San Jacinto River Authority Surface Water Conversion Contracts: What They Mean for a MUD’s Capital Plan

Which regulator is behind an SJRA conversion contract?

Lone Star Groundwater Conservation District, not the Harris Galveston Subsidence District. The Texas Supreme Court's April 12, 2024 opinion in San Jacinto River Authority v. City of Conroe sets out the history.

The Legislature created Lone Star over concerns about Montgomery County's growth and reliance on groundwater. Lone Star adopted a Regulatory Plan that set pumpage limits for high-volume groundwater users in the county. SJRA developed its groundwater reduction plan to draw surface water from Lake Conroe and sell it to cities and utilities so they could comply.

Harris County districts work under a different framework, with subsidence district area limits and regional water authorities. Our post on HGSD groundwater reduction plans, listed below, covers that side.

What does the contract actually commit a district to?

Decades of payments that do not depend on taking the water. The court describes decades-long contracts that secured SJRA's bonds for the treatment plant and related systems. SJRA began supplying water under them in 2015.

The terms the court lists as disputed are the ones a board should read first:

• the procedures and substance SJRA must follow in setting the price of water
• the limits on SJRA's authority to set the quantity a participant must take
• the procedures for payment defaults and performance defaults

Participants pay pumpage fees on their groundwater under the contracts. One city in the case received no surface water and still owed pumpage fees. For a capital plan, that means a groundwater-only district carries a contract cost line too.

Do the contracts still apply after Lone Star's pumpage limits were struck down?

The contracts and the regulation are separate questions. Utilities and cities sued Lone Star, and a trial court final judgment, which came out of a settlement, invalidated the pumpage limits in its Regulatory Plan. The rest of that plan stayed in place.

The contract disputes went on separately. In its earlier 2020 decision, the court held SJRA could get declarations that the contracts were validly executed. In 2024 it held the cities' immunity from SJRA's contract claims was waived and sent the case back to the trial court for the merits.

So a district cannot assume the end of the pumpage limits ended its contract. Read the contract, check Lone Star's current rules, and get your attorney's view on where the litigation stands.

What infrastructure does a district build to receive SJRA surface water?

Receiving facilities, not usually a treatment plant. SJRA's GRP Division treats surface water from Lake Conroe and delivers treated water to cities and utilities in Montgomery County. The district's own scope usually covers:

• the line from SJRA's delivery point to the district's plant site, with easements
• metering and flow control at the delivery point
• ground storage sized so the delivery rate can stay steady while demand swings
• booster pumps and pressure tanks to serve the distribution system
• controls that pace purchased water against the district's own wells

Water quality still needs engineering. Check the disinfectant and chemistry of the delivered water against the district's well water before blending, and plan sampling at the points where the two meet.

How do TCEQ capacity rules change when a district buys treated water?

The contract's delivery rates become part of your capacity math. TCEQ's minimum water system capacity rule, 30 TAC §290.45, has a separate subsection, (f), for systems that purchase treated water.

• The contract must state the maximum daily and hourly rates the district may draw ((f)(3)).
• The maximum daily purchase rate plus the district's own production capacity must be at least 0.6 gpm per connection ((f)(4)).
• For a system served by direct pressure, the hourly purchase rate plus service pump capacity must be at least 2.0 gpm per connection, or 1,000 gpm while meeting peak hourly demand, whichever is less ((f)(5)).
• All other minimum capacity requirements in §290.45 still apply ((f)(7)), including storage.

This is where a capital plan goes wrong. If the contract's maximum daily rate is too low for build-out, the shortfall must come from district wells or a contract amendment. That is why wells often stay in service after conversion.

How should a board sequence conversion work in the capital plan?

Tie each project to a connection count, not a date. List the contract's delivery rates, the district's well capacity and storage, and the connections each phase adds. Then find the phase where §290.45 capacity runs short.

Put the receiving facilities, storage and pumps ahead of that phase, alongside wastewater and distribution projects competing for the same bond capacity. Update it every time the developer's lot schedule changes.

What should a developer check before buying land in an SJRA participant district?

Whether the district's water plan already covers your lots. Use this readiness check. Every answer should be yes before closing:

1. Is the district a participant in SJRA's groundwater reduction plan, and have you seen the contract's quantity and pricing terms?
2. Do the contract's maximum delivery rates plus the district's wells cover your connections under §290.45?
3. Is storage and pumping for your phase in the district's capital plan?
4. Has the district told you how conversion costs are shared between existing customers and new development?
5. Does the district's bond capacity reach your phase?

A no is a question for the district engineer before closing. It belongs in your water and wastewater due diligence, along with the wastewater path.

This is general education, not legal advice. It draws on the Texas Supreme Court's 2024 opinion, SJRA's public program description and TCEQ's capacity rule. Contract terms differ by participant, Lone Star's rules can change, and the litigation was sent back to the trial court in 2024. Confirm current status with the district's attorney and engineer.

Frequently asked questions

Does SJRA deliver raw or treated water under its groundwater reduction plan?

Treated. SJRA's GRP Division treats Lake Conroe surface water and delivers it to cities and utilities in Montgomery County.

Does a district that receives no surface water still pay under the contract?

It can. In the case the Texas Supreme Court decided in 2024, a city that took no SJRA surface water still paid pumpage fees under its contract.

Can a district keep its wells after conversion?

Often it must. Under §290.45(f)(4), the contract's daily rate plus the district's own production must reach 0.6 gpm per connection, so wells frequently stay part of the capacity count.

I'm a MUD board member in Montgomery County and our engineer says we need more ground storage before the next section opens. Is that the SJRA contract's fault?

Not necessarily. Storage and service pumps are set by TCEQ's §290.45 for each connection, whether water comes from wells or a contract. The contract matters because its hourly rate counts toward the pump requirement under (f)(5). Ask your engineer to show both numbers.

I'm a developer looking at land in north Harris County. Does the SJRA contract affect me there?

Probably not. Districts in Harris County generally work under the Harris Galveston Subsidence District's area limits, often through a regional water authority's plan. Confirm which district and authority cover your tract.

Related resources

• Groundwater Reduction Plans: What the Harris Galveston Subsidence District Requires Before You Drill a Well
• Fort Bend Subsidence District vs. Harris Galveston: A Developer’s Guide to Houston’s Competing Groundwater Rulebooks
• Municipal Utility Districts in Houston Suburbs: When to Form One and When to Use a Developer-Owned Treatment Plant Instead
• Water Supply Planning for Master Planned Communities in Tarrant County: What Developers Get Wrong

Planning a district's water system around a surface water contract?

We check the contract's delivery rates against TCEQ capacity rules and build the storage, pumping and phasing plan your bond schedule can carry.

We specialize in:

• Water system capacity planning for utility districts
• Ground storage, booster pump and water plant design
• Water distribution design
• Water supply and wastewater due diligence
• Site civil engineering for land development
• Construction administration

Modern Engineering Solutions, McKinney, Texas. Contact: (214) 833-6748 or mod-eng.com