This paper discusses how, in July 2000, the San Marco River Foundation (SMRF) filed an application with the Texas Commission on Environmental Quality (TCEQ or "Commission") that, if granted, would be unprecedented in Texas history. The application sought 1.3 million acre-feet of water per year from the Guadalupe River Basin for instream and bay and estuary flow purposes but proposed no storage or diversion of the water ("SMRF Application"). In essence, the SMRF Application proposed to short-circuit the process established by the Texas legislature of reserving environmental flows through new water rights. The objective of the SMRF Application was to dedicate as much water as possible to freshwater inflow needs of the Guadalupe River estuary, while at the same time establishing an instream flow target at a point along the river. On March 19, 2003 TCEQ commissioners voted unanimously to deny the SMRF Application and, as of the time of this paper, SMRF has indicated that they will appeal that decision.