Enrolled Bill Summary

            Senate Bill 2 is the successor to 1997 legislation that launched the regional water planning process. It also ratifies creation of 12 of the 13 groundwater conservation districts that were established tentatively in 1999. The other is ratified by House Bill 1258. The bill creates the Kimble County Groundwater Conservation District and the Northeast Travis County Utility District.

            Amendments to the Water Code create the Texas Water Advisory Council, empowered to coordinate a state position on federal and international water issues and advise the Texas Water Development Board (TWDB) on criteria for prioritizing water project funding, encouraging border environmental quality and living conditions, and otherwise heightening dialogue on water policy issues. The bill establishes 10 groups of river authorities, requires them to provide the council with a self-assessment and other information on a specified cycle, and requires the council to include in a biennial report to the governor and legislative presiding officers and certain legislative committees findings from its most recent river authority reviews. The council and a supportive interagency water advisory account expire September 1, 2005.

            The bill establishes a procedure for resolving conflicts between a regional water plan and a certified groundwater conservation district (GCD) management plan. It requires each regional planning group to examine the financing needed to implement strategies and projects identified in its plan and to report to the TWDB by June 1, 2002, on financing proposals, including the financing role it proposes for the state. In turn, the TWDB must consider those reports, consult with interested parties, and submit to the legislature not later than October 1, 2002, a report containing and analyzing the regional planning group reports.

            Certain provisions relate to technical studies and determinations. The bill requires the TWDB to develop groundwater availability models for major and minor aquifers, to be completed no later than October 1, 2004. The agency may conduct surveys of groundwater and surface water users. Survey compliance is mandatory, and noncompliance is punishable as a Class C misdemeanor. Designation of groundwater management areas becomes the task of the TWDB, with designation of priority groundwater management areas by the Texas Natural Resource Conservation Commission to follow, subject to deadlines of September 1, 2003, and September 1, 2005, respectively. Those agencies, with the Parks and Wildlife Department, must jointly establish and continuously maintain an instream flow data collection and evaluation program and conduct studies and analyses relating to methodologies for the determination of flow conditions in Texas rivers and streams. Priority instream flow studies are due by December 31, 2010.

            Water rights provisions replace references to irrigation and stock raising with references to agriculture defined broadly to encompass numerous other activities. Agricultural uses are to be considered equivalent in priority to industrial uses for water appropriation purposes in times of shortage. A holder of a permit, certified filing, or certificate of adjudication that included irrigation or industrial use before the bill's effective date may use or supply water for agricultural purposes without obtaining an amendment.

            The bill sets a maximum of $10 per acre-foot, compared to 17 cents per 1,000 gallons under previous law, for nonagricultural GCD production fees. Certain districts are subject to other maximums, or are exempted including certain districts that are funded by property taxes. The Edwards Aquifer Authority's maximum fee for agricultural use is $2 per acre-foot, rather than the maximum of 20 percent of the municipal rate specified under previous law. Other changes relating to the authority and aquifer revise rulemaking procedures and set restrictions on injection wells.

            Fees or surcharges imposed by GCDs for export of water may be set in one of three ways: a fee negotiated with the transporter; a formula fee per 1,000 gallons based on the district's tax rate; or, for a district funded by production fees, a 50 percent export surcharge. Generally, a GCD may not impose more restrictive permit conditions on water transporters than it imposes on existing in-district water users. The bill requires transporters of groundwater or surface water to report to the TWDB information relating to pipelines and facilities that can be used for water conveyance. A like reporting requirement applies to regional planning groups with respect to their regional water plans.

            Provisions relating to water infrastructure financing focus and the Texas water assistance program give more emphasis to brush control, weather modification, desalination, and regionalization of water supply and wastewater collection and treatment systems. Equipment associated with certain of these activities, and with rainwater harvesting, are the subject of a Tax Code amendment authorizing a sales and use tax exemption. The major water finance provisions create a water infrastructure fund and a rural water assistance fund. The first supports loans and in some cases grants to political subdivisions for various water conservation, mitigation, conveyance, and development projects. The second is targeted to rural political subdivisions for water or water-related projects as well as outreach and technical assistance programs. The TWDB may direct the comptroller to make transfers from its financial assistance account to the two funds. Other financial provisions authorize TWDB grants to GCDs for measurement and data collection related to groundwater conservation.

            The bill also establishes limited liability for aquatic herbicide applicators and amends laws relating to certificates of public utility and water utility systems. A water utility may consolidate multiple systems under a single tariff only if they are substantially similar in terms of facilities, service quality, and service cost, and if the tariff provides for rates that promote water conservation for single-family residences and landscape irrigation. The bill requires the Texas Natural Resource Conservation Commission to establish a preference that rates under a consolidated tariff be consolidated by region. It includes various revisions to ratemaking procedures. The bill amends the enabling statute of the North Harris County Regional Water Authority and contains miscellaneous provisions relating in part to local water quality regulation.

            Senate Bill 2 establishes a Joint Committee on Water Resources, consisting of six legislators, to conduct an interim study and offer legislative recommendations on water marketing, increasing efficient use of water resources, developing sufficient long-term water financing strategies, improving water conveyance systems, determining the appropriate role of environmental and wildlife concerns in water permitting and development, and protecting the natural condition of the beds and banks of state watercourses. A final report to the lieutenant governor and the speaker of the house of representatives is due November 1, 2002.