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Snafu In Legislative Session
Left Stock Tanks In Jeopardy

By Steve Kelton

AUSTIN It has long been said that squeamish souls should not watch the making of sausages or laws. Add to that short list the fabrication of rules and regulations.

A recent case in point combined both of the latter categories. At stake for Texas landowners is the right to construct "impoundments" stock tanks on their own property without government permission.

Texas law has long recognized that right when the use of the impoundment relates to household or livestock use, providing that the structure does not hold more than 200 acre-feet of water. Larger structures, or those used for other purposes, must be permitted by the Texas Natural Resource Conservation Commission.

In recent years, however, landowners have increasingly turned to wildlife management as a way to diversify their farms and ranches. With the confluence of drouth and record-low cattle, wool and mohair markets during the past decade, income from hunting and other recreational activities in many cases has eclipsed traditional agricultural pursuits.

That left many operations tiptoeing through a gray area in the law, relying on the livestock use exemption to avoid having to permit stock tanks whose utilization had tilted toward wildlife. Most landowners weren't even aware that they were tiptoeing, but organizations that represented their interests could see the potential dangers.

These organizations, including the Texas Farm Bureau, Texas and Southwestern Cattle Raisers Association and the Texas Wildlife Association, had faced a similar situation a few years earlier with regard to property tax valuations. In the late 1970s and early 1980s they had sought and won tax law changes allowing agricultural land to be taxed according to its productive value rather than its potential value as developed real estate.

That change greatly reduced the tax burden on farmers and ranchers, particularly those in rapidly developing parts of the state whose property was worth millions of dollars on paper but produced only a fraction of that in actual agricultural income. Even urban legislators recognized the benefits because it helped to keep rural land in production when its owners would otherwise have been forced to sell it to developers to escape a crushing tax burden.

A few years ago that concept was extended to include land devoted primarily to wildlife management, so-called "open spaces" valuation. It seemed only natural that the recognition accorded wildlife management in regard to property taxes should be extended to necessary land use practices such as dirt tanks.

There remained the little matter of amending the law, however, and Rep. Bob Turner, D-Voss, took the lead in doing so. Representing a primarily rural region of West Central Texas and an agricultural producer himself, Turner has carried numerous pieces of ag and property-related legislation.

He introduced a bill to extend the stock tank exemption to wildlife in the legislative session before last, only to see it die without consideration after having been "tagged" by an urban representative with whom he had locked horns over an unrelated issue. Turner was back with the same bill in the session just concluded, and for good measure added similar wording to the huge state water policy package that eventually passed as Senate Bill 2.

When Turner's "clean" bill, H.B. 247, passed by unanimous vote in both chambers, he removed the "fail-safe" back-up language from S.B. 2. The complex and controversial omnibus water bill also passed both houses, but with differences that required a conference committee to resolve. In the process, Rep. Robert "Robby" Cook replaced the impoundment language that Turner had removed but with a critical difference.

Cook, a rice farmer, represents the counties of Bastrop, Colorado, Fayette and Wharton, near the Coast. Water is an issue there as it is elsewhere in the state, particularly after the recent dry years. Cook's constituents are especially sensitive to the question of stream flow because the water they count on so heavily originates on upstate watersheds. As a result, Cook's amendment included a crucial limitation: "This exemption does not apply to a commercial operation."

S.B. 2 eventually passed and, like H.B. 247, was signed into law by Gov. Rick Perry. By then, the battle over interpretation was already underway. The Texas Natural Resource Conservation Commission was the battleground and, some observers contend one of the primary combatants.

As the agency charged with interpreting and enforcing most Texas environmental laws, TNRCC follows every legislative session with a review of changes to those laws, followed by changes in its own rules and regulations. S.B. 2 gave the agency a slew of such changes to deal with, including the stock tank amendment.

At issue: Did the legislature broaden the permit exemption or inadvertently wipe it completely off the books? Is wildlife management now a permit-exempt activity, or did the "non-commercial" limitation effectively remove the exemption even from the farms and ranches which have been protected for decades? Isn't a farm or ranch by nature a "commercial operation?"

One school of thought can always be counted on to view regulatory issues in their narrowest and most restrictive possible interpretation, with an eye toward imposing governmental control wherever possible. By last week it looked as if that school was in full session and in total charge.

TNRCC had scheduled but not publicized a "stakeholder" meeting, ostensibly to gain comments from those who would be affected by any regulations it eventually issued regarding the matter. The agency had invited a list of such "stakeholders", and out of roughly 30 invitees, that list included representatives of only three agriculture organizations and the Texas Wildlife Association. There were almost that many attorneys alone, not to mention the Texas Municipal League, the Texas League of Women Voters, the Sierra Club, and the National Wildlife Federation, all of which could be expected to argue for the strictest and most expansive regulations possible.

Conspicuously absent from the list were Turner and Cook, the very sponsors of the two pieces of legislation in conflict.

Agriculture and landowner supporters feared they were viewing a carefully stacked deck. They suspected that, when dealt out, the cards would spell more rather than less government interference in private property rights.

It didn't help that several landowners with hunting and recreational operations had recently been told by TNRCC enforcement officials that their unpermitted stock tanks were in violation of the new law. One had even been told that using a picture of a stock tank on a brochure advertising his bed and breakfast sideline in itself constituted an offense punishable by thousands of dollars in fines.

Turner was reportedly livid when he finally learned of the meeting at the last minute. Cook was also unaware until after he had scheduled his harvest. He couldn't make the meeting, but Turner did, along with a number of other uninvited "stakeholders".

As the meeting convened last Thursday in Austin, a veneer of politeness barely veiled the tense air of potential confrontation. The tension was broken inadvertently by TNRCC's Todd Chenoweth, who led the discussion.

In his opening remarks, Chenoweth laid what he termed the "ground rules" for the meeting by noting that TNRCC was "not trying for consensus, because we don't have enough time for that.

"Our agency will be guided by legislative intent," Chenoweth continued, "not what the stakeholders can live with."

His reference to "legislative intent" provoked rueful chuckles from a number of observers in the room who were fully aware that the agency had declined to invite the only two legislators capable of speaking to that question.

But one of them was there anyway, and Turner's views on the matter quickly became the dominant theme of the meeting.

At the heart of the issue, Turner explained, was the intent to expand the permit exemption to any property eligible for actual use valuations under state tax laws. Those laws recognized wildlife management as equivalent to agriculture for the purposes of property valuation, and the intent was to do the same in regard to dirt tanks.

Chenoweth returned several times to the question of what constitutes a "commercial operation," but Turner was prepared for that as well, having come armed with a written definition consistent with his statement of intent.

South Texas rancher and Texas Wildlife Commission member Joseph Fitzsimmons quipped at one point that, in his experience, ranches are "commercial" operations some days, "and some days they're not."

The meeting digressed at times into blind alleys what is the difference between a bed and breakfast and a ranch that supplies cabins for its hunters, for example but it always gravitated back toward the core issue, and that issue gradually turned in favor of landowners.

It emerged in the course of discussions that many downstream "stakeholders" feared a proliferation of upstream impoundments that would intercept rainfall runoff and gradually choke off the streams and rivers that supplied their needs. Their fears, it became apparent, were based on the idea that many if not most stock tanks were of a size apporoaching the 200 acre-foot exemption limit.

Several participants pointed out that the vast majority of farm and ranch "impoundments" are only a fraction of that size, and even the "big" ones sprouting around potential "ranchette" development sites don't begin to approach 200 acre-feet. At an average depth of well under 10 feet, one participant pointed out, they would sprawl over far more surface than the developers would be willing to sacrifice, given the per-acre prices they are receiving.

Aesthetics help sell land, they noted, but they don't boost profits if they eat up so much land that there's little left to sell.

Besides, Turner pointed out, these types of operations are not what the legislation addressed in expanding the exemption.

As long as they qualify for "use" valuation under the tax code, their impoundments would be exempt, he said, "but most of them wouldn't qualify."

Chenoweth presented several similar scenarios, and each time, Turner pointed out that the types of operations in question would not qualify for the exemption because they don't qualify for "use" valuations under the tax laws.

As the afternoon wore on, even skeptical downstream stakeholders began to voice support for Turner's viewpoint.

"As I see it," said one, "surface water is state property and wildlife is state property, so if it benefits wildlife, we need to leave it alone."

Chenoweth eventually scheduled a followup meeting for Sept. 20, and Turner promised to have a clear statement of intent from both himself and Cook available for dissemination to stakeholders before that date.

One participant initially viewed as friendly toward more rather than less regulation summed the meeting up this way: "It looks like where we're going is to grant exemptions for any use, provided that use qualifies under the tax valuation law."

Which was exactly what the landowner representatives had wanted in the first place.

Chenoweth early on had laid out a rough timetable for the regulatory process which would consume most of a year, so there is still plenty of time for things to go wrong. As the meeting broke up, however, landowner representatives who had entered the room tense and concerned were smiling broadly.

They were happy with what they had accomplished and more than a little surprised.


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