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AUSTIN — A legal battle between the San Antonio Water System and the Lower Colorado River Authority appears headed back to trial after an appellate court ruled LCRA is not immune to a lawsuit.

On July 29, the Third Court of Appeals in Austin issued an opinion rejecting LCRA’s claim of immunity in a breach-of-contract suit, ruling in favor of an appeal filed by SAWS last year over issues arising from a joint water study.

The appellate court sent the case back to a lower court, setting the stage for a trial.

SAWS President/CEO Robert R. Puente applauded the appellate court’s decision.

"We believe the court made the right decision for the right reasons,” Puente said in a prepared statement.

LCRA officials have decried the ruling.

More legal jousts with SAWS may accomplish little more than increased court costs on both sides, according to LCRA General Manager Becky Motal.

"This lawsuit does nothing to increase water supplies for anyone in Texas," Motal said Aug. 1. "It does, however, increase fees for lawyers on both sides – fees that are eventually passed on to ratepayers in both our basin and in San Antonio.”

The case revolves around the recent collapse of a joint study and cooperative planning venture between the two agencies, aimed at the possible development of future water resources, particularly a proposed pipeline from the Highland Lakes to a proposed off-channel reservoir in Wharton County near El Campo.

More than nine years ago, LCRA and SAWS officials entered a contract to study a plan to provide new water resources for their respective customers, especially through the proposed pipeline and reservoir.

SAWS officials claim they have contributed the lion’s share of the study’s cost, more than $43 million.

The original study estimated 330,000 acre-feet of water from the lower Colorado River basin could be stored each year in the reservoir, including as much as 180,000 acre-feet for the Highland Lakes and 150,000 acre-feet for San Antonio.

By 2008, the study re-estimated the reservoir could store 90,000-115,000 acre-feet for San Antonio.

As such, SAWS officials predict enough water in the reservoir could be stored to support water requirements in the Highland Lakes and San Antonio.

However, LCRA officials withdrew from the study in 2009, soon after they decided the Highland Lakes would need more water from the reservoir than original estimate of 180,000 acre-feet.

Furthermore, the Legislature stipulates LCRA cannot support the reservoir if it cannot protect and benefit the lower Colorado River watershed and LCRA water service area, including agricultural, environmental, industrial, municipal and recreational interests.

An acre-foot is the volume of water — 43,560 cubic feet or 325,851 gallons — that will cover an acre to a depth of one foot.

SAWS officials filed a breach of contract lawsuit against LCRA after the authority withdrew from the study.

However, LCRA won round one of the legal battle in a Travis County state District Court in February 2010, as attorneys for the authority argued their contract with SAWS is unenforceable.

Also, Judge Stephen Yelenosky ruled state law indicates LCRA is immune from the SAWS suit.

Yet, the Third Court of Appeals in Austin ruled the district court erred in its interpretation of state law and remanded the case to the lower court for trial.

SAWS seeks more than $1 billion in damages from LCRA, the amount it would cost to forgo construction of the reservoir and build a desalinization plant for San Antonio, according to SAWS officials.

“We look forward to finally addressing LCRA’s breach of contract in court, and hope to obtain recovery of our ratepayers’ losses in connection with this water project,” Puente said.

However, LCRA officials insist the appellate court’s ruling fails to address the merits of the case, Motal said.

If the case is tried on its merits, LCRA will prevail, she added.