The 15th Court of Appeals has affirmed a trial court ruling reversing TCEQ’s decision to grant a water-rights permit to a river authority for a substantial diversion of water from the Guadalupe River.
Texas Commission on Environmental Quality and Guadalupe-Blanco River Authority v. National Wildlife Federation (No. 15-24-00050-CV; March 10, 2026) arose from a dispute over a water-rights permit that TCEQ granted to the Guadalupe-Blanco River Authority in 2020. GBRA sought to divert water from the Guadalupe River for municipal and industrial purposes, as well as approval of a plan to store some of the diverted water in reservoirs for use when the river ran low. Protests abounded, so TCEQ referred the matter to SOAH for a contested-case hearing. NWF, along with others, was granted affected-party status and participated in the proceeding. SOAH recommended that TCEQ grant the permit, provided the agency conducted an additional environmental assessment to determine impacts on fish and wildlife habitats and required GBRA to amend the permit before diverting any water to specify the exact locations of the reservoirs. TCEQ signed the order granting the permit but rejected the ALJ’s recommendations to conduct an additional assessment and to require additional location information about the reservoirs.
NWF timely filed suit for judicial review. A Travis County district court reversed TCEQ’s order and remanded for further proceedings. The court stated that “(1) TCEQ erred by failing to fully assess the effects on fish and wildlife habitats from GBRA’s proposed divisions; (2) TCEQ erred by failing to assess the effects of GBRA’s proposed off-channel reservoirs on fish and wildlife habitats; (3) TCEQ’s approval of GBRA’s water-rights application, which did not identify the location of the diversion points and describe the proposed facilities, was arbitrary and capricious; and (4) the substantial rights of NWF have been prejudiced as a result of TCEQ’s improper administrative findings, inferences, conclusions, or decisions.” TCEQ and GBRA appealed.
In an opinion by Justice Field, the court of appeals affirmed. GBRA first argued that NWF did not have standing to seek judicial review in the first place. NWF alleged that one of its members, a restaurateur on the San Antonio Bay, was aggrieved by TCEQ’s order because its business “depends on the quantity and quality of freshwater flows into the [Bay] from the Guadalupe River ….” NWF thus had associational standing under the APA. Additionally, the ALJs in their determination of NWF’s status as an “affected person” heard testimony “that the diversion sought by GBRA upstream from the [Bay] would affect conditions, including salinity, in the [Bay],” adversely affecting consumers of seafood products. GBRA contended that NWF’s allegations were insufficient to support standing because, “in its view, Texas law does not recognize standing based on an environmental interest, ‘absent a directly impacted interest in real property.’” Since none of its members had a legal interest in real property along the river, NWF could not show associational standing. But here NWF produced a member with a direct economic interest, not just an environmental or recreational one, in the Bay that would be negatively affected by the appropriation of water requested by GBRA. The court held that the member’s economic interest was “sufficiently particularized so as to distinguish it from that experienced by the general public.”
Next, the court turned to whether TCEQ’s approval of the application satisfied all procedural and substantive requirements was supported by substantial evidence. Did TCEQ commit an error of law by ignoring the ALJ’s recommendations? Section 11.147, Water Code, requires TCEQ both to assess conditions the agency considers “necessary to maintain existing instream uses and water quality” and “necessary to maintain fish and wildlife habitats.” Additionally, § 11.152 requires the agency, in considering a permit application to store, take, or divert more than 5,000 acre feet per year, to assess the affects of the permit on fish and wildlife habitats and, in the agency’s discretion, to require the applicant to mitigate those effects. Section 11.1471 further requires the agency to adopt by rule environmental flow standards for each river and bay system.
The question was whether TCEQ was required under § 11.152 to conduct a site-specific analysis of the effects of the permit on fish and wildlife habitats. The agency and GBRA argued that once the agency concluded that the proposed permit would not violate the inflow stream requirements of the river or the bay, it didn’t have to conduct either a § 11.147 or § 11.152 analysis (or any site-specific analysis, for that matter). The court ruled that “the application of an adopted environmental flow standard relieves the TCEQ from its duty to perform an assessment under § 11.152 but only ‘for the purpose of determining environmental flow conditions necessary to maintain’ certain conditions, including ‘fish and aquatic wildlife habitats.’” The court pointed out further that this interpretation squared with § 11.134, “which suggests that Section 11.152 may be applicable even when an environmental flow standard has been adopted.” Moreover, to accept TCEQ and GBRA’s “broad interpretation” of § 11.147(e-3) would render § 111.147(b)-(e) unnecessary and superfluous. And since the Legislature used the term “aquatic wildlife habitats” in (e-3) and a different term, “fish and wildlife habitats” in § 11.152, “if GBRA’s proposed diversion would impact ‘fish and aquatic wildlife habitats’ for reasons unrelated to environmental flow or would impact non-aquatic ‘wildlife habitats,’ TCEQ must conduct an assessment under § 11.152. By not doing so, TCEQ committed an error of law, as the district court ruled.
As to requiring an assessment of the off-channel storage reservoirs, TCEQ’s rules require that the agency must assess the effects “of the granting of an application on fish and wildlife habitat,” including “the project site as well as potentially impacted habitat upstream, adjoining, and downstream of the project site.” 30 TAC §297.53. Based on the statutory and regulatory language, the court held that a required assessment “is limited to the site of the proposed appropriation (whether by storing, taking, or diverting from the watercourse), as well as any potentially impacted habitats ‘upstream, adjoining, and downstream’ from the site of appropriation.” Consequently, the off-site storage of appropriated water are not covered, unless the reservoirs “are located at the appropriation site or in an area ‘upstream’, adjoining, [or] downstream’ from the site. TCEQ did not commit an error of law in declining to assess the effects of the off-channel reservoirs
But did the TCEQ’s findings and conclusions prejudice NWF’s “substantial rights”? To answer this question, the court conducted a harm analysis. “[T]he relevant inquiry as it relates to the substantial-rights prong,” the court observed, “is whether [TCEQ’s] error of law caused TCEQ to improperly grant GBRA’s permit or, instead, whether other conclusions and findings supported by substantial evidence support TCEQ’s determination that fish-and-wildlife-habitat assessment was not required in this case, despite its erroneous interpretation of subsection (e-3).” Here neither TCEQ nor GBRA could explain why the error did not result in the improper issuance of the permit. They presented no evidence on the issue and simply didn’t address it in the findings or conclusions, other than to state that (e-3) took them off the hook. The court held that the error prejudiced NWF’s rights and that the district court did not err in reversing and remanding TCEQ’s order. “In those proceedings,” the court added, “the TCEQ should reconsider, in light of our decision, whether site-specific assessments of the proposed diversion’s effects on fish and wildlife habitats are required in this case and make any necessary findings of fact and conclusions of law to support its decision.”
