BILL ANALYSIS



C.S.H.B. 1001
By: Cuellar, Henry
April 13, 1995
Committee Report (Substituted)


BACKGROUND

A large number of subdivisions have been developed in economically
distressed areas throughout South Texas along the international
border with Mexico that lack an adequate potable water supply and
waste water or sewer services.  The lack of such services creates
a serious and unacceptable health hazard from third world illnesses
for the residents of the distressed areas in the affected counties,
and it also erodes the economic stability of the affected counties. 
The health risk along the border in the affected counties, coupled
with the mobile nature of the residents of these affected areas and
the fact that the trade, transportation, and commerce along the
border is the most intense in the United States, creates the very
substantial risk of epidemics of third world diseases spreading to
the residents of this state and beyond.  

PURPOSE

This legislation is designed to remedy the public health and safety
crisis caused by the proliferation of residential subdivisions in
economically distressed areas lacking minimally acceptable potable
water and waste water or sewer services.  The bill confers
enforcement authority on the attorney general in affected counties
to regulate subdivisions in economically distressed areas, imposes
platting requirements and service requirements on persons selling
property in economically distressed subdivisions, and imposes civil
and criminal penalties for failure to comply.  The bill brings
within the regulatory ambit of the Texas Natural Resource
Conservation Commission those counties offering utility services
and affords remedies to affected ratepayers.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill delegates rulemaking
authority to the Texas Natural Resource Conservation Commission in
SECTION 13 and to the Texas Water Development Board in consultation
with the attorney general in SECTION 16.

SECTION BY SECTION ANALYSIS

SECTION 1  Legislative findings relating to conditions in the
           Colonias.  

SECTION 2  Renumbers several sections of Chapter 232, Local
           Government Code, which govern the regulation of
           subdivisions and creates Subchapter A, Subdivision
           Platting Requirements in General, which pulls together
           those sections in that chapter dealing with subdivisions
           generally.  Those sections of Chapter 232 that were
           intended to deal with subdivisions in economically
           distressed areas (i.e., "colonias") are deleted from the
           new Subchapter A and placed in a new Subchapter B,
           Subdivision Platting Requirements in Economically
           Distressed Counties.

SECTION 3  Amends Section 232.0015 of the Local Government Code to
           clarify that the requirements that pertain to "affected
           counties" under Subchapter B do not apply to counties
           under Subchapter A.  

SECTION 4  Amends Chapter 232, Local Government Code, by the
           addition of a new Subchapter B, which applies only to
           real property within the jurisdiction of an affected
           county that is subdivided into four or more lots that
           are intended primarily for residential use.  Under this
           section a lot is presumed to be intended for residential
           use if the lot is five acres or less.  This section
           limits the applicability of Subchapter B if the
           subdivision is incident to the conveyance of the land
           as a gift.  Subchapter B sets forth subdivision platting
           requirements in those counties that fall within the
           Water Code definition of counties eligible for
           assistance from the Economically Distressed Areas
           Program ("EDAP").  All counties eligible for EDAP
           assistance must now adopt the Model Subdivision Rules. 
           

           In affected counties, subdivision plats containing the
           information specified in the section must be filed with
           the county clerk and the plat must be approved by the
           commissioners court.  In order that a subdivision be
           approved, the subdivision must have adequate drainage,
           adequate roadways, adequate potable water, waste water
           or sewer services, and electrical and gas service.  The
           plat must specify the date by which such adequate
           services must be provided; the commissioners court may
           extend the date.  If the installation of such facilities
           is not completed by the date specified, the owner of the
           tract must execute a bond in an amount adequate to
           ensure the proper construction or installation of such
           facilities.  

           After the commissioners court approves the plat, it
           shall issue a certificate so stating to the owner.  No
           entity providing utilities may provide utility services
           unless the plat approval certificate is first presented. 
           Commissioners courts are required to adopt the necessary
           rules to provide certification of compliance with the
           plat requirements of new Subchapter B of the Local
           Government Code.  Further, commissioners courts are
           required to adopt regulations setting forth requirements
           for: potable water sufficient in quality and quantity
           to meet minimum state standards; and solid waste
           disposal, sufficient and adequate roads, sewer
           facilities, electrical and gas service and standards for
           flood management that meet minimum state and federal
           standards.  

           If a county commissioner has an interest in a subdivided
           tract, as defined in the bill, the commissioner must
           file an affidavit with the county clerk so stating and
           shall abstain from participation in any discussion or
           vote on any matter involving the tract.  Participation
           in a vote is a removable offense.  

           No sale of a subdivision may occur unless a plat has
           been prepared and Subchapter B imposes a criminal
           penalty for any misrepresentations contained in
           brochures, publications, and advertising related to
           subdivided land.

           Subchapter B provides for civil and criminal penalties
           for violating the section and confers enforcement
           jurisdiction on the attorney general for violation of
           any provision of that subchapter and of the model
           subdivision rules, as well as conferring such
           enforcement authority on local prosecuting attorneys who
           are requested to do so by the attorney general.  A
           subdivider may not cause the creation of a public health
           nuisance.  Generally, venue for actions under this new
           Subchapter is in Travis County District Court, the
           county in which the defendant resides, or in the county
           in which the violation or threat of violation occurs. 
           

           Subchapter B waives governmental immunity of affected
           counties and county officials and creates a private
           cause of action on the part of any person against any
           subdivider or county commissioner who is alleged to be
           in violation of the subchapter.  

           Subchapter B permits the cancellation and revision of
           pre-existing plats as well as replatting of existing
           subdivisions.  The new Subchapter B replatting
           requirements do not apply to subdivisions in which there
           are pre-existing conforming water and waste water
           systems that are fully compliant with current minimum
           state standards and at the time of approval, conformed
           with the applicable state and county statutes, rules,
           and regulations.  Existing utility services to a
           subdivision that must be platted or replatted may not
           be terminated.  Finally, new Subchapter B also allows
           a variance to be granted from the replatting
           requirements.  A variance for utility service may be
           renewed once (for a total of four years) and a variance
           from complying with other requirements (not utilities)
           may be granted by a commissioners court if it is shown
           that compliance would be impractical.  

SECTION 5  This section Amends the Local Government Code by
           creating Section 412.015, County Water And Sewer
           Utility, which allows affected counties to operate water
           or sewer utilities, as defined by Section 16.341 of the
           Water Code, in the same manner as a municipality under
           Chapter 402.  

SECTION 6  This section amends Section 13.002, Water Code, by
           amending the definition of utility to include a "water
           or sewer utility operated by an affected county" and
           adds a definition of "affected county," which tracks the
           definition set forth in Chapter 17, Water Code,
           governing EDAP assistance.  The amendments have the
           effect of including residents of economically distressed
           subdivisions within the ambit of Chapter 13, which
           governs water rates and services.  

SECTION 7  This section amends Section 13.043, Water Code, by the
           amendment of Subsections (b), (c), (f), (g), and by
           adding Subsection (k) to provide that residents of
           economically distressed subdivisions may appeal rate
           decisions that actually adversely affected them to the
           Texas Natural Resources Conservation Commission
           ("TNRCC").  Additionally, commissioners courts of
           affected counties are required to provide individual
           written notice to ratepayers who are eligible to appeal
           their decisions to the TNRCC.  

SECTION 8  This section amends the heading of Subchapter D, Chapter
           13 of the Water Code to read "Subchapter D.
           Municipalities And Counties."  

SECTION 9  This section amends Section 13.084, Water Code, which
           confers authority on commissioners courts of affected
           counties to hire rate consultants, accountants,
           attorneys, engineers, and auditors to assist in
           ratemaking proceedings and authorizes the TNRCC to
           assist those commissioners courts in such proceedings. 

SECTION 10 This section amends Section 13.085, Water Code,
           authorizing the TNRCC to provide assistance to affected
           counties in connection with the provision of water and
           sewer service.  

SECTION 11 This section amends Section 13.139(a), Water Code, to
           include affected counties within the requirement of
           providing services and facilities that are safe,
           adequate, and efficient.  

SECTION 12 This section amends Section 13.141, Water Code, to
           include affected counties operating utilities within the
           prohibition forbidding billing of state agencies for
           services before the service is rendered.  

SECTION 13 This section amends Section 13.181, Water Code, to
           include counties within the lists of entities to which
           that subchapter does not apply, except as provided by
           Section 13.192.  Section 13.181 authorizes the TNRCC to
           adopt rules relating to the operation of certain
           utilities in specific circumstances.

SECTION 14 This section amends Section 13.242, Water Code, to
           include a utility operated by an affected county within
           the list of entities, unless otherwise specified, that
           may not render retail services to the public unless it
           is granted a certificate of convenience and necessity
           from the TNRCC.  

SECTION 15 This section amends Section 15.407(g), Water Code, to
           provide that if, after an application, a county is no
           longer an affected county, the political subdivision
           that submitted the application continues to be eligible
           for funds and the board shall process the application,
           and if the application is approved shall provide the
           funds requested.  

SECTION 16 This section amends Subsection (a), Section 16.342,
           Water Code, to require the board to prepare rules in
           consultation with the attorney general.  

SECTION 17 This section amends Subsection (g), Section 16.343,
           Water Code, to prohibit the disbursement of state or
           federal moneys in eligible counties that do not adopt
           and enforce the model subdivision rules.  

SECTION 18 This section amends Section 16.344, Water Code, to
           require the board to prepare and file quarterly with the
           governor, the presiding officer of each house of the
           legislature, the attorney general, and the state auditor
           a complete and detailed written report describing its
           monitoring activities under this section.  

SECTION 19 This section amends Subsection (b), Section 16.349,
           Water Code, by providing that a holder of a certificate
           of convenience and necessity that provides service to
           an economically distressed area located outside the
           boundaries of the political subdivision may not charge
           residents of economically distressed area rates that
           exceed: the cost of providing service to the area; or
           the rates charged other residents of the political
           subdivision plus 15 percent.  

SECTION 20 This section amends Section 16.352, Water Code, by
           increasing the civil penalties for violations of the
           code and removes the Class B misdemeanor punishment
           which requires that the violation be knowingly and
           intentionally committed.  Venue is in a county in which
           any element of the offense is alleged to have occurred
           or in Travis County.  

SECTION 21 This section amends Section 16.353, Water Code, by
           limiting the county officials who can seek relief before
           a district court to enjoin a violation of the rules to
           the county or district attorney.  It thus removes the
           phrase "or other local officials" from the list of
           officers who are authorized to apply to district court
           for an injunction or restraining orders to enjoin
           violations of the rules.  

SECTION 22 This section amends Section 16.354, Water Code, to allow
           the attorney general to assess as well as recover the
           penalties provided under Section 16.352 of the code.  

SECTION 23 This section amends Subchapter J, Chapter 16, Water
           Code, by adding Section 16.356 which allows a suit for
           injunctive relief or for recovery of a civil penalty to
           be brought in a district court: (1) in the county in
           which the defendant resides; (2) in the county in which
           the violation or threat of violation occurs; or (3) in
           Travis County.  

SECTION 24 This section amends Section 26.001, Water Code, by
           adding Subsection (26) which is the definition of an
           "affected county"; Chapter 26, Water Code, governs water
           quality control.  

SECTION 25 This section amends Section 26.123, Water Code, by the
           addition of Subsection (j), which confers authority on
           the attorney general, whenever it appears that there has
           been a violation or threatens to be a violation any
           provision of that chapter or rule promulgated by the
           commission, to request the executive director of the
           Texas Natural Resource Conservation Commission to
           initiate an investigation.  

SECTION 26 This section amends Section 26.124, Water Code, by the
           addition of Subsection (c), which confers authority on
           the attorney general to institute a civil suit in
           district court for injunctive relief or civil penalties
           or both against any person who commits or is threatening
           to commit a violation of Section 26.121 of the code,
           which prohibits the unauthorized discharge of polluted
           water or sewage, or of any rule promulgated by the
           board.  

SECTION 27 This section repeals various sections of Subchapter A
           of the Local Government Code to enable the creation of
           Subchapter B.  

SECTION 28 CRIMINAL OFFENSES OR VIOLATIONS AND CIVIL CAUSES OF
           ACTION.  This section defines the applicability of
           changes in civil and criminal penalties of the Act.  

SECTION 29 EFFECTIVE DATE.  This act takes effect on September 1,
           1995.  

SECTION 30 EMERGENCY.  Declares an emergency suspending the
           constitutional rule that bills be read on three days in
           each house.  

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute restructures and reorganizes the original bill,
which was structured in articles as opposed to sections.  Many
sections of the original bill are renumbered or incorporated into
other sections in the substitute.  Any substantive changes that
were made are listed below.

The substitute divides Chapter 232 of the Local Government Code
into Subchapter A, Subdivision Platting Requirements in General,
and Subchapter B, Subdivision Platting Requirements in Economically
Distressed Counties.  The sections of the original bill that
addressed "colonias" are placed in the new Subchapter B, with the
exception of certain sections that were deleted.  

SECTION 4 of the substitute contains new Subchapter B.  The
substitute renumbers and reorders numerous sections of the original
bill in addition to making the following substantive changes.  The
subchapter applies only to land in the jurisdiction of an affected
county that is subdivided into four or more lots that are intended
primarily for residential use.  A lot is presumed to be intended
for residential use if the lot is five acres or less.  The
subchapter does not apply to the subdivision of land incident to
conveyance as a gift.  

The definition of "affected county" is changed to require a county
to meet the 25/25 rule and to be located within 50 miles of an
international border.  The definition of "minimum state standards"
is altered to clarify and distinguish between sewer facilities and
treatment of solid waste.  The definition of "subdivider" is
altered to include an owner.  The definition of floodplain has been
modified.  The originally floodplain was defined as "any are
susceptible to being inundated by water from any source and which
is identified" by FEMA.  The definition has been changed to include
"any area in the 100-year floodplain that is susceptible to being
inundated by water from any source which is identified" by FEMA. 
The definition of subdivide has been modified to limit the
definition to divisions of land into lots intended for residential
use.  The following definitions have been added:  board, common
promotional plan, executive administrator, and utility.  The
following definitions have been removed:  division, economically
distressed subdivision, eligible county, land, parcel, and person. 

Section 232.023 in the substitute now specifically requires that
plats affirmatively state that a subdivision meets the requirements
of Sections 232.028 and 232.029 of the subchapter.

Section 232.024 allows approval of a plat in a floodplain if:  (1)
the plat contains a restrictive covenant prohibiting construction
of housing in the floodplain; or (2) the housing qualifies for
insurance from FEMA.

In Section 232.026, only the attorney general, instead of the
attorney general and the Texas Water Development Board, will
receive notice of the granting of an extension by a commissioners
court, and the attorney general is required to notify all other
state agencies that have enforcement responsibilities under state
law of the granting of an extension.

Section 232.034 provides that a conviction under this section
constitutes official misconduct and is grounds for removal from
office.

In Section 232.035, the term "person" is changed to "subdivider" in
order to protect colonias residents.   Subsection (a) is altered to
prohibit the sale of a lot in a subdivision if the subdivision has
not been platted or if the lot is without water, sewer, gas or
electrical services.  Subsection (b) has been changed to state that
a subdivider may not cause, suffer, allow, or permit a subdivision
or any part of a subdivision in an affected county to become a
public health nuisance. In addition to the penalties provided in
the original version of this bill a person who violates this
section must also pay court costs, investigative costs, and
attorney s fees to the governmental entity bringing the suit.

Throughout Section 232.036, the term "person" is replaced by the
term "subdivider"; and  the felony in the third degree is dropped
to a state jail felony.  Subsection (a) is changed to make the
failure to file a plat a Class A misdemeanor.  Subsection (d) is
added which provides that a subdivider commits an offense if the
subdivider allows the conveyance of a lot in the subdivision
without the appropriate water, sewer, electric and gas utilities.

Section 232.037 has been redrafted to foster cooperation between
local prosecuting attorneys and the attorney general in both
criminal and civil cases.

In Section 232.038, three new subsections are added that state when
an action may or may not be commenced, when attorneys fees and
costs will be awarded, and when the attorney general may intervene.

The substitute adds a new Section 232.039, which authorizes a suit
by a private person who owns property in an affected county to
recover damages related to conditions in the colonias.  Recovery
may include attorney fees.

Section 232.040 is substantially simplified in the substitute.  It
allows a subdivider to apply for cancellation of a subdivision in
the manner provided by Section 232.008 of the Local Government
Code.  It also allows a resident of the subdivision to object to
the cancellation.

Section 232.041 of the original bill, which allowed a person with
subdivided land to apply for revision of a subdivision plat, is
deleted in the substitute and replaced with new Section 232.041,
which is titled "Replatting in Economically Distressed Areas."  The
substitute also limits the application of replatting by stating
that it does not apply to subdivisions that already have conforming
water and wastewater systems."  Section 232.042 is also added by
the substitute and includes provisions relating to variances from
the replatting requirements.

The majority of the sections in Subchapter C of the original bill
are deleted in the substitute.  The following sections, listed by
title, are deleted:  "Short Title", "Applicability of Subchapter",
"Definitions", "Fraud", "Disclosure Prior to Sale", "Waiver of
Governmental Immunity; Permission to Sue", and "Venue."  The
remaining sections of the subchapter were incorporated into
Subchapter B with no substantive changes.

Article II of the original bill, which made certain amendments to
the Tax Code, is deleted in the substitute.

SECTION 5, which is added by the substitute, permits an affected
county to operate a water or sewer utility.

SECTIONS 9 and 10 of the substitute accomplish the same results as
SECTION 8 of the original bill, but they amend different sections
of the Texas Water Code.

A new SECTION 15 has been inserted that makes changes to Texas
Water Code  15.407(g).  The changes amend the statute that defines
construction funding eligibility under the Economically Distressed
Areas Program so loan applicants will not lose this eligibility
after receiving facility planning funds. 

SECTION 16 of the substitute accomplishes the same result as
SECTION 16 of the original bill by making changes to existing
Section 16.342, Texas Water Code, instead of adding a new
subsection.

A new SECTION 17 has been added that requires that an affected
county adopt the model rules prior to the receipt of funds under
Section 15.407 or Subchapter K, Chapter 17.

A new SECTION 18 is inserted amending Section 16.344, Texas Water
Code, that requires the TWDB to prepare and file quarterly reports
with the governor, the presiding officer of each house of the
legislature, the attorney general, and the state auditor a complete
and detailed written report describing its monitoring activities
under this section

A new SECTION 19 was inserted that allows any holder of a
certificate of convenience and necessity that extends service to an
economically distressed area located outside the boundaries of the
political subdivision to charge the residents of such economically
distressed area rates that are just, fair, and reasonable or rates
that recover the cost of services, whichever is lower, to provide
such service to the economically distressed area. 

Article IV of the original bill, which made changes to Subchapter
D of the Property Code relating to executory contracts and
contracts for deed, has been deleted in the substitute.

Article V of the original bill, which made changes to the Texas
Deceptive Trade Practices Act, has been deleted in the substitute.

Article VI of the original bill, which set forth mandatory "boiler-plate" language, has been deleted in the substitute.

SECTION 32 of the original bill, which contained a severability
clause, has been deleted.

SUMMARY OF COMMITTEE ACTION

H.B. 1001 was considered by the committee in a public hearing on
February 28, 1995.

The following persons testified in favor of the bill:

           Representative Henry Cuellar; and
           Ronald B. Rodenhaven, representing himself.

The following person testified neutrally on the bill:

           Javier Guajardo, representing the Office of the Attorney
General.

The bill was referred to a subcommittee to be named later by the
Chair.

On February 28, 1995, the Chair named the following subcommittee
members:  Representatives Turner, Hamric, and Alexander.

H.B. 1001 was considered by the subcommittee in a formal meeting on
March 29, 1995. 

The subcommittee considered a complete substitute for the bill. 
The substitute was adopted without objection.

The bill was reported favorably as substituted to the full
committee by a record vote of 3 ayes, 0 nays, 0 pnv, and 0 absent.

H.B. 1001 was considered by the committee in a formal meeting on
April 6, 1995.  

The committee considered a complete substitute for the bill.  The
substitute was adopted without objection.

The bill was reported favorably as substituted, with the
recommendation that it do pass and be printed, by a record vote of
6 ayes, 0 nays, 0 pnv, and 3 absent.