By:  Armbrister                                       S.B. No. 1465
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to the regulation of groundwater.
    1-2        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-3        SECTION 1.  The caption of Title 2, Water Code, is amended to
    1-4  read as follows:
    1-5                 TITLE 2.  <STATE> WATER ADMINISTRATION
    1-6        SECTION 2.  Title 2, Water Code, is amended by adding
    1-7  Subtitle E, as follows:
    1-8                  SUBTITLE E.  GROUNDWATER MANAGEMENT
    1-9                   CHAPTER 35.  GROUNDWATER STUDIES
   1-10        Sec. 35.001.  PURPOSE. In order to provide for the
   1-11  conservation, preservation, protection, recharging, and prevention
   1-12  of waste of the groundwater, of groundwater reservoirs or their
   1-13  subdivisions, and to control subsidence caused by withdrawal of
   1-14  water from those groundwater reservoirs or their subdivisions,
   1-15  consistent with the objectives of Article XVI, Section 59, of the
   1-16  Texas Constitution, groundwater management areas may be created as
   1-17  provided by this chapter.
   1-18        Sec. 35.002.  DEFINITIONS.  In this chapter:
   1-19              (1)  "District" means any district or authority created
   1-20  under Article III, Section 52 or Article XVI, Section 59 of the
   1-21  Texas Constitution that has the authority to regulate the spacing
   1-22  of water wells, the production from water wells, or both.
   1-23              (2)  "Commission" means the Texas Natural Resource
    2-1  Conservation Commission.
    2-2              (3)  "Executive director" means the executive director
    2-3  of the commission.
    2-4              (4)  "Executive administrator" means the executive
    2-5  administrator of the Texas Water Development Board.
    2-6              (5)  "Groundwater" means water percolating below the
    2-7  surface of the earth.
    2-8              (6)  "Groundwater reservoir" means a specific
    2-9  subsurface water-bearing reservoir having ascertainable boundaries
   2-10  containing groundwater.
   2-11              (7)  "Subdivision of a groundwater reservoir" means a
   2-12  definable part of a groundwater reservoir in which the groundwater
   2-13  supply will not be measurably affected by withdrawing water from
   2-14  any other part of the reservoir, as indicated by known geological
   2-15  and hydrological conditions and relationships and on foreseeable
   2-16  economic development at the time the subdivision is designated or
   2-17  altered.
   2-18              (8)  "Waste" means any one or more of the following:
   2-19                    (A)  withdrawal of groundwater from a groundwater
   2-20  reservoir at a rate and in an amount that causes or threatens to
   2-21  cause intrusion into the reservoir of water unsuitable for
   2-22  agricultural, gardening, domestic, or stock raising purposes;
   2-23                    (B)  the flowing or producing of wells from a
   2-24  groundwater reservoir if the water produced is not used for a
   2-25  beneficial purpose;
    3-1                    (C)  escape of groundwater from a groundwater
    3-2  reservoir to any other reservoir or geologic strata that does not
    3-3  contain groundwater;
    3-4                    (D)  pollution or harmful alteration of
    3-5  groundwater in a groundwater reservoir by salt water, other
    3-6  deleterious matter admitted from another stratum, or from the
    3-7  surface of the ground;
    3-8                    (E)  wilfully or negligently causing, suffering,
    3-9  or allowing groundwater to escape into any river, creek, natural
   3-10  watercourse, depression, lake, reservoir, drain, sewer, street,
   3-11  highway, road, or road ditch, or onto any land other than that of
   3-12  the owner of the well; or
   3-13                    (F)  groundwater pumped for irrigation that
   3-14  escapes as irrigation tailwater onto land other than that of the
   3-15  owner of the well unless permission has been granted by the
   3-16  occupant of the land receiving the discharge.
   3-17              (9)  "Use for a beneficial purpose" means use for:
   3-18                    (A)  agricultural, gardening, domestic, stock
   3-19  raising, municipal, mining, manufacturing, industrial, commercial,
   3-20  recreational, or pleasure purposes;
   3-21                    (B)  exploring for, producing, handling, or
   3-22  treating oil, gas, sulphur, or other minerals; or
   3-23                    (C)  any other purpose that is useful and
   3-24  beneficial to the user.
   3-25              (10)  "Subsidence" means the lowering in elevation of
    4-1  the land surface caused by withdrawal of groundwater.
    4-2              (11)  "Board" means the board of directors of a
    4-3  district.
    4-4              (12)  "Director" means a member of a board.
    4-5              (13)  "Management area" means an area designated and
    4-6  delineated by the commission as an area suitable for management of
    4-7  groundwater resources.
    4-8              (14)  "Critical area" means an area designated and
    4-9  delineated by the commission as an area that is experiencing or is
   4-10  expected to experience critical groundwater problems.
   4-11              (15)  "Political subdivision" means a county,
   4-12  municipality, or other body politic or corporate of the state,
   4-13  including a district or authority created under Article III,
   4-14  Section 52 or Article XVI, Section 59, of the Texas Constitution, a
   4-15  state agency, or a nonprofit water supply corporation created under
   4-16  Chapter 76, Acts of the 43rd Legislature, 1st Called Session, 1933
   4-17  (Article 1434a, Vernon Texas Civil Statutes).
   4-18        Sec. 35.003.  SURFACE WATER LAWS NOT APPLICABLE.  The laws
   4-19  and administrative rules relating to the use of surface water do
   4-20  not apply to groundwater.
   4-21        Sec. 35.004.  DESIGNATION OF MANAGEMENT AREAS.  (a)  On its
   4-22  own motion from time to time, or on receiving a petition, the
   4-23  commission may designate groundwater management areas.  Each
   4-24  management area shall be designated with the objective of providing
   4-25  the most suitable area for the management of the groundwater
    5-1  resources.  To the extent feasible, the management area shall
    5-2  coincide with the boundaries of an groundwater reservoir or a
    5-3  subdivision of an groundwater reservoir.  The commission also may
    5-4  consider other factors, including the boundaries of political
    5-5  subdivisions.
    5-6        (b)  On the request of any person interested in the petition,
    5-7  or on the request of the commission, the executive director shall
    5-8  prepare available evidence relating to the configuration of a
    5-9  groundwater management area.  Before making the designation, the
   5-10  commission shall consider the evidence prepared by the executive
   5-11  director and other evidence submitted at the hearing.
   5-12        (c)  The commission may alter the boundaries of designated
   5-13  management areas as required by future conditions and as justified
   5-14  by factual data.  An alteration of boundaries does not invalidate
   5-15  the previous creation of any district.
   5-16        (d)  The commission shall designate groundwater management
   5-17  areas using the procedures applicable to rule making under the
   5-18  Administrative Procedure Act, Subchapter B, Chapter 2001,
   5-19  Government Code.
   5-20        Sec. 35.005.  PETITION TO DESIGNATE A GROUNDWATER MANAGEMENT
   5-21  AREA.  (a)  A petition may be submitted to the commission for the
   5-22  sole purpose of requesting that the commission designate a
   5-23  management area for all or part of one or more counties.
   5-24        (b)  A petition filed pursuant to this section must be signed
   5-25  by:
    6-1              (1)  a majority of the landowners in the proposed
    6-2  management area; or
    6-3              (2)  if there are more than 50 landowners in the
    6-4  proposed management area, the petition must be signed by at least
    6-5  50 of those landowners.
    6-6        (c)  A petition filed pursuant to this section must contain
    6-7  the following statement:
    6-8        "Petitioners request that the Texas Natural Resource
    6-9  Conservation Commission designate a groundwater management area to
   6-10  include all or part of ______________ County (counties).  The
   6-11  management area shall be designated with the objective of providing
   6-12  the most suitable area for the management of groundwater resources
   6-13  of the part of the state in which a district is to be located.
   6-14  Petitioners understand that this petition requests only the
   6-15  designation of a management area, but that all or part of the land
   6-16  in the management area designated may later be added to an existing
   6-17  groundwater conservation district or become a new groundwater
   6-18  conservation district, as provided by Chapter 36 of the Water
   6-19  Code."
   6-20        (d)  A petition shall include a map that shows the location
   6-21  of the proposed management area and may include any other
   6-22  information desired by the petitioners concerning the proposed
   6-23  management area.
   6-24        (e)  The petitioners shall file the petition with the
   6-25  executive director for review in accordance with the rules of the
    7-1  commission.  The petitioners shall supply any additional
    7-2  information requested by the commission or the executive director.
    7-3        (f)  The commission shall act on the petition within a
    7-4  reasonable amount of time.
    7-5        Sec. 35.006.  NOTICE FOR DESIGNATION OF MANAGEMENT AREA.
    7-6  (a)  In addition to the notice required under the Administrative
    7-7  Procedure Act, Section 2001.023, Government Code, the petitioners
    7-8  shall have notice published in at least one newspaper with general
    7-9  circulation in the county or counties in which the proposed
   7-10  management area is to be located.  Notice must be published not
   7-11  later than the 30th day before the date set for the commission to
   7-12  consider the designation of the management area.
   7-13        (b)  The notice must include:
   7-14              (1)  a statement of the general purpose and effect of
   7-15  designating the proposed management area;
   7-16              (2)  a map generally outlining the boundaries of the
   7-17  proposed management area or notice of the location at which a copy
   7-18  of the map may be examined or obtained; and
   7-19              (3)  the time and place at which the commission will
   7-20  consider the designation of the management area.
   7-21        (c)  If the commission designates a management area on its
   7-22  own motion, the commission shall give the same notice as required
   7-23  by the petitioner under this section.
   7-24        Sec. 35.007.  IDENTIFYING, DESIGNATING AND DELINEATING
   7-25  CRITICAL AREAS.  (a)  The executive director and the executive
    8-1  administrator shall meet at least once a year to identify those
    8-2  areas of the state that are experiencing or that are expected to
    8-3  experience, based on information available to the commission and
    8-4  the Texas Water Development Board, within the immediately following
    8-5  20-year period, critical groundwater problems including shortages
    8-6  of surface or groundwater, land subsidence resulting from
    8-7  groundwater withdrawal, and contamination of groundwater supplies.
    8-8        (b)  If the executive director concludes that an area of the
    8-9  state should be considered for designation as a critical area, the
   8-10  executive director shall prepare a report to the commission.
   8-11        (c)  The executive director shall begin preparation of a
   8-12  critical area report by requesting a study from the executive
   8-13  administrator.  The study must include an appraisal of the
   8-14  hydrogeology of the area and matters within the Texas Water
   8-15  Development Board's planning expertise relevant to the area.  The
   8-16  study must be completed and delivered to the executive director on
   8-17  or before the 90th day following the date of the request.  If the
   8-18  study is not delivered within this 90-day period, the executive
   8-19  director may proceed with the preparation of the report.
   8-20        (d)  The report shall include:
   8-21              (1)  the recommended delineation of the boundaries of
   8-22  any proposed critical area in the form of a rule to be considered
   8-23  for adoption by the commission;
   8-24              (2)  the reasons and supporting information for or
   8-25  against designating the area as a critical area;
    9-1              (3)  a recommendation regarding whether a district
    9-2  should be created in the critical area or whether the critical area
    9-3  should be added to an existing district;
    9-4              (4)  any other information that the executive director
    9-5  considers helpful to the commission.
    9-6        (e)  The executive director must complete the report and file
    9-7  it with the commission on or before the 210th day following the
    9-8  date on which the executive administrator was requested to produce
    9-9  a study.  The executive director shall make the report available
   9-10  for public inspection by providing a copy of the report to at least
   9-11  one library in each county in which the proposed critical area is
   9-12  located.
   9-13        (f)  To carry out this section, the executive director may
   9-14  make necessary studies, hold hearings, solicit and collect
   9-15  information, and use information already prepared by the executive
   9-16  director or the executive administrator for other purposes.
   9-17        Sec. 35.008.  PROCEDURES FOR DESIGNATION OF CRITICAL AREAS.
   9-18  (a)  The commission shall designate critical areas using the
   9-19  procedures applicable to rule making under the Administrative
   9-20  Procedure Act, Subchapter B, Chapter 2001, Government Code, but if
   9-21  procedures required by this chapter are in conflict with that Act,
   9-22  this chapter controls.
   9-23        (b)  The designation of a critical area may not be appealed
   9-24  nor may it be challenged under the Administrative Procedure Act,
   9-25  Section 2001.038, Government Code.
   10-1        Sec. 35.009.  NOTICE AND HEARING.  (a)  In addition to the
   10-2  notice required for rule making under the Administrative Procedure
   10-3  Act, Sec. 2001.023, Government Code, the commission shall have
   10-4  notice published in at least one newspaper with general circulation
   10-5  in the county or counties in which the proposed critical area is to
   10-6  be located.  Notice must be published not later than the 30th day
   10-7  before the date set for the commission to consider the designation
   10-8  of the critical area.
   10-9        (b)  The notice must include:
  10-10              (1)  a statement of the general purpose and effect of
  10-11  designating the proposed critical areas;
  10-12              (2)  a map generally outlining the boundaries of the
  10-13  proposed critical area or notice of the location at which a copy of
  10-14  the map may be examined or obtained;
  10-15              (3)  a description or the name of the locations at
  10-16  which the commission has provided copies of the executive
  10-17  director's report to be made available for public inspection; and
  10-18              (4)  the date, time, and place at which the commission
  10-19  will consider the designation of the critical areas.
  10-20        Sec. 35.010.  CONSIDERATION OF THE CREATION OF A DISTRICT OR
  10-21  ADDITION OF LAND IN A CRITICAL AREA TO AN EXISTING DISTRICT.
  10-22  (a)  Following its designation of a critical area, the commission
  10-23  may call a hearing to consider:
  10-24              (1)  whether a district should be created over all or
  10-25  part of a critical area; or
   11-1              (2)  whether all or part of the land in the critical
   11-2  area should be added to an existing district.
   11-3        (b)  Evidentiary hearings shall be held at a location in one
   11-4  of the counties in which the critical area is located or in the
   11-5  nearest convenient location if adequate facilities are not
   11-6  available in the critical area.
   11-7        (c)  At the hearing, the commission shall hear testimony and
   11-8  receive evidence from all interested parties.  The commission shall
   11-9  consider the executive director's report and supporting information
  11-10  and the testimony and evidence received at the hearing.  If the
  11-11  commission considers further information necessary, it may request
  11-12  it from any source.
  11-13        Sec. 35.011.  NOTICE OF HEARING TO CREATE DISTRICT OR ADD
  11-14  CRITICAL AREA TO EXISTING DISTRICT.  (a)  The commission shall have
  11-15  notice of the hearing published in a newspaper with general
  11-16  circulation in the county or counties in which the area being
  11-17  considered for district creation or addition to an existing
  11-18  district is located.  Notice must be published not later than the
  11-19  30th day before the date of the hearing.
  11-20        (b)  The notice must include:
  11-21              (1)  a general statement of the nature and purpose of
  11-22  the district that may be created in the critical area;
  11-23              (2)  if applicable, a statement that all or part of the
  11-24  land in the critical area could be added to an existing district;
  11-25              (3)  a map generally outlining the boundaries of the
   12-1  critical area being considered for district creation or addition to
   12-2  an existing district or notice of the location at which a copy of
   12-3  the map may be examined or obtained;
   12-4              (4)  a statement that the full executive director's
   12-5  report concerning the critical area in question is available at the
   12-6  commission's main office in Austin, Texas, and that the report is
   12-7  available for inspection during regular business hours;
   12-8              (5)  the name and address of each library in the
   12-9  proposed critical area to which the commission has provided copies
  12-10  of the executive director's report; and
  12-11              (6)  the date, time, and place of the hearing.
  12-12        (c)  The commission also shall give written notice of the
  12-13  date, time, place, and purpose of the hearing to the governing body
  12-14  of each county, city, and district created under Article III,
  12-15  Sections 52(b)(1) and (2), or Article XVI, Section 59, of the Texas
  12-16  Constitution, all or part of which is located in the critical area.
  12-17  The notice must be given before the 30th day preceding the date set
  12-18  for the hearing.
  12-19        Sec. 35.012.  COMMISSION ORDER.  (a)  At the conclusion of
  12-20  its hearing and considerations, the commission shall issue an order
  12-21  stating its findings and conclusions.
  12-22        (b)  If the commission finds that the land and other property
  12-23  in the critical area would benefit from the creation of one or more
  12-24  districts, that there is a public need for one or more districts,
  12-25  and that the creation of one or more districts would further the
   13-1  public welfare, the commission shall issue an order stating that
   13-2  the creation of one or more districts is needed.
   13-3        (c)  During the period between the date of issuance of a
   13-4  commission order under subsection (b) and one year after the close
   13-5  of the next regular session of the legislature following the
   13-6  issuance of the order, the landowners in the critical area may:
   13-7              (1)  create one or more districts under Subchapter B of
   13-8  Chapter 36;
   13-9              (2)  have the area annexed to a district that adjoins
  13-10  the area; or
  13-11              (3)  create one or more districts through the
  13-12  legislative process.
  13-13        (d)  The commission shall identify the areas subject to the
  13-14  order of the commission issued under subsection (b) that have not,
  13-15  in the period provided by subsection (c), been incorporated into a
  13-16  district, and shall delineate proposed boundaries of a district to
  13-17  include those areas.  If the commission proposes the creation of
  13-18  one or more districts, the commission shall begin the procedures
  13-19  for creation of a district provided in Subchapter B, Chapter 36.
  13-20        (e)  If the commission fails to find that the district would
  13-21  be a benefit to the land and other property within the critical
  13-22  area, that there is a public need for the district, or that
  13-23  creation of the district will further the public welfare, the
  13-24  commission shall issue an order stating that a district should not
  13-25  be created within the boundaries of the critical area.
   14-1        (f)  An order of the commission issued under this section may
   14-2  not be appealed.
   14-3        Sec. 35.013.  ADDING CRITICAL AREA TO EXISTING DISTRICT.
   14-4  (a)  If land in a critical area is located adjacent to one or more
   14-5  existing districts, the commission, instead of issuing an order
   14-6  under Section 35.012, may issue an order recommending that the
   14-7  critical area be added to the existing district designated by the
   14-8  commission.  In its order, the commission must find that the land
   14-9  and other property in the critical area and the land in the
  14-10  existing district will benefit from the addition of the area, that
  14-11  there is a public need to add the critical area to the existing
  14-12  district, and that the addition of the land to the existing
  14-13  district would further the public welfare.
  14-14        (b)  If the executive director recommends that the critical
  14-15  area be added to an existing district or if the commission
  14-16  considers it possible to add the critical area to an adjacent
  14-17  existing district, the commission shall give notice to the board of
  14-18  the existing district recommended by the executive director or
  14-19  considered by the commission to possibly serve the area and to any
  14-20  other existing districts adjacent to the critical area.
  14-21        (c)  The commission shall submit a copy of the order to the
  14-22  board of the district to which it is recommending the critical area
  14-23  be added.  The board shall vote on the addition of the critical
  14-24  area to the district and shall advise the commission of the
  14-25  outcome.
   15-1        (d)  If the board votes to accept the addition of the
   15-2  critical area to the district, the board shall call an election
   15-3  within the critical area as delineated by the commission to
   15-4  determine if the critical area will be added to the district.  In
   15-5  the order calling the election, the board shall designate election
   15-6  precincts and polling places for the elections.
   15-7        (e)  The board shall give notice of the election and the
   15-8  proposition to be voted on.  The board shall publish notice of the
   15-9  election at least one time in one or more newspapers with general
  15-10  circulation within the boundaries of the critical area.  The notice
  15-11  must be published before the 30th day preceding the date set for
  15-12  the election.
  15-13        (f)  The ballots for the election shall be printed to provide
  15-14  for voting for or against the proposition:  "The inclusion of
  15-15  __________ (briefly describe critical area) in the __________
  15-16  District and assumption by the described area of a proportional
  15-17  share of the outstanding indebtedness of the district."
  15-18        (g)  Immediately after the election, the presiding judge of
  15-19  each polling place shall deliver the returns of the election to the
  15-20  board, and the board shall canvass the returns for the election
  15-21  within the critical area and declare the results.  If a majority of
  15-22  the voters in the critical area voting on the proposition vote in
  15-23  favor of the proposition, the board shall declare that the critical
  15-24  area is added to the district.  If a majority of the voters in the
  15-25  critical area voting on the proposition vote against adding the
   16-1  critical area to the district, the board shall declare that the
   16-2  critical area is not added to the district.  The board shall file a
   16-3  copy of the election results with the commission.
   16-4        (h)  If the voters approve adding the critical area to the
   16-5  district, the board of the district to which the critical area is
   16-6  added shall provide reasonable representation on that board
   16-7  compatible with the district's existing scheme of representation.
   16-8        (i)  If the proposition is defeated, another election to add
   16-9  the critical area to an existing district may not be called before
  16-10  the first anniversary of the date on which the election on the
  16-11  proposition was held.
  16-12        Sec. 35.014.  COSTS OF ELECTIONS.  (a)  The costs of an
  16-13  election to create a district at which a district is authorized to
  16-14  be created shall be paid by the district.
  16-15        (b)  The costs of an election to add a critical area to an
  16-16  existing district at which the voters approve adding the critical
  16-17  area to the district shall be paid by the existing district.
  16-18        (c)  The costs of an election to create a district or add a
  16-19  critical area to an existing district at which the proposition
  16-20  fails shall be paid by the commission.
  16-21        Sec. 35.015.  STATE ASSISTANCE.  (a)  A city, county, or
  16-22  district created under Article III, Section 52(b)(1) and (2), or
  16-23  Article XVI, Section 59, of the Texas Constitution located in or
  16-24  that has within its boundaries an area or part of an area
  16-25  delineated as a critical area, and in which the qualified voters
   17-1  fail to approve the creation of a district or to join an existing
   17-2  district, shall not be eligible to receive any financial assistance
   17-3  from the state under Chapters 15, 16 or 17 for use within that
   17-4  portion of the critical area not covered by a district.
   17-5        (b)  A city, county, or district created under Article III,
   17-6  Section 52, or Article XVI, Section 59, of the Texas Constitution
   17-7  located in an area delineated as a critical area, and in which
   17-8  qualified voters approve the creation of a district or annexation
   17-9  into an existing district, shall be given consideration to receive
  17-10  financial assistance from the state under Chapter 17 for funds to
  17-11  be used in addressing issues identified in the critical area report
  17-12  in the manner provided by Sections 17.124 and 17.125 except that
  17-13  the board is not required to make the finding set out in Section
  17-14  17.125(a)(2).
  17-15        Sec. 35.016.  EXEMPTION FROM CHAPTER.  (a)  This chapter does
  17-16  not apply to any active groundwater conservation district or to
  17-17  land within an active groundwater conservation district.
  17-18        (b)  In this section, "active groundwater conservation
  17-19  district" has the same meaning as the term is defined in Section
  17-20  36.301(c).
  17-21        Sec. 35.017.  STATE-OWNED LAND.  If state-owned land or a
  17-22  portion of state-owned land is located in a critical area, the
  17-23  state agency that has management and control over that land under
  17-24  the constitution or by statute may elect by written agreement with
  17-25  the commission and the district to include the state-owned land in
   18-1  the district.  The agreement shall be entered into as provided by
   18-2  the Texas Intergovernmental Cooperation Act, Chapter 741,
   18-3  Government Code, and may include provisions for the payment by the
   18-4  state agency of reasonable fees to the district.  If the state does
   18-5  not elect to enter into the agreement to include the state-owner
   18-6  land in the district, the state agency must establish a groundwater
   18-7  management plan that will conserve, protect, and prevent the waste
   18-8  of groundwater on that state-owned land.
   18-9        Sec. 35.018.  JOINT PLANNING IN A MANAGEMENT AREA.  (a)  If
  18-10  two or more districts are located within the boundaries of the same
  18-11  management area, each district shall prepare a comprehensive
  18-12  management plan as required by Section 36.107 covering that
  18-13  district's respective territory.  On completion of the plan, each
  18-14  district shall forward a copy of the new revised management plan to
  18-15  the other districts in the management area.
  18-16        (b)  The board of directors of each district in the
  18-17  management area may, by resolution, call a joint meeting with the
  18-18  boards of directors of the other districts in the management area
  18-19  to review the management plans and accomplishments for the
  18-20  management area.  The boards shall meet to consider the plans
  18-21  individually and shall compare them to other management plans then
  18-22  in force in the management area.  In reviewing the management
  18-23  plans, the boards shall consider:
  18-24              (1)  the goals of each management plan and its impact
  18-25  on planning throughout the management area;
   19-1              (2)  the effectiveness of the measures established by
   19-2  each management plan for conserving and protecting groundwater and
   19-3  preventing waste and the effectiveness of these measures in the
   19-4  management area generally; and
   19-5              (3)  any other matters that the boards consider
   19-6  relevant to the protection and conservation of groundwater and the
   19-7  prevention of waste in the management area.
   19-8        (c)  A joint meeting of the boards of directors must be held
   19-9  in accordance with the Open Meetings Act, Chapter 551, Government
  19-10  Code.  Notice of the meeting shall be given in accordance with the
  19-11  requirements for notice of district board of directors meetings
  19-12  under that Act.  In addition, notice of the meeting shall be
  19-13  published not later than the 30th day before the date of the
  19-14  scheduled meeting in a newspaper with general circulation in each
  19-15  county in the management area.
  19-16        (d)  A district in the management area may file a petition
  19-17  with the commission requesting an inquiry if the petitioner
  19-18  district believes that:
  19-19              (1)  another district in the management area has failed
  19-20  to adopt rules;
  19-21              (2)  the groundwater in the management area is not
  19-22  adequately protected by the rules adopted by another district; or
  19-23              (3)  the groundwater in the management area is not
  19-24  adequately protected due to the failure of another district to
  19-25  enforce substantial compliance with its rules.
   20-1        (e)  Not later than the 90th day after the date the petition
   20-2  is filed, the commission shall review the petition and either:
   20-3              (1)  dismiss it if it finds that the evidence is not
   20-4  adequate to show that any of the conditions alleged in the petition
   20-5  exist; or
   20-6              (2)  select a review panel as provided below.
   20-7        (f)  The commission may appoint a review panel consisting of
   20-8  a chairman and four other members.  A director or general manager
   20-9  of a district located outside the management area that is the
  20-10  subject of the petition may be appointed to the review panel.  The
  20-11  commission may not appoint more than two members of the review
  20-12  panel from any one district.  The commission also shall appoint a
  20-13  disinterested person to serve as a nonvoting recording secretary
  20-14  for the review panel.  The recording secretary may be an employee
  20-15  of the commission.  The recording secretary shall record and
  20-16  document the proceedings of the panel.
  20-17        (g)  Not later than the 120th day after appointment, the
  20-18  review panel shall review the petition and any evidence relevant to
  20-19  the petition and, in a public meeting, prepare a report to the
  20-20  commission.  The commission may direct the review panel to conduct
  20-21  public hearings at a location in the management area to take
  20-22  evidence on the petition.  The review panel may attempt to
  20-23  negotiate a settlement or resolve the dispute by any lawful means.
  20-24        (h)  In its report, the review panel shall include:
  20-25              (1)  a summary of all evidence taken in any hearing on
   21-1  the petition;
   21-2              (2)  a list of any actions, including approval of a
   21-3  settlement, that it finds are appropriate for the commission to
   21-4  take and the reasons it finds those actions appropriate or, if it
   21-5  finds that no action by the commission is necessary, the reasons
   21-6  why it so finds; and
   21-7              (3)  any other information the panel considers
   21-8  appropriate.
   21-9            CHAPTER 36.  GROUNDWATER CONSERVATION DISTRICTS
  21-10                   SUBCHAPTER A.  GENERAL PROVISIONS
  21-11        Sec. 36.001.  DEFINITIONS. In this chapter:
  21-12              (1)  "District" means any district or authority created
  21-13  under Article III, Section 52 or Article XVI, Section 59 of the
  21-14  Texas Constitution that has the authority to regulate the spacing
  21-15  of water wells, the production from water wells, or both.
  21-16              (2)  "Commission" means the Texas Natural Resource
  21-17  Conservation Commission.
  21-18              (3)  "Executive director" means the executive director
  21-19  of the commission.
  21-20              (4)  "Executive administrator" means the executive
  21-21  administrator of the Texas Water Development Board.
  21-22              (5)  "Groundwater" means water percolating below the
  21-23  surface of the earth.
  21-24              (6)  "Groundwater reservoir" means a specific
  21-25  subsurface water-bearing reservoir having ascertainable boundaries
   22-1  containing groundwater.
   22-2              (7)  "Subdivision of a groundwater reservoir" means a
   22-3  definable part of a groundwater reservoir in which the groundwater
   22-4  supply will not be measurably affected by withdrawing water from
   22-5  any other part of the reservoir, as indicated by known geological
   22-6  and hydrological conditions and relationships and on foreseeable
   22-7  economic development at the time the subdivision is designated or
   22-8  altered.
   22-9              (8)  "Waste" means any one or more of the following:
  22-10                    (A)  withdrawal of groundwater from a groundwater
  22-11  reservoir at a rate and in an amount that causes or threatens to
  22-12  cause intrusion into the reservoir of water unsuitable for
  22-13  agricultural, gardening, domestic, or stock raising purposes;
  22-14                    (B)  the flowing or producing of wells from a
  22-15  groundwater reservoir if the water produced is not used for a
  22-16  beneficial purpose;
  22-17                    (C)  escape of groundwater from a groundwater
  22-18  reservoir to any other reservoir or geologic strata that does not
  22-19  contain groundwater;
  22-20                    (D)  pollution or harmful alteration of
  22-21  groundwater in a groundwater reservoir by salt water, other
  22-22  deleterious matter admitted from another stratum, or from the
  22-23  surface of the ground;
  22-24                    (E)  wilfully or negligently causing, suffering,
  22-25  or allowing groundwater to escape into any river, creek, natural
   23-1  watercourse, depression, lake, reservoir, drain, sewer, street,
   23-2  highway, road, or road ditch, or onto any land other than that of
   23-3  the owner of the well; or
   23-4                    (F)  groundwater pumped for irrigation that
   23-5  escapes as irrigation tailwater onto land other than that of the
   23-6  owner of the well unless permission has been granted by the
   23-7  occupant of the land receiving the discharge.
   23-8              (9)  "Use for a beneficial purpose" means use for:
   23-9                    (A)  agricultural, gardening, domestic, stock
  23-10  raising, municipal, mining, manufacturing, industrial, commercial,
  23-11  recreational, or pleasure purposes;
  23-12                    (B)  exploring for, producing, handling, or
  23-13  treating oil, gas, sulphur, or other minerals; or
  23-14                    (C)  any other purpose that is useful and
  23-15  beneficial to the user.
  23-16              (10)  "Subsidence" means the lowering in elevation of
  23-17  the land surface caused by withdrawal of groundwater.
  23-18              (11)  "Board" means the board of directors of a
  23-19  district.
  23-20              (12)  "Director" means a member of a board.
  23-21              (13)  "Management area" means an area designated and
  23-22  delineated by the commission under Chapter 35 as an area suitable
  23-23  for management of groundwater resources.
  23-24              (14)  "Critical area" means an area designated and
  23-25  delineated by the commission under Chapter 35 as an area
   24-1  experiencing or expected to experience critical groundwater
   24-2  problems.
   24-3              (15)  "Political subdivision" means a county,
   24-4  municipality, or other body politic or corporate of the state,
   24-5  including a district or authority created under Article III,
   24-6  Section 52 or Article XVI, Section 59, of the Texas Constitution, a
   24-7  state agency, or a nonprofit water supply corporation created under
   24-8  Chapter 76, Acts of the 43rd Legislature, 1st Called Session, 1933
   24-9  (Article 1434a, Vernon Texas Civil Statutes).
  24-10        Sec. 36.002.  OWNERSHIP OF GROUNDWATER.  The ownership and
  24-11  rights of the owners of the land and their lessees and assigns in
  24-12  groundwater are hereby recognized, and nothing in this code shall
  24-13  be construed as depriving or divesting the owners or their lessees
  24-14  and assigns of the ownership or rights, subject to rules
  24-15  promulgated by a district.
  24-16            (Sections 36.003-36.010 reserved for expansion
  24-17                 SUBCHAPTER B.  CREATION OF DISTRICT.
  24-18        Sec. 36.011.  METHOD OF CREATING DISTRICT. (a)  A groundwater
  24-19  conservation district may be created under and subject to the
  24-20  authority, conditions, and restrictions of Article XVI, Section 59,
  24-21  of the Texas Constitution.
  24-22        (b)  The commission has exclusive jurisdiction over the
  24-23  delineation of management areas and the creation of districts.
  24-24        Sec. 36.012.  COMPOSITION OF DISTRICT.  (a)  A district may
  24-25  include all or part of one or more counties, cities, districts, or
   25-1  other political subdivisions.
   25-2        (b)  A district may not include territory located in more
   25-3  than one county except on a majority vote of the voters residing
   25-4  within the territory in each county sought to be included in the
   25-5  district at an election called for that purpose.
   25-6        (c)  The boundaries of a district must be coterminous with or
   25-7  inside the boundaries of a management area or a critical area.
   25-8        (d)  The areas of which a district is composed do not have to
   25-9  be contiguous but may consist of separate bodies of land separated
  25-10  by land not included in the district.
  25-11        (e)  A majority of the voters in a segregated area must
  25-12  approve the creation of the district before that area may be
  25-13  included in the district.
  25-14        Sec. 36.013.  PETITION TO CREATE DISTRICT.  (a)  A petition
  25-15  requesting creation of a district must be filed with the executive
  25-16  director for review and submission to the commission.
  25-17        (b)  The petition filed pursuant to this section must be
  25-18  signed by:
  25-19              (1)  a majority of the landowners within the proposed
  25-20  district, as indicated by the county tax rolls; or
  25-21              (2)  if there are more than 50 landowners in the
  25-22  proposed district, the petition must be signed by at least 50 of
  25-23  those landowners.
  25-24        (c)  The petition must include:
  25-25              (1)  the name of the proposed district;
   26-1              (2)  the area and boundaries of the proposed district,
   26-2  including a map generally outlining the boundaries of the proposed
   26-3  district;
   26-4              (3)  the purpose or purposes of the district;
   26-5              (4)  a statement of the general nature of any projects
   26-6  proposed to be undertaken by the district, the necessity and
   26-7  feasibility of the work, and the estimated costs of those projects
   26-8  according to the persons filing the projects if the projects are to
   26-9  be funded by the sale of bonds or notes; and
  26-10              (5)  any additional terms or conditions that restrict
  26-11  the powers of the district from those provided in this chapter.
  26-12        (d)  If a part of the proposed district is not included
  26-13  either within a management area or a critical area, the petition to
  26-14  create a district may also contain a request to create a management
  26-15  area.  A request to create a management area must comply with the
  26-16  requirements for a petition in Section 35.005, and may be acted on
  26-17  by the commission separately from the petition to create the
  26-18  district.
  26-19        Sec. 36.014.  NOTICE AND HEARING ON DISTRICT CREATION.
  26-20  (a)  The notice of hearing on a petition must include a statement
  26-21  of the nature and purpose of the proposed district and the date,
  26-22  time, and place of hearing.
  26-23        (b)  The notice must be posted on the bulletin board used for
  26-24  posting legal notices in each county in which all or part of the
  26-25  proposed district is to be located.
   27-1        (c)  Notice of the hearing shall be published in a newspaper
   27-2  with general circulation in the county or counties in which the
   27-3  proposed district is to be located.  Notice must be published no
   27-4  later than the 30th day before the date of the hearing.
   27-5        (d)  If the petition contains a request to create a
   27-6  management area in all or part of the proposed district, the notice
   27-7  must also be given in accordance with the requirements in Section
   27-8  35.006 for the designation of management areas.
   27-9        Sec. 36.015.  FINDINGS.  (a)  If the commission finds that a
  27-10  district is feasible and practicable, that it would be a benefit to
  27-11  the land in the district, and that it would be a public benefit or
  27-12  utility, the commission shall issue an order containing these
  27-13  findings granting the petition.
  27-14        (b)  If the commission finds that a district is not feasible
  27-15  and practicable, that it would not be a benefit to the land in the
  27-16  district, that it would not be a public benefit or utility, or that
  27-17  it is not needed, the commission by order shall deny the petition.
  27-18        (c)  The commission may adjust the boundaries of the proposed
  27-19  district to exclude any land that would not be benefited by
  27-20  inclusion in the district and is not necessary to the district for
  27-21  proper regulation of the groundwater reservoir.
  27-22        (d)  If the commission grants the petition to create the
  27-23  district, it shall direct in its order creating the district that
  27-24  an election be called by the temporary directors to confirm the
  27-25  creation of the district and to elect permanent directors.
   28-1        (e)  The refusal to grant a petition to create a district
   28-2  does not invalidate or affect the designation of any management
   28-3  area requested in the same petition.
   28-4        (f)  The commission shall act on the petition within a
   28-5  reasonable amount of time.
   28-6        Sec. 36.016.  APPOINTMENT OF TEMPORARY DIRECTORS.  (a)  If
   28-7  the commission grants a petition to create a district, it shall
   28-8  appoint five temporary directors who shall serve until the initial
   28-9  directors are elected and have qualified for office or until the
  28-10  voters fail to approve the creation of the district.
  28-11        (b)  If an appointee of the commission fails to qualify or if
  28-12  a vacancy occurs in the office of temporary director, the
  28-13  commission shall appoint an individual to fill the vacancy.
  28-14        (c)  As soon as all temporary directors have qualified, the
  28-15  directors shall meet, take the oath of office, and elect a chairman
  28-16  and vice-chairman from among their membership.  The chairman shall
  28-17  preside at all meetings of the board and, in the chairman's
  28-18  absence, the vice-chairman shall preside.
  28-19        Sec. 36.017.  CONFIRMATION AND DIRECTORS ELECTION.  (a)  Not
  28-20  later than the 60th day after the date all temporary directors have
  28-21  been appointed and have qualified, the temporary directors shall
  28-22  meet and order an election to be held within the boundaries of the
  28-23  proposed district to approve the creation of the district and to
  28-24  elect permanent directors.
  28-25        (b)  In the order calling the election, the temporary
   29-1  directors shall designate election precincts and polling places for
   29-2  the election.  In designating the polling places, the temporary
   29-3  directors shall consider the needs of all voters for conveniently
   29-4  located polling places.
   29-5        (c)  The temporary directors shall publish notice of the
   29-6  election at least one time in at least one newspaper with general
   29-7  circulation within the boundaries of the proposed district.  The
   29-8  notice must be published before the 30th day preceding the date of
   29-9  the election.
  29-10        (d)  The ballot for the election must be printed to  provide
  29-11  for  voting  for  or  against  the  proposition:  "The creation of
  29-12  the ____________ Groundwater Conservation District."  If the
  29-13  district levies a maintenance tax for payment of its expenses, the
  29-14  proposition shall include the following language:  "and the levy of
  29-15  a maintenance tax at a rate not to exceed ______ cents for each
  29-16  $100 of assessed valuation."
  29-17        (e)  Immediately after the election, the presiding judge of
  29-18  each polling place shall deliver the returns of the election to the
  29-19  temporary board, and the board shall canvass the returns and
  29-20  declare the result.  The board shall file a copy of the election
  29-21  result with the commission.
  29-22        (f)  If a majority of the votes cast at the election favor
  29-23  the creation of the district, the temporary board shall declare the
  29-24  district created and shall enter the result in its minutes.
  29-25        (g)  If a majority of the votes cast at the election are
   30-1  against the creation of the district, the temporary board shall
   30-2  declare the district defeated and shall enter the result in its
   30-3  minutes.
   30-4        (h)  If the majority of the votes cast at the election are
   30-5  against the creation of the district, the district shall have no
   30-6  further authority, except that any debts incurred shall be paid and
   30-7  the organization of the district shall be maintained until all the
   30-8  debts are paid.
   30-9        Sec. 36.018.  INCLUSION OF MUNICIPALITY.  (a)  If part of the
  30-10  territory to be included in a district is located in a
  30-11  municipality, a separate voting district may not be established in
  30-12  the municipality for the purpose of determining whether the
  30-13  municipality as a separate area is to be included in the district.
  30-14        (b)  If for any other reason the territory in a municipality
  30-15  is established as a separate voting district, the failure by the
  30-16  voters in the municipal territory to confirm the creation of the
  30-17  district or the annexation of territory to a district does not
  30-18  prevent the territory in the municipality from being included in
  30-19  the district.
  30-20        Sec. 36.019.  CONFIRMATION ELECTION IN DISTRICT INCLUDING
  30-21  LAND IN MORE THAN ONE COUNTY.  A district, the major portion of
  30-22  which is located in one county, may not be organized to include
  30-23  land in another county unless the election held in the other county
  30-24  to confirm and ratify the creation of the district is approved by a
  30-25  majority of the voters of the other county voting in an election
   31-1  called for that purpose.
   31-2        Sec. 36.020.  BOND AND TAX PROPOSAL.  (a)  At an election to
   31-3  create a district, the temporary directors may include a
   31-4  proposition for the issuance of bonds or notes, the levy of taxes
   31-5  to retire all or part of the bonds or notes, and the levy of a
   31-6  maintenance tax.  The maintenance tax rate may not exceed 50 cents
   31-7  on each $100 of assessed valuation.
   31-8        (b)  The board shall include in any bond and tax proposition
   31-9  the maximum amount of bonds or notes to be issued and their maximum
  31-10  maturity date.
  31-11        Sec. 36.021.  NOTIFICATION OF COUNTY CLERK.  Within 30 days
  31-12  following the creation of a district or any amendment to the
  31-13  boundaries of a district, the board of directors shall file with
  31-14  the county clerk of each county in which all or part of the
  31-15  district is located a certified copy of the description of the
  31-16  boundaries of the district.  Each county clerk shall record the
  31-17  certified copy of the boundaries in the property records of that
  31-18  county.
  31-19            (Sections 36.022-36.050 reserved for expansion
  31-20                     SUBCHAPTER C.  ADMINISTRATION
  31-21        Sec. 36.051.  BOARD OF DIRECTORS. (a)  The governing body of
  31-22  a district is the board of directors, which shall consist of not
  31-23  fewer than five and not more than 11 directors elected for
  31-24  four-year terms.  The number of directors may be changed as
  31-25  determined by the board when territory is annexed by the district.
   32-1        (b)  A member of a governing body of another political
   32-2  subdivision is ineligible for appointment or election as a
   32-3  director.  A director is disqualified and vacates the office of
   32-4  director if the director is appointed or elected as a member of the
   32-5  governing body of another political subdivision.  This subsection
   32-6  does not apply to any district with a population less than 50,000.
   32-7        (c)  Vacancies in the office of director shall be filled by
   32-8  appointment of board.  If the vacant office is not scheduled for
   32-9  election for longer than two years at the time of the appointment,
  32-10  the board shall order an election for the unexpired term to be held
  32-11  as part of the next regularly scheduled director's election.  The
  32-12  appointed director's term shall end upon qualification of the
  32-13  director elected at that election.
  32-14        Sec. 36.052.  OTHER LAWS NOT APPLICABLE.  Other laws
  32-15  governing the administration or operations of districts created
  32-16  under Article III, Section 52 or Article XVI, Section 59 of the
  32-17  Texas Constitution shall not apply to any district governed by this
  32-18  chapter.  This chapter prevails over any other law in conflict or
  32-19  inconsistent with this chapter, except any law governing a specific
  32-20  district shall prevail over this chapter.
  32-21        Sec. 36.053.  QUORUM.  A majority of the membership of the
  32-22  board constitutes a quorum for any meeting, and a concurrence of a
  32-23  majority of the entire membership of the board is sufficient for
  32-24  transacting any business of the district.
  32-25        Sec. 36.054.  OFFICERS.  (a)  After a district is created and
   33-1  the directors have qualified, the board shall meet, elect a
   33-2  president, vice-president, secretary, and any other officers or
   33-3  assistant officers as the board may deem necessary and begin the
   33-4  discharge of its duties.
   33-5        (b)  After each directors election, the board shall meet and
   33-6  elect officers.
   33-7        (c)  The president is the chief executive officer of the
   33-8  district, presides at all meetings of the board, and shall execute
   33-9  all documents on behalf of the district.  The vice-president shall
  33-10  act as president in case of the absence or disability of the
  33-11  president.  The secretary is responsible for seeing that all
  33-12  records and books of the district are properly kept and shall
  33-13  attest the president's signature on all documents.
  33-14        (d)  The board may appoint another director, the general
  33-15  manager, or any employee as assistant or deputy secretary to assist
  33-16  the secretary, and any such person shall be entitled to certify as
  33-17  to the authenticity of any record of the district, including but
  33-18  not limited to all proceedings relating to bonds, contracts, or
  33-19  indebtedness of the district.
  33-20        (e)  After any election or appointment of a director, a
  33-21  district shall notify the executive director within 30 days after
  33-22  the date of the election or appointment of the name and mailing
  33-23  address of the director chosen and the date that director's term of
  33-24  office expires.  The executive director shall provide forms to the
  33-25  district for such purpose.
   34-1        Sec. 36.055.  SWORN STATEMENT, BOND AND OATH OF OFFICE.
   34-2  (a)  As soon as practicable after a director is elected or
   34-3  appointed, that director shall make the sworn statement prescribed
   34-4  by the constitution for public office.
   34-5        (b)  As soon as practicable after a director has made the
   34-6  sworn statement, and before beginning to perform the duties of
   34-7  office, that director shall take the oath of office prescribed by
   34-8  the constitution for public officers.
   34-9        (c)  Before beginning to perform the duties of office, each
  34-10  director shall execute a bond for $10,000 payable to the district
  34-11  and conditioned on the faithful performance of that director's
  34-12  duties.  All bonds of the directors shall be approved by the board
  34-13  and paid for by the district.
  34-14        (d)  The sworn statement, bond, and oath shall be filed with
  34-15  the district and retained in its records.  A duplicate original of
  34-16  the sworn statement and the oath shall also be filed with the
  34-17  secretary of state within 10 days after their execution and need
  34-18  not be filed before the new director begins to perform the duties
  34-19  of office.
  34-20        Sec. 36.056.  GENERAL MANAGER.  (a)  The board may employ or
  34-21  contract with a person to perform such services as general manager
  34-22  for the district as the board may from time to time specify.  The
  34-23  board may delegate to the general manager full authority to manage
  34-24  and operate the affairs of the district subject only to orders of
  34-25  the board.
   35-1        (b)  The board may delegate to the general manager the
   35-2  authority to employ all persons necessary for the proper handling
   35-3  of the business and operation of the district and to determine the
   35-4  compensation to be paid all employees other than the general
   35-5  manager.
   35-6        (c)  Except in a district that is composed of the territory
   35-7  of more than one county, a director may be employed as general
   35-8  manager of the district.  The compensation of a general manager who
   35-9  also serves as a director shall be established by the other
  35-10  directors.
  35-11        Sec. 36.057.  MANAGEMENT OF DISTRICT.  (a)  The board shall
  35-12  be responsible for the management of all the affairs of the
  35-13  district.  The district shall employ or contract with all persons,
  35-14  firms, partnerships, corporations, or other entities, public or
  35-15  private, deemed necessary by the board for the conduct of the
  35-16  affairs of the district, including, but not limited to, engineers,
  35-17  attorneys, financial advisors, operators, bookkeepers, tax
  35-18  assessors and collectors, auditors, and administrative staff.
  35-19        (b)  The board shall set the compensation and terms for
  35-20  consultants.
  35-21        (c)  In selecting attorneys, engineers, auditors, financial
  35-22  advisors, or other professional consultants, the district shall
  35-23  follow the procedures provided in the Professional Services
  35-24  Procurement Act, Subchapter A, Chapter 2254, Government Code.
  35-25        (d)  The board shall require an officer, employee, or
   36-1  consultant who collects, pays, or handles any funds of the district
   36-2  to furnish good and sufficient bond, payable to the district, in an
   36-3  amount determined by the board to be sufficient to safeguard the
   36-4  district.  The bond shall be conditioned on the faithful
   36-5  performance of that person's duties and on accounting for all funds
   36-6  and property of the district.  Such bond shall be signed or
   36-7  endorsed by a surety company authorized to do business in the
   36-8  state.
   36-9        (e)  The board may pay the premium on surety bonds required
  36-10  of officials, employees, or consultants of the district out of any
  36-11  available funds of the district, including proceeds from the sale
  36-12  of bonds.
  36-13        (f)  The board may adopt bylaws to govern the affairs of the
  36-14  district to perform its purposes.  The board may, by resolution,
  36-15  authorize its general manager or other employee to execute
  36-16  documents on behalf of the district.
  36-17        (g)  The board shall also have the right to purchase all
  36-18  materials, supplies, equipment, vehicles, and machinery needed by
  36-19  the district to perform its purposes.
  36-20        Sec. 36.058.  CONFLICTS OF INTEREST.  A director of a
  36-21  district is subject to the provisions of Chapter 171, Local
  36-22  Government Code, relating to the regulation of conflicts of
  36-23  officers of local governments.
  36-24        Sec. 36.059.  GENERAL ELECTIONS.  (a)  All elections shall be
  36-25  generally conducted in accordance with the Election Code except as
   37-1  otherwise provided for by this chapter.  Write-in candidacies for
   37-2  any district office shall be governed by Subchapter C, Chapter 146,
   37-3  Election Code.
   37-4        (b)  The directors of the district shall be elected according
   37-5  to the precinct method as defined by Chapter 12, page 1105, Special
   37-6  Laws, Acts of the 46th Legislature, Regular Session, 1939.  To be
   37-7  qualified to be elected as a director, a person must be a
   37-8  registered voter  in the precinct  that the person represents.  If
   37-9  any part of a municipal corporation is a part of one precinct, then
  37-10  no part of the municipal corporation shall be included in another
  37-11  precinct, except that a municipal corporation having a population
  37-12  of more than 200,000 may be divided between two or more precincts.
  37-13  In a multi-county district, not more than two of the five precincts
  37-14  may include the same municipal corporation or part of the same
  37-15  municipal corporation.
  37-16        Sec. 36.060.  FEES OF OFFICE; REIMBURSEMENT.  (a)  A director
  37-17  is entitled to receive fees of office of not more than $100 a day
  37-18  for each day the director actually spends performing the duties of
  37-19  a director.  The fees of office may not exceed $6,000 per annum.
  37-20        (b)  Each director is also entitled to receive reimbursement
  37-21  of actual expenses reasonably and necessarily incurred while
  37-22  engaging in activities on behalf of the district.
  37-23        (c)  In order to receive fees of office and to receive
  37-24  reimbursement for expenses, each director shall file with the
  37-25  district a verified statement showing the number of days actually
   38-1  spent in the service of the district and a general description of
   38-2  the duties performed for each day of service.
   38-3        Sec. 36.061.  POLICIES.  (a)  Subject to the law governing
   38-4  the district, the board shall adopt the following in writing:
   38-5              (1)  a code of ethics for district directors, officers,
   38-6  employees, and persons who are engaged in handling investments for
   38-7  the district;
   38-8              (2)  a policy relating to travel expenditures;
   38-9              (3)  a policy relating to district investments that
  38-10  ensures that:
  38-11                    (A)  purchases and sales of investments are
  38-12  initiated by authorized individuals, conform to investment
  38-13  objectives and regulations, and are properly documented and
  38-14  approved; and
  38-15                    (B)  periodic review is made of district
  38-16  investments to evaluate investment performance and security;
  38-17              (4)  policies and procedures for selection, monitoring,
  38-18  or review and evaluation of professional services;
  38-19              (5)  policies that ensure a better use of management
  38-20  information including:
  38-21                    (A)  budgets for use in planning and controlling
  38-22  cost;
  38-23                    (B)  an audit or finance committee of the board;
  38-24  and
  38-25                    (C)  uniform reporting requirements that use
   39-1  "Audits of State and Local Governmental Units" as a guide  on audit
   39-2  working papers and that uses "Governmental Accounting and Financial
   39-3  Reporting Standards."
   39-4        (b)  The state auditor may audit the financial transactions
   39-5  of any district if the state auditor determines that the audit is
   39-6  necessary.
   39-7        Sec. 36.062.  OFFICES AND MEETING PLACES.  (a)  The board
   39-8  shall designate from time to time and maintain one or more regular
   39-9  offices for conducting the business of the district  and
  39-10  maintaining the records of the district.  Such offices may be
  39-11  located either inside or outside the district's boundaries as
  39-12  determined in the discretion of the board.
  39-13        (b)  The board  shall designate one or more places inside or
  39-14  outside the district for conducting the meetings of the board.
  39-15        Sec. 36.063.  NOTICE OF MEETINGS.  Notice of meetings of  the
  39-16  board shall be given as set forth in the Open Meetings  Act,
  39-17  Chapter 551, Government Code.  Neither failure to provide notice of
  39-18  a regular meeting nor an insubstantial defect in notice of any
  39-19  meeting shall affect the validity of any action taken at the
  39-20  meeting.
  39-21        Sec. 36.064.  MEETINGS.  (a)  The board  shall hold regular
  39-22  meetings at least quarterly.  It may hold meetings at other times
  39-23  as required for the business of the district.
  39-24        (b)  Meetings  shall be conducted and notice of meetings
  39-25  shall be posted in accordance with the Open Meetings Act, Chapter
   40-1  551, Government Code.  A meeting of a committee of the board, or a
   40-2  committee composed of representatives of more than one board, where
   40-3  less than a quorum of any one board is present is not subject to
   40-4  the provisions of the Open Meetings Act, Chapter 551, Government
   40-5  Code.
   40-6        Sec. 36.065.  RECORDS.  (a)  The board shall keep a complete
   40-7  account of all its meetings and proceedings and shall preserve its
   40-8  minutes, contracts, records, notices, accounts, receipts, and other
   40-9  records in a safe place.
  40-10        (b)  The records of each district are the property of the
  40-11  district and are subject to the Open Records Act, Chapter 552,
  40-12  Government Code.
  40-13        (c)  The preservation, microfilming, destruction, or other
  40-14  disposition of the records of each district is subject to the
  40-15  requirements of Chapter 201, Local Government Code, and rules
  40-16  adopted thereunder.
  40-17        Sec. 36.066.  SUITS.  (a)  A district may sue and be sued in
  40-18  the courts of this state in the name of the district by and through
  40-19  its board.  All courts shall take judicial notice of the creation
  40-20  of the district and of its boundaries.
  40-21        (b)  Any court in the state rendering judgment for debt
  40-22  against a district may order the board to levy, assess, and collect
  40-23  taxes or assessments to pay the judgment.
  40-24        (c)  The president or the general manager of any district
  40-25  shall be the agent of the district on whom process, notice, or
   41-1  demand required or permitted by law to be served upon a district
   41-2  may be served.
   41-3        (d)  Except as provided in subsection (e), no suit may be
   41-4  instituted in any court of this state contesting:
   41-5              (1)  the validity of the creation and boundaries of a
   41-6  district;
   41-7              (2)  any bonds or other obligations issued by a
   41-8  district; or
   41-9              (3)  the validity or the authorization of a contract
  41-10  with the United States by a district.
  41-11        (e)  The matters listed in subsection (d) may be judicially
  41-12  inquired into at any time and determined in any suit brought by the
  41-13  State of Texas through the attorney general.  The action shall be
  41-14  brought on good cause shown, except where otherwise provided by
  41-15  other provisions of this code or by the Texas Constitution.  It is
  41-16  specifically provided, however, that no such proceeding shall
  41-17  affect the validity of or security for any bonds or other
  41-18  obligations theretofore issued by a district if such bonds or other
  41-19  obligations have been approved by the attorney general.
  41-20        (f)  A district shall not be required to give bond for
  41-21  appeal, injunction, or costs in any suit to which it is a party and
  41-22  shall not be required to deposit more than the amount of any award
  41-23  in any eminent domain proceeding.
  41-24        (g)  If the district prevails in any suit it may, in the same
  41-25  action, recover reasonable fees for attorneys, expert witnesses,
   42-1  and other costs incurred by the district before the court.  The
   42-2  amount of the attorney's fees shall be fixed by the court.
   42-3        Sec. 36.067.  CONTRACTS.  (a)  A district shall contract, and
   42-4  be contracted with, in the name of the district.
   42-5        (b)  A district may purchase property from any other
   42-6  governmental entity by negotiated contract without the necessity of
   42-7  securing appraisals or advertising for bids.
   42-8        Sec. 36.068.  EMPLOYEE BENEFITS.  (a)  The board may provide
   42-9  for and administer a retirement, disability, and death compensation
  42-10  funds for the employees of the district.
  42-11        (b)  The board may establish a public retirement system in
  42-12  accordance with the provisions of Chapter 810, Government Code.
  42-13  The board may also provide for a deferred compensation plan
  42-14  described by Section 457 of the Internal Revenue Code of 1986 (26
  42-15  U.S.C. Section 457).
  42-16        (c)  The board may include hospitalization and medical
  42-17  benefits to its employees as part of the compensation currently
  42-18  paid to the officers and employees and may adopt any plan, rule, or
  42-19  regulation in connection with it and amend or change the plan,
  42-20  rule, or regulation as it may determine.
  42-21            (Sections 36.069-36.100 reserved for expansion
  42-22                   SUBCHAPTER D.  POWERS AND DUTIES
  42-23        Sec. 36.101.  RULE-MAKING POWER. (a)  A district may make and
  42-24  enforce rules to provide for conserving, preserving, protecting,
  42-25  and recharging of the groundwater or of a groundwater reservoir or
   43-1  its subdivisions in order to control subsidence or prevent waste of
   43-2  groundwater and to carry out the powers and duties provided by this
   43-3  chapter.
   43-4        (b)  After notice and hearing, the board shall adopt and
   43-5  enforce rules to implement this chapter, including rules governing
   43-6  procedure before the board.  Notice in this section shall include
   43-7  publication of the agenda of the hearing in one or more newspapers
   43-8  of general circulation in the county or counties in which the
   43-9  district is located.
  43-10        (c)  The board shall compile its rules in a book and make
  43-11  them available for use and inspection at the district's principle
  43-12  office.
  43-13        Sec. 36.102.  ENFORCEMENT OF RULES.  (a)  A district may
  43-14  enforce this chapter and its rules by injunction, mandatory
  43-15  injunction, or other appropriate remedy in a court of competent
  43-16  jurisdiction.
  43-17        (b)  The board may set reasonable civil penalties for breach
  43-18  of any rule of the district that shall not exceed the jurisdiction
  43-19  of a justice court as provided by Section 27.031, Government Code.
  43-20        (c)  A penalty under this section is in addition to any other
  43-21  penalty provided by the law of this state and may be enforced by
  43-22  complaints filed in the appropriate court of jurisdiction in the
  43-23  county in which the district's principal office or meeting place is
  43-24  located.
  43-25        (d)  If the district prevails in any suit to enforce its
   44-1  rules, it may, in the same action, recover reasonable fees for
   44-2  attorneys, expert witnesses, and other costs incurred by the
   44-3  district before the court.  The amount of the attorney's fees shall
   44-4  be fixed by the court.
   44-5        Sec. 36.103.  IMPROVEMENTS AND FACILITIES.  (a)  A district
   44-6  may build, acquire, or obtain by any lawful means any property
   44-7  necessary for the district to carry out its purpose and the
   44-8  provisions of this chapter.
   44-9        (b)  A district may:
  44-10              (1)  acquire land to erect dams or to drain lakes,
  44-11  draws, and depressions;
  44-12              (2)  construct dams;
  44-13              (3)  drain lakes, depressions, draws, and creeks;
  44-14              (4)  install pumps and other equipment necessary to
  44-15  recharge a groundwater reservoir or its subdivision; and
  44-16              (5)  provide necessary facilities for the purpose, sale
  44-17  transportation, and distribution of water.
  44-18        Sec. 36.104.  PURCHASE, SALE, TRANSPORTATION, AND
  44-19  DISTRIBUTION OF WATER.  A district may purchase, sell, transport,
  44-20  and distribute surface water or groundwater for any purpose.
  44-21        Sec. 36.105.  EMINENT DOMAIN.  (a)  A district may exercise
  44-22  the power of eminent domain to acquire by condemnation a fee simple
  44-23  or other interest in property if that property interest is
  44-24  necessary to the exercise of the authority conferred by this
  44-25  chapter.
   45-1        (b)  The power of eminent domain authorized in this section
   45-2  may not be used for the condemnation of land for the purpose of
   45-3  acquiring rights to groundwater, surface water or water rights.
   45-4        (c)  The district must exercise the power of eminent domain
   45-5  in the manner provided by Chapter 21, Property Code, but the
   45-6  district is not required to deposit a bond as provided by Section
   45-7  21.021(a), Property Code.
   45-8        (d)  In a condemnation proceeding brought by a district, the
   45-9  district is not required to pay in advance or give bond or other
  45-10  security for costs in the trial court, to give bond for the
  45-11  issuance of a temporary restraining order or a temporary
  45-12  injunction, or to give bond for costs or supersedeas on an appeal
  45-13  or writ of error.
  45-14        (e)  In exercising the power of eminent domain, if the
  45-15  district requires relocating, raising, lowering, rerouting,
  45-16  changing the grade, or altering the construction of any railroad,
  45-17  highway, pipeline, or electric transmission or distribution,
  45-18  telegraph, or telephone lines, conduits, poles, or facilities, the
  45-19  district must bear the actual cost of relocating, raising,
  45-20  lowering, rerouting, changing the grade, or altering the
  45-21  construction to provide comparable replacement without enhancement
  45-22  of facilities after deducting the net salvage value derived from
  45-23  the old facility.
  45-24        Sec. 36.106.  ENGINEERING SURVEYS.  A district may employ
  45-25  registered professional engineers to make surveys of the
   46-1  groundwater reservoir or subdivision and surveys of the facilities
   46-2  for development, production, transportation, distribution, and use
   46-3  of the water, in order to determine the quantity of water available
   46-4  for production and use and to determine the improvements,
   46-5  development, and recharging needed by a reservoir or its
   46-6  subdivision.
   46-7        Sec. 36.107.  PLANNING.  (a)  Following notice and hearing,
   46-8  the district shall develop a comprehensive management plan for the
   46-9  most efficient use of the groundwater, for controlling and
  46-10  preventing waste of groundwater, and for controlling and preventing
  46-11  subsidence.  The plan may be reviewed annually but must be reviewed
  46-12  by the board at least once every five years.
  46-13        (b)  The district shall specify in the management plan, in as
  46-14  much detail as possible, the acts, procedures, performance, and
  46-15  avoidance that are or may be necessary to effect the plan,
  46-16  including specifications and proposed rules.  The district shall
  46-17  adopt rules that are necessary to implement the management plan.
  46-18  The district shall file a copy of the management plan and the rules
  46-19  with the commission.
  46-20        Sec. 36.108.  RESEARCH PROJECTS.  A district may carry out
  46-21  any research projects deemed necessary by the board.
  46-22        Sec. 36.109.  COLLECTION OF INFORMATION.  A district may
  46-23  collect any information the board deems necessary, including
  46-24  information regarding the use of groundwater, water conservation,
  46-25  and the practicability of recharging a groundwater reservoir.
   47-1        Sec. 36.110.  PUBLICATION OF PLANS AND INFORMATION.  A
   47-2  district may publish its plans and the information it develops,
   47-3  bring them to the attention of the users of groundwater in the
   47-4  district, and encourage the users to adopt and use them.
   47-5        Sec. 36.111.  RECORDS AND REPORTS.  The district shall
   47-6  require that records be kept and reports be made of the drilling,
   47-7  equipping, and completing of water wells and of the production and
   47-8  use of groundwater.
   47-9        Sec. 36.112.  DRILLERS' LOGS.  A district shall require that
  47-10  accurate drillers' logs be kept of water wells and that copies of
  47-11  drillers' logs and electric logs be filed with the district.
  47-12        Sec. 36.113.  PERMITS FOR WELLS.  A district shall require
  47-13  permits for the drilling, equipping, or completing of wells, or for
  47-14  substantially altering the size of wells or well pumps.  Permits
  47-15  may be issued subject to the rules promulgated by the district and
  47-16  subject to terms and provisions with reference to the drilling,
  47-17  equipping, completion, or alteration of wells or pumps that may be
  47-18  necessary to conserve the groundwater, prevent waste, minimize as
  47-19  far as practicable the drawdown of the water table or the reduction
  47-20  of artesian pressure, lessen interference between wells, or control
  47-21  and prevent subsidence.
  47-22        Sec. 36.114.  PERMIT:  APPLICATION AND HEARING.  The district
  47-23  shall promptly consider and pass on each application for a permit.
  47-24  If, within 20 days after the date it is submitted, an application
  47-25  has not been passed on or set for a hearing on a specific date, the
   48-1  applicant may petition the district court of the county where the
   48-2  land is located for a writ of mandamus to compel the district to
   48-3  act on the application or set a date for a hearing on the
   48-4  application.  A hearing shall be held within 35 days after the
   48-5  setting of the date and the district shall act on the application
   48-6  within 35 days after the date of the hearing.
   48-7        Sec. 36.115.  DRILLING OR ALTERING A WELL WITHOUT PERMIT.
   48-8  (a)  No person, firm or corporation may drill a well without first
   48-9  obtaining a permit from the district.
  48-10        (b)  No person, firm or corporation may alter the size of a
  48-11  well or well pump such that it would bring that well under the
  48-12  jurisdiction of the district without first obtaining a permit from
  48-13  the district.
  48-14        (c)  No person, firm or corporation may operate a well
  48-15  without first obtaining a permit from the district.
  48-16        (d)  A violation occurs on the first day the drilling,
  48-17  alteration or operation begins and continues each day thereafter
  48-18  until the appropriate permits are approved.
  48-19        Sec. 36.116.  REGULATION OF SPACING AND PRODUCTION.  In order
  48-20  to minimize as far as practicable the drawdown of the water table
  48-21  or the reduction of artesian pressure, to control subsidence, or to
  48-22  prevent waste, a district may provide for the spacing of water
  48-23  wells and may regulate the production of wells.
  48-24        Sec. 36.117.  EXCEPTIONS; LIMITATIONS.  (a)  A district may
  48-25  not require a permit for:
   49-1              (1)  drilling or producing from a well either drilled,
   49-2  completed, or equipped so that it is incapable of producing more
   49-3  than 25,000 gallons of groundwater a day;
   49-4              (2)  the drilling or alteration of the size of a well
   49-5  or to restrict the production of a well if the water produced or to
   49-6  be produced from the well is used or to be used to supply the
   49-7  domestic needs of 10 or fewer households and a person who is a
   49-8  member of each household is either the owner of the well, a person
   49-9  related to the owner or a member of the owner's household within
  49-10  the second degree by consanguinity, or an employee of the owner;
  49-11              (3)  the drilling or alteration of the size of a well
  49-12  or to restrict the production from the well if the water produced
  49-13  or to be produced from the well is used or to be used to provide
  49-14  water for feeding livestock and poultry connected with farming,
  49-15  ranching, or dairy enterprises;
  49-16              (4)  water wells to supply water for hydrocarbon
  49-17  production activities, regardless of whether those wells are
  49-18  producing, that are associated with any well permitted by the
  49-19  Railroad Commission of Texas drilled before September 1, 1985; or
  49-20              (5)  jet wells used for domestic needs.
  49-21        (b)  The board shall adopt rules determining the
  49-22  applicability of Subsection (a)(3) to facilities used primarily for
  49-23  feeding livestock.
  49-24        (c)  The district shall not deny the owner of a tract of
  49-25  land, or his lessee, who has no well equipped to produce more than
   50-1  25,000 gallons a day on the tract, either a permit to drill a well
   50-2  on his land or the privilege to produce groundwater from his land,
   50-3  subject to the rules of the district.
   50-4        (d)  A district may not restrict the production of any well
   50-5  equipped to produce 25,000 gallons or less a day.
   50-6        (e)  Nothing in this chapter applies to wells drilled for
   50-7  oil, gas, sulphur, uranium, or brine, or for core tests, or for
   50-8  injection of gas, salt water, or other fluid, or for any other
   50-9  purpose, under permits issued by the Railroad Commission of Texas.
  50-10  A district may not require a permit to drill a well to supply water
  50-11  for drilling any of these wells permitted by the Railroad
  50-12  Commission of Texas.  Any well that ceases to be used for these
  50-13  purposes and is then used as an ordinary water well is subject to
  50-14  the rules of the district.
  50-15        (f)  Water wells exempted under this section shall be
  50-16  equipped and maintained so as to conform to the district's rules
  50-17  requiring installation of casing, pipe, and fittings to prevent the
  50-18  escape of groundwater from a groundwater reservoir to any reservoir
  50-19  not containing groundwater and to prevent the pollution or harmful
  50-20  alteration of the character of the water in any groundwater
  50-21  reservoir.
  50-22        (g)  A district shall require water wells exempted under this
  50-23  section to be registered with the district.  All exempt water wells
  50-24  shall be equipped and maintained so as to conform to the district's
  50-25  rules requiring installation of casing, pipe, and fittings to
   51-1  prevent the escape of groundwater from a groundwater reservoir to
   51-2  any reservoir not containing groundwater and to prevent the
   51-3  pollution or harmful alteration of the character of the water in
   51-4  any groundwater reservoir.
   51-5        Sec. 36.118.  OPEN OR UNCOVERED WELLS.  (a)  A district may
   51-6  require the owner or lessee of land on which an open or uncovered
   51-7  well is located to keep the well permanently closed or capped with
   51-8  a covering capable of sustaining weight of at least 400 pounds,
   51-9  except when the well is in actual use.
  51-10        (b)  As used in this section, "open or uncovered well" means
  51-11  an artificial excavation dug or drilled for the purpose of
  51-12  exploring for or producing water from the groundwater reservoir and
  51-13  is not capped or covered as required by this chapter.
  51-14        (c)  If the owner or lessee fails or refuses to close or cap
  51-15  the well in compliance with this chapter in accordance with
  51-16  district rules, any person, firm, or corporation employed by the
  51-17  district may go on the land and close or cap the well safely and
  51-18  securely.
  51-19        (d)  Reasonable expenses incurred by the district in closing
  51-20  or capping a well constitute a lien on the land on which the well
  51-21  is located.
  51-22        (e)  The lien is perfected by filing in the deed records of
  51-23  the county where the well is located an affidavit, executed by any
  51-24  person conversant with the facts, stating the following:
  51-25              (1)  the existence of the well;
   52-1              (2)  the legal description of the property on which the
   52-2  well is located;
   52-3              (3)  the approximate location of the well on the
   52-4  property;
   52-5              (4)  the failure or refusal of the owner or lessee,
   52-6  after notification, to close the well within 10 days after the
   52-7  notification;
   52-8              (5)  the closing of the well by the district, or by an
   52-9  authorized agent, representative, or employee of the district; and
  52-10              (6)  the expense incurred by the district in closing
  52-11  the well.
  52-12        (f)  Nothing in this section affects the enforcement of
  52-13  Subchapter A, Chapter 756, Health and Safety Code.
  52-14        Sec. 36.119.  ILLEGAL DRILLING AND OPERATION OF WELL; CITIZEN
  52-15  SUIT.  (a)  Drilling a well without a required permit or operating
  52-16  a well at a higher rate of production than the rate approved for
  52-17  the well is declared to be illegal, wasteful per se, and a
  52-18  nuisance.
  52-19        (b)  A person who has an estate in land adjacent to the land
  52-20  on which the well is located, or a part that lies within one-half
  52-21  mile of the well, may sue in a court of competent jurisdiction to
  52-22  restrain or enjoin the illegal drilling or operation, or both.  The
  52-23  suit may be brought with or without the joinder of the district.
  52-24        (c)  The aggrieved party may also sue for damages for
  52-25  injuries suffered by reason of the illegal operation and for other
   53-1  relief to which they may be entitled.  In a suit for damages, the
   53-2  existence or operation of a well in violation of the rules of the
   53-3  district is prima facie evidence of illegal drainage.
   53-4        (d)  The suit may be brought in the county where the illegal
   53-5  well is located or in the county where all or part of the affected
   53-6  land is located.
   53-7        (e)  The remedies provided by this section are cumulative of
   53-8  other remedies available to the individual or the district.
   53-9        (f)  A suit brought under this section shall be advanced for
  53-10  trial and determined as expeditiously as possible.  The court shall
  53-11  not grant a postponement or continuance, including a first motion,
  53-12  except for reasons considered imperative by the court.
  53-13        Sec. 36.120.  INFORMATION.  On request of the executive
  53-14  director or the executive administrator, the district shall make
  53-15  available information that it acquires concerning the groundwater
  53-16  resources within its jurisdiction.  The district shall also provide
  53-17  information to the commission and Texas Water Development Board
  53-18  concerning its plans and activities in conserving and protecting
  53-19  groundwater resources.  On request of a district, the executive
  53-20  director and the executive administrator shall provide information
  53-21  they acquire concerning the groundwater resources within the
  53-22  district's jurisdiction.
  53-23        Sec. 36.121.  LIMITATION ON RULE-MAKING POWER OF DISTRICTS
  53-24  OVER WELLS IN CERTAIN COUNTIES.  Except as provided by Section
  53-25  36.117, a district that is created under this chapter on or after
   54-1  September 1, 1991, shall exempt from regulation under this chapter
   54-2  a well and any water produced or to be produced by a well that is
   54-3  located in a county that has a population of 14,000 or less if the
   54-4  water is to be used solely to supply a municipality that has a
   54-5  population of 115,000 or less and the rights to the water produced
   54-6  from the well are owned by a political subdivision that is not a
   54-7  municipality, or by a municipality that has a population of 93,000
   54-8  or less, and that purchased, owned, or held rights to the water
   54-9  before the date on which the district was created, regardless of
  54-10  the date the well is drilled or the water is produced.  The
  54-11  district may not prohibit the political subdivision or municipality
  54-12  from transporting produced water inside or outside the district's
  54-13  boundaries.
  54-14            (Sections 36.122-36.150 reserved for expansion
  54-15                   SUBCHAPTER E.  DISTRICT FINANCES
  54-16        Sec. 36.151.  EXPENDITURES. (a)  A district's money may be
  54-17  disbursed only by check, draft, order, or other instrument.
  54-18        (b)  Disbursements shall be signed by at least two directors,
  54-19  except the board may by resolution allow certain employees of the
  54-20  district, or a combination of employees and directors, to sign
  54-21  disbursements on behalf of the board.
  54-22        (c)  The board may by resolution allow disbursements to be
  54-23  transferred by federal reserve wire system to accounts in the name
  54-24  of the district.
  54-25        Sec. 36.152.  FISCAL YEAR.  (a)  The district shall be
   55-1  operated on the basis of a fiscal year established by the board.
   55-2        (b)  The fiscal year may not be changed during a period in
   55-3  which revenue bonds of the district are outstanding or more than
   55-4  once in a 24-month period.
   55-5        Sec. 36.153.  ANNUAL AUDIT.  (a)  Annually, the board shall
   55-6  have an audit made of the financial condition of the district.
   55-7        (b)  The annual audit and other district records must be open
   55-8  to inspection during regular business hours at the principal office
   55-9  of the district.
  55-10        Sec. 36.154.  ANNUAL BUDGET.  (a)  The board shall prepare
  55-11  and approve an annual budget.
  55-12        (b)  The budget shall contain a complete financial statement,
  55-13  including a statement of:
  55-14              (1)  the outstanding obligations of the district;
  55-15              (2)  the amount of cash on hand to the credit of each
  55-16  fund of the district;
  55-17              (3)  the amount of money received by the district from
  55-18  all sources during the previous year;
  55-19              (4)  the amount of money available to the district from
  55-20  all sources during the ensuing year;
  55-21              (5)  the amount of the balances expected at the end of
  55-22  the year in which the budget is being prepared;
  55-23              (6)  the estimated amount of revenues and balances
  55-24  available to cover the proposal budget; and
  55-25              (7)  the estimated tax rate or fee revenues that will
   56-1  be required.
   56-2        (c)  The annual budget may be amended on the board's
   56-3  approval.
   56-4        Sec. 36.155.  DEPOSITORY.  (a)  The board shall name one or
   56-5  more banks to serve as depository for the district funds.
   56-6        (b)  District funds, other than those transmitted to a bank
   56-7  for payment of bonds issued by the district, shall be deposited as
   56-8  received with the depository bank and shall remain on deposit.
   56-9  This subsection does not limit the power of the board to place a
  56-10  portion of the district's funds on time deposit or to purchase
  56-11  certificates of deposit.
  56-12        (c)  To the extent that funds in the depository are not
  56-13  insured by the Federal Deposit Insurance Corporation, they shall be
  56-14  secured in the manner provided by law for the security of funds by
  56-15  the Public Funds Collateral Act, Chapter 2257, Government Code.
  56-16        Sec. 36.156.  INVESTMENTS.  (a)  Funds of the district may be
  56-17  invested and reinvested in accordance with the provisions of the
  56-18  Public Funds Investment Act, Chapter 2256, Government Code.
  56-19        (b)  The board, by resolution, may provide that an authorized
  56-20  representative of the district may invest and reinvest the funds of
  56-21  the district and provide for money to be withdrawn from the
  56-22  appropriate accounts of the district for investments on such terms
  56-23  as the board considers advisable.
  56-24        Sec. 36.157.  REPAYMENT OF ORGANIZATIONAL EXPENSES.  (a)  A
  56-25  district may pay all costs and expenses necessarily incurred in the
   57-1  creation and organization of a district, including legal fees and
   57-2  other incidental expenses, and may reimburse any person for money
   57-3  advanced for these purposes.
   57-4        (b)  Payments may be made from money obtained from the sale
   57-5  of bonds first issued by the district or out of maintenance taxes
   57-6  or other revenues of the district.
   57-7        Sec. 36.158.  GRANTS.  A district may make or accept grants,
   57-8  gratuities, advances, or loans in any form to or from any source
   57-9  approved by the board, including any governmental entity, and may
  57-10  enter into contracts, agreements, and covenants in connection with
  57-11  grants, gratuities, advances or loans that the board considers
  57-12  appropriate.
  57-13            (Sections 36.159-36.170 reserved for expansion
  57-14                    SUBCHAPTER F.  BONDS AND NOTES
  57-15        Sec. 36.171.  ISSUANCE OF BONDS AND NOTES. (a)  The board may
  57-16  issue and sell bonds and notes in the name of the district for any
  57-17  lawful purpose of the district.  A district may not issue bonds
  57-18  unless the commission determines that the project to be financed by
  57-19  the bonds is feasible and issues an order approving the issuance of
  57-20  the bonds.  This section does not apply to refunding bonds.
  57-21        (b)  A district may submit to the commission a written
  57-22  application for investigation of feasibility.  An engineer's report
  57-23  describing the project, including the data, profiles, maps, plans,
  57-24  and specifications prepared in connection with the report, must be
  57-25  submitted with the application.
   58-1        (c)  The executive director shall examine the application and
   58-2  the report and shall inspect the project area.  The district shall,
   58-3  on request, supply the executive director with additional data and
   58-4  information necessary for an investigation of the application, the
   58-5  engineer's report, and the project.
   58-6        (d)  The executive director shall prepare a written report on
   58-7  the project and include suggestions, if any, for changes or
   58-8  improvements in the project.  The executive director shall retain a
   58-9  copy of the report and send a copy of the report to both the
  58-10  commission and the district.
  58-11        (e)  The commission shall consider the application, the
  58-12  engineer's report, the executive director's report, and any other
  58-13  evidence allowed by commission rule to be considered in determining
  58-14  the feasibility of the project.
  58-15        (f)  The commission shall determine whether the project to be
  58-16  financed by the bonds is feasible and issue an order either
  58-17  approving or disapproving, as appropriate, the issuance of the
  58-18  bonds.  The commission shall retain a copy of the order and send a
  58-19  copy of the order to the district.
  58-20        (g)  Notwithstanding any provision of this code to the
  58-21  contrary, the commission may approve the issuance of bonds of a
  58-22  district without the submission of plans and specifications of the
  58-23  improvements to be financed with the bonds.  The commission may
  58-24  condition the approval on any terms or conditions considered
  58-25  appropriate by the commission.
   59-1        Sec. 36.172.  MANNER OF REPAYMENT OF BONDS AND NOTES.  The
   59-2  board may provide for the payment of principal of and interest on
   59-3  the bonds and notes in any one of the following manners:
   59-4              (1)  from the levy and collection of ad valorem taxes
   59-5  on taxable property within the district;
   59-6              (2)  from fees;
   59-7              (3)  by pledging all or any part of the designated
   59-8  revenues from the ownership or operation of the district's works,
   59-9  improvements, and facilities and from the sale, transportation, and
  59-10  distribution of water; or
  59-11              (4)  from any combination of these sources.
  59-12        Sec. 36.173.  ADDITIONAL SECURITY FOR BONDS AND NOTES.
  59-13  (a)  The bonds and notes may be additionally secured by a deed of
  59-14  trust or mortgage lien on part or all of the physical properties of
  59-15  the district and rights appurtenant to those properties, vesting in
  59-16  the trustee power to sell the properties for payment of the
  59-17  indebtedness, power to operate the properties, and all other powers
  59-18  necessary for the further security of the bonds and notes.
  59-19        (b)  The trust indenture, regardless of the existence of the
  59-20  deed trust or mortgage lien on the properties, may contain
  59-21  provisions established by the board for the security of the bonds
  59-22  and notes and the preservation of the trust estate, may make
  59-23  provisions for amendment or modification, and may make provisions
  59-24  for investment of funds of the district.
  59-25        (c)  A purchaser under a sale under the deed trust or
   60-1  mortgage lien shall be absolute owner of the properties and rights
   60-2  purchased and may maintain and operate them.
   60-3        Sec. 36.174.  FORM OF BONDS OR NOTES.  (a)  A district may
   60-4  issue its bonds or notes in various series or issues.
   60-5        (b)  Bonds or notes may mature serially or otherwise not more
   60-6  than 50 years from their date and shall bear interest at any rate
   60-7  permitted by the constitution and laws of this state.
   60-8        (c)  A district's bonds, notes and interest coupons, if any,
   60-9  are investment securities under the terms of Chapter 8 of the
  60-10  Business & Commerce Code, and may be issued registrable as to
  60-11  principal or as to both principal and interest and may be made
  60-12  redeemable before maturity, at the option of the district, or may
  60-13  contain a mandatory redemption provision.
  60-14        (d)  A district's bonds and notes may be issued in the form,
  60-15  denominations, and manner and under the terms, conditions, and
  60-16  details, and shall be signed and executed as provided by the board
  60-17  in the resolution or order authorizing their issuance.
  60-18        Sec. 36.175.  PROVISIONS OF BONDS AND NOTES.  (a)  In the
  60-19  orders or resolutions authorizing the issuance of bonds or notes,
  60-20  including refunding bonds, the board may provide for the flow of
  60-21  funds, the establishment and maintenance of the interest and
  60-22  sinking fund, the reserve fund, and other funds.  The board may
  60-23  make additional covenants with respect to bonds or notes, pledged
  60-24  revenues, and the operation and maintenance of those works,
  60-25  improvements, and facilities, of which the revenue is pledged.
   61-1        (b)  The orders or resolutions of the board authorizing the
   61-2  issuance of bonds or notes may also prohibit the further issuance
   61-3  of bonds, notes, or other obligations payable from the pledged
   61-4  revenue or may reserve the right to issue additional bonds or notes
   61-5  to be secured by a pledge of and payable from the revenue on a
   61-6  parity with or subordinate to the lien and pledge in support of the
   61-7  bonds or notes being issued.
   61-8        (c)  The orders or resolutions of the board issuing bonds or
   61-9  notes may contain other provisions and covenants as the board may
  61-10  determine.
  61-11        (d)  The board may adopt and have executed any other
  61-12  proceeding or instruments necessary and convenient in the issuance
  61-13  of bonds or notes.
  61-14        Sec. 36.176.  REFUNDING BONDS.  (a)  A district may issue
  61-15  bonds to refund all or any part of its outstanding bonds or notes,
  61-16  including matured but unpaid interest coupons.
  61-17        (b)  Refunding bonds shall mature serially or otherwise not
  61-18  more than 50 years from their date and shall bear interest at any
  61-19  rate or rates permitted by the constitution and laws of the state.
  61-20        (c)  Refunding bonds may be payable from the same source as
  61-21  the bonds or notes being refunded or from other additional sources.
  61-22        (d)  The refunding bonds must be approved by the attorney
  61-23  general as in the case of other bonds or notes and shall be
  61-24  registered by the comptroller on the surrender and cancellation of
  61-25  the bonds or notes being refunded.
   62-1        (e)  The orders or resolutions authorizing the issuance of
   62-2  the refunding bonds may provide that they be sold and the proceeds
   62-3  deposited in the place or places at which the bonds or notes being
   62-4  refunded are payable, in which case the refunding bonds may be
   62-5  issued before the cancellation of the bonds or notes being
   62-6  refunded.  If refunding bonds are issued before cancellation of the
   62-7  other bonds or notes, an amount sufficient to pay the principal of
   62-8  and interest on the bonds or notes being refunded to their maturity
   62-9  dates, or to their option dates if the bonds or notes have been
  62-10  duly called for payment prior to maturity according to their terms,
  62-11  shall be deposited in the place or places at which the bonds or
  62-12  notes being refunded are payable.  The comptroller shall register
  62-13  the refunding bonds without the surrender and cancellation of bonds
  62-14  or notes being refunded.
  62-15        (f)  A refunding may be accomplished in one or in several
  62-16  installment deliveries.  Refunding bonds and their interest coupons
  62-17  are investment securities under Chapter 8 of the Business &
  62-18  Commerce Code.
  62-19        (g)  In lieu of the method set forth in Subsection (a)-(f), a
  62-20  district may refund bonds, notes, or other obligations as provided
  62-21  by the general laws of the state.
  62-22        Sec. 36.177.  BONDS AND NOTES AS INVESTMENTS.  District bonds
  62-23  and notes are legal and authorized investments for:
  62-24              (1)  banks;
  62-25              (2)  savings banks;
   63-1              (3)  trust companies;
   63-2              (4)  savings and loan associations;
   63-3              (5)  insurance companies;
   63-4              (6)  fiduciaries;
   63-5              (7)  trustees;
   63-6              (8)  guardians; and
   63-7              (9)  sinking funds of cities, counties, school
   63-8  districts, and other political subdivisions of the state and other
   63-9  public funds of the state and its agencies, including the permanent
  63-10  school fund.
  63-11        Sec. 36.178.  BONDS AND NOTES AS SECURITY FOR DEPOSITS.
  63-12  District bonds and notes are eligible to secure deposits of public
  63-13  funds of the state and cities, counties, school districts, and
  63-14  other political subdivisions of the state.  The bonds or notes are
  63-15  lawful and sufficient security for deposits to the extent of their
  63-16  value when accompanied by all unmatured coupons.
  63-17        Sec. 36.179.  TAX STATUS OF BONDS AND NOTES.  Since a
  63-18  district governed by chapter this chapter is a public entity
  63-19  performing an essential public function, bonds and notes issued by
  63-20  the district, any transaction relating to the bonds and notes, and
  63-21  profits made in the sale of the bonds and notes, are free from
  63-22  taxation by the state or by any city, county, special district, or
  63-23  other political subdivision of the state.
  63-24        Sec. 36.180.  ELECTION.  (a)  Bonds or notes secured in whole
  63-25  or in part by taxes may not be issued by the district until
   64-1  authorized by a majority vote of the qualified voters of the
   64-2  district at an election called for that purpose.
   64-3        (b)  The board may order an election, and the order calling
   64-4  the election shall state the nature and the date of the election,
   64-5  the hours during which the polls will be open, the location of the
   64-6  polling places, the amount of bonds or notes to be authorized, and
   64-7  the maximum maturity of the bonds or notes.
   64-8        (c)  At an election to authorize bonds or notes payable
   64-9  wholly from ad valorem taxes, the ballots must be printed to
  64-10  provide for voting for or against the proposition:  "The issuance
  64-11  of (bonds or notes) and the levy of taxes for payment of the (bonds
  64-12  or notes)."  At any election to authorize bonds or notes payable
  64-13  from both ad valorem taxes and revenues, the ballots must be
  64-14  printed to provide for voting for or against:  "The issuance of
  64-15  (bonds or notes) and the pledge of net revenues and the levy of ad
  64-16  valorem taxes adequate to provide for the payment of the (bonds or
  64-17  notes)."
  64-18        (d)  The board shall canvass the returns and declare the
  64-19  results of the election.  If a majority of the votes cast at the
  64-20  election favor the issuance of the bonds or notes, the bonds or
  64-21  notes may be issued by the board, but if a majority of the votes
  64-22  cast at the election do not favor issuance of the bonds or notes,
  64-23  the bonds or notes may not be issued.
  64-24        Sec. 36.181.  APPROVAL BY ATTORNEY GENERAL; REGISTRATION BY
  64-25  COMPTROLLER.  (a)  Bonds and notes issued by a district must be
   65-1  submitted to the attorney general for examination.
   65-2        (b)  If the attorney general finds that the bonds or notes
   65-3  have been authorized in accordance with law, he shall approve them,
   65-4  and they shall be registered by the comptroller.
   65-5        (c)  After the approval and registration of bonds or notes,
   65-6  the bonds or notes are incontestable in any court or other forum,
   65-7  for any reason, and are valid and binding obligations in accordance
   65-8  with their terms for all purposes.
   65-9            (Sections 36.182-36.200 reserved for expansion
  65-10                   SUBCHAPTER G.  DISTRICT REVENUES
  65-11        Sec. 36.201.  LEVY OF TAXES. (a)  The board may annually levy
  65-12  taxes to pay the bonds issued by the district that are payable in
  65-13  whole or in part by taxes.
  65-14        (b)  the board may annually levy taxes to pay the maintenance
  65-15  and operating expenses of the district at a rate not to exceed 50
  65-16  cents on each $100 of assessed valuation.
  65-17        Sec. 36.202.  BOARD AUTHORITY.  (a)  The board may levy taxes
  65-18  for the entire year in which the district is created.
  65-19        (b)  If territory is added to or annexed by the district, the
  65-20  board may levy taxes in the new territory for the entire year in
  65-21  which the territory is added or annexed.
  65-22        (c)  The board shall levy taxes on all property in the
  65-23  district subject to district taxation.
  65-24        Sec. 36.203.  TAX RATE.  In setting the tax rate, the board
  65-25  shall take into consideration the income of the district from
   66-1  sources other than taxation.  On determination of the amount of tax
   66-2  required to be levied, the board shall make the levy and certify it
   66-3  to the tax assessor-collector.
   66-4        Sec. 36.204.  TAX APPRAISAL, ASSESSMENT AND COLLECTION.
   66-5  (a)  The Tax Code governs the appraisal, assessment, and collection
   66-6  of district taxes.
   66-7        (b)  The board may provide for the appointment of a tax
   66-8  assessor-collector for the district or may contract for the
   66-9  assessment and collection of taxes as provided by the Tax Code.
  66-10        Sec. 36.205.  AUTHORITY TO SET FEES.  (a)  A district may set
  66-11  fees for administrative acts of the district, such as filing
  66-12  applications.  Fees set by a district may not unreasonably exceed
  66-13  the cost to the district of performing the administrative function
  66-14  for which the fee is charged.
  66-15        (b)  A district shall set and collect fees for all services
  66-16  provided outside the boundaries of the district.
  66-17            (Sections 36.206-36.250 reserved for expansion
  66-18                    SUBCHAPTER H.  JUDICIAL REVIEW
  66-19        Sec. 36.251.  SUIT AGAINST DISTRICT. A person, firm,
  66-20  corporation, or association of persons affected by and dissatisfied
  66-21  with any provision or with any rule or order made by a district is
  66-22  entitled to file a suit against the district or its directors to
  66-23  challenge the validity of the law, rule, or order.  The suit shall
  66-24  be filed in a court of competent jurisdiction in any county in
  66-25  which the district or any part of the district is located.
   67-1        Sec. 36.252.  SUIT TO BE EXPEDITED.  A suit brought under
   67-2  this subchapter shall be advanced for trial and determined as
   67-3  expeditiously as possible.  No postponement or continuance shall be
   67-4  granted except for reasons considered imperative by the court.
   67-5        Sec. 36.253.  TRIAL OF SUIT.  The burden of proof is on the
   67-6  petitioner, and the challenged law, rule, order, or act shall be
   67-7  deemed prima facie valid.  The review on appeal is governed by the
   67-8  substantial evidence rule as defined by Section 2001.174,
   67-9  Government Code.
  67-10        Sec. 36.254.  SUBCHAPTER CUMULATIVE.  The provisions of this
  67-11  subchapter do not affect other legal or equitable remedies that may
  67-12  be available.
  67-13            (Sections 36.255-36.300 reserved for expansion
  67-14                SUBCHAPTER I.  DISSOLUTION OF DISTRICT
  67-15        Sec. 36.301.  DISSOLUTION. (a)  After notice and hearing, the
  67-16  commission may dissolve a district that:
  67-17              (1)  has been inactive for a period of three
  67-18  consecutive years; and
  67-19              (2)  has no outstanding bonded indebtedness.
  67-20        (b)  A district composed of territory entirely within one
  67-21  county may be dissolved even if it has outstanding indebtedness
  67-22  that matures after the year in which the district is dissolved,
  67-23  whereupon the commissioners court shall levy and collect taxes on
  67-24  all taxable property in the district in an amount sufficient to pay
  67-25  the principal of and interest on the indebtedness when due.  The
   68-1  taxes shall be levied and collected in the same manner as county
   68-2  taxes.
   68-3        (c)  A district is considered active if:
   68-4              (1)  the district has a board as required by Subchapter
   68-5  D;
   68-6              (2)  the board holds regularly scheduled meetings and
   68-7  has on file minutes of its meetings;
   68-8              (3)  the district has developed and filed with the
   68-9  commission a management plan for the district;
  68-10              (4)  the district has copies of drillers' logs on file;
  68-11              (5)  the district has on file well permits issued by
  68-12  the district; and
  68-13              (6)  the district has on file annual district audits.
  68-14        Sec. 36.302.  NOTICE OF HEARING.  (a)  The commission shall
  68-15  give notice of the dissolution hearing which briefly describes the
  68-16  reasons for the proceeding.
  68-17        (b)  The notice shall be published once each week for two
  68-18  consecutive weeks before the day of hearing in some newspaper
  68-19  having general circulation in the county or counties in which the
  68-20  district is located.  The first publication shall be 30 days before
  68-21  the day of the hearing.
  68-22        (c)  The commission shall give notice of the hearing by first
  68-23  class mail addressed to the directors of the district according to
  68-24  the last record on file with the executive director.
  68-25        Sec. 36.303.  INVESTIGATION.  The executive director shall
   69-1  investigate the facts and circumstances of the district to be
   69-2  dissolved and the result of the investigation shall be included in
   69-3  a written report.
   69-4        Sec. 36.304.  ORDER OF DISSOLUTION.  The commission may enter
   69-5  an order dissolving the district at the conclusion of the hearing
   69-6  if it finds that the district has performed none of the functions
   69-7  for which it was created for a period of five consecutive years
   69-8  before the day of the proceeding and that the district has no
   69-9  outstanding bonded indebtedness.
  69-10        Sec. 36.305.  CERTIFIED COPY OF ORDER.  The commission shall
  69-11  file a certified copy of the order of dissolution of the district
  69-12  in the deed records of the county or counties in which the district
  69-13  is located.  If the district was created by a special Act of the
  69-14  legislature, the commission shall file a certified copy of the
  69-15  order of dissolution with the secretary of state.
  69-16        Sec. 36.306.  APPEALS.  (a)  Appeals from a commission order
  69-17  dissolving a district shall be filed and heard in the district
  69-18  court of any of the counties in which the land is located.
  69-19        (b)  The trial on appeal shall be de novo and the substantial
  69-20  evidence rule shall not apply.
  69-21        Sec. 36.307.  ASSETS ESCHEAT TO STATE.  Upon the dissolution
  69-22  of a district by the commission, all assets of the district shall
  69-23  escheat to the State of Texas.  The assets shall be administered by
  69-24  the state treasurer and shall be disposed of in the manner provided
  69-25  by Chapter 72, Property Code.
   70-1            (Sections 36.308-36.320 reserved for expansion
   70-2              SUBCHAPTER J.  ADDING TERRITORY TO DISTRICT
   70-3        Sec. 36.321.  ADDING LAND BY PETITION OF LANDOWNER. The owner
   70-4  of land contiguous to a district may file with the board a
   70-5  notarized petition requesting that the owner's land be included in
   70-6  the district.  The petition must describe the land by legal
   70-7  description or by metes and bounds or by lot and block number if
   70-8  there is a recorded plat of the area to be included in the
   70-9  district.
  70-10        Sec. 36.322.  ASSUMPTION OF BONDS.  If the district has
  70-11  bonds, notes, or other obligations outstanding or bonds payable in
  70-12  whole or in part from taxation that have been voted but are
  70-13  unissued, the petitioner shall assume its share of the outstanding
  70-14  bonds, notes, or other obligations and any voted but unissued tax
  70-15  bonds of the district, and the property shall be assessed an ad
  70-16  valorem tax at the same rate as that set for the existing district
  70-17  to pay for outstanding bonds and for the maintenance and operation
  70-18  of the district.
  70-19        Sec. 36.323.  HEARING AND DETERMINATION OF PETITION.
  70-20  (a)  The board shall hear and consider the petition and may add to
  70-21  the district the land described in the petition if it is considered
  70-22  to be to the advantage of the petitioner and to the existing
  70-23  district.
  70-24        (b)  If the district has bonds payable in whole or in part
  70-25  from taxation that are voted but unissued at the time of the
   71-1  annexation, the board may issue the voted but unissued bonds even
   71-2  though the boundaries of the district have been altered since the
   71-3  authorization of the bonds.
   71-4        Sec. 36.324.  RECORDING PETITION.  A petition that is granted
   71-5  which adds land to the district shall be recorded in the office of
   71-6  the county clerk of the county or counties in which the land is
   71-7  located and the county or counties in which the existing district's
   71-8  principal office is located.
   71-9        Sec. 36.325.  ADDING CERTAIN TERRITORY BY PETITION.
  71-10  (a)  Landowners of a defined area of territory not already in a
  71-11  district may file with any district a petition requesting inclusion
  71-12  in that district.
  71-13        (b)  The petition must be signed by:
  71-14              (1)  a majority of the landowners in the territory;
  71-15              (2)  at least 50 landowners if the number of landowners
  71-16  is more than 50; or
  71-17              (3)  the commissioners court of the county in which the
  71-18  area is located if the area is identified as a critical area or
  71-19  includes the entire county.
  71-20        (c)  The petition must describe the land by legal description
  71-21  or by metes and bounds or by lot and block number if there is a
  71-22  recorded plat of the area to be included in the district.
  71-23        Sec. 36.326.  HEARING ON PETITION.  The board by order shall
  71-24  set the time and place of separate hearings on the petition to
  71-25  include the territory in the district.  At least one hearing shall
   72-1  be held in the existing district and one hearing shall be held in
   72-2  the territory to be added.
   72-3        Sec. 36.327.  RESOLUTION TO ADD TERRITORY.  If the board
   72-4  finds after the hearing on the petition that the addition of the
   72-5  land would benefit the district and the territory to be added, it
   72-6  may add the territory to the district by resolution.  The board
   72-7  does not have to include all the territory described in the
   72-8  petition if it finds that a modification or change is necessary or
   72-9  desirable.
  72-10        Sec. 36.328.  ELECTION TO RATIFY ANNEXATION OF LAND.
  72-11  (a)  Annexation of the territory is not final until ratified by a
  72-12  majority vote of the voters in the territory to be added.  An
  72-13  election in the existing district accepting the addition of land is
  72-14  not required.
  72-15        (b)  The ballots for the election shall be printed to provide
  72-16  for voting for or against the proposition:  "The inclusion of
  72-17  (briefly describe additional area) in the __________ District."  If
  72-18  the district levies a property tax for payment of its maintenance
  72-19  and operating expenses, the proposition shall include the following
  72-20  language:  "and the levy of a tax on property at a rate not to
  72-21  exceed _____ cents on each $100 of assessed valuation for payment
  72-22  of maintenance and operating expenses of the district."
  72-23        (c)  The amount of the tax included in the proposition shall
  72-24  be the maximum amount that the district is authorized to levy.  If
  72-25  the district has outstanding or authorized bonded indebtedness, the
   73-1  proposition shall include language providing for the assumption by
   73-2  the additional area of a proportional share of the bonded
   73-3  indebtedness of the district.
   73-4        Sec. 36.329.  NOTICE AND PROCEDURE OF ELECTION.  The notice
   73-5  of the election, the manner and the time of giving the notice, the
   73-6  manner of holding the election, and qualifications of the voters
   73-7  are governed by the Election Code.
   73-8        Sec. 36.330.  LIABILITY OF ADDED TERRITORY.  The added
   73-9  territory shall bear its pro rata share of indebtedness or taxes
  73-10  that may be owed, contracted, or authorized by the district to
  73-11  which it is added.
  73-12        Sec. 36.331.  ANNEXATION OF NONCONTIGUOUS TERRITORY.  Land
  73-13  not contiguous to the existing boundaries of a district may not be
  73-14  added to or annexed to a district unless the land is located either
  73-15  within the same management area, critical area, or a groundwater
  73-16  subdivision designated by the commission or its predecessors.
  73-17            (Sections 36.332-36.350 reserved for expansion
  73-18               SUBCHAPTER K.  CONSOLIDATION OF DISTRICTS
  73-19        Sec. 36.351.  CONSOLIDATION OF DISTRICTS. (a)  Two or more
  73-20  districts may consolidate into one district.
  73-21        (b)  Adjacent districts may consolidate portions of either
  73-22  district if one district relinquishes land within that district to
  73-23  the jurisdiction of the other district.
  73-24        (c)  A consolidation under this subchapter occurs if the
  73-25  board of each involved district adopts a resolution containing the
   74-1  terms and conditions of the consolidation.
   74-2        Sec. 36.352.  TERMS AND CONDITIONS OF CONSOLIDATION.
   74-3  (a)  The terms and conditions for consolidation shall include:
   74-4              (1)  adoption of a name for the district;
   74-5              (2)  the number and apportionment of directors to serve
   74-6  on the board;
   74-7              (3)  the effective date of the consolidation;
   74-8              (4)  an agreement on finances for the consolidated
   74-9  district, including disposition of funds, property, and other
  74-10  assets of each district;
  74-11              (5)  transfer of all permits issued in the area that is
  74-12  the subject of the consolidation to the consolidated district; and
  74-13              (6)  an agreement on governing the districts during the
  74-14  transition period, including selection of officers.
  74-15        (b)  The terms and conditions for consolidation may include:
  74-16              (1)  assumption by each district of the other
  74-17  district's bonds, notes, voted but unissued bonds, or other
  74-18  obligations;
  74-19              (2)  an agreement to levy taxes to pay for bonds;
  74-20              (3)  any other terms of conditions agreed upon by the
  74-21  board of each district.
  74-22        Sec. 36.353.  NOTICE AND HEARING ON CONSOLIDATION.  (a)  Each
  74-23  board shall publish notice and hold a public hearing within that
  74-24  district on the terms and conditions for consolidation of the
  74-25  districts.
   75-1        (b)  After the hearing, the board may, by resolution, approve
   75-2  the terms and conditions for consolidation and enter an order
   75-3  consolidating the districts.
   75-4        Sec. 36.354.  ELECTIONS TO APPROVE CONSOLIDATION.  (a)  An
   75-5  election to ratify the consolidation is required unless the
   75-6  districts to be consolidated meet the following requirements:
   75-7              (1)  the districts have not authorized or issued bonds
   75-8  and do not levy or assess taxes; or
   75-9              (2)  the consolidation would not result in any
  75-10  additional taxing or bonding authority for any of the districts,
  75-11  and would not require any district to contribute to the debt
  75-12  payments of any other district.
  75-13        (b)  The board shall order an election in each district to be
  75-14  consolidated only after the board of each district has agreed on
  75-15  the terms and conditions of consolidation.  The directors of each
  75-16  district shall order the election to be held on the same day in
  75-17  each district.  The election shall be held and notice given in the
  75-18  manner provided by the Election Code.
  75-19        (c)  The ballots for the election shall be printed to provide
  75-20  for voting for or against the proposition:  "The consolidation of
  75-21  (names of the districts to be consolidated) in the __________
  75-22  District."  If the district levies a property tax for payment of
  75-23  its bonded indebtedness, the proposition shall include the
  75-24  following language:  "and the levy of a tax on property at a rate
  75-25  not to exceed _____ cents on each $100 of assessed valuation for
   76-1  payment of bonds."  If the district levies a property tax for
   76-2  payment of its maintenance and operating expenses, the proposition
   76-3  shall include the following language:  "and the levy of a tax on
   76-4  property at a rate not to exceed _____ cents on each $100 of
   76-5  assessed valuation for payment of maintenance and operating
   76-6  expenses of the district."
   76-7        (d)  A district may be consolidated only if a majority of the
   76-8  electors in each district vote in favor of the consolidation.  If
   76-9  more than two districts are consolidating, failure of any one
  76-10  district to ratify the consolidation shall not prevent the
  76-11  consolidation of the other districts.
  76-12        Sec. 36.355.  GOVERNING CONSOLIDATED DISTRICTS.  (a)  After
  76-13  two or more districts are consolidated, they become one district
  76-14  and are governed as one district.
  76-15        (b)  During the transition period, the officers of each
  76-16  district shall continue to act jointly as officers of the original
  76-17  districts to settle the affairs of their respective districts.
  76-18        (c)  If the consolidated district elects directors, directors
  76-19  for the consolidated district shall be elected in the same manner
  76-20  and for the same term as directors elected at a confirmation
  76-21  election.  The directors election shall be set for the next regular
  76-22  election.
  76-23        Sec. 36.356.  DEBTS OF ORIGINAL DISTRICTS.  (a)  After two or
  76-24  more districts are consolidated, the consolidated district shall
  76-25  protect the debts of the original districts and shall assure that
   77-1  the debts are not impaired.  If the consolidated district has
   77-2  taxing authority, the debts may be paid by taxes levied on the land
   77-3  in the original districts as if they had not consolidated or from
   77-4  contributions from the consolidated district on terms stated in the
   77-5  consolidation agreement.
   77-6        (b)  If the consolidated district has taxing authority and
   77-7  assumes the bonds, notes, and other obligations of the original
   77-8  districts, taxes may be levied uniformly on all taxable property
   77-9  within the consolidated district to pay the debts.
  77-10        Sec. 36.357.  ASSESSMENT AND COLLECTION OF TAXES.  If the
  77-11  consolidated district has taxing authority, the district shall
  77-12  assess and collect taxes on property on all property in the
  77-13  district for maintenance and operation of the district.
  77-14        Sec. 36.358.  VOTED BUT UNISSUED BONDS.  If either district
  77-15  has voted but unissued bonds payable in whole or in part from
  77-16  taxation assumed by the consolidated district, the consolidated
  77-17  district may issue the voted but unissued bonds in the name of the
  77-18  consolidated district and levy a uniform tax on all taxable
  77-19  property in the consolidated district to pay for the bonds.
  77-20        Sec. 36.359.  FILING OF ORDER WITH COUNTY CLERK AND EXECUTIVE
  77-21  DIRECTOR.  A consolidation order issued by the board shall be kept
  77-22  in the records of the consolidated district, recorded in the office
  77-23  of the county clerk in each of the counties in the consolidated
  77-24  district, and filed with the executive director.
  77-25        SECTION 3.  Section 151.003(b), Water Code, is amended to
   78-1  read as follows:
   78-2        (b)  Except as provided in this subsection, an adjoining
   78-3  county may be added to the district on application of the
   78-4  commissioners court of the adjoining county and by complying with
   78-5  the procedures provided in Subchapter K, Chapter 36 <Sections
   78-6  55.730-55.744 of this code, to the extent those provisions are
   78-7  applicable>.  Any county added under this subchapter is subject to
   78-8  the jurisdiction of the board and this chapter, and two members
   78-9  shall be added to the board.  One shall be chosen by the
  78-10  commissioners court of the county added to the district and one
  78-11  shall be chosen by the mayor of the city that has the largest
  78-12  population in the county that is added.  The two new members shall
  78-13  draw lots to establish staggered terms of office.
  78-14        SECTION 4.  Section 151.005(a), Water Code, is amended to
  78-15  read as follows:
  78-16        (a)  The district has all of the rights, powers, privileges,
  78-17  authority, functions, and duties provided by the general law of
  78-18  this state, including Chapter 36 <Chapters 50 and 52 of this code>,
  78-19  applicable to groundwater <underground water> conservation
  78-20  districts created under Article XVI, Section 59, of the Texas
  78-21  Constitution.
  78-22        SECTION 5.  Section 151.005(c), Water Code, is amended to
  78-23  read as follows:
  78-24        (c)  Sections 36.104, 36.114, 36.117, 36.201, 36.202, 36.203,
  78-25  and 36.204 <52.1511, 52.156, 52.167, 52.168, 52.170, and 52.173 of
   79-1  this code> and Subchapter I, Chapter 36 <Subchapters B, C, H, I, J,
   79-2  and K of Chapter 52 of this code> do not apply to the district.
   79-3        SECTION 6.  Chapter 52, Water Code, is repealed.
   79-4        SECTION 7.  The importance of this legislation and the
   79-5  crowded condition of the calendars in both houses create an
   79-6  emergency and an imperative public necessity that the
   79-7  constitutional rule requiring bills to be read on three several
   79-8  days in each house be suspended, and this rule is hereby suspended.