DUGGINS: Let's use four.

MR. WOLF: Okay.

COMMISSIONER FRIEDKIN: Good, four.

COMMISSIONER MORIAN: And one other question, just so I'm comfortable with this. With your proposed three years — and I'm just doing the math in my head — what's — what was the probability that you would detect a CWD animal?

MR. WOLF: Well, that's going to be — that is going to be specific to each independent herd and the movement patterns. I don't know that I can convert that to a metric for all facilities, all release site testing. We can get you — I guess we can get the probability of — we can get you the average probability of detection from a facility if they harvest 15 deer from the release site, the — we ran the metrics based on if they harvested the animals that were released because those are associated with this herd and so you could assign that probability of detection in a shooting buck operation to the animals that are released. I believe it — I don't — I'm certain we did not run a model where folks are just shooting 15 deer that are not associated specifically with this herd that I could give you a probability of detection on that. We ran some models on kind of a shooter buck —

COMMISSIONER MORIAN: On a closed, yeah.

MR. WOLF: And we do have on closed herds. Now, just as a point of departure, you know, we ran those models on assumed closed herds and in Texas, we don't necessarily — we don't have that model because of animals that are liberated and never tested. So there is a — you know, there is a way to have animals that leave the facility that are never tested. Our models were run based on a closed facility, and we understood that assumption and that weakness in our models.

COMMISSIONER MORIAN: And what was that? I mean, what — 70 percent or 90 plus percent?

MR. WOLF: Probability of detection? Oh, no. They're not that high. I mean, even the best — if you'll recall, the highest probability of detection for rectal mucosal sampling was 60 — if you did 100 percent of your herd, there would be a 62 percent probability of detection of finding that one animal if it was there; and that's if you do 100 percent of them. So, you know, we have to benchmark against where we were. If you do 100 percent probability — if you 100 percent of your mortalities in a pen in one year and you're looking at a one-year window, there's a 3.7 percent probability of detection. So we still don't get near 100 percent.

COMMISSIONER MORIAN: Over three years, you're still not anywhere near not...

MR. WOLF: Yeah, I would say we're — yeah, we're still not — we're still not going to push 100 percent over three years. There's just no — now, the only model that I would say pushes that is if you have a closed model and after, say, four years, five years, if you have tested every mortality of every deer that's been in that pen, you — and that's the basis for the herd certification program. Five years, it's closed. You've got all the tests. If you didn't find it, you hadn't introduced it and you're part of that same population of people at that level, that's really the only thing that's going to approach something of that — of that — but that's assuming you get — you're getting tests off of all the animals that were liberated and shot, as well.

COMMISSIONER MORIAN: Where I was going with that is just are we all comfortable with the three-year window and I — nobody commented on it. So I assume we are.

MR. WOLF: I'm comfortable given the — given the — you know, given all the conversations, particularly with our veterinarians and health professionals on the group, I have to really defer to them sometimes and sometimes it's — you know, we can't model the exact, you know, the exact scenario. So they have — some of this is a bit intuitive using their professional judgment. But given all the give and take among the group, I'm comfortable with that.

COMMISSIONER MORIAN: Thank you.

COMMISSIONER FRIEDKIN: But statistically, we have modeled the scenario of not having this transition period and going straight to the long-term proposal?

MR. WOLF: Going straight to no release site testing, 80 percent mortality testing for all herds? Yeah, so that would be — it would be a pretty low probability of detection in year one, clearly, yes. I mean, because doing 100 percent is 3.7 and that's assuming a closed system. So it would be very low.

COMMISSIONER FRIEDKIN: Okay.

MR. WOLF: I'll get some assistance.

MR. LOCKWOOD: Mr. Chairman, for the record, my name's Mitch Lockwood, Big Game Program Director. I don't believe we modeled that 80 percent, but we did model testing 100 percent of eligible mortalities or expected mortalities over a five-year period and if the herd remained closed and the static remained constant — I'm sorry, the prevalence remained static, neither of which are probably likely, that probability of detection would increase from 3 point, I believe, 17 percent to 17 point something percent in year five, if testing 100 percent of expected mortalities.

COMMISSIONER FRIEDKIN: Okay. That's helpful. Thank you. Thanks, Mitch.

Any other questions? Discussion?

Clayton, thank you very much.

MR. WOLF: Thank you.

COMMISSIONER FRIEDKIN: If there's no further discussion on this item, I'll authorize staff to place the CWD Response Rules on Thursday — on the Thursday Commission agenda for public comment and action.

We're going to work Item No. 9, and then recess for Executive Session and lunch. But the next one is Item No. 9, Chronic Wasting Disease Response Rules, Request Permission to Publish Proposed Changes in the Texas Register, Mitch Lockwood.

MR. LOCKWOOD: Good afternoon, Mr. Chairman, Commissioners. For the record, my name's Mitch Lockwood. I'm the Big Game Program Director. And I'm a little surprised you're ready for more discussion on CWD, at this point; but I do have one more item, discussion item regarding CWD — our CWD management plan in the state.

Some of you will recall that back in 2012, this Commission established some CWD zones out in far West Texas after the detection of CWD in the Hueco Mountains. This map before you illustrates our current CWD zones out there where that western most zone is referred to as the containment zone and this is the area in which CWD is known to exist. That area, of course, is shaded in red and it is surrounded by a high risk zone that is shaded in yellow and then our high risk zone is surrounded by a buffer zone, which is shaded in blue.

This morning, I will share with you a recommendation to modify the delineations of these CWD zones, as well as a recommendation for additional CWD zones and also some recommendations for the rules that would be associated with these CWD zones and we're requesting your permission to publish proposed rules in the Texas Register.

These new zones being recommended are associated with the CWD detections in free-ranging Mule deer up there in Hartley County in the northwestern part of the Panhandle and in the captive White-tail deer in Medina County. In response to these more recent detections of CWD, we convened a meeting of the CWD task force to discuss these potential new zones and those rules that would be associated with them.

I'll remind the commission that the CWD task force is comprised of wildlife health professionals and cervid producers who were appointed to advise the Department and Texas Animal Health Commission, as well, on proper management strategies to protect the susceptible species in the state, both the native White-tail deer and Mule deer and then also the susceptible species that are identified as — or classified as exotic species, such as elk, Red deer, and Sika deer. And this task force was — is cochaired by our wildlife veterinarian, Dr. Dittmar, and Dr. Andy Schwartz, who was the State epidemiologist for Texas Animal Health Commission, who now as of yesterday is officially the Executive Director of Texas Animal Health Commission and he's been serving in that capacity for the past few months.

But these recommendations that resulted from those discussions with the task force are intended to act in concert with our overall CWD management plan, including the proposed rules that you just discussed in the previous agenda item. And this Commission's decision on those proposed rules could have some affect on these recommendations that I'm sharing with you today. For example, the first recommendation of the task force was to eliminate this buffer zone — again, that's the zone that is shaded in blue on this map — and leave us with simply a containment zone and a high risk zone.

And the justification for this change is that the proposed rules would implement more appropriate testing strategies for anyone who's interested in moving deer, whether that be breeder deer to be move around the state or free-ranging deer via a Triple T Permit. And, therefore, this would reduce the need for the rules that are currently associated with the buffer zones, which essentially would achieve additional testing requirements for people who are interested in moving deer around the state.

Now, as we focus on the rules that would apply to each zone, I would like to explain to you my technique here on the next few slides on how I distinguish between the existing rules and then recommended amendments to those rules. Simply, I used white font or white text to illustrate the existing rules and then any recommended amendments to those rules I've highlighted in yellow. We recommend no change to the current requirement of testing any deer that's harvested within a containment zone. This has proven to be a very important tool for early detection of the disease, and it's also an important tool to shorten that period of time that's required to acquire a sufficient number of samples within this zone so that we can establish the confidence that an area is not enclosed in a zone that is known to have CWD or that an area is not included in a zone that is considered to be at high risk for CWD.

But we do recommend a modification to the rule that prohibits all movement of deer within a containment zone. The current rules allow no movement of breeder deer, of free-ranging deer whatsoever into, out of, or within a containment zone. And as you know, the interim rules, as well as the proposed rules, establish risk categories for deer breeding facilities based on their surveillance history and other factors. And, of course, TC 1 facilities are those that have been determined to have the least risk and we believe that the risk is low enough to allow TC 1 facilities to release breeder deer onto their own properties. Of course, these would be the same property where the breeder — breeding facility is located.

We do not recommend removing the prohibition against establishing new deer breeding facilities within a containment zone. And finally, we recommend carcass movement restrictions for any deer that's harvested within a CWD containment zone; and I'll discuss those restrictions in more detail later in my presentation.

Regarding the high risk zone, the first recommendation was to change the name out of concern that the term "high risk" may carry a negative connotation that may inadvertently stigmatize properties and potentially affect property values. Therefore, we recommend that that zone that surrounds a containment zone be referred to as a CWD surveillance zone. Our current rules do not require testing of deer that are harvested within a CWD surveillance zone.

You might recall when this Commission was considering adoption of the interim rules back in November, we received quite a few public comments in response to that proposal, including many comments stating that CWD surveillance should not be limited to breeder deer or breeder deer release sites and we concur that surveillance should be required anywhere where there is increased risk of CWD. We've attempted to achieve our goals for increased surveillance through a voluntary approach over the last four years out in West Texas and the past year out in the Bandera and Medina County area, as well. And despite an extensive outreach effort, despite a lot of cooperation that we've had with landowners in these particular areas, we've not been able to achieve — acquire an adequate number or distribution of samples within those zones that would give us the level of confidence that's needed to significantly reduce the size of these zones.

For example, the Delaware Mountains there in northern Culberson County continue to be an area of concern for us because of their connectivity with the Guadalupe Mountains and eventually the Sacramento Mountains in New Mexico. It's our understanding that CWD surveillance has been very, very light in the Guadalupe Mountains of New Mexico. However, they have detected CWD in quite a few susceptible species in the Sacramento Mountains.

Now, you'll see momentarily that we will — we do recommend some reduction in the size of both of these CWD zones in West Texas; but at this point, we're not able to reduce the size of the zones nearly as much as we would like to long term, simply because we haven't been able to achieve a good number of samples in that northern area of the high risk zone or I should say as I move forward, the proposed CWD surveillance zone. So the more — the quicker we're able to establish an adequate number of samples within that Delaware Mountain area, the quicker we could clear that area from this CWD surveillance zone. Therefore —

COMMISSIONER JONES: The blue dots indicate samples that you have received?

MR. LOCKWOOD: Thank you for that question. The blue dots do represent samples that we've received over the last four years through our check stations that are established out there. Again, those check stations are mandatory for the containment zone in red and voluntary for deer harvested in the high risk zone in yellow. So, therefore, staff recommend that testing be required of any deer that's harvested within a surveillance zone, as well. So we recommend this requirement for both CWD containment zones and CWD surveillance zones.

Triple T and DMP activities are not authorized current — under current rule for properties located in a surveillance zone. In fact, the only movement of deer that's allowed — the only natural movement, if you will, of deer that's allowed within a surveillance zone would be for deer breeders that have achieved a certified status with Texas Animal Health Commission through their herd certification program. But considering the reduced risk that's associated with the TC 1 facilities, we recommend that those TC 1 facilities be allowed to release deer onto release sites within that zone.

We also recommend — in fact, I got — I didn't state that quite right. We actually recommend for a CWD surveillance zone, that TC 1 facilities be allowed to move deer anywhere, in or out, just like other deer breeders in the state of Texas that have a similar status. But we recommend that TC 2 facilities also be allowed to receive deer, to release deer on their own sites, to release deer to other release sites within a surveillance zone or even send deer to other facilities within a surveillance zone; but we still do not recommend that TC 2 facilities be allowed to transport deer outside of that zone.

While we still do not recommend the trapping of deer from any sites within a surveillance zone, we do recommend allowing sites with low densities of deer to be able to receive Triple T deer. We also recommend authorizing DMP activities for sites within a CWD surveillance zone, provided that all deer that are detained within that DMP facility ultimately be released onto that adjacent release site. And again, we recommend that carcass movement restrictions apply to the CWD surveillance zone, as well.

I should note that the first and last bullets that I have on this slide pertaining to the mandatory testing of hunter-harvested deer and the carcass movement restrictions, apply to — excuse me, were both consensus recommendations from the CWD stakeholder group and our representative on that group, Clayton Wolf, as well as all representatives on that group, did agree to advocate for those consensus items. I should also say that those are — those have been mandatory recommendations from our CWD task force, as well.

I do — we all have received some letters from public officials in the Bandera and Medina/Uvalde County areas, and I'll remind you of their request as I get to that particular part of my presentation. As I briefly mentioned a little bit ago, we also recommend that — we also recommend reducing the extent of the CWD zones out there in the Trans-Pecos. And as I've already mentioned, we really haven't been able to require a sufficient number of samples in that high risk zone or CWD surveillance zone, if you will, to be able to defend a reduction in the size of this zone. However, that area, that far eastern corner of that surveillance zone really has marginal deer habitat at best. It has very low deer densities; and really for all practical purposes, we do not believe that's an area that's at high risk for having CWD. And as you'll see in the next slide, you'll see that we recommend pulling that eastern boundary of the CWD surveillance zone to the west, while it may not be as simple as following an easy to distinguish boundary with the Pecos River that we currently have.

We also recommend moving the eastern boundary of the containment zone to the west. And we're able to make this recommendation based on the number of samples that we have been able to collect there over the last few years because of our mandatory check stations. That mandatory surveillance has provided us an ability to collect an adequate number of samples there on the eastern side of that containment zone and, therefore, we recommend moving both those zones to the west and, therefore, shrinking the size of both. And again, if were to implement mandatory hunter harvest — testing of hunter-harvested deer in both zones as we move forward, we believe that we could see significant reductions in the size of these zones sooner than later.

COMMISSIONER FRIEDKIN: Mitch, is that a road? I assume that's a road.

MR. LOCKWOOD: So the western — I'm sorry, the eastern boundary now of the containment zone would be FM 1111. Yes, sir. And the eastern boundary of the surveillance zone, the proposed surveillance zone, would be a series of roads, county roads and farm-to-market roads. And I believe the description of that is provided in a packet — is included in a packet that's been provided to y'all, the actual road names.

Now, we'll shift our focus to Hartley County there in the Northwest Panhandle where CWD was detected in a free-ranging Mule deer last February. And as staff contemplate the delineation of potential CWD zones, we take a lot of things into consideration, such as deer density, deer movements, habitat types and habitat availability in this area. And given what we know about those factors in this part of the state, we recommend a containment zone that's illustrated on the slide before you, which has a southern boundary of Highway 40 — Interstate 40 that runs east of New Mexico to Vega, Texas; and then an eastern boundary of Highway 385 from Vega, Texas, running north up to the Oklahoma border. And then we recommend that that containment zone be surrounded by a CWD surveillance zone, which would follow — excuse me, which would follow Highway 60 northwest out of Clovis, New Mexico, to Canyon, Texas, and then follow Highways 87 and 287 through Amarillo, Dumas, and on up to Oklahoma. And again, the rules that are associated with the zones — that we recommend for the zones in the Trans-Pecos region, we recommend those same rules applied in these zones, as well.

Now, we'll shift our attention to Medina County, where CWD has been detected in three different deer breeding facilities, as well as a release site that's associated with one of those facilities. In fact, it's that western most dot that you see on the slide before you. The release site, immediately surrounding that area, is where that other hunter-harvested CWD positive was detected.

The CWD task force had quite a bit of discussion regarding the designation of zones in this particular area; and if so, what the delineation of those zones would be. And it was finally decided that a containment zone isn't necessary in this situation because each of those positive facilities is under a quarantine issued by Texas Animal Health Commission. They're operating under a herd plan, which essentially functions as a CWD containment zone. However, we do believe that it's important and necessary to establish a CWD surveillance zone so that we're able to provide much more confidence to obtain that certainty, if you will, that CWD is not located on other properties throughout this area and to be able to get enough samples in a very short order to potentially eliminate this zone; but also in the unfortunate event that CWD does exist outside of these areas where we currently know it to exist, we also want to minimize the risk of transmitting the disease outside of that zone.

Now, we did receive a letter from the County Judges in Bandera and Medina and Uvalde Counties. I believe Judge Schuchart is with us today from Medina County. And we received a letter from Representative Andrew Murr, as well, all indicating a very strong preference for us to utilize voluntary testing. And they — it's my understanding that they will offer us in the near future a plan of how we may be able to acquire the same number of samples through a voluntary approach, as we would through a mandatory approach.

Staff certainly is very receptive to the idea of acquiring these samples through voluntary approach. As I've shared with you, we've tried that approach for the last four years in West Texas and in the last year in that Medina County area. We weren't successful. We did put forth an extensive outreach effort. We did reach out to many, many, many landowners in that area, had a lot of support; but nonetheless, their support doesn't necessarily equate to hunters stopping at a check station to provide a sample. And so we recognize that if we're going to be more successful and if we're going to be able to acquire as many samples through a voluntary approach, we need their help. And so we look forward to seeing a plan from them to help ensure that the number of samples wouldn't be sacrificed if we went through a voluntary approach as opposed to a mandatory sampling approach.

And I'm nearing the conclusion of my presentation. Before I touch on the last item, I thought I would show this statewide perspective of the proposed CWD zones in the state and I'll come back to this slide and conclude with this after we discuss this last item, which I've touched on a couple of times this morning and that has to do with the carcass restrictions. Something else that I'm sure y'all recall when this Commission was contemplating adoption of the interim rules last November, among all those public comments we received, we received many comments stating that the movement restrictions shouldn't be restricted to live deer. A lot of comments stated that carcass parts pose risk of transmitting CWD, as well. Prions could be found in certain carcass parts and persist there.

And staff and the CWD task force concur with that. We certainly don't believe that carcass parts pose the same level of risk as live deer, probably not near as much; but the risk does still exist. And so last summer, we started researching the management strategies utilized in other states to address this concern; and there were, at that time, 37 other states that had implemented some form of carcass restrictions. And we recommend at this time that deer carcasses not be transported into Texas from any state known to have CWD or transported out any CWD zone or at least any CWD containment and surveillance zone within this state, except for cut and wrapped meat, boned meat, cut quarters with all brain and spinal cord tissue removed, caped hides with skull not attached, skull plate with antlers attached and cleaned of all soft tissue, and finished taxidermy products.

And actually, we encourage these practices statewide. This is — these are just good practices to implement. However, hunters throughout the state of Texas may not have means other than retaining the head to serve as a proof of sex, which is required. Some hunters certainly can — will have an MLD tag, which serves as proof of sex. Some may have a statement written by the landowner to certify proof of sex. Some will have a check station receipt that they receive from a CWD check station, which will serve as proof of sex. But that option is not available to many hunters throughout the state. So internally, we'll need to discuss amongst ourselves the best way to move forward so that hunters can follow these recommendations throughout the state. But for the time being, we recommend these carcass movement restrictions for any deer that is harvested within a CWD containment zone or a CWD surveillance zone.

Now, there is one exception to this. We do recognize and appreciate the value of trophy animals; and, of course, you know, the memories that are created while in pursuit of that animal. Hunters can be pretty particular, I think, when — on how they hope to preserve, how they plan to preserve those memories and that trophy. Many of us have our preferred taxidermist. I know I do. And we think that it would be reasonable to allow hunters to take a trophy head out of the zone, provided that that head is accompanied with its deer head waiver, which they would receive at a CWD check station. So we would be able to obtain a sample for CWD testing purposes without harming the cape and then they would have this form accompany the carcass until it reaches the taxidermist and then at the bottom of this waiver is an advisement to taxidermists on how they could just properly dispose of that carcass part of that head.

Another way that a head could leave the zone would apply to fewer hunters, I'm sure: Those who either own the land, or those who have a lease where they may have a freezer on site are a couple of examples that come to mind. But the bottom line is, is if one is able to leave the head behind and wait for the CWD test results to come back, then they later could remove that head from the ranch and outside of the zone if it's accompanied by a not-detected CWD test result. But I think this option that's on the screen before you would probably be most feasible for most hunters in that area who have a trophy and would like to remove it from the zone.

And so with that, Mr. Chairman, that concludes my presentation and I'll be glad to entertain any questions you may have and, again, any discussion that may result from the public comments we've already received.

COMMISSIONER FRIEDKIN: Thank you, Mitch.

Questions for Mitch on this item?

COMMISSIONER WARREN: I have a question. So do we have a cooperative relationship with New Mexico?

MR. LOCKWOOD: I would like to say yes. We're not in frequent conversation or communication with New Mexico. We have visited with them at length about our management strategies. Quite frankly, their management approach became a little bit more lax with the loss of federal funding here a few years ago. Their surveillance has backed off significantly, but we do have a working relationship with them. I don't know if that addresses your question.

COMMISSIONER MORIAN: I've got one question. What's the — what class violation — if I transport meat out of a containment zone, what's the penalty?

MR. LOCKWOOD: I would like to ask Kevin Davis to come up here if he's in the room, Chief of Wildlife Enforcement. Simply put, I think we were dealing with a Class C misdemeanor for a violation of this — any hunting regulation. But, Kevin, would you...

MR. DAVIS: Good morning. For the record, my name is Kevin Davis with Law Enforcement Division. I only caught part of your question. So if I could get the —

COMMISSIONER MORIAN: If I transport a deer out of a containment zone, what violation —

MR. DAVIS: So — yeah. So when we adopt regulations, that — you know, obviously the Code gives us the authority to — for you guys to adopt the regulations and whenever there's a penalty associated with the regulation that is adopted under the authority of the legislative action, it's always a Class C misdemeanor unless otherwise specified.

COMMISSIONER MORIAN: Always a Class C.

COMMISSIONER FRIEDKIN: Thank you.

COMMISSIONER MORIAN: Didn't know that.

COMMISSIONER FRIEDKIN: Any other questions?

MR. SMITH: Mr. Chairman, if I could, I would like to go back to the feedback that Mitch brought up with respect about the feedback and the proposal that Representative Murr and Judge Schuchart and his counterparts in Uvalde and Bandera Counties brought forward. As Mitch said, collectively they have expressed very strong concern about the implementation of mandatory hunter-harvest testing and carcass restrictions on non-breeder ranches inside the surveillance zone and are very concerned with that proposal.

What they have brought forward though is a proposal to work with the Department. In short order, we would collectively develop a plan to help address our desired sampling related goals in that area on ranches within our targeted area and I think this offers really a lot of promise with respect to a local/private/state partnership to help accomplish that. Representative Murr, who's with us, Judge Schuchart is with us, have both committed in our conversations and meetings to help lead that effort. Not only that, they have engaged two eminently qualified, prominent landowners; a real estate attorney; and a wildlife biologist to help with outreach to private landowners to help work through this.

And I would like to suggest that we proceed with their request and that is to suspend consideration of implementing the mandatory hunter-harvest and carcass restrictions in the surveillance zone until early July to give us a chance to work with the Judge and State Rep. and area landowners to come up with a plan that we could come back to you in July and talk about. We're confident that we can accomplish what we need to through that plan. If we can't, you would still have the option by July 11th to direct us to go forward with publishing these proposed regulations, that the Commission then consider in August.

So that would give us a fairly defined and finite timeframe to follow up on this and work with our local leadership to pursue that. And I would like to suggest that you give us the latitude to do that.

COMMISSIONER FRIEDKIN: I like that very much. I think that's a great idea, and we appreciate your willingness to work with us on that. Looking forward to it. So thank you.

Mitch, thank you. Appreciate it.

I'm going to skip to Item 18, which is update on Regulatory Litigation, Red Snapper, Oysters Chronic Wasting Disease. This item will be heard in Executive Session.

At this time, I would like to announce that pursuant to the requirements of Chapter 551 Government Code referred to as the Open Meetings Act, an Executive Session will be held at this time for the purpose of seeking legal advice under Section 551.071 of the Open Meetings Act, including advice regarding pending or contemplated litigation. We'll now recess for Executive Session. Thank you.

(Recess taken for Executive Session)

COMMISSIONER FRIEDKIN: All right. I've got to figure out how to get my — somebody's got my...

MR. SMITH: Open session again and then we're just going to hear Item No. 10.

COMMISSIONER FRIEDKIN: Okay. Our plan is to just hear Item No. 10 and to skip the other items at this time and they will be heard later. So that's — we're going to go ahead and start with 10, Oyster Rules, Request Permission to Publish the Proposed Rules in the Texas Register, Mr. Lance Robinson.

MR. ROBINSON: Good afternoon, Mr. Chairman, Commissioners, Mr. Smith. For the record, my name is Lance Robinson. I'm with Coastal Fisheries Division. I'm here today to provide or present three proposals related to oyster and oyster management and as I get into this, I wanted to really kind of bring the message home that this is — you know, this oyster management that we're involved with is a long-term process. We've been working on this for a number of years. It's all about the restoration of the resource. Before you are just some of the recent regulations and some of the actions that the Commission has taken to try to work toward the management of this resource, leading up to the most recent ones in 2015 where we are working to refine some of our closure criteria under emergency authorities that were granted by the Legislature and looking at metrics that once an area is closed, it is — a little bit higher bar is necessary before that area is reopened. And then also the most recent one was the inclusion of dead shell as part of the 15 percent tolerance or undersized oysters, which helps keeps some of that valuable resource, the dead shell, on a reef that provides the substrate for future development and growth.

Some of the other components of the management strategy include certainly restoration. This is just a little bit of our recent history in restoration, beginning really in earnest in about 2007 or '08. Most of it has been confined to Galveston Bay at this point because of damage from hurricanes, but you can see the number of acres that the Department has been able to restore up to this point and the funding that has been necessary to accomplish that.

We have a couple of planned cultch planting events, and part of that leads to one of the proposals that we'll be talking about this morning or this afternoon. And then, of course, I wanted to bring your attention to the future. As part of the Deepwater Horizon settlement, there has been a commitment of 22 and a half million dollars spread out over the next 15 years that is targeted for oyster restoration.

So before you today are the three proposals that we're bringing to the table. One that deals with area closure. These are temporary closures, and we'll get into the specifics of those areas. Also, looking at a reduction in the daily sack limit and an adjustment or reduction in the number of harvest days per week that initially would be allowed to commercially fish. And then want to bring before you a proposal dealing with the commercial and restoration oyster leases and kind of a framework for moving forward in this avenue.

Just to get moving into the temporary closure proposal, there are four areas in Galveston Bay that are slated for restoration activities this summer; and as the Commission has done in the past when we have planted cultch onto these areas, we have closed the areas for two years, which allows the oyster to settle onto that new substrate material, grow to a marketable size before we open it up for commercial harvest. And so these four areas in Galveston Bay would be ones we would be looking to close temporarily beginning November 1 for the season, and then run for two commercial seasons.

The areas are commercially fished areas, all three of them. Of interest, you know, just to bring to your attention, the Todd's Dump area and — let me move here — Todd's Dump area on the map is an area that is actually utilizing some of the funding that has been generated through the shell recovery fee, that is based on 20-cent per sack tag that all fishermen have to acquire and affix to their oyster sacks and so about 430,000 of that fund is going into replanting cultch on the Todd's Dump area. And then the Texas City Dike area and some additional funding to Todd's Dump is actually coming from a donation from the city of Texas City.

The other area that we're looking to — or asking for extension of a — or a temporary closure for two years is the Half Moon oyster reef in Matagorda Bay. You may recall that a couple of years ago, we were before you asking for a temporary closure of this very tract and for the purpose of looking at restoration efforts and to monitor those recovery efforts once that material was put in place. That particular reef complex has not been fished in many, many years. The sub — due to a lot of factors, but mostly because of high velocity currents and just not good substrate there.

The Nature Conservancy was able to get some funding and did some restoration there and the picture in the lower right-hand part of your screen is just an example of the successes that they have seen in just the two years since that closure has been in effect. The reason for the extension of the closure is that part of the monitoring requirements — so they're grant requirements that they — when they received this funding was to monitor the recovery of this reef for a five-year period. And so we're looking to, again, extend that so they can accomplish the monitoring that's necessary to meet the grant obligations for this particular site. And this is just a map drawing of where it's located off of Palacious Point in Matagorda Bay.

Just as a reminder, here are some of the current management regulations in place for oysters for the public season. Public season runs from November the 1st of one year and ends on April 30th of the following year. And so currently, the daily sack limit is 50 sacks a day. Legal fishing time can begin at sunrise and they're able to fish. The dredges have to be out of the water by 3:30 in the afternoon. There's a three-inch minimum size on oysters. That's the legal size that can be retained. And then as I mentioned earlier, there's a tolerance of 15 percent of undersized that can be a part of that load; but it also cannot have dead shell or oysters less than three inches that exceed that 15 percent tolerance.

What we are proposing today is actually a reduction in the daily sack limit from 50 sacks down to 40 sacks and also the elimination of Sunday as a legal harvesting day. So that the only legal times that a fisherman could commercially harvest would be Monday through Saturday, Sunday would be closed, and then they would operate under a 40-sack limit. Part of the rational for these two proposals, they somewhat go together because the goal here is to look at spreading the harvest out a little bit further into the season.

Currently, that season and the fishing effort is ending in January/February; and certainly oysters staying in the water a little bit longer, they — through their physiology, how they grow — they get a little — put on a little more fat stores and they become more valuable from a half-shell shucking product and it brings a higher value to the market, and so the idea here — and we worked very closely with the oyster advisory work group and this was something that they advocated looking to add these two components to hopefully stretch that season out a little bit longer and create a little better economic return for that product harvested.

We also wanted to point your attention, you know, to the Bullet No. 2 down at the bottom. These numbers that you see here are based on the commercial landings for the 2014 and '15 season and assumes no change in effort going forward and we certainly don't expect that to be the case. We certainly believe that we won't see a reduction. That number is 17.1 percent reduction. I just don't want anybody to walk away thinking that there will be a reduction because I think the industry will adjust and just push that harvest a little bit later in the season. So the same quantity of the oysters would still be harvested. It would just be delayed further into the six-month timeframe.

COMMISSIONER DUGGINS: So what's the estimate of the realistic reduction?

MR. ROBINSON: Overall reduction of harvest, there won't be any reduction in harvest. We don't believe there will be any reduction in overall harvest during the year.

COMMISSIONER LATIMER: Is there a regulatory time of harvest, or it's just up to them when they —

MR. ROBINSON: They can harvest from November the 1st of one year until April the 30th of the following year. They can harvest seven days a week, as I indicated. So —

COMMISSIONER LATIMER: So this is limiting the day, but the time stays the same?

MR. ROBINSON: The time — from sunrise to 3:30 stays the same. What we have found — and we looked at a sack-size analysis and we looked at it pretty rigorously, that what we're seeing is that the fleet — we're talking about a 182-day season and typically what the vessels are fishing, the last day they are fishing is about half of that. So they're really not fishing later into the season and so — and part of this rational here would allow some of the oysters that are being harvested already, just to stay in the water a little bit longer and so that the animal itself gets a little more valuable because it's putting on fat stores and plumps up, which is what the market typically likes. The consumer wants something that, you know, has that little plumper yield to it.

COMMISSIONER LATIMER: So for their licensing fee that they pay, they really won't have a reduction in product?

MR. ROBINSON: No, ma'am.

COMMISSIONER LATIMER: Thank you.

MR. ROBINSON: We don't anticipate that.

COMMISSIONER DUGGINS: But back to my question, you're not suggesting that the overall harvest will not be reduced by these two proposed changes?

MR. ROBINSON: No, sir. We do not expect that to occur. The overall harvest we do not believe will be affect in any way. It will just be delayed later into the season.

COMMISSIONER DUGGINS: But if the oysters are in trouble, why shouldn't we be taking steps that do reduce the overall harvest?

MR. ROBINSON: Well, one of the things that we are also working very closely with, it is evaluating the metrics that we're using under our emergency closure authority that we've been using now for a couple of years. We've recently adjusted some of the metrics there and such that we're seeing more areas that are entering a regulatory closure, emergency closure because the product — the resource has been depleted in that area and once it's closed, the bar for reopening is a much higher bar and so areas are staying closed for longer periods of time. What's remaining, what is a legal product out there though, is just delaying some of those legal harvest of oysters to a little bit later in that season.

COMMISSIONER DUGGINS: But didn't you start off with the premise that the industry — I mean, that the resource was in trouble?

MR. ROBINSON: I think our goal in managing the resource is certainly one of management of the resources that are there, but also restoring resources certainly in Galveston and some of the restoration efforts have been to try to recoup and recover some of those resources where there is nothing there today.

MR. SMITH: Vice-Chairman, the reason that he mentioned that is not just because of overexploitation of oysters. There's a lot of other variables that have affected —

COMMISSIONER LATIMER: The hurricane.

MR. SMITH: Yeah. Oysters, yeah.

MR. ROBINSON: Right.

MR. SMITH: So think about all the hurricane impacts and the sedimentation and —

MR. ROBINSON: Right.

MR. SMITH: — water quality issues and so forth.

MR. ROBINSON: Yeah. Thank you for that, Carter.

COMMISSIONER DUGGINS: That's a cause though. It sounds like the resource is down; isn't that right?

MR. SMITH: Certainly the resource in terms of the amount of oysters that we have left in the bay are down. There's no doubt. And there's a series of actions that we're looking at to try to accelerate the recovery and we're going to talk about some of those in just a minute, too. So this is part of a bigger context.

MR. ROBINSON: As I tried to allude to in the beginning, there's a lot of actions that we're taking — undertaking to address the whole oyster issue. I mean, and it's a multipronged approach and I think this is just one of those aspects of it that we're looking at.

The last proposal is really to look at the — developing a framework for extending the current oyster leases that occur in Galveston Bay and look at options for expanding that program to enhance some of the oyster production and oyster resources, also from an incentive-based standpoint. We would like to look at ways to incentivize industry to help kind of give back some of that resource that they're utilizing. One of the things that we had to look at when with we went down this road was that — as pictures depict on the screen — there are a lot of users of the bays in Texas. And so we certainly wanted to be sensitive to the other user groups within the bays and so we had staff work on developing a framework or a special planning tool that we could look at all of these different users and all these different activities in the bay and hopefully as we built this layer, built this GIS tool, it would identify gaps within the mapping that might suggest that oyster — that might be areas where oyster restoration and oyster leases may — could occur.

And I need to probably stop here for a minute and just specify. We use the term "lease" kind of loosely here when we talk about these oyster leases; but what we're really referring to is an area under location that oyster fishermen are allowed to take oysters from restricted areas along the shorelines that are closed by the State Health Department due to high bacteria counts. Leaving that product in the water poses a potential harvest risk from an illegal harvest during that public season. And so the oyster lease program that exists in Galveston Bay and has been in the bay for decades, it was established really as a tool for the Department to be able to allow those boats to go into these restricted waters under special permits issued by the Department, allowed to pick up the oysters growing in that restricted area, and move it on to those areas under location where they were allowed to stay there for two weeks and exploring the physiology of the oyster, as it pumps and filters water, it's purging itself of that bacteria. And so the State Health Department then, after two weeks, will allow that product to be harvested and sold as a food product.

It assists the Department in helping keeping those oysters thinned down in those restricted areas and it aids in law enforcement so that that product hopefully doesn't end up on the food pipeline, somebody gets sick, and then it affects the whole industry as the Health Department then has to step in and start closing bay systems down because of illnesses that occur. So the lease program has served a valuable tool to the Department in allowing some management of the oysters in these restricted waters and minimizing the risk to public health.

The program, the current lease program was established in 2002 as a 15-year term. That term is set to expire. These leases are set to expire on March the 1st of 2017. So part of the proposal here today would be to extend that — those existing leases for an additional 15-year term, but also look at some opportunities to help create some additional lease opportunities with also the caveat that there is to be some restoration of public resources in the process.

This is just a list of some of the variables that we looked at, some of the competing or certainly shared interest in the bay systems. As we work through these different lists and we generated a series of maps, we have these maps for every bay system and this is just Galveston Bay. It just gives you an idea of even though it's a large body of water, there's a lot of area in Galveston that's taken up just in oil and gas activity and surface leases for oil and gas. And so those are specifically avoided in any kind of oyster leased proposal that we may be looking at.

So as we work through all of these different layers, we ended up with a series of maps that would show where these areas might be, some potential sites where oyster restoration through leases could possibly be expanded; and they're depicted on this map in the blue layer, blue color. The brownish color are just the existing leases in Galveston Bay, just to kind of show you where they are. And you'll notice pretty quickly that a lot of these blue areas are lying on top of existing oyster habitat. Those are public reefs; and to kind of speak the point of restoration, that was the goal here in looking at these areas is that we identify sites that are on degraded oyster habitat for a multitude of reasons. These — the oysters just aren't growing there. And so the idea here is if you target these areas with some leases, build those reefs back up, and then they would ultimately revert back to the public resource.

Through that exercise, these are the potential number of acres per bay system that were identified as possible candidates for lease expansion. And then we just kind of move right into the framework. This is kind of — I've used the analogy of kind of a three-legged stool, if you will. These are all bottom leases. The box to the left are the existing leases. There are 43 leases in Galveston Bay. They total about 2,300 acres. They range in size from 100 acres down to 11 acres is the smallest, and the proposal would be to extend the term of those leased for an additional 15 years, beginning on March the 1st of 2017.

The second box, the middle box, also would be considered a commercial lease application; but we're calling them a reclamation lease. The distinction here with a reclamation lease is that they would be specifically targeting areas of public oyster habitat that has — or the substrate that has been degraded. There's really no oysters growing there. But the idea — and we've talked with industry and are telling industry right up front that these leases, once granted, would not be renewable unless the Commission so determined in 15 years; but that the rational here is that these leases would revert back to a public reef in 15 years after they have spent time in building up the substrate by planting cultch and kind of enhancing that habitat, then they would revert back to a public reef status.

The third box are restoration leases and we've certainly have had conversations with a number of groups who have expressed an interest in looking at developing reefs that are closed to commercial harvest and so this option could provide a tool for them to enter into — obtain a certificate of location for an area that could create an oyster reef there with allowing no harvest off of that. So it would be afforded some protection from harvest for at least the length of the term of the lease, which is 15 years.

Some of the conditions of the lease program that we're looking at here — and again, the yellow — the text in yellow are current regulations. Anything in white is new, would be proposed for new. They are all 15-year terms. You have a limit on 100 acres per tract and no one individual or entity could control more than 300 acres. Currently, the annual lease rent is $6 an acre. We are proposing to go to $12 an acre. Some of those funds are used to kind of help offset some of the administrative costs of issuing permits, harvest and transplant permits that — for — to be able to do any activity on those leases. As I mentioned, the reclamation leases would revert back to a public reef system at the conclusion of that lease term; and then any new leases that would be granted, would be distributed based on a sealed bid process.

One of the other different — a new component that we're looking at is an active use criteria. If we're going to allow the expansion of a lease program for commercial purposes, we certainly want to make sure — and restoration purposes — we want to make sure that those tracts are used for the purposes intended. And so an active use criteria would just stipulate that there are certain requirements that the leaseholder would have to abide by in order to maintain that lease and those areas — that would include mandatory cultch planting at a certain level. It would also include a restoration component and I'll go into that in just a minute and then some reporting requirements, just to meet some requirements of the federal permits that they would have to have in order to obtain these leases, as well.

Down at the bottom is a new fee that I just wanted to bring to your attention. The General Land Office is now requiring that all submerged bottom lands or all leases, they are requiring a $125 per acre one-time fee to be assessed for the use of those bay bottoms and so that would apply across the board to existing leases that may be renewed or any new leases, as well as the restoration leases. This is something that the GLO has now implemented.

To the proposed active use criteria, what we are proposing is that if you are granted a commercial lease — whether it's — and a — or a restoration lease, that within the first five years of the term of that lease, that there is a minimum amount of cultch material that you need to be depositing on that substrate, on that — in that tract to help promote the growth of the oysters within that footprint. And what we're proposing is that that be 25 cubic yards per acre within the first five years. Based on the number of acres you have, that comes to about $2,000 per acre investment that the — within the first five years that the lessee would be responsible for. If you were to lay that material out evenly, it would account to about a half-inch thick layer.

In year six, what we are advocating proposing is that there be a shift from a cultch planting requirement onto the leased property to a production requirement. Based on the production of oysters harvested from that lease, the lessee would be required to take a third of that quantity by volume and using some type of cultch material approved by the Department and they would be required to plant that quantity onto an area designated by the Department, which would be identified on a public reef location, a restoration site that we would identify.

Just to give you some ideas of the numbers here — and this would be on an annual basis based on the previous year's production. Just looking at the 2015 numbers off of the existing leases, you can see it varies. Certainly the quantity harvested off these leases is certainly variable from year to year, as well as from lease to lease. In 2015, we saw a production range of, well, 1.7 cubic yards of material that would have been available and required to be planted on these designated locations on the smallest producing lease, all the way up to about 820 cubic yards for the highest producing leases during that 2015 season and so they would have had to plant that amount of material onto the designated sites. Total would have been about 1400 cubic yards generated from the 2015 production.

And then shifting over to the restoration leases, these are the ones that would be off limits to commercial harvest. Again, 15-year term, hundred acres max per tract, and the same rules would apply. What we would be proposing is that the annual lease fee of $12 an acre be waived for these restoration leases primarily because there is no harvest associated with them and, therefore, the Department wouldn't be issuing harvest or transplant permits for those leases. And then the site location would be certainly coordinated with Parks and Wildlife because they would be applying for that certificate of location, but we also didn't want to limit the — where these restoration leases might occur because they are being used today right now in a number of areas for a number of reasons and we certainly didn't want to have any, you know, impact on what these leases or these restoration leases are used for now. It's just this would provide some additional protection from commercial harvest for a period of time.

The active use criteria would still apply. The mandatory planting within the first five years, we don't think that would be onerous. They're rebuilding on these substrates, these areas anyway. The restoration component, these restoration leases are, in fact, restoration. That's the purpose for which they are being constructed to begin with and then certainly the reporting requirements, just identifying quantity of material, what type of material is being planted and the timing on that would just be something that would need to be communicated with the Department.

And I believe that's the end of my presentation. I certainly will address any questions you may have.

COMMISSIONER FRIEDKIN: Thank you very much.

Any questions?

COMMISSIONER DUGGINS: I've got some.

COMMISSIONER FRIEDKIN: Commissioner Duggins.

COMMISSIONER DUGGINS: Why would somebody want to do the restoration lease if they can get no commercial activity out of it?

MR. ROBINSON: The restoration leases or the reclamation?

COMMISSIONER DUGGINS: The restoration. The one where there's no harvest allowed for 15 years.

MR. ROBINSON: Right.

COMMISSIONER DUGGINS: What's the incentive to do that?

MR. ROBINSON: Right. A number of groups — one of the proposals that I had before you today was the extension of a temporary closure of Half Moon reef in Matagorda Bay. The Nature Conservancy built that reef for the purpose of restoration. We believe that would be a perfect candidate perhaps for moving over into one of these restoration leases. So it would be afforded some protection from commercial harvest, at least for the term of the lease. And so there's a number of groups — CCA has asked questions about building restoration leases that aren't available for commercial harvest.

Another aspect that comes into play with some of these restoration sites is that some of the federal funding sources that provide dollars specifically for oyster restoration, will oftentimes come with a caveat with that those restoration sites be protected from commercial harvest for a period of time. Up until this point, that option really didn't exist. And so this actually creates an opportunity where somebody who wanted to put a — and apply for a grant for restoration, specific restoration funding, they could enter into one of these restoration leases and be afforded that 15-year protection from harvest, which could help alleviate the concerns of the grantor.

COMMISSIONER DUGGINS: All right. Let me switch to a reclamation lease — sorry, the first category. You're talking about taking existing leases?

MR. ROBINSON: The existing leases, nothing would change for them except they would stay in the same location that they are today. They would just — the term of the lease would just be extended for another 15 years. The active use criteria would apply to them, as well.

COMMISSIONER DUGGINS: I've got a couple of observations. One, are you proposing that the lease be terminated by the Department if the lessee fails to materially comply, such as doesn't meet the first five-year requirements?

MR. ROBINSON: That would be something we would, yes, certainly look to. That if they are not meeting the obligations of the term of the lease, then that would jeopardize that lease going forward.

COMMISSIONER DUGGINS: I don't know — I think it ought to be clearer than jeopardize. I think we ought to have the right to terminate it if they don't fulfill the covenants that you're proposing.

MR. ROBINSON: Okay.

COMMISSIONER DUGGINS: And then second, I don't think — you know, we've talked for years about how our fees are way below the administrative costs to handle them. And to me, I know $6 is — I mean six to 12 is doubling it, but 12 is still super cheap. Why wouldn't we offer that — particularly since the existing least holders have not had any covenants up to now, why would we just offer that at a minimum lease per acre lease and just leave it up to the market? You say we're going to take closed bids. Why don't we let the market determine what it's worth?

MR. ROBINSON: Well, one of the things that we're looking at here is that — that hasn't been available or hasn't been an option before is the active use component to it. That certainly is going to be adding an additional annual fee, a cost, to the operation of that lease; and it's based on production. So if they're producing a lot of oysters off of that, then the State would benefit because the cost of the cultch — I mean, we're looking at the numbers. Some of these leases are looking at 50, $60,000 a year to plant that cultch, in addition to whatever they're doing; but the State would benefit from getting that new substrate.

COMMISSIONER DUGGINS: I'm not disputing that; but I'm saying one person might think that even though you're imposing that restriction or burden, that it's worth more than $12 an acre. I don't know why we wouldn't offer it at the market rate.

MR. RIECHERS: Well, for the record, I'm Robin Riechers, Director of Coastal Fisheries. One of the things by statute is those individuals are offered a first right of refusal. So within that context, it seems to me that we would set a rate and then they have that first right of refusal, as opposed to entering this new sealed bid process. We certainly want to use that process with any new leases.

The only other thing I can say, as many of you may recall when this was done over 15 years ago now, there was a lot of discussion in the Legislature about this and about how to price those systems and at that point, they chose to keep those current leases in place with a new license fee, which now has — you know, is under your authority. But there was a recognition that those leases had been built up over a long period of time and a lot of effort and/or capital had gone into those leases and those people had invested in a business proposition associated with those leases.

You know, certainly if you would want us to consider a different per acre cost, we can do that; but what we've tried to do is create a cost that we thought was reasonable based on the increase, as well as with these additional new costs that that lessee is going to bear.

COMMISSIONER DUGGINS: Why, if they have a right of first refusal, why couldn't you still offer it up at the market? And if Joe Blow comes in and offers a hundred an acre, then the current lessee has got the right to preempt it. They're still in the driver seat with a ROFR.

MR. SMITH: So are you suggesting, Vice-Chairman, that we would offer it up under a right-of-first-refusal concept like you're describing, coupled with the mandatory active use criteria, which also is an obvious cost, but a value add to the State —

COMMISSIONER DUGGINS: Sure.

MR. SMITH: — in terms of non-monetary, but ecological benefits in the bay, that would be understood that that's part of it and then we leave it open to the market to bid on it, whatever the dollar will bear, and if somebody bids something and then the ones that had the existing lease, they'd have a right to match it?

COMMISSIONER DUGGINS: They have a right to preempt whatever the highest offer was and it's — everybody has got to deal with the burdens, just like on an oil and gas lease. You know that's in our form going in when you bid on it. So, I mean, you take that into account. You may only bid $6 an acre, but at least we're letting the market drive the value of the —

COMMISSIONER FRIEDKIN: Resource.

COMMISSIONER DUGGINS: — opportunity and the resource. And I'd say when you talk about where the Legislature is, I want to remind everybody that Senator Huffines has made it very clear to me he thinks that we're — that it's — he wants us to be circumspect about what he calls selling State's property or State's resources at less than fair market value. So they — and he's not alone in that. I've heard from others there. So I think it's more consistent with that directive that I got from Senator Huffines that we try to let this be market driven, with the understanding that the statute apparently gives the current lessee a right of first refusal.

MR. SMITH: Robin and Lance, what extent have we had conversations with the oyster industry task force about this proposal? That's just another data point that I think the Commissioners ought to hear.

MR. ROBINSON: I apologize for not mentioning that. We have visited with certainly the existing leaseholders. We met with and briefed our oyster advisory work group at length over the proposal and we've met with the NGO community, as well as academic and other state agencies and federal agencies as to kind of the proposal here and it's modified a little bit based on some of the input and direction that we've heard from all of those groups.

MR. RIECHERS: But what I will — to add a little flavor to that, as well. Certainly the one push-back we're receiving already is the increase in costs associated with those extra active use criteria that we are asking industry to partake in at this point, you know, because they just see it as additional cost to their business that in the past they have not had. I'm not saying that we shouldn't go down that road. I'm just suggesting that they've already started expressing concern about the overall costs and whether it would be reasonable for them to stay in that business given those concerns.

COMMISSIONER DUGGINS: That's a different issue. I'm not debating whether we should or shouldn't. You're the ones that are proposing that, and I'm fine with it. I'm just saying I think if that's part of the deal, everybody knows that's one of the burdens to the lease; but let the market determine what that lease with that burden is worth.

COMMISSIONER LATIMER: And then whatever the proposed market value per acre would be, then in addition they'd to pay one time for how long or the one — the 15-year term and the $125 acre to the General Land Office?

MR. ROBINSON: It's a one-time fee, and it's 125 per acre. So they would have to pay that, as well. Yeah.

COMMISSIONER JONES: Unless I'm viewing this wrong, would you have a situation or could you have a situation where someone has invested into the planting and restoration and then they've basically put it back into a place where it is marketable and then someone else sits back and lets them invest that and then all of a sudden when it comes time for that lease period to come up, they set a market price that doesn't really account for the initial investment, unless I'm viewing this wrong?

COMMISSIONER DUGGINS: That's a different — that's on the restoration.

MR. RIECHERS: Well, if I may, that is the situation that could occur with those current existing leases because of the past investments for many, many, many years. Longer than the 15-year term that they're now under. The whole notion was with the reclamation leases, we were — hopefully we have settled on a time period and it's really set in statute, the time period, that will still give them the opportunity to start making money after two years; but still it would be worth it to them to come in and do that reclamation and help us in a partnership for restoring oyster resources that we know, frankly, we don't have enough money to do if we were to take it on as a Department ourselves.

COMMISSIONER JONES: Okay. So you've got two sets of participants, I guess?

MR. RIECHERS: You've got a current set that's been there many, many years; and a proposed set who we have yet to identify, but would possibly be some of these folks, but also some new folks quite possibly.

MR. SMITH: Plus the restoration leases.

MR. RIECHERS: Plus the restoration leases from NGOs or others who want to just restore it for ecological purposes.

COMMISSIONER FRIEDKIN: So do we want to modify the language of the proposal?

COMMISSIONER DUGGINS: I understand your point, Bill; but if we just — if the Commission simply says to the current lessee, "You get it no matter what," they're grandfathered forever out there and I don't — I have a problem with that with a State resource. So I think it ought to be — if you-all believe these burdens — and I recognize they bring valuable benefits and we don't have the resources to do this kind of work. But if you think that's necessary, then let whoever wants to bid on it, knowing that's part of the deal. But if you don't want to do that, that's fine. I just think it's more appropriate to have a public — give the public an opportunity where a lease is expired, knowing that the current lessee still has a right of first refusal to preempt whatever the highest bid is.

MR. RIECHERS: Well, certainly the fee structure, is that at the Commission's feet, as well as how we would possibly do that? You have outlined a way we could do that and just as a reminder, we're at the proposal stage. So, you know, I can guarantee we would hear a lot about this proposal if it goes out that way, which, you know, certainly isn't a bad thing; but we will get considerable feedback on this issue.

COMMISSIONER FRIEDKIN: Commissioner Scott.

COMMISSIONER SCOTT: Well, looking at it from another perspective, if we sit here and let it get to where it is strictly a bid process, knowing that industry and them folks because I'm from down there as all y'all know, I'm afraid we're not going to get even the reclamation people involved. That's what my concern would be because it's expensive work. Now, they love the fishing deals and everything; but to further that statement, my question I guess would be to Carter or either one of y'all: Have we got the internal resources — what we would be creating then is we have to have a full-blown purchasing policy in effect. In other words, you know, it's going to have to have a good set of specifications and all of that. Do we have the internal resources to get into this with everything else we're getting into from a purchasing standpoint?

I mean, i.e. parks and everything with all the other money we've got to spend. My concern is do we have the internal resources to prepare a bid document and to identify these exact acreages and do that? I mean, that's just a concern I would have.

MR. SMITH: Yeah, it's a fair question about capacity and do we have the appropriate capacity and expertise and time to administer an expanded lease program and so —

MR. RIECHERS: And certainly from the expansion standpoint, we've discussed that, realizing that that's also an element where we're going to be working with General Land Office and Department of Health in identifying those tracts and creating a sealed bid process. You know, we understand that that may not occur as quickly as we were trying to achieve with the renewals. From the renewals perspective, these tracts have already been surveyed. I mean, you know, the tracts are well-known, identified; and, you know, are — we have all the records associated with those.

Now, whether or not between now and March — I mean, we would create a sealed bid process between now and March. That's what you would have to do and then create enough time for that first-right-of-refusal notion.

COMMISSIONER SCOTT: That's just — you know, that's just a concern because we're going — we don't want to get bogged down and not — at on the renewals.

COMMISSIONER DUGGINS: In the site — in your presentation, it says "new leases issued based on sealed bids.

MR. ROBINSON: Yes, sir.

COMMISSIONER DUGGINS: So we're carving out one set of leases and saying we're going to have bids, but another we're not. And I don't think there ought to be a distinction, or at least let's look into it before we just say the current lessee is automatically going to get it. I think that's a mistake. I'm just telling you guys that.

COMMISSIONER FRIEDKIN: You may have addressed this, but can it — I don't recall. But can they sublease, or does it revert back to the Department? So if they do an operational sublease of —

MR. RIECHERS: They can do that currently. It doesn't revert —

COMMISSIONER FRIEDKIN: They can't?

MR. RIECHERS: They can. They have a 15-year term and whomever — whatever business deal they make underneath our arrangement, they can do.

COMMISSIONER DUGGINS: So that undermines your 300-acre maximum under the control of one person.

MR. RIECHERS: It — certainly there's been grouping of those leases and management of those leases. That control has always been dependent on how you identify an individual or a partnership, and that's always been difficult. That was changed from 100 acres to 300 the last time this was dealt with in the Legislature over 15 years ago now. So I understand your point, Commissioner.

COMMISSIONER DUGGINS: Let's say if one person or entity wants to come in and bid a thousand dollars an acre and they're a good partner and they do everything you think should be done, that's in the best interest of the State. I don't have a problem with that, but it's — I do think it ought to be opened up and not just grandfathered forever and particularly where you're not — apparently we're not recognizing the distinction between entity — I mean, persons. We're not really holding the line on one person having, as you say, is it 200 acres now?

MR. RIECHERS: 300.

COMMISSIONER DUGGINS: 300.

COMMISSIONER FRIEDKIN: In that situation, how would the individuals who have made those investments be protected from not losing that or basically developing a, you know, potentially outstanding resource and then it goes to open bid?

COMMISSIONER DUGGINS: You wouldn't, but that's true with any lease. You — I mean, I think you go — you know when you lease it you've got a 15-year lease and you get a right of first refusal and you make whatever investment you deem is appropriate. It's just a market —

COMMISSIONER FRIEDKIN: Then it becomes a market lease, yeah.

COMMISSIONER DUGGINS: Yeah, it's a market lease. I'm not saying it's the right thing to do. I'm just asking us to be careful and cautious about moving forward without looking at that.

COMMISSIONER FRIEDKIN: How do we — how do we in terms of process here, how do we go back and look at this and address some of these things and just take a beat on this to understand those aspects a little better and the consequences of those decisions?

Please.

COMMISSIONER WARREN: I'd like to understand better how the right of first refusal works because we all know that there's variations of those. And, I mean, are these — do you have to be financially qualified to bid? I mean, there's got to be certain criteria. How does that work?

MR. RIECHERS: Well, this will be first time we've gone into that process with these lessees; but it's our belief that basically, depending on either a set fee or whatever mechanism we create, we would then offer those people the first right of refusal and as long as they're a dollar beyond or willing to pay the price or the structured fee that we create, whatever that is, then they would receive their 15-year lease for the next, you know, next time period.

COMMISSIONER WARREN: I see. And so it could — and by the way, Ralph, nobody is more free enterprise guy than me. So I love where you're going. But, you know, right of first refusals create gamesmanship and that person could just sit out, bid $3 an acre, just see where the bids come in, and then exercise that right if they're lower than 12 bucks. Do you see what I'm saying? So it just does encourage that. We just need to — maybe we can tighten that right of first refusal up, or is that too late?

MR. RIECHERS: The current statute just says it about the way we've talked about it here. We certainly have the parameters as we create those new leases and that new structure, to help with that, to help define that some.

COMMISSIONER FRIEDKIN: Okay.

COMMISSIONER SCOTT: That's a good observation on first refusal.

COMMISSIONER JONES: You could maybe put a floor — put a floor on your —

COMMISSIONER WARREN: The higher of right of first refusal of $12 an acre or —

COMMISSIONER JONES: Right.

COMMISSIONER FRIEDKIN: So for the purposes of this discussion, I think there are things that we want to dig a little deeper on, understand a little bit better before we take, you know, a position to the extent that we can take a position; but I thought maybe Ann could speak to that from a procedural standpoint.

MS. BRIGHT: Good afternoon, Commission. I'm Ann Bright, General Counsel. One of the options procedurally that we could do in some ways is similar to a rule we talked about earlier today. There's quite a bit of time between now and the August Commission meeting. So — and there are a lot of these options that, you know, since they haven't been explored, we're going to have to make sure that they're authorized under the statute and I believe that just the normal process has been to at least work with this advisory committee and that can be — you know, we can do that or not at the direction of the Commission and then come back and then prior to anything going to the Texas Register — I mean, we've got a little bit of time to develop that. Carter could get with the Chairman or Vice-Chairman and kind of lay out what we're proposing to send to the Texas Register so that we'll have something when we come back in August that is at least consistent and has been vetted a little bit so that we'll have something ready for adoption.

COMMISSIONER DUGGINS: Does it need to be approved in August, or can we have more time to be able to see whatever — I'm not pushing one way or the other. I'm just asking. I know we've got a pretty full plate in August.

MS. BRIGHT: The — some of the — the current leases expire in March.

MR. RIECHERS: Yeah. So with the current leases expiring in March, we could actually go to November on those options dealing with leases. We were wanting to go ahead and make sure the openings and closings and the rules regarding the bag limit and the day closure would go through by August so that they could be in effect for the November season.

So we've got a portion of it that we would like to adopt really in May, no later than August; but the lease part could adopt as late as November and still be okay for that March timeframe.

MS. BRIGHT: We could do that.

COMMISSIONER DUGGINS: Could we go ahead and adopt or consider adopting the —

MS. BRIGHT: We'll just split this up, and do it in two different Commission meetings. Absolutely.

COMMISSIONER DUGGINS: That's what I recommend, Mr. Chairman. Take that up and then —

MS. BRIGHT: And then what we can do in August is come back —

COMMISSIONER FRIEDKIN: November for the other.

MS. BRIGHT: — come back with a full proposal, taking into these other — into account these other considerations.

COMMISSIONER FRIEDKIN: Okay.

MR. RIECHERS: Can I make sure I get clarification? Ann may have understood it, but I want to make sure I do.

Are we going to actually — are we going to split and come back in August and not go to the Register with those items regarding leases and bring that back as a formal proposal to you in August to publish as a proposal after the August meeting, but go ahead and move forward with the items that need to move forward now?

COMMISSIONER FRIEDKIN: Correct.

MR. RIECHERS: Okay.

COMMISSIONER JONES: The bag limits and whatnot?

MR. SMITH: Some of the closure --

MR. RIECHERS: Yes, the bag limits and the closures of the areas and the opening of the other area.

MR. SMITH: Yeah, yeah.

COMMISSIONER FRIEDKIN: Okay. So at this point, so there's no aspect to that would be — we're good, right?

MR. SMITH: We're good.

COMMISSIONER FRIEDKIN: Okay. Thank you.

With regard to Work Session Item No. 12, Briefing on the Status of Palo Pinto Mountains State Parks and Devils River State Natural Area, we will hear that item at a subsequent Commission meeting.

With regard to Work Session Items No. 11, Texas Statewide Recreational Trail Grants Funding, Recommended Approval of Trail Construction, Renovation, and Acquisition Projects; Work Session Item No. 13, Approval of Conveyance of Land, Harris County, Approximately 10 acres at Lake Houston Wilderness Park; Item 16, Grant of Security Easement, Cameron County; and Item 17, Grant of Easement, Jefferson County, Approximately 8 Acres at the J.D. Murphree Wildlife Management Area, if there are no questions or discussion from the Commissioners, I will place these items on Thursday's Commission meeting agenda for public comment and action.

With regard to Work Session Item No. 14, Disposition of Real Estate, Williamson County, House and Lot in Florence, Texas, Request Permission to Begin the Public Notice and Input Process, if there is no question or comment from the Commission, I will authorize staff to publish to begin the public notice and input process.

Mr. Smith, this Commission has completed its Commission meeting business; and I declare us adjourned. Thank you.

MR. SMITH: Thank you, Mr. Chairman.

(Commission Work Session Adjourns)


C E R T I F I C A T E

STATE OF TEXAS       )
COUNTY OF TRAVIS )

I, Paige S. Watts, Certified Shorthand Reporter in and for the State of Texas, do hereby certify that the above-mentioned matter occurred as hereinbefore set out.

I FURTHER CERTIFY THAT the proceedings of such were reported by me or under my supervision, later reduced to typewritten form under my supervision and control and that the foregoing pages are a full, true, and correct transcription of the original notes.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this Turn in date _____ day of ________________, ________.

___________________________________
Paige S. Watts, CSR
CSR No.: 8311
Expiration: December 31, 2016
7010 Cool Canyon Cove
Round Rock, Texas 78681
(512)779-8320

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