By:  Brown, et al.                                       S.B. No. 1

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to the development and management of the water resources

 1-2     of the state; providing penalties.

 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-4             ARTICLE 1.  WATER PLANNING:  DROUGHT, CONSERVATION,

 1-5                         DEVELOPMENT, AND MANAGEMENT

 1-6           SECTION 1.01.  Section 16.051, Water Code, is amended to read

 1-7     as follows:

 1-8           Sec. 16.051.  STATE WATER PLAN:  DROUGHT, CONSERVATION,

 1-9     DEVELOPMENT, AND MANAGEMENT; EFFECT OF PLAN.  (a)  No later than

1-10     September 1, 2001, and every five years thereafter, the board [The

1-11     executive administrator] shall adopt [prepare, develop, and

1-12     formulate] a comprehensive state water plan that incorporates the

1-13     regional water plans approved under Section 16.053 of this code.

1-14     The state water plan shall provide for the orderly development,

1-15     management, and conservation of water resources and preparation for

1-16     and response to drought conditions, in order that sufficient water

1-17     will be available at a reasonable cost to ensure public health,

1-18     safety, and welfare; further economic development; and protect the

1-19     agricultural and natural resources of the entire state.

1-20           (b)  The state water plan, as formally adopted by the board,

1-21     shall be a guide to state water policy.  The commission shall take

1-22     the plan into consideration in matters coming before it.  Nothing

1-23     in the state water plan or any amendment or modification of the

 2-1     plan  affects  any  vested  right existing  before August 30, 1965.

 2-2           (c)  The board by rule [plan] shall define and designate

 2-3     river basins and watersheds.

 2-4           (d)  The board, in coordination with the commission and the

 2-5     Parks and Wildlife Department, shall adopt by rule guidance

 2-6     principles for the state water plan which reflect the public

 2-7     interest of the entire state.  When adopting guidance principles,

 2-8     due consideration shall be given to the construction and

 2-9     improvement of surface water resources and the application of

2-10     principles that result in voluntary redistribution of water

2-11     resources.

2-12           (e)  On adoption the board shall deliver the state water plan

2-13     to the governor, the lieutenant governor, and the speaker of the

2-14     house of representatives and present the plan for review to the

2-15     appropriate legislative committees.  The plan shall include

2-16     legislative recommendations that the board believes are needed and

2-17     desirable to facilitate more voluntary water transfers.  [(c)  The

2-18     executive administrator shall be governed in his preparation of the

2-19     plan by a regard for the public interest of the entire state.  The

2-20     executive administrator shall direct his efforts toward the orderly

2-21     development and management of water resources in order that

2-22     sufficient water will be available at a reasonable cost to further

2-23     the economic development of the entire state.]

2-24           [(d)  The executive administrator shall also give

2-25     consideration in the plan to the effect of upstream development on

 3-1     the bays, estuaries, and arms of the Gulf of Mexico and to the

 3-2     effect of the plan on navigation.]

 3-3           SECTION 1.02.  Sections 16.053 through 16.057, Water Code,

 3-4     are amended to read as follows:

 3-5           Sec. 16.053.  REGIONAL WATER PLANS.  (a)  The regional water

 3-6     planning group in each regional water planning area shall prepare a

 3-7     regional water plan, using an existing state water plan identified

 3-8     in Section 16.051 of this code as a guide, if one is present, that

 3-9     provides for the orderly development, management, and conservation

3-10     of water resources and preparation for and response to drought

3-11     conditions in order that sufficient water will be available at a

3-12     reasonable cost to ensure public health, safety, and welfare;

3-13     further economic development; and protect the agricultural and

3-14     natural resources of that particular region.

3-15           (b)  No later than September 1, 1998, the board shall

3-16     designate the areas for which regional water plans shall be

3-17     developed, taking into consideration such factors as river basin

3-18     and aquifer delineations, water utility development patterns,

3-19     socioeconomic characteristics, existing regional water planning

3-20     areas, political subdivision boundaries, public comment, and other

3-21     factors the board deems relevant.  The board shall review and

3-22     update the designations as necessary but at least every five years.

3-23           (c)  No later than 60 days after the designation of the

3-24     regions under Subsection (b) of this section, the board shall

3-25     designate representatives within each regional water planning area

 4-1     to serve as the initial coordinating body for planning.  The

 4-2     initial coordinating body shall then designate additional

 4-3     representatives to serve on the regional water planning group,

 4-4     ensuring adequate representation from the interests comprising that

 4-5     region, including but not limited to the public, counties,

 4-6     municipalities, industries, agricultural interests, environmental

 4-7     interests, small businesses, electric generating utilities, river

 4-8     authorities, water districts, and water utilities.

 4-9           (d)  The board shall provide guidelines for the consideration

4-10     of existing regional planning efforts by regional water planning

4-11     groups.  The board shall provide guidelines for the format in which

4-12     information shall be presented in the regional water plans.

4-13     Nothing in the initial planning effort shall prevent development of

4-14     a management plan or project where local or regional needs require

4-15     action prior to completion of the initial regional water plan under

4-16     this section.

4-17           (e)  Each regional water planning group shall submit to the

4-18     board a regional water plan that:

4-19                 (1)  is consistent with the guidance principles for the

4-20     state water plan adopted by the board under Section 16.051(d) of

4-21     this code;

4-22                 (2)  provides information based on data provided or

4-23     approved by the board in a format consistent with the guidelines

4-24     provided by the board under Subsection (d) of this section;

4-25                 (3)  has specific provisions for water management

 5-1     strategies to be used:  during a drought of record; when flows are

 5-2     at 75 percent of normal; and when flows are at 50 percent of

 5-3     normal; and

 5-4                 (4)  includes but is not limited to consideration of

 5-5     the following:

 5-6                       (A)  any existing water or drought planning

 5-7     efforts addressing all or a portion of the region;

 5-8                       (B)  certified groundwater conservation district

 5-9     management plans;

5-10                       (C)  all potentially feasible water management

5-11     strategies, including but not limited to improved conservation and

5-12     management of existing water supplies, acquisition of available

5-13     existing water supplies, and development of new water supplies;

5-14                       (D)  protection of existing water rights in the

5-15     region;

5-16                       (E)  opportunities for and the benefits of

5-17     developing regional water supply facilities or providing regional

5-18     management of water supply facilities;

5-19                       (F)  appropriate provision for environmental

5-20     water needs and for the effect of upstream development on the bays,

5-21     estuaries, and arms of the Gulf of Mexico and the effect of plans

5-22     on navigation;

5-23                       (G)  provisions in Section 11.085(h)(1) of this

5-24     code if interbasin transfers are contemplated; and

5-25                       (H)  voluntary transfer of water within the

 6-1     region using, but not limited to, regional water banks, sales,

 6-2     leases, options, subordination agreements, and financing

 6-3     agreements.

 6-4           (f)  No later than September 1, 1998, the board shall adopt

 6-5     rules:

 6-6                 (1)  to provide for the procedures for adoption of

 6-7     regional water plans by regional water planning groups and for

 6-8     approval of regional water plans by the board; and

 6-9                 (2)  to govern procedures to be followed in carrying

6-10     out the responsibilities of this section.

6-11           (g)  The board shall provide technical and financial

6-12     assistance to the regional water planning groups in the development

6-13     of their plans.  The board shall simplify, as much as possible,

6-14     planning requirements in regions with abundant water resources.

6-15     The board, if requested, may facilitate resolution of conflicts

6-16     within regions.

6-17           (h)(1)  Prior to the preparation of the regional water plan,

6-18     the regional water planning group shall, after notice, hold at

6-19     least one public meeting at some central location within the

6-20     regional planning area to gather suggestions and recommendations

6-21     from the public as to issues that should be addressed in the plan

6-22     or provisions that should be considered for inclusion in the plan.

6-23                 (2)  The regional water planning group shall provide an

6-24     ongoing opportunity for public input during the preparation of the

6-25     regional water plan.

 7-1                 (3)  After the regional water plan is initially

 7-2     prepared, the regional water planning group shall, after notice,

 7-3     hold at least one public hearing at some central location within

 7-4     the regional water planning area.

 7-5                 (4)  After the regional water plan is initially

 7-6     prepared, the regional water planning group shall submit a copy of

 7-7     the plan to the board.  The board shall submit comments on the

 7-8     regional water plan as to whether the plan meets the requirements

 7-9     of Subsection (e) of this section.

7-10                 (5)  If no interregional conflicts exist, the regional

7-11     water planning group shall consider all public and board comments;

7-12     prepare, revise, and adopt the final plan; and submit the adopted

7-13     plan to the board for approval and inclusion in the state water

7-14     plan.

7-15                 (6)  If an interregional conflict exists, the board

7-16     shall facilitate coordination between the involved regions to

7-17     resolve the conflict.  If conflict remains, the board shall resolve

7-18     the conflict.  On resolution of the conflict, the involved regional

7-19     water planning groups shall prepare revisions to their respective

7-20     plans and hold, after notice, at least one public hearing at some

7-21     central location within their respective regional water planning

7-22     areas.  The regional water planning groups shall consider all

7-23     public and board comments; prepare, revise, and adopt their

7-24     respective plans; and submit their plans to the board for approval

7-25     and inclusion in the state water plan.

 8-1                 (7)  The board may approve a regional water plan only

 8-2     after it has determined that all interregional conflicts involving

 8-3     that regional water planning area have been resolved.

 8-4           (i)  The regional water planning groups shall submit their

 8-5     adopted regional water plans to the board by September 1, 2000, for

 8-6     approval and inclusion in the state water plan.  In conjunction

 8-7     with the submission of regional water plans, each planning group

 8-8     should make legislative recommendations, if any, to facilitate more

 8-9     voluntary water transfers in the region.  Subsequent regional water

8-10     plans shall be submitted every five years thereafter.  Public

8-11     participation for revised regional plans shall follow the

8-12     procedures under Subsection (h) of this section.

8-13           (j)  The board may provide financial assistance to political

8-14     subdivisions under Subchapters E and F of this chapter and

8-15     Subchapters C, D, E, F, and J, Chapter 15, and Subchapters D, I, K,

8-16     and L, Chapter 17 of this code for water projects only if the board

8-17     determines that the needs to be addressed by the project will be

8-18     addressed in a manner consistent with an approved regional water

8-19     plan for the area in which the facility is to be located, unless

8-20     the board determines that conditions warrant waiver of this

8-21     requirement.  [HEARING ON PRELIMINARY PLAN.  (a)  After the

8-22     executive administrator completes his preliminary planning of the

8-23     water resources development within a river basin, he shall hold a

8-24     public hearing, after notice, at some central location within the

8-25     river basin.  If the proposed plan involves the transfer of water

 9-1     from one basin to another, the hearing shall be held at some

 9-2     location convenient to the areas affected.]

 9-3           [(b)  The executive administrator shall present the proposed

 9-4     plan of development and hear evidence for and against the plan.]

 9-5           [(c)  After the hearing, the executive administrator shall

 9-6     consider the effect the plan will have on the present and future

 9-7     development, economy, general welfare, and water requirements of

 9-8     the river basin or the areas affected.]

 9-9           Sec. 16.054.  OTHER WATER PLANNING.  (a)  It is the policy of

9-10     the state that water resource management, water conservation, and

9-11     drought planning should occur on an ongoing basis.  The board,

9-12     commission, and Parks and Wildlife Department shall make available

9-13     where appropriate technical and financial assistance for such

9-14     planning.

9-15           (b)  When preparing individual water plans that address

9-16     drought or the development, management, or conservation of water

9-17     resources from the holders of existing permits, certified filings,

9-18     or certificates of adjudication, the water suppliers, groundwater

9-19     districts, special districts, irrigation districts, and other water

9-20     users should ensure that the plan is consistent with the applicable

9-21     approved regional water plan for their region.  [HEARING ON

9-22     COMPLETED STATE WATER PLAN.  When the executive administrator has

9-23     prepared and examined the completed preliminary plan, the board

9-24     shall hold a public hearing on the plan to determine whether or not

9-25     it gives adequate consideration to the protection of existing water

 10-1    rights in this state and whether or not it takes into account modes

 10-2    and procedures for the equitable adjustment of water rights

 10-3    affected by the plan.  After the hearing, the board may formally

 10-4    adopt the state water plan.  A majority vote is necessary for

 10-5    adoption.]

 10-6          Sec. 16.055.  DROUGHT RESPONSE PLAN.  (a)  The division of

 10-7    emergency management of the office of the governor shall be

 10-8    responsible for coordinating the drought response component of the

 10-9    state water plan.

10-10          (b)  The drought response and monitoring committee is created

10-11    and shall meet as necessary to carry out the provisions of this

10-12    section.  The committee is composed of one representative from each

10-13    of the following entities, appointed by the administrative head of

10-14    that entity:

10-15                (1)  the division of emergency management in the office

10-16    of the governor;

10-17                (2)  the board;

10-18                (3)  the commission;

10-19                (4)  the Parks and Wildlife Department;

10-20                (5)  the Department of Agriculture; and

10-21                (6)  the Texas Agricultural Extension Service.

10-22          (c)  The governor may designate any other person or a

10-23    representative of any other entity to serve on the committee.

10-24          (d)  The representative of the division of emergency

10-25    management shall serve as chair of the committee.

 11-1          (e)  The committee shall be responsible for:

 11-2                (1)  the assessment and public reporting of drought

 11-3    monitoring and water supply conditions;

 11-4                (2)  advising the governor on significant drought

 11-5    conditions;

 11-6                (3)  recommending specific provisions for a defined

 11-7    state response to drought-related disasters for inclusion in the

 11-8    state emergency management plan and the state water plan;

 11-9                (4)  advising the regional planning groups on

11-10    drought-related issues in the regional water plans; and

11-11                (5)  ensuring effective coordination among state,

11-12    local, and federal agencies in drought-response planning.

11-13          (f)  In performing its duties under this section, the drought

11-14    response and monitoring committee shall consider the following

11-15    factors when determining whether a drought exists for the purposes

11-16    of this section:

11-17                (1)  meteorological conditions and forecasts;

11-18                (2)  hydrological conditions and forecasts;

11-19                (3)  water use and demand forecasts;

11-20                (4)  water supply conditions and forecasts;

11-21                (5)  the potential impacts of the water shortage

11-22    on:  the public health, safety, and welfare; economic development;

11-23    and agricultural and natural resources; and

11-24                (6)  other factors deemed appropriate by the committee.

11-25    [EFFECT OF PLAN.  (a)  The state water plan, as formally adopted by

 12-1    the board, shall be a flexible guide to state policy for the

 12-2    development of water resources in this state.]

 12-3          [(b)  The commission shall take the plan into consideration

 12-4    in matters coming before it but is not bound by the plan.]

 12-5          [(c)  Nothing in the state water plan or any amendment or

 12-6    modification of the plan affects any vested right existing before

 12-7    August 30, 1965.]

 12-8          Sec. 16.056.  [AMENDMENT OF PLAN.  (a)  The board shall

 12-9    review the plan biennially to consider any amendment or

12-10    modification that may be needed because of changed conditions.]

12-11          [(b)  The board shall amend or modify the plan as experience

12-12    and changed conditions require after holding a public hearing on

12-13    any amendment or modification in the manner and for the purposes

12-14    provided by Section 16.054 of this code.]

12-15          [(c)  Any amendment or modification adopted by the board

12-16    becomes a part of the plan.]

12-17          [Sec. 16.057.]  FEDERAL ASSISTANCE IN FINANCING REGIONAL

12-18    WATER PLANS [PLAN].  The executive administrator may take all

12-19    necessary action to qualify for federal assistance in financing the

12-20    development and improvement of the regional water plans [plan].

12-21          SECTION 1.03.  Subchapter D, Chapter 11, Water Code, is

12-22    amended by amending Section 11.1271 and adding Section 11.1272 to

12-23    read as follows:

12-24          Sec. 11.1271.  ADDITIONAL REQUIREMENTS:  WATER CONSERVATION

12-25    PLANS.  (a)  The commission shall [may] require the formulation and

 13-1    submission of a water conservation plan and the adoption of

 13-2    reasonable water conservation measures, as defined by Subdivision

 13-3    (8)(B), Section 11.002, of this code.

 13-4          (b)  The commission shall require the holder of an existing

 13-5    permit, certified filing, or certificate of adjudication for the

 13-6    appropriation of surface water in the amount of 1,000 acre-feet a

 13-7    year or more to develop, submit, and implement a water conservation

 13-8    plan, consistent with the appropriate regional water plan, that

 13-9    adopts reasonable water conservation measures as defined by

13-10    Subdivision (8)(B), Section 11.002, of this code.  The requirement

13-11    for a water conservation plan under this section shall not result

13-12    in the need for an amendment to an existing permit, certified

13-13    filing, or certificate of adjudication.

13-14          (c)  The commission shall adopt rules establishing criteria

13-15    and deadlines for submission of water conservation plans.

13-16          Sec. 11.1272.  ADDITIONAL REQUIREMENT:  DROUGHT CONTINGENCY

13-17    PLANS FOR CERTAIN APPLICANTS AND WATER RIGHT HOLDERS.  The

13-18    commission shall by rule require wholesale and retail public water

13-19    suppliers and irrigation districts to develop drought contingency

13-20    plans consistent with the appropriate approved regional water plan

13-21    to be implemented during periods of water shortages and drought.

13-22          SECTION 1.04.  Section 15.401, Water Code, is amended to read

13-23    as follows:

13-24          Sec. 15.401.  PROGRAM CREATION.  The research and planning

13-25    program is created to provide money for research into and planning

 14-1    of the proper conservation, management, and development of the

 14-2    state's water resources, for regional planning by political

 14-3    subdivisions, for facility engineering in economically distressed

 14-4    areas, and for flood control planning by political subdivisions.

 14-5    The program may also provide money for research and planning by

 14-6    Texas political subdivisions related to the proper conservation,

 14-7    management, and development of water resources of areas outside

 14-8    Texas if such research or planning will result in water being

 14-9    available for use in or for the benefit of Texas or will maintain

14-10    and enhance the quality of water in Texas.

14-11          SECTION 1.05.  Subsection (a), Section 15.404, Water Code, is

14-12    amended to read as follows:

14-13          (a)  The board may enter into a contract with any person for

14-14    research into any matter relating to the conservation and

14-15    development of the state's water resources or for research by Texas

14-16    political subdivisions related to the proper conservation and

14-17    development of water resources of areas outside Texas if such

14-18    research will result in water being available for use in or for the

14-19    benefit of Texas or will help maintain and enhance the quality of

14-20    water in Texas.

14-21          SECTION 1.06.  Subsection (f), Section 15.406, Water Code, is

14-22    amended to read as follows:

14-23          (f)  The board shall adopt rules establishing criteria of

14-24    eligibility for regional facility planning money that considers:

14-25                (1)  the relative need of the political subdivision for

 15-1    the money;

 15-2                (2)  the legal authority of the political subdivision

 15-3    to plan, develop, and operate regional facilities; [and]

 15-4                (3)  the effect of regional facility planning by the

 15-5    political subdivision on overall regional facility planning,

 15-6    development, and operation in the state and within the area in

 15-7    which the political subdivision is located; and

 15-8                (4)  the degree to which the regional facility planning

 15-9    by the political subdivision is consistent with an approved

15-10    regional water plan for the area in which the political subdivision

15-11    is located.

15-12          SECTION 1.07.  Subchapter F, Chapter 15, Water Code, is

15-13    amended by adding Section 15.4061 to read as follows:

15-14          Sec. 15.4061.  FUNDING FOR REGIONAL WATER PLANS.  (a)  The

15-15    board may enter into contracts with political subdivisions

15-16    designated as representatives of a regional water planning group

15-17    under Section 16.053(c) of this code to pay from the research and

15-18    planning fund all or part of the cost of developing or revising

15-19    regional water plans as defined in Section 16.053 of this code.

15-20          (b)  A political subdivision may submit, either individually

15-21    or jointly with other political subdivisions, a written application

15-22    to the board for the purpose of funding regional water planning

15-23    from the research and planning fund.

15-24          (c)  The application shall be in the manner and form required

15-25    by board rules and include:

 16-1                (1)  the name of the political subdivision or political

 16-2    subdivisions;

 16-3                (2)  a citation to the laws under which the political

 16-4    subdivision was created and is operating, including specific

 16-5    citation of all laws providing authority to develop and implement a

 16-6    regional water plan;

 16-7                (3)  the amount requested from the board for regional

 16-8    water planning; and

 16-9                (4)  any other relevant information required by the

16-10    board in its rules or specifically requested by the board.

16-11          (d)  After notice and hearing, the board may award the

16-12    applicant all or part of the requested funds that the board

16-13    considers necessary for the political subdivision to carry out

16-14    regional water planning.

16-15          (e)  If the board grants an application under this section

16-16    and awards funds for regional water planning, the board shall enter

16-17    into a contract with the political subdivision or political

16-18    subdivisions that includes:

16-19                (1)  a detailed statement of the purpose for which the

16-20    money is to be used;

16-21                (2)  the total amount of money to be paid by the board

16-22    from the research and planning fund under the contract; and

16-23                (3)  any other terms and conditions required by the

16-24    board's rules or agreed to by the contracting parties.

16-25          (f)  The board shall adopt rules establishing criteria for

 17-1    eligibility for regional water planning money that include:

 17-2                (1)  the relative need of the political subdivision for

 17-3    the money;

 17-4                (2)  the legal authority of the political subdivision

 17-5    to develop and implement a regional water plan; and

 17-6                (3)  the degree to which regional water planning by the

 17-7    political subdivision or political subdivisions will address the

 17-8    water supply needs in the regional water planning area.

 17-9          (g)  The board shall require that regional water plans

17-10    developed or revised under contracts entered into under this

17-11    section be made available to the commission and the Parks and

17-12    Wildlife Department.

17-13          SECTION 1.08.  The state water plan in effect on the

17-14    effective date of this Act shall remain in effect until a new state

17-15    water plan is adopted pursuant to Subsection (a), Section 16.051,

17-16    Water Code, as amended by Section 1.01 of this Act.

17-17          ARTICLE 2.  WATER MANAGEMENT, MARKETING, AND TRANSFERS

17-18          SECTION 2.01.  Section 791.026, Government Code, is amended

17-19    to read as follows:

17-20          Sec. 791.026.  CONTRACTS FOR WATER SUPPLY AND WASTEWATER

17-21    TREATMENT FACILITIES.  (a)  A municipality, district, or river

17-22    authority of this state may contract with another municipality,

17-23    district, or river authority of this state to obtain or provide

17-24    part or all of:

17-25                (1)  water supply or wastewater treatment facilities;

 18-1    or

 18-2                (2)  a lease or operation of water supply facilities or

 18-3    wastewater treatment facilities.

 18-4          (b)  The contract may provide that the municipality,

 18-5    district, or river authority obtaining one of the services may not

 18-6    obtain those services from a source other than a contracting party,

 18-7    except as provided by the contract.

 18-8          (c)  If a contract includes a term described by Subsection

 18-9    (b), payments made under the contract are the paying party's

18-10    operating expenses for its water supply system, wastewater

18-11    treatment facilities, or both.

18-12          (d)  The contract may:

18-13                (1)  contain terms and extend for any period on which

18-14    the parties agree; [and]

18-15                (2)  require the purchaser to develop alternative or

18-16    replacement supplies prior to the expiration date of the contract

18-17    and may provide for enforcement of such terms by court order; and

18-18                (3)  provide that it will continue in effect until

18-19    bonds specified by the contract and any refunding bonds issued to

18-20    pay those bonds are paid.

18-21          (e)  Where a contract sets forth explicit expiration

18-22    provisions, no continuation of the service obligation will be

18-23    implied.

18-24          (f)  Tax revenue may not be pledged to the payment of amounts

18-25    agreed to be paid under the contract.

 19-1          (g) [(f)]  The powers granted by this section prevail over a

 19-2    limitation contained in another law.

 19-3          SECTION 2.02.  Section 11.002, Water Code, is amended by

 19-4    amending Subdivision (4) and adding Subdivisions (9) and (10) to

 19-5    read as follows:

 19-6                (4)  "Beneficial use" means use of the amount of water

 19-7    which is economically necessary for a purpose authorized by this

 19-8    chapter, when reasonable intelligence and reasonable diligence are

 19-9    used in applying the water to that purpose and shall include

19-10    conserved water.

19-11                (9)  "Conserved water" means that amount of water saved

19-12    by a holder of an existing permit, certified filing, or certificate

19-13    of adjudication through practices, techniques, and technologies

19-14    that would otherwise be irretrievably lost to all consumptive

19-15    beneficial uses arising from storage, transportation, distribution,

19-16    or application.

19-17                (10)  "Surplus water" means water in excess of the

19-18    initial or continued beneficial use of the appropriator.

19-19          SECTION 2.03.  Subsection (e), Section 11.023, Water Code, is

19-20    amended to read as follows:

19-21          (e)  The amount of water appropriated for each purpose

19-22    mentioned in this section shall be specifically appropriated for

19-23    that purpose, subject to the preferences prescribed in Section

19-24    11.024 of this code.  The commission may authorize appropriation of

19-25    a single amount or volume of water for more than one purpose of

 20-1    use.  In the event that a single amount or volume of water is

 20-2    appropriated for more than one purpose of use, the total amount of

 20-3    water actually diverted for all of the authorized purposes may not

 20-4    exceed the total amount of water appropriated.

 20-5          SECTION 2.04.  Section 11.036, Water Code, is amended to read

 20-6    as follows:

 20-7          Sec. 11.036.  CONSERVED OR STORED WATER:  SUPPLY CONTRACT.

 20-8    (a)  A person, association of persons, corporation, or water

 20-9    improvement or irrigation district having in possession and control

20-10    any storm water, floodwater, or rainwater that is conserved or

20-11    stored as authorized by this chapter may contract to supply the

20-12    water to any person, association of persons, corporation, or water

20-13    improvement or irrigation district having the right to acquire use

20-14    of the water.

20-15          (b)  The price and terms of the contract shall be just and

20-16    reasonable and without discrimination, and the contract is subject

20-17    to the same revision and control as provided in this code for other

20-18    water rates and charges.  If the contract sets forth explicit

20-19    expiration provisions, no continuation of the service obligation

20-20    will be implied.

20-21          (c)  The terms of a contract may expressly provide that the

20-22    person using the stored or conserved water is required to develop

20-23    alternative or replacement supplies prior to the expiration of the

20-24    contract and may further provide for enforcement of such terms by

20-25    court order.

 21-1          (d)  If any person uses the stored or conserved water without

 21-2    first entering into a contract with the party that conserved or

 21-3    stored it, the user shall pay for the use at a rate determined by

 21-4    the commission to be just and reasonable, subject to court review

 21-5    as in other cases.

 21-6          SECTION 2.05.  Section 11.042, Water Code, is amended to read

 21-7    as follows:

 21-8          Sec. 11.042.  DELIVERING WATER DOWN BANKS AND BEDS.

 21-9    (a)  Under rules prescribed by the commission, a person,

21-10    association of persons, corporation, or water control and

21-11    improvement or irrigation district supplying stored or conserved

21-12    water under contract as provided in this chapter may use the bank

21-13    and bed of any flowing natural stream in the state to convey the

21-14    water from the place of storage to the place of use or to the

21-15    diversion point [plant] of the appropriator.  [The commission shall

21-16    prescribe rules for this purpose.]

21-17          (b)  Except as provided by Subsection (a) of this section, a

21-18    person who wishes to convey and subsequently divert water in a

21-19    watercourse or stream must obtain the prior approval of the

21-20    commission through a bed and banks authorization.  The

21-21    authorization shall allow to be diverted only the amount of water

21-22    put into a watercourse or stream, less carriage losses and subject

21-23    to any special conditions that may address the impact of the

21-24    discharge, conveyance, and diversion on existing permits, certified

21-25    filings, or certificates of adjudication, instream uses, and

 22-1    freshwater inflows to bays and estuaries.  Water discharged into a

 22-2    watercourse or stream under this chapter shall not cause a

 22-3    degradation of water quality to the extent that the stream

 22-4    segment's classification would be lowered.  Authorizations under

 22-5    this section and water quality authorizations may be approved in a

 22-6    consolidated permit proceeding.

 22-7          (c)  Nothing in this section shall be construed to affect an

 22-8    existing project for which water rights and reuse authorizations

 22-9    have been granted by the commission before September 1, 1997.

22-10          SECTION 2.06.  Section 11.046, Water Code, is amended to read

22-11    as follows:

22-12          Sec. 11.046.  RETURN SURPLUS [UNUSED] WATER.  (a)  A person

22-13    who takes or diverts water from a watercourse or [running] stream

22-14    for the purposes authorized by this code shall conduct surplus

22-15    water back to the watercourse or stream from which it was taken if

22-16    the water can be returned by gravity flow and it is reasonably

22-17    practicable to do so.

22-18          (b)  In granting an application for a water right, the

22-19    commission may include conditions in the water right providing for

22-20    the return of surplus water, in a specific amount or percentage of

22-21    water diverted, and the return point on a watercourse or stream as

22-22    necessary to protect senior downstream permits, certified filings,

22-23    or certificates of adjudication or to provide flows for instream

22-24    uses or bays and estuaries.

22-25          (c)  Except as specifically provided otherwise in the water

 23-1    right, water appropriated under a permit, certified filing, or

 23-2    certificate of adjudication may, prior to its release into a

 23-3    watercourse or stream, be beneficially used and reused by the

 23-4    holder of a permit, certified filing, or certificate of

 23-5    adjudication for the purposes and locations of use provided in the

 23-6    permit, certified filing, or certificate of adjudication.  Once

 23-7    water has been diverted under a permit, certified filing, or

 23-8    certificate of adjudication and then returned to a watercourse or

 23-9    stream, however, it is considered surplus water and therefore

23-10    subject to reservation for instream uses or beneficial inflows or

23-11    to appropriation by others unless expressly provided otherwise in

23-12    the permit, certified filing, or certificate of adjudication.

23-13          (d)  Water appropriated under a permit, certified filing, or

23-14    certificate of adjudication which is recirculated within a

23-15    reservoir for cooling purposes shall not be considered to be

23-16    surplus for purposes of this chapter.

23-17          SECTION 2.07.  Section 11.085, Water Code, is amended to read

23-18    as follows:

23-19          Sec. 11.085.  INTERBASIN [INTERWATERSHED] TRANSFERS.  (a)  No

23-20    person may take or divert any state [of the] water from a river

23-21    basin [of the ordinary flow, underflow, or storm flow of any

23-22    stream, watercourse, or watershed] in this state and transfer such

23-23    water to [into] any other river basin [natural stream, watercourse,

23-24    or watershed to the prejudice of any person or property situated

23-25    within the watershed from which the water is proposed to be taken

 24-1    or diverted.]

 24-2          [(b)  No person may transfer water from one watershed to

 24-3    another] without first applying for and receiving a water right or

 24-4    an amendment to a permit, certified filing, or certificate of

 24-5    adjudication [permit] from the commission authorizing the transfer

 24-6    [to do so.  Before issuing such a permit, the commission shall hold

 24-7    a hearing to determine the rights that might be affected by the

 24-8    transfer.  The commission shall give notice and hold the hearing in

 24-9    the manner prescribed by its procedural rules].

24-10          (b)  Prior to taking action on an application for an

24-11    interbasin transfer, the commission shall conduct at least one

24-12    public meeting to receive comments in both the basin of origin of

24-13    the water proposed for transfer and the basin receiving water from

24-14    the proposed transfer.  Notice shall be provided pursuant to

24-15    Subsection (e) of this section.  Any person may present relevant

24-16    information and data at the meeting on the criteria which the

24-17    commission is to consider related to the interbasin transfer.

24-18          (c)  In addition to the public meetings required by

24-19    Subsection (b) of this section, if the application is contested in

24-20    a manner requiring an evidentiary hearing under the rules of the

24-21    commission, the commission shall give notice and hold an

24-22    evidentiary hearing, in accordance with commission rules and

24-23    applicable state law.

24-24          (d)  Notice of an application for an interbasin transfer

24-25    shall be mailed to the following:

 25-1                (1)  all holders of permits, certified filings, or

 25-2    certificates of adjudication located in whole or in part in the

 25-3    basin of origin;

 25-4                (2)  each county judge of a county located in whole or

 25-5    in part in the basin of origin;

 25-6                (3)  each mayor of a city with a population of 1,000 or

 25-7    more located in whole or in part in the basin of origin; and

 25-8                (4)  all groundwater conservation districts located in

 25-9    whole or in part in the basin of origin.

25-10          (e)  The applicant shall cause the notice of application for

25-11    an interbasin transfer to be published once a week for two

25-12    consecutive weeks in one or more newspapers having general

25-13    circulation in each county located in whole or in part in the basin

25-14    of origin.  The published notice may not be smaller than 96.8

25-15    square centimeters or 15 square inches with the shortest dimension

25-16    at least 7.6 centimeters or three inches.  The notice of

25-17    application and public meetings shall be combined in the mailed and

25-18    published notices.

25-19          (f)  The applicant shall pay the cost of notice required to

25-20    be provided under this section.  The commission by rule may

25-21    establish procedures for payment of those costs.

25-22          (g)  In addition to other requirements of this code relating

25-23    to the review of and action on an application for a new water right

25-24    or amended permit, certified filing, or certificate of

25-25    adjudication, the commission shall:

 26-1                (1)  request review and comment on an application for

 26-2    an interbasin transfer from each county judge of a county located

 26-3    in whole or in part in the basin of origin.  A county judge should

 26-4    make comment only after seeking advice from the county

 26-5    commissioners court; and

 26-6                (2)  give consideration to the comments of each county

 26-7    judge of a county located in whole or in part in the basin of

 26-8    origin prior to taking action on an application for an interbasin

 26-9    transfer.

26-10          (h)  In addition to other requirements of this code relating

26-11    to the review of and action on an application for a new water right

26-12    or amended permit, certified filing, or certificate of

26-13    adjudication, the commission shall weigh the effects of the

26-14    proposed transfer by considering:

26-15                (1)  the need for the water in the basin of origin and

26-16    in the proposed receiving basin based on the period for which the

26-17    water supply is requested, but not to exceed 50 years;

26-18                (2)  factors identified in the applicable approved

26-19    regional water plans which address the following:

26-20                      (A)  the availability of feasible and practicable

26-21    alternative supplies in the receiving basin to the water proposed

26-22    for transfer;

26-23                      (B)  the amount and purposes of use in the

26-24    receiving basin for which water is needed;

26-25                      (C)  proposed methods and efforts by the

 27-1    receiving basin to avoid waste and implement water conservation and

 27-2    drought contingency measures;

 27-3                      (D)  proposed methods and efforts by the

 27-4    receiving basin to put the water proposed for transfer to

 27-5    beneficial use;

 27-6                      (E)  the projected economic impact that is

 27-7    reasonably expected to occur in each basin as a result of the

 27-8    transfer; and

 27-9                      (F)  the projected impacts of the proposed

27-10    transfer that are reasonably expected to occur on existing instream

27-11    uses, water quality, aquatic and riparian habitat, and bays and

27-12    estuaries that must be assessed under Sections 11.147, 11.150, and

27-13    11.152 of this code in each basin.  If the water sought to be

27-14    transferred is currently authorized to be used under an existing

27-15    permit, certified filing, or certificate of adjudication, such

27-16    impacts shall only be considered in relation to that portion of the

27-17    permit, certified filing, or certificate of adjudication proposed

27-18    for transfer and shall be based on historical uses of the permit,

27-19    certified filing, or certificate of adjudication for which

27-20    amendment is sought;

27-21                (3)  proposed mitigation or compensation, if any, to

27-22    the basin of origin by the applicant; and

27-23                (4)  the continued need to use the water for the

27-24    purposes authorized under the existing permit, certified filing, or

27-25    certificate of adjudication, if an amendment to an existing water

 28-1    right is sought.

 28-2          (i)  The commission may grant, in whole or in part, an

 28-3    application for an interbasin transfer only to the extent that the

 28-4    detriments to the basin of origin during the proposed transfer

 28-5    period are less than the benefits to the receiving basin during the

 28-6    proposed transfer period.

 28-7          (j)  This section does not apply to:

 28-8                (1)  a proposed transfer of less than 3,000 acre-feet

 28-9    of water per annum from the same permit, certified filing, or

28-10    certificate of adjudication; or

28-11                (2)  a request for an emergency transfer of water; or

28-12                (3)  a proposed transfer from a basin to its adjoining

28-13    coastal basin.

28-14          (k)  If the transfer of water is based on a contractual sale

28-15    of water, the new water right or amended permit, certified filing,

28-16    or certificate of adjudication authorizing the transfer shall

28-17    contain a condition for a term or period not greater than the

28-18    contract term.

28-19          (l)  The parties to a contract for an interbasin transfer may

28-20    include provisions for compensation and mitigation.  If the party

28-21    from the basin of origin is a government entity, each county judge

28-22    of a county located in whole or in part in the basin of origin may

28-23    provide input on the appropriate compensation and mitigation for

28-24    the interbasin transfer.

28-25          (m)  For the purposes of this section, a basin is designated

 29-1    as provided in accordance with Section 16.051 of this code.  A

 29-2    basin may not be redesignated in order to allow a transfer or

 29-3    diversion of water otherwise in violation of this section.

 29-4          (n) [(c)]  A person who takes or diverts water in violation

 29-5    of this section is guilty of a misdemeanor and upon conviction is

 29-6    punishable by a fine of not [less than $100 nor] more than $10,000

 29-7    [$500] or by confinement in the county jail for not more than six

 29-8    months.

 29-9          (o) [(d)]  A person commits a separate offense each day he

29-10    continues to take or divert water in violation of this section.

29-11          SECTION 2.08.  Subsection (a), Section 11.124, Water Code, is

29-12    amended to read as follows:

29-13          (a)  An application to appropriate unappropriated state water

29-14    must:

29-15                (1)  be in writing and sworn to;

29-16                (2)  contain the name and post-office address of the

29-17    applicant;

29-18                (3)  identify the source of water supply;

29-19                (4)  state the nature and purposes of the proposed use

29-20    or uses and the amount of water to be used for each purpose;

29-21                (5)  state the location and describe the proposed

29-22    facilities;

29-23                (6)  state the time within which the proposed

29-24    construction is to begin; and

29-25                (7)  state the time required for the application of

 30-1    water to the proposed use or uses.

 30-2          SECTION 2.09.  Subsection (b), Section 11.135, Water Code, is

 30-3    amended to read as follows:

 30-4          (b)  The permit shall be in writing and attested by the seal

 30-5    of the commission, and it shall contain substantially the following

 30-6    information:

 30-7                (1)  the name of the person to whom the permit is

 30-8    issued;

 30-9                (2)  the date the permit is issued;

30-10                (3)  the date the original application was filed;

30-11                (4)  the use or purpose for which the appropriation is

30-12    to be made;

30-13                (5)  the amount or volume of water authorized to be

30-14    appropriated for each purpose; if use of the appropriated water is

30-15    authorized for multiple purposes, the permit shall contain a

30-16    special condition limiting the total amount of water that may

30-17    actually be diverted for all of the purposes to the amount of water

30-18    appropriated;

30-19                (6)  a general description of the source of supply from

30-20    which the appropriation is proposed to be made;

30-21                (7)  the time within which construction or work must

30-22    begin and the time within which it must be completed; and

30-23                (8)  any other information the commission prescribes.

30-24          SECTION 2.10.  Subsection (a), Section 11.142, Water Code, is

30-25    amended to read as follows:

 31-1          (a)  Without obtaining a permit, a person may construct on

 31-2    his own property a dam or reservoir with a normal conservation

 31-3    storage capacity of [to impound or contain] not more than 200

 31-4    acre-feet of water for domestic and livestock purposes.

 31-5          SECTION 2.11.  Sections 11.176 and 11.177, Water Code, are

 31-6    amended to read as follows:

 31-7          Sec. 11.176.  HEARING.  (a)  Except as provided by Subsection

 31-8    (b) of this section, the [The] commission shall hold a hearing and

 31-9    shall give the holder of the permit, certified filing, or

31-10    certificate of adjudication and other interested persons an

31-11    opportunity to be heard and to present evidence on any matter

31-12    pertinent to the questions at issue.

31-13          (b)  A hearing on the cancellation of a permit, certified

31-14    filing, or certificate of adjudication as provided by this chapter

31-15    is unnecessary if the right to such hearing is expressly waived by

31-16    the affected holder of a permit, certified filing, or certificate

31-17    of adjudication.

31-18          (c)  A permit, certified filing, or certificate of

31-19    adjudication for a term does not vest in the holder of a permit,

31-20    certified filing, or certificate of adjudication any right to the

31-21    diversion, impoundment, or use of water for longer than the term of

31-22    the permit, certified filing, or certificate of adjudication and

31-23    shall expire and be cancelled in accordance with its terms without

31-24    further need for notice or hearing.

31-25          Sec. 11.177.  COMMISSION FINDING; ACTION.  (a)  At the

 32-1    conclusion of the hearing, the commission shall cancel the permit,

 32-2    certified filing, or certificate of adjudication in whole or in

 32-3    part to the extent that it finds that:

 32-4                (1)  the water or any portion of the water appropriated

 32-5    under the permit, certified filing, or certificate of adjudication

 32-6    has not been put to an authorized beneficial use during the 10-year

 32-7    period; and

 32-8                (2)  the holder has not used reasonable diligence in

 32-9    applying the water or the unused portion of the water to an

32-10    authorized beneficial use or is otherwise unjustified in the

32-11    nonuse[; and]

32-12                [(3)  the holder has not been justified in the nonuse

32-13    or does not then have a bona fide intention of putting the water or

32-14    the unused portion of the water to an authorized beneficial use

32-15    within a reasonable time after the hearing].

32-16          (b)  In determining what constitutes reasonable diligence or

32-17    a justified nonuse [and a reasonable time] as used in Subsection

32-18    (a)(2) [(a)(3)] of this section, the commission shall give

32-19    consideration to:

32-20                (1)  whether sufficient water is available in the

32-21    source of supply to meet all or part of the appropriation during

32-22    the 10-year period of nonuse;

32-23                (2)  whether the nonuse is justified by the holder's

32-24    participation in the federal Conservation Reserve Program or a

32-25    similar governmental program as provided by Section 11.173(b)(1) of

 33-1    this code;

 33-2                (3)  whether the permit, certified filing, or

 33-3    certificate of adjudication was obtained to meet demonstrated

 33-4    long-term public water supply or electric generation needs as

 33-5    evidenced by a water management plan developed by the holder and

 33-6    consistent with projections of future water needs contained in the

 33-7    state water plan;

 33-8                (4)  whether the permit, certified filing, or

 33-9    certificate of adjudication was obtained as the result of the

33-10    construction of a reservoir funded, in whole or in part, by the

33-11    holder of the permit, certified filing, or certificate of

33-12    adjudication as part of the  holder's long-term water planning;

33-13                (5)  whether the existing or proposed authorized

33-14    purpose and place of use are consistent with an approved regional

33-15    water plan as provided by Section 16.053 of this code;

33-16                (6)  whether the permit, certified filing, or

33-17    certificate of adjudication has been deposited into the Texas Water

33-18    Bank as provided by Sections 15.7031 and 15.704 of this code or

33-19    whether it can be shown that the water right or water available

33-20    under the right is currently being made available for purchase

33-21    through private marketing efforts; or

33-22                (7)  whether the permit, certified filing, or

33-23    certificate of adjudication has been reserved to provide for

33-24    instream flows or bay and estuary inflows [the expenditures made or

33-25    obligations incurred by the holder in connection with the permit,

 34-1    certified filing, or certificate of adjudication;]

 34-2                [(2)  the purpose to which the water is to be applied;]

 34-3                [(3)  the priority of the purpose;]

 34-4                [(4)  the amount of time usually necessary to put water

 34-5    to a beneficial use for the same purpose when diligently developed;

 34-6    and]

 34-7                [(5)  whether at all times during the 10-year period

 34-8    there was rainfall adequate to enable the use of all or part of the

 34-9    water authorized to be appropriated under the permit, certified

34-10    filing, or certificate of adjudication].

34-11          SECTION 2.12.  Section 15.701, Water Code, is amended to read

34-12    as follows:

34-13          Sec. 15.701.  Definitions.  In this subchapter:

34-14                (1)  "Deposit" means the placement of a water right or

34-15    the right to use water in the water bank for transfer.

34-16                (2)  "Depositor" means a person who deposits or has on

34-17    deposit a water right in the water bank.

34-18                (3)  "Person" includes but is not limited to any

34-19    individual, corporation, organization, government, or governmental

34-20    subdivision or agency, including the board, business trust, estate,

34-21    trust, partnership, association, and any other legal entity.

34-22                (4)  "Transfer" means the conveyance of a water right

34-23    or the right to use water under a water right in any of the

34-24    following manners:

34-25                      (A)  the conveyance of legal title to a water

 35-1    right; or

 35-2                      (B)  a contract or option contract to allow use

 35-3    of a water right.

 35-4                (5)  "Trust" means the Texas Water Trust.

 35-5                (6)  "Water bank" or "bank" means the Texas Water Bank.

 35-6                (7) [(6)]  "Water right" means a right acquired or

 35-7    authorized under the laws of this state to impound, divert, or use

 35-8    state water, underground water, or water from any source to the

 35-9    extent authorized by law.

35-10          SECTION 2.13.  Section 15.702, Water Code, is amended to read

35-11    as follows:

35-12          Sec. 15.702.  Creation of Bank.  The Texas Water Development

35-13    Board shall establish the Texas Water Bank.  The board shall

35-14    administer the water bank to facilitate water transactions [the

35-15    transfer of water from all sources as necessary] to provide sources

35-16    of adequate water supplies for use within the State of Texas.

35-17          SECTION 2.14.  Subsection (a), Section 15.703, Water Code, is

35-18    amended to read as follows:

35-19          (a)  The board may take all actions necessary to operate the

35-20    water bank and to facilitate the transfer of water rights from the

35-21    water bank for future beneficial use including but not limited to:

35-22                (1)  negotiating a sale price and terms acceptable to

35-23    the depositor and purchaser;

35-24                (2)  maintaining a registry of water bank deposits and

35-25    those water users in need of additional supplies;

 36-1                (3)  informing water users in need of additional supply

 36-2    of water rights available in the bank;

 36-3                (4)  encouraging water right holders to implement water

 36-4    conservation practices and deposit the right to use the conserved

 36-5    water into the bank;

 36-6                (5)  establishing requirements for deposit of a water

 36-7    right into the water bank including minimum terms for deposit;

 36-8                (6)  purchasing, holding, and selling water rights in

 36-9    its own name;

36-10                (7)  establishing regional water banks; [and]

36-11                (8)  acting as a clearinghouse for water marketing

36-12    information including water availability, pricing of water

36-13    transactions, environmental considerations, and potential buyers

36-14    and sellers of water rights;

36-15                (9)  preparing and publishing a manual on structuring

36-16    water transactions;

36-17                (10)  accepting and holding donations of water rights

36-18    to meet instream, water quality, fish and wildlife habitat, or bay

36-19    and estuary inflow needs; and

36-20                (11)  other actions to facilitate water transactions

36-21    [transfers].

36-22          SECTION 2.15.  Subchapter K, Chapter 15, Water Code, is

36-23    amended by adding Section 15.7031 to read as follows:

36-24          Sec. 15.7031.  TEXAS WATER TRUST.  (a)  The Texas Water Trust

36-25    is established within the water bank to hold water rights dedicated

 37-1    to environmental needs, including instream flows, water quality,

 37-2    fish and wildlife habitat, or bay and estuary inflows.

 37-3          (b)  The board, in consultation with the Parks and Wildlife

 37-4    Department and the commission, shall adopt rules governing the

 37-5    process for holding and transferring water rights.

 37-6          (c)  The dedication of any water rights placed in trust must

 37-7    be reviewed and approved by the commission, in consultation with

 37-8    the board and the Parks and Wildlife Department.

 37-9          (d)  Water rights may be held in the trust for a term

37-10    specified by contractual agreement or in perpetuity.

37-11          SECTION 2.16.  Section 15.704, Water Code, is amended by

37-12    amending Subsection (a) and adding Subsection (c) to read as

37-13    follows:

37-14          (a)  A [Up to 50 percent of a] water right may be deposited

37-15    in the water bank for an initial term of up to 10 years, unless

37-16    otherwise held in the Texas Water Trust as established under

37-17    Section 15.7031 of this code, during which time the water right is

37-18    exempt from cancellation by the commission under the terms of

37-19    Subchapter E of Chapter 11 of this code.  A water right is exempt

37-20    from cancellation under this subsection only once even if it has

37-21    been transferred or redeposited.

37-22          (c)  A contract or option contract to allow use of a water

37-23    right under this subchapter:

37-24                (1)  may include a requirement that the purchaser show

37-25    diligence in pursuing feasible and practicable alternative water

 38-1    supplies; and

 38-2                (2)  does not vest any right in the purchaser beyond

 38-3    the stated terms and conditions of the contract or option contract.

 38-4          SECTION 2.17.  (a)  All permits approved by the Texas Natural

 38-5    Resource Conservation Commission before the effective date of this

 38-6    Act that allow the multiple use of the appropriation of a specific

 38-7    amount of water and which are no longer subject to appeal are

 38-8    validated in all respects as if they originally had been legally

 38-9    authorized or accomplished.

38-10          (b)  This article does not apply to an application for an

38-11    interbasin transfer filed and pending before March 2, 1997.  Any

38-12    subsequent renewals of such applications shall be subject to the

38-13    provisions of this Act.

38-14          (c)  Nothing in this Act shall affect the validity of any

38-15    interbasin transfer permitted or authorized before the effective

38-16    date of this Act.

38-17             ARTICLE 3.  EMERGENCY AUTHORIZATIONS; ENFORCEMENT

38-18          SECTION 3.01.  Subsection (a), Section 11.082, Water Code, is

38-19    amended to read as follows:

38-20          (a)  A person who wilfully takes, diverts, or appropriates

38-21    state water without complying with the applicable requirements of

38-22    this chapter is also liable to a civil penalty of not more than

38-23    $10,000 [$1,000] for each day he continues the taking, diversion,

38-24    or appropriation.

38-25          SECTION 3.02.  Subchapter C, Chapter 11, Water Code, is

 39-1    amended by adding Sections 11.0841, 11.0842, and 11.0843 to read as

 39-2    follows:

 39-3          Sec. 11.0841.  CIVIL REMEDY.  (a)  Nothing in this chapter

 39-4    affects the right of any private corporation, individual, or

 39-5    political subdivision that has a justiciable interest in pursuing

 39-6    any available common-law remedy to enforce a right or to prevent or

 39-7    seek redress or compensation for the violation of a right or

 39-8    otherwise redress an injury.

 39-9          (b)  A district court may award the costs of litigation,

39-10    including reasonable attorney fees and expert costs, to any

39-11    political subdivision of the state, private corporation, or

39-12    individual that is a water right holder and that prevails in a suit

39-13    for injunctive relief to redress an unauthorized diversion,

39-14    impoundment, or use of surface water in violation of this chapter

39-15    or a rule adopted pursuant to this chapter.

39-16          Sec. 11.0842.  ADMINISTRATIVE PENALTY.  (a)  If a person

39-17    violates this chapter, a rule or order adopted under this chapter

39-18    or Section 16.236 of this code, or a permit, certified filing, or

39-19    certificate of adjudication issued under this chapter, the

39-20    commission may assess an administrative penalty against that person

39-21    as provided by this section.  This section and Section 12.052 of

39-22    this code are not applicable to any violation resulting from the

39-23    failure to obtain a permit for the construction of a dam or

39-24    reservoir for domestic and livestock purposes initiated prior to

39-25    March 2, 1997, if a registration for authorization is submitted to

 40-1    the commission within two years of the effective date of this

 40-2    section, unless modifications other than repairs are made to the

 40-3    dam or reservoir after March 2, 1997.  On registration, the

 40-4    commission shall issue a permit for the dam or reservoir relating

 40-5    back to the date of completion of construction.  The date of

 40-6    completion of construction may be established by the submission of

 40-7    competent evidence.

 40-8          (b)  The penalty may be in an amount not to exceed $10,000

 40-9    for each day the person is in violation of this chapter, the rule

40-10    or order adopted under this chapter or Section 16.236 of this code,

40-11    or the permit, certified filing, or certificate of adjudication

40-12    issued under this chapter.  Each day a violation continues may be

40-13    considered a separate violation for purposes of penalty assessment.

40-14          (c)  In determining the amount of the penalty, the commission

40-15    shall consider:

40-16                (1)  the nature, circumstances, extent, duration, and

40-17    gravity of the prohibited acts, with special emphasis on the

40-18    impairment of an existing permit, certified filing, or certificate

40-19    of adjudication or the hazard or potential hazard created to the

40-20    health, safety, or welfare of the public;

40-21                (2)  the impact of the violation on the instream uses,

40-22    water quality, fish and wildlife habitat, or beneficial freshwater

40-23    inflows to bays and estuaries;

40-24                (3)  with respect to the alleged violator:

40-25                      (A)  the history and extent of previous

 41-1    violations;

 41-2                      (B)  the degree of culpability, including whether

 41-3    the violation was attributable to mechanical or electrical failures

 41-4    and whether the violation could have been reasonably anticipated

 41-5    and avoided;

 41-6                      (C)  demonstrated good faith, including actions

 41-7    taken by the alleged violator to rectify the cause of the violation

 41-8    and to compensate affected persons;

 41-9                      (D)  any economic benefit gained through the

41-10    violation; and

41-11                      (E)  the amount necessary to deter future

41-12    violations; and

41-13                (4)  any other matters that justice may require.

41-14          (d)  If, after examination of a possible violation and the

41-15    facts surrounding that possible violation, the executive director

41-16    concludes that a violation has occurred, the executive director

41-17    shall issue a preliminary report stating the facts on which that

41-18    conclusion was based, recommending that an administrative penalty

41-19    under this section be imposed on the person charged, and

41-20    recommending the amount of the penalty.  The executive director

41-21    shall base the recommended amount of the proposed penalty on the

41-22    factors provided by Subsection (c) of this section and shall

41-23    analyze each factor for the benefit of the commission.

41-24          (e)  No later than the 10th day after the date on which the

41-25    report is issued, the executive director shall give written notice

 42-1    of the report to the person charged with the violation.  The notice

 42-2    shall include a brief summary of the charges, a statement of the

 42-3    amount of the penalty recommended, and a statement of the right of

 42-4    the person charged to a hearing on the occurrence of the violation,

 42-5    the amount of the penalty, or both the occurrence of the violation

 42-6    and the amount of the penalty.

 42-7          (f)  No later than the 20th day after the date on which

 42-8    notice is received, the person charged may either give to the

 42-9    commission written consent to the executive director's report,

42-10    including the recommended penalty, or make a written request for a

42-11    hearing.

42-12          (g)  If the person charged with the violation consents to the

42-13    penalty recommended by the executive director or fails to timely

42-14    respond to the notice, the commission by order shall either assess

42-15    the penalty or order a hearing to be held on the findings and

42-16    recommendations in the executive director's report.  If the

42-17    commission assesses the penalty recommended by the report, the

42-18    commission shall give written notice of its decision to the person

42-19    charged.

42-20          (h)  If the person charged requests or the commission orders

42-21    a hearing, the commission shall call a hearing and give notice of

42-22    the hearing.  As a result of the hearing, the commission by order

42-23    either may find that a violation has occurred and may assess a

42-24    penalty, may find that a violation has occurred but that no penalty

42-25    should be assessed, or may find that no violation has occurred.

 43-1    All proceedings under this subsection are subject to Chapter 2001,

 43-2    Government Code.  In making any penalty decision, the commission

 43-3    shall analyze each of the factors provided by Subsection (c) of

 43-4    this section.

 43-5          (i)  The commission shall give notice of its decision to the

 43-6    person charged, and if the commission finds that a violation has

 43-7    occurred and assesses an administrative penalty, the commission

 43-8    shall give written notice to the person charged of its findings, of

 43-9    the amount of the penalty, and of the person's right to judicial

43-10    review of the commission's order.  If the commission is required to

43-11    give notice of a penalty under this subsection or Subsection (g) of

43-12    this section, the commission shall file notice of its decision in

43-13    the Texas Register not later than the 10th day after the date on

43-14    which the decision is adopted.

43-15          (j)  Within the 30-day period immediately following the day

43-16    on which the commission's order is final, as provided by Subchapter

43-17    F, Chapter 2001, Government Code, the person charged with the

43-18    penalty shall:

43-19                (1)  pay the penalty in full; or

43-20                (2)  pay the amount of the penalty and file a petition

43-21    for judicial review contesting the occurrence of the violation, the

43-22    amount of the penalty, or both the occurrence of the violation and

43-23    the amount of the penalty; or

43-24                (3)  without paying the amount of the penalty, file a

43-25    petition for judicial review contesting the occurrence of the

 44-1    violation, the amount of the penalty, or both the occurrence of the

 44-2    violation and the amount of the penalty.

 44-3          (k)  Within the 30-day period, a person who acts under

 44-4    Subsection (j)(3) of this section may:

 44-5                (1)  stay enforcement of the penalty by:

 44-6                      (A)  paying the amount of the penalty to the

 44-7    court for placement in an escrow account; or

 44-8                      (B)  giving to the court a supersedeas bond that

 44-9    is approved by the court for the amount of the penalty and that is

44-10    effective until all judicial review of the commission's order is

44-11    final; or

44-12                (2)  request the court to stay enforcement of the

44-13    penalty by:

44-14                      (A)  filing with the court a sworn affidavit of

44-15    the person stating that the person is financially unable to pay the

44-16    amount of the penalty and is financially unable to give the

44-17    supersedeas bond; and

44-18                      (B)  giving a copy of the affidavit to the

44-19    commission by certified mail.

44-20          (l)  If the commission receives a copy of an affidavit under

44-21    Subsection (k)(2) of this section, it may file with the court

44-22    within five days after the date the copy is received a contest to

44-23    the affidavit.  The court shall hold a hearing on the facts alleged

44-24    in the affidavit as soon as practicable and shall stay the

44-25    enforcement of the penalty on finding that the alleged facts are

 45-1    true.  The person who files an affidavit has the burden of proving

 45-2    that the person is financially unable to pay the amount of the

 45-3    penalty and to give a supersedeas bond.

 45-4          (m)  If the person does not pay the amount of the penalty and

 45-5    the enforcement of the penalty is not stayed, the commission may

 45-6    refer the matter to the attorney general for collection of the

 45-7    amount of the penalty.

 45-8          (n)  Judicial review of the order or decision of the

 45-9    commission assessing the penalty shall be under the substantial

45-10    evidence rule and shall be instituted by filing a petition with a

45-11    district court in Travis County, as provided by Subchapter G,

45-12    Chapter 2001, Government Code.

45-13          (o)  A penalty collected under this section shall be

45-14    deposited in the state treasury to the credit of the general

45-15    revenue fund.

45-16          (p)  Notwithstanding any other provision to the contrary, the

45-17    commission may compromise, modify, or remit, with or without

45-18    condition, any penalty imposed under this section.

45-19          (q)  Payment of an administrative penalty under this section

45-20    shall be full and complete satisfaction of the violation for which

45-21    the administrative penalty is assessed and shall preclude any other

45-22    civil or criminal penalty for the same violation.

45-23          Sec. 11.0843.  FIELD CITATION.  (a)  Upon witnessing a

45-24    violation of this chapter or a water right issued under this

45-25    chapter, a watermaster or the watermaster's deputy, as defined by

 46-1    commission rule, may issue the alleged violator a field citation

 46-2    alleging that a violation has occurred and providing the alleged

 46-3    violator the option of either:

 46-4                (1)  without admitting to or denying the alleged

 46-5    violation, paying an administrative penalty in accordance with the

 46-6    predetermined penalty amount established under Subsection (b) of

 46-7    this section and taking remedial action as provided in the

 46-8    citation; or

 46-9                (2)  requesting a hearing on the alleged violation in

46-10    accordance with Section 11.0842 of this code.

46-11          (b)  By rule the commission shall establish penalty amounts

46-12    corresponding to types of violations of this chapter or rules or

46-13    orders adopted or water rights issued under this chapter.

46-14          (c)  A penalty collected under this section shall be

46-15    deposited in the state treasury to the credit of the general

46-16    revenue fund.

46-17          SECTION 3.03.  Section 11.139, Water Code, is amended to read

46-18    as follows:

46-19          Sec. 11.139.  EMERGENCY AUTHORIZATIONS [PERMITS].

46-20    (a)  Except as provided by Section 11.148 of this code, the [The]

46-21    commission may grant an emergency permit, order, or amendment to an

46-22    existing permit, certified filing, or certificate of adjudication

46-23    after notice to the governor [for the diversion and use of water]

46-24    for an initial [a] period of not more than 120 [30] days if the

46-25    commission [it] finds that emergency conditions exist which present

 47-1    an imminent threat to [threaten] the public health and[,] safety[,

 47-2    and welfare] and which override the necessity to comply with

 47-3    established statutory procedures and there are no feasible

 47-4    practicable alternatives to the emergency authorization.  Such

 47-5    emergency action may be renewed once for not longer than 60 days.

 47-6          (b)  A person desiring to obtain an emergency authorization

 47-7    under this section shall submit to the commission a sworn

 47-8    application containing the following information:

 47-9                (1)  a description of the condition of emergency

47-10    justifying the granting of the emergency authorization;

47-11                (2)  a statement setting forth facts which support the

47-12    findings required under this section;

47-13                (3)  an estimate of the dates on which the proposed

47-14    authorization should begin and end;

47-15                (4)  a description of the action sought and the

47-16    activity proposed to be allowed, mandated, or prohibited; and

47-17                (5)  any other statements or information required by

47-18    the commission.

47-19          (c)  If the commission finds the applicant's statement made

47-20    under Subsection (b) of this section to be correct, the commission

47-21    may grant emergency authorizations under this section without

47-22    notice and hearing or with such notice and hearing as the

47-23    commission considers practicable under the circumstances.

47-24          (d)  If the commission grants an emergency authorization

47-25    under this section without a hearing, the authorization shall fix a

 48-1    time and place for a hearing to be held before the commission.  The

 48-2    hearing shall be held as soon after the emergency authorization is

 48-3    granted as is practicable but not later than 20 days after the

 48-4    emergency authorization is granted.

 48-5          (e)  At the hearing, the commission shall affirm, modify, or

 48-6    set aside the emergency authorization.  Any hearing on an emergency

 48-7    authorization shall be conducted in accordance with Chapter 2001,

 48-8    Government Code, and rules of the commission.

 48-9          (f)  If an imminent threat to the public health and safety

48-10    exists which requires emergency action before the commission can

48-11    take action as provided by Subsections (a) through (c) of this

48-12    section and there are no feasible alternatives, the executive

48-13    director may grant an emergency authorization.  If the executive

48-14    director issues an emergency authorization under this subsection,

48-15    the commission shall hold a hearing as provided for in Subsections

48-16    (d) and (e) of this section.  The requirements of Subsection (b) of

48-17    this section shall be satisfied by the applicant before action is

48-18    taken by the executive director on the request for emergency

48-19    authorization.

48-20          (g)  The requirements of Section 11.132 of this code relating

48-21    to the time for notice, newspaper notice, and method of giving a

48-22    person notice do not apply to a hearing held on an application for

48-23    an emergency authorization under this section, but such general

48-24    notice of the hearing shall be given as the commission, under

48-25    Subsections (c) and (e) of this section, considers practicable

 49-1    under the circumstances.

 49-2          (h)  The commission may grant an emergency authorization

 49-3    under this section for the temporary transfer and use of all or

 49-4    part of a permit, certified filing, or certificate of adjudication

 49-5    for other than domestic or municipal use to a retail or wholesale

 49-6    water supplier for public health and safety purposes.  In addition

 49-7    to the requirements contained in Subsection (b) of this section,

 49-8    the commission may direct that the applicant will timely pay the

 49-9    amounts for which the applicant may be potentially liable under

49-10    Subsection (i) of this section and to the extent authorized by law

49-11    will fully indemnify and hold harmless the state, the executive

49-12    director, and the commission from any and all liability for the

49-13    authorization sought.  The commission may order bond or other

49-14    surety in a form acceptable to the commission as a condition for

49-15    such emergency authorization.  The commission may not grant an

49-16    emergency authorization under this section which would cause a

49-17    violation of a federal regulation.

49-18          (i)  The person granted an emergency authorization under

49-19    Subsection (h) of this section is liable to the owner and the

49-20    owner's agent or lessee from whom the use is transferred for the

49-21    fair market value of the water transferred as well as for any

49-22    damages caused by the transfer of use.  If, within 60 days of the

49-23    termination of the authorization, the parties do not agree on the

49-24    amount due, or if full payment is not made, either party may file a

49-25    complaint with the commission to determine the amount due.  The

 50-1    commission may use dispute resolution procedures for a complaint

 50-2    filed under this subsection.  After exhausting all administrative

 50-3    remedies under this subsection, an owner from whom the use is

 50-4    transferred may file suit to recover or determine the amount due in

 50-5    a district court in the county where the owner resides or has its

 50-6    headquarters.  The prevailing party in a suit filed under this

 50-7    subsection is entitled to recover court costs and reasonable

 50-8    attorney's fees.

 50-9          (j)  [An emergency permit may be granted for a period of not

50-10    more than 30 days, and no extension or additional emergency permit

50-11    may be granted at the expiration of the original permit.]

50-12          [(c)  An emergency permit may be granted under this section

50-13    without the necessity to comply with statutory and other procedures

50-14    required for granting other permits issued by the commission.]

50-15          [(d)]  The commission may prescribe rules and adopt fees

50-16    which are necessary to carry out the provisions of this section.

50-17          (k) [(e)]  An emergency authorization [permit] does not vest

50-18    in the grantee [permittee] any right to the diversion, impoundment,

50-19    or [and] use of water and shall expire and be cancelled in

50-20    accordance with its terms.

50-21          SECTION 3.04.  Subsection (c), Section 12.052, Water Code, is

50-22    amended to read as follows:

50-23          (c)  If the owner of a dam that is required to be

50-24    constructed, reconstructed, repaired, or removed in order to comply

50-25    with the rules and orders promulgated under Subsection (a) of this

 51-1    section wilfully fails or refuses to comply within the 30-day

 51-2    period following the date of the commission's final, nonappealable

 51-3    order to do so or if a person wilfully fails to comply with any

 51-4    rule or other order issued by the commission under this section

 51-5    within the 30-day period following the effective date of the order,

 51-6    he is liable to a penalty of not more than $10,000 [$1,000] a day

 51-7    for each day he continues to violate this section.  The state may

 51-8    recover the penalty by suit brought for that purpose in the

 51-9    district court of Travis County.

51-10          SECTION 3.05.  Section 16.236, Water Code, is amended to read

51-11    as follows:

51-12          Sec. 16.236.  CONSTRUCTION OF LEVEE WITHOUT APPROVAL OF

51-13    PLANS; LEVEE SAFETY.  (a)  No person may construct, attempt to

51-14    construct, cause to be constructed, maintain, or cause to be

51-15    maintained any levee or other such improvement on, along, or near

51-16    any stream of this state that is subject to floods, freshets, or

51-17    overflows so as to control, regulate, or otherwise change the

51-18    floodwater of the stream without first obtaining approval of the

51-19    plans by the commission.

51-20          (b)  The commission shall make and enforce rules and orders

51-21    and shall perform all other acts necessary to provide for the safe

51-22    construction, maintenance, repair, and removal of levees located in

51-23    this state.

51-24          (c)  If the owner of a levee that is required to be

51-25    constructed, reconstructed, repaired, or removed to comply with the

 52-1    rules and orders promulgated under this section wilfully fails or

 52-2    refuses to comply within the 30-day period following the date of an

 52-3    order of the commission requiring such action or compliance or if a

 52-4    person wilfully fails to comply with any rule or order issued by

 52-5    the commission under this section within the 30-day period

 52-6    following the effective date of the order, the person is liable for

 52-7    a penalty of not more than $10,000 a day for each day the person

 52-8    continues to violate this section.  The state may recover the

 52-9    penalty by suit brought for that purpose in a district court of

52-10    Travis County.

52-11          (d)  If the commission determines that the existing condition

52-12    of a levee is creating or will cause extensive or severe property

52-13    damage or economic loss to others or is posing an immediate and

52-14    serious threat to human life or health and that other procedures

52-15    available to the commission to remedy or prevent such property

52-16    damage or economic loss will result in unreasonable delay, the

52-17    commission may issue an emergency order, either mandatory or

52-18    prohibitory in nature, directing the owner of the levee to repair,

52-19    modify, maintain, dewater, or remove the levee which the commission

52-20    determines is unsafe.  The emergency order may be issued without

52-21    notice to the levee owner or with notice the commission considers

52-22    practicable under the circumstances.

52-23          (e)  If the commission issues an emergency order under

52-24    authority of this section without notice to the levee owner, the

52-25    commission shall fix a time and place for a hearing, to be held as

 53-1    soon as practicable but not later than 20 days after the emergency

 53-2    order is authorized, to affirm, modify, or set aside the emergency

 53-3    order.  If the nature of the commission's action requires further

 53-4    proceedings, those proceedings shall be conducted, as appropriate,

 53-5    under Chapter 2001, Government Code.

 53-6          (f)  Nothing in this section or in rules or orders adopted by

 53-7    the commission shall be construed to relieve an owner or operator

 53-8    of a levee of the legal duties, obligations, or liabilities

 53-9    incident to ownership or operation.

53-10          (g)  Any person who violates any provision of Subsection (a)

53-11    of this section is guilty of a Class C misdemeanor and upon

53-12    conviction is punishable by a fine of not more than $4,000 [$100].

53-13    A separate offense is committed each day a structure constructed in

53-14    violation of this section is maintained.

53-15          (h)  Subsection (a) of this [(c)  At the request of the

53-16    executive director, the attorney general shall file suit in a

53-17    district court of Travis County to enjoin any violation or

53-18    threatened violation of this section.  In the suit, the attorney

53-19    general may seek to have the illegal levee or other improvement

53-20    removed and the preexisting conditions restored and may also

53-21    collect civil penalties of up to $100 a day for each day a

53-22    violation occurs.]

53-23          [(d)  This] section does not apply to:

53-24                (1)  any dam, reservoir, or canal system associated

53-25    with a water right issued or recognized by the commission [dams

 54-1    permitted by the commission or recognized as valid by final decree

 54-2    in any proceeding begun under Subchapter G, Chapter 11, of this

 54-3    code];

 54-4                (2)  dams authorized by Section 11.142 of this code;

 54-5                (3)  a levee or other improvement within the corporate

 54-6    limits of a city or town provided:  (a) plans for the construction

 54-7    or maintenance or both must be approved by the city or town as a

 54-8    condition precedent to starting the project and (b) the city or

 54-9    town requires that such plans be in substantial compliance with

54-10    rules and standards adopted by the commission; or

54-11                (4)  a levee or other improvement within the boundaries

54-12    of any political subdivision which has qualified for the National

54-13    Flood Insurance Program as authorized by the National Flood

54-14    Insurance Act of 1968 (Title 42, U.S.C., Sections 4001-4127)

54-15    provided:  (a) plans for the construction or maintenance or both

54-16    must be approved by the political subdivision which is

54-17    participating in the national flood insurance program as a

54-18    condition precedent to starting the project and (b) the political

54-19    subdivision requires that such plans be in substantial compliance

54-20    with rules and standards adopted by the commission;

54-21                (5)  projects implementing soil and water conservation

54-22    practices set forth in a conservation plan with a landowner or

54-23    operator and approved by the governing board of a soil and water

54-24    conservation district organized under the State Soil Conservation

54-25    Law, as amended (Article 165a-4, Vernon's Texas Civil Statutes),

 55-1    provided that the governing board finds the practices do not

 55-2    significantly affect stream flooding conditions on, along, or near

 55-3    a state stream; or

 55-4                (6)  any levee or other improvement constructed outside

 55-5    of the 100-year floodway.  For the purposes of this section,

 55-6    "100-year floodway" is defined as the channel of a stream and the

 55-7    adjacent land areas that must be reserved in order to discharge the

 55-8    100-year flood without cumulatively increasing the water surface

 55-9    elevation more than one foot above the 100-year flood elevation

55-10    prior to encroachment.

55-11          (i) [(e)]  On projects located within the corporate limits of

55-12    a city or town or within the boundaries of any political

55-13    subdivision which are exempt from the provisions of Subsection (a)

55-14    of this section by Subdivision (3) or (4) of Subsection (h) of this

55-15    section [(d) above], any person whose property is located outside

55-16    of the corporate limits of such city or town or of the boundaries

55-17    of such a political subdivision and whose property is affected or

55-18    potentially affected by the effect of the project on the

55-19    floodwaters of the stream may appeal the decision of such political

55-20    subdivision.  The appeal shall be in writing and shall specify the

55-21    grounds therefor and a copy shall be sent by certified mail to the

55-22    project applicant and to the city or town or such political

55-23    subdivision.  The timely filing of such an appeal with the

55-24    executive director suspends the decision of the city or town or

55-25    political subdivision until a final decision is rendered by the

 56-1    commission.  The executive director shall review the complaint and

 56-2    investigate the facts surrounding the nature of the complaint.  If

 56-3    the executive director finds that the complaint is frivolous or

 56-4    nonmeritorious or made solely for purposes of harassment or delay,

 56-5    then he shall dismiss the appeal.  Otherwise, the executive

 56-6    director shall refer the appeal to the commission which shall after

 56-7    due notice hold a hearing to determine whether the project should

 56-8    be approved using the standards established by the commission and

 56-9    shall hear such appeal de novo under the procedural rules

56-10    established by the commission for other reclamation projects.

56-11          SECTION 3.06.  Subchapter G, Chapter 16, Water Code, is

56-12    amended by adding Section 16.237 to read as follows:

56-13          Sec. 16.237.  ADMINISTRATIVE PENALTY; CIVIL REMEDY.  (a)  If

56-14    a person violates a commission rule or order adopted under Section

56-15    16.236 of this code, the commission may assess an administrative

56-16    penalty against that person as provided by Section 11.0842 of this

56-17    code.

56-18          (b)  Nothing in this chapter affects the right of any private

56-19    corporation, individual, or political subdivision that has a

56-20    justiciable interest in pursuing any available common-law remedy to

56-21    enforce a right or to prevent or seek redress or compensation for

56-22    the violation of a right or otherwise redress an injury.

56-23            ARTICLE 4.  SURFACE WATER AND GROUNDWATER SUPPLIES

56-24          SECTION 4.01.  Subsection (b), Section 11.134, Water Code, is

56-25    amended to read as follows:

 57-1          (b)  The commission shall grant the application only if:

 57-2                (1)  the application conforms to the requirements

 57-3    prescribed by this chapter and is accompanied by the prescribed

 57-4    fee;

 57-5                (2)  unappropriated water is available in the source of

 57-6    supply;

 57-7                (3)  the proposed appropriation:

 57-8                      (A)  is intended for a [contemplates the

 57-9    application of water to any] beneficial use;

57-10                      (B)  does not impair existing water rights or

57-11    vested riparian rights; [and]

57-12                      (C)  is not detrimental to the public welfare;

57-13    [and]

57-14                      (D)  considers the effects of any hydrological

57-15    connection between surface water and groundwater; and

57-16                      (E)  addresses a water supply need in a manner

57-17    that is consistent with the state water plan and an approved

57-18    regional water plan for any area in which the proposed

57-19    appropriation is located, unless the commission determines that

57-20    conditions warrant waiver of this requirement; and

57-21                (4)  the applicant has provided evidence that

57-22    reasonable diligence will be used to avoid waste and achieve water

57-23    conservation as defined by Subdivision (8)(B), Section 11.002, of

57-24    this code.

57-25          SECTION 4.02.  Subchapter D, Chapter 11, Water Code, is

 58-1    amended by adding Sections 11.1501 and 11.151 to read as follows:

 58-2          Sec. 11.1501.  CONSIDERATION AND REVISION OF PLANS.  In

 58-3    considering an application for a permit to store, take, or divert

 58-4    surface water, or for an amendment to a permit, certified filing,

 58-5    or certificate of adjudication, the commission shall consider the

 58-6    state water plan and any approved regional water plan for the area

 58-7    or areas in which the water is proposed to be stored, diverted, or

 58-8    used.

 58-9          Sec. 11.151.  EFFECTS OF PERMITS ON GROUNDWATER.  In

58-10    considering an application for a permit to store, take, or divert

58-11    surface water, the commission shall consider the effects, if any,

58-12    on groundwater or groundwater recharge.

58-13          SECTION 4.03.  Section 11.153, Water Code, is amended by

58-14    amending the section heading and Subsections (a) and (d) to read as

58-15    follows:

58-16          Sec. 11.153.  [PILOT] PROJECTS FOR STORAGE OF APPROPRIATED

58-17    WATER IN AQUIFERS.

58-18          (a)  The commission shall investigate the feasibility of

58-19    storing appropriated water in various types of aquifers around the

58-20    state by encouraging the issuance of temporary or term permits for

58-21    [pilot] demonstration projects for the storage of appropriated

58-22    water for subsequent retrieval and beneficial use [in the following

58-23    aquifers in the specified counties:]

58-24                [(1)  the Anacacho, Austin Chalk, and Glen Rose

58-25    Limestone aquifers in Bexar County and Medina County;]

 59-1                [(2)  the Carrizo-Wilcox aquifer in Bexar, Webb, Smith,

 59-2    Wood, Rains, and Van Zandt counties;]

 59-3                [(3)  the Hickory and Ellenberger aquifers in Gillespie

 59-4    County; and]

 59-5                [(4)  the Gulf Coast aquifer in Cameron and Hidalgo

 59-6    counties].

 59-7          (d)  The commission shall only issue a [A] final order

 59-8    granting a permit or amendment to a permit authorizing the storage

 59-9    of appropriated water in aquifers for subsequent beneficial use

59-10    where completed pilot projects or historically demonstrated

59-11    projects have been shown to be feasible under the criteria provided

59-12    in Sections 11.154(c) and (d)[, other than for the pilot projects

59-13    authorized by this section, may not be issued before June 1, 1999].

59-14          SECTION 4.04.  Subsections (a), (b), (c), and (e), Section

59-15    11.154, Water Code, are amended to read as follows:

59-16          (a)  An application filed with the commission to undertake a

59-17    [pilot] project under Section 11.153 must include:

59-18                (1)  the information required for an application for a

59-19    permit or permit amendment to appropriate state water;

59-20                (2)  all information required for an application for a

59-21    permit for a Class V injection well without requiring a separate

59-22    hearing or notice; and

59-23                (3)  a map or plat showing the injection facility and

59-24    the aquifer in which the water will be stored.

59-25          (b)  If the application is for a permit or permit amendment

 60-1    to store appropriated water in a groundwater [an underground water]

 60-2    reservoir or a subdivision of a groundwater [an underground water]

 60-3    reservoir, as defined by Chapter 36 [52], that is under the

 60-4    jurisdiction of a groundwater [an underground water] conservation

 60-5    district:

 60-6                (1)  the applicant shall:

 60-7                      (A)  provide a copy of the application to each

 60-8    groundwater [underground water] conservation district that has

 60-9    jurisdiction over the reservoir or subdivision;

60-10                      (B)  cooperate with each district [the districts]

60-11    that has [have] jurisdiction over the reservoir or subdivision to

60-12    ensure compliance with the rules of each district;

60-13                      (C)  cooperate with each district that has

60-14    jurisdiction over the reservoir or subdivision to develop rules

60-15    regarding the injection, storage, and withdrawal of appropriated

60-16    water stored in the aquifer; and

60-17                      (D)  comply with the rules governing the

60-18    injection, storage, and [or] withdrawal of appropriated water

60-19    stored in the reservoir or subdivision that are adopted by each [a]

60-20    district that has jurisdiction over the reservoir or subdivision;

60-21    and

60-22                (2)  the commission shall require that any agreement

60-23    the applicant reaches with a district that has jurisdiction over

60-24    the reservoir or subdivision regarding the terms for the injection,

60-25    storage, and withdrawal of appropriated water be included as a

 61-1    condition of the permit or permit amendment.

 61-2          (c)  On [completion of a pilot project and] receipt of an

 61-3    [appropriate] application for a permit or an amendment to an

 61-4    existing permit from an applicant with a completed pilot or

 61-5    historically demonstrated project, the commission shall evaluate

 61-6    the success of the [pilot] project for purposes of issuing a final

 61-7    order granting a permit or permit amendment authorizing the storage

 61-8    of appropriated water incident to a beneficial use.  The commission

 61-9    shall consider whether:

61-10                (1)  the introduction of water into the aquifer will

61-11    alter the physical, chemical, or biological quality of native

61-12    groundwater to a degree that the introduction would:

61-13                      (A)  render groundwater produced from the aquifer

61-14    harmful or detrimental to people, animals, vegetation, or property;

61-15    or

61-16                      (B)  require treatment of the groundwater to a

61-17    greater extent than the native groundwater requires before being

61-18    applied to that beneficial use;

61-19                (2)  the water stored in the receiving aquifer can be

61-20    successfully harvested from the aquifer for beneficial use; and

61-21                (3)  [the permit holder has provided evidence that]

61-22    reasonable diligence will be used to protect the water stored in

61-23    the receiving aquifer from unauthorized withdrawals to the extent

61-24    necessary to maximize the permit holder's ability to retrieve and

61-25    beneficially use the stored water without experiencing unreasonable

 62-1    loss of appropriated water.

 62-2          (e)  A permit to store appropriated water in a groundwater

 62-3    [an underground water] reservoir or subdivision, as defined by

 62-4    Chapter 36 [52], shall provide as a condition to the permit that

 62-5    the permit holder shall:

 62-6                (1)  register the permit holder's injection and

 62-7    recovery wells with a groundwater [an underground water]

 62-8    conservation district that has jurisdiction over the reservoir or

 62-9    subdivision, if any; and

62-10                (2)  each calendar month, provide the district, if any,

62-11    with a written report showing for the previous calendar month:

62-12                      (A)  the amount of water injected for storage;

62-13    and

62-14                      (B)  the amount of water recaptured for use.

62-15          SECTION 4.05.  Subsection (b), Section 11.155, Water Code, is

62-16    amended to read as follows:

62-17          (b)  The board shall make other studies, investigations, and

62-18    surveys of the aquifers in the state as it considers necessary to

62-19    determine the occurrence, quantity, quality, and availability of

62-20    other aquifers in which water may be stored and subsequently

62-21    retrieved for beneficial use.  The board shall undertake the

62-22    studies, investigations, and surveys in the following order of

62-23    priority:

62-24                (1)  the aquifers described [identified] in Section

62-25    11.153(a);

 63-1                (2)  areas designated by the commission as "priority

 63-2    groundwater management [critical] areas" under Section 35.008

 63-3    [52.053]; and

 63-4                (3)  other areas of the state in a priority to be

 63-5    determined by the board's ranking of where the greatest need

 63-6    exists.

 63-7          SECTION 4.06.  Subsection (b), Section 11.173, Water Code, is

 63-8    amended to read as follows:

 63-9          (b)  A permit, certified filing, or certificate of

63-10    adjudication or a portion of a permit, certified filing, or

63-11    certificate of adjudication is exempt from cancellation under

63-12    Subsection (a) of this section:

63-13                (1)  to the extent of the owner's participation in the

63-14    Conservation Reserve Program authorized by the Food Security Act,

63-15    Pub.L. No. 99-198, Secs. 1231-1236, 99 Stat. 1354, 1509-1514 (1985)

63-16    or a similar governmental program; or

63-17                (2)  if any portion of the water authorized to be used

63-18    pursuant to a permit, certified filing, or certificate of

63-19    adjudication has been used in accordance with a regional water

63-20    [management] plan approved pursuant to Section 16.053 of this code

63-21    [by the commission].

63-22          SECTION 4.07.  Subdivision (6), Section 15.001, Water Code,

63-23    is amended to read as follows:

63-24                (6)  "Project" means:

63-25                      (A)  any undertaking or work to conserve, convey,

 64-1    and develop [surface or subsurface] water resources in the state,

 64-2    to provide for the maintenance and enhancement of the quality of

 64-3    the water of the state, to provide nonstructural and structural

 64-4    flood control, drainage, subsidence control, recharge, chloride

 64-5    control, brush control, precipitation enhancement, and

 64-6    desalinization, and to carry out other purposes defined by board

 64-7    rules; [or]

 64-8                      (B)  any undertaking or work outside the state to

 64-9    provide for the maintenance and enhancement of the quality of water

64-10    by eliminating saline inflow through well pumping and deep well

64-11    injection of brine; or

64-12                      (C)  any undertaking or work by Texas political

64-13    subdivisions or institutions of higher education to conserve,

64-14    convey, and develop water resources in areas outside Texas or to

64-15    provide for the maintenance and enhancement of the quality of the

64-16    water in areas adjoining Texas, if such undertaking or work will

64-17    result in water being available for use in or for the benefit of

64-18    Texas or will maintain and enhance the quality of water in Texas.

64-19          SECTION 4.08.  Subsection (b), Section 15.002, Water Code, is

64-20    amended to read as follows:

64-21          (b)  The legislature finds that the conventional means of

64-22    financing projects are inadequate to meet current and anticipated

64-23    needs of the state.  Therefore, it is the further intent of the

64-24    legislature to provide a means of coordinating the development of

64-25    projects [throughout the state] through the board and to provide

 65-1    political subdivisions the maximum opportunity to finance projects

 65-2    through programs provided by this chapter.  Projects may be in the

 65-3    state or outside the state, provided that out-of-state projects

 65-4    must be funded through a Texas political subdivision or an

 65-5    institution of higher education and must result in water being

 65-6    available for use in or for the benefit of Texas or maintain and

 65-7    enhance the quality of water in Texas.

 65-8          SECTION 4.09.  Section 17.895, Water Code, is amended by

 65-9    amending Subsection (a) and adding Subsection (c) to read as

65-10    follows:

65-11          (a)  The board or lender districts may make conservation

65-12    loans for capital equipment or materials, labor, preparation costs,

65-13    and installation costs:

65-14                (1)  to improve water use efficiency of water delivery

65-15    and application on existing irrigation systems;

65-16                (2)  for preparing irrigated land to be converted to

65-17    dryland conditions; [or]

65-18                (3)  for preparing dryland for more efficient use of

65-19    natural precipitation;

65-20                (4)  for preparing and maintaining land to be used for

65-21    brush control activities, including but not limited to activities

65-22    conducted pursuant to Chapter 203, Agriculture Code; or

65-23                (5)  for implementing precipitation enhancement

65-24    activities in areas of the state where such activities would be, in

65-25    the board's judgment, most effective.

 66-1          (c)  The board may make conservation loans to borrower

 66-2    districts for the cost of purchasing and installing devices, on

 66-3    public or private property, designed to indicate the amount of

 66-4    water withdrawn for irrigation purposes.

 66-5          SECTION 4.10.  Subdivision (12), Section 35.002, Water Code,

 66-6    is amended to read as follows:

 66-7                (12)  "Priority groundwater management [Critical] area"

 66-8    means an area designated and delineated by the commission as an

 66-9    area that is experiencing or is expected to experience critical

66-10    groundwater problems.

66-11          SECTION 4.11.  Section 35.007, Water Code, is amended to read

66-12    as follows:

66-13          Sec. 35.007.  IDENTIFYING, DESIGNATING, AND DELINEATING

66-14    PRIORITY GROUNDWATER MANAGEMENT [CRITICAL] AREAS.  (a)  The

66-15    executive director and the executive administrator shall meet at

66-16    least once a year to identify, based on information gathered by the

66-17    commission and the Texas Water Development Board, those areas of

66-18    the state that are experiencing or that are expected to experience,

66-19    [based on information available to the commission and the Texas

66-20    Water Development Board,] within the immediately following 25-year

66-21    [20-year] period, critical groundwater problems, including

66-22    shortages of surface water or groundwater, land subsidence

66-23    resulting from groundwater withdrawal, and contamination of

66-24    groundwater supplies.

66-25          (b)  If the executive director concludes that an area of the

 67-1    state should be considered for designation as a priority

 67-2    groundwater management [critical] area, the executive director

 67-3    shall prepare a report to the commission.

 67-4          (c)  The executive director shall begin preparation of a

 67-5    priority groundwater management [critical] area report by

 67-6    requesting a study from the executive administrator.  The study

 67-7    must:

 67-8                (1)  include an appraisal of the hydrogeology of the

 67-9    area and matters within the Texas Water Development Board's

67-10    planning expertise relevant to the area;

67-11                (2)  assess the area's immediate, short-term, and

67-12    long-term water supply and needs; and

67-13                (3)  [.  The study must] be completed and delivered to

67-14    the executive director on or before the 180th [90th] day following

67-15    the date of the request.  If the study is not delivered within this

67-16    180-day [90-day] period, the executive director may proceed with

67-17    the preparation of the report.

67-18          (d)  The executive director shall request a study from the

67-19    executive director of the Parks and Wildlife Department for the

67-20    purpose of preparing the report required by this section.  The

67-21    study must:

67-22                (1)  evaluate the potential effects of the designation

67-23    of a priority groundwater management area on an area's natural

67-24    resources; and

67-25                (2)  be completed and delivered to the executive

 68-1    director on or before the 180th day following the date of the

 68-2    request.  If the study is not delivered within this 180-day period,

 68-3    the executive director may proceed with the preparation of the

 68-4    report.

 68-5          (e)  The report shall include:

 68-6                (1)  the recommended delineation of the boundaries of

 68-7    any proposed priority groundwater management [critical] area in the

 68-8    form of an order [a rule] to be considered for adoption by the

 68-9    commission;

68-10                (2)  the reasons and supporting information for or

68-11    against designating the area as a priority groundwater management

68-12    [critical] area;

68-13                (3)  a recommendation regarding whether a district

68-14    should be created in the priority groundwater management [critical]

68-15    area or whether the priority groundwater management [critical] area

68-16    should be added to an existing district;

68-17                (4)  a recommendation as to actions that should be

68-18    considered to conserve natural resources; and

68-19                (5)  any other information that the executive director

68-20    considers helpful to the commission.

68-21          (f) [(e)]  The executive director must complete the report

68-22    and file it with the commission on or before the 240th [210th] day

68-23    following the date on which the executive administrator was

68-24    requested  to produce a study.  The executive director shall make

68-25    the report available for public inspection by providing a copy of

 69-1    the report to at least one public library and the county clerk's

 69-2    office in each county in which the proposed priority groundwater

 69-3    management [critical] area is located and to all districts adjacent

 69-4    to the area of the proposed priority groundwater management area.

 69-5          (g) [(f)]  To carry out this section, the executive director

 69-6    may make necessary studies, hold hearings, solicit and collect

 69-7    information, and use information already prepared by the executive

 69-8    director or the executive administrator for other purposes.

 69-9          SECTION 4.12.  Section 35.008, Water Code, is amended to read

69-10    as follows:

69-11          Sec. 35.008.  PROCEDURES FOR DESIGNATION OF PRIORITY

69-12    GROUNDWATER MANAGEMENT AREA; CONSIDERATION OF CREATION OF DISTRICT

69-13    OR ADDITION OF LAND IN PRIORITY GROUNDWATER MANAGEMENT AREA TO

69-14    EXISTING DISTRICT [CRITICAL AREAS].  (a)  The commission shall

69-15    designate priority groundwater management [critical] areas using

69-16    the procedures provided by this chapter in lieu of those provided

69-17    by [applicable to rulemaking under the Administrative Procedure

69-18    Act,] Subchapter B, Chapter 2001, Government Code[, but if

69-19    procedures required by this chapter are in conflict with that Act,

69-20    this chapter controls].

69-21          (b)  The commission shall call an evidentiary hearing to

69-22    consider:

69-23                (1)  the designation of a priority groundwater

69-24    management area;

69-25                (2)  whether a district should be created over all or

 70-1    part of a priority groundwater management area; or

 70-2                (3) whether all or part of the land in the priority

 70-3    groundwater management area should be added to an existing

 70-4    district.

 70-5          (c)  Evidentiary hearings shall be held at a location in one

 70-6    of the counties in which the priority groundwater management area

 70-7    is located, or proposed to be located, or in the nearest convenient

 70-8    location if adequate facilities are not available in those

 70-9    counties.

70-10          (d)  At the hearing, the commission shall hear testimony and

70-11    receive evidence from affected persons.  The commission shall

70-12    consider the executive director's report and supporting information

70-13    and the testimony and evidence received at the hearing.  If the

70-14    commission considers further information necessary, the commission

70-15    may request such information from any source.

70-16          (e)  The designation of a priority groundwater management

70-17    [critical] area may not be appealed nor may it be challenged under

70-18    the Administrative Procedure Act, Section 2001.038, Government

70-19    Code.

70-20          SECTION 4.13.  Section 35.009, Water Code, is amended to read

70-21    as follows:

70-22          Sec. 35.009.  NOTICE AND HEARING.  (a)  The [In addition to

70-23    the notice required for rulemaking under the Administrative

70-24    Procedure Act, Section 2001.023, Government Code, the] commission

70-25    shall have notice of the hearing published in at least one

 71-1    newspaper with general circulation in the county or counties in

 71-2    which the area being designated a proposed priority groundwater

 71-3    management [critical] area or the area within a priority

 71-4    groundwater management area being considered for district creation

 71-5    or for addition to an existing district is [to be] located.  Notice

 71-6    must be published not later than the 30th day before the date set

 71-7    for the commission to consider the designation of the priority

 71-8    groundwater management [critical] area, the creation of a district

 71-9    in a priority groundwater management area, or the addition of land

71-10    in a priority groundwater management area to an existing district.

71-11          (b)  The notice must include:

71-12                (1)  if applicable, a statement of the general purpose

71-13    and effect of designating the proposed priority groundwater

71-14    management area [critical areas];

71-15                (2)  if applicable, a statement of the general purpose

71-16    and effect of creating a district in the priority groundwater

71-17    management area;

71-18                (3)  if applicable, a statement of the general purpose

71-19    and effect of adding all or part of the land in the priority

71-20    groundwater management area to an existing district;

71-21                (4)  a map generally outlining the boundaries of the

71-22    area being considered for priority groundwater management [proposed

71-23    critical] area designation or the priority groundwater management

71-24    area being considered for district creation or for addition to an

71-25    existing district, or notice of the location at which a copy of the

 72-1    map may be examined or obtained;

 72-2                (5)  a statement that the executive director's report

 72-3    concerning the priority groundwater management area or proposed

 72-4    area is available at the commission's main office in Austin, Texas,

 72-5    and at regional offices of the commission for regions which include

 72-6    territory within the priority groundwater management area or

 72-7    proposed priority groundwater management area and that the report

 72-8    is available for inspection during regular business hours;

 72-9                (6) [(3)]  a description or the name of the locations

72-10    in the affected area at which the commission has provided copies of

72-11    the executive director's report to be made available for public

72-12    inspection;

72-13                (7)  the name and address of each public library, each

72-14    county clerk's office, and each district to which the commission

72-15    has provided copies of the executive director's report; and

72-16                (8) [(4)]  the date, time, and place of the hearing [at

72-17    which the commission will consider the designation of the critical

72-18    areas].

72-19          (c)  The commission shall also give written notice of the

72-20    date, time, place, and purpose of the hearing to the governing body

72-21    of each county, regional water planning group, adjacent groundwater

72-22    district, municipality, river authority, water district, or other

72-23    entity which supplies public drinking water, and of each irrigation

72-24    district, located either in whole or in part in the priority

72-25    groundwater management area or proposed priority groundwater

 73-1    management area.  The notice must be given before the 30th day

 73-2    preceding the date set for the hearing.

 73-3          SECTION 4.14.  Subsections (b), (c), (d), and (e), Section

 73-4    35.012, Water Code, are amended to read as follows:

 73-5          (b)  If the commission finds that the land and other property

 73-6    in the priority groundwater management [critical] area would

 73-7    benefit from the creation of one or more districts, that there is a

 73-8    public need for one or more districts, and that the creation of one

 73-9    or more districts would further the public welfare, the commission

73-10    shall issue an order stating that the creation of one or more

73-11    districts is needed.

73-12          (c)  Following [During the period between] the [date of]

73-13    issuance of a commission order under Subsection (b) [and one year

73-14    after the close of the next regular session of the legislature

73-15    following the issuance of the order], the landowners in the

73-16    priority groundwater management [critical] area may:

73-17                (1)  create one or more districts under Subchapter B,

73-18    Chapter 36;

73-19                (2)  have the area annexed to a district that adjoins

73-20    the area; or

73-21                (3)  create one or more districts through the

73-22    legislative process.

73-23          (d)  The commission shall identify the areas subject to the

73-24    order of the commission issued under Subsection (b) that have not[,

73-25    in the period provided by Subsection (c),] been incorporated into a

 74-1    district[,] and shall delineate proposed boundaries of a district

 74-2    to include those areas.  If the commission proposes the creation of

 74-3    one or more districts, the Texas Agricultural Extension Service

 74-4    [commission] shall begin an educational program within such areas

 74-5    with the assistance of the Texas Water Development Board, the

 74-6    commission, other state agencies, and existing districts to inform

 74-7    the residents of the status of the area's water resources and

 74-8    management options including possible formation of a district,

 74-9    before beginning the procedures for creation of a district provided

74-10    in Subchapter B, Chapter 36.

74-11          (e)  If the commission fails to find that the district would

74-12    be a benefit to the land and other property within the priority

74-13    groundwater management [critical] area, that there is a public need

74-14    for the district, or that creation of the district will further the

74-15    public welfare, the commission shall issue an order stating that a

74-16    district should not be created within the boundaries of the

74-17    priority groundwater management [critical] area.

74-18          SECTION 4.15.  Section 35.013, Water Code, is amended to read

74-19    as follows:

74-20          Sec. 35.013.  ADDING PRIORITY GROUNDWATER MANAGEMENT

74-21    [CRITICAL] AREA TO EXISTING DISTRICT.  (a)  If land in a priority

74-22    groundwater management [critical] area is located adjacent to one

74-23    or more existing districts, the commission, instead of issuing an

74-24    order under Section 35.012, may issue an order recommending that

74-25    the priority groundwater management [critical] area be added to the

 75-1    existing district designated by the commission.  In its order, the

 75-2    commission must find that the land and other property in the

 75-3    priority groundwater management [critical] area and the land in the

 75-4    existing district will benefit from the addition of the area, that

 75-5    there is a public need to add the priority groundwater management

 75-6    [critical] area to the existing district, and that the addition of

 75-7    the land to the existing district would further the public welfare.

 75-8          (b)  If the executive director recommends that the priority

 75-9    groundwater management [critical] area be added to an existing

75-10    district or if the commission considers it possible to add the

75-11    priority groundwater management [critical] area to an adjacent

75-12    existing district, the commission shall give notice to the board of

75-13    the existing district recommended by the executive director or

75-14    considered by the commission to possibly serve the area and to any

75-15    other existing districts adjacent to the priority groundwater

75-16    management [critical] area.

75-17          (c)  The commission shall submit a copy of the order to the

75-18    board of the district to which it is recommending the priority

75-19    groundwater management [critical] area be added.  The board shall

75-20    vote on the addition of the priority groundwater management

75-21    [critical] area to the district and shall advise the commission of

75-22    the outcome.

75-23          (d)  If the board votes to accept the addition of the

75-24    priority groundwater management [critical] area to the district,

75-25    the board:

 76-1                (1)  may request the Texas Agricultural Extension

 76-2    Service, the commission, the Texas Water Development Board, and

 76-3    other state agencies to administer an educational program to inform

 76-4    the residents of the status of the area's water resources and

 76-5    management options including possible annexation into a district;

 76-6    and

 76-7                (2)  shall call an election within the priority

 76-8    groundwater management [critical] area as delineated by the

 76-9    commission to determine if the priority groundwater management

76-10    [critical] area will be added to the district; and

76-11                (3)  [In the order calling the election, the board]

76-12    shall designate election precincts and polling places for the

76-13    elections in the order calling an election under this subsection.

76-14          (e)  The board shall give notice of the election and the

76-15    proposition to be voted on.  The board shall publish notice of the

76-16    election at least one time in one or more newspapers with general

76-17    circulation within the boundaries of the priority groundwater

76-18    management [critical] area.  The notice must be published before

76-19    the 30th day preceding the date set for the election.

76-20          (f)  The ballots for the election shall be printed to provide

76-21    for voting for or against the proposition:  "The inclusion of

76-22    __________ (briefly describe priority groundwater management

76-23    [critical] area) in the __________ District."  If the district has

76-24    outstanding debts or taxes [issued bonds], the proposition shall

76-25    include the following language:  "and assumption by the described

 77-1    area of a proportional share of the debts or taxes [outstanding

 77-2    indebtedness] of the district."

 77-3          (g)  Immediately after the election, the presiding judge of

 77-4    each polling place shall deliver the returns of the election to the

 77-5    board, and the board shall canvass the returns for the election

 77-6    within the priority groundwater management [critical] area and

 77-7    declare the results.  If a majority of the voters in the priority

 77-8    groundwater management [critical] area voting on the proposition

 77-9    vote in favor of the proposition, the board shall declare that the

77-10    priority groundwater management [critical] area is added to the

77-11    district.  If a majority of the voters in the priority groundwater

77-12    management [critical] area voting on the proposition vote against

77-13    adding the priority groundwater management [critical] area to the

77-14    district, the board shall declare that the priority groundwater

77-15    management [critical] area is not added to the district.  The board

77-16    shall file a copy of the election results with the commission.

77-17          (h)  If the voters approve adding the priority groundwater

77-18    management [critical] area to the district, the board of the

77-19    district to which the priority groundwater management [critical]

77-20    area is added shall provide reasonable representation on that board

77-21    compatible with the district's existing scheme of representation.

77-22          (i)  If the proposition is defeated, another election to add

77-23    the priority groundwater management [critical] area to an existing

77-24    district may not be called before the first anniversary of the date

77-25    on which the election on the proposition was held.

 78-1          SECTION 4.16.  Subsections (b) and (c), Section 35.014, Water

 78-2    Code, are amended to read as follows:

 78-3          (b)  The costs of an election to add a priority groundwater

 78-4    management [critical] area to an existing district at which the

 78-5    voters approve adding the priority groundwater management

 78-6    [critical] area to the district shall be paid by the existing

 78-7    district.

 78-8          (c)  The costs of an election to create a district or add a

 78-9    priority groundwater management [critical] area to an existing

78-10    district at which the proposition fails shall be paid by the

78-11    commission.

78-12          SECTION 4.17.  Section 35.015, Water Code, is amended to read

78-13    as follows:

78-14          Sec. 35.015.  STATE ASSISTANCE.  [(a)  A political

78-15    subdivision located in or that has within its boundaries an area or

78-16    part of an area delineated as a critical area, and in which the

78-17    qualified voters fail to approve the creation of a district or to

78-18    join an existing district, shall not be eligible to receive any

78-19    financial assistance from the state under Chapter 15, 16, or 17 for

78-20    use within that portion of the critical area not covered by a

78-21    district.]

78-22          [(b)]  A political subdivision located in an area delineated

78-23    as a priority groundwater management [critical] area, and in which

78-24    qualified voters approve the creation of a district or annexation

78-25    into an existing district, shall be given consideration to receive

 79-1    financial assistance from the state under Chapter 17 for funds to

 79-2    be used in addressing issues identified in the priority groundwater

 79-3    management [critical] area report in the manner provided by

 79-4    Sections 17.124 and 17.125[, except that the board is not required

 79-5    to make the finding set out in Section 17.125(a)(2)].

 79-6          SECTION 4.18.  Section 35.017, Water Code, is amended to read

 79-7    as follows:

 79-8          Sec. 35.017.  STATE-OWNED LAND.  If state-owned land or a

 79-9    portion of state-owned land is located in a priority groundwater

79-10    management [critical] area, the state agency that has management

79-11    and control over that land under the constitution or by statute may

79-12    elect by written agreement with the commission and the district to

79-13    include the state-owned land in the district.  The agreement shall

79-14    be entered into as provided by the Texas Intergovernmental

79-15    Cooperation Act, Chapter 741, Government Code, and may include

79-16    provisions for the payment by the state agency of reasonable fees

79-17    to the district.  If the state does not elect to enter into the

79-18    agreement to include the state-owned land in the district, the

79-19    state agency must establish a groundwater management plan that will

79-20    conserve, protect, and prevent the waste of groundwater on that

79-21    state-owned land.

79-22          SECTION 4.19.  Chapter 35, Water Code, is amended by adding

79-23    Section 35.018 to read as follows:

79-24          Sec. 35.018.  REPORTS.  (a)  No later than January 31 of each

79-25    odd-numbered year, the commission in conjunction with the Texas

 80-1    Water Development Board shall prepare and deliver to the governor,

 80-2    the lieutenant governor, and the speaker of the house of

 80-3    representatives a comprehensive report concerning activities during

 80-4    the preceding two years relating to the designation of priority

 80-5    groundwater management areas by the commission and the creation and

 80-6    operation of districts.

 80-7          (b)  The report must include:

 80-8                (1)  the names and locations of all priority

 80-9    groundwater management areas and districts created or attempted to

80-10    be created on or after November 5, 1985, the effective date of

80-11    Chapter 133 (H.B. No. 2), Acts of the 69th Legislature, Regular

80-12    Session, 1985;

80-13                (2)  the authority under which each priority

80-14    groundwater management area and district was proposed for creation;

80-15                (3)  a detailed analysis of each election held to

80-16    confirm the creation of a district, including analysis of election

80-17    results, possible reasons for the success or failure to confirm the

80-18    creation of a district, and the possibility for future voter

80-19    approval of districts in areas in which attempts to create

80-20    districts failed;

80-21                (4)  a detailed analysis of the activities of each

80-22    district created, including those districts which are implementing

80-23    management plans certified under Section 36.1072;

80-24                (5)  a report on audits performed on districts under

80-25    Section 36.302 and remedial actions taken under Section 36.303;

 81-1                (6)  recommendations for changes in this chapter and

 81-2    Chapter 36 that will facilitate the creation of priority

 81-3    groundwater management areas and the creation and operation of

 81-4    districts;

 81-5                (7)  a report on educational efforts in newly

 81-6    designated priority groundwater management areas; and

 81-7                (8)  any other information and recommendations that the

 81-8    commission considers relevant.

 81-9          (c)(1)  If voters fail to create a groundwater district in a

81-10    priority groundwater management area or if voters fail to add the

81-11    priority groundwater management area to an existing groundwater

81-12    district, the report shall include recommendations for the future

81-13    management of the priority groundwater management area.  The

81-14    recommendations may include but are not limited to the following:

81-15                      (A)  creation of a groundwater district by the

81-16    legislature;

81-17                      (B)  annexation of a priority groundwater

81-18    management area into an existing district by the legislature; or

81-19                      (C)  management of the priority groundwater

81-20    management area by the nearest regional office of the commission.

81-21    The commission may be authorized to:

81-22                            (i)  adopt spacing and annual per acre

81-23    pumping restrictions;

81-24                            (ii)  issue well permits in accordance with

81-25    Section 36.113 and 36.1131;

 82-1                            (iii)  prevent waste and protect the

 82-2    quality of groundwater in accordance with Section 36.001(8)(A)-(G);

 82-3                            (iv)  levy administrative penalties for

 82-4    violations; and

 82-5                            (v)  collect fees in accordance with

 82-6    Sections 36.206(a) and (b).

 82-7                (2)  If the commission is required by the legislature

 82-8    to manage the priority groundwater management area, a new election

 82-9    may not be called for three years from the date of the last

82-10    election.

82-11          SECTION 4.20.  Section 36.001, Water Code, is amended by

82-12    amending Subdivision (14) and adding Subdivisions (16) and (17) to

82-13    read as follows:

82-14                (14)  "Priority groundwater management [Critical] area"

82-15    means an area designated and delineated by the commission under

82-16    Chapter 35 as an area experiencing or expected to experience

82-17    critical groundwater problems.

82-18                (16)  "Loan fund" means the groundwater district loan

82-19    assistance fund created under Section 36.371.

82-20                (17)  "Applicant" means a newly confirmed district

82-21    applying for a loan from the loan fund.

82-22          SECTION 4.21.  Subsection (c), Section 36.012, Water Code, is

82-23    amended to read as follows:

82-24          (c)  The boundaries of a district must be coterminous with or

82-25    inside the boundaries of a management area or a priority

 83-1    groundwater management [critical] area.

 83-2          SECTION 4.22.  Subsection (d), Section 36.013, Water Code, is

 83-3    amended to read as follows:

 83-4          (d)  If a part of the proposed district is not included

 83-5    within either a management area or a priority groundwater

 83-6    management [critical] area, the petition to create a district may

 83-7    also contain a request to create a management area.  A request to

 83-8    create a management area must comply with the requirements for a

 83-9    petition in Section 35.005, and may be acted on by the commission

83-10    separately from the petition to create the district.

83-11          SECTION 4.23.  Subchapter B, Chapter 36, Water Code, is

83-12    amended by adding Section 36.0151 to read as follows:

83-13          Sec. 36.0151.  CREATION OF DISTRICT FOR PRIORITY GROUNDWATER

83-14    MANAGEMENT AREA.  (a)  If the commission proposes that a district

83-15    be created under Section 35.012(d), it shall in its order creating

83-16    the district provide that temporary directors be appointed under

83-17    Section 36.016 and that an election be called by the temporary

83-18    directors to confirm the creation of the district and to elect

83-19    permanent directors.

83-20          (b)  The commission shall notify the county commissioners

83-21    court of each county with territory in the district of the

83-22    district's creation as soon as practicable after issuing the order

83-23    creating the district.

83-24          SECTION 4.24.  Section 36.016, Water Code, is amended to read

83-25    as follows:

 84-1          Sec. 36.016.  APPOINTMENT OF TEMPORARY DIRECTORS.  (a)  If

 84-2    the commission grants a petition to create a district under Section

 84-3    36.015 or after the commission dissolves a district's board under

 84-4    Section 36.303, it shall appoint five temporary directors.

 84-5          (b)  If the commission creates a district under Section

 84-6    36.0151, the county commissioners court or courts of the county or

 84-7    counties that contain the area of the district shall, within 90

 84-8    days after receiving notification by the commission under Section

 84-9    36.0151(b), appoint five temporary directors, or more if the

84-10    district contains the territory of more than five counties, for the

84-11    district's board using the method provided by Section 36.0161.  A

84-12    county commissioners court shall not make any appointments after

84-13    the expiration of the 90-day period.  If fewer than five temporary

84-14    directors have been appointed at the expiration of the period, the

84-15    commission shall appoint additional directors so that the board has

84-16    at least five members.

84-17          (c)  Temporary directors appointed under this section [who]

84-18    shall serve until the initial directors are elected and have

84-19    qualified for office or until the voters fail to approve the

84-20    creation of the district.

84-21          (d) [(b)]  If an appointee of the commission or of a county

84-22    commissioners court fails to qualify or if a vacancy occurs in the

84-23    office of temporary director, the commission or the county

84-24    commissioners court, as appropriate, shall appoint an individual to

84-25    fill the vacancy.

 85-1          (e) [(c)]  As soon as all temporary directors have qualified,

 85-2    the directors shall meet, take the oath of office, and elect a

 85-3    chairman and vice chairman from among their membership.  The

 85-4    chairman shall preside at all meetings of the board and, in the

 85-5    chairman's absence, the vice chairman shall preside.

 85-6          SECTION 4.25.  Subchapter B, Chapter 36, Water Code, is

 85-7    amended by adding Section 36.0161 to read as follows:

 85-8          Sec. 36.0161.  METHOD FOR APPOINTING TEMPORARY DIRECTORS FOR

 85-9    DISTRICT IN PRIORITY GROUNDWATER MANAGEMENT AREA.  (a)  If a

85-10    district in a priority groundwater management area is:

85-11                (1)  contained within one county, the county

85-12    commissioners court of that county shall appoint five temporary

85-13    directors for the district;

85-14                (2)  contained within two counties, the county

85-15    commissioners court of each county shall appoint at least one

85-16    temporary director, with the appointments of the three remaining

85-17    directors to be apportioned as provided by Subsection (b);

85-18                (3)  contained within three counties, the county

85-19    commissioners court of each county shall appoint at least one

85-20    temporary director, with the appointments of the two remaining

85-21    directors to be apportioned as provided by Subsection (b);

85-22                (4)  contained within four counties, the county

85-23    commissioners court of each county shall appoint at least one

85-24    temporary director, with the appointment of the remaining director

85-25    to be apportioned as provided by Subsection (b); or

 86-1                (5)  contained within five or more counties, the county

 86-2    commissioners court of each county shall appoint one temporary

 86-3    director.

 86-4          (b)(1)  In this subsection, "estimated groundwater use" means

 86-5    the estimate of groundwater use in acre-feet developed by the

 86-6    commission under Subsection (c) for the area of a county that is

 86-7    within the district.

 86-8                (2)  The apportionment of appointments under Subsection

 86-9    (a) shall be made by the commission so as to reflect, as closely as

86-10    possible, the proportion each county's estimated groundwater use

86-11    bears to the sum of the estimated groundwater use for the district

86-12    as determined under Subsection (c).  The commission shall by rule

86-13    determine the method it will use to implement this subdivision.

86-14          (c)  If a district for which temporary directors are to be

86-15    appointed is contained within two, three, or four counties, the

86-16    commission shall develop an estimate of annual groundwater use in

86-17    acre-feet for each county area within the district.

86-18          SECTION 4.26.  Section 36.052, Water Code, is amended to read

86-19    as follows:

86-20          Sec. 36.052.  OTHER LAWS NOT APPLICABLE.  (a)  Other laws

86-21    governing the administration or operations of districts created

86-22    under Section 52, Article III, or Section 59, Article XVI, Texas

86-23    Constitution, shall not apply to any district governed by this

86-24    chapter.  This chapter prevails over any other law in conflict or

86-25    inconsistent with this chapter, except any special law governing a

 87-1    specific district shall prevail over this chapter.

 87-2          (b)  Notwithstanding Subsection (a), the following provisions

 87-3    prevail over a conflicting or inconsistent provision of a special

 87-4    law that governs a specific district:

 87-5                (1)  Sections 36.107-36.108;

 87-6                (2)  Sections 36.159-36.161; and

 87-7                (3)  Subchapter I.

 87-8          SECTION 4.27.  Subchapter D, Chapter 36, Water Code, is

 87-9    amended by amending Section 36.107 and adding Sections 36.1071,

87-10    36.1072, and 36.1073 to read as follows:

87-11          Sec. 36.107.  RESEARCH [AND PLANNING].  [(a)]  A district may

87-12    carry out any research projects deemed necessary by the board.

87-13          Sec. 36.1071.  MANAGEMENT PLAN.  (a)[(b)]  Following notice

87-14    and hearing, the district shall, in coordination with surface water

87-15    management entities on a regional basis, develop a comprehensive

87-16    management plan which addresses the following management goals, as

87-17    applicable:

87-18                (1)  providing the most efficient use of groundwater;

87-19                (2)  controlling and preventing waste of groundwater;

87-20                (3)  controlling and preventing subsidence;

87-21                (4)  addressing conjunctive surface water management

87-22    issues; and

87-23                (5)  addressing natural resource issues.

87-24          (b)  A district management plan, or any amendments to a

87-25    district management plan, adopted after the Texas Water Development

 88-1    Board approval of a regional water plan for the region in which the

 88-2    district is located shall be consistent with the regional water

 88-3    plan.

 88-4          (c)  The commission and the Texas Water Development Board

 88-5    shall provide technical assistance to a district in the development

 88-6    of the management plan required under Subsection (a) which may

 88-7    include, if requested by the district, a preliminary review and

 88-8    comment on the plan prior to final approval by the board.  If such

 88-9    review and comment by the commission is requested, the commission

88-10    shall provide comment not later than 30 days from the date the

88-11    request is received.

88-12          (d)  The commission shall provide technical assistance to a

88-13    district during its initial operational phase.

88-14          (e)  In the management plan described under Subsection (a),

88-15    the district shall:

88-16                (1)  identify the performance standards and management

88-17    objectives under which the district will operate to achieve the

88-18    management goals identified under Subsection (a);

88-19                (2)  specify, in as much detail as possible, the

88-20    actions, procedures, performance, and avoidance that are or may be

88-21    necessary to effect the plan, including specifications and proposed

88-22    rules;

88-23                (3)  include estimates of the following:

88-24                      (A)  the existing total usable amount of

88-25    groundwater in the district;

 89-1                      (B)  the amount of groundwater being used within

 89-2    the district on an annual basis;

 89-3                      (C)  the annual amount of recharge, if any, to

 89-4    the groundwater resources within the district and how natural or

 89-5    artificial recharge may be increased; and

 89-6                      (D)  the projected water supply and demand for

 89-7    water within the district; and

 89-8                (4)  address water supply needs in a manner that is not

 89-9    in conflict with the appropriate approved regional water plan if a

89-10    regional water plan has been approved under Section 16.053 [for the

89-11    most efficient use of the groundwater, for controlling and

89-12    preventing waste of groundwater, and for controlling and preventing

89-13    subsidence.  The plan may be reviewed annually but must be reviewed

89-14    by the board at least once every five years].

89-15          (f)  [(c)  The district shall specify in the management plan,

89-16    in as much detail as possible, the acts, procedures, performance,

89-17    and avoidance that are or may be necessary to effect the plan,

89-18    including specifications and proposed rules.]  The district shall

89-19    adopt rules necessary to implement the management plan.

89-20          (g)  The board shall adopt amendments to the management plan

89-21    as necessary.  Amendments to the management plan shall be adopted

89-22    after notice and hearing and shall otherwise comply with the

89-23    requirements of this section.

89-24          Sec. 36.1072.  TEXAS WATER DEVELOPMENT BOARD REVIEW AND

89-25    CERTIFICATION OF MANAGEMENT PLAN.  (a)  A [The] district shall, not

 90-1    later than two years after the creation of the district or, if the

 90-2    district required confirmation, after the election confirming the

 90-3    district's creation, submit [file a copy of] the management plan

 90-4    required under Section 36.1071 to [and the rules with] the Texas

 90-5    Water Development Board for review and certification [commission].

 90-6          (b)  Within 60 days of receipt of a management plan adopted

 90-7    under Section 36.1071, the Texas Water Development Board shall

 90-8    certify a management plan if the plan is administratively complete.

 90-9    A management plan is administratively complete when it contains the

90-10    information required to be submitted under Section 36.1071.  The

90-11    Texas Water Development Board may determine that conditions justify

90-12    waiver of the requirements under Section 36.1071(e)(4).

90-13          (c)  Once a determination that a management plan is

90-14    administratively complete has been made:

90-15                (1)  the Texas Water Development Board may not revoke

90-16    the determination that a management plan is administratively

90-17    complete;

90-18                (2)  the Texas Water Development Board may request

90-19    additional information from the district if the information is

90-20    necessary to clarify, modify, or supplement previously submitted

90-21    material; and

90-22                (3)  a request for additional information does not

90-23    render the management plan incomplete.

90-24          (d)  A management plan takes effect on certification by the

90-25    Texas Water Development Board.

 91-1          (e)  The board may review the plan annually and must review

 91-2    and readopt the plan with or without revisions at least once every

 91-3    five years.

 91-4          (f)  If the Texas Water Development Board does not certify

 91-5    the management plan, the Texas Water Development Board shall

 91-6    provide to the district, in writing, the reasons for its action.

 91-7    Not later than the 180th day after the date a district receives

 91-8    notice that its management plan has not been certified, the

 91-9    district may submit a revised management plan for review and

91-10    certification.  The commission shall not take enforcement action

91-11    against a district under Subchapter I until the later of the

91-12    expiration of the 180-day period or the date the Texas Water

91-13    Development Board has taken final action withholding certification

91-14    of a revised management plan.

91-15          Sec. 36.1073.  AMENDMENT TO MANAGEMENT PLAN.  Any amendment

91-16    to the management plan shall be submitted to the Texas Water

91-17    Development Board within 60 days following adoption of the

91-18    amendment by the district's board.  The Texas Water Development

91-19    Board shall review and certify any amendment which substantially

91-20    affects the management plan in accordance with the procedures

91-21    established under Section 36.1072.

91-22          SECTION 4.28.  Subsection (a), Section 36.108, Water Code, is

91-23    amended to read as follows:

91-24          (a)  If two or more districts are located within the

91-25    boundaries of the same management area, each district shall prepare

 92-1    a comprehensive management plan as required by Section 36.1071

 92-2    [36.107] covering that district's respective territory.  On

 92-3    completion of the plan, each district shall forward a copy of the

 92-4    new revised management plan to the other districts in the

 92-5    management area.

 92-6          SECTION 4.29.  Section 36.113, Water Code, is amended to read

 92-7    as follows:

 92-8          Sec. 36.113.  PERMITS FOR WELLS.  (a)  A district shall

 92-9    require permits for the drilling, equipping, or completing of

92-10    wells[,] or for substantially altering the size of wells or well

92-11    pumps.

92-12          (b)  A district shall require that an application for a

92-13    permit be in writing and sworn to.

92-14          (c)  A district may require that the following be included in

92-15    the permit application:

92-16                (1)  the name and mailing address of the applicant and

92-17    the owner of the land on which the well will be located;

92-18                (2)  if the applicant is other than the owner of the

92-19    property, documentation establishing the applicable authority to

92-20    construct and operate a well for the proposed use;

92-21                (3)  a statement of the nature and purpose of the

92-22    proposed use and the amount of water to be used for each purpose;

92-23                (4)  a water conservation plan or a declaration that

92-24    the applicant will comply with the district's management plan;

92-25                (5)  the location of each well and the estimated rate

 93-1    at which water will be withdrawn;

 93-2                (6)  a water well closure plan or a declaration that

 93-3    the applicant will comply with well plugging guidelines and report

 93-4    closure to the commission; and

 93-5                (7)  a drought contingency plan.

 93-6          (d)  Before granting or denying a permit, the district shall

 93-7    consider whether:

 93-8                (1)  the application conforms to the requirements

 93-9    prescribed by this chapter and is accompanied by the prescribed

93-10    fees;

93-11                (2)  the proposed use of water unreasonably affects

93-12    existing groundwater and surface water resources;

93-13                (3)  the proposed use of water is dedicated to any

93-14    beneficial use;

93-15                (4)  the proposed use of water is consistent with the

93-16    district's certified water management plan;

93-17                (5)  the applicant has agreed to avoid waste and

93-18    achieve water conservation; and

93-19                (6)  the applicant has agreed that reasonable diligence

93-20    will be used to protect groundwater quality and that the applicant

93-21    will follow well plugging guidelines at the time of well closure.

93-22          (e)  Permits may be issued subject to the rules promulgated

93-23    by the district and subject to terms and provisions with reference

93-24    to the drilling, equipping, completion, or alteration of wells or

93-25    pumps that may be necessary to [conserve the groundwater,] prevent

 94-1    waste and achieve water conservation, minimize as far as

 94-2    practicable the drawdown of the water table or the reduction of

 94-3    artesian pressure, lessen interference between wells, or control

 94-4    and prevent subsidence.

 94-5          (f)  A district may require that changes in the withdrawal

 94-6    and use of groundwater under a permit not be made without the prior

 94-7    approval of a permit amendment issued by the district.

 94-8          SECTION 4.30.  Subchapter D, Chapter 36, Water Code, is

 94-9    amended by adding Section 36.1131 to read as follows:

94-10          Sec. 36.1131.  ELEMENTS OF PERMIT.  (a)  A permit issued by

94-11    the district to the applicant under Section 36.113 shall state the

94-12    terms and provisions prescribed by the district.

94-13          (b)  The permit may include:

94-14                (1)  the name and address of the person to whom the

94-15    permit is issued;

94-16                (2)  the location of the well;

94-17                (3)  the date the permit is to expire if no well is

94-18    drilled;

94-19                (4)  a statement of the purpose for which the well is

94-20    to be used;

94-21                (5)  a requirement that the water withdrawn under the

94-22    permit be put to beneficial use at all times;

94-23                (6)  the location of the use of the water from the

94-24    well;

94-25                (7)  a water well closure plan or a declaration that

 95-1    the applicant will comply with well plugging guidelines and report

 95-2    closure to the commission;

 95-3                (8)  the conditions and restrictions, if any, placed on

 95-4    the rate and amount of withdrawal;

 95-5                (9)  any conservation-oriented methods of drilling and

 95-6    operating prescribed by the district;

 95-7                (10)  a drought contingency plan prescribed by the

 95-8    district; and

 95-9                (11)  other terms and conditions as provided by Section

95-10    36.113.

95-11          SECTION 4.31.  Subchapter E, Chapter 36, Water Code, is

95-12    amended by adding Sections 36.159, 36.160, and 36.161 to read as

95-13    follows:

95-14          Sec. 36.159.  GROUNDWATER DISTRICT MANAGEMENT PLAN FUNDS.

95-15    The Texas Water Development Board may allocate funds from the

95-16    research and planning fund created under Subchapter F, Chapter 15,

95-17    to a district to conduct initial data collections under this

95-18    chapter, to develop and implement a long-term management plan under

95-19    Section 36.1071, and to participate in regional water plans.

95-20          Sec. 36.160.  FUNDS.  The Texas Water Development Board, the

95-21    commission, the Parks and Wildlife Department, the Texas

95-22    Agricultural Extension Service, and institutions of higher

95-23    education may allocate funds to carry out the objectives of this

95-24    chapter and Chapter 35, which include but are not limited to:

95-25                (1)  conducting initial and subsequent studies and

 96-1    surveys under Sections 36.106, 36.107, and 36.109;

 96-2                (2)  providing appropriate education in affected areas

 96-3    identified in Section 35.007 relating to the problems and issues

 96-4    concerning water management that may arise;

 96-5                (3)  processing priority groundwater management area

 96-6    evaluations under this chapter and Chapter 35;

 96-7                (4)  providing technical and administrative assistance

 96-8    to newly created districts under this chapter and Chapter 35;

 96-9                (5)  covering the costs of newspaper notices required

96-10    under Sections 35.009 and 36.014 and failed elections in accordance

96-11    with Sections 35.014(c), 36.017(h), and 36.019; and

96-12                (6)  providing for assistance from the Parks and

96-13    Wildlife Department to the Texas Water Development Board or a

96-14    district for the purpose of assessing fish and wildlife resource

96-15    habitat needs as they may apply to overall management plan goals

96-16    and objectives of the district.

96-17          Sec. 36.161.  ELIGIBILITY FOR FUNDING.  (a)  The Texas Water

96-18    Development Board may provide funds under Sections 36.159 and

96-19    36.160, Chapters 15, 16, and 17, and Subchapter L of this chapter

96-20    to a district if the Texas Water Development Board determines that

96-21    such funding will allow the district to comply or continue to

96-22    comply with provisions of this chapter.

96-23          (b)  The Texas Water Development Board may, after notice and

96-24    hearing, discontinue funding described in Subsection (a) if the

96-25    Texas Water Development Board finds that the district is not using

 97-1    the funds to comply with the provisions of this chapter.

 97-2          (c)  The Texas Water Development Board, when considering a

 97-3    discontinuance under Subsection (b), shall give written notice of

 97-4    the hearing to the district at least 20 days before the date set

 97-5    for the hearing.  The hearing shall be conducted in accordance with

 97-6    Chapter 2001, Government Code, or the rules of the respective

 97-7    agency.  General notice of the hearing shall be given in accordance

 97-8    with the rules of the agency.

 97-9          (d)  The Texas Water Development Board may delegate to the

97-10    State Office of Administrative Hearings the responsibility to

97-11    conduct a hearing under this section.

97-12          SECTION 4.32.  Subchapter G, Chapter 36, Water Code, is

97-13    amended by adding Section 36.206 to read as follows:

97-14          Sec. 36.206.  DISTRICT FEES.  (a)  A temporary board may set

97-15    user fees to pay for the creation and initial operation of a

97-16    district, until such time as the district creation has been

97-17    confirmed and a permanent board has been elected by a majority vote

97-18    of the qualified voters voting in the district in an election

97-19    called for those purposes.

97-20          (b)  The rate of fees set for agricultural uses shall be no

97-21    more than 20 percent of the rate applied to municipal uses.

97-22          SECTION 4.33.  Subchapter I, Chapter 36, Water Code, is

97-23    amended to read as follows:

97-24      SUBCHAPTER I.  PERFORMANCE REVIEW AND DISSOLUTION [OF DISTRICT]

97-25          Sec. 36.301.  FAILURE TO SUBMIT A MANAGEMENT PLAN.  If a

 98-1    board fails to submit a management plan or to receive certification

 98-2    of its management plan under Section 36.1072 or fails to submit or

 98-3    receive certification of an amendment to the management plan under

 98-4    Section 36.1073, the commission shall take appropriate action under

 98-5    Section 36.303.

 98-6          Sec. 36.302.  LEGISLATIVE AUDIT REVIEW; DETERMINATION OF

 98-7    WHETHER DISTRICT IS OPERATIONAL.  (a)  A district is subject to

 98-8    review by the state auditor under the direction of the legislative

 98-9    audit committee pursuant to Chapter 321, Government Code.

98-10          (b)  The commission, the Texas Water Development Board, and

98-11    the Parks and Wildlife Department shall provide technical

98-12    assistance to the state auditor's office for the review.

98-13          (c)  The state auditor shall make a determination of whether

98-14    a district is actively engaged in achieving the objectives of the

98-15    district's management plan based on an audit of the district's

98-16    performance under the plan.

98-17          (d)  The state auditor shall conduct such audits following

98-18    the first anniversary of the initial certification of the plan by

98-19    the Texas Water Development Board under Section 36.1072 and

98-20    following the end of every five-year period thereafter.

98-21          (e)  The state auditor shall report findings of the review to

98-22    the legislative audit committee and to the commission.

98-23          (f)  If it is determined under Subsection (c) that the

98-24    district is not operational, the commission shall take appropriate

98-25    action under Section 36.303.

 99-1          Sec. 36.303.  ACTION BY COMMISSION.  (a)  After notice and

 99-2    hearing in accordance with Chapter 2001, Government Code, the

 99-3    commission may take actions the commission deems appropriate to

 99-4    enforce compliance with rules or orders of the commission or

 99-5    provisions of this chapter, including:

 99-6                (1)  issuing an order requiring the district to take

 99-7    certain actions or to refrain from taking certain actions;

 99-8                (2)  dissolving the board in accordance with Sections

 99-9    36.305 and 36.307;

99-10                (3)  removing the district's taxing authority; or

99-11                (4)  dissolving the district in accordance with

99-12    Sections 36.304, 36.305, and 36.308.

99-13          (b)  In addition to actions identified under Subsection (a),

99-14    the commission may recommend to the legislature, based upon the

99-15    report required by Section 35.018, actions the commission deems

99-16    necessary to accomplish comprehensive management in the district.

99-17          Sec. 36.304 [36.301].  DISSOLUTION OF DISTRICT.  (a)  The

99-18    [After notice and hearing, the] commission may dissolve a district

99-19    that:

99-20                (1)  is not operational, as determined under Section

99-21    36.302 [has been inactive for a period of three consecutive years];

99-22    and

99-23                (2)  has no outstanding bonded indebtedness.

99-24          (b)  A district composed of territory entirely within one

99-25    county may be dissolved even if the district [it] has outstanding

 100-1   indebtedness that matures after the year in which the district is

 100-2   dissolved, whereupon the commissioners court shall levy and collect

 100-3   taxes on all taxable property in the district in an amount

 100-4   sufficient to pay the principal of and interest on the indebtedness

 100-5   when due.  The taxes shall be levied and collected in the same

 100-6   manner as county taxes.

 100-7         [(c)  A district is considered active if:]

 100-8               [(1)  the district has a board as required by

 100-9   Subchapter D;]

100-10               [(2)  the board holds regularly scheduled meetings and

100-11   has on file minutes of its meetings;]

100-12               [(3)  the district has developed and filed with the

100-13   commission a management plan for the district;]

100-14               [(4)  the district has copies of drillers' logs on

100-15   file;]

100-16               [(5)  the district has on file well permits issued by

100-17   the district; and]

100-18               [(6)  the district has on file annual district audits.]

100-19         Sec. 36.305 [36.302].  NOTICE OF HEARING FOR DISSOLUTION OF

100-20   BOARD OR DISTRICT.  (a)  The commission shall give notice of the

100-21   [dissolution] hearing for dissolution of a district or of a board

100-22   which briefly describes the reasons for the proceeding.

100-23         (b)  The notice shall be published once each week for two

100-24   consecutive weeks before the day of hearing in a [some] newspaper

100-25   having general circulation in the county or counties in which the

 101-1   district is located.  The first publication shall be 30 days before

 101-2   the day of the hearing.

 101-3         (c)  The commission shall give notice of the hearing by first

 101-4   class mail addressed to the directors of the district according to

 101-5   the last record on file with the executive director.

 101-6         Sec. 36.306 [36.303].  INVESTIGATION.  The executive director

 101-7   shall investigate the facts and circumstances of any violations of

 101-8   any rule or order of the commission or any provisions of this

 101-9   chapter and shall prepare and file a written report with the

101-10   commission and district and include any actions the executive

101-11   director believes the commission should take under Section 36.303.

101-12         Sec. 36.307.  ORDER OF DISSOLUTION OF BOARD.  If the

101-13   commission enters an order to dissolve the board, the commission

101-14   shall notify the county commissioners court of each county which

101-15   contains territory in the district and the commission shall provide

101-16   that temporary directors be appointed under Section 36.016 to serve

101-17   until an election for a new board can be held under Section 36.017,

101-18   provided, however, that district confirmation shall not be required

101-19   for continued existence of the district and shall not be an issue

101-20   in the election  [the district to be dissolved and the result of

101-21   the investigation shall be included in a written report].

101-22         [Sec. 36.304.  ORDER OF DISSOLUTION.  The commission may

101-23   enter an order dissolving the district at the conclusion of the

101-24   hearing if it finds that the district has performed none of the

101-25   functions for which it was created for a period of three

 102-1   consecutive years before the day of the proceeding and that the

 102-2   district has no outstanding bonded indebtedness.]

 102-3         Sec. 36.308 [36.305].  CERTIFIED COPY OF ORDER.  The

 102-4   commission shall file a certified copy of the order of dissolution

 102-5   of the district in the deed records of the county or counties in

 102-6   which the district is located.  If the district was created by a

 102-7   special Act of the legislature, the commission shall file a

 102-8   certified copy of the order of dissolution with the secretary of

 102-9   state.

102-10         Sec. 36.309 [36.306].  APPEALS.  [(a)]  Appeals from any [a]

102-11   commission order [dissolving a district] shall be filed and heard

102-12   in the district court of any of the counties in which the land is

102-13   located.

102-14         [(b)  The trial on appeal shall be de novo and the

102-15   substantial evidence rule shall not apply.]

102-16         Sec. 36.310 [36.307].  ASSETS ESCHEAT [TO STATE].  Upon the

102-17   dissolution of a district by the commission, all assets of the

102-18   district shall be sold at public auction and the proceeds given to

102-19   the county if it is a single-county district.  If it is a

102-20   multicounty district, the proceeds shall be divided with the

102-21   counties in proportion to the surface land area in each county

102-22   served by the district [escheat to the State of Texas.  The assets

102-23   shall be administered by the state treasurer and shall be disposed

102-24   of in the manner provided by Chapter 72, Property Code].

102-25         SECTION 4.34.  Subsection (b), Section 36.325, Water Code, is

 103-1   amended to read as follows:

 103-2         (b)  The petition must be signed by:

 103-3               (1)  a majority of the landowners in the territory;

 103-4               (2)  at least 50 landowners if the number of landowners

 103-5   is more than 50; or

 103-6               (3)  the commissioners court of the county in which the

 103-7   area is located if the area is identified as a priority groundwater

 103-8   management [critical] area or includes the entire county.  The

 103-9   petition must describe the land by legal description or by metes

103-10   and bounds or by lot and block number if there is a recorded plat

103-11   of the area to be included in the district.

103-12         SECTION 4.35.  Section 36.331, Water Code, is amended to read

103-13   as follows:

103-14         Sec. 36.331.  ANNEXATION OF NONCONTIGUOUS TERRITORY.  Land

103-15   not contiguous to the existing boundaries of a district may not be

103-16   added to or annexed to a district unless the land is located either

103-17   within the same management area, priority groundwater management

103-18   [critical] area, or a groundwater subdivision designated by the

103-19   commission or its predecessors.

103-20         SECTION 4.36.  Chapter 36, Water Code, is amended by adding

103-21   Subchapter L to read as follows:

103-22        SUBCHAPTER L.  GROUNDWATER DISTRICT LOAN ASSISTANCE FUND

103-23         Sec. 36.371.  GROUNDWATER DISTRICT LOAN ASSISTANCE FUND.

103-24   (a)  The groundwater district loan assistance fund is created, to

103-25   be funded by direct appropriation and by the Texas Water

 104-1   Development Board from the water assistance fund.

 104-2         (b)  Repayments of loans shall be deposited in the water

 104-3   assistance fund.

 104-4         Sec. 36.372.  FINANCIAL ASSISTANCE.  (a)  The loan fund may

 104-5   be used by the Texas Water Development Board to provide loans to

 104-6   newly confirmed districts and legislatively created districts that

 104-7   do not require a confirmation election to pay for their creation

 104-8   and initial operations.

 104-9         (b)  The Texas Water Development Board shall establish rules

104-10   for the use and administration of the loan fund.

104-11         Sec. 36.373.  APPLICATION FOR ASSISTANCE.  (a)  In an

104-12   application to the Texas Water Development Board for financial

104-13   assistance from the loan fund, the applicant shall include:

104-14               (1)  the name of the district and its board members;

104-15               (2)  a citation of the law under which the district

104-16   operates and was created;

104-17               (3)  a description of the initial operations;

104-18               (4)  the total start-up cost of the initial operations;

104-19               (5)  the amount of state financial assistance

104-20   requested;

104-21               (6)  the plan for repaying the total cost of the loan;

104-22   and

104-23               (7)  any other information the Texas Water Development

104-24   Board may require to perform its duties and protect the public

104-25   interest.

 105-1         (b)  The Texas Water Development Board may not accept an

 105-2   application for a loan from the loan fund unless it is submitted in

 105-3   affidavit form by the applicant's board.  The Texas Water

 105-4   Development Board shall prescribe the affidavit form in its rules.

 105-5         (c)  The rules implementing this section shall not restrict

 105-6   or prohibit the Texas Water Development Board from requiring

 105-7   additional factual material from an applicant.

 105-8         Sec. 36.374.  APPROVAL OF APPLICATION.  The Texas Water

 105-9   Development Board, by resolution, may approve an application if it

105-10   finds that:

105-11               (1)  granting financial assistance to the applicant

105-12   will serve the public interest; and

105-13               (2)  the revenue pledged by the applicant from district

105-14   taxes and fees and other sources will be sufficient to meet all the

105-15   obligations assumed by the applicant.

105-16         SECTION 4.37.  Subsection (g), Section 151.318, Tax Code, is

105-17   amended to read as follows:

105-18         (g)  Each person engaged in manufacturing, processing,

105-19   fabricating, or repairing tangible personal property for ultimate

105-20   sale is entitled to a refund or a reduction in the amount of tax

105-21   imposed by this chapter as provided by Subsection (h) for the

105-22   purchase of machinery, equipment, and replacement parts or

105-23   accessories with a useful life in excess of six months if the

105-24   equipment is:

105-25               (1)  used or consumed in or during the actual

 106-1   manufacturing, processing, fabrication, or repair of tangible

 106-2   personal property for ultimate sale, and the use or consumption of

 106-3   the property is necessary or essential to the manufacturing,

 106-4   processing, fabrication, or repair operation, or to a pollution

 106-5   control process; or

 106-6               (2)  specifically installed to:

 106-7                     (A)  reduce water use and wastewater flow volumes

 106-8   from the manufacturing, processing, fabrication, or repair

 106-9   operation;

106-10                     (B)  reuse and recycle wastewater streams

106-11   generated within the manufacturing, processing, fabrication, or

106-12   repair operation; or

106-13                     (C)  treat wastewater from another industrial or

106-14   municipal source for the purpose of replacing existing freshwater

106-15   sources in the manufacturing, processing, fabrication, or repair

106-16   operation.

106-17         SECTION 4.38.  (a)  Sections 35.010, 35.011, and 35.016,

106-18   Water Code, are repealed.

106-19         (b)  Section 5.02, Chapter 133, Acts of the 69th Legislature,

106-20   Regular Session, 1985, is repealed.

106-21         SECTION 4.39.  (a)  In this section, "district" means a

106-22   groundwater conservation district created under Section 52, Article

106-23   III, or Section 59, Article XVI, Texas Constitution, that has the

106-24   authority to regulate the spacing of water wells, the production

106-25   from water wells, or both.

 107-1         (b)  Notwithstanding the time limitation under Subsection

 107-2   (a), Section 36.1072, Water Code, as added by this Act, and

 107-3   notwithstanding any provision to the contrary in prior law, a

 107-4   district which was created or, if the district required a

 107-5   confirmation election, a district whose creation was confirmed

 107-6   before the effective date of this Act shall submit a management

 107-7   plan for certification under Section 36.1072, Water Code, as added

 107-8   by this Act, to the Texas Water Development Board not later than

 107-9   September 1, 1998.

107-10         SECTION 4.40.  An area designated as a critical area under

107-11   Chapter 35, Water Code, as it existed before the effective date of

107-12   this Act, or under other prior law, shall be known and referred to

107-13   as a priority groundwater management area on or after the effective

107-14   date of this Act.

107-15         SECTION 4.41.  Not later than September 1, 1998, the Texas

107-16   Natural Resource Conservation Commission must, under Chapter 35,

107-17   Water Code, as amended by this Act, make all designations of

107-18   priority groundwater management areas for which critical area

107-19   reports were required to have been completed before the effective

107-20   date of this Act under Section 35.007, Water Code, as that section

107-21   existed immediately before the effective date of this Act.

107-22          ARTICLE 5.  FINANCIAL ASSISTANCE FOR WATER NEEDS AND

107-23                              CONSERVATION

107-24         SECTION 5.01.  Section 15.431, Water Code, is amended by

107-25   amending Subsection (d) and adding Subsection (g) to read as

 108-1   follows:

 108-2         (d)  Money appropriated by the legislature to be maintained

 108-3   as principal in the fund, $10 million of the money transferred to

 108-4   that fund by H.B. No. 2, Acts of the 69th Legislature, Regular

 108-5   Session, 1985, and half of the money earned as interest on the

 108-6   money held as principal in the agricultural trust fund shall be

 108-7   maintained as principal.  Money maintained as principal in the

 108-8   agricultural trust fund may [not] be used by the board to make

 108-9   conservation loans to borrower districts and loans to lender

108-10   districts for the purposes listed in Section 17.895 of this code.

108-11   Loans and conservation loans made under this subchapter are subject

108-12   to the provisions of Sections 17.896 through 17.903 of this code.

108-13   Repayments of principal and interest on loans and conservation

108-14   loans made under this subchapter shall be deposited in the

108-15   agricultural trust fund [spent for any purpose].

108-16         (g)  In this section, "borrower district," "conservation

108-17   loan," "individual borrower," "lender district," and "loan" have

108-18   the meanings assigned those terms by Section 17.871 of this code.

108-19         SECTION 5.02.  Section 16.189, Water Code, is amended to read

108-20   as follows:

108-21         Sec. 16.189.  LEASE PAYMENTS.  In leasing a state facility

108-22   for a term of years, the board shall require [annual] payments that

108-23   will recover over the lease period not less than the total of:

108-24               (1)  all [the annual] principal and interest

108-25   requirements applicable to the debt incurred by the state in

 109-1   acquiring the facility; and

 109-2               (2)  the state's [annual] cost for operation,

 109-3   maintenance, and rehabilitation of the facility.

 109-4         SECTION 5.03.  Chapter 17, Water Code, is amended by adding

 109-5   Subchapter L to read as follows:

 109-6         SUBCHAPTER L.  WATER FINANCIAL ASSISTANCE BOND PROGRAM

 109-7         Sec. 17.951.  DEFINITIONS.  In this subchapter:

 109-8               (1)  "Fund" means the Texas Water Development Fund II.

 109-9               (2)  "Resolution" means any resolution or order

109-10   approved by the board authorizing the issuance of water financial

109-11   assistance bonds.

109-12         Sec. 17.952.  ISSUANCE OF WATER FINANCIAL ASSISTANCE BONDS.

109-13   The board by resolution may provide for the issuance of water

109-14   financial assistance bonds, which shall be general obligation bonds

109-15   of the state, in an aggregate principal amount not to exceed the

109-16   principal amount authorized to be issued by Section 49-d-8, Article

109-17   III, Texas Constitution.

109-18         Sec. 17.953.  CONDITIONS FOR ISSUANCE OF WATER FINANCIAL

109-19   ASSISTANCE BONDS.  (a)  Water financial assistance bonds may be

109-20   issued as various series and issues.

109-21         (b)  Water financial assistance bonds may mature, serially or

109-22   otherwise, not later than 50 years after the date on which they are

109-23   issued.

109-24         (c)  Water financial assistance bonds may be issued as bonds,

109-25   notes, or other obligations as permitted by law and may be in the

 110-1   form and denominations and be issued in the manner and under the

 110-2   terms, conditions, and details as provided by resolution.

 110-3         (d)  Water financial assistance bonds may be sold at public

 110-4   or private sale at a price or prices and on terms determined by the

 110-5   board.

 110-6         (e)  Water financial assistance bonds shall be signed and

 110-7   executed as provided by resolution.

 110-8         (f)  Water financial assistance bonds may bear no interest or

 110-9   bear interest at a rate or rates determined in accordance with law.

110-10         (g)  Rates of interest on water financial assistance bonds

110-11   may be fixed, variable, floating, adjustable, or otherwise, as

110-12   determined by the board or determined pursuant to any contractual

110-13   arrangements approved by the board.  The resolution may provide for

110-14   the payment of interest at any time or the periodic determination

110-15   of interest rates or interest rate periods.

110-16         Sec. 17.954.  BOND ENHANCEMENT AGREEMENTS; PAYMENT OF

110-17   EXPENSES.  (a)  The board at any time and from time to time may

110-18   enter into one or more bond enhancement agreements that the board

110-19   determines to be necessary or appropriate to place the obligation

110-20   of the board, as represented by the water financial assistance

110-21   bonds, in whole or in part, on the interest rate, currency, cash

110-22   flow, or other basis desired by the board.  A bond enhancement

110-23   agreement is an agreement for professional services and shall

110-24   contain the terms and conditions and be for the period that the

110-25   board approves.

 111-1         (b)  The fees and expenses of the board in connection with

 111-2   the issuance of water financial assistance bonds and the providing

 111-3   of financial assistance to political subdivisions may be paid from

 111-4   money in the fund, provided that any payments due from the board

 111-5   under a bond enhancement agreement, other than fees and expenses,

 111-6   that relate to the payment of debt service on water financial

 111-7   assistance bonds constitute payments of principal of and interest

 111-8   on the water financial assistance bonds.

 111-9         (c)  Bond enhancement agreements may include, on terms and

111-10   conditions approved by the board, interest rate swap agreements;

111-11   currency swap agreements; forward payment conversion agreements;

111-12   agreements providing for payments based on levels of or changes in

111-13   interest rates or currency exchange rates; agreements to exchange

111-14   cash flows or a series of payments; agreements, including options,

111-15   puts, or calls, to hedge payment, currency, rate, spread, or other

111-16   exposure; or other agreements that further enhance the

111-17   marketability, security, or creditworthiness of water financial

111-18   assistance bonds.

111-19         Sec. 17.955.  PERSONS DESIGNATED TO ACT AS AGENTS OF BOARD.

111-20   (a)  In the resolution the board may delegate authority to one or

111-21   more officers, employees, or agents designated by the board to act

111-22   on behalf of the board during the time any series of water

111-23   financial assistance bonds are outstanding to:

111-24               (1)  fix dates, prices, interest rates, amortization

111-25   schedules, redemption features, and interest payment periods;

 112-1               (2)  perform duties and obligations of the board under

 112-2   a bond enhancement agreement; and

 112-3               (3)  perform other procedures specified in the

 112-4   resolution.

 112-5         (b)  The person designated by the board may adjust the

 112-6   interest on water financial assistance bonds and perform all duties

 112-7   described in a bond enhancement agreement as necessary to permit

 112-8   the water financial assistance bonds to be sold or resold at par in

 112-9   conjunction with secondary market transactions.

112-10         Sec. 17.956.  TEXAS WATER DEVELOPMENT FUND II.  The fund is a

112-11   special fund in the state treasury, and all water financial

112-12   assistance bond proceeds shall be deposited in the state treasury

112-13   to the credit of the fund.  The fund shall contain a "state

112-14   participation account," an "economically distressed areas program

112-15   account," and a "financial assistance account," and proceeds from

112-16   the sale of water financial assistance bonds issued for the purpose

112-17   of providing financial assistance to political subdivisions shall

112-18   be credited to such accounts as provided by resolution by the

112-19   board.  By resolution, the board may create additional accounts

112-20   within the fund as the board determines are necessary or convenient

112-21   for the administration of the fund.

112-22         Sec. 17.957.  STATE PARTICIPATION ACCOUNT.  (a)  The Texas

112-23   Water Development Fund II state participation account, referred to

112-24   as the "state participation account," is an account established

112-25   within the fund in the state treasury.  Transfers shall be made

 113-1   from this account as provided by this subchapter.

 113-2         (b)  The state participation account is composed of:

 113-3               (1)  money and assets attributable to water financial

 113-4   assistance bonds designated by the board as issued for projects

 113-5   described in Section 16.131;

 113-6               (2)  money from the sale, transfer, or lease of a

 113-7   project described in Subdivision (1) that was acquired,

 113-8   constructed, reconstructed, developed, or enlarged with money from

 113-9   the state participation account;

113-10               (3)  payments received under a bond enhancement

113-11   agreement with respect to water financial assistance bonds

113-12   designated by the board as issued for projects described in Section

113-13   16.131;

113-14               (4)  investment income earned on money on deposit in

113-15   the state participation account; and

113-16               (5)  any other funds, regardless of their source, that

113-17   the board directs be deposited to the credit of the state

113-18   participation account.

113-19         (c)  Money on deposit in the state participation account may

113-20   be used by the board for projects described in Section 16.131 in

113-21   the manner that the board determines necessary for the

113-22   administration of the fund.

113-23         Sec. 17.958.  ECONOMICALLY DISTRESSED AREAS PROGRAM ACCOUNT.

113-24   (a)  The Texas Water Development Fund II economically distressed

113-25   areas program account, referred to as the "economically distressed

 114-1   areas program account," is an account established within the fund

 114-2   in the state treasury.  Transfers shall be made from this account

 114-3   as provided by this subchapter.

 114-4         (b)  The economically distressed areas program account is

 114-5   composed of:

 114-6               (1)  money and assets attributable to water financial

 114-7   assistance bonds designated by the board as issued for projects

 114-8   described in Subchapter K;

 114-9               (2)  money provided by the federal government, the

114-10   state, political subdivisions, and private entities for the purpose

114-11   of paying debt service on water financial assistance bonds issued

114-12   for purposes provided by Subchapter K;

114-13               (3)  payments received under a bond enhancement

114-14   agreement with respect to water financial assistance bonds

114-15   designated by the board as issued for purposes provided by

114-16   Subchapter K;

114-17               (4)  investment income earned on money on deposit in

114-18   the economically distressed areas program account; and

114-19               (5)  any other funds, regardless of their source, that

114-20   the board directs be deposited to the credit of the economically

114-21   distressed areas program account.

114-22         (c)  Money on deposit in the economically distressed areas

114-23   program account may be used by the board for purposes provided by

114-24   Subchapter K in the manner that the board determines necessary for

114-25   the administration of the fund.

 115-1         Sec. 17.959.  FINANCIAL ASSISTANCE ACCOUNT.  (a)  The Texas

 115-2   Water Development Fund II water financial assistance account,

 115-3   referred to as the "financial assistance account," is an account

 115-4   established within the fund in the state treasury.  Transfers shall

 115-5   be made from this account as provided by this subchapter.

 115-6         (b)  The financial assistance account is composed of:

 115-7               (1)  money and assets attributable to water financial

 115-8   assistance bonds designated by the board as issued for purposes

 115-9   described in Section 49-d-8, Article III, Texas Constitution, other

115-10   than for purposes described in Sections 17.957 and 17.958;

115-11               (2)  payments received under a bond enhancement

115-12   agreement with respect to water financial assistance bonds

115-13   designated by the board as issued for purposes described in Section

115-14   49-d-8, Article III, Texas Constitution, other than for purposes

115-15   described in Sections 17.957 and 17.958;

115-16               (3)  investment income earned on money on deposit in

115-17   the financial assistance account; and

115-18               (4)  any other funds, regardless of their source, that

115-19   the board directs be deposited to the credit of the financial

115-20   assistance account.

115-21         (c)  Money on deposit in the financial assistance account may

115-22   be used by the board for any one or more of the purposes described

115-23   in Section 49-d-8, Article III, Texas Constitution, other than for

115-24   purposes described in Sections 17.957 and 17.958, in the manner

115-25   that the board determines necessary for the administration of the

 116-1   fund.

 116-2         Sec. 17.960.  BOND RESOLUTIONS.  (a)  In the resolution, the

 116-3   board may make additional covenants with respect to water financial

 116-4   assistance bonds and may provide for:

 116-5               (1)  the flow of funds;

 116-6               (2)  the establishment of accounts and subaccounts

 116-7   within the fund that the board determines are necessary for the

 116-8   administration of the fund;

 116-9               (3)  at the discretion of the board, the payment of

116-10   fees and expenses of the board in connection with providing

116-11   financial assistance to political subdivisions as the board

116-12   determines are necessary for the administration of the fund;

116-13               (4)  the maintenance, investment, and management of

116-14   money within the fund and any accounts established by resolution by

116-15   the board; and

116-16               (5)  any other provisions and covenants that the board

116-17   determines are necessary for the administration of the fund.

116-18         (b)  The board may invest and reinvest money in the fund and

116-19   any account therein in any obligations or securities as provided by

116-20   the resolution or by rule adopted by the board.

116-21         (c)  The board may adopt and have executed other proceedings,

116-22   agreements, or trust agreements or instruments necessary in the

116-23   issuance of water financial assistance bonds, including, without

116-24   limitation, bond enhancement agreements.

116-25         Sec. 17.961.  TRANSFERS TO REVOLVING FUNDS.  (a)  In order to

 117-1   implement and administer a revolving loan program established under

 117-2   Title VI of the Federal Water Pollution Control Act (33 U.S.C.

 117-3   Section 1381 et seq.), the board may direct the comptroller to

 117-4   transfer amounts from the financial assistance account to the state

 117-5   water pollution control revolving fund created by Section 15.601 to

 117-6   provide financial assistance pursuant to this subchapter.

 117-7         (b)  In order to implement and administer a revolving loan

 117-8   program established by any other federal legislation, including,

 117-9   without limitation, Title XIV of the federal Public Health Service

117-10   Act, or any federal agency program under which an additional state

117-11   revolving fund, as defined in Section 15.602, has been established,

117-12   the board may direct the comptroller to transfer amounts from the

117-13   financial assistance account to such additional state revolving

117-14   fund to provide financial assistance pursuant to this subchapter.

117-15         (c)  The board shall use the state water pollution control

117-16   revolving fund in accordance with Section 15.604(a)(4) and Section

117-17   603(d)(4), Federal Water Pollution Control Act (33 U.S.C. Section

117-18   1383), as a source of revenue to be deposited in accordance with

117-19   this subchapter for the payment of principal and interest on water

117-20   financial assistance bonds issued by the board, the proceeds of

117-21   which are deposited into the state water pollution control

117-22   revolving fund, and to make payments under a bond enhancement

117-23   agreement with respect to principal or interest on the water

117-24   financial assistance bonds.

117-25         (d)  In the event amounts are transferred to any additional

 118-1   state revolving fund, as defined in Section 15.602, pursuant to

 118-2   Subsection (b), the board shall, to the extent permitted by the

 118-3   federal legislation or federal agency program under which such

 118-4   additional state revolving fund was established, use the additional

 118-5   state revolving fund as a source of revenue to be deposited in

 118-6   accordance with this subchapter for the payment of principal and

 118-7   interest on water financial assistance bonds issued by the board,

 118-8   the proceeds of which are deposited into the additional state

 118-9   revolving fund, and to make payments under a bond enhancement

118-10   agreement with respect to principal or interest on the water

118-11   financial assistance bonds.

118-12         Sec. 17.962.  STATE APPROVALS.  (a)  Water financial

118-13   assistance bonds may not be issued under this subchapter unless

118-14   such issuance has been reviewed and approved by the bond review

118-15   board.

118-16         (b)  The proceedings relating to the water financial

118-17   assistance bonds issued under this subchapter are subject to review

118-18   and approval by the attorney general in the same manner and with

118-19   the same effect as provided by Chapter 656, Acts of the 68th

118-20   Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas

118-21   Civil Statutes).

118-22         (c)  After approval by the attorney general of the

118-23   proceedings relating to water financial assistance bonds issued

118-24   under this subchapter, registration of the proceedings by the

118-25   comptroller, and delivery of the water financial assistance bonds

 119-1   to the purchasers, the water financial assistance bonds are

 119-2   incontestable and constitute general obligations of the state.

 119-3         Sec. 17.963.  PAYMENT OF BOARD OBLIGATIONS.  (a)  The board

 119-4   shall cooperate with the comptroller to develop procedures for the

 119-5   payment of principal and interest on water financial assistance

 119-6   bonds and any obligation under a bond enhancement agreement, as the

 119-7   same become due and owing.

 119-8         (b)  If there is not enough money in any account of the fund

 119-9   available to pay the principal and interest on water financial

119-10   assistance bonds issued for such account, including money to make

119-11   payments by the board under a bond enhancement agreement with

119-12   respect to principal or interest on such water financial assistance

119-13   bonds, the board shall notify the comptroller of such occurrence,

119-14   and the comptroller shall transfer out of the first money coming

119-15   into the state treasury not otherwise appropriated by the

119-16   constitution the amount required to pay the obligations of the

119-17   board that are due and owing.  The comptroller shall make the

119-18   transfers required by Section 49-d-8, Article III, Texas

119-19   Constitution, and this subchapter in the manner specified in the

119-20   resolution.

119-21         Sec. 17.964.  ELIGIBLE SECURITY.  Water financial assistance

119-22   bonds are eligible to secure deposits of public funds of the state

119-23   and political subdivisions of the state.  Water financial

119-24   assistance bonds are lawful and sufficient security for deposits to

119-25   the extent of their face value.

 120-1         Sec. 17.965.  LEGAL INVESTMENTS.  Water financial assistance

 120-2   bonds are legal and authorized investments for:

 120-3               (1)  banks;

 120-4               (2)  savings banks;

 120-5               (3)  trust companies;

 120-6               (4)  savings and loan associations;

 120-7               (5)  insurance companies;

 120-8               (6)  fiduciaries;

 120-9               (7)  trustees;

120-10               (8)  guardians; and

120-11               (9)  sinking funds and other public funds of the state

120-12   and its agencies and of political subdivisions of the state.

120-13         Sec. 17.966.  MUTILATED, LOST, OR DESTROYED BONDS.  The board

120-14   may provide for the replacement of mutilated, lost, or destroyed

120-15   water financial assistance bonds.

120-16         Sec. 17.967.  REFUNDING BONDS.  (a)  The board by resolution

120-17   may provide for the issuance of water financial assistance bonds to

120-18   refund outstanding bonds and water financial assistance bonds

120-19   issued under this chapter and federal contractual obligations

120-20   incurred under Section 49-d, Article III, Texas Constitution.

120-21         (b)  The board may sell the refunding water financial

120-22   assistance bonds and use the proceeds to retire any of the

120-23   outstanding obligations described in Subsection (a), exchange the

120-24   refunding water financial assistance bonds for the outstanding

120-25   bonds or water financial assistance bonds, or refund any of the

 121-1   outstanding obligations described in Subsection (a) in the manner

 121-2   provided by any other applicable statute, including Chapter 503,

 121-3   Acts of the 54th Legislature, 1955 (Article 717k, Vernon's Texas

 121-4   Civil Statutes), and Chapter 784, Acts of the 61st Legislature,

 121-5   Regular Session, 1969 (Article 717k-3, Vernon's Texas Civil

 121-6   Statutes).

 121-7         Sec. 17.968.  SALE OF POLITICAL SUBDIVISION BONDS BY THE

 121-8   BOARD; USE OF PROCEEDS.  (a)  The board may sell or dispose of

 121-9   political subdivision bonds purchased with money in the fund to any

121-10   person, including the Texas Water Resources Finance Authority, and

121-11   the board, in such manner as it shall determine, may apply the

121-12   proceeds of the sale of political subdivision bonds held by the

121-13   board to:

121-14               (1)  pay debt service on water financial assistance

121-15   bonds issued under this subchapter; or

121-16               (2)  provide financial assistance to political

121-17   subdivisions for any one or more of the purposes authorized by

121-18   Section 49-d-8, Article III, Texas Constitution.

121-19         (b)  The board shall sell the political subdivision bonds at

121-20   the price and under the terms that it determines to be reasonable.

121-21         Sec. 17.969.  TAX EXEMPT BONDS.  Since the board is

121-22   performing an essential governmental function in the exercise of

121-23   the powers conferred on it by this chapter, water financial

121-24   assistance bonds issued under this subchapter and the interest and

121-25   income from the water financial assistance bonds, including any

 122-1   profit made on the sale of water financial assistance bonds, and

 122-2   all fees, charges, gifts, grants, revenues, receipts, and other

 122-3   money received or pledged to pay or secure the payment of water

 122-4   financial assistance bonds are free from taxation and assessments

 122-5   of every kind by this state and any city, county, district,

 122-6   authority, or other political subdivision of this state.

 122-7         Sec. 17.970.  ENFORCEMENT BY MANDAMUS.  Payment of water

 122-8   financial assistance bonds and obligations incurred under bond

 122-9   enhancement agreements and performance of official duties

122-10   prescribed by Section 49-d-8, Article III, Texas Constitution, and

122-11   this subchapter may be enforced in a court of competent

122-12   jurisdiction by mandamus or other appropriate proceedings.

122-13         Sec. 17.971.  SUBCHAPTER CUMULATIVE OF OTHER LAWS.  (a)  This

122-14   subchapter is cumulative of other laws on the subject, and the

122-15   board may use provisions of other applicable laws in the issuance

122-16   of water financial assistance bonds and the execution of bond

122-17   enhancement agreements, but this subchapter is wholly sufficient

122-18   authority for the issuance of water financial assistance bonds, the

122-19   execution of bond enhancement agreements, and the performance of

122-20   all other acts and procedures authorized by this subchapter.

122-21         (b)  In addition to other authority granted by this

122-22   subchapter, the board may exercise the authority granted to the

122-23   governing body of an issuer with regard to the issuance of

122-24   obligations under Chapter 656, Acts of the 68th Legislature,

122-25   Regular Session, 1983 (Article 717q, Vernon's Texas Civil

 123-1   Statutes).

 123-2         (c)  In exercising the powers granted to the board under this

 123-3   subchapter, the board may exercise any powers granted to it under

 123-4   this chapter and Chapter 16 including the powers described in

 123-5   Subchapters D, E, F, G, and K, notwithstanding any provision in

 123-6   this chapter or Chapter 16 that may be inconsistent with or in

 123-7   conflict with the provisions of this subchapter as a result of the

 123-8   establishment of the fund as a fund separate and distinct from the

 123-9   existing Texas Water Development Fund, it being the intent of the

123-10   legislature that the financial assistance made available to

123-11   political subdivisions under this subchapter, in pursuance of the

123-12   authority granted by Section 49-d-8, Article III, Texas

123-13   Constitution, be provided by the board in the manner the board

123-14   deems necessary to achieve the purposes of Section 49-d-8, Article

123-15   III, Texas Constitution, and notwithstanding any other existing

123-16   provisions in this chapter or Chapter 16, the provisions of this

123-17   chapter and Chapter 16 shall be inclusive of the provisions of this

123-18   subchapter and Section 49-d-8, Article III, Texas Constitution.

123-19         SECTION 5.04.  Subdivision (7), Section 17.001, Water Code,

123-20   is amended to read as follows:

123-21               (7)  "Water supply project" means:

123-22                     (A)  any engineering undertaking or work to

123-23   conserve and develop [surface or subsurface] water resources of the

123-24   state, including the control, storage, and preservation of its

123-25   storm water and floodwater and the water of its rivers and streams

 124-1   for all useful and lawful purposes by the acquisition, improvement,

 124-2   extension, or construction of dams, reservoirs, brush control,

 124-3   precipitation enhancement, desalinization, and other water storage

 124-4   and conservation projects, which may include flood storage,

 124-5   including underground storage projects, filtration and water

 124-6   treatment plants, including any system necessary to transport water

 124-7   from storage to points of distribution or from storage to

 124-8   filtration and treatment plants, including facilities for

 124-9   transporting water therefrom to wholesale purchasers or to retail

124-10   purchasers as authorized by Section 17.072(c) of this code, by the

124-11   acquisition, by purchase of rights in [underground] water, by the

124-12   drilling of wells, or for any one or more of these purposes or

124-13   methods; [or]

124-14                     (B)  any engineering undertaking or work outside

124-15   the state to provide for the maintenance and enhancement of the

124-16   quality of water by eliminating saline inflow through well pumping

124-17   and deep well injection of brine if such undertaking or work

124-18   results in water being available for use in or for the benefit of

124-19   Texas; or

124-20                     (C)  any undertaking or work by Texas political

124-21   subdivisions to conserve, convey, or develop water resources in

124-22   areas outside Texas if such undertaking or work results in water

124-23   being available for use in or for the benefit of Texas.

124-24         SECTION 5.05.  Section 17.001, Water Code, is amended by

124-25   amending Subdivision (17) and adding Subdivision (25) to read as

 125-1   follows:

 125-2               (17)  "Financial assistance" means any loan of funds

 125-3   from the water supply account, the water quality enhancement

 125-4   account, or the flood control account to a political subdivision

 125-5   for construction of a water supply project, including projects

 125-6   referenced in the state water plan, treatment works, or flood

 125-7   control measures through the purchase of bonds or other obligations

 125-8   of the political subdivision, and any loan of funds the source of

 125-9   which is the proceeds from water financial assistance bonds.

125-10               (25)  "Water financial assistance bonds" means the

125-11   Texas Water Development Bonds authorized to be issued by Section

125-12   49-d-8, Article III, Texas Constitution, and dedicated to use for

125-13   the purposes described in that section.

125-14         SECTION 5.06.  Section 17.011, Water Code, is amended by

125-15   adding Subsection (c) to read as follows:

125-16         (c)  Notwithstanding any other provision of this section, the

125-17   board by resolution may issue water financial assistance bonds for

125-18   any one or more of the purposes described in Section 49-d-8,

125-19   Article III, Texas Constitution, in an aggregate principal amount

125-20   not to exceed the amount of bonds authorized by Section 49-d-8,

125-21   Article III, Texas Constitution, in accordance with the provisions

125-22   of Subchapter L.

125-23         SECTION 5.07.  Section 17.0111, Water Code, is amended to

125-24   read as follows:

125-25         Sec. 17.0111.  DEDICATION OF CERTAIN BONDS.  No more than

 126-1   $250,000,000 in principal [Fifty percent of the] amount of bonds

 126-2   authorized by Article III, Section 49-d-7, of the Texas

 126-3   Constitution, and issued under either that section or Article III,

 126-4   Section 49-d-8, of the Texas Constitution, may be [is] dedicated to

 126-5   the purposes provided by Subchapter K [of this chapter].

 126-6         SECTION 5.08.  Section 17.182, Water Code, is amended to read

 126-7   as follows:

 126-8         Sec. 17.182.  PROCEEDS FROM SALE.  Unless used to pay debt

 126-9   service on bonds issued under this chapter, the proceeds from the

126-10   sale of political subdivision bonds held by the board either shall

126-11   be credited to the account from which financial assistance was made

126-12   to the political subdivision, except that accrued interest shall be

126-13   credited to the interest and sinking fund, or shall be deposited to

126-14   the credit of the Texas Water Development Fund II, established

126-15   within the state treasury pursuant to Section 49-d-8, Article III,

126-16   Texas Constitution.  However, no such proceeds shall be deposited

126-17   to the credit of the Texas Water Development Fund II unless the

126-18   executive administrator certifies to the board that the transfer of

126-19   such proceeds into the Texas Water Development Fund II will not

126-20   cause the board, in the fiscal year the transfer is made, to direct

126-21   the comptroller to transfer out of the first money coming into the

126-22   state treasury during that fiscal year funds sufficient for the

126-23   payment of principal of or interest on water development bonds,

126-24   other than water development bonds issued for the purposes

126-25   described in Subsection (e), Section 49-d-7, Article III, Texas

 127-1   Constitution, coming due in that fiscal year.

 127-2         SECTION 5.09.  Section 17.278, Water Code, is amended to read

 127-3   as follows:

 127-4         Sec. 17.278.  FINDINGS REGARDING PERMITS.  If an application

 127-5   includes a proposal for a wastewater treatment plant, the board may

 127-6   not deliver funds for the wastewater treatment plant until the

 127-7   applicant has obtained a permit for the construction and operation

 127-8   of the plant and approval of the plans and specifications for the

 127-9   plant from the commission.  If an application includes a proposal

127-10   for a wastewater treatment plant that is located outside the

127-11   jurisdiction of this state and that is not subject to the

127-12   permitting authority of the commission, the board may not deliver

127-13   funds for the wastewater treatment plant until after the board

127-14   reviews the plans and specifications in coordination with the

127-15   commission and finds that the wastewater treatment plant is capable

127-16   of producing effluent that will meet federal and Texas-approved

127-17   water quality standards and if effluent produced will result in

127-18   water being available for use in or for the benefit of Texas.

127-19         SECTION 5.10.  Sections 44.007 through 44.010, Agriculture

127-20   Code, are amended to read as follows:

127-21         Sec. 44.007.  LINKED DEPOSIT PROGRAM.  (a)  The board shall

127-22   establish a linked deposit program to encourage commercial lending

127-23   for the enhanced production, processing, and marketing of certain

127-24   agricultural crops and for the financing [purchase] of water

127-25   conservation projects or equipment for agricultural production

 128-1   purposes.

 128-2         (b)  The board shall promulgate rules for the loan portion of

 128-3   the linked deposit program.  The rules must include:

 128-4               (1)  a list of the categories of crops customarily

 128-5   grown in Texas;

 128-6               (2)  a list of crops that are alternative agricultural

 128-7   crops;

 128-8               (3)  a list of crops the production of which has

 128-9   declined markedly because of natural disasters; and

128-10               (4)  identification of projects and [the] types of

128-11   equipment considered as water conservation projects or equipment

128-12   for agricultural production purposes.

128-13         (c)  In order to participate in the linked deposit program,

128-14   an eligible lending institution may solicit loan applications from

128-15   eligible borrowers.

128-16         (d)  After reviewing an application and determining that the

128-17   applicant is eligible and creditworthy, the eligible lending

128-18   institution shall send the application for a linked deposit loan to

128-19   the board.

128-20         (e)  The eligible lending institution shall certify the

128-21   interest rate applicable to the specific eligible borrower and

128-22   attach it to the application sent to the board.

128-23         (f)  After reviewing each linked deposit loan application,

128-24   the board shall recommend to the comptroller [state treasurer] the

128-25   acceptance or rejection of the application.

 129-1         (g)  After acceptance of the application, the comptroller

 129-2   [state treasurer] shall place a linked deposit with the applicable

 129-3   eligible lending institution for the period the comptroller

 129-4   [treasurer] considers appropriate.  The comptroller [state

 129-5   treasurer] may not place a deposit for a period extending beyond

 129-6   the state fiscal biennium in which it is placed.  Subject to the

 129-7   limitation described by Section 44.010 of this chapter, the

 129-8   comptroller [treasurer] may place time deposits at an interest rate

 129-9   described by Section 44.001(5)(A) of this chapter, notwithstanding

129-10   any order of the State Depository Board to the contrary.

129-11         (h)  Before the placing of a linked deposit, the eligible

129-12   lending institution and the state, represented by the comptroller

129-13   [state treasurer] and the board, shall enter into a written deposit

129-14   agreement containing the conditions on which the linked deposit is

129-15   made.

129-16         (i)  If a lending institution holding linked deposits ceases

129-17   to be a state depository, the comptroller [state treasurer] may

129-18   withdraw the linked deposits.

129-19         (j)  The board may adopt rules that create a procedure for

129-20   determining priorities for loans granted under this chapter.  Each

129-21   rule adopted must state the policy objective of the rule.  The

129-22   policy objectives of the rules may include preferences to:

129-23               (1)  achieve adequate geographic distribution of loans;

129-24               (2)  assist certain industries;

129-25               (3)  encourage certain practices including water

 130-1   conservation; and

 130-2               (4)  encourage value-added processing of agricultural

 130-3   products.

 130-4         Sec. 44.008.  COMPLIANCE.  (a)  On accepting a linked

 130-5   deposit, an eligible lending institution must loan money to

 130-6   eligible borrowers in accordance with the deposit agreement and

 130-7   this chapter.  The eligible lending institution shall forward a

 130-8   compliance report to the board.

 130-9         (b)  The board shall monitor compliance with this chapter and

130-10   inform the comptroller [state treasurer] of noncompliance on the

130-11   part of an eligible lending institution.

130-12         Sec. 44.009.  STATE LIABILITY PROHIBITED.  The state is not

130-13   liable to an eligible lending institution for payment of the

130-14   principal, interest, or any late charges on a loan made to an

130-15   eligible borrower.  A delay in payment or default on a loan by an

130-16   eligible borrower does not affect the validity of the deposit

130-17   agreement.  Linked deposits are not an extension of the state's

130-18   credit within the meaning of any state constitutional prohibition.

130-19         Sec. 44.010.  LIMITATIONS IN PROGRAM.  (a)  At any one time,

130-20   not more than $15 [$5] million, of which $10 million may only be

130-21   used to finance water conservation projects, may be placed in

130-22   linked deposits under this chapter.

130-23         (b)  The maximum amount of a loan under this chapter to

130-24   process and market Texas agricultural crops is $500,000.  The

130-25   maximum amount of a loan under this chapter to produce alternative

 131-1   agricultural crops in this state is $250,000.  The maximum amount

 131-2   of a loan under this chapter to finance [purchase] water

 131-3   conservation projects or equipment for agricultural production

 131-4   purposes is $250,000.

 131-5         (c)  A loan granted pursuant to this chapter must be applied

 131-6   to the purchase or lease of land, equipment, seed, fertilizer,

 131-7   direct marketing facilities, or processing facilities, or to

 131-8   payment for professional services.

 131-9         (d)  A loan granted pursuant to this chapter, when used to

131-10   finance eligible water conservation projects or equipment, may be

131-11   applied to existing debt resulting from the financing of water

131-12   conservation projects or equipment for agricultural purposes as

131-13   defined by board rule.

131-14         SECTION 5.11.  Subchapter B, Chapter 11, Tax Code, is amended

131-15   by adding Section 11.32 to read as follows:

131-16         Sec. 11.32.  CERTAIN WATER CONSERVATION INITIATIVES.  The

131-17   governing body of a taxing unit by official action of the governing

131-18   body adopted in the manner required by law for official actions may

131-19   exempt from taxation part or all of the assessed value of property

131-20   on which approved water conservation initiatives have been

131-21   implemented.  For purposes of this section, approved water

131-22   conservation initiatives shall be designated pursuant to an

131-23   ordinance or other law adopted by the governing unit.

131-24         SECTION 5.12.  Section 2155.444, Government Code, is amended

131-25   by adding Subsection (d) to read as follows:

 132-1         (d)  The commission and all state agencies making purchase of

 132-2   vegetation for landscaping purposes, including plants, shall give

 132-3   preference to vegetation native to Texas if the cost to the state

 132-4   and the quality are equal.

 132-5                ARTICLE 6.  SMALL COMMUNITIES ASSISTANCE

 132-6         SECTION 6.01.  Section 5.311, Water Code, is amended to read

 132-7   as follows:

 132-8         Sec. 5.311.  DELEGATION OF RESPONSIBILITY.  (a)  The

 132-9   commission may delegate to an administrative law judge of the State

132-10   Office of Administrative Hearings the responsibility to hear any

132-11   matter before the commission and to issue interlocutory orders

132-12   related to interim rates under Chapter 13.

132-13         (b)  Except as provided in Subsection (a), the [The]

132-14   administrative law judge shall report to the commission on the

132-15   hearing in the manner provided by law.

132-16         SECTION 6.02.  Subdivisions (11), (21), and (24), Section

132-17   13.002, Water Code, are amended to read as follows:

132-18               (11)  "Member" means a person who holds a membership in

132-19   a water supply or sewer service corporation and [who either

132-20   receives water or sewer utility service from the corporation or] is

132-21   a record owner of a fee simple title to property in an area served

132-22   by a water supply or sewer service corporation or a person who is

132-23   granted a membership and who either currently receives or will be

132-24   eligible to receive water or sewer utility service from the

132-25   corporation.  In determining member control of a water supply or

 133-1   sewer service corporation, a person is entitled to only one vote

 133-2   regardless of the number of memberships the person owns.

 133-3               (21)  "Service" means any act [done, rendered, or]

 133-4   performed, anything furnished or supplied, and any facilities or

 133-5   lines committed or [facility] used[, furnished, or supplied] by a

 133-6   retail public utility in the performance of its duties under this

 133-7   chapter to its patrons, employees, other retail public utilities,

 133-8   and the public, as well as the interchange of facilities between

 133-9   two or more retail public utilities.

133-10               (24)  "Water supply or sewer service corporation" means

133-11   a nonprofit[, member-owned, member-controlled] corporation

133-12   organized and operating under Chapter 76, Acts of the 43rd

133-13   Legislature, 1st Called Session, 1933 (Article 1434a, Vernon's

133-14   Texas Civil Statutes) that provides potable water service or sewer

133-15   service for compensation and that has adopted and is operating in

133-16   accordance with by-laws or articles of incorporation which ensure

133-17   that it is member-owned and member-controlled.  The term does not

133-18   include a corporation that provides retail water or sewer service

133-19   to a person who is not a member, except that the corporation may

133-20   provide retail water or sewer service to a person who is not a

133-21   member if the person only builds on or develops property to sell to

133-22   another and the service is provided on an interim basis before the

133-23   property is sold.

133-24         SECTION 6.03.  Section 13.181, Water Code, is amended to read

133-25   as follows:

 134-1         Sec. 13.181.  POWER TO ENSURE COMPLIANCE; RATE REGULATION.

 134-2   (a)  Except for the provisions of Section 13.192, this subchapter

 134-3   shall apply only to a utility and shall not be applied to

 134-4   municipalities, counties, districts, or water supply or sewer

 134-5   service corporations.

 134-6         (b)  Subject to this chapter, the commission has all

 134-7   authority and power of the state to ensure compliance with the

 134-8   obligations of utilities under this chapter.  For this purpose the

 134-9   regulatory authority may fix and regulate rates of utilities,

134-10   including rules and regulations for determining the classification

134-11   of customers and services and for determining the applicability of

134-12   rates.  A rule or order of the regulatory authority may not

134-13   conflict with the rulings of any federal regulatory body.  [Except

134-14   Section 13.192, this subchapter shall apply only to a utility and

134-15   shall not be applied to municipalities, counties, districts, or

134-16   water supply or sewer service corporations.]  The commission may

134-17   adopt rules which authorize a utility which is permitted under

134-18   Section 13.242(c) to provide service without a certificate of

134-19   public convenience and necessity to request or implement a rate

134-20   increase and operate according to rules, regulations, and standards

134-21   of service other than those otherwise required under this chapter

134-22   provided that rates are just and reasonable for customers and the

134-23   utility and that service is safe, adequate, efficient, and

134-24   reasonable.

134-25         SECTION 6.04.  Section 13.183, Water Code, is amended by

 135-1   adding Subsection (c) to read as follows:

 135-2         (c)  To ensure that retail customers receive a higher quality

 135-3   or more reliable water or sewer service, to encourage

 135-4   regionalization, or to maintain financially stable and technically

 135-5   sound utilities, the regulatory authority may develop methodologies

 135-6   for water or sewer rates based on factors other than rate of return

 135-7   and those specified in Section 13.185.  Overall revenues determined

 135-8   pursuant to an alternate methodology developed under this section

 135-9   must provide revenues to the utility that satisfy the requirements

135-10   of Subsection (a).  In determining to use alternate ratemaking

135-11   methodologies, the regulatory authority shall assure that rates,

135-12   operations, and services are just and reasonable to the consumers

135-13   and to the utilities.

135-14         SECTION 6.05.  Subsection (a), Section 13.184, Water Code, is

135-15   amended to read as follows:

135-16         (a)  Unless the commission establishes alternate rate

135-17   methodologies in accordance with Section 13.183(c), the commission

135-18   [The regulatory authority] may not prescribe any rate that will

135-19   yield more than a fair return on the invested capital used and

135-20   useful in rendering service to the public.  The governing body of a

135-21   municipality exercising its original jurisdiction over rates and

135-22   services may use alternate ratemaking methodologies established by

135-23   ordinance or by commission rule in accordance with Section

135-24   13.183(c).  Unless the municipal regulatory authority uses

135-25   alternate ratemaking methodologies established by ordinance or by

 136-1   commission rule in accordance with Section 13.183(c), it may not

 136-2   prescribe any rate that will yield more than a fair return on the

 136-3   invested capital used and useful in rendering service to the

 136-4   public.

 136-5         SECTION 6.06.  Subsection (a), Section 13.185, Water Code, is

 136-6   amended to read as follows:

 136-7         (a)  Unless alternate methodologies are adopted as provided

 136-8   in Sections 13.183(c) and 13.184(a), the [The] components of

 136-9   invested capital and net income shall be determined according to

136-10   the rules stated in this section.

136-11         SECTION 6.07.  Subchapter G, Chapter 13, Water Code, is

136-12   amended by adding Section 13.241 to read as follows:

136-13         Sec. 13.241.  GRANTING OR AMENDING CERTIFICATES.  (a)  In

136-14   determining whether to grant or amend a certificate of public

136-15   convenience and necessity, the commission shall ensure that the

136-16   applicant possesses the financial, managerial, and technical

136-17   capability to provide continuous and adequate service.

136-18         (b)  For water utility service, the commission shall ensure

136-19   that the applicant:

136-20               (1)  is capable of providing drinking water that meets

136-21   the requirements of Chapter 341, Health and Safety Code, and

136-22   requirements of this code; and

136-23               (2)  has access to an adequate supply of water.

136-24         (c)  For sewer utility service, the commission shall ensure

136-25   that the applicant is capable of meeting the commission's design

 137-1   criteria for sewer treatment plants and the requirements of this

 137-2   code.

 137-3         (d)  Before the commission grants a new or amended

 137-4   certificate of convenience and necessity  for an area which would

 137-5   require construction of a physically separate water or sewer

 137-6   system, the applicant must demonstrate that regionalization or

 137-7   consolidation with another retail public utility is not

 137-8   economically feasible.

 137-9         SECTION 6.08.  Section 13.246, Water Code, is amended to read

137-10   as follows:

137-11         Sec. 13.246.  NOTICE AND HEARING; ISSUANCE, AMENDMENT, OR

137-12   REFUSAL; FACTORS CONSIDERED.  (a)  If an application for a

137-13   certificate of public convenience and necessity is filed, the

137-14   commission shall cause notice of the application to be given to

137-15   affected parties and, if requested, shall fix a time and place for

137-16   a hearing and give notice of the hearing.  Any person affected by

137-17   the application may intervene at the hearing.

137-18         (b)  The commission may grant applications and issue

137-19   certificates only if the commission finds that a certificate is

137-20   necessary for the service, accommodation, convenience, or safety of

137-21   the public.  The commission may issue a certificate as requested,

137-22   or refuse to issue it, or issue it for the construction of only a

137-23   portion of the contemplated system or facility or extension, or for

137-24   the partial exercise only of the right or privilege and may impose

137-25   special conditions necessary to ensure that continuous and adequate

 138-1   service is provided.

 138-2         (c)  Certificates of convenience and necessity shall be

 138-3   granted or amended on a nondiscriminatory basis after consideration

 138-4   by the commission of the adequacy of service currently provided to

 138-5   the requested area, the need for additional service in the

 138-6   requested area, the effect of the granting of a certificate on the

 138-7   recipient of the certificate and on any retail public utility of

 138-8   the same kind already serving the proximate area, the ability of

 138-9   the applicant to provide adequate service, the feasibility of

138-10   obtaining service from an adjacent retail public utility, the

138-11   financial stability of the applicant, including, if applicable, the

138-12   adequacy of the applicant's debt-equity ratio, environmental

138-13   integrity, and the probable improvement of service or lowering of

138-14   cost to consumers in that area resulting from the granting of the

138-15   certificate.

138-16         (d)  The commission may require that an applicant for a

138-17   certificate of convenience and necessity demonstrate adequate

138-18   financial, managerial, and technical capability for providing

138-19   continuous and adequate service to the requested area and any areas

138-20   currently certificated to the applicant.

138-21         (e)  The commission may require an applicant utility to

138-22   provide a bond or other financial assurance in a form and amount

138-23   specified by the commission to ensure that continuous and adequate

138-24   utility service is provided.

138-25         (f)  Where applicable, in addition to the other factors in

 139-1   this section the commission shall consider the efforts of the

 139-2   applicant to extend service to any economically distressed areas

 139-3   located within the service areas certificated to the applicant.

 139-4   For the purposes of this subsection, "economically distressed area"

 139-5   has the meaning assigned by Section 15.001.

 139-6         SECTION 6.09.  Section 13.253, Water Code, is amended to read

 139-7   as follows:

 139-8         Sec. 13.253.  IMPROVEMENTS IN SERVICE; INTERCONNECTING

 139-9   SERVICE.  After notice and hearing, the commission may:

139-10               (1)  order any retail public utility that is required

139-11   by law to possess a certificate of public convenience and necessity

139-12   or any retail public utility that possesses a certificate of public

139-13   convenience and necessity and is located in an affected county as

139-14   defined in Section 16.341 to:

139-15                     (A)  provide specified improvements in its

139-16   service in a defined area if service in that area is inadequate or

139-17   is substantially inferior to service in a comparable area and it is

139-18   reasonable to require the retail public utility to provide the

139-19   improved service; or

139-20                     (B)  develop, implement, and follow financial,

139-21   managerial, and technical practices that are acceptable to the

139-22   commission to ensure that continuous and adequate service is

139-23   provided to any areas currently certificated to the retail public

139-24   utility if the retail public utility has not provided continuous

139-25   and adequate service to any of those areas;

 140-1               (2)  order two or more public utilities or water supply

 140-2   or sewer service corporations to establish specified facilities for

 140-3   [the] interconnecting service; [or]

 140-4               (3)  order a public utility or water supply or sewer

 140-5   service corporation that has not demonstrated that it can provide

 140-6   continuous and adequate service from its drinking water source or

 140-7   sewer treatment facility to obtain service sufficient to meet its

 140-8   obligation to provide continuous and adequate service on at least a

 140-9   wholesale basis from another consenting utility service provider;

140-10   or

140-11               (4)  issue an emergency order, with or without a

140-12   hearing, under Section 13.041 [of this code].

140-13         SECTION 6.10.  Section 13.254, Water Code, is amended to read

140-14   as follows:

140-15         Sec. 13.254.  REVOCATION OR AMENDMENT OF CERTIFICATE.

140-16   (a)  The commission at any time after notice and hearing may revoke

140-17   or amend any certificate of public convenience and necessity with

140-18   the written consent of the certificate holder or if it finds that:

140-19               (1)  the certificate holder has never provided, is no

140-20   longer providing, or has failed to provide continuous and adequate

140-21   service in the area, or part of the area, covered by the

140-22   certificate;

140-23               (2)  in an affected county as defined in Section

140-24   16.341, the cost of providing service by the certificate holder is

140-25   so prohibitively expensive as to constitute denial of service,

 141-1   provided that, for commercial developments or for residential

 141-2   developments started after September 1, 1997, in an affected county

 141-3   as defined in Section 16.341, the fact that the cost of obtaining

 141-4   service from the currently certificated retail public utility makes

 141-5   the development economically unfeasible does not render such cost

 141-6   prohibitively expensive in the absence of other relevant factors;

 141-7               (3)  the certificate holder has agreed in writing to

 141-8   allow another retail public utility to provide service within its

 141-9   service area, except for an interim period, without amending its

141-10   certificate; or

141-11               (4)  the certificate holder has failed to file a cease

141-12   and desist action pursuant to Section 13.252 within 180 days of the

141-13   date that it became aware that another retail public utility was

141-14   providing service within its service area, unless the certificate

141-15   holder demonstrates good cause for its failure to file such action

141-16   within the 180 days.

141-17         (b)  Upon written request from the certificate holder, the

141-18   executive director may cancel the certificate of a utility or water

141-19   supply corporation authorized by rule to operate without a

141-20   certificate of public convenience and necessity under Section

141-21   13.242(c).

141-22         (c)  If the certificate of any retail public utility is

141-23   revoked or amended, the commission may require one or more retail

141-24   public utilities with their consent to provide service in the area

141-25   in question.  The order of the commission shall not be effective to

 142-1   transfer property.

 142-2         (d)  A retail public utility may not in any way render retail

 142-3   water or sewer service directly or indirectly to the public in an

 142-4   area that has been decertified under this section without the

 142-5   consent of the retail public utility that previously held the

 142-6   certificate of convenience and necessity without providing

 142-7   compensation for any property that the commission determines is

 142-8   rendered useless or valueless to the decertified retail public

 142-9   utility as a result of the decertification.

142-10         (e)  The determination of the monetary amount of

142-11   compensation, if any, shall be determined at the time another

142-12   retail public utility seeks to provide service in the previously

142-13   decertified area and before service is actually provided.

142-14         (f)  The monetary amount shall be determined by a qualified

142-15   individual or firm serving as independent appraiser selected by the

142-16   executive director after considering the recommendations of the

142-17   decertified retail public utility and the retail public utility

142-18   seeking to serve the area.  The determination of compensation by

142-19   the independent appraiser shall be binding on the commission.  The

142-20   costs of the independent appraiser shall be borne by the retail

142-21   public utility seeking to serve the area.

142-22         (g)  For the purpose of implementing this section, the value

142-23   of real property shall be determined according to the standards set

142-24   forth in Chapter 21, Property Code, governing actions in eminent

142-25   domain and the value of personal property shall be determined

 143-1   according to the factors in this subsection.  The factors ensuring

 143-2   that the compensation to a retail public utility for the taking,

 143-3   damaging, or loss of personal property, including the retail public

 143-4   utility's business, is just and adequate shall at a minimum

 143-5   include:  the impact on the existing indebtedness of the retail

 143-6   public utility and its ability to repay that debt; the value of the

 143-7   service facilities of the retail public utility located within the

 143-8   area in question; the amount of any expenditures for planning,

 143-9   design, or construction of service facilities that are allocable to

143-10   service to the area in question; the amount of the retail public

143-11   utility's contractual obligations allocable to the area in

143-12   question; any demonstrated impairment of service or increase of

143-13   cost to consumers of the retail public utility remaining after the

143-14   decertification; the impact on future revenues and expenses of the

143-15   retail public utility; necessary and reasonable legal expenses and

143-16   professional fees; factors relevant to maintaining the current

143-17   financial integrity of the retail public utility; and other

143-18   relevant factors.

143-19         (h)  The commission shall determine whether payment of

143-20   compensation shall be in a lump sum or paid out over a specified

143-21   period of time.  If there were no current customers in the area

143-22   decertified and no immediate loss of revenues or if there are other

143-23   valid reasons determined by the commission, installment payments as

143-24   new customers are added in the decertified area may be an

143-25   acceptable method of payment.

 144-1         SECTION 6.11.  Section 13.301, Water Code, is amended to read

 144-2   as follows:

 144-3         Sec. 13.301.  REPORT OF SALE, MERGER, ETC.; INVESTIGATION;

 144-4   DISALLOWANCE OF TRANSACTION.  (a)  A utility or a water supply or

 144-5   sewer service corporation, on or before the 120th day before the

 144-6   effective date of a sale, acquisition, lease, or rental of a water

 144-7   or sewer system that is required by law to possess a certificate of

 144-8   public convenience and necessity or the effective date of a merger

 144-9   or consolidation with such a utility or water supply or sewer

144-10   service corporation, shall:

144-11               (1)  file a written application with [notify] the

144-12   commission; and

144-13               (2)  [give public notice] unless public notice is

144-14   waived by the executive director for good cause shown, give public

144-15   notice of the action [at least 120 days before the effective date

144-16   of any sale, acquisition, lease, or rental of any water or sewer

144-17   system required by law to possess a certificate of public

144-18   convenience and necessity or of any merger or consolidation with

144-19   such a utility or water supply or sewer service corporation].

144-20         (b)  The commission may require that the person purchasing or

144-21   acquiring the water or sewer system demonstrate adequate financial,

144-22   managerial, and technical capability for providing continuous and

144-23   adequate service to the requested area and any areas currently

144-24   certificated to the person.

144-25         (c)  If the person purchasing or acquiring the water or sewer

 145-1   system cannot demonstrate adequate financial capability, the

 145-2   commission may require that the person provide a bond or other

 145-3   financial assurance in a form and amount specified by the

 145-4   commission to ensure continuous and adequate utility service is

 145-5   provided.

 145-6         (d)  The commission shall, with or without a public hearing,

 145-7   investigate the sale, acquisition, lease, or rental to determine

 145-8   whether the transaction will serve the public interest.

 145-9         (e) [(c)]  Before the expiration of the 120-day notification

145-10   period, the executive director shall notify all known parties to

145-11   the transaction of the executive director's decision whether to

145-12   request that the commission hold a public hearing to determine if

145-13   the transaction will serve the public interest.  The executive

145-14   director may request a hearing if:

145-15               (1)  the application filed with [notification to] the

145-16   commission or the public notice was improper;

145-17               (2)  the person purchasing or acquiring the water or

145-18   sewer system has not demonstrated adequate financial, managerial,

145-19   and technical capability for providing continuous and adequate

145-20   service to the service area being acquired and to any areas

145-21   currently certificated to the person [is inexperienced as a utility

145-22   service provider];

145-23               (3)  the person or an affiliated interest of the person

145-24   purchasing or acquiring the water or sewer system has a history of:

145-25                     (A)  noncompliance with the requirements of the

 146-1   commission or the Texas Department of Health; or

 146-2                     (B)  [of] continuing mismanagement or misuse of

 146-3   revenues as a utility service provider;

 146-4               (4)  the person purchasing or acquiring the water or

 146-5   sewer system cannot demonstrate the financial ability to provide

 146-6   the necessary capital investment to ensure the provision of

 146-7   continuous and adequate service to the customers of the water or

 146-8   sewer system; or

 146-9               (5)  there are concerns that the transaction may not

146-10   serve the public interest, after the application of the

146-11   considerations provided by Section 13.246(c) for determining

146-12   whether to grant a certificate of convenience and necessity.

146-13         (f) [(d)]  Unless the executive director requests that a

146-14   public hearing be held, the sale, acquisition, lease, or rental may

146-15   be completed as proposed:

146-16               (1)  at the end of the 120-day period; or

146-17               (2)  [may be completed] at any time after the executive

146-18   director notifies the utility or water supply or sewer service

146-19   corporation that a hearing will not be requested.

146-20         (g)  If a hearing is requested or if the utility or water

146-21   supply or sewer service corporation fails to make the application

146-22   as [provide the] required [notification] or to provide public

146-23   notice, the sale, acquisition, lease, or rental may not be

146-24   completed unless the commission determines that the proposed

146-25   transaction serves the public interest.

 147-1         (h)  A sale, acquisition, lease, or rental of any water or

 147-2   sewer system required by law to possess a certificate of public

 147-3   convenience and necessity that is not completed in accordance with

 147-4   the provisions of this section is void.

 147-5         (i) [(e)]  This section does not apply to:

 147-6               (1)  the purchase of replacement property; or

 147-7               (2)  [to] a transaction under Section 13.255 of this

 147-8   code.

 147-9         (j) [(f)]  If a public utility facility or system is sold and

147-10   the facility or system was partially or wholly constructed with

147-11   customer contributions in aid of construction derived from specific

147-12   surcharges approved by the regulatory authority over and above

147-13   revenues required for normal operating expenses and return, the

147-14   public utility may not sell or transfer any of its assets, its

147-15   certificate of convenience and necessity, or its controlling

147-16   interest in an incorporated utility, unless the utility provides to

147-17   the purchaser or transferee before the date of the sale or transfer

147-18   a written disclosure relating to the contributions.  The disclosure

147-19   must contain, at a minimum, the total dollar amount of the

147-20   contributions and a statement that the contributed property or

147-21   capital may not be included in invested capital or allowed

147-22   depreciation expense by the regulatory authority in rate-making

147-23   proceedings.

147-24         (k) [(g)]  A utility or a water supply or sewer service

147-25   corporation that proposes to sell, assign, lease, or rent its

 148-1   facilities shall notify the other party to the transaction of the

 148-2   requirements of this section before signing an agreement to sell,

 148-3   assign, lease, or rent its facilities.

 148-4         SECTION 6.12.  Section 13.302, Water Code, is amended to read

 148-5   as follows:

 148-6         Sec. 13.302.  PURCHASE OF VOTING STOCK IN ANOTHER PUBLIC

 148-7   UTILITY:  REPORT.  (a)  A utility may not purchase voting stock in

 148-8   another utility doing business in this state and a person may not

 148-9   acquire a controlling interest in a utility doing business in this

148-10   state unless the person or utility files a written application with

148-11   [notifies] the commission [of the proposed purchase or acquisition]

148-12   not later than the 61st day before the date on which the

148-13   transaction is to occur.

148-14         (b)  The commission may require that a person acquiring a

148-15   controlling interest in a utility demonstrate adequate financial,

148-16   managerial, and technical capability for providing continuous and

148-17   adequate service to the requested area and any areas currently

148-18   certificated to the person.

148-19         (c)  If the person acquiring a controlling interest cannot

148-20   demonstrate adequate financial capability, the commission may

148-21   require that the person provide a bond or other financial assurance

148-22   in a form and amount specified by the commission to ensure

148-23   continuous and adequate utility service is provided.

148-24         (d)  The executive director may request that the commission

148-25   hold a public hearing on the transaction if the executive director

 149-1   believes that a criterion [criteria] prescribed by Section

 149-2   13.301(e) [13.301(c) of this code] applies.

 149-3         (e) [(c)]  Unless the executive director requests that a

 149-4   public hearing be held, the purchase or acquisition may be

 149-5   completed as proposed:

 149-6               (1)  at the end of the 60-day period; or

 149-7               (2)  [may be completed] at any time after the executive

 149-8   director notifies the person or utility that a hearing will not be

 149-9   requested.

149-10         (f)  If a hearing is requested or if the person or utility

149-11   fails to make the application to the commission as [provide the]

149-12   required [notification to the commission], the purchase or

149-13   acquisition may not be completed unless the commission determines

149-14   that the proposed transaction serves the public interest.  A

149-15   purchase or acquisition that is not completed in accordance with

149-16   the provisions of this section is void.

149-17         SECTION 6.13.  Section 13.412, Water Code, is amended by

149-18   amending Subsections (a) and (b) and adding Subsections (f) and (g)

149-19   to read as follows:

149-20         (a)  At the request of the commission, the attorney general

149-21   shall bring suit for the appointment of a receiver to collect the

149-22   assets and carry on the business of a water or sewer utility that:

149-23               (1)  has abandoned operation of its facilities;

149-24               (2)  informs the commission that the owner is

149-25   abandoning the system;

 150-1               (3)  [or] violates a final order of the commission; or

 150-2               (4)  allows any property owned or controlled by it to

 150-3   be used in violation of a final order of the commission.

 150-4         (b)  The court shall appoint a receiver if an appointment is

 150-5   necessary:

 150-6               (1)  to guarantee the collection of assessments, fees,

 150-7   penalties, or interest;

 150-8               (2)  to guarantee continuous and adequate [continued]

 150-9   service to the customers of the utility; or

150-10               (3)  to prevent continued or repeated violation of the

150-11   final order.

150-12         (f)  For purposes of this section and Section 13.4132,

150-13   abandonment may include but is not limited to:

150-14               (1)  failure to pay a bill or obligation owed to a

150-15   retail public utility or to an electric or gas utility with the

150-16   result that the utility service provider has issued a notice of

150-17   discontinuance of necessary services;

150-18               (2)  failure to provide appropriate water or wastewater

150-19   treatment so that a potential health hazard results;

150-20               (3)  failure to adequately maintain facilities,

150-21   resulting in potential health hazards, extended outages, or

150-22   repeated service interruptions;

150-23               (4)  failure to provide customers adequate notice of a

150-24   health hazard or potential health hazard;

150-25               (5)  failure to secure an alternative available water

 151-1   supply during an outage;

 151-2               (6)  displaying a pattern of hostility towards or

 151-3   repeatedly failing to respond to the commission or the utility's

 151-4   customers; and

 151-5               (7)  failure to provide the commission with adequate

 151-6   information on how to contact the utility for normal business and

 151-7   emergency purposes.

 151-8         (g)  Notwithstanding Section 64.021, Civil Practice and

 151-9   Remedies Code, a receiver appointed under this section may seek

151-10   commission approval to acquire the water or sewer utility's

151-11   facilities and transfer the utility's certificate of convenience

151-12   and necessity.  The receiver must apply in accordance with

151-13   Subchapter H.

151-14         SECTION 6.14.  Subsections (a) and (c), Section 13.4132,

151-15   Water Code, are amended to read as follows:

151-16         (a)  The commission, after providing to the utility notice

151-17   and an opportunity to be heard by the commissioners at a commission

151-18   meeting [for a hearing], may authorize a willing person to

151-19   temporarily manage and operate a utility if the utility:

151-20               (1)  [that] has discontinued or abandoned operations or

151-21   the provision of services; or

151-22               (2)  has been or is being referred to the attorney

151-23   general for the appointment of a receiver under Section 13.412 [of

151-24   this code].

151-25         (c)  A person appointed under this section has the powers and

 152-1   duties necessary to ensure the continued operation of the utility

 152-2   and the provision of continuous and adequate services to customers,

 152-3   including the power and duty to:

 152-4               (1)  read meters;

 152-5               (2)  bill for utility services;

 152-6               (3)  collect revenues;

 152-7               (4)  disburse funds; [and]

 152-8               (5)  access all system components; and

 152-9               (6)  request rate increases.

152-10         SECTION 6.15.  Section 15.602, Water Code, is amended to read

152-11   as follows:

152-12         Sec. 15.602.  DEFINITIONS.  In this subchapter:

152-13               (1)  "Additional state revolving fund" means any state

152-14   revolving fund hereafter established by the board to provide

152-15   financial assistance to political subdivisions for public works in

152-16   accordance with a capitalization grant program hereafter

152-17   established by a federal agency or otherwise authorized by federal

152-18   law.

152-19               (2)  "Authorized investments" means any authorized

152-20   investments described in Section 404.024, Government Code.

152-21               (3)  "Community water system" means a public water

152-22   system that:

152-23                     (A)  serves at least 15 service connections used

152-24   by year-round residents of the area served by the system; or

152-25                     (B)  regularly serves at least 25 year-round

 153-1   residents.

 153-2               (4)  "Construction" shall have the meaning assigned by

 153-3   the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.).

 153-4               (5)  "Disadvantaged community" means an area meeting

 153-5   criteria established by board rule, which criteria shall be based

 153-6   on measures that may include single-family residential property

 153-7   valuation, income levels of residents of the area, or other

 153-8   similarly appropriate measures.

 153-9               (6) [(4)]  "Federal Act" means the Federal Water

153-10   Pollution Control Act, as amended (33 U.S.C. 1251 et seq.).

153-11               (7)  "Nonprofit noncommunity water system" means a

153-12   public water system that is not operated for profit and that:

153-13                     (A)  is owned by a political subdivision or

153-14   nonprofit entity; and

153-15                     (B)  is not a community water system.

153-16               (8) [(5)]  "Political subdivision" means a

153-17   municipality, intermunicipal, interstate, or state agency, [or] any

153-18   other public entity eligible for assistance under this subchapter,

153-19   or a nonprofit water supply corporation created and operating under

153-20   Chapter 76, Acts of the 43rd Legislature, 1st Called Session, 1933

153-21   (Article 1434a, Vernon's Texas Civil Statutes), if such entity is

153-22   eligible for financial assistance under federal law establishing

153-23   the state revolving fund or an additional state revolving fund.

153-24               (9)  "Public water system" means a system that is owned

153-25   by any person and that meets the definition of public water system

 154-1   in the Safe Drinking Water Act.

 154-2               (10) [(6)]  "Public works" means any project to

 154-3   acquire, construct, improve, repair, or otherwise provide any

 154-4   buildings, structures, facilities, equipment, or other real or

 154-5   personal property or improvements designed for public use,

 154-6   protection, or enjoyment undertaken by a political subdivision and

 154-7   paid for, in whole or in part, out of public funds.

 154-8               (11) [(7)]  "Revolving fund" means the state water

 154-9   pollution control revolving fund.

154-10               (12)  "Safe Drinking Water Act" means Title XIV of the

154-11   federal Public Health Service Act, commonly known as the Safe

154-12   Drinking Water Act, as amended (42 U.S.C. Section 300f et seq.).

154-13               (13)  "Safe drinking water revolving fund" means the

154-14   fund established by the board as an additional state revolving fund

154-15   to provide  financial assistance in accordance with the federal

154-16   program established pursuant to the provisions of the Safe Drinking

154-17   Water Act.

154-18               (14) [(8)]  "Treatment works" has the meaning

154-19   established by the federal act and the eligible components of the

154-20   management programs established by Sections 319 and 320 of the

154-21   federal act.

154-22         SECTION 6.16.  Subchapter J, Chapter 15, Water Code, is

154-23   amended by adding Section 15.6041 to read as follows:

154-24         Sec. 15.6041.  FINANCIAL ASSISTANCE UNDER THE SAFE DRINKING

154-25   WATER REVOLVING FUND.  (a)  The safe drinking water revolving fund

 155-1   shall be administered by the board under this subchapter and rules

 155-2   adopted by the board.  The safe drinking water revolving fund shall

 155-3   be held and administered by the board in the same manner as

 155-4   provided by Section 15.603, except that the safe drinking water

 155-5   revolving fund shall be held and administered in accordance with

 155-6   the Safe Drinking Water Act and shall be used to provide financial

 155-7   assistance in accordance with that act and in the manner provided

 155-8   by rules adopted by the board:

 155-9               (1)  to political subdivisions for community water

155-10   systems and for nonprofit noncommunity water systems;

155-11               (2)  to persons other than political subdivisions for

155-12   community water systems or nonprofit noncommunity water systems

155-13   from the account established by Subsection (b)(1);

155-14               (3)  to persons, including political subdivisions, for

155-15   service to disadvantaged communities from the account established

155-16   by Subsection (b)(2); and

155-17               (4)  for other purposes authorized by the Safe Drinking

155-18   Water Act.

155-19         (b)  In addition to other accounts the board may establish in

155-20   the safe drinking water revolving fund, the board shall establish

155-21   the following separate accounts:

155-22               (1)  the community/noncommunity water system financial

155-23   assistance account, to be used solely for providing financial

155-24   assistance to persons, other than political subdivisions, providing

155-25   services through a community water system or a nonprofit

 156-1   noncommunity water system, which account shall be composed solely

 156-2   of funds appropriated by the legislature, funds provided as gifts

 156-3   or grants by the United States government, interest earnings on

 156-4   amounts credited to the account, and repayments of loans made from

 156-5   the account; and

 156-6               (2)  the disadvantaged community account, to be used

 156-7   solely for providing financial assistance under the terms of

 156-8   Subsections (c) and (d), which account shall be composed solely of

 156-9   funds appropriated by the legislature, funds provided as gifts or

156-10   grants by the United States government, interest earnings on

156-11   amounts credited to the account, and repayments of loans made from

156-12   the account.

156-13         (c)  The board may provide financial assistance from the

156-14   disadvantaged community account to:

156-15               (1)  a political subdivision:

156-16                     (A)  that is a disadvantaged community; or

156-17                     (B)  for a project serving an area that:

156-18                           (i)  is located outside the boundaries of

156-19   the political subdivision; and

156-20                           (ii)  meets the definition of a

156-21   disadvantaged community; or

156-22               (2)  an owner of a community water system that is

156-23   ordered by the commission to provide service to a disadvantaged

156-24   community, provided that the financial assistance is for the sole

156-25   purpose of providing service to a disadvantaged community.

 157-1         (d)  In providing financial assistance from the disadvantaged

 157-2   community account, the board shall determine the amount of a loan

 157-3   which the political subdivision cannot repay based on affordability

 157-4   criteria established by the board by rule.  The board shall forgive

 157-5   repayment of that portion of the principal of the loan which the

 157-6   board determines the political subdivision cannot repay.  Financial

 157-7   assistance from the disadvantaged community account may not exceed

 157-8   the allowable percentage of the amount of the capitalization grant

 157-9   received by the state pursuant to the Safe Drinking Water Act.

157-10         SECTION 6.17.  Subsections (c) and (g), Section 15.603, Water

157-11   Code, are amended to read as follows:

157-12         (c)  The revolving fund consists of money derived from

157-13   federal grants, direct appropriations, investment earnings on

157-14   amounts credited to the revolving fund, and, at the board's

157-15   discretion, from any and all sources available [to provide the

157-16   required state match for the purposes of this subchapter].

157-17         (g)  The revolving fund and any accounts established in the

157-18   revolving fund shall be kept and maintained by or at the direction

157-19   of the board and do not constitute and are not a part of the State

157-20   Treasury.  However, at the direction of the board, the revolving

157-21   fund or accounts in the revolving fund may be kept and held in

157-22   escrow and in trust by the comptroller [State Treasurer] for and on

157-23   behalf of the board, shall be used only as provided by this

157-24   subchapter, and pending such use shall be invested in authorized

157-25   investments as provided by any order, resolution, or rule of the

 158-1   board.  Legal title to money and investments in the revolving fund

 158-2   is in the board unless or until paid out as provided by this

 158-3   subchapter, the federal act, and the rules of the board.  The

 158-4   comptroller [State Treasurer], as custodian, shall administer the

 158-5   funds strictly and solely as provided by this subchapter and in the

 158-6   orders, resolutions, and rules, and the state shall take no action

 158-7   with respect to the revolving fund other than that specified in

 158-8   this subchapter, the federal act, and the rules of the board.

 158-9         SECTION 6.18.  Subsection (a), Section 341.031, Health and

158-10   Safety Code, is amended to read as follows:

158-11         (a)  Public drinking water must be free from deleterious

158-12   matter and must comply with the standards established by the

158-13   commission[, the United States Public Health Service,] or the

158-14   United States Environmental Protection Agency.  The commission may

158-15   adopt and enforce rules to implement the federal Safe Drinking

158-16   Water Act (42 U.S.C. Section 300f et seq.).

158-17         SECTION 6.19.  Subchapter C, Chapter 341, Health and Safety

158-18   Code, is amended by adding Section 341.0315 to read as follows:

158-19         Sec. 341.0315.  PUBLIC DRINKING WATER SUPPLY SYSTEM

158-20   REQUIREMENTS.  (a)  To preserve the public health, safety, and

158-21   welfare, the commission shall ensure that public drinking water

158-22   supply systems:

158-23               (1)  supply safe drinking water in adequate quantities;

158-24               (2)  are financially stable; and

158-25               (3)  are technically sound.

 159-1         (b)  The commission shall encourage and promote the

 159-2   development and use of regional and areawide drinking water supply

 159-3   systems.

 159-4         (c)  Each public drinking water supply system shall provide

 159-5   an adequate and safe drinking water supply.  The supply must meet

 159-6   the requirements of Section 341.031 and commission rules.

 159-7         (d)  The commission shall consider compliance history in

 159-8   determining issuance of new permits, renewal permits, and permit

 159-9   amendments for a public drinking water system.

159-10         SECTION 6.20.  Subchapter C, Chapter 341, Health and Safety

159-11   Code, is amended by amending Section 341.035 and adding Sections

159-12   341.0351 through 341.0356 to read as follows:

159-13         Sec. 341.035.  APPROVED PLANS REQUIRED FOR PUBLIC WATER

159-14   SUPPLIES.  (a)  Except as provided by Subsection (d), a person may

159-15   not begin construction of a public drinking water supply system

159-16   unless the executive director of the commission approves:

159-17               (1)  a business plan for the system; and

159-18               (2)  the plans and specifications for the system.

159-19         (b)  The prospective owner or operator of the system must

159-20   submit to the executive director a business plan that demonstrates

159-21   that the owner or operator of the proposed system has available the

159-22   financial, managerial, and technical capability to ensure future

159-23   operation of the system in accordance with applicable laws and

159-24   rules.  The executive director:

159-25               (1)  shall review the business plan; and

 160-1               (2)  may order the prospective owner or operator of the

 160-2   system to provide adequate financial assurance of ability to

 160-3   operate the system in accordance with applicable laws and rules, in

 160-4   the form of a bond or as specified by the commission, unless the

 160-5   executive director finds that the business plan demonstrates

 160-6   adequate financial capability.

 160-7         (c)  The prospective owner or operator of the proposed system

 160-8   shall provide to the commission [A person contemplating

 160-9   establishing a drinking water supply system for public use must

160-10   submit] completed plans and specifications for review and approval

160-11   in accordance with commission rules.

160-12         (d)  A person is not required to file a business plan under

160-13   Subsection (a) or (b) if the person:

160-14               (1)  is a county;

160-15               (2)  is a retail public utility as defined by Section

160-16   13.002, Water Code, unless that person is a utility as defined by

160-17   that section; or

160-18               (3)  has executed an agreement with a political

160-19   subdivision to transfer the ownership and operation of the water

160-20   supply system to the political subdivision [to the commission

160-21   before construction of the system.  The commission shall approve

160-22   plans that conform to the state's water safety laws.  The water

160-23   supply system may be established only on the commission's

160-24   approval].

160-25         Sec. 341.0351.  NOTIFICATION OF SYSTEM CHANGES.  [(b)]  Any

 161-1   person [agency], including a municipality, supplying a drinking

 161-2   water service to the public that intends to make a material or

 161-3   major change in a water supply system that may affect the sanitary

 161-4   features of that utility must give written notice of that intention

 161-5   to the commission before making the change.

 161-6         Sec. 341.0352.  ADVERTISED QUALITY OF WATER SUPPLY.  [(c)]  A

 161-7   water supply system owner, manager, or operator or an agent of a

 161-8   water supply system owner, manager, or operator may not advertise

 161-9   or announce a water supply as being of a quality other than the

161-10   quality that is disclosed by the commission's latest rating.

161-11         Sec. 341.0353.  DRINKING WATER SUPPLY COMPARATIVE RATING

161-12   INFORMATION.  [(d)]  The commission shall assemble and tabulate all

161-13   necessary information [data] relating to public drinking water

161-14   supplies at least once each year and as often during the year as

161-15   conditions demand or justify.  The information [data] forms the

161-16   basis of an official comparative rating of public drinking water

161-17   supply systems.

161-18         Sec. 341.0354.  HIGHWAY SIGNS FOR APPROVED SYSTEM RATING.

161-19   [(e)]  A water supply system that attains an approved rating is

161-20   entitled to erect signs of a design approved by the commission on

161-21   highways approaching the municipality in which the water supply

161-22   system is located.  The signs shall be immediately removed on

161-23   notice from the commission if the water supply system does not

161-24   continue to meet the specified standards.

161-25         Sec. 341.0355.  FINANCIAL ASSURANCE FOR CERTAIN SYSTEMS.

 162-1   (a)  The commission may require the owner or operator of a public

 162-2   drinking water supply system that was constructed without the

 162-3   approval required by Section 341.035, that has a history of

 162-4   noncompliance with this subchapter or commission rules, or that is

 162-5   subject to a commission enforcement action to:

 162-6               (1)  provide the executive director of the commission

 162-7   with a business plan that demonstrates that the system has

 162-8   available the financial, managerial, and technical resources

 162-9   adequate to ensure future operation of the system in accordance

162-10   with applicable laws and rules; and

162-11               (2)  provide adequate financial assurance of the

162-12   ability to operate the system in accordance with applicable laws

162-13   and rules in the form of a bond or as specified by the commission.

162-14         (b)  If the commission relies on rate increases or customer

162-15   surcharges as the form of financial assurance, such funds shall be

162-16   deposited in an escrow account and released only with the approval

162-17   of the commission.

162-18         Sec. 341.0356.  ORDER TO STOP OPERATIONS.  (a)  A public

162-19   water supply system shall stop operations on receipt of a written

162-20   notification of the executive director of the commission or an

162-21   order of the commission issued under this section.

162-22         (b)  The executive director or the commission may order a

162-23   public water supply system to stop operations if:

162-24               (1)  the system was constructed without the approval

162-25   required by Section 341.035; or

 163-1               (2)  the executive director determines that the system

 163-2   presents an imminent health hazard.

 163-3         (c)  A notification or order issued under this section may be

 163-4   delivered by facsimile, by personal service, or by mail.

 163-5         (d)  A water supply system subject to notification or an

 163-6   order under this section, on written request, is entitled to an

 163-7   opportunity to be heard by the commissioners at a commission

 163-8   meeting.

 163-9         (e)  The public water supply system may not resume operations

163-10   until the commission, the executive director, or a court authorizes

163-11   the resumption.

163-12         SECTION 6.21.  Subsections (a) and (b), Section 341.047,

163-13   Health and Safety Code, are amended to read as follows:

163-14         (a)  A person commits an offense if the person:

163-15               (1)  violates a provision of Section 341.031;

163-16               (2)  violates a provision of Section 341.032(a) or (b);

163-17               (3)  violates a provision of Section 341.033(a)-(f);

163-18               (4)  constructs a drinking water supply system without

163-19   submitting completed plans and specifications as required by

163-20   Section 341.035(c) [341.035(a)];

163-21               (5)  begins construction of [establishes] a drinking

163-22   water supply system without the commission's approval as required

163-23   by Section 341.035(a);

163-24               (6)  violates a provision of Section 341.0351 or

163-25   341.0352 [341.035(b) or (c)];

 164-1               (7)  fails to remove a sign as required by Section

 164-2   341.0354 [341.035(e)]; or

 164-3               (8)  violates a provision of Section 341.036.

 164-4         (b)  An offense under Subsection (a) is a Class C misdemeanor

 164-5   [punishable by a fine of not less than $100].

 164-6         SECTION 6.22.  Subsections (b) through (i), Section 341.048,

 164-7   Health and Safety Code, are amended to read as follows:

 164-8         (b)  A person who causes, suffers, allows, or permits a

 164-9   violation under this subchapter shall be assessed a civil penalty

164-10   of not less than $50 nor more than $10,000 [$500] for each

164-11   violation.  Each day of a continuing violation is a separate

164-12   violation.

164-13         (c)  [If it is shown on a trial of the defendant that the

164-14   defendant has previously been assessed a civil penalty under this

164-15   section within a year before the date on which the violation being

164-16   tried occurred, the defendant shall be assessed a civil penalty of

164-17   not less than $50 nor more than $1,000 for each subsequent

164-18   violation under this subchapter.  Each day of a continuing

164-19   violation is a separate violation.]

164-20         [(d)]  If it appears that a person has violated, is

164-21   violating, or threatens to violate a provision under this

164-22   subchapter, the commission, a county, or a municipality may

164-23   institute a civil suit in a district court for:

164-24               (1)  injunctive relief to restrain the person from

164-25   continuing the violation or threat of violation;

 165-1               (2)  the assessment and recovery of a civil penalty; or

 165-2               (3)  both injunctive relief and a civil penalty.

 165-3         (d) [(e)]  The commission is a necessary and indispensable

 165-4   party in a suit brought by a county or municipality under this

 165-5   section.

 165-6         (e) [(f)]  On the commission's request, the attorney general

 165-7   shall institute a suit in the name of the state for injunctive

 165-8   relief, to recover a civil penalty, or for both injunctive relief

 165-9   and civil penalty.

165-10         (f) [(g)]  The suit may be brought in:

165-11               (1)  Travis County;

165-12               (2)  [, in] the county in which the defendant resides;

165-13   or

165-14               (3)  [, or in] the county in which the violation or

165-15   threat of violation occurs.

165-16         (g) [(h)]  In a suit under this section to enjoin a violation

165-17   or threat of violation of this subchapter, the court shall grant

165-18   the state, county, or municipality, without bond or other

165-19   undertaking, any injunction that the facts may warrant including

165-20   temporary restraining orders, temporary injunctions after notice

165-21   and hearing, and permanent injunctions.

165-22         (h) [(i)]  Civil penalties recovered in a suit brought under

165-23   this section by a county or municipality shall be equally divided

165-24   between:

165-25               (1)  the state; and

 166-1               (2)  the county or municipality that first brought the

 166-2   suit.

 166-3         SECTION 6.23.  Subsection (a), Section 341.049, Health and

 166-4   Safety Code, is amended to read as follows:

 166-5         (a)  If a person causes, suffers, allows, or permits a

 166-6   violation of this subchapter or a rule or order adopted under this

 166-7   subchapter, the commission may assess a penalty against that person

 166-8   as provided by this section.  The penalty shall not be less than

 166-9   $50 nor more than $10,000 [$500] for each violation.  Each day of a

166-10   continuing violation may be considered a separate violation.

166-11           ARTICLE 7.  WATER DATA COLLECTION AND DISSEMINATION

166-12         SECTION 7.01.  Section 16.012, Water Code, is amended to read

166-13   as follows:

166-14         Sec. 16.012.  STUDIES, INVESTIGATIONS, SURVEYS.  (a)  The

166-15   executive administrator shall make studies, investigations, and

166-16   surveys of the occurrence, quantity, quality, and availability of

166-17   the surface water and groundwater of this state and shall, in

166-18   cooperation with other entities of the state, guide the development

166-19   of a statewide water resource data collection and dissemination

166-20   network.  For these purposes the board [staff] shall collect,

166-21   receive, analyze, [and] process, and facilitate access to basic

166-22   data and summary information concerning [the] water resources of

166-23   the state and provide guidance regarding data formats and

166-24   descriptions required to access and understand Texas water resource

166-25   data.

 167-1         (b)  The executive administrator shall:

 167-2               (1)  determine suitable locations for future water

 167-3   facilities, including reservoir sites;

 167-4               (2)  determine suitable, cost-effective water supply

 167-5   alternatives on a regional basis;

 167-6               (3)  locate land best suited for irrigation;

 167-7               (4) [(3)]  make estimates of the cost of proposed

 167-8   irrigation works and the improvement of reservoir sites;

 167-9               (5) [(4)]  examine and survey reservoir sites; [and]

167-10               (6)  monitor [(5)  investigate] the effects of fresh

167-11   water inflows upon the bays and estuaries of Texas;

167-12               (7)  monitor instream flows;

167-13               (8)  lead a statewide effort, in coordination with

167-14   federal, state, and local governments, institutions of higher

167-15   education, and other interested parties, to develop a network for

167-16   collecting and disseminating water resource-related information

167-17   that is sufficient to support assessment of ambient water

167-18   conditions statewide;

167-19               (9)  make recommendations for optimizing the efficiency

167-20   and effectiveness of water resource data collection and

167-21   dissemination as necessary to ensure that basic water resource data

167-22   are maintained and available for Texas;

167-23               (10)  make basic data and summary information developed

167-24   under this subsection accessible to state agencies and other

167-25   interested persons; and

 168-1               (11)  cooperate with the Texas Agricultural Extension

 168-2   Service to facilitate development and delivery of educational

 168-3   programs as appropriate for rural and urban water users.

 168-4         (c)  In performing the duties required under Subdivisions

 168-5   (1), (4), (5), (6), and (7) of Subsection (b), the executive

 168-6   administrator shall consider advice from the Parks and Wildlife

 168-7   Department.

 168-8         (d)  All entities of the state, including institutions of

 168-9   higher education, that collect or use water data or information

168-10   shall cooperate with the board in the development of a coordinated,

168-11   efficient, and effective statewide water resource data collection

168-12   and dissemination network.

168-13         (e)  The executive administrator shall keep full and proper

168-14   records of his work, observations, data, and calculations, all of

168-15   which are the property of the state.

168-16         (f) [(d)]  In performing his duties under this section, the

168-17   executive administrator shall assist the commission in carrying out

168-18   the purposes and policies stated in Section 12.014 of this code.

168-19         (g)  No later than December 31, 1999, the commission shall

168-20   obtain or develop an updated water availability model for six river

168-21   basins as determined by the commission.  The commission shall

168-22   obtain or develop an updated water availability model for all

168-23   remaining river basins no later than December 31, 2001.

168-24         (h)  Within 90 days of completing a water availability model

168-25   for a river basin, the commission shall provide to all holders of

 169-1   existing permits, certified filings, and certificates of

 169-2   adjudication in that river basin the projected amount of water that

 169-3   would be available:  during a drought of record; when flows are at

 169-4   75 percent of normal; and when flows are at 50 percent of normal.

 169-5         (i)  Within 90 days of completing a water availability model

 169-6   for a river basin, the commission shall provide to each regional

 169-7   water planning group created under Section 16.053 of this code in

 169-8   that river basin the projected amount of water that would be

 169-9   available if cancellation procedures were instigated under the

169-10   provisions of Subchapter E, Chapter 11 of this code.

169-11         (j)  Within 90 days of completing a water availability model

169-12   for a river basin, the commission, in coordination with the Parks

169-13   and Wildlife Department, shall determine the maximum amount of

169-14   municipal effluent that may be reused without causing harm to

169-15   existing water rights, instream uses, and freshwater inflows to

169-16   bays and estuaries.  Within 30 days of making this determination,

169-17   the commission shall provide the projections to each regional water

169-18   planning group created under Section 16.053 of this code in that

169-19   river basin.

169-20         SECTION 7.02.  Section 16.021, Water Code, is amended to read

169-21   as follows:

169-22         Sec. 16.021.  TEXAS NATURAL RESOURCES INFORMATION SYSTEM.

169-23   (a)  The executive administrator shall establish the Texas Natural

169-24   Resources Information System (TNRIS) to serve Texas agencies and

169-25   citizens as a centralized clearinghouse and referral center for

 170-1   natural resource, census, and other socioeconomic data [as a

 170-2   centralized information system incorporating all Texas natural

 170-3   resource data, socioeconomic data related to natural resources, or

 170-4   indexes related to that data that is collected by state agencies or

 170-5   other entities].

 170-6         (b)  The Texas Geographic Information Council (TGIC) [Natural

 170-7   Resources Information System Task Force] is created to provide

 170-8   strategic planning and coordination in the acquisition and use of

 170-9   geo-spatial data and related technologies in the State of Texas.

170-10   The executive administrator and the executive director of the

170-11   Department of Information Resources shall designate entities to be

170-12   members of the TGIC.  The chief administrative officer of each

170-13   member entity shall select one representative to serve on the TGIC.

170-14   The duties of the TGIC shall include providing guidance to the

170-15   executive administrator in carrying out his duties under this

170-16   section and guidance to the Department of Information Resources for

170-17   development of rules related to statewide geo-spatial data and

170-18   technology standards.  [The task force is composed of one

170-19   representative from each state agency designated by the executive

170-20   administrator.  The executive administrator shall designate a state

170-21   agency as a participant in the task force if the agency collects or

170-22   uses natural resource and related socioeconomic data.

170-23   Representatives of each designated agency shall be selected by the

170-24   chief administrative officer of that agency.]

170-25         (c)  Under the guidance of the TGIC [Texas Natural Resources

 171-1   Information System Task Force], the executive administrator shall:

 171-2               (1)  further develop [and implement] the Texas Natural

 171-3   Resources Information System by promoting and providing for

 171-4   effective acquisition, archiving, documentation, indexing, and

 171-5   dissemination of natural resource and related digital and

 171-6   nondigital data and information;

 171-7               (2)  obtain information in response to disagreements

 171-8   regarding names and name spellings for natural and cultural

 171-9   features in the state and provide this information to the Board on

171-10   Geographic Names of the United States Department of the Interior;

171-11               (3)  make recommendations to the Board on Geographic

171-12   Names of the United States Department of the Interior for naming

171-13   any natural or cultural feature subject to the limitations provided

171-14   by Subsection (d) of this section;

171-15               (4)  make recommendations to the Department of

171-16   Information Resources to adopt and promote standards that

171-17   facilitate sharing of digital natural resource data and related

171-18   socioeconomic data among federal, state, and local governments and

171-19   other interested parties;

171-20               (5)  acquire and disseminate natural resource and

171-21   related socioeconomic data describing the Texas-Mexico border

171-22   region; and

171-23               (6)  coordinate, conduct, and facilitate the

171-24   development, maintenance, and use of mutually compatible statewide

171-25   digital base maps depicting natural resources and man-made

 172-1   features.

 172-2         (d)  A recommendation may not be made under Subdivision (3)

 172-3   of Subsection (c) of this section for:

 172-4               (1)  a feature previously named under statutory

 172-5   authority or recognized by an agency of the federal government, the

 172-6   state, or a political subdivision of the state;

 172-7               (2)  a feature located on private property for which

 172-8   consent of the property owner cannot be obtained; or

 172-9               (3)  naming a natural or cultural feature for a living

172-10   person.

172-11         SECTION 7.03.  On September 1, 1997, the Texas Natural

172-12   Resources Information System Task Force and the Texas Geographic

172-13   Information Systems Planning Council are merged into the Texas

172-14   Geographic Information Council.  All designated member agencies of

172-15   both predecessor entities shall continue to serve as member

172-16   agencies of the Texas Geographic Information Council.

172-17         ARTICLE 8.  REPEALER; EFFECTIVE DATE; SAVING; EMERGENCY

172-18         SECTION 8.01.  Section 11.028, Water Code, is repealed.

172-19         SECTION 8.02.  (a)  Except as provided by Subsections (b)

172-20   through (f) of this section, this Act takes effect September 1,

172-21   1997.

172-22         (b)  This section and Sections 2.03, 2.08, 2.09, 2.17, and

172-23   3.03 of this Act take effect immediately.

172-24         (c)  Section 4.37 of this Act takes effect on the first day

172-25   of the first calendar quarter beginning on or after the date that

 173-1   it may take effect under Section 39, Article III, Texas

 173-2   Constitution.

 173-3         (d)  The change in law made by Section 4.37 of this Act to

 173-4   Section 151.318, Tax Code, does not affect taxes imposed before the

 173-5   effective date of Section 4.37 of this Act, and the law in effect

 173-6   before the effective date of that section is continued in effect

 173-7   for purposes of liability for and collection of those taxes.

 173-8         (e)  Sections 5.03, 5.05 through 5.08, and 5.11 of this Act

 173-9   take effect on the date on which the constitutional amendment

173-10   proposed by S.J.R. No. 17, 75th Legislature, Regular Session, 1997,

173-11   takes effect.  If that amendment is not approved by the voters,

173-12   those sections have no effect.

173-13         (f)  The change in law made by Section 5.11 of this Act to

173-14   Subchapter B, Chapter 11, Tax Code, does not affect taxes imposed

173-15   before the effective date of Section 5.11 of this Act, and the law

173-16   in effect before the effective date of that section is continued in

173-17   effect for purposes of liability for and collection of those taxes.

173-18         SECTION 8.03.  (a)  The requirement of Section 341.035,

173-19   Health and Safety Code, as amended by Section 6.20 of this Act,

173-20   that certain persons must provide the executive director of the

173-21   Texas Natural Resource Conservation Commission with a business

173-22   plan, applies only to the prospective owner or operator of a public

173-23   drinking water supply system for which construction begins on or

173-24   after September 1, 1997.

173-25         (b)  Section 341.0355, Health and Safety Code, as added by

 174-1   Section 6.20 of this Act, applies to the owner or operator of a

 174-2   public drinking water supply system regardless of the date

 174-3   construction of the system began.

 174-4         SECTION 8.04.  (a)  A change in law made by this Act that

 174-5   applies to a criminal, civil, or administrative penalty applies

 174-6   only to an offense committed or a violation that occurs on or after

 174-7   the effective date of this Act.  For the purposes of this Act, an

 174-8   offense is committed or a violation occurs before the effective

 174-9   date of this Act if any element of the offense or violation occurs

174-10   before that date.

174-11         (b)  An offense committed or violation that occurs before the

174-12   effective date of this Act is covered by the law in effect when the

174-13   offense was committed or the violation occurred, and the former law

174-14   is continued in effect for this purpose.

174-15         SECTION 8.05.  The importance of this legislation and the

174-16   crowded condition of the calendars in both houses create an

174-17   emergency and an imperative public necessity that the

174-18   constitutional rule requiring bills to be read on three several

174-19   days in each house be suspended, and this rule is hereby suspended,

174-20   and that this Act take effect and be in force according to its

174-21   terms, and it is so enacted.