JBM C.S.H.B. 3387 75(R)BILL ANALYSIS NATURAL RESOURCES C.S.H.B. 3387 By: Gallego 4-30-97 Committee Report (Substituted) BACKGROUND The watermaster program was started at the Texas Water Commission. Later, the program was used by the Texas Natural Resource Conservation Commission (TNRCC) for the purpose of administrating adjudicated water rights after the enactment of the Water Rights Adjudication Act in 1967. Today, there are two watermaster offices in operation: the Rio Grande watermaster, covering the Middle and Lower Rio Grande, and the South Texas watermaster, covering the Nueces watershed in the Uvalde, San Antonio, and Corpus Christi areas. The watermaster programs are totally funded by local water right user fees. Budgets are established for the needs of the program, and the assessments are paid each year by water right holders to meet the costs of operation. The watermaster's offices receive support from TNRCC with respect to various issues relating to water rights administration, water rights marketing, and transfer of ownership of water rights. Many of the water right holders in the watermaster program would prefer a system that made the watermaster more accountable to local users. Therefore, this legislation would place the watermaster assessment fee in a special fund used only for certain purposes. In addition, the bill creates a watermaster advisory committee in each water division where there is a watermaster. This would give the watermaster a formal way to allow direct input from the local stakeholders. Lastly, the bill simplifies the duties of the watermaster with regard to the administration of the water rights of individuals who own these rights. PURPOSE To make the watermaster more accountable and responsive to the users who fund the program by creating a watermaster advisory committee and a special watermaster fund. This legislation also limits some specific administrative duties of the watermaster and requires the watermaster to involve water right holders in decisions on the annual budget. RULEMAKING AUTHORITY It is the committee's opinion that this bill does expressly grant additional rulemaking authority to the TNRCC in Section 5. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 11.326, Water Code, by providing that the executive director shall supervise and direct the watermaster in the performance of his duties as defined in Section 11.327 of the Water Code. SECTION 2. Amends Subchapter G, Chapter 11, Water Code, by adding Section 11.3261. Section 11.3261(a) Creates the watermaster advisory committee, composed of at least nine members but no more than 15 members, who are holders of water rights or representatives of holders of water rights in the water division of a watermaster. The executive director shall consider geographic representation, amount of water rights held, different types of holders of water rights and users of such rights such as municipal suppliers, irrigators, and industrial users, and experience and knowledge in water management practices in making the appointments to the commission. (b) Committee members are not entitled to reimbursement of expenses incurred or to compensation. (c) Terms of office for committee members are two years from the date of initial appointment and hold office until a successor is appointed. (d) The advisory committee shall meet within thirty days following the initial appointment to elect a presiding officer who serves on an annual basis. Following the first meeting, the committee shall meet regularly after as necessary. (e) The duties of the committee include: (1) providing recommendations to the executive director regarding activities of benefit to the holders of water rights in the administration and distribution or water to holders of water rights. (2) review and comment to the executive director on the annual budget. (3) other duties as may be requested by the executive director with regard to the watermaster operations or as requested by holders of water rights in a water division which the committee deems of benefit to the administration of water rights in water divisions. SECTION 3. Amends Section 11.327, Water Code, as follows: Section 11.327 (d) States that a watermaster's duties shall not include activities which relate to other programs of the commission, except in situations of imminent threat to public health and safety or the environment. SECTION 4. Amends Section 11.329, Water Code, as follows: Section 11.329 (a) Limits the compensation of the watermaster to necessary expenses associated with streamflow measurement and monitoring, water accounting, assessment billing and collection associated with a watermaster's operation, and other duties a watermaster may be required to perform under this subchapter. (b) Provides that after the adjudication decree becomes final, and each fiscal year thereafter, the executive director shall provide notice to each holder of water rights at least 30 days prior to the commission's holding a public hearing as provided in Subsection (c), of the proposed budget for their watermaster operations showing the amount of compensation and expenses that will be required annually for the administration of the water rights so determined. The budget shall also be given to the watermaster advisory committee for comment at least 30 days prior to notification to each holder of water rights.. (c) Provides for a public hearing on the proposed fiscal year budget for each watermaster operation. Also, the commission shall determine the apportionment of the costs of administration of adjudicated water rights among the holders of the rights. After a public hearing, the commission shall issue an order assessing the annual cost against the holders of the water rights to whom the water will be distributed under the final decree. The commission shall equitably apportion the costs. The executive director may provide for payments in installments and shall specify the dates by which payments shall be made to the commission. At the request of the watermaster advisory committee the commission may modify a fiscal year budget for any water division. (d) The executive director shall collect the assessments and shall account for them separately for each watermaster operation and deposit the assessments in a special fund known as the watermaster fund established and governed by Section 11.3291. SECTION 5. Amends Subchapter G, Chapter 11, Water Code, by adding Section 11.3291. Section 11.3291 (a) Creates the special watermaster fund in the state treasury and provides that the fund shall be administered by the commission under this subchapter and rules adopted by the TNRCC. (b) Provides that the legislature hereby appropriates without further legislative action any funds deposited in the watermaster's fund as provided by this subchapter. The fund shall be used for: (1) compensation and expenses of the watermaster in each water division; (2) expenditures for equipment, facilities and capital expenditures necessary to the operation of the watermaster program, when recommended by the water master advisory committee and the executive director and approved by the commission when hearings are required as provided in Section 11.329; and (3) providing overhead and administrative expenses to a general revenue fund of the commission in an amount not greater than 10 percent times the approved annual budget under this subchapter in a water division. Amounts not used in one fiscal year shall be carried over and used for the following fiscal year's operational expenses of the watermaster. (c) The fund shall be accounted for separately for each water division. (d) The watermaster fund shall consist of fees collected in each water division, money from gifts, grants or donations, and money from any other source designated by the legislature or commission. (e) Allows the commission to invest, reinvest, and direct the investment of any available money in the fund as provided by Section 404.024, Government Code. SECTION 6. Effective date: September 1, 1997. SECTION 7. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1. Section 11.326(e), Water Code, is amended in the original by inserting the word "directly" between "responsible" and "to." This insertion is not made in the substitute. SECTION 2. Section 11.3261(e)(1), Water Code, in the original states that the advisory committee's duties include the general oversight of watermaster operations and recommendations to the executive director regarding activities of benefit to the holders of water rights in the administration and distribution of water holders of water rights. The substitute differs from the original in Section 11.3261(e)(1) by stating that the duties of the committee include providing recommendations to the executive director regarding activities of benefit to the holders of water rights in the administration and distribution or water to holders of water rights (no reference to oversight). SECTION 3. Section 11.327(d), Water Code, in the original states that a watermaster's duties shall not include duties directly associated with the duties defined in Subsections (a), (b) or (c) or duties which relate to other activities programs or purposes of the commission except duties as may directly benefit the holders of water rights in respect to their water rights when approved by the watermaster advisory committee and executive director. The substitute differs in this section by stating that a watermaster's duties shall not include activities which relate to other programs of the commission, except in situations of imminent threat to public health and safety or the environment. SECTION 4. Section 11.329(a), Water Code, is amended in the original by inserting the words "done by a watermaster" after "collection" and before "and." In the substitute, this section is amended by inserting the words "associated with a watermaster's operation" after "collection" and before "and." Also, Section 11.329(b), Water Code, is amended in the original by stating that the executive director shall notify by July 1 of each fiscal year each holder of water rights under the decree of the budget for the watermaster operations showing the amount of compensation and expenses that will be required annually for the administration of the water rights so determined. This section in the substitute is amended by stating that the executive director shall provide notice to each holder of water rights at least 30 days prior to the commission's holding a public hearing as provided in Subsection (c), of the proposed budget for their watermaster operations showing the amount of compensation and expenses that will be required annually for the administration of the water rights so determined. Finally, Section 11.329(c), Water Code, is amended in the original by requiring that the commission hold a public hearing on the required annual amount as set out in the budget if requested in writing by ten water right holders filed with the commission on or before August 1 of each fiscal year. In the substitute, the commission is required to hold a public hearing on the proposed fiscal year budget for each watermaster operation. Also in the original in this section, the commission was required to hold a public hearing to determine the apportionment of costs of administration of adjudicated rights. This requirement is deleted in the substitute. Further, in this section, the original provides for more than one hearing before an order assessing the annual cost against water right holders, and the substitute only provides for one public hearing on this matter. Also in Section 11.329(c), Water Code, a new sentence is added in the substitute that states that, at the request of the watermaster advisory committee, the commission may modify a fiscal year budget for any water division. SECTION 5. Section 11.3291(b)(3), Water Code, in the original states that overhead and administration expenses of the commission may not exceed 2 1/2 percent times the annual amount of assessment collected. The substitute changes this number to 10 percent.