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TPW Commission

Work Session, August 24, 2016

Transcript

TPW Commission Meetings

TEXAS PARKS AND WILDLIFE COMMISSION

August 24, 2016

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

COMMISSION WORK SESSION & EXECUTIVE SESSION

COMMISSIONER FRIEDKIN: Boy, that came together quicker than I would have thought. Thank you. This meeting is called to order August 24th, 2016, at 10:08 a.m. Before -- excuse me, 9:08 a.m. Before proceeding with any business, I believe Mr. Smith has a statement to make.

MR. SMITH: I do, Mr. Chairman. Thank you. Public notice 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'd like for this fact to be noted in the official record of the meeting. Thank you, Mr. Chairman.

COMMISSIONER FRIEDKIN: Thank you, Carter.

Next up is approval of the minutes from the previous Work Session held on May 25th, 2016, which have already been distributed. Motion for approval?

COMMISSIONER MORIAN: Moved.

COMMISSIONER FRIEDKIN: So moved by Morian. Second, Lee. All in favor?

(Chorus of ayes)

COMMISSIONER FRIEDKIN: Any opposed? Hearing none, motion carries.

Item 1 is an update on Texas Parks and Wildlife Department progress in implementing the TPWD Land and Water Resources Conservation and Recreation Plan, Mr. Carter Smith.

MR. SMITH: Thank you, Mr. Chairman, Commissioners. For the record, my name is Carter Smith. In the interest of time, I'm going to be uncharacteristically brief this morning and so just share a couple of quick updates with you.

First among them, just a quick update on our Internal Affairs team. As we reported at the last meeting, that team is now completely staffed with the addition of Mike Durand as our Assistant Commander. Case load is fairly normal and customary. One of the things that I will just give you a heads up on, please expect sometime around the end of September for us to have an end-of-the-fiscal year report on that team and the variety of cases and issues that we just want to make sure that the Commission is aware of. And so Jonathan and I will plan on distributing that to you, Chairman and the Commissioners, again towards the end of September. So heads up on that front.

Also just as a quick reminder, by statute, every agency at the very minimum is required to review all of their regulations at least once every four years and really the genesis for that is not surprising. Want to make sure that there's still reason for rules to be in place and if not, then for the appropriate governing body to take action to repeal them or if the reason or effect of those rules has changed in such a way that they ought to be amended, then for the governing body to consider that or if they ought to just simply be readopted. And so we have a whole process for managing that, and Ms. Bright has a presentation a little later on in the morning to talk about various sections of our code that are currently under review.

Just as a reminder, the way that we approach that is really through a three-step process. First, those sections of the code that the staff are going to begin review on, we just want to make sure that the Commission is given a heads up on the start of that at a Commission meeting and then we'll publish notice to that effect in the Texas Register. At the second Commission meeting, we will come back to this body to share with all of you any proposed changes that we recommend that you consider and then we'll seek direction from the body then to put those changes out for public comment on the Texas Register and then at the third Commission meeting, the Commission will vote to adopt or repeal or simply to reissue the regulations. So again, just a quick reminder about process.

And this table -- which admittedly is a little busy and let me apologize for that -- but the parts of the code that are highlighted in yellow there, are ones that we just want to give notice to you and to the public that we are initiating review on and they relate to finance, parks, and resource protection. And so we're going to go ahead and start that process. We'll publish a notice to that effect in the Texas Register, and then Ann will come back in November and we'll talk more specifically about any changes with those areas of the code.

The next item I want to cover and I just want to have a chance to herald our team and specifically members of our Law Enforcement team for just a minute. I think as most of you know, we are members of a variety of national and regional relevant and related associations -- the Association of Fish and Wildlife Agencies, Western Association of Fish and Wildlife Agencies, the Southeastern, the Midwestern. We had the privilege of hosting the Midwestern Association of Fish and Game and Law Enforcement officers in San Antonio in June. We had officers and administrators that came from 16 states and provinces. They came down to San Antonio and the River Walk and not surprisingly, our Law Enforcement team rolled out the Texas hospitality and the red carpet for them and just did a terrific job. You know that there's a lot of work that goes behind the scenes to host a big crowd like that and a gathering that was focused on best practices and leadership and technology and investigations and other things that are germane to the important work that our Law Enforcement team -- and I just want to take a minute to acknowledge our colleagues that were very involved in that, led by Assistant Commander Gary Teeler and Suzette and Josh and April and Mike and Laura and Pam. They just did a terrific job and just know that they made you proud and had Texas shine across the country and a privilege to be able to thank them for that publically.

Last but not least, hardly a week goes by in which one of our officers or first responders does not save somebody's life and I just thought I'd take a minute really to put a face behind a recent one this summer, Jorge Cuellar. Jorge is a State Park police officer at Lake Casa Blanca and just does a terrific job representing the Department in his law enforcement role there. This summer while he was on patrol, he noticed a man flailing in the lake, obviously struggling, watched him go under. Thankfully, we had these life-saving rings placed strategically around the lake. Jorge was able to shed his law enforcement gear, dive into the lake, swim out 60 yards or so. The gentleman was unconscious, unresponsive, bring him to shore where the Laredo Fire Department and paramedics were waiting. They were able to perform CPR, and they saved the man's life. And I can't be more proud of Jorge and his life-saving activities and just how hard your State Park police officers and game wardens work to serve the citizens and people of this state and I think it's just important. Again, our officers will tell you it's just their job; but when their jobs involve saving a life, it's a whole lot more than that and I'm deeply proud of them.

Mr. Chairman, as I said, I'm going to be very brief this morning and so that's the sum and substance of my report and if you have any questions, I'll be happy to address them.

COMMISSIONER FRIEDKIN: Carter, thank you.

Any questions?

MR. SMITH: Thank you, Mr. Chairman.

COMMISSIONER FRIEDKIN: Appreciate it.

Item 2 is Financial Overview, Legislative Appropriations Request Update, Fiscal Year 2017 Operating and Capital Budget Approval, and Budget and Investment Policy Resolutions. Mr. Mike Jensen, good morning.

MR. JENSEN: Good morning, Commissioners, Chairman. This morning I have a presentation to walk you through as quickly as I can, the LAR process and where we're at, the status; and then to walk you through the summary of the 2007[sic] operating budget that ties to the General Appropriations Act.

This slide here gives a summary of where we're at with Legislative Appropriations Requests. We call that the LAR. Just so you'll -- since we have a couple new Commissioners, two years ago this is what we produced. We have a lot of data that we collect agencywide. Every division participates. Every division has a Division Budget Coordinator and their directors work with that Division Budget Coordinator with our Central Budget team. We capture all the data that we -- is required to report. We put it in the Legislative Budget Board's ABEST system and then we're able to produce a document that is useful for the Legislature to look at strategy, to look at objects of expense, lots of things for them to look at to make decisions.

There's information about the HUB Program in there. They have a one-time schedule where we have rider provisions where we have funding for specific things that's only for that appropriation period. We have a schedule that's a theoretical 10 percent reduction schedule that's in here. I just want you to get an idea of this is what it looks like when it's printed, and they take that to the Legislature. They talk about that. We have all the hearings, the subcommittees, Senate Finance, House Appropriations, and then they produce the General Appropriations Act. And our piece is in Article VI and that's where our budget is and today, the latter part of the presentation is going to be the 2007[sic] piece in Article VI for us for our budget that we're going to seek your approval and that will be an action item for tomorrow.

I just wanted you to get an idea of what it looks like when it's actually printed. There's a lot of legwork that goes into producing that. This go-around, we submitted our base reconciliation in June. I don't recall what the deadline was, but we are awaiting our control totals for general revenue and general revenue dedicated because that's where you really start the process of developing the details for data entry into ABEST.

As you can see from the slide, our anticipated submission date was August 19th; but we didn't get our control totals until close of business the before that, August 18th. So we had discussions with the Executive Office that Friday to launch a plan. We've done a lot of legwork. We have a lot of information that we're working on; but when we got the GRD totals -- I'll go to the slide, and we'll kind of walk through what was going on there. So what we do is we're going to have a -- we start with a base. Then we have an opportunity to request items in addition to our base budget. We call those exceptional items. And then we have a schedule that is a theoretical "What happens if we reduced your general revenue/general revenue dedicated by 10 percent?" And that's all being worked on right now.

Our control totals, you can see for general revenue is 191.7 million. General revenue dedicated -- that's our State Parks Account; that's our Game, Fish, and Water Safety Accounts -- 376.7 million. Federal funds are estimated at 173.6. Other funds are 94.3 million. For a total base over the biennium of 836.3 million.

The LBB's methodology was different than it has been in the past. We submitted our base reconciliation and what they did, they looked at our general revenue and general revenue dedicated totals. We had a UB amount of approximately 18.65 million that we expected to be in the base. They actually took that out of our budget off the top before they calculated a 4 percent reduction. The 4 percent calculation on this slide you can see is almost $23 million. So effectively, we're starting with a reduction of $41.6 million because they took our capital construction unexpended balance off the top and then they did their calculation.

And so once we got this information -- when they provide you with information, it's just one, single table. So we have to do analysis to figure out where the variances and discrepancies are. We have great staff -- Julie Horsley, Lance Goodrum, and some others. They figured out pretty quickly what that variance was, that 18.65. So we have a plan in place to gather the information. We're still refining the actual 4 percent reduction, but we do have an opportunity for the one-time things that are in our current biennium from prior fiscal -- this fiscal year and 2017. They can be reduced without impact to operations and staff.

For example, we have the pass-through grants that were specific to San Antonio, to Houston, and to Angleton, the State Aquarium funding. We're still refining -- that covers about 59 percent. We're still working with Carter and the Executive Office on the remaining 41 percent, but we do have a plan that we'll be able to put into place that will not impair anybody's operational budgets in the base.

MR. SMITH: So, Commissioners, if I could just jump in for just a second and maybe elaborate a little bit more on what Mike is saying is, is we're thinking about how to meet that 4 percent mandatory reduction and that roughly 23 million diminution. Our overarching goals are really to protect the have to haves -- our core programs, the statutorily required responsibilities, make sure that we absolutely minimize the impacts to, again, operations and core programs and so we're pretty well down the road on a plan to do that and we'll share more details with the Commission once we're ready on that.

COMMISSIONER FRIEDKIN: Great.

MR. JENSEN: So as it stands, the base is 836.3 million and that does reflect the 22.9, that's the 4 percent, as well as the 18.65 that was already taken out.

Exceptional items, as you can see at the bottom, it says these are still in development. The items and amounts are estimates at this time, but I do have some information. We've been gathering and working with the divisions for two months on this. It's just a matter of looking at the method of finance on these.

The first item is the CAPPS, HR payroll. That's the Comptroller system that all State agencies at some point in the future will be using that to process payroll, that all State agencies will be using for their financials. We are on the schedule to do the CAPPS HR piece only. That's the payroll piece. And we're asking for $1.1 million and six FTEs to launch that project. That's about a 10-month, 12-month project that will start a year from now, 12 months; and it takes about 10 months to implement. And after the project is deployed, six of those FTEs will drop off. Those were just to staff augment so that we can get through the project and three will remain and that's split between Administrative Resources, two FTEs, one will drop off. That's about 155,000. Human Resources for the project will need four FTEs, and two of those will drop off once it's deployed. And we have 500,000 set aside for any IT contract work that might be necessary for that migration.

The second item on -- and they're not in any order of priority right now either. These are just things that we've been discussing with the Executive Office for two months. The second is Law Enforcement operations and equipment and that is a $31.5 million exceptional item at this point in time and it has -- broken down into three categories that we've done that we've created internally just to keep track of it. The LE operation's piece is about 11.8 million. Their capital equipment, transportation, and aircraft needs, about 18.1 million. Law Enforcement technology and support is about 1.6 million. It is in that piece that we've embedded an FTE to provide them the necessary support for their technology and their applications.

If you want to break down the operations at 11.8 million, we have 6.8 million in overtime, travel, equipment, fuel, maintenance. We have 1.7 million for special teams and operations; 610,000 for aircraft fuel, training for patrols, and for wildlife surveys. We have approximately 200,000 for forensic lab; 1.5 million for the technology for interfacing with the Agency applications and for software such as Pocket Cop; a million dollars for safety equipment and installation on the patrol vehicles.

The second category -- which was capital equipment, transportation, and aircraft of 18.1 million -- has 10.9 million for boats and vehicles; 3.69 million for radios; 3.3 million for a new aircraft, which would be a helicopter; and 300,000 for lab equipment.

The third subset, which is LE technology and support of 1.6 million that has the FTE that has three components, 336,000 for a replacement of the phone system statewide; 857,000 for any security and support services, there would be a system analyst. That's where the FTE is to provide the support that is needed. And the third element is for network support, management, and services for monitoring and the help desk, that's 387,000.

Going back to the slide, the third item that's listed on there is State Parks Operation. That's currently 20.3 million and a little over 16 FTEs and that also has three main subcategories. The first subcategory is State Parks maintain core services of 13.6 million, and that's where the FTEs are statewide. So if I break that down, that has 5.6 million for operational cost increases; for additional staffing at park locations; for cost increases to utilities, fuel, training, cyclical maintenance. It also includes 3.7 million for anticipated cost increases of the State Park business system. We're currently going through a competitive process to replace the TexPark system with a new system. 2.8 million would be for additional salary funding and FTEs and about 500,000 is for IT communications. Those are T1 lines that are needed across state parks so we can do business effectively. And 1.1 million for concession growth for reinvestment. They're wanting to be able to take the revenue from the sales and the concessions to buy new goods for sale to grow our appropriation authority to do that.

The second sub-bullet is State Park capital needs. That's about 5 million. It has two pieces. It's 1 million for replacement of equipment, and 4 million for replacement of vehicles. The third component for the State Park's line item is technology and support. It has three items -- 983,000 for a phone system replacement; 250,000 for call center modernization, contracting with vendors to provide that service; and 387,000 for network support management services for monitoring and help desk for the applications that are used agencywide and statewide.

The fourth item that we have up here is flood damage, emergency repairs. It's a contingency item at this time. We're hoping that we'll have a supplemental that will provide funding to the Department. The supplemental would come out of funds available from the State coffers for this biennium, and it can be anywhere from 35 to 40 million. We're working through that to figure out what that amount needs to be. The request that we'll make is probably going to be general revenue. So we're holding this as an exceptional item as a contingency. If that's funded through the supplemental, then that exceptional item will drop off our list; but we still need to put it in in the published LAR because those decisions won't be made until after we submit in ABEST.

The next item we have on here is Texas Farm and Ranch Lands. I think you'll recall that we were given funding for that this biennium, $2 million. So we're going to seek an additional 5 million so that we can grow that program. And the final item we have on here is border security. The amount is 11 million, no FTEs, and that has three components to it. 5.8 million is for overtime, travel, professional equipment, fuel, maintenance, and repair for all the services that are being done on the border and for staff augmentation of the border services.

The second item is 1.2 million in capital equipment for vehicles, boats, ATVs, radios, and other equipment that's being used along the border. And 4 million, we currently have two fairly old 34-year-old or older 65-foot long-range offshore vessels and we're wanting to replace at least one of those and that's what the 4 million would be for.

We don't have on this list a local parks item; but if we finalize the 4 percent, some of that 4 percent will probably come out of the Local Park Grant Program and whatever comes out, we're probably add as an exceptional item to get that restored. We have a lot of advocates and supporters for the Local Park Program. So whatever that amount is, we will count on them to help us get support with the Legislature and get those funds put back, whatever that amount ends up being.

Our bill pattern has a number of riders and each -- every two years, each LAR, we try to add a few and we try to get rid of as many as we can. We have quite a few. One of the new riders that we're going to seek is to get flexibility for payments to state parks for the business system vendor. We're expecting that that's going to be a per transaction -- it's not per -- it's going to be a percent of revenue model, rather than a per transaction model. So if we have a great year, we need to have flexibility to grow the appropriation authority to pay that contractor. We have a similar rider in place right now for our license vendor and the tax assessors who help us with the boat registration revenues.

The second line item there is appropriation of concession's income for concession operations. I had mentioned that briefly before. The State Parks revenue, we're projecting about at least 50 to 52 million by the end of this fiscal year. If you look back to when I started seven years ago, their revenue stream was about 37 million. There's a lot of more paid visitation, a lot more visitation at the parks, and they sell through stuff. So we need to have the ability to actually have flexibility when they sell out and they've exhausted their budget, to be able to grow their appropriation to buy replacement goods for resale. I mean, that's what that rider would do.

Rider 10 is just a clean-up appropriation of license plate receipts; and we're just trying to clarify that anything that's there, including the interest, is available to be used for the purpose of the plates. There's been some confusion with the Comptroller's Office. We've not been able to spend everything because of the language that's in the statute and the prior bills was not allowing us to spend the interest. So that should help clean that up. And similar for Rider 32, appropriation of oyster shell recovery receipts. We want to just be able to spend everything that is currently in the balance.

We're going to seek deletion of about 13 riders. We're going to try to delete Rider 16, which is information on sporting goods sales tax; delete 21, which is information on bond proceeds UB; eliminate 24, which was the sporting goods sales transfer to coastal erosion, the GLO, because that one was taken care of by the last Legislature. It's no longer needed. Eliminate Rider 34, the aquatic vegetation. It's already in our base, and we already know what to do with it. There's some other directives in that rider trying to direct us how we spend federal funds we feel are not necessary. Elimination of Rider 36, the Bob-white quail; 37, Fort Boggy, that project's complete. Many of you may have received an invitation for the opening. Franklin Mountains, we expect that one to be encumbered before this biennium -- before 2017 is over. So we'll eliminate that rider. Rider 39, sporting goods sales tax contingency, that needs to be eliminated. It's no longer necessary. Riders 41, 42, and 45 are all dealing with specific local parks. Those are no longer necessary. We'll eliminate those. And we'll eliminate Rider 43 for the State Aquarium and Palo Pinto because they're already working on the design for that.

Now, we do have that 10 percent reduction option schedule and it's just theoretical. It's an option. It's nothing that we're committing to, that we're going to do these reductions because it would be very draconian. Once we complete that schedule, there will be more information; but the high-level perspective is it would be significant impacts to FTEs, staffing, and core Agency programs. There would be loss of revenue due to limited operations, and we would have impaired LBB performance on their measures because we would have less people and less funds to work with. But this is what it would total to: 17.5 million of the general revenue, 37.67 million out of general revenue dedicated for a total reduction of 55.17 million.

They did hold the Department harmless for the border security piece that was in our base and for debt service. So that was not part of the 10 percent and 4 percent calculations.

That is my summary of where we're at with the Legislation Appropriations Request. We have a lot of work in play. A lot of decisions we'll be working with Carter and the Executive Office so that we can move forward because we've got to make final decisions on the 4 percent before we can actually start entering data and there are other elements that are important for the Department, like our Information Technology detail. That is -- that has replaced what used to be called the BOP, the Biennial Operating Plan for IT. So we've got to lock in the 4 percent decision so that we can get all that data in so that we can start reviewing the schedules and making sure that we didn't fat-finger something, that everything is keyed in appropriately, to make sure that we're looking at it and that we're being as strategic as we can. If you have any questions on the LAR, I'd be happy to try and entertain them; otherwise, I'll move on to the operating budget for 2017.

Moving forward, this will be an action item for tomorrow; and tomorrow, I'll probably go through it much more quickly than I'm going through it today. What we're going to go through is do a quick crosswalk from the 84th Legislature General Appropriation Act to the budget. There are a couple of adjustments on it, and we'll walk through the budget summaries for 2017. We'll talk about the full-time FTE equivalence, our cap and what we're budgeting and we'll have some slides on the capital budget. And we have a requirement that the Commission approve a budget investment policy each year.

So we start with the General Appropriation Act, and I'll remind y'all that it does not include any fringe amounts. It has estimates, but it's not really built in to what's appropriated to us. So fringe is cost that you'll see on this slide that we have to factor in because it's a real cost that we have -- we incur. So that's why it's an adjustment item on this slide. So we start with 317.95 million, which is in the Appropriation Act itself. We have some adjustments related to Article IX. Article IX did allow for a two and a half percent pay increase because of the increased -- in benefits and benefit costs to employees. And that's that full 3.88 million amount as an adjustment.

We have appropriate receipts and federal funds of 2.2 million and the fringe benefits and benefit replacement pay is the 49.89 million and most of that is -- the BRP is a pretty small amount. It's only 386,000. So our starting budget would be 373.94 million, and I do need to let you know that that does not include any estimates of UB on our capital construction program. So you'll see some budget adjustments on our monthly financial report probably around November that our base budget is going to significantly increase by the amount of money that's moving from 2016 into 2017. It will be a significant adjustment at that time. I just wanted you to be aware of that.

The method of finance, from this pie chart you can see that we have Account 64 is the State Parks Account, 51.45 million, 13.8 percent of the budget; other GR dedicated is 28.58 million or 7.6 percent; general revenue is 110.7 million, 29 percent; other is 4.63 million and that's basically appropriated receipts, interagency contracts, 1.2 percent; federal funds are 43.3 million, 11 percent; and Account 9, the Game, Fish, and Water Safety Account, 135.23 million, 36 percent.

Just so you know, the general revenue includes GR. It includes sporting goods sales tax that transfers into the State Parks Account, Texas Recreation Parks Account and the Large County Municipality Accounts and we have a direct appropriation from sporting goods sales tax into 5004, which is the Capital Conservation Account.

The next couple of slides are going to tie to your Exhibit B, and it should be page 13. Tomorrow it will be page 87. And I think what you have in your exhibit gives you a good breakdown by division of these different type of budget categories, object of expense. It also includes FTEs. So overall, you can see salaries and other personnel costs are 45 percent, 167.45 million; operating are 18 percent at 69 million; grants, 8 percent at 28 million; capital budget is 56.45 million, 15 percent; debt service is 1 percent at 3 million; fringe benefits, 13 percent, 49.89 million; and the total budget is 373.94 million.

This breaks it down by division. Your Exhibit B makes the same breakdown. You can crosswalk Exhibit B, what the budget is and the number of FTEs for each division and those are budgeted FTEs, not the cap. We're allowed to budget in excess of the cap per -- or Rider 29 gives us flexibility and Article IX Section 6.10 also gives us flexibility to 50 FTEs. I'm not going to read through them all because it's in the exhibit.

The next slide kind of wraps it up, every single division. We also include in there departmentwide. It's not an actual division, but it's a place where we park money that is used for -- I have a slide on that, and I'll show you that. So our full-time equipment, to recap, you can see our General Appropriation Act. We're still at 3,143.2. That's our cap, and we're budgeting slightly in excess of that. You can see we have 84.7 above the Legislative cap that we're budgeting, which we're allowed to do. We manage our vacancies and our attrition rates, and we do not have a cap problem because of vacancies and retirements; but it's something that we strategically do. Some divisions budget slightly more than others, and some just stick with the cap.

This is a breakdown of the departmentwide budget. The first line on there is payments to license agents and the license system. This relates to our Rider No. 12 that gives us flexibility to increase our appropriations if we have a good year, and this year is a good year on license sales. Through the end of July, we are already over 103 million, which is a great year. Debt service is the third line on there, 3 million. Strategic reserve is 3.9 million. That's broken between Fund 9, about 2 million, and Fund 64, 1 million. The SORM payment for Workers' Comp. and other types of insurance is 798,000. Our airport commerce facility, the lease and utilities is 681,000. Headquarter's utilities is 333,000. The pass-through plates, there's five of those, 93,000. The uncertified authority in Rider 20, that's the DMV when you go and pay registration on your vehicle, it asks the public "Would you like to donate to state parks," and it has an amount -- I think an approximate amount of 611,000. We're pretty sure we're always going to do 500,000. If we are not sure we're going to meet that, we always put this authority in DYed so that we don't spend it until we've actually realized the cash. The master lease payments is about 72,000. So the total DYed amount is 15.19 million.

The capital budget, this simply tracks exactly what's in Rider 2 and our appropriations bill. Construction major repairs, Rider 2 Part A is 38.31 million. Rider 2 Part B is parks minor repair, 4.28 million. Rider 2 Part C and G combined is Information Technology and the data center, it is 6.37 million. Transportation items is 5.68 million. Capital equipment is 1.74 million, and the master lease that I just mentioned on the last slide is 72,000. So the capital budget is 56.45 million, ties to Rider 2.

This next slide, I'll probably drop it off in the future; but since we have three new Commissioners, historically, the plate revenue was appropriated to us 5004, Capital Conservation Account and by our Parks and Wildlife Code, whenever we had plate revenue put into 5004, we would provide the Commission a list of the projects that were going to be performed from those plate revenues. The Legislature created account -- a trust account, 0802. So now all the license plate revenue is in that account, and there's not a requirement. And all the 5004 money that we have is a direct appropriation from sporting goods sales tax and the capital construction and you already see those lists and approve those lists. I just wanted to give you that information because in the future, I'm probably going to drop this slide out because I don't need to make that explanation because the license plate revenues have their own account. They're no longer in the Capital Conservation Account.

You have the budget policy, which really has had no change since about 2012. The Commission authorizes the Executive Director to execute Department's budget. Any adjustments greater than 250,000, other than federal funds and bonds, requires prior approval by the Chair or Vice-Chair or designee. Donations or gifts exceeding $500 monthly are accepted by the Chair or Vice-Chair or designee; and at the Commission meeting, there's always acceptance of donations that are acknowledge usually on the action day, the second day of each Commission meeting sequence. Commission fund/dedication funds are authorized for any use permitted by statute or rule.

The investment policy, it also has no changes. We did strike through a reference to a statute, but it was redundant. It was referring to a statute on petty cash; but petty cash is already in a pressed account, which had another citation to it. The salient points here is it is our intent that all the funds in our budget to be held by the Treasury. If we were to move -- for example, the only one we could really move was the Lifetime License Endowment. We would have to be in compliance with the Public Funds Investment Act. We'd have to make necessary appointments for an officer to be responsible for that; and currently, all funds are presently deposited in the Treasury and there have really been no changes to this in at least four years.

Tomorrow, I'll read into the record the staff recommendation. The only action item for tomorrow is the approval of the operating budget. There is no approval needed on the LAR at this time. That's all I have.

COMMISSIONER FRIEDKIN: Mike, thank you.

Any questions for Mike?

Okay. I'll place the fiscal year 2017 operating and capital budget and budget and investment policy on the Thursday Commission meeting agenda for public comment and action.

With regard to Work Session Item No. 3, Rule Review, Request Permission to Publish Proposed Changes in the Texas Register, does any Commissioner have any questions or comments?

Okay. I'll authorize staff to publish -- yes.

COMMISSIONER JONES: I might have a question for Ann, but I'll talk to her about it during the break.

COMMISSIONER FRIEDKIN: Okay. I'll authorize staff to publish the proposed changes in the Texas Register for the required public comment period.

Item 4 is Commercial Fishing, Individual Fishing Quota Rules, Request Permission to Publish Proposed Rules in the Texas Register, Ms. Brandi Reeder. How are you?

MS. REEDER: I'm doing well.

COMMISSIONER FRIEDKIN: Good.

MS. REEDER: Good morning, Mr. Chairman, Commissioners, Mr. Smith. My name is Brandi Reeder. I'm the Fisheries Law Administrator for the Law Enforcement Division. I am here regarding proposed changes to commercial/individual fishing quota rules.

The Commission originally adopted the applicable Code of Federal Regulations, or CFR, in full text with verbiage that made clear IFQ regulations applied in both state and federal waters to help eliminate enforcement issues. Later the rule was amended, adopting the CFR by site reference, eliminating the full body of the text. Recently I was made aware that the CFR had been restructured, changing site locations within its regulations. While reviewing the CFR, it also became apparent that the CFR language had changed to only apply to fish caught in the EEZ.

Staff requests to amend Rule 57.994 regarding individual fishing quota Subsection A to reflect current sites in the CFR regarding IFQ provisions for the commercial take, possession, transportation, and landing of Red snapper, Grouper, and Tilefish in state waters to include adoption of gear requirements. Staff seeks amendment to Subsection B to reinstate the original intent of the regulation and make clear that the possession of a federal commercial fishing vessel permit with applicable endorsements is required to conduct commercial activities associated with IFQ species in state waters. That intent was lost whenever the verbiage had changed from full text to CFR sites and the regulation changes within the CFR itself.

With that, I would be happy to answer any questions you have at this time.

COMMISSIONER FRIEDKIN: Any questions?

Okay. Thank you very much.

MS. REEDER: Okay. And then we would just request permission to publish.

COMMISSIONER FRIEDKIN: Okay.

MS. REEDER: Thank you.

COMMISSIONER FRIEDKIN: So I'll authorize staff to publish the proposed commercial fishing/individual fishing quota rules in the Texas Register for the required public comment period. Thank you.

Item 5 is Chronic Wasting Disease Response Rules, Recommended Adoption of Proposed Rules, Carcass Movement Restriction and CWD Zones and Associated Rules, Mr. Mitch Lockwood. How are you, Mitch?

MR. LOCKWOOD: Doing well. Thank you. And good morning, Mr. Chairman --

COMMISSIONER FRIEDKIN: Good morning.

MR. LOCKWOOD: -- and Commissioners. For the record, my name is Mitch Lockwood. I'm the Big Game Program Director; and tomorrow we will seek adoption of our proposed rules pertaining to the modification of our CWD zones that were established out in the Trans-Pecos region back in 2012, as well as the creation of some new CWD zones we propose for areas where the disease has been detected in the past year. These -- this proposal also would establish rules pertaining to various deer management activities within those zones.

This slide before you gives an illustration of the current CWD zones. And again, those were established back in 2012. Our containment zone is that area that is shaded in red and that's the area that in which CWD is known to exist and that area is surrounded by what we currently call a high-risk zone and that's the region shaded in yellow and then it is surrounded by a region shaded in blue that we refer to as our buffer zone.

One of the proposed changes is the elimination of the buffer zone. As you-all remember, just this past June, this Commission adopted a comprehensive package of CWD rules pertaining to some of the more intensive deer management practices and those new rules addressed the concerns that the buffer zone rules were intended to address, such as implementing or requiring some more responsible CWD monitoring requirements prior to permitting the movement of live deer. And so as a result of that action this past June, we no longer have a need for these buffer zones.

We also propose to change the name of that high-risk zone, which again is that area shaded in yellow on this map before you. And the reason for this, this is simply a response to a concern that we heard from a number of individuals that the term "high risk" may carry with it a negative connotation. It may inadvertently stigmatize properties. And so we decided to rename that and propose to rename that as a surveillance zone and that more accurately describes what our management actions are for those particular regions anyway.

Now, as you see as I advance to this next slide, we also propose a reduction in the geographic extent of these zones. We're proposing to shrink them somewhat. So I'm going to go back to the previous slide to refresh your memory on what these zones currently look like. And as you'll see with the high-risk zone -- or as we move forward perhaps, the surveillance zone -- if you look at the eastern extent of that, basically the Reeves County portion of the surveillance zone that extends out to the Pecos River, that region has marginal deer habitat at best. It, therefore, has very few deer in there and we really -- other than having a very simple, easily defined boundary with the Pecos River and interstate -- and the interstate there, we really don't have any other reason to maintain that particular area within that surveillance zone.

Likewise, if you look on the southern portion of Culberson County, right around where Interstate 10 cuts through Culberson County, there's been a lot of surveillance that's been conducted there over the last four years. Likewise, for the eastern side of the containment zone, if you look at that eastern boundary of that red containment zone there, that basically runs north out of Van Horn -- excuse me, that's right -- Van Horn up to the Guadalupe Mountains and right there on the eastern edge of that containment zone, we've conducted a lot sampling. Not just in the last four years, but actually since 2012. And so as a result of that sampling there, as well as that southern portion of the high-risk zone -- I'm going to advance now to the next slide and show you how we propose to begin to shrink in these zones.

That eastern extreme of the proposed surveillance zone is basically a series of farm-to-market roads that stay on the -- that follow the eastern side of the Delaware Mountains, if you will, and the eastern extent or boundary of the containment zone will be -- would shift westward away from Highway 54 to FM 1111, which runs from Interstate 10 up to Highway 62/180. We hope in the near future to be able to shrink these zones even more. As you'll see here momentarily, we have a proposal also to help increase our sampling effort in that area to help us get a better idea of the geographic extent of the disease; and as we collect those samples and get no additional positives or no positives in new areas, we hope to shrink this even more hopefully in the not too distant future.

So with that, let's shift our focus to Hartley County up in the northwestern part of the Panhandle where CWD was detected in a free-ranging Mule deer. It was a hunter-harvested Mule deer, and the disease was detected last February. We have proposed a containment zone in this area based on the location of where that CWD positive animal was harvested, as well as what we know about the deer biology, deer movements in that part of the state, and the habitat types in that part of the state.

So our proposed containment zone would run along Interstate 40 from New Mexico to Vega, Texas. And then the eastern boundary would follow -- would go from Vega, Texas, up Highway 385 all the way on up to Oklahoma. And then surrounding that containment zone, we propose this surveillance zone, which would follow Highway 60 out of Clovis, New Mexico, to the northeast to Canyon, Texas; and then from there, it would travel north on Highways 87-287 through Amarillo and Dumas and then on up to Oklahoma.

Now, I'd like to discuss some of the management actions that we propose for these CWD zones. For the containment zone, we propose mandatory sampling of hunter-harvested deer. This is consistent with our current CWD rules. The previous maps had those red areas shaded in red are containment zones, already have these mandatory sampling requirements of hunter-harvested deer. With this proposal though, one thing that differs from our current rule is we also propose to implement carcass movement restrictions from any deer harvested in a containment zone; and I'll address this in a little bit more detail here a little later in this presentation.

We also propose that there be no Triple T activities permitted, no DMP activities permitted, and no new deer breeding facilities established within a containment zone; and these are all consistent with our current rules, as well. Our current rules basically allow for absolutely no movement of White-tailed deer and Mule deer into, within, or out of a containment zone. A common phrase that was used by the task force in making these recommendations a few years ago was no movement in, no movement out; and they took it a step further and even said no movement within the zone.

However, things have changed. We've learned more. We've gotten more samples over the years, and we have new rules that this Commission adopted back in June that does -- that did establish some more prudent disease surveillance requirements for not just captive deer facilities; but anybody who's transferring deer from one location to another, whether they be free-ranging or not. And because of that, we have proposed that TC 1 facilities be allowed to release deer onto their own release sites. These being those release sites on the same property where that deer breeding facility exists. We believe that these TC 1 facilities, the risk associated with these facilities is low enough to where we feel comfortable permitting the release onto that adjacent release site.

And finally for the containment zone, we propose that any positive facilities and their associated properties would be managed under a herd plan issued by Texas Animal Health Commission and that there would be no recapture of escaped deer unless specified in a Texas Animal Health Commission herd plan and that's consistent with our current rules, as well.

Now, as I move to the surveillance zone, here we propose mandatory sampling of hunter-harvested deer and carcass movement restrictions, that they be implemented for any deer harvested in a surveillance zone and both of those are a change to the current rule. As I shared with you on a previous slide where we propose to being to shrink in those zones out in the Trans-Pecos, we -- our goal is to shrink in those zones even more, but we haven't been able to get the distribution of samples that we want through a voluntary approach. In particular, in the northern part of that surveillance zone. And so after four years of effort with extensive outreach and really good landowner cooperation too, we still haven't been able to meet those sampling goals. And so we believe with a mandatory approach to surveillance of hunter-harvested deer, we'll be able to achieve those goals, establish that confidence that CWD is not in that particular area, and begin to shrink those zones even more. And again, I'll address the carcass movement restrictions in a little more detail here momentarily.

Now, the movement that's currently allowed within a surveillance zone -- which again, is currently referred to as a high-risk zone -- it's very restricted, as well. In fact, the current rules allow only a breeder with a certified status with Texas Animal Health Commission to be able to move deer into their facility and out of their facility. To refresh your memory, to have certified status, they've been enrolled with the Texas Animal Health Commission program for more than five years and compliant and testing with 100 percent of their mortalities, with annual inspections, and so on. And so the current rules allow only a breeder with that status to move deer in or out. There's no Triple T activities permitted. There's no DMP activities permitted.

Well, under this proposal, we actually propose to allow for Triple T release sites within a zone. In other words, if there's a very low population of deer within a surveillance zone, we don't really see disease risk by allowing deer to be added to those populations under a management plan that would prescribe appropriate harvest. But we still would have concern and, therefore, do not recommend allowing for or permitting any Triple T trap sites within a zone. We don't want to see any deer leaving -- free-range deer included -- leaving this zone.

We also now propose to allow for DMP activities to be permitted within a surveillance zone. This is a change, again, from the existing rule. Excuse me. However, as many of you know, one common practice with DMP operations is to use what is commonly referred to as a "rent-a-buck," if you will, where they rent a buck from a deer breed -- pardon me -- a deer breeding facility. They transfer that buck into the DMP facility for breeding purposes, and then that buck goes back home to the deer breeding facility. Well, we propose any deer -- DMP facility within a surveillance zone, that they be required to release all of the deer in those pens onto that adjacent release site, where that breeder buck cannot go back home to its originating deer breeding facility.

We also propose to allow the movement of deer from any TC 1 facility from a zone. So let me rephrase that to say we think any breeder with a TC 1 status that's in a surveillance zone should be able to operate like any other TC 1 status breeder in the state of Texas, be able to move deer in and out. We also propose a change from our current rule by allowing breeders with TC 2 status to release deer -- not just release deer; but to trade deer with other deer breeders within that same surveillance zone, including the release of deer within that surveillance zone. But the level of risk for these TC 2 facilities is still too great for us to have a comfort level on permitting the movement of deer outside of the zone from a TC 2 facility.

And finally, similar to the containment zone, we propose that there be no recapture of escaped deer from a facility within a containment zone unless it's authorized through a Texas Animal Health Commission herd plan.

Now, I've already mentioned a couple of times how we propose carcass movement restrictions for the CWD zones in the state. In particular, the CWD zones in the Trans-Pecos region and in the Panhandle, northwester part of our Panhandle. What we've proposed is similar to what you see in about 40 other states in the country; and that is that no carcasses or parts of carcasses be allowed to enter this state from a state known to have CWD or be allowed to leave one of these proposed CWD zones in West Texas, except for carcass parts that pose the least risk, if you will. The idea here is to leave the brain behind, the spinal column behind, the eyes behind. The parts that are know to accumulate high doses, if you will, of prions.

So we would allow them to leave the zones with cut quarters, with meat that's boned out, even cut and wrapped meat. A lot of hunters come into Texas from another state. They already get their animals processed in another state. They could come in with processed, packaged meat. Caped hides with skulls not attached, a skull plate with the antlers attached and cleaned of all soft tissue, and, of course, finished taxidermy products. Now, most states that have these restrictions, they look very similar to this; and they do require that these skulls be cleaned of all soft material before they're allowed to leave a zone, even for trophy animals.

But, you know, we've given this a lot of thought and we realize what a burden that this could place on a lot of hunters, a lot of hunters who are not experienced in caping an animal, much less cleaning skull plates and we think it would still be responsible to add one more exception here and to allow a hunter to take his trophy back to a taxidermist back home, you know, outside of a zone, provided that those unused parts of that carcass still end up in a landfill that's permitted by TCEQ.

So now I'll shift our focus to Medina County or that area, southern Bandera County, eastern Uvalde County, and Median County where CWD has been detected in three different captive deer breeding facilities and one release site that is associated with one of those breeding facilities. It's a contained release site. And this area we do not recommend and we do not propose the establishment of a containment zone, and the reason is quite simple. All of these sites -- let me say the disease has only been detected in these captive facilities that are all -- have all been issued a quarantine order. They're all operating under a herd plan. They're required to test 100 percent of their harvest. Movement is not allowed of animals outside of those facilities, outside of those properties, if you will, as per the herd plan. So those herd plans already function as a containment zone.

Having said that, we do think it would be prudent to establish a surveillance zone in this area; and rules that I just shared with you that we propose for the surveillance zones in West Texas, in the Trans-Pecos and in the northwest part of the Panhandle, and particularly those rules that address the restrictions of movement of deer from one location to another, those would apply to this zone, as well. There is an exception for this zone though, and that is the -- we're going to try and -- we're going to attempt to obtain our CWD surveillance of hunter-harvested deer through a voluntary approach. We also propose that the carcass movement restrictions be carried out on a voluntary basis, as well.

And the reason is the same as the reason I just provided for not establishing a containment zone. The disease has not been detected outside of any of these captive facilities. We want to use this approach to provide us much more confidence that it is truly contained in these facilities where we know it to exist; but until we find evidence that it's not, that it's somewhere else, that it's in a free-range, and we believe that this voluntary approach will be -- will help us achieve this goal. And the reason that we have a lot of hope with this voluntary approach is because of a very, very strong collaborative effort that's been put together locally there in Medina County.

This is an effort that's been spearheaded by Judge Schuchart there in Hondo, by some landowners in that area, some land managers in that area, and neighboring judges, too -- Judges Evans and Mitchell from the Bandera and Uvalde County areas that helped spearhead this effort -- have met with our staff on multiple occasions. We have more meetings coming up in the near future and we're very hopeful that this voluntary approach will allow us to get the surveillance that we need so that we can provide that level of confidence that that disease truly is contained in the facilities where it's known to exist and we can clear this -- the rest of this area from this zone or let me say clear this zone from the rest of this area, if you will.

I explained to you that in northwest part of the Panhandle, that the zone boundaries there were established based on our knowledge of where the deer was harvested, as well the deer biology, the deer movements that we know to take place in that area based on the habitat types in that area. In this particular area -- and I'll go back one -- we picked -- to define the surveillance zone, we picked the smallest geographic area that could enclose all three of these positive facilities with easily defined boundaries. Boundaries that hunters could understand and follow, which are three public roadways.

For this area, let me spend just a couple of minutes talking a -- giving you a little bit more detail on our approach with these check stations in the Trans-Pecos. We plan on having check stations in Cornudas and Van Horn and Alpine. We've had check stations here for the last several years.

I'll step back just for a minute and remind the Commission that statewide since 2002, we've been operating pseudo-check stations, I guess you could say. We've had locations scattered throughout the state where we collect hunter-harvested deer samples from hunter-harvested deer, meat processing facilities or other strategic locations; but here in these proposed zones, we have stationary check stations. Check stations where you can depend on our staff being there during -- throughout the day throughout the hunting season. So for the Trans-Pecos, we're looking at Cornudas, Van Horn, and Alpine. For the Panhandle, we're looking at Dalhart and Vega.

Now, in both of these regions of the state, one of the common concerns that we've heard and the input/feedback we've received during our public hearing process was to try and make this as convenient on the hunters as possible. Certainly we would agree with that. Well, one of the ideas is -- excuse me -- is more check stations perhaps on the eastern side. If I go back, you'll see there on the eastern side of the containment zone, except for the southeast corner there, we don't have a check station location identified. Same thing here in the Panhandle. There's a lot of interest like in the Amarillo area for a check station. It would provide hunters more convenience. They're heading back home to the east or southeast. They can stop by a check station.

Logistically, additional check stations is very difficult to establish. We are investigating options. We're looking into more resources, more human resources to help us pull this off, additional check stations. We're hiring six seasonal employees to help us with this effort, but we're going to need more than that. And so we're going to -- we're going to implement a new strategy this year with not just Parks and Wildlife staff and Texas Animal Health Commission staff collecting samples. We're going to rely on others to help us get these samples -- taxidermists, for example, landowners, land managers. Dr. Bob Dittmar, our veterinarian who's with us today, he's going to -- he's already scheduling some training to get many individuals trained. We already have lots of people in private sector trained. Texas Animal Health Commission has been doing this for the last several months, training what eventually become certified collectors.

Well, we're going to take it to the next step and get even more people trained to help us because the regulation proposal requires them to submit the unfrozen head to a check station within 24 hours of harvest; but as you see in parentheses there on the slide before you, we're building in exceptions, such as allowing other people to collect them, such as contact us. You see on this slide that we have a cell phone that's going to be dedicated to each check station. They can communicate with us and let us know, "Hey, we have a walk-in cooler. Is it okay if our hunters wait until they go home, which may be three or four days later, before they bring you the samples?" That would certainly be acceptable. We can work with them on that.

Likewise, we can go to their site. And many times, not always, but sometimes we can send a biologist to them to collect samples. And so we're working through lots of different ideas right now to make this as convenient on our hunting constituency and our landowners as possible. And as I get near the end of this presentation, while it's a voluntary effort with regard to our CWD surveillance in the Medina County area, we will have stationary check stations located in Tarpley and Hondo and anybody who comes to a check station and has a sample collected, including all those other locations in Texas where we're collecting samples at these processing facilities and other locations, the hunter will receive this CWD receipt that's on the slide before you. On the back of that receipt -- number one, this receipt will serve as a proof-of-sex document; therefore, allowing them to leave that head behind as we're wanting them to do. But on the back of that receipt, there's a CWD number, a sample number; and the hunter will be able to go to our website, plug that number in within just a few days of us collecting the sample and get their result.

So as I wrap up, this slide before you just gives a statewide perspective of the proposed CWD zones in the state of Texas. And with that, I'll let you know that we've received some public comment so far, combined through the internet, e-mail, and then at our public hearing. We've heard support from 49 different individuals and opposition from 28 individuals. I'll break down the opposition into the main categories, the themes, if you will, of opposition that we heard. There were those that just didn't think this went far enough. There were those that just do not think that deer breeding or deer movement, for that matter, should be permitted; but they really weren't germane to the proposal as written. Then we also received a form letter from a number of individuals that each stated that the rules created a severe and unprecedented restriction on commerce. That TC 2 facilities in the surveillance zones should have the same privileges as other TC 2 facilities across Texas and that these are purely subjective boundaries chosen by the Department and they're determining winners and losers in the Texas deer industry.

Of course, I've already addressed some of these comments with you. The form letter also stated that only facilities that merit being locked down are the ones who are directly connected to index facilities. This is a common sense approach -- this common sense disease management approach has been adopted by Texas Animal Health Commission.

Well, I'll let you know just yesterday, I was -- I attended the Commission meeting over at Texas Animal Health Commission with their Commission and authorized staff to publish a proposal that looks almost identical to the proposal that is before you today that you'll consider for adoption tomorrow. And we also have -- I'd like to point out we have some representatives of Texas Animal Health Commission with us today -- Dr. Susan Rollo, the State epidemiologist, and then their general counsel, Gene Snelson. They're both here if you have questions for them today, as well.

And then there was also the comment that deer -- there's never been a deer die of CWD in the state of Texas. Of course, we haven't conducted any research involving live deer known to have CWD; but other states have. And just to give you an idea of a couple of projects, there was Mule deer project and one White-tail project that both showed that CWD was one of the leading -- clinical CWD was one of the top two leading factors causing mortality in those two populations.

We also heard that the regulation language is complicated, and that they need to be able to move deer -- move venison rather, from a CWD zone to other major cities for processing and that they need to be able to move skulls to taxidermists. And as I shared with you today, we believe this proposal does allow for those accommodations.

We also heard that there's a need for more check stations, that we need more than 24 hours to collect the sample under certain circumstances, and that we allow others to collect samples. Again, these are comments that kind of -- I think the theme here is make this as convenient as possible to the hunters. And as I shared with you today, we're working on that. We plan to make this as convenient as possible, including hopefully be able to establish even some additional check stations.

We also heard that all deer should be tested in those counties, whether they're pen-raised or free-ranging deer. And we heard that the surveillance should not be mandatory until other key species, such as elk, are regulated like deer. Again, I'll share with you what the Texas Animal Health Commission -- Commission authorized staff to publish yesterday was a proposal very similar to this that would pertain to the other susceptible species -- the Red deer, the elk, the Sika deer, and so on. So their proposal would be similar to ours.

And then finally, we've heard concern about what's going to happen when you find CWD on our ranch, a concern that maybe the Department doesn't have written protocol that's going to clearly describe what this Department would do. And this is a question or a comment that we field frequently; and even though we do field this frequently, it's never an easy one to address because like many things, our response could vary from one situation to another based on many different factors. And so for that reason and understanding how important a response to this is to so many landowners in this state, we have prepared a draft response not only to that question, but to other frequently asked questions that we hear primarily from landowners and we're near the -- we're close to finalizing that draft response.

And I'll share some of the excerpts with you this morning that we have in this draft response. As I said, this response may vary depending on -- from -- you know, vary from one situation to another; but it's most likely to involve a containment strategy, as opposed to a disease eradication strategy. A disease eradication strategy would be considered only in the most extraordinary of circumstances.

So what does a containment strategy look like? We just went through it. It looks like this proposal that you will consider for adoption tomorrow. I looks a lot like our -- this Department's response to the detection of Chronic Wasting Disease in Mule deer back in 2012. It looks a lot like this Department's response to the detection of Mule deer in Hartley County area. It looks a lot like our response to the detection of CWD in captive deer breeding facilities. And as you all know, our response isn't identical from that latter situation to, say, a West Texas free-range Mule deer population situation; but as they vary, there are some common approaches that you see from one situation to another.

As we proposed here, there's a chance -- if not a likelihood -- of trying to establish some CWD zones in that area in an attempt to contain the disease. This -- in order to establish zones, in order to come up with an effective disease containment strategy, we would most likely recommend additional surveillance so that we can get a good idea of the geographic extent of the disease; the prevalence of the disease; could even have some measures put in place that would restrict the movement of deer, not just live deer, but deer carcasses as I've shared with you in this proposal today.

But if CWD is detected somewhere else in Texas, our first step -- in cooperation with Texas Animal Health Commission -- is going to be to contact this landowner and to begin to open this dialogue, if you will, to learn more about what that landowner's interests are, what that landowner's goals are for that population and for the activities that are planned out for that particular ranch and work with that landowner in developing a plan that best suits the need there and many times it won't be just one landowner. It may involve neighboring landowners, as well. We -- there's a good chance we would recommend additional harvest in those areas to help us collect samples and to help us contain this disease; but that additional harvest would most likely utilize hunter harvest, if you will. Let the landowner continue with the hunting operation that they have on the ranch for their enjoyment, for their income needs, etcetera.

But as I close, I'll just -- I'll share with you a few excerpts that we have in this draft. This draft states that we understand that hunting is an essential and longstanding contributor to the State's culture, economy, and land values. Ensuring that that heritage continues on private lands is very important to this Agency, as well as ensuring the health and sustainability of our native White-tail and Mule deer populations. As such, any management strategies deployed will reflect our goals of limiting -- of limiting the impacts on hunting activities, maintaining the confidence of hunters and landowners, and protecting our big game resources. You-all are quite familiar with the goals of our CWD management plan. The ultimate management strategy would be devised with recommendations from Texas Animal Health Commission and input from those affected landowners. And finally, I want to emphasize that Texas Parks and Wildlife Department and Texas Animal Health Commission will always use the best science available and take into account all ramifications, not only of the disease, but of the management actions as well before any decisions are made.

And so with that, I'd like to conclude this presentation. I'll be glad to entertain any questions you might have.

COMMISSIONER FRIEDKIN: Mitch, thank you. If you could -- looking back at the check stations. So currently if you're hunting in Hudspeth County, are you suggesting that these would be additional, always manned stations; or would these be the only two options and then Cornudas and Van Horn? I mean, what -- how are we increasing check station options?

MR. LOCKWOOD: So we've already identified the three locations that you see on the map before you -- Cornudas, Van Horn, and Alpine. We'll have -- I'll say permanent, fixed, manned stations there that will be manned throughout the day throughout the general season. And then we're always going to be available for any hunters during the extended MLDP season. But beyond what you see on the slide before you, we have received requests for additional check stations, more. In particular, to help address those hunters that are in that surveillance zone, say in that Delaware Mountain region of northern Culberson County, whose hunters are going to go east or southeast to get back home. We'd like to try and find a way from them to do that without having to backtrack to go to a check station; find a check station on the way home.

Again, we're looking at different options. We're thinking with the limited resources, Chairman, we may man a check -- an additional check station just during the peak times, maybe during the weekends, and utilize -- make sure every landowner out there who -- well, every landowner out there is aware of how their hunters can reach us, other measures that they can take to get samples collected; and, again, we're going to have some training out there, too, to try to get more of the private sector collecting samples as well. Does that address your question?

COMMISSIONER FRIEDKIN: It does. Thank you.

COMMISSIONER JONES: I have a question.

COMMISSIONER FRIEDKIN: Commissioner Jones.

COMMISSIONER JONES: Mitch, across the border, do we know if New Mexico or some of the other states or Mexico are doing something similar to what we're doing to manage the program across the border?

MR. LOCKWOOD: The surveillance in New Mexico has -- let's see the best way to put this, but it's not nearly as aggressive as it was a few years ago when there was federal funding. And all of the states lost their federal funding -- I don't remember, Commissioner -- but three, four, five years ago. And from that point forward, New Mexico's surveillance has been much reduced; but they do still get some surveillance of hunter-harvested deer, and it's just not nearly to the extent and the effort that we're putting forward.

Likewise, as you go to the Panhandle, northeastern New -- that's right, northeastern New Mexico, there's been very, very little surveillance up in that area. There's been very little surveillance in the Oklahoma panhandle, and we do know of CWD in southeastern Colorado. So I think to summarize, New Mexico and Oklahoma haven't been conducting surveillance at the same -- with the same intensity as we've attempted here, especially in recent years. And south -- and Colorado still has a pretty aggressive surveillance program, to my understanding.

COMMISSIONER FRIEDKIN: Any other questions for Mitch?

MR. SMITH: Chairman, if I could, I just want to go back to something that Mitch said and I think he articulated very well the anxiety that many landowners have about what would transpire if we were to find CWD in a free-range deer on somebody's ranch, high fence or low fence and I thought he enumerated that very, very well. I guess what I want to make sure the Commission understands, our goal is to provide as much predictability and clarity as we can to landowners and so we're proposing to formalize that in a series of FAQs that can be widely distributed and disseminated to our landowner partners so that they have some sense of the boundaries in which we propose to operate and I think that will help attenuate that anxiety. It will never eliminate it, but I think it will help a bit. So I just wanted to make sure that y'all were aware of that.

COMMISSIONER FRIEDKIN: I agree. Thanks, Carter.

So if no further discussion, I'll place the proposed rules regarding Chronic Wasting Disease on the Thursday Commission meeting agenda for public comment and action.

Mitch, thanks.

MR. LOCKWOOD: Thank you.

COMMISSIONER FRIEDKIN: Item 6 is Oyster Rules, Recommended Adoption of Proposed Rules, Mr. Lance Robinson.

MR. ROBINSON: Good morning, Mr. Chairman, Commissioners.

COMMISSIONER FRIEDKIN: Good morning.

MR. ROBINSON: For the record, my name is Lance Robinson; and I have before you the first item is a proposed action item that you'll hear tomorrow. It is dealing with two specific proposals related to commercial oyster harvest. The first one would be dealing with temporary closures of some reefs that will be -- restoration will be conducted upon. And the other one would be reduction in the daily sack limit during the public season and the removal of Sunday as a legal harvest day during the commercial season.

The proposed temporary closure areas, there are four small tracts totaling, in total, about 28 acres in Galveston Bay for which we have restoration funds available and we'll be conducting some restoration cultch plants. We've done these before where we plant the cultch. They close those areas to all harvest for two years, allowing those oysters to grow to a marketable size before reopening. Then it becomes part of our management -- in our management strategy of looking at and monitoring routinely to determine whether those areas stay open or close.

The other area is in Half Moon Reef in Matagorda Bay. This area really is an extension of a closure that's already in effect. It is scheduled to expire in November of this year; but the Nature Conservancy, the organization which created that reef, they are -- part of their funding sources require a much longer post-construction monitoring for success and they have contracted with Texas A&M University to facilitate that sampling and so they've asked us to consider an additional two-years' extension on that closure so they can complete that post-construction monitoring. It's about a 54-acre tract in East Matagorda Bay -- or in Matagorda Bay.

This is a map. It may be a little hard to see, but it just shows in red the four areas in Galveston Bay and, you know, down near the Texas City Dike and then two on some of the public reefs in the central part of the bay. As I mentioned --

COMMISSIONER FRIEDKIN: I'm sorry, excuse me.

MR. ROBINSON: I'm sorry.

COMMISSIONER FRIEDKIN: Sorry. The gray represents?

MR. ROBINSON: The gray represents existing natural oyster habitat.

COMMISSIONER FRIEDKIN: Okay.

MR. ROBINSON: As I mentioned, the Half Moon Reef is a site that historically has not been a very productive reef. It's -- or historically was a productive reef; but in more recent years, it's become fairly degraded primarily due to erosion from the Intercoastal Waterway that's disturbed a lot of the sediment, of the cultch materials there, a lot of fine shell pieces. It's really not -- with the current action, just can't really hold spat once it settles.

So the Nature Conservancy planted some materials, some substrate there about two years ago. They've had very good success in seeing recruitment of oysters onto that habitat. And as I said, they are looking just to continue their monitoring of that site for two more years just to meet the grant obligations that they're operating under. And there's just a map of the area. Again, a 54-acre tract in Matagorda Bay.

Just before I get into the other two proposals dealing with the sack limit and the harvesting days, just a reminder of the current regulations that are in place for the public season. Fishermen are currently under a 50-sack daily limit. The sack is 110 pounds, including the weight of the sack. Legal fishing time is from sunrise until 3:30 in the afternoon, seven days a week. There's a 3-inch minimum size limit, and there is also a 15 percent tolerance whereby a sack of oysters cannot contain more than that 15 percent of undersized oysters or dead shell that ultimately makes up the substrate upon which oysters will settle.

COMMISSIONER FRIEDKIN: Please.

MR. ROBINSON: Yes, sir.

COMMISSIONER SCOTT: One quick question. Going back to the map you show on proposed Galveston Bay closure area -- and I'm glad Ann's back. I'm assuming, which we all know is not a good thing to do, that none of our lawsuit issues on the leases or any of that kind of stuff -- because some of this is getting a little close to some of that it looks to me like -- I don't know how close, but this is not overlapping on any of the issues on the lawsuits that are out there on the other lease deals that are going on, right?

MR. ROBINSON: No, sir. None of these are on the Navigation District.

COMMISSIONER SCOTT: Okay, thank you.

MR. ROBINSON: The proposed changes to the regulations for the public season would include a reduction in the daily sack limit from 50 to 40 sacks a day and, as I mentioned, an elimination of one day a week and in this case, we are proposing the elimination of Sunday as a legal fishing day for that commercial fishery.

The public oyster season runs from November until the end of April, November the 1st through the end of April, which is about 180, 182 days during the season. What we have seen over the last several years is that the fishery, the commercial fishing industry, is pretty much concluding the majority of their harvest within about 90 -- 90 days -- 90 to 100 days of that season. These two proposals, we would not expect that the season would be -- or that it would reduce the total harvest over the course of that six-month season. What we'd expect to see happen is that those fishermen who may be quitting or stopping because it's not as economically viable to them, stopping sooner, may actually delay some of that harvest until later in the regular season and by pushing it back a little bit into that regular season, it puts it into the -- excuse me -- into the colder months and from an economic standpoint, a shucked oyster is much more plump and it yields a lot better and they get a better value for it delaying some of that harvest into those colder months. So that's part of the rational here.

We would also be utilizing our current closure management strategy that we are monitoring a lot of these different areas up and down the coast and as certain metrics are met, we will step in and implement emergency closures and close those areas down until the condition of that resource comes back to a level higher than what precipitated the closure initially.

We've received -- here's an overview of the comments that we've received thus far, again, through public hearings. We held four along the coast of Texas, as well as e-mail and online and -- yeah, online comments. We've had 20 individual -- or 20 comments in support of the proposals and 26 in opposition to those proposals. The opposition generally runs from some concerns voiced over the sack limit reduction. The concerns are that by reducing the sack limit, it's lowering the limit and the industry will never see that limit go back up. It's kind of creeping down and never will come back. The closure of Sunday was another. The closure day was another comment in the opposition category. It wasn't really that they were opposed necessarily to a closure day. It was really the questioning of closing on Sunday as opposed to any other day of the week, and so that was one of the comments we received.

We also received several comments from folks who indicated that the proposals that we were making up here didn't go far enough. That they would like -- would have liked to have seen lower bag limits and more days in closure. As I will also point out on the slide, that these proposals were, in fact, supported by the Oyster Advisory Workgroup. We've worked very closely with industry in coming up with these proposals and many of them were actually recommended by that working group and it's also been endorsed by the Coastal Resources Advisory Committee.

And with that, I will take any questions that you may have regarding this particular action item.

COMMISSIONER FRIEDKIN: Any questions or discussion from the Commission?

Okay, thank you. I'll place the proposed rules regarding oysters on the Thursday Commission meeting agenda for public comment and action.

Item 7 is Oyster Lease Rules, Request Permission to Publish Proposed Rules in the Texas Register, Lance Robinson.

MR. ROBINSON: Again, for the record, my name is Lance Robinson with Coastal Fisheries Division. What I'm bringing for you today is a proposal on dealing with the extension of the private oyster location or oyster lease program that exists in Galveston Bay.

As you may recall in May, we came before you with some proposals that would have looked at expanding -- renewing those existing leases; but also expanding that lease program to include what we call reclamation leases, as well as restoration leases. There have been a number of questions about, you know, how a bid process might work in the case of reclamation leases and also, you know, how to assess a value to that -- to those particular resources.

So for the purposes of the proposal today, we are removing the reclamation and restoration components and are only dealing with the extension of the existing lease program in Galveston Bay, the box to the left. So to give you a little bit of background on the oyster lease program in Texas, we've had oyster leases in the state of Texas since the late 1800s. Every bay system on the Texas coast has had an oyster lease in it at one time or another.

The modern day, if you will, lease program that we were currently working with, really became into being in the mid 70s. It's when a lot of these leases in Galveston came into being. At that time, the fishery looked much different than it was today. In the 70s, Galveston Bay was the major oyster producing bay system on the Texas coast. 90 percent of the landings were coming out of that bay system. The purpose for that lease program was to create a vehicle where oysters that grow in restricted waters -- because of all of that fishing activity in Galveston Bay back then, there was a lot of concern and certainly a lot of risk, public health risk, for individuals who may go into these restricted waters and illegally harvest these oysters. They end up getting into that food pipeline. People consume it, and we have human health -- people get sick.

So as a result of that and as a strategy to kind of help manage that risk, the lease program was developed and implemented whereby these individuals who have these areas under location on submerged lands are allowed to go into these restricted waters outside of the public season and under a special permit that is issued by Parks and Wildlife Department, they're allowed to go into these areas, collect the legal size oysters that are growing in these restricted waters, move them onto those beds that are in approved waters of the bay and then working very, very closely with the State Health Department, allowing those oysters to remain in the water for a couple of weeks and exploiting the physiology of that animal, it will purge itself of bacteria, and then can be safely harvested and sold for consumption. And so that program -- and then the harvest of the product is also controlled by permits issued by our Department. And so that methodology hopefully is keeping some of those oysters thinned down so it minimizes or at least reduce the risk of illegal harvest in those restricted waters.

Currently in Galveston, there are 43 leases. They range in size from 11 acres up to 100 acres. They cannot exceed 100 acres by statute. The total acreage is 23 -- 2300 -- 2,321 acres in Galveston Bay. Let's see. And as I mentioned before, under a Parks and Wildlife permit, they're allowed to go into these restricted waters, collect those oysters, move them to their leases, allow them to depurate, and then they can be legally harvested, again, under a permit.

Under the current oyster location terms, these location -- certificates of locations are issued for a period of 15 years. The current timeframe cycle will end February -- end of February 2018 -- I'm sorry, 2017. And so we're -- this is part of the reason for coming before you with the proposal to renew. Again, in statute, they cannot exceed 100 acres in size, nor can one individual or entity control more than 300 acres in aggregate. And then there is an annual location rent fee that is assessed on these tracts at a rate of $6 per acre per year.

The proposal that we bring before you today would be to extend those existing leases for an additional 15-year term. One of the changes that we are advocating and proposing would be to increase that annual rent fee from $6 an acre to $60 an acre, and that is -- that value was arrived at through looking at the -- coming up with a cost of what we -- our break-even cost. That's the term I'm looking -- it's the break-even cost for management, enforcement, and administrative costs for facilitating and operating that lease program.

We also would propose that over the term, that 15-year term, that that annual rent fee be reviewed every three years and look at -- under a consumer price index or another cost analysis of break-even cost for the Agency. We're also incorporating the -- an active-use criteria whereby in years -- the first five years of the lease term, that the lease holder would be required to plant a minimum of 25 cubic yards to the acre. Any time within that five-year timeframe as long as they meet that 25 -- minimum 25 cubic yards, they have met the obligations that we're requesting of them.

The second part of that active-use criteria is that -- kind of trips or kicks in in year six and runs to the end of the term lease in year 15 and it's really based on a production component whereby if -- as they produce oysters off of that lease, we would be requesting that there is a -- as they remove oysters, they're also taking shell, which is substrate and habitat. And what we are asking, that they would return one-third by volume an equivilant amount of cultch onto an area designated by the Department. For example, if a leaseholder harvested 100 sacks of oysters in a given year, then in the following year, they would be required to plant 33 sacks of approved cultch onto an area the Department has designated, which would be located on one of our public reefs. It would also be closed for a period -- minimally for a period of two years to allow that new cultch to catch spat and oysters to grow to marketable size.

Again, this is just a little more detail about the two active-use criteria. That minimum of 25 cubic yards any time within that first five years, as long as they meet that minimum amount, then that will meet that requirement; and then, of course, the production.

We also looked at cost, looking at the current cost versus what the cost might be for this proposal. As you'll see, the current cost of $3,402, that's a per acre cost per year. That comes from the $6 an acre currently that they are required to pay, but it also includes some of the costs that the industry is already contributing in cultch plants onto those beds. They are actively planting cultch onto these beds already. The 25 cubic yards that we're asking for in the minimum requirement, we believe is minimum. A lot of them -- most of them are planting quantities much, much larger than that.

This value here reflects some of those costs that we've been able to obtain. And you'll see in the proposed amount, that includes the 25 cubic yards per acre. We calculated -- to make that calculation, we used a value of $80 a cubic yard, which is about what we are having to pay when we do our cultch plants and we bid them out on the open market, as well as the production component. And the way we calculated that was we looked at the current leases, the 43 leases production over the last 14 years because we're in year 15 now, but we looked at their production over the last nine years at least and calculated an average production per acre for the existing leases using that number to arrive at that 4,180 -- part of that $4,180.

One thing I will also point out to you is that the prices here, the costs here, do not include a $125 per acre fee that the Texas General Land Office is now going to be requiring. It's a one-time fee that they will be requiring on any oyster leases.

COMMISSIONER FRIEDKIN: Commissioner Scott, do you have a question?

COMMISSIONER SCOTT: Yeah.

MR. ROBINSON: Yes, sir.

COMMISSIONER SCOTT: Two quick questions. One, if you go back a couple slides, you're proposed active-use criteria, on the cultch planting, you say a minimum of 25 cubic yards. 25 cubic yards of what?

MR. ROBINSON: It would be an approved material approved by the Department. That could be oyster shell. It could be river rock, which is a substrate that works very well in collecting -- allowing oysters to settle. It could be limestone; or it could be clean, crushed concrete. Those are pretty much the only materials that we would allow.

COMMISSIONER SCOTT: Just as a point, you probably need to spell that out if this is going to be a rule going forward.

MR. ROBINSON: Thank you. It does include that language, but we'll make sure. I'll check it out.

COMMISSIONER SCOTT: Oh, okay. I was just making sure. I wasn't sure.

MR. ROBINSON: Thank you.

COMMISSIONER SCOTT: Second part, what does that oyster advisory bunch think about -- have they been asked about these -- this proposal?

MR. ROBINSON: Well, the Oyster Advisory Workgroup, we have briefed them on this. They have watched -- some of their members have -- they have certainly some concerns. Originally, when we came before you, we were -- there was some discussions, I guess, in the interim here about some bidding that may go out and certainly there was some concerns over that. For a lot of the folks, this -- the $60 amount is the first time they are hearing that. We plan to visit with them. We have informed them of that, but we haven't gotten official feedback from that community, the current leaseholders yet. We plan to visit with them very quickly.

COMMISSIONER SCOTT: So are we going to be voting before --

MR. ROBINSON: No, sir. This is a proposal that would go out for public comment, and the final action would be in November.

COMMISSIONER SCOTT: Okay, thank you.

COMMISSIONER FRIEDKIN: Thank you.

COMMISSIONER JONES: Just a quick question to follow up. Did I understand you to say -- and I believe it's when you had the $3,400 number and $4,100 number up on the board. But that -- those numbers notwithstanding, is the proposal for the planting similar to what -- and have you confirmed that this is similar to what the oyster industry is doing currently under the current lease or at least close to what they're doing currently?

MR. ROBINSON: They are certainly planting at least that amount on just about every lease in the bay. The cost amount that we used the figure, the $80 per cubic yard that we're using to make these calculations, there were some questions from industry that -- and perhaps that that was too low. But I -- we have a project -- the one I previously mentioned previously mentioned about -- in that presentation in Galveston Bay, those areas that we're going to be requesting temporary closure for. We bid that out on state contract this summer and the price was $74 a cubic yard for material, planting, turnkey project. So we think the $80, at least this year, is in that ballpark. It's in that range.

COMMISSIONER JONES: Well, I'll be interested to hear what the industry thinks about some of this. They have time to respond to this proposal, right?

MR. ROBINSON: Yes, sir, absolutely.

And with that, that's the end of the presentation.

COMMISSIONER FRIEDKIN: Thank you, Lance.

Any other questions or discussion?

All right. I'll authorize staff to publish proposed rules regarding oyster leases in the Texas Register for the required public comment period.

With regard to Session -- Work Session Item No. 8, Acceptance of Land Donation, Limestone County, Undeveloped Subdivision Lots at Fort Parker State Park, does any Commissioner have any questions or comments?

Okay. I'll place this item on the Thursday Commission meeting agenda as well for public comment and action.

And for Work Session Item No. 9, which is Acceptance of Land Transfer from Texas Department of Transportation, Palo Pinto County, Approximately 20 Acres at Palo Pinto Mountains State Park, any discussion or question from any Commissioners?

All right. I'll place this item on the Thursday Commission agenda for public comment and action.

And for Item No. 10, which is Acceptance of Land Donation, Jefferson County, Approximately 388 Acres at Sea Rim State Park, is there any questions -- do we have any questions? Commissioner Scott.

COMMISSIONER SCOTT: Yeah. Ross, this map that you -- this deal you gave me on that other one, now that we're looking at the same deal, is that the same piece of property or not? Do you know? This is the agenda item that I'm familiar with that's being donated back to Jefferson County.

And, Ted, I guess you're probably the one. Ross gave me this.

MR. HOLLINGSWORTH: No, sir. That's a different one.

COMMISSIONER SCOTT: This is a different deal?

MR. HOLLINGSWORTH: Yes, sir.

COMMISSIONER SCOTT: Okay, that's what I was trying to make sure of. Okay.

COMMISSIONER FRIEDKIN: Thanks, Ted.

Okay. So I will place -- any other discussions/questions from the Commission on Item 10?

Okay. I'll place this item on the Thursday Commission meeting agenda for public comment and action.

For Item 11, which is Acceptance of Land Donation, Brazoria County, 230 Acres at the Follets Island Coastal Preserve, any Commissioner, discussion or questions?

I will also place this item on the Thursday Commission meeting agenda for public comment and action.

Work Session Item No. 12, Pipeline Corridor, Jefferson County, Approximately 30 Acres at the J.D. Murphree Wildlife Management Area, Permission to Begin the Public Notice and Input Process, Mr. Ted Hollingsworth.

MR. HOLLINGSWORTH: Mr. Chairman, Commissioners, good morning. My name is Ted Hollingsworth. I'm with the Land Conservation Program. This is a first reading, request for -- to solicit public comment on this proposal. It's brought to you as a result of a request from a company in Jefferson County at the J.D. Murphree Wildlife Management Area, which is just south of Port Arthur. That's a very significant wildlife management area for us. It's on the Chenier Plain; adjacent to Sea Rim State Park; adjacent to Texas Point National Wildlife Refuge; adjacent or very close to the McFaddin National Wildlife Refuge and part of a tremendous landscape of wetlands; home to hundreds of thousands of migratory waterfowl, alligators, other indigenous wildlife there. But it's also -- it's also physically adjacent to Port Arthur and thousands and thousands of acres of chemical-related industry, oil-and-gas industry, tank farms, transportation industries, and so forth.

And so we regularly have requests for pipelines and other infrastructure to take part of the wildlife management area. In this case -- in this case, the company has acquired a large petrochemical transfer facility just east of the north end of the WMA and then they've acquired a docking facility farther downstream on the Ship Channel and they've presented us with a pipeline route analysis and have convinced staff that there really is no feasible, prudent alternative to getting pipelines from that transfer facility to that dock facility except by going through the WMA.

This is a major pipeline corridor. The propose to install as many as ten 30-inch diameter product pipelines to take a variety of products ranging from crude oil to gasoline to diesel fuel to fuel oil, and so it is a major pipeline route. And in this map, you can see the location of that route. The company has worked very closely with staff. We are currently evaluating installation methodologies.

We had initially told them that they needed to directionally drill those pipelines, and they agreed to do that. The problem with that methodology is that the back-string area required would do tremendous damage to a very large area of marsh, that the soils -- the soils in that marsh in many places are the consistency of toothpaste. I mean, they're very soft, mucky soils. And so board -- board roads, stringing facilities, heavy equipment anything you put on those soils causes damage. And so we're looking at an alternative that would use an existing drainage channel and would deepen and widen that channel, place those pipelines, and then cover those back up.

Staff is evaluating those. We've not made a final determination, but would certainly do that before we come back to you with a request to proceed with the easement. Staff does request permission to begin the public notice and input process. I'd be happy to answer any questions.

COMMISSIONER FRIEDKIN: Commissioner Scott.

COMMISSIONER SCOTT: Ted, who is the applicant? I don't see that anywhere in the work.

MR. HOLLINGSWORTH: It should be -- it should be in your Commission agenda item, and I apologize. I've worked with so many applicants the last few weeks. It's --

COMMISSIONER LATIMER: It's on page 45.

MR. HOLLINGSWORTH: Oh, here we go. It's GT Logistics is the name of the company. GT Logistics, they -- and then Hebert is their consultant that we've been working directly with. GT Logistics has offices in Houston and a couple of out-of-state offices. We researched them. They appear to be a fairly substantial company and fairly well capitalized.

COMMISSIONER SCOTT: Thank you.

COMMISSIONER FRIEDKIN: Any other questions for Ted?

Commissioner Warren.

COMMISSIONER WARREN: Up to ten pipes. So that's not clear to me because that's a big difference. It's up to ten 30-inch. Are they going to -- are they going to define how many pipes they're going to put through there?

MR. HOLLINGSWORTH: Yes, sir, and that is also something that they'll have to clarify before we come back to the Commission and actually request permission to proceed with the easement. They started out requesting permission to install ten 30-inch pipelines. They came back and said their initial installation would probably be three or four of those with a corridor that would allow additional pipelines. That's a problem for us because it means, obviously, brand new impacts.

We've told them that we really need a full build-out schedule. In the latest iteration of that schedule, they're talking about a combination of 24- and 30-inch pipelines. So we won't come back to you with a request for that easement until we have pretty firm build-out and schedule for that.

COMMISSIONER WARREN: Great, thank you.

COMMISSIONER SCOTT: One more question, Ted; and this is more of a statement than a question. Having been involved with some of this, the new eminent domain rules and everything, we need to evaluate what we're charging for damages.

MR. HOLLINGSWORTH: Yes, sir.

COMMISSIONER SCOTT: Because that law has changed dramatically in the last two or three years. We hadn't really had any pipeline stuff in a while, so I didn't mention it; but we need to evaluate what we're charging for damages.

MR. HOLLINGSWORTH: Yes, sir. We certainly will do that. I stay in touch with some brokers, with some landmen down in that neck of the woods and they keep me appraised of the going market rates and I monitor that against our rate schedule to make sure we're not too far out of line; but I will continue to do that, yes, sir.

COMMISSIONER SCOTT: Because this is a major damage's issue if they're talking about -- that's a lot of pipeline.

MR. HOLLINGSWORTH: Yes, sir.

MS. BRIGHT: Excuse me. This is -- I'm Ann Bright, General Counsel. And I did want to clarify something regarding that, is we're not proposing to use eminent domain to acquire any of these pipelines. I mean, obviously, we're going to negotiate the best price we can. But I guess I should say they're not proposing to use eminent domain to acquire these pipelines, so.

COMMISSIONER SCOTT: But in that same vein, damages are damages.

MS. BRIGHT: Absolutely.

COMMISSIONER SCOTT: So that's --

MS. BRIGHT: No disagreement. I just wanted to make sure you were aware that --

COMMISSIONER SCOTT: Right. Okay. Thank you, Ann.

MS. BRIGHT: -- this was going to be negotiated.

COMMISSIONER SCOTT: I appreciate that, yeah.

MS. BRIGHT: Thank you.

COMMISSIONER FRIEDKIN: And they've already acquired the facilities; or it's contingent upon easement, approval of the easement?

MR. HOLLINGSWORTH: Our understanding is that they have options on both of those facilities.

COMMISSIONER FRIEDKIN: Okay. Commissioner Morian?

COMMISSIONER MORIAN: I've got one question. Commissioner Warren, I think, touched on it; but in the write-up it says installation of up to ten, but there will only be one construction period. So whatever the number they decide on, they'll install. They won't come back two years from now and say we've got to go back in and lay another pipeline in the easement?

MR. HOLLINGSWORTH: And that's a very good question and that's the reason I say we will not come back to the Commission until we have that full build-out schedule. If their proposal is to put four lines in now and four more lines in five years from now, that's a very different --

COMMISSIONER MORIAN: That's a different -- yeah.

MR. HOLLINGSWORTH: That's a different way we have to look at those collective impacts, yes, sir.

COMMISSIONER MORIAN: Okay.

COMMISSIONER FRIEDKIN: Good question.

COMMISSIONER MORIAN: Yeah, thank you.

COMMISSIONER FRIEDKIN: Commissioner Latimer.

COMMISSIONER LATIMER: You said they had no other alternative route between the facilities and I don't know what -- I can't tell from the map if that's really --

MR. HOLLINGSWORTH: Yes, ma'am, I can help with that. If you'll see where the pipeline originates at the north, it's pointed at a big oval. That oval is actually a railroad track and it encompasses -- I don't remember now -- a 40- or 50-acre area. That's the area that they have under contract. There are some tank batteries there now. They propose to add more tank batteries that would receive product from those refineries to the north -- to the north and east of that facility. Their loading dock, the facility they've bought is on the Ship Channel property just, just south of the southern -- it would be the southeast corner of this map that you're looking at.

The problem is they cannot bore -- or they can't place a pipeline under an existing petrochemical facility. They can't place one underneath that blue L-shaped water reservoir because if there were ever a discharge of product from a line into that reservoir, it would obviously ruin the reservoir, which supplies process water for a number of those adjacent chemical facilities. And so that route just to the west of that reservoir across the WMA, again, staff has looked -- they provided a very thorough route analysis. We looked at a number of routes and they have convinced staff that that really is the only feasible and prudent route for that pipeline corridor.

Does that answer your question?

COMMISSIONER LATIMER: (Nods head affirmatively).

COMMISSIONER FRIEDKIN: Okay. Other questions on this item? Discussion?

Ted, thank you.

I'll authorize staff to publish -- to publish and begin the public notice and input process. Thanks.

Item 14, is -- do we have one more here? Where are we?

COMMISSIONER LATIMER: Thirteen.

COMMISSIONER FRIEDKIN: Excuse me. Okay. Exchange of Land, Bexar County, Approximately 9 Acres at Government Canyon State Park, Permission to Begin the Public Notice Input Process.

MR. HOLLINGSWORTH: Chairman, Commissioners, again, good morning. My name is Ted Hollingsworth. I'm with the Land Conservation Program. This is a first reading, again, of a proposal to affect a small exchange of properties on the south end of the Government Canyon State Natural Area, which is inside the city limits of San Antonio.

Government Canyon State Natural Area, if you haven't been there, you really should go. It is certainly one of the gems in our system. Well over 12,000 acres inside the city limits of San Antonio. Protects just a stunning landscape of limestone hills and canyons and springs and small creeks and several endangered species that live on the property, many miles of trails, very popular. Again, just one of the gems in our system.

The current site manager and his predecessor were both extremely active in working with the City and the County and the adjacent landowners to try and add to that state natural area and to try and arrange those boundaries to where they make sense to where we have the most viable, long-term facility, conservation and recreation facility possible. And in 2014, the City transferred to us a little over 3,000 acres and about 20 parcels. Amongst those parcels was a 65-acre tract on the south side of that state natural area and a long strip, a mile-long strip of land, to provide access to that 65-acre tract.

We don't really need that access because the tract is contiguous with the state natural area and there's access to it from inside the state natural area. That mile-long strip is something of a liability. It's adjacent to a subdivision and as always is our experience, you know, when you've got a lot of neighbors adjacent to a state natural area or a state park or a wildlife management area, there's always a temptation for the neighbors to toss tires over the fence and they cut those fences and do things over time.

So we've been working with the landowner that's adjacent on the other side from that neighborhood. We've been working with that landowner on an exchange. He would take that 9.3 acres, that mile-long strip. It's completely contiguous with the property he owns; and he would exchange it for a tract that's in the north part of the property he owns, shown as this red triangle, which has much higher values for the state natural area. It's all over the recharge zone. It's limestone break. It's very pretty, rugged country. It's accessible from inside the state natural area. Has Golden-cheek warbler habitat on it; and just makes a lot more sense from a management standpoint, as well as from a resource standpoint.

That landowner also owns that subdivision you can see on the east side of that strip and would deed us an access through that subdivision into the state natural area in case we ever needed access from the south end of -- we wouldn't lose any access in the process of divesting ourselves of that mile-long strip of land. It would just relieve us of that liability. The county -- and you can see here a picture of that road that runs through that strip of land. You can sort of tell that to the right of that is just open pasture and then in the distance, you can actually see that bluff that this 9-acre tract of land straddles.

The City and the County have both -- we've both -- we've worked closely with them, and they're both in favor of this exchange. At this point, we're just asking permission to begin the public notice process; and I'd be happy to answer any questions.

COMMISSIONER FRIEDKIN: Questions for Ted?

Thanks, Ted.

Okay. I'll authorize staff to publish the -- begin the public notice and input process. Thank you.

Item 14 is an Update on Regulatory Litigation for Chronic Wasting Disease, Deer Breeder Litigation. This will be held 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.

(Work Session Adjourns for Executive Session)


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

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