Board Meeting

May , 2018

LSGCD

NOTICE OF MEETINGS AND HEARINGS OF THE BOARD OF DIRECTORS OF THE LONE STAR GROUNDWATER CONSERVATION DISTRICT To be held on Tuesday, May 8, 2018 Lone Star GCD – James B. "Jim" Wesley Board Room 655 Conroe Park North Drive Conroe, Texas 77303

NOTICE OF MEETING

TUESDAY, MAY 8, 2018, AT 9:00 A.M.

SPECIAL MEETING OF THE DISTRICT BOARD

1. Call to Order and Declare Meeting Open to the Public.

2. Roll Call.

3. Executive Session - The Board will recess for a closed Executive Session pursuant to Texas Government Code, Section 551.071, to consult with the District’s attorney regarding pending or contemplated litigation, settlement offers, or on matters in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Texas Open Meetings Act, Chapter 551, Government Code regarding any agenda item on any of the board meetings or hearings posted for today.

No action will be taken in Executive Session.

4. Re-convene in Open Session.

5. Adjourn Special Board Meeting.

05.08.18 Agenda Page 1 Executive Session – Special Meeting

NOTICE OF PUBLIC HEARING OF THE BOARD OF DIRECTORS OF THE LONE STAR GROUNDWATER CONSERVATION DISTRICT

NOTICE OF PUBLIC HEARING

TUESDAY, MAY 8, 2017, AT 10:00 A.M.

PUBLIC HEARING ON PERMIT AND PERMIT AMENDMENT APPLICATIONS

1. Call to Order and Declare Hearing Open to the Public

2. Roll Call

3. Prayer and Pledges of Allegiance

4. Receive Permit Hearing Report from General Manager, Any Public Comments or Requests to Contest, and Consider Granting, Denying, or Amending Applications for the following Operating Permits and/or Meter Exemptions – Samantha Reiter.

1. Legacy Preparatory Christian Academy, for a proposed amendment to OP-13072602, 9768 Research Forest Dr., The Woodlands, increase of 1.5 mg annually, Irrigation use; 2. Ready Mix, LP (Lessee), for a proposed well to be drilled at 30911 Old Hockley Rd, Magnolia, not to exceed 3.3 mg annually, Industrial and Commercial use, (Driller of record: Scott Drilling Inc); and 3. General Mini Storage, for a proposed operating permit for an unpermitted existing well not to exceed 0.12 mg annually, 3002 Sawdust Rd., Spring, Commercial and irrigation use.

5. Adjourn or continue permit hearing in whole or in part.

05.08.18 Agenda Page 2 Public Hearing on Permit Amendments

NOTICE OF HEARING

TUESDAY, MAY 8, 2017, AT 10:00 A.M.

SHOW CAUSE HEARING ON ENFORCEMENT MATTERS

1. Call to Order and Declare Hearing Open to the Public

2. Roll Call

3. Show Cause Hearing for Eduardo Lopez, pursuant to District Rule 2.5

A. Show Cause Hearing directing Eduardo Lopez, ("Respondent"), pursuant to District Rule 2.5, to appear before the Lone Star GCD Board of Directors and show cause why the District should not:

1) issue a cease and desist order pursuant to District Rule 2.6(c) for failure to remit 2017 production report and/or fines associated with timely submission;

2) file a civil suit against Respondent in State District Court seeking enforcement of District rules and the collection of all due and owing water use fees, late payment penalties, other civil penalties, and attorneys’ fees and court costs incurred by the District in the prosecution of claims against Respondent for its violations of District Rules; and

3) take all other enforcement action that is necessary and appropriate under the laws of the State of Texas.

B. Consider, discuss, and take action on matters raised in the Eduardo Lopez show cause hearing, including, but not limited to, issuing a cease and desist order described in Agenda Item No. 3.A.1., authorizing filing of a civil suit against Respondent in State District Court as described in Agenda Item No. 3.A.2., and taking all other enforcement action described in Agenda Item No. 3.A.3.

4. Show Cause Hearing for LCBGH15, LLC, pursuant to District Rule 2.5

A. Show Cause Hearing directing LCBGH15, LLC, ("Respondent"), pursuant to District Rule 2.5, to appear before the Lone Star GCD Board of Directors and show cause why the District should not:

05.08.18 Agenda Page 3 Show Cause Hearing

1) issue a cease and desist order pursuant to District Rule 2.6(c) for failure to remit 2017 production report and/or fines associated with timely submission;

3) take all other enforcement action that is necessary and appropriate under the laws of the State of Texas.

B. Consider, discuss, and take action on matters raised in the LCBGH15, LLC show cause hearing, including, but not limited to, issuing a cease and desist order described in Agenda Item No. 3.A.1., authorizing filing of a civil suit against Respondent in State District Court as described in Agenda Item No. 3.A.2., and taking all other enforcement action described in Agenda Item No. 3.A.3.

5. Show Cause Hearing for LCBGH15, LLC, pursuant to District Rule 2.5

A. Show Cause Hearing directing LCBGH15, LLC, ("Respondent"), pursuant to District Rule 2.5, to appear before the Lone Star GCD Board of Directors and show cause why the District should not:

1) issue a cease and desist order pursuant to District Rule 2.6(c) failure to remit 2018 annual water use fees and/or fines associated with timely submission;

2) file a civil suit against Respondent in State District Court seeking enforcement of District rules and the collection of all due and owing water use fees, late payment penalties, other civil penalties, and attorney’s fees and court costs incurred by the District in the prosecution of claims against Respondent for its violations of District Rules; and

3) take all other enforcement action that is necessary and appropriate under the laws of the State of Texas.

B. Consider, discuss, and take action on matters raised in the LCBGH15, LLC show cause hearing, including, but not limited to, issuing a cease and desist order described in Agenda Item No. 4.A.1., authorizing filing of a civil suit against Respondent in State District Court as described in Agenda Item No. 4.A.2., and taking all other enforcement action described in Agenda Item No. 4.A.3.

6. Show Cause Hearing for Joe Worthy, pursuant to District Rule 2.5

05.08.18 Agenda Page 4 Show Cause Hearing

A. Show Cause Hearing directing Joe Worthy, ("Respondent"), pursuant to District Rule 2.5, to appear before the Lone Star GCD Board of Directors and show cause why the District should not:

1) issue a cease and desist order pursuant to District Rule 2.6(c) for failure to submit the Consent Order and/or remit the overproduction fees and fines associated with the 2017 withdrawal of groundwater in an amount which exceeded the specific amount authorized for withdrawal by ten percent (10%) or greater than the authorized amount;

3) take all other enforcement action that is necessary and appropriate under the laws of the State of Texas.

B. Consider, discuss, and take action on matters raised in the Joe Worthy show cause hearing, including, but not limited to, issuing a cease and desist order described in Agenda Item No. 3.A.1., authorizing filing of a civil suit against Respondent in State District Court as described in Agenda Item No. 3.A.2., and Taking all other enforcement action described in Agenda Item No. 3.A.3.

7. Show Cause Hearing for Quality Car Care, pursuant to District Rule 2.5

A. Show Cause Hearing directing Quality Car Care, ("Respondent"), pursuant to District Rule 2.5, to appear before the Lone Star GCD Board of Directors and show cause why the District should not:

3) take all other enforcement action that is necessary and appropriate under the laws of the State of Texas.

05.08.18 Agenda Page 5 Show Cause Hearing

B. Consider, discuss, and take action on matters raised in the Quality Car Care show cause hearing, including, but not limited to, issuing a cease and desist order described in Agenda Item No. 3.A.1., authorizing filing of a civil suit against Respondent in State District Court as described in Agenda Item No. 3.A.2., and Taking all other enforcement action described in Agenda Item No. 3.A.3.

8. Adjourn Show Cause Hearing on Enforcement Matters.

05.08.18 Agenda Page 6 Show Cause Hearing

NOTICE OF PUBLIC MEETING OF THE BOARD OF DIRECTORS OF THE LONE STAR GROUNDWATER CONSERVATION DISTRICT

NOTICE OF MEETING

TUESDAY, MAY 8, 2018, AT 10:00 A.M.

REGULAR MEETING OF THE DISTRICT BOARD

The Board of Directors may discuss, consider, and take action, including expenditure of funds, on any item or subject matter posted in this agenda.

1. Call to Order and Declare Regular Meeting Open to the Public. 2. Roll Call. 3. Public Comment (Public comment is limited to a maximum of 5 minutes per speaker) 4. Discuss, consider, and take action as necessary concerning approval of Meeting Minutes: a) April 10, 2018, Special Board Meeting b) April 10, 2018, Public Hearing on Permit Applications c) April 10, 2018, Regular Board of Directors Meeting

5. Committee Reports:

A. Executive Committee and/or Settlement Committee – Rick Moffatt, President 1) Brief the Board on the Committee's activities since the last regular Board meeting 2) Defense of the following lawsuit, including without limitation mediation and/or settlement offers: City of Conroe et al. v. Lone Star Groundwater Conservation District (and the District’s directors and general manager in their official capacities)

B. Water Awareness and Conservation Committee – Billy Wood, Chair 1) Brief the Board on the Committee's activities since the last regular Board meeting 2) Update on public outreach activities, water efficiency, and conservation efforts – James Ridgway

C. Rules and Regulatory Planning Committee – Jim Stinson, Chair 1) Brief the Board on the Committee's activities since the last regular Board meeting

05.08.18 Agenda Page 7 Notice of Regular Meeting

D. Policy and Personnel Development Committee - Jace Houston, Chair 1) Brief the Board on the Committee's activities since the last regular Board meeting

E. Budget and Finance Development Committee – Billy Wood, Chair 1) Brief the Board on the Committee's activities since the last regular Board meeting 2) Review of unaudited financials for the month of April 2018 3) Review 1st Quarterly Investment Report 2018

F. Findings and Review Committee – Rick Moffatt, Chair 1) Brief the Board on the Committee's activities since the last regular Board meeting – Kathy Turner Jones 2) Groundwater Management Area 14 – Update the board on the legal, technical, and financial issues related to joint planning activities and development of desired future conditions in GMA 14 – Kathy Turner Jones

9. General Manager’s Report – The General Manager will brief the Board on pertinent operational and management issues that the District, its employees, or consultants have encountered since the last regular Board meeting. – Kathy Turner Jones. 1) Brief the Board on November 6, 2018, board of directors’ election and process 2) Discuss, consider and take action as necessary concerning authorizing contract with Montgomery County Election and/or authorization to begin the notice of “Order the Election” for the November 6, 2018 election 10. General Counsel’s Report – The District's legal counsel will brief the Board on pertinent legal issues and developments impacting the District since the last regular Board meeting, and legal counsel's activities on behalf of the District, including without limitation: waste injection well monitoring activities and injection well applications filed at the Railroad Commission of Texas or the Texas Commission on Environmental Quality, including District protests or other actions regarding same; District rules enforcement activities; District Regulatory Plan, District Rules, and District Management Plan development or implementation issues; groundwater-related legislative activities; joint planning and desired future conditions development activities; pending litigation involving the District; developments in groundwater case law and submission of legal briefs; contractual issues related to the District; open government, policy, personnel, and financial issues of the District; and other legal activities on behalf of the District. – Brian L. Sledge. 11. New Business 12. Adjourn The above agenda schedules for the meetings and hearings of the District represent an estimate of the order for the indicated items and are subject to change at any time.

05.08.18 Agenda Page 8 Notice of Regular Meeting

These public hearings and meetings are available to all persons regardless of disability. If you require special assistance to attend the meeting or hearing, please contact the Lone Star GCD at 936/494-3436 at least 24 hours in advance of the meeting.

At any time during one the above meetings or hearings and in compliance with the Texas Open Meetings Act, Chapter 551, Government Code, Vernon’s Texas Codes, Annotated, the Lone Star Groundwater Conservation District Board may meet in executive session on any of the above agenda items for consultation concerning attorney-client matters (§551.071); deliberation regarding real property (§551.072); deliberation regarding prospective gift (§551.073); personnel matters (§551.074); and deliberation regarding security devices (§551.076). Any subject discussed in executive session may be subject to action during an open meeting.

Certification I, the undersigned authority, do hereby certify that on May 3, 2018, at or before 5:00 p.m., I posted and filed the above notices of meeting(s) and hearing(s) with the Montgomery County Clerk’s office and also posted a copy in the front window of the Lone Star GCD office in a place convenient and readily accessible to the general public all times and that it will remain so posted continuously for at least 72 hours preceding the scheduled time of said meeting in accordance with the Texas Government Code, Chapter 551.

Kathy Turner Jones, General Manager Lone Star Groundwater Conservation District

05.08.18 Agenda Page 9 Notice of Regular Meeting Legacy Preparatory Christian Academy Attn: Jeana Francis & Audra May Permit No. OP-13072602A 9768 Research Forest The Woodlands, TX 77354

Amend Operating Permit

Date of Hearing: 5/8/2018

Request (MG): 2018 = 1.500 2019 = 1.500

GM Recommendation (MG): 2018 = 1.500 2019 = 1.500

Water use: Irrigation

Location: 9768 Research Forest Drive, The Woodlands

Well Registration: N/A

Depth (ft): N/A

Diameter (in): N/A

Information

1. Amend permit - increase allocation. Permit Term: 12 months commencing January 1, 2018, with an expiration of December 31, 2018.

2. No written opposition was received regarding the proposed permit.

3. The permit application is administratively complete.

4. Applicant requests to increase allocation by 1,500,000 gallons.

5. Applicant currently has an OP in the amount of 3,750,000 gallons. Amount available pending approval of this application equals 5,250,000 gallons.

6. Applicant's reported pumpage for 2017 equals 3,515,277 gallons.

7. District Staff Technical Review and Recommendation: Applicant currently holds OP-13072602 with an allocation of 3,750,000 gallons for 2018 and annually thereafter. Applicant uses the water from this allocation to provide irrigation to 8 acres of high traffic turf grass on football and baseball fields. Applicant sites towards the end of 2017 they added a new 2.75-acre baseball field and a 1.5-acre utility/practice field. Applicant is requesting an allocation increase of 1,500,000 gallons for 2018 and beyond. Should applicants increase be approved annual allocation for 12.25 acres of high traffic turf grass would calculate to 5,250,000 gallons. Staff have reviewed the information supplied by the applicant and recommends to the General Manager that she recommend the Board authorize the requested increase of 1,500,000 gallons for 2018 and annually thereafter

8. Based on technical review, staff recommends to the General Manager that she recommend approval of that which is being requested. PV Ready Mix, LP (Lessee) Attn: Paul Vasquez Permit No. OP-18041801 23103 Park Rd Tomball, TX 77377

Operating Permit

Date of Hearing: 5/8/2018

Request (MG): 2018 = 2.100 2019 = 3.300

GM Recommendation (MG): 2018 = 2.100 2019 = 3.300

Water use: Industrial & Commercial

Location: 30911 Old Hockley Rd, Magnolia

Well Registration: 2018041903

Depth (ft): 250.0

Diameter (in): 5.0

Information

1. Issue a permit commencing May 8, 2018, with an expiration of December 31, 2018.

2. No written opposition was received regarding the proposed permit.

3. The permit application is administratively complete.

4. Applicant provides water for the concrete batch plant.

5. Applicant requests 2,100,000 gallons for 2018 and 3,300,000 gallons annually thereafter.

6. District Staff Technical Review and Recommendation: Applicant is requesting registration of and authorization to begin construction of a new well which will serve a concrete batch plant. Applicant has 10 acres with 1 acre of dust control, wash down of each truck per state requirement and approximately 13 persons serviced a day. The concrete batch plant will have 10 concrete trucks with approximately 30 loads per day. Applicant is requesting an allocation of 2,100,000 gallons for the remainder of 2018 and 3,300,000 gallons annually thereafter based on irrigation/dust control, public supply, wash down and concrete trucks using an estimated 45,000 gallons per week. District staff and consultant have reviewed the information supplied by applicant. Staff recommends to the General Manager that she recommend the Board approve the request for registration and construction of the new well, as well as an allocation of 2,100,000 gallons for 2018 and 3,300,000 gallons annually thereafter as requested.

7. Based on technical review, staff recommends to the General Manager that she recommend approval of that which is being requested. PV Ready Mix, LP (Lessee)/ 30911 Old Hockley Rd, Lone Star Groundwater Conservation District Hello, LSGCD Internal! 655 Conroe Park North Drive, Conroe, TX 77303 Magnolia/ 30/12/12 -95/45/56 Home | Log off |

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 General Mini Storage Attn: Enrique L Macias Peralta Permit No. OP-18041901 3002 Sawdust Rd Spring, TX 77380

Operating Permit

Date of Hearing: 5/8/2018

Request (MG): 2018 = 0.120 2019 = 0.120

GM Recommendation (MG): 2018 = 0.120 2019 = 0.120

Water use: Commercial and Irrigation

Location: 3002 Sawdust Rd, Spring

Well Registration: 2018041902

Depth (ft): Unknown

Diameter (in): 4.0

Information

1. Existing Well - Issue a permit for a term of 12 months commencing January 1, 2018, with an expiration of December 31, 2018. 2. No written opposition was received regarding the proposed permit.

3. The permit application is administratively complete.

4. Applicant requests 120,000 gallons for 2018 and 120,000 gallons annually thereafter.

5. Applicant provides water for mini storage business and a plumbing business.

6. District Staff Technical Review and Recommendation: Applicant is requesting registration of an existing well not permitted with the District and an allocation of 120,000 gallons for 2018 and annually thereafter. Applicant provides water for 2 business, including a mini storage business and a plumbing business. Water is also used to irrigate .08 acres of established landscaping at the site. District staff have reviewed the information submitted by the applicant and recommend that the General Manager recommend the Board approve registration of the existing well and an allocation of 120,000 gallons for 2018 and annually thereafter as requested.

7. Based on technical review, staff recommends that the General Manager recommend approval to the Board as requested with two conditions: 1. That a water meter is properly installed by 5/23/18. 2. Applicant remits water use fees from 2014 to present as specified by District.

Status Summary for Pending Show Cause Hearing:

Failure to Remit 2017 Production Reports and/or Associated Fines and Fees

Permittee Permit Number Amount Due As of 5/2/18

Eduardo Lopez OP-14051301 $381.88 LCBGH15, LLC OP-08092501 $556.88

Failure to Remit 2018 Water Use Fees

Amount Due As of 5/2/18 Permittee Permit Number (includes late fees)

LCBGH15, LLC OP-08092501 $514.00

Failure to Submit Consent Order and/or Remit Overproduction Fees and Fines Associated with 2017 Overpumpage

Permittee Permit Number Amount Due As of 5/2/18

Joe Worthy OP-09111101 $1,580.76 Quality Car Care HUP182 $522.80

*Detailed summaries attached.

LSGCD Order No. SCO 18-004

IN THE MATTER OF § BEFORE THE EDUARDO LOPEZ §

ATTN: MS. JULISSA MUNGIA § 6534 FM 1488 § LONE STAR

MAGNOLIA, TX 77354 § PERMIT #: OP-14051301 § GROUNDWATER CONSERVATION DISTRICT

SHOW CAUSE ORDER

The following findings are made and order provisions issued by the Lone Star Groundwater Conservation District (the “District”) to Eduardo Lopez (the “Respondent”) pursuant to District Rule 2.5(a) (the “Show Cause Order”). This Show Cause Order is based on findings by the District of noncompliance by the Respondent of District Rules.

FINDINGS

1. Respondent is currently authorized to produce groundwater from Well No. 2014051307 (the “Well”), which is located within the boundaries of the District, through Permit No. OP-14051301 (the “Permit”).

2. On January 2, 2018, January 23, 2018, and January 30, 2018, the District emailed a postcard notice that the 2017 Production Report was due to the District no later than February 15, 2018 and that it should be submitted via the District’s online system. The postcard contained instructions on how to obtain login information from the District as well as how to request a paper form.

3. On February 20, 2018, having still not received the 2017 Production Report, the District’s Field Operations Technician made a site visit and performed a meter verification/re- inspection.

4. On March 1, 2018, the District issued a Notice of Violation to the Respondent for failure to timely submit annual production report.

5. To date, the Respondent has failed to submit the annual production report for 2017 and/or pay the penalties associated with the violation listed in the provisions above.

6. On several occasions, the District attempted to contact Respondent and encourage full regulatory compliance without the instigation of any additional enforcement action by the District Board of Directors.

7. After repeated attempts to resolve informally the issue of Respondent’s failure to submit production report and violation fees associated; the General Manager has recommended to the District Board of Directors that the Respondent be ordered to appear, following proper IN THE MATTER OF EDUARDO LOPEZ LSGCD ORDER NO. SCO 18-004 PAGE 1

notice, and show cause to the District Board of Directors why the District should not issue a cease and desist order that would indefinitely suspend the Permit No. OP-14051301.

8. The District Board of Directors met on April 10, 2018 and, following proper notice, took up and considered the enforcement matter discussed herein above. After deliberations regarding the same, the Board of Directors voted to issue this Show Cause Order directing Respondent to appear at a properly called and noticed hearing for such purposes to show cause why the Board should not issue a cease and desist order indefinitely suspending Permit No. OP-14051301, initiate legal action against Respondent in State District Court seeking enforcement of District rules and the collection of all due and owing water use fees, late payment penalties, other civil penalties, and attorneys fees and court costs incurred by the District in the prosecution of claims against Respondent, and take all other necessary and appropriate enforcement action against Respondent authorized under the law.

ORDER

NOW, THEREFORE, based on the above findings, is hereby ORDERED as follows:

9. Respondent shall appear at the show cause hearing scheduled by the Lone Star Groundwater Conservation District to be held on May 8, 2018, at 10:00 a.m., in the Board Room of the Lone Star Groundwater Conservation District office, 655 Conroe Park North Drive, in Conroe, Texas (the “Show Cause Hearing”).

10. At the Show Cause Hearing, Respondent shall demonstrate to the District Board of Directors why the District should not issue a cease and desist order indefinitely suspending all production authorization otherwise allowed under Permit No. OP-14051301 for its violations of District Rules.

11. At the Show Cause Hearing, Respondent shall also demonstrate to the District Board of Directors why the District should not file a civil suit against Respondent in State District Court seeking enforcement of District rules and the collection of all due and owing water use fees, late payment penalties, other civil penalties, and attorneys fees and court costs incurred by the District in the prosecution of claims against Respondent for its violations of District Rules.

12. Respondent will submit all documents that it intends to rely upon in support of its position at the Show Cause Hearing to the District no later than five (5) days prior to the date of the Show Cause Hearing. No documents submitted after this deadline will be considered by the District Board of Directors, unless good cause for their untimely filing is demonstrated.

13. As part of the demonstrations required in provision 2 and 3 above, Respondent shall have prepared, and shall present to the District Board of Directors at the Show Cause Hearing, a proposed schedule for achieving complete compliance with the terms of the Permit and the District Rules.

IN THE MATTER OF EDUARDO LOPEZ LSGCD ORDER NO. SCO 18-004 PAGE 2

14. Representatives of Respondent may be accompanied by legal counsel at the Show Cause Hearing.

15. The District may pursue immediate enforcement action against Respondent if Respondent or its authorized representative fail to appear at the Show Cause Hearing and show cause why the enforcement actions described herein should not be pursued.

16. This Order is issued this 16th day of April, 2018.

For Lone Star Groundwater Conservation District (District):

Signed: ______4/16/18 Kathy Turner Jones Date General Manager

IN THE MATTER OF EDUARDO LOPEZ LSGCD ORDER NO. SCO 18-004 PAGE 3

LSGCD Order No. SCO 18-003

IN THE MATTER OF § BEFORE THE LCBGH15, LLC §

ATTN: MR. STEVE § WEISINGER § LONE STAR

P.O. BOX 2666 § CONROE, TX 77305 § GROUNDWATER CONSERVATION DISTRICT PERMIT #: OP-08092501

SHOW CAUSE ORDER

The following findings are made and order provisions issued by the Lone Star Groundwater Conservation District (the “District”) to LCBGH15, LLC (the “Respondent”) pursuant to District Rule 2.5(a) (the “Show Cause Order”). This Show Cause Order is based on findings by the District of noncompliance by the Respondent of District Rules.

FINDINGS

1. Respondent is currently authorized to produce groundwater from Well No. 2008092501 (the “Well”), which is located within the boundaries of the District, through Permit No. OP-08092501 (the “Permit”).

1. On January 2, 2018 and February 2, 2018 and weekly thereafter the District emailed a postcard notice that the 2017 Production Report was due to the District no later than February 15, 2018 and that it should be submitted via the District’s online system. The postcard contained instructions on how to obtain login information from the District as well as how to request a paper form.

2. On February 19, 2018, having still not received the 2017 Production Report, the District’s Field Operations Technician made a site visit and performed a meter verification/re- inspection.

3. On March 1, 2018, the District issued a Notice of Violation to the Respondent for failure to timely submit annual production report.

4. To date, the Respondent has failed to submit the annual production report for 2017 and/or pay the penalties associated with the violation listed in the provisions above.

5. On several occasions, the District attempted to contact Respondent and encourage full regulatory compliance without the instigation of any additional enforcement action by the District Board of Directors.

6. After repeated attempts to resolve informally the issue of Respondent’s failure to submit production report and violation fees associated; the General Manager has recommended to

IN THE MATTER OF LCBGH15, LLC LSGCD ORDER NO. SCO 18-003 PAGE 1

the District Board of Directors that the Respondent be ordered to appear, following proper notice, and show cause to the District Board of Directors why the District should not issue a cease and desist order that would indefinitely suspend the Permit No. OP-08092501.

7. The District Board of Directors met on April 10, 2018 and, following proper notice, took up and considered the enforcement matter discussed herein above. After deliberations regarding the same, the Board of Directors voted to issue this Show Cause Order directing Respondent to appear at a properly called and noticed hearing for such purposes to show cause why the Board should not issue a cease and desist order indefinitely suspending Permit No. OP-08092501, initiate legal action against Respondent in State District Court seeking enforcement of District rules and the collection of all due and owing water use fees, late payment penalties, other civil penalties, and attorneys fees and court costs incurred by the District in the prosecution of claims against Respondent, and take all other necessary and appropriate enforcement action against Respondent authorized under the law.

ORDER

NOW, THEREFORE, based on the above findings, is hereby ORDERED as follows:

8. Respondent shall appear at the show cause hearing scheduled by the Lone Star Groundwater Conservation District to be held on May 8, 2018, at 10:00 a.m., in the Board Room of the Lone Star Groundwater Conservation District office, 655 Conroe Park North Drive, in Conroe, Texas (the “Show Cause Hearing”).

9. At the Show Cause Hearing, Respondent shall demonstrate to the District Board of Directors why the District should not issue a cease and desist order indefinitely suspending all production authorization otherwise allowed under Permit No. OP-08092501 for its violations of District Rules.

10. At the Show Cause Hearing, Respondent shall also demonstrate to the District Board of Directors why the District should not file a civil suit against Respondent in State District Court seeking enforcement of District rules and the collection of all due and owing water use fees, late payment penalties, other civil penalties, and attorneys fees and court costs incurred by the District in the prosecution of claims against Respondent for its violations of District Rules.

11. Respondent will submit all documents that it intends to rely upon in support of its position at the Show Cause Hearing to the District no later than five (5) days prior to the date of the Show Cause Hearing. No documents submitted after this deadline will be considered by the District Board of Directors, unless good cause for their untimely filing is demonstrated.

12. As part of the demonstrations required in provision 2 and 3 above, Respondent shall have prepared, and shall present to the District Board of Directors at the Show Cause Hearing, a proposed schedule for achieving complete compliance with the terms of the Permit and the District Rules. IN THE MATTER OF LCBGH15, LLC LSGCD ORDER NO. SCO 18-003 PAGE 2

13. Representatives of Respondent may be accompanied by legal counsel at the Show Cause Hearing.

14. The District may pursue immediate enforcement action against Respondent if Respondent or its authorized representative fail to appear at the Show Cause Hearing and show cause why the enforcement actions described herein should not be pursued.

15. This Order is issued this 16th day of April, 2018.

For Lone Star Groundwater Conservation District (District):

Signed: ______4/16/18 Kathy Turner Jones Date General Manager

IN THE MATTER OF LCBGH15, LLC LSGCD ORDER NO. SCO 18-003 PAGE 3

LSGCD Order No. SCO 18-002

IN THE MATTER OF § BEFORE THE LCBGH15, LLC § ATTN: MR. STEVE § WEISINGER § LONE STAR P.O. BOX 2666 § CONROE, TX 77305 § PERMIT #: OP-08092501 GROUNDWATER CONSERVATION DISTRICT

SHOW CAUSE ORDER

FINDINGS

2. On November 12, 2017, the District submitted an invoice to the Respondent for water use fees totaling $189.00 for 2018. All such fees were due and owing to the District no later than January 1, 2018.

3. To date, the Respondent has failed to pay any of the water use fees due and owing to the District for 2018, and is in direct violation of District Rules 9.1 and 9.6, and as a result, has incurred late payment penalties for non-payment.

4. On February 1, 2018, the District submitted an invoice to the Respondent for water use fees and late payment penalties for non-payment totaling $25.00 for 2018.

5. On March 1, 2018, the District issued a Notice of Violation to the Respondent for water use fees, late payment and civil penalties for non-payment, and reimbursement of certified mailings totaling $300.00 for 2018.

6. The District attempted to contact Respondent in writing and encourage full regulatory compliance without the instigation of any additional enforcement action by the District Board of Directors.

7. After repeated attempts to resolve informally the issue of Respondent’s failure to timely remit unpaid water use fees for calendar year 2018 production and associated late payment penalties, the General Manager has recommended to the District Board of Directors that

IN THE MATTER OF LCBGH15, LLC LSGCD ORDER NO. SCO 18-002 PAGE 1

the Respondent be ordered to appear, following proper notice, and show cause to the District Board of Directors why the District should not issue a cease and desist order that would indefinitely suspend the Permit No. OP-08092501.

8. The District Board of Directors met on April 10, 2018 and, following proper notice, took up and considered the enforcement matter discussed herein above. After deliberations regarding the same, the Board of Directors voted to issue this Show Cause Order directing Respondent to appear at a properly called and noticed hearing for such purposes to show cause why the Board should not issue a cease and desist order indefinitely suspending Permit No. OP-08092501, initiate legal action against Respondent in State District Court seeking enforcement of District rules and the collection of all due and owing water use fees, late payment penalties, other civil penalties, and attorneys fees and court costs incurred by the District in the prosecution of claims against Respondent, and take all other necessary and appropriate enforcement action against Respondent authorized under the law.

ORDER

NOW, THEREFORE, based on the above findings, is hereby ORDERED as follows:

1. Respondent shall appear at the show cause hearing scheduled by the Lone Star Groundwater Conservation District to be held on May 8, 2018, at 10:00 a.m., in the Board Room of the Lone Star Groundwater Conservation District office, 655 Conroe Park North Drive, in Conroe, Texas (the “Show Cause Hearing”).

2. At the Show Cause Hearing, Respondent shall demonstrate to the District Board of Directors why the District should not issue a cease and desist order indefinitely suspending all production authorization otherwise allowed under Permit No. OP-08092501 for its violations of District Rules.

3. At the Show Cause Hearing, Respondent shall also demonstrate to the District Board of Directors why the District should not file a civil suit against Respondent in State District Court seeking enforcement of District rules and the collection of all due and owing water use fees, late payment penalties, other civil penalties, and attorneys fees and court costs incurred by the District in the prosecution of claims against Respondent for its violations of District Rules.

4. Respondent will submit all documents that it intends to rely upon in support of its position at the Show Cause Hearing to the District no later than five (5) days prior to the date of the Show Cause Hearing. No documents submitted after this deadline will be considered by the District Board of Directors, unless good cause for their untimely filing is demonstrated.

5. As part of the demonstrations required in provision 2 and 3 above, Respondent shall have prepared, and shall present to the District Board of Directors at the Show Cause Hearing, a proposed schedule for achieving complete compliance with the terms of the Permit and the District Rules. IN THE MATTER OF LCBGH15, LLC LSGCD ORDER NO. SCO 18-002 PAGE 2

6. Representatives of Respondent may be accompanied by legal counsel at the Show Cause Hearing.

7. The District may pursue immediate enforcement action against Respondent if Respondent or its authorized representative fail to appear at the Show Cause Hearing and show cause why the enforcement actions described herein should not be pursued.

8. This Order is issued this 16th day of April, 2018.

For Lone Star Groundwater Conservation District (District):

Signed: ______04/16/18 Kathy Turner Jones Date General Manager

IN THE MATTER OF LCBGH15, LLC LSGCD ORDER NO. SCO 18-002 PAGE 3

LSGCD Order No. SCO 18-005

IN THE MATTER OF § BEFORE THE JOE WORTHY §

P.O. BOX 251 CONROE, § TX 77305 § LONE STAR

PERMIT #: OP-09111101 § § GROUNDWATER CONSERVATION DISTRICT

SHOW CAUSE ORDER

The following findings are made and order provisions issued by the Lone Star Groundwater Conservation District (the “District”) to Joe Worthy (the “Respondent”) pursuant to District Rule 2.5(a) (the “Show Cause Order”). This Show Cause Order is based on findings by the District of noncompliance by the Respondent of District Rules.

FINDINGS

1. Respondent is currently authorized to produce groundwater from Well No. 2009111102 (the “Well”), which is located within the boundaries of the District, through Permit No. OP-09111101 (the “Permit”).

2. On March 1, 2018, the District issued a Notice of Violation and Consent Order to the Respondent for withdrawal of groundwater in an amount which exceeded the specific amount authorized for withdrawal in the applicable District permit by ten (10%) or greater than the authorized amount.

3. To date, the Respondent has failed to submit the Consent Order and/or pay the overproduction fees and fines associated with the violation listed in the provisions above.

4. On several occasions, the District attempted to contact Respondent and encourage full regulatory compliance without the instigation of any additional enforcement action by the District Board of Directors.

5. After repeated attempts to resolve informally the issue of Respondent’s failure to submit production report and violation fees associated; the General Manager has recommended to the District Board of Directors that the Respondent be ordered to appear, following proper notice, and show cause to the District Board of Directors why the District should not issue a cease and desist order that would indefinitely suspend the Permit No. OP-09111101.

6. The District Board of Directors met on April 10, 2018 and, following proper notice, took up and considered the enforcement matter discussed herein above. After deliberations regarding the same, the Board of Directors voted to issue this Show Cause Order directing Respondent to appear at a properly called and noticed hearing for such purposes to show cause why the Board should not issue a cease and desist order indefinitely suspending IN THE MATTER OF JOE WORTHY LSGCD ORDER NO. SCO 18-005 PAGE 1

Permit No. OP-09111101, initiate legal action against Respondent in State District Court seeking enforcement of District rules and the collection of all due and owing water use fees, late payment penalties, other civil penalties, and attorneys fees and court costs incurred by the District in the prosecution of claims against Respondent, and take all other necessary and appropriate enforcement action against Respondent authorized under the law.

ORDER

NOW, THEREFORE, based on the above findings, is hereby ORDERED as follows:

7. Respondent shall appear at the show cause hearing scheduled by the Lone Star Groundwater Conservation District to be held on May 8, 2018, at 10:00 a.m., in the Board Room of the Lone Star Groundwater Conservation District office, 655 Conroe Park North Drive, in Conroe, Texas (the “Show Cause Hearing”).

8. At the Show Cause Hearing, Respondent shall demonstrate to the District Board of Directors why the District should not issue a cease and desist order indefinitely suspending all production authorization otherwise allowed under Permit No. OP-09111101 for its violations of District Rules.

9. At the Show Cause Hearing, Respondent shall also demonstrate to the District Board of Directors why the District should not file a civil suit against Respondent in State District Court seeking enforcement of District rules and the collection of all due and owing water use fees, late payment penalties, other civil penalties, and attorneys fees and court costs incurred by the District in the prosecution of claims against Respondent for its violations of District Rules.

10. Respondent will submit all documents that it intends to rely upon in support of its position at the Show Cause Hearing to the District no later than five (5) days prior to the date of the Show Cause Hearing. No documents submitted after this deadline will be considered by the District Board of Directors, unless good cause for their untimely filing is demonstrated.

11. As part of the demonstrations required in provision 2 and 3 above, Respondent shall have prepared, and shall present to the District Board of Directors at the Show Cause Hearing, a proposed schedule for achieving complete compliance with the terms of the Permit and the District Rules.

12. Representatives of Respondent may be accompanied by legal counsel at the Show Cause Hearing.

13. The District may pursue immediate enforcement action against Respondent if Respondent or its authorized representative fail to appear at the Show Cause Hearing and show cause why the enforcement actions described herein should not be pursued.

IN THE MATTER OF JOE WORTHY LSGCD ORDER NO. SCO 18-005 PAGE 2

14. This Order is issued this 16th day of April, 2018.

For Lone Star Groundwater Conservation District (District):

Signed: ______4/16/18 Kathy Turner Jones Date General Manager

IN THE MATTER OF JOE WORTHY LSGCD ORDER NO. SCO 18-005 PAGE 3

LSGCD Order No. SCO 18-006

IN THE MATTER OF § BEFORE THE QUALITY CAR CARE §

ATTN: MR. JEFF MCEADDY § 18849 HWY 105 WEST § LONE STAR

MONTGOMERY, TX 77356 § PERMIT #: HUP182 § GROUNDWATER CONSERVATION DISTRICT

SHOW CAUSE ORDER

The following findings are made and order provisions issued by the Lone Star Groundwater Conservation District (the “District”) to Quality Car Care (the “Respondent”) pursuant to District Rule 2.5(a) (the “Show Cause Order”). This Show Cause Order is based on findings by the District of noncompliance by the Respondent of District Rules.

FINDINGS

1. Respondent is currently authorized to produce groundwater from Well No. 2004072871 (the “Well”), which is located within the boundaries of the District, through Permit No. HUP182 (the “Permit”).

3. To date, the Respondent has failed to submit the Consent Order and/or pay the overproduction fees and fines associated with the violation listed in the provisions above.

Permit No. HUP182, initiate legal action against Respondent in State District Court seeking enforcement of District rules and the collection of all due and owing water use fees, late payment penalties, other civil penalties, and attorneys fees and court costs incurred by the District in the prosecution of claims against Respondent, and take all other necessary and appropriate enforcement action against Respondent authorized under the law.

ORDER

NOW, THEREFORE, based on the above findings, is hereby ORDERED as follows:

12. Representatives of Respondent may be accompanied by legal counsel at the Show Cause Hearing.

IN THE MATTER OF QUALITY CAR CARE LSGCD ORDER NO. SCO 18-006 PAGE 2

14. This Order is issued this 16th day of April, 2018.

For Lone Star Groundwater Conservation District (District):

Signed: ______4/16/18 Kathy Turner Jones Date General Manager

IN THE MATTER OF QUALITY CAR CARE LSGCD ORDER NO. SCO 18-006 PAGE 3

LONE STAR GROUNDWATER CONSERVATION DISTRICT

April 10, 2018

MINUTES OF SPECIAL MEETING

The Board of Directors of the Lone Star Groundwater Conservation District (“District”) held a “Special Meeting,” open to the public, in the Lone Star GCD – James B. “Jim” Wesley Board Room located at 655 Conroe Park North Drive, Conroe, Texas, within the boundaries of the District on April 10, 2018.

Vice President Stinson called the meeting to order at 9:00 AM, announcing that it was now open to the public.

The roll was called of the members of the Board of Directors, to wit:

John D. Bleyl, PE Gregg Hope Jace Houston Roy McCoy, Jr. Webb Melder Rick J. Moffatt Jim Stinson, PE M. Scott Weisinger, PG W. B. Wood

All members of the Board were present, with the exceptions of Director(s) Moffatt, and McCoy thus constituting a quorum of the Board of Directors. Also, in attendance at said meeting were Kathy Turner Jones, District General Manager; Samantha Reiter, Assistant General Manager; Brian L. Sledge, District Counsel, District staff and members of the public. Copies of the public sign-in sheets are attached hereto as Exhibit “A”.

After a proper and legally sufficient announcement to the public by Vice President Stinson, the Board of Directors went into a Closed Executive Session at 9:01 AM pursuant to Texas Government Code, Sections 551.071, to consult with the District’s attorney regarding pending or contemplated litigation, settlement offers, personnel matters, or on matters in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Texas Open Meetings Act, Chapter 551, Government Code.

04.10.18 Special Minutes Page 1 Director Weisinger joined the Executive Session at 9:13 AM. Following Executive Session, the Board reconvened in Open Session and Vice President Stinson declared it open to the public at 9:58 AM.

No additional action was taken on matters discussed in Executive Session and Vice President Stinson adjourned the meeting at 9:58 AM.

PASSED, APPROVED, AND ADOPTED THIS 8th DAY OF MAY 2018.

______Gregg Hope, Board Secretary

04.10.18 Special Minutes Page 2 LONE STAR GROUNDWATER CONSERVATION DISTRICT

April 10, 2018

MINUTES OF PUBLIC HEARING ON PERMIT APPLICATIONS

The Board of Directors of the Lone Star Groundwater Conservation District (“District”) met in regular session, open to the public, in the Lone Star GCD – James B. “Jim” Wesley Board Room located at 655 Conroe Park North Drive, Conroe, Texas, within the boundaries of the District on April 10, 2018.

CALL TO ORDER:

Vice President Stinson called to order the Public Hearing on Permit Applications at 10:01 AM announcing the meeting open to the public.

ROLL CALL:

The roll was called of the members of the Board of Directors, to wit:

John D. Bleyl, PE Gregg Hope Jace Houston Roy McCoy, Jr. Webb Melder Rick J. Moffatt Jim Stinson, PE M. Scott Weisinger, PG W. B. Wood

All members of the Board were present with the exceptions of Director(s) Moffatt and McCoy, thus constituting a quorum of the Board of Directors. Also, in attendance at said meeting were Kathy Turner Jones, General Manager; Samantha Reiter, Assistant General Manager; Brian L. Sledge, District Counsel; District staff; and members of the public. Copies of the public sign-in sheets are attached hereto as Exhibit “A”.

PRAYER AND PLEDGES OF ALLEGIANCE:

Director Melder gave the opening prayer. Next, Vice President Stinson led the Pledge of Allegiance and the Pledge of Allegiance to the state flag.

04.10.18 Permit Hearing Minutes Page 1 of 3

Assistant General Manager, Samantha Reiter informed the Board that there were five permit applications received for the month. Ms. Reiter stated that the first group included items #1-4 and that it is the General Manager’s recommendation to approve those items as requested. Ms. Reiter then noted the second group included item #5 was a request for a new permit which received the General Manager’s approval to drill and also authorization for a reduced permitted allocation.

Item #1, T & W Water Services (Falls of Wildwood) Applicant is requesting an amendment to an Operating Permit for drilling authorization only. No additional production authorization is being requested at this time. Based on technical review of the information supplied, it is the General Manager’s recommendation to approve that which is requested.

Item #2, Tranquility Ranch Sand & Gravel Applicant is requesting registration of a new well and production authorization in the amount of 2,000,000 gallons for 2018 and annually thereafter. Based on technical review of the information supplied, it is the General Manager’s recommendation to approve that which is requested.

Item #3, Crossed Flags Performance LLC Applicant is requesting registration of a new well and production authorization in the amount of 50,000 gallons for 2018 and 100,000 gallons for 2019 and annually thereafter. Based on technical review of the information supplied, it is the General Manager’s recommendation to approve that which is requested.

Item #4, Cherry Crushed Concrete (FM 1485) Applicant is requesting registration of a new well and production authorization in the amount of 9,500,000 gallons for 2018 and annually thereafter. Based on technical review of the information supplied, it is the General Manager’s recommendation to approve that which is requested.

Item #5, Watercrest at Kingwood Phase II, LP Applicant is requesting registration of a new well and production authorization in the amount of 2,000,000 gallons for 2018 and annually thereafter. Based on technical review of the information supplied, it is the General Manager’s recommendation to approve the registration and construction of the well and further authorize a reduced allocation of 1,447,000 gallons for 2018 and 2019 and 1,113,000 gallons for 2020 and beyond.

Following Ms. Reiter’s report, a motion was made by Director Bleyl, seconded by Director Hope to approve items #1-4. The motion was approved. A motion to approve items #5 was made by Director Hope, and seconded by Director Bleyl. The motion was approved.

Vice President Stinson adjourned the public hearing on permit applications at 10:03 AM.

PASSED, APPROVED, AND ADOPTED THIS 8th DAY OF MAY 2018.

04.10.18 Permit Hearing Minutes Page 2 of 3

______Gregg Hope, Board Secretary

04.10.18 Permit Hearing Minutes Page 3 of 3

LONE STAR GROUNDWATER CONSERVATION DISTRICT

April 10, 2018

MINUTES OF REGULAR MEETING

The Board of Directors of the Lone Star Groundwater Conservation District (“District”) met in regular session, open to the public, in the Lone Star GCD - James B. “Jim” Wesley Board Room located at 655 Conroe Park North Drive, Conroe, Texas, within the boundaries of the District on April 10, 2018.

CALL TO ORDER:

Vice President Stinson presided and called to order the regular Board of Directors meeting at 10:05 AM, announcing that it was open to the public.

ROLL CALL:

The roll was called of the members of the Board of Directors, to wit:

John D. Bleyl, PE Gregg Hope Jace Houston Roy McCoy, Jr. Webb Melder Rick J. Moffatt Jim Stinson, PE M. Scott Weisinger, PG W. B. Wood

All members of the Board were present, with the exceptions of Director(s) Moffatt and McCoy, thus constituting a quorum of the Board of Directors. Also in attendance at said meeting were Kathy Turner Jones, General Manager; Samantha Reiter, Assistant General Manager; Brian L. Sledge, District Counsel, District staff; and members of the public. Copies of the public sign-in sheets are attached hereto as Exhibit "A".

PUBLIC COMMENTS:

No comments.

APPROVAL OF THE MINUTES:

Vice President Stinson stated the Board would consider all meeting minutes as listed for approval on today’s agenda as one item. A motion was made to approve the meeting minutes by

04.10.18 Minutes Page 1 of 6

Director Wood, seconded by Director Hope. The motion to approve the minutes was approved unanimously.

a) March 13, 2018, Special Board Meeting b) March 13, 2018, Public Hearing on Permit Applications c) March 13, 2018, Regular Board of Directors Meeting

COMMITTEE REPORTS:

A. Executive Committee and/or Settlement Committee – Rick Moffatt, Chair

1) Brief the Board on the Committee’s activities since the last regular Board meeting – Vice President Stinson reported that the settlement team had met by conference call and asked District Counsel, Brian Sledge, to give an update.

2) Defense of the following lawsuit: City of Conroe et al. v. Lone Star Groundwater Conservation District (and the District’s directors and general manager in their official capacities) – Mr. Sledge confirmed the settlement team is continuing to work with the plaintiffs towards a resolution. A court date of April 25th is scheduled for the hearing on summary judgment which will include motions to recover legal fees in defending the directors and general manager.

B. Water Awareness and Conservation Committee - Billy Wood, Chair

1) Brief the Board on the Committee’s activities since the last regular Board meeting – No meeting.

2) Update on public outreach activities, water efficiency, and conservation efforts – James Ridgway – Mr. Ridgway reported that the 7th Annual Gulf Coast Water Conservation Symposium was well attended with lots of useful information presented. This event was live streamed and is part of our library of Resources. Mr. Ridgway announced that on April 26th the Water Efficiency Network Meeting is planned and will feature guest speaker, Mark Bowen. Mr. Ridgway presented a timeline illustrating future education and public outreach events. Upcoming events include: Montgomery County Fair & Rodeo Kids Day on April 16-17 which is anticipating double the attendance from the previous year and Conroe Kidzfest on April 28th. May 11th there will be a Rainwater Harvesting Class the District is co- sponsoring with TX A&M AgriLife Extension and The Woodlands Joint Powers Agency.

C. Rules and Regulatory Planning Committee – Jim Stinson, Chair

1) Brief the Board on the Committee’s activities since the last regular board meeting – The committee met on March 29th to discuss well spacing parameters. They will meet again before bringing their suggestions to the board.

04.10.18 Minutes Page 2 of 6

D. Policy and Personnel Development Committee – Jace Houston, Chair

1) Brief the Board on the Committee’s activities since the last regular Board meeting – No report.

E. Budget and Finance Development Committee – Billy Wood, Chair

1) Brief the Board on the Committee’s Activities – Director Wood stated that the committee met March 27th to review the draft of the annual financial report for the year ending December 31, 2017.

2) Review of monthly financial reports – Director Wood reported that, for the month of March, revenue was budgeted at $198,929—actual was $247,710. He said expenses were budgeted at $176,303—actual expenses were $137,732. Net income for the month was $109,732. Year-to-date net income is $302,612.

3) Review 1st Quarterly Investment Report 2018 – Director Stinson reported that the total balance of the investment pools, including TexPool and First Financial Bank (FFB) is $593,000 and that $2.9 million is pledged.

4) Receive audit presentation for fiscal year 2017 – Jon Watson, CPA; BrooksWatson & Co., PLLC. Mr. Watson presented the annual financial audit report for the District for the year ending December 31, 2017. Mr. Watson discussed the revenues, expenses and changes to net position for the year; emphasizing the decrease in net position is due to ongoing litigation. In discussing budget versus actual variances, the major variance was due to legal expense. A five-year comparative analysis of changes in net position illustrated the use of cash reserves to fund litigation. Mr Watson acknowledged the directors were prudent to increase rates as necessary to sustain District operations. (A copy of the PowerPoint presentation is attached hereto as Exhibit “B”.)

Following questions and further discussion, Director Stinson made a motion to accept the audit report; seconded by Director Bleyl. The motion was approved with Directors Melder and Weisinger abstained.

F. Findings and Review Committee – Rick Moffatt, Chair

1) Brief the Board on the Committee’s activities since the last regular Board meeting – No report.

2) Groundwater Management Area 14 – update the board on the legal, technical, and financial issues related to joint planning activities and development of desire future conditions in GMA 14 – Ms. Jones reported that member districts and participants for GMA 14 met March 27th to continue working to accomplish statutory mandates to support the development of DFCs for the current round of joint planning. At the March GMA 14 meeting, Lone Star GCD requested GMA 14 to approve formal consideration of another request for amended DFCs and take action to consider the

04.10.18 Minutes Page 3 of 6

DFC request referred to as “Run D of Task 3 of the Lone Star GCD Strategic Water Resources Planning Study” only as an amendment to the DFCs previously adopted for the second cycle of joint planning (2010 – 2016). The request was presented in the form of a written resolution to attempt to eliminate any confusion on what was being requested. The motion failed to meet the two-thirds requirement for approval. Following the failed vote to approve, Lone Star GCD made a motion that the GMA 14 district representatives amend their action taken at the December 8, 2017, joint planning meeting and approve formal consideration of Run D as requested by Lone Star GCD as both an amendment to the second joint planning cycle desired future conditions in response to the appeal of Lone Star GCD’s desired future conditions and to develop the third cycle desired future conditions. Motion was approved by the planning group. The next meeting of the GMA 14 is on Thursday, April 26.

Discussion and possible action to issue a show cause order directing the following permittees, or their designated representative, to appear at a show cause hearing for that purpose and show cause why appropriate enforcement action should not be taken, including without limitation initiating a lawsuit against it for failure to submit 2017 production report and/or fines associated with timely submissions:

1) Eduardo Lopez – OP-14051301 2) LCBGH15, LLC – OP-08092501

Discussion of possible action to issue a show cause order directing the following permittees, or their designated representative, to appear at a show cause hearing for that purpose and show cause why appropriate enforcement action should not be taken, including without limitation initiating a lawsuit against it for failure to remit 2018 water use fees and/or fines associated with timely submissions: 1) Jim Fox – OP-07120501 2) LCBGH15, LLC – OP-08092501

Discussion and possible action to issue a show cause order directing the following permittees, or their designated representative, to appear at a show cause hearing for that purpose and show cause why appropriate enforcement action should not be taken including without limitation initiating a lawsuit against it for overproduction of 2017 permitted allocation and/or fines associated with timely submission:

1) East Montgomery County MUD #4 – OP03-004/OP-07022201 2) Joe Worthy – OP-09111101 3) Quality Car Care – HUP182 4) Sanberg Investments – OP-13112101

Mr. Sledge discussed all three show cause hearings as a group. He stated that East Montgomery County MUD #4 was removed from the Show Cause Order, as they have reached an agreement with the District. Based on the information reported by District staff, Mr. Sledge recommended that the board consider action to direct the above listed permittees to appear at a

04.10.18 Minutes Page 4 of 6

Show Cause Hearing to be held in conjunction with the May 8th board meeting and show cause why appropriate action should not be taken against them for the above listed violations. A motion was made by Director Wood, and seconded by Director Bleyl in accordance with the General Counsel’s recommendation. The motion passed.

GENERAL MANAGER’S REPORT:

Ms. Jones updated the Board concerning Director’s Hope request to research the effect Daylight Savings Time (DST) might have on local water consumption. Ms. Jones presented a white paper developed by Mr. Ridgway detailing the history of DST and water. While the original rationale (1784) for adopting DST was energy savings, modern research studies question the magnitude and even direction of the effect of DST on electricity consumption. In conclusion, Ms. Jones added that state representative Lyle Larson (San Antonio) was on record proposing Texas keep DST year-round, rather than changing the clocks twice a year citing various studies have proven that there are many health and economic benefits of maintaining DTS year-round. In addition, some argue that there is a public health benefit to DST, as several studies in the U.S. and Great Britain have shown that the DST daylight shift reduces net traffic accidents and fatalities by close to one percent. An increase in accidents in the dark mornings is more than offset by the evening decrease in accidents. Additionally, it is estimated that the United States loses nearly $434 million every year due to the reorganizational efforts and increased incidences of workplace injuries, heart attacks and cyber loafing that follow from switching time.

Ms. Jones briefed the Board on the status of TexCom Gulf Disposal, LLC.

1) Brief the Board on November 6, 2018, board of directors’ election and process. Ms. Jones confirmed the District is corresponding with the Montgomery County Elections Administrator and further stated the District intends to contract with Montgomery County in order for the county to conduct the election on behalf of the District. Following discussion, it was the consensus of the Board that discussion to authorize contract with Montgomery County Elections and notice of ‘Order the Election’ be placed on the June 12, 2018 agenda for consideration and possible action.

GENERAL COUNSEL’S REPORT:

Mr. Sledge commented that the majority of his month’s work for the District focused on the litigation and GMA 14 activities. He had previously briefed the Board in Executive Session on the upcoming GMA 14 meeting. Mr. Sledge updated the Board of next week’s House of Natural Resources committee meeting on Hurricane Harvey flooding and discussions on aquifer storage/drainage project’s viability to help alleviate flooding in the future.

NEW BUSINESS:

There was no new business.

There being no further business, upon a motion made by Director Weisinger and seconded by Director Hope, the meeting was adjourned at 10:51 AM.

04.10.18 Minutes Page 5 of 6

PASSED, APPROVED, AND ADOPTED THIS 8th DAY OF MAY 2018.

______Gregg Hope, Board Secretary

04.10.18 Minutes Page 6 of 6

Exhibit "B" Lone Star Groundwater Conservation District Audit Presentation December 31, 2017

Presented By: Jon Watson, CPA April 10, 2018

1 OVERVIEW OF THE AUDIT PROCESS Audit Planning and Risk Assessment

Preliminary analytics – changes year over year

Internal controls – gain understanding

Assessing financial and fraud risk

Designing audit procedures – Risk Based Approach

2 OVERVIEW OF THE AUDIT PROCESS Audit Fieldwork & Completion and Reporting

Typical audit procedures as part of our audit fieldwork include:

 Agreeing financial statements to underlying records and activity  Inspection of documents, inquiry of individuals providing information  Confirmations – cash, debt, receivables, revenue, grants, etc.  Analytical procedures – comparing actual results to expectations

Audit Completion and Reporting Procedures Include:

 Evaluate the sufficiency and appropriateness of audit evidence obtained.  Perform an overall analytical review.  Evaluate and conclude on the results of audit procedures.  Prepare District’s Annual Financial Report.  Issue the Auditor’s Opinion (report).

3 COMPONENTS OF THE ANNUAL FINANCIAL REPORT

 Auditor’s Opinion  Management’s Discussion and Analysis  Basic Financial Statements . Financial Statements . Notes to the Financial Statements  Other Supplementary Information . Budgetary Comparison Schedule  Texas Supplementary Information . Information required by TCEQ

4 INDEPENDENT AUDITOR’S REPORT REFERENCE AFR – PAGE 2

 Four possible outcomes -Unmodified -Modified -Disclaimed -Adverse

 The District received an unmodified opinion  Highest level of assurance

5 FINANCIAL HIGHLIGHTS REFERENCE AFR – PAGE 7

Total assets exceeded total liabilities by $1,072,819, a decrease of $1,078,439.

Unrestricted net position was negative $534,114.

Cash decreased by $650,133 during the year from $1,221,230 to $571,097.

6 District Revenues, Expenses, and Changes to Net Position

YEAR ENDING 12/31/17 - REFERENCE AFR PAGE 17

Operating Revenues/Expenses:

3,000,000 2,750,000 2,500,000 2,250,000 2,000,000 1,750,000 1,500,000 Total Revenues 1,250,000 Total Expenses 1,000,000 750,000 500,000 250,000 - Total Revenues Total Expenses  Total Revenues were $1,764,061  Operating Expenses were $2,842,500  Net Decrease was $1,078,439 7 SCHEDULE OF REVENUES, EXPENDITURES & CHANGES IN NET POSITION (Budget & Actual) YEAR ENDING 12/31/17 - REFERENCE AFR PAGES 34 & 35

Variance with Final Budget Positive Final Budget Actual (Negative) Revenues Total Revenues 1,695,847 1,764,061 68,214 Expenses Total Expenses 2,320,307 2,778,409 (458,102)

Revenues Over (Under) Expenditures (624,460) (1,014,348) (389,888)

Net Change in Net Position $ (624,460) (1,014,348) $ (389,888) Beginning Net Position 2,151,258 Capital Expenses - Depreciation Expenses (64,091) Ending Net Position $ 1,072,819

8 COMPARATIVE SCHEDULE OF REVENUES AND EXPENDITURES

YEAR ENDING 12/31/17 - REFERENCE AFR PAGE 40

12/31/2017 12/31/2016 12/31/2015 12/31/2014 12/31/2013 Revenues Application fees $ 27,542 $ 33,400 $ 34,850 $ 44,460 $ 42,939 Export fees 2,625 597 1,765 2,942 18,842 Water use fees 1,717,353 1,400,845 2,020,219 1,964,785 1,895,988 Interest income 4,602 3,542 4,657 5,096 6,744 Overpumpage income 5,714 30,748 16,712 7,296 27,534 Miscellaneous - 50 11,372 11,560 2,401 Penalty & interest 6,225 7,085 16,630 1,930 14,351 Total Revenues 1,764,061 1,476,267 2,106,205 2,038,069 2,008,799

% Change 19% -30% 3% 1% Total Expenses 2,842,500 2,254,888 2,203,781 1,902,987 1,668,815

% Change 26% 2% 16% 14%

Revenues over (under) Expenses $ (1,078,439) $ (778,621) $ (97,576) $ 135,082 $ 339,984

9 CONCLUSION Other Communications and Questions

Presented By: Jon Watson, CPA April 10, 2018

Lone Star Groundwater Conservation District Directors’ Election: Information regarding the Lone Star Groundwater Conservation District (“District”) directors’ election to be held on November 6, 2018. The District will be ordering the election in accordance with state law after the official early voting information is available. The Texas Election Code requires specific early voting information to be in the District’s order calling the election. The official early voting information for the November election has not yet been adopted by the Montgomery County Commissioners Court. As a result, the District will adopt the election order calling the November 6, 2018, directors’ election once the official early voting information becomes available, which is expected to be in June (after the May 5th and May 22nd election dates). Please see the District’s letter that was provided in response to questions regarding the District directors’ election in November. Please also visit the District’s website at www.lonestargcd.org/2018-election to obtain additional information about the election.

6136 F R I S CO S Q U A R E B LVD., S UITE 400 F RISCO , TX 75034 | P HONE : (469) 925-0022 F AX: (469) 547-0684 | Email: [email protected]

April 13, 2018

Mr. Simon Sequeira Via Email – [email protected]; Restore Affordable Water [email protected] c/o Quadvest P.O. Box 409 Tomball, Texas 77377

Re: Response to Letter Regarding Lone Star Groundwater Conservation District Election Matters

Dear Mr. Sequeira:

Please accept this letter as a response to your letter dated March 19, 2018, regarding Lone Star Groundwater Conservation District (“District”) election matters. I represent the District as special counsel on election law matters, and the District requested that I provide a response to your letter due to the legal nature of the issues presented.

The District is aware of the provision in Texas Election Code § 201.051(a) related to ordering the election “as soon as practicable” after the vacancy,1 but “subject to” the deadline in subsection (b). Section 201.051(b) provides that the actual deadline for adopting the order is the 78th day before the election. Please note that Texas Election Code §§ 85.004 and 85.007, among other provisions, prescribe some of the required content of the District’s election order. The required content of the District’s election order is different than that required for cities and counties.2 The provisions applicable to the District require the election order to include the main early voting location(s) and the dates and hours of early voting,3 and this information has not yet been officially released.

The District intends to contract with Montgomery County in order for the county to conduct the election on behalf of the District. I have therefore advised the District to wait for the main early voting location(s), dates and hours for the November 2018 election to be officially designated by Montgomery County, as is common practice, so that the official information may be included in the District’s election order. While there is information on the Montgomery County elections website regarding anticipated locations, dates and times of early voting for the November 2018 election, the official information has not yet been approved. It is also my understanding that one or more of the main early voting locations in Montgomery County could change from the May

1 TEXAS ELECTION CODE § 201.027 (stating that a vacancy occurs upon the effective date of the legislative creation of a new office). 2 Texas Secretary of State Election Law Advisory No. 2017-23, available at: https://www.sos.texas.gov/elections/laws/may-5-election-calendar-2018.shtml (the same advisory has not yet been released for the November 2018 election). 3 TEXAS ELECTION CODE §§ 85.004 and 85.007.

Mr. Simon Sequeira April 13, 2018 Page 2 of 2 election to the November election due to certain sites that sustained damage from Hurricane Harvey becoming available for use again in November.

This should also clarify the issue that your organization has raised indicating the District is late in ordering the election and “has failed to follow state law.” The November 2018 early voting information that is required to be in the District’s election order was not available, even in draft form, at the time House Bill 1982 became effective on September 1, 2017. The District is therefore required to wait for the release of the official early voting information in order to adopt an accurate and complete election order that complies with each of the applicable provisions in the Texas Election Code.

The District has been in touch with Ms. Suzie Harvey, the Montgomery County Elections Administrator, concerning the District directors’ election in November. It is our understanding from these discussions that the official information related to the November election will be available at some point after the May primary runoff date. The District intends to adopt the election order once the early voting information is made available in an official capacity. The District’s General Manager, Ms. Kathy Turner Jones, recently reported at both the March and April District Board of Directors meetings that the District expects to adopt the election order in June, which is well within the July 23, 2018, timeframe requested in your letter.

The District has also been in contact with the Elections Division of the Texas Secretary of State’s office regarding this election. The District intends to be in full compliance with House Bill 1982, Chapter 36 of the Texas Water Code, and the Texas Election Code regarding all aspects of the election.

I believe this information clarifies the issues raised by your organization, but please let me know if you have any questions. Thank you for your attention to this matter.

Regards,

Kristen O. Fancher

6136 F R I S CO S Q U A R E B LVD., S UITE 400 F RISCO , TX 75034 | P HONE : (469) 925-0022 F AX: (469) 547-0684 | Email: [email protected]

April 13, 2018

Mr. Simon Sequeira Via Email – [email protected]; Restore Affordable Water [email protected] c/o Quadvest P.O. Box 409 Tomball, Texas 77377

Re: Response to Letter Regarding Lone Star Groundwater Conservation District Election Matters

Dear Mr. Sequeira:

Mr. Simon Sequeira April 13, 2018 Page 2 of 2 election to the November election due to certain sites that sustained damage from Hurricane Harvey becoming available for use again in November.

I believe this information clarifies the issues raised by your organization, but please let me know if you have any questions. Thank you for your attention to this matter.

Regards,

Kristen O. Fancher

cc: The Honorable Robert Nichols, Texas Senate The Honorable Brandon Creighton, Texas Senate The Honorable Cecil Bell, Jr., Texas House of Representatives The Honorable Will Metcalf, Texas House of Representatives The Honorable Mark Keough, Texas House of Representatives Mr. Rick Moffatt, Board President, Lone Star Groundwater Conservation District Ms. Kathy Turner Jones, General Manager, Lone Star Groundwater Conservation District https://www.yourconroenews.com/neighborhood/moco/opinion/article/Sequeira-It-s-time-for-people-to-take- control-of-12865118.php Sequeira: It's time for people to take control of their water By Simon Sequeira, Guest columnist Published 6:42 pm, Wednesday, April 25, 2018

Simon Sequeira

Even after being targeted by the Legislature, local unelected bureaucrats on the Lone Star Groundwater Conservation District still are playing political games - and it needs to end for the benefit of Montgomery County families and their water rates.

The LSGCD has had more than 230 days to order a special election in compliance with state law, and they have failed to do so, ultimately ignoring the will of Gov. Greg Abbott and the Montgomery County state legislative delegation.

The Texas Legislature formed the LSGCD in 2001 to preserve, conserve and protect Montgomery County groundwater supplies. Nearly 75 percent of voters approved its creation - but that was the last time voters have had a say in matters concerning the LSGCD. LSGCD board members are appointed, leaving these unelected officials wholly unaccountable to the Montgomery County voters they are supposed to represent.

Lack of accountability has led to mismanagement and increased water rates; Montgomery County residents have seen nearly two-fold increase in water rates in recent years. Families on a single income, like Sandra Guerrero-Davis from Conroe, who are already struggling to make ends meet, must now choose between putting food on the table or having running water. This type of hardship caused by high water rates must end. Montgomery County residents deserve accountable leaders and clean running water that doesn't break the bank.

This past legislative session, Sen. Brandon Creighton and Rep. Will Metcalf recognized the water rate issue and saw that LSGCD's lack of accountability was a problem and stepped in to help. Ultimately, the Legislature passed and Gov. Abbott signed a law - HB 1982 - that changed the board's nine appointed positions into seven elected ones that Montgomery County voters will elect for the first time on November 6th, 2018. The work of these two state legislators has empowered their constituents to take back control of the LSGCD and set the path forward on water rates.

HB 1982 went into effect on Sept. 1, 2017, which marked the earliest opportunity the LSGCD had to order a special election to fill the new elected board positions - but more than 230 days later, the LSGCD has failed to comply with the law.

Every day that goes by without the LSGCD calling for a special election is one less day that potential candidates for the new board have to file their intention to run. Without candidates for office, what chance do the voters have to make their decision on who best to represent them?

If the board waits until the last possible date to order the election - Aug. 20, 2018 -- potential candidates would only have three days to file paperwork for office before the filing deadline, which is completely unfair to the voters. Voters deserve the largest pool of candidates possible when it comes to such a consequential election. Unelected bureaucrats dragging their heels is nothing new, but when it affects the integrity of an election, it's wholly unacceptable. I ask the Montgomery County community to join me in urging the LSGCD board to comply with state law and order a special election immediately. The future of our water rates and our community's quality of life depends on it.

Simon Sequeira, president of Quadvest Water and Sewer Utility, a major private groundwater producer in Montgomery County, is president of Restore Affordable Water (RAW), a registered 501(c)(4) advocacy organization. RAW is a group of Montgomery County residents, business owners, and community leaders who demand truth, transparency, and accountability from the Lone Star Groundwater Conservation District. More information about Restore Affordable Water can be found at RestoreAffordableWater.com.