HOUSTON—A Texas agency may restrict water supplies to Gulf Coast bays, estuaries and rice farmers for a third straight year.

The Texas Commission on Environmental Quality held a hearing Wednesday to consider the request by a Central Texas water authority. The commission is expected to announce its decision later this month.

The Lower Colorado River Authority says lakes are so low water cannot be released downstream for rice farmers to irrigate their fields and to replenish salty Gulf Coast bays. The authority also wants to raise the trigger at which it can halt downstream releases.

Rice farmers and environmentalists agree the lakes are at historic lows, and don't believe water can be released now. They oppose the move to permanently increase the level that would trigger halting downstream supplies.