Navigating Lake Permits in Texas

By: Jack Kardys, Sales Associate, Featured in the Q3 2025 Republic Report

In the state of Texas, especially in its drier regions, the presence of surface water on private land adds an allure to a property that few other land features can match. Such water produces numerous benefits, enhancing the quality of the land as a whole through recreational enjoyment, wildlife and livestock management, and marketability, leading to an increase in overall monetary value.1 In the article Surface Waters Add Value to Land, Principal and Partner Jeff Boswell establishes benchmark values for private lakes in Texas based on a decade of statewide market data. Lakes of one to ten surface acres typically carry an incremental value (to the land beneath the water) of $20,000 to $25,000 per surface acre. Lakes larger than ten surface acres typically carry an incremental value of $25,000 to $40,000 per surface acre. The variations in these values are driven by differences in the surface water’s location, its ability to hold water annually, and whether its construction required a permit.2 In almost every case, adding surface water yields a positive return on investment, especially when its value in use is accounted for. Despite the numerous advantages of implementing surface water features, many landowners choose not to, but why?

To legally divert surface water to construct a lake, landowners must overcome several regulatory obstacles, which vary depending on the size and location of the lake. Two primary agencies oversee the impoundment of surface water and, in many cases, require permits: the Texas Commission on Environmental Quality and the U.S. Army Corps of Engineers. Additionally, in more urban areas of the state, some counties have local ordinances overseen by the county or a floodplain administrator requiring permits or mitigation for pond or lake construction. Each agency has specific, and sometimes overlapping, criteria that may trigger the need for a permit. These permits are expensive and require a time-consuming application and review process.

In Texas, surface water in a watercourse is owned by the state, held in a trust for citizens, and is managed by the Texas Commission on Environmental Quality (TCEQ).3 In most cases, landowners looking to divert surface water to create a lake are required to obtain a permit from the TCEQ, which designates the amount of surface water that can be used and its purpose. If the diverted surface water is to come from a non-navigable waterway, certain exemptions, described in section 11.142 of the Texas Water Code, may apply that waive the need for a TCEQ permit. Each of these exemptions requires the impoundment to be no larger than 200 acre-feet (an acre-foot is one surface acre with a 1-foot depth) and be used for specific purposes, including:

  • Non-commercial domestic and livestock purposes.
  • Non-commercial fish and wildlife purposes if the impoundment is located on qualified open-space land (land currently devoted to agricultural use to the degree of intensity generally accepted in the area).4
  • Commercial or non-commercial wildlife management, including fishing, but not including fish farming, if the impoundment is in an unincorporated area (an area outside of city limits).5

It is important to note that if an impoundment is leveed on all four sides and is solely supplied by groundwater and runoff, a permit is not required. This is because, generally, groundwater and diffused surface water (rainwater, snow, etc., that remains on the property) is owned by the landowner. Restrictions by a local Groundwater Conservation District (GCD) may apply, depending on whether the property is within a GCD. There are currently 98 GCDs in Texas, but they do not cover the entire state.

If an impoundment does not qualify for any of the above exemptions, the landowner must obtain a permit from the TCEQ. Before applying for a permit, the landowner is required to complete a pre-application meeting with the TCEQ. Upon successful completion of the pre-application meeting, the landowner can complete the water rights permitting application, which includes two parts: the administrative checklist and the technical report. An uncontested application is usually processed within 300 days; however, the TCEQ approves very few of these permits. If the application is granted, the TCEQ may place specific conditions on the permit, such as stream flow restrictions or protections for senior water rights.6 Additionally, if an impoundment is larger than 500 acre-feet, the landowner must comply with certain dam safety requirements.7 While these permits can cost millions of dollars, depending on the size and scale, many projects are permitted for substantially less.

In addition to TCEQ permits, some projects require a federal permit issued by the U.S. Army Corps of Engineers (USACE). Any private lake that undergoes activity (construction, maintenance, etc.) that impacts navigable waters, wetlands, etc (aka jurisdictional waters) or involves the discharge of dredged or fill material may require a USACE permit. Generally, a landowner is exempt from the USACE permitting requirements if the discharge of dredge or fill materials is associated with normal farming, ranching, or silviculture activities as part of an established, ongoing operation.8 There are multiple permits that the USACE issues depending on the extent of the project’s adverse environmental effects. Nationally, at the time of this article, only three percent of all requests for permits are denied. These applications are usually denied because the landowner refuses to change the proposed project’s design, timing, and/or location.9 It is important to note that permits are difficult to obtain when the proposed lake is used solely for recreational or aesthetic purposes. In any situation, the easiest way to remove the need for a USACE permit is to avoid navigable waterways as well as wetlands adjacent to the lake.9

Adding surface water, especially a lake, is an excellent way to diversify raw land to maximize its monetary value, productivity, and enjoyment. Before constructing or modifying any lake, it is crucial for landowners to understand their rights as well as the environmental regulations imposed by both the federal, state, and local governments. Failure to do so can result in severe consequences, with reports of fines up to $25,000 per day of violation (starting the day the violation occurred, not when discovered), up to one year of imprisonment, and restoration to the land’s previous state.9

Because of the complexities involved in obtaining permits from the TCEQ, USACE, or local counties, properties with a permitted lake tend to carry a value premium. When a landowner is willing to be flexible with the size, location, and timeframe of a project, they can usually obtain a permit or avoid the need for one. Even if a permit is not required, the increase in value of the land due to the implementation of surface water development almost always exceeds the cost of construction, not to mention the multitude of recreational opportunities it provides. Contacting the TCEQ, USACE, and any local authorities, as well as hiring a qualified consultant, can help determine whether your project affects streams, wetlands, floodplains, or other regulated waters and ensure your project stays compliant with all applicable laws.

References

  1. Studer, Ross (2023). JustAdd Water
  2. Boswell, Jeff (2024) SurfaceWatersAddValuetoLand
  3. Texas Water Code Section 11.021.
  4. Tax Code Section 23.51
  5. Texas Water Code Section 55.047
  6. Texas Water Code Section 11.1351
  7. Texas Water Code Section 12.052
  8. “Exemptions to Permit Requirements under CWA Section 404.” EPA, Environmental Protection Agency. Accessed 23 June 2025.
  9. “Permitting Overview.” UnitedStatesArmyCorpsofEngineersFortWorth District. Accessed 2 June 2025.