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

 1-2           (In the Senate - Filed January 22, 1997; January 23, 1997,

 1-3     read first time and referred to Committee on Natural Resources;

 1-4     March 25, 1997, reported adversely, with favorable Committee

 1-5     Substitute by the following vote:  Yeas 11, Nays 0; March 25, 1997,

 1-6     sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 1                      By:  Brown

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to the development and management of the water resources

1-11     of the state; providing penalties.

1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-13             ARTICLE 1.  WATER PLANNING:  DROUGHT, CONSERVATION,

1-14                         DEVELOPMENT, AND MANAGEMENT

1-15           SECTION 1.01.  Section 16.051, Water Code, is amended to read

1-16     as follows:

1-17           Sec. 16.051.  STATE WATER PLAN:  DROUGHT, CONSERVATION,

1-18     DEVELOPMENT, AND MANAGEMENT; EFFECT OF PLAN.  (a)  No later than

1-19     September 1, 2001, and every five years thereafter, the board [The

1-20     executive administrator] shall adopt [prepare, develop, and

1-21     formulate] a comprehensive state water plan that incorporates the

1-22     regional water plans approved under Section 16.053 of this code.

1-23     The state water plan shall provide for the orderly development,

1-24     management, and conservation of water resources and preparation for

1-25     and response to drought conditions, in order that sufficient water

1-26     will be available at a reasonable cost to ensure public health,

1-27     safety, and welfare; further economic development; and protect the

1-28     agricultural and natural resources of the entire state.

1-29           (b)  The state water plan, as formally adopted by the board,

1-30     shall be a guide to state water policy.  The commission shall take

1-31     the plan into consideration in matters coming before it.  Nothing

1-32     in the state water plan or any amendment or modification of the

1-33     plan  affects  any  vested  right existing  before August 30, 1965.

1-34           (c)  The board by rule [plan] shall define and designate

1-35     river basins and watersheds.

1-36           (d)  The board, in coordination with the commission and the

1-37     Parks and Wildlife Department, shall adopt by rule guidance

1-38     principles for the state water plan which reflect the public

1-39     interest of the entire state.  When adopting guidance principles,

1-40     due consideration shall be given to the construction and

1-41     improvement of surface water resources and the application of

1-42     principles that result in voluntary redistribution of water

1-43     resources.

1-44           (e)  On adoption the board shall deliver the state water plan

1-45     to the governor, the lieutenant governor, and the speaker of the

1-46     house of representatives and present the plan for review to the

1-47     appropriate legislative committees.  The plan shall include

1-48     legislative recommendations that the board believes are needed and

1-49     desirable to facilitate more voluntary water transfers.  [(c)  The

1-50     executive administrator shall be governed in his preparation of the

1-51     plan by a regard for the public interest of the entire state.  The

1-52     executive administrator shall direct his efforts toward the orderly

1-53     development and management of water resources in order that

1-54     sufficient water will be available at a reasonable cost to further

1-55     the economic development of the entire state.]

1-56           [(d)  The executive administrator shall also give

1-57     consideration in the plan to the effect of upstream development on

1-58     the bays, estuaries, and arms of the Gulf of Mexico and to the

1-59     effect of the plan on navigation.]

1-60           SECTION 1.02.  Sections 16.053 through 16.057, Water Code,

1-61     are amended to read as follows:

1-62           Sec. 16.053.  REGIONAL WATER PLANS.  (a)  The regional water

1-63     planning group in each regional water planning area shall prepare a

1-64     regional water plan, using an existing state water plan identified

 2-1     in Section 16.051 as a guide, if one is present, that provides for

 2-2     the orderly development, management, and conservation of water

 2-3     resources and preparation for and response to drought conditions in

 2-4     order that sufficient water will be available at a reasonable cost

 2-5     to ensure public health, safety, and welfare; further economic

 2-6     development; and protect the agricultural and natural resources of

 2-7     that particular region.

 2-8           (b)  No later than September 1, 1998, the board shall

 2-9     designate the areas for which regional water plans shall be

2-10     developed, taking into consideration such factors as river basin

2-11     and aquifer delineations, water utility development patterns,

2-12     socioeconomic characteristics, existing regional water planning

2-13     areas, political subdivision boundaries, public comment, and other

2-14     factors the board deems relevant.  The board shall review and

2-15     update the designations as necessary but at least every five years.

2-16           (c)  No later than 60 days after the designation of the

2-17     regions under Subsection (b) of this section, the board shall

2-18     designate representatives within each regional water planning area

2-19     to serve as the initial coordinating body for planning.  The

2-20     initial coordinating body shall then designate additional

2-21     representatives to serve on the regional water planning group,

2-22     ensuring adequate representation from the interests comprising that

2-23     region, including but not limited to the public, counties,

2-24     municipalities, industries, agricultural interests, environmental

2-25     interests, small businesses, electric generating utilities, river

2-26     authorities, water districts, and water utilities.

2-27           (d)  The board shall provide guidelines for the consideration

2-28     of existing regional planning efforts by regional water planning

2-29     groups.  The board shall provide guidelines for the format in which

2-30     information shall be presented in the regional water plans.

2-31     Nothing in the initial planning effort shall prevent development of

2-32     a management plan or project where local or regional needs require

2-33     action prior to completion of the initial regional water plan under

2-34     this section.

2-35           (e)  Each regional water planning group shall submit to the

2-36     board a regional water plan that:

2-37                 (1)  is consistent with the guidance principles for the

2-38     state water plan adopted by the board under Section 16.051(d) of

2-39     this code;

2-40                 (2)  provides information based on data provided or

2-41     approved by the board in a format consistent with the guidelines

2-42     provided by the board under Subsection (d) of this section;

2-43                 (3)  has specific provisions for water management

2-44     strategies to be used:  during a drought of record; when flows are

2-45     at 75 percent of normal; and when flows are at 50 percent of

2-46     normal; and

2-47                 (4)  includes but is not limited to consideration of

2-48     the following:

2-49                       (A)  any existing water or drought planning

2-50     efforts addressing all or a portion of the region;

2-51                       (B)  certified groundwater conservation district

2-52     management plans;

2-53                       (C)  all potentially feasible water management

2-54     strategies, including but not limited to improved conservation and

2-55     management of existing water supplies, acquisition of available

2-56     existing water supplies, and development of new water supplies;

2-57                       (D)  protection of existing water rights in the

2-58     region and modes and procedures for the equitable adjustment of

2-59     water rights affected by the plan;

2-60                       (E)  opportunities for and the benefits of

2-61     developing regional water supply facilities or providing regional

2-62     management of water supply facilities;

2-63                       (F)  appropriate provision for environmental

2-64     water needs and for the effect of upstream development on the bays,

2-65     estuaries, and arms of the Gulf of Mexico and the effect of plans

2-66     on navigation;

2-67                       (G)  provisions in Section 11.085(h)(1) of this

2-68     code if interbasin transfers are contemplated; and

2-69                       (H)  voluntary transfer of water within the

 3-1     region using, but not limited to, regional water banks, sales,

 3-2     leases, options, subordination agreements, and financing

 3-3     agreements.

 3-4           (f)  No later than September 1, 1998, the board shall adopt

 3-5     rules:

 3-6                 (1)  to provide for the procedures for adoption of

 3-7     regional water plans by regional water planning groups and for

 3-8     approval of regional water plans by the board; and

 3-9                 (2)  to govern procedures to be followed in carrying

3-10     out the responsibilities of this section.

3-11           (g)  The board shall provide technical and financial

3-12     assistance to the regional water planning groups in the development

3-13     of their plans.  The board shall simplify, as much as possible,

3-14     planning requirements in regions with abundant water resources.

3-15     The board, if requested, may facilitate resolution of conflicts

3-16     within regions.

3-17           (h)(1)  After the regional water plan is initially prepared,

3-18     the regional water planning group shall, after notice, hold at

3-19     least one public hearing at some central location within the

3-20     regional water planning area.

3-21                 (2)  After the regional water plan is initially

3-22     prepared, the regional water planning group shall submit a copy of

3-23     the plan to the board.  The board shall submit comments on the

3-24     regional water plan as to whether the plan meets the requirements

3-25     of Subsection (e) of this section.

3-26                 (3)  If no interregional conflicts exist, the regional

3-27     water planning group shall consider all public and board comments;

3-28     prepare, revise, and adopt the final plan; and submit the adopted

3-29     plan to the board for approval and inclusion in the state water

3-30     plan.

3-31                 (4)  If an interregional conflict exists, the board

3-32     shall facilitate coordination between the involved regions to

3-33     resolve the conflict.  If conflict remains, the board shall resolve

3-34     the conflict.  On resolution of the conflict, the involved regional

3-35     water planning groups shall prepare revisions to their respective

3-36     plans and hold, after notice, at least one public hearing at some

3-37     central location within their respective regional water planning

3-38     areas.  The regional water planning groups shall consider all

3-39     public and board comments; prepare, revise, and adopt their

3-40     respective plans; and submit their plans to the board for approval

3-41     and inclusion in the state water plan.

3-42                 (5)  The board may approve a regional water plan only

3-43     after it has determined that all interregional conflicts involving

3-44     that regional water planning area have been resolved.

3-45           (i)  The regional water planning groups shall submit their

3-46     adopted regional water plans to the board by September 1, 2000, for

3-47     approval and inclusion in the state water plan.  In conjunction

3-48     with the submission of regional water plans, each planning group

3-49     should make legislative recommendations, if any, to facilitate more

3-50     voluntary water transfers in the region.  Subsequent regional water

3-51     plans shall be submitted every five years thereafter.  Public

3-52     participation for revised regional plans shall follow the

3-53     procedures under Subsection (h) of this section.

3-54           (j)  The board may provide financial assistance to political

3-55     subdivisions under Subchapters E and F of this chapter and

3-56     Subchapters C, D, E, F, and J, Chapter 15, and Subchapters D, I, K,

3-57     and L, Chapter 17 of this code for water projects only if the board

3-58     determines that the needs to be addressed by the project will be

3-59     addressed in a manner consistent with an approved regional water

3-60     plan for the area in which the facility is to be located, unless

3-61     the board determines that conditions warrant waiver of this

3-62     requirement.  [HEARING ON PRELIMINARY PLAN.  (a)  After the

3-63     executive administrator completes his preliminary planning of the

3-64     water resources development within a river basin, he shall hold a

3-65     public hearing, after notice, at some central location within the

3-66     river basin.  If the proposed plan involves the transfer of water

3-67     from one basin to another, the hearing shall be held at some

3-68     location convenient to the areas affected.]

3-69           [(b)  The executive administrator shall present the proposed

 4-1     plan of development and hear evidence for and against the plan.]

 4-2           [(c)  After the hearing, the executive administrator shall

 4-3     consider the effect the plan will have on the present and future

 4-4     development, economy, general welfare, and water requirements of

 4-5     the river basin or the areas affected.]

 4-6           Sec. 16.054.  OTHER WATER PLANNING.  (a)  It is the policy of

 4-7     the state that water resource management, water conservation, and

 4-8     drought planning should occur on an ongoing basis.  The board,

 4-9     commission, and Parks and Wildlife Department shall make available

4-10     where appropriate technical and financial assistance for such

4-11     planning.

4-12           (b)  When preparing individual water plans that address

4-13     drought or the development, management, or conservation of water

4-14     resources from the holders of existing permits, certified filings,

4-15     or certificates of adjudication, the water suppliers, groundwater

4-16     districts, special districts, irrigation districts, and other water

4-17     users should ensure that the plan is consistent with the applicable

4-18     approved regional water plan for their region.  [HEARING ON

4-19     COMPLETED STATE WATER PLAN.  When the executive administrator has

4-20     prepared and examined the completed preliminary plan, the board

4-21     shall hold a public hearing on the plan to determine whether or not

4-22     it gives adequate consideration to the protection of existing water

4-23     rights in this state and whether or not it takes into account modes

4-24     and procedures for the equitable adjustment of water rights

4-25     affected by the plan.  After the hearing, the board may formally

4-26     adopt the state water plan.  A majority vote is necessary for

4-27     adoption.]

4-28           Sec. 16.055.  DROUGHT RESPONSE PLAN.  (a)  The Division of

4-29     Emergency Management of the Office of the Governor shall be

4-30     responsible for coordinating the drought response component of the

4-31     state water plan.

4-32           (b)  The drought response and monitoring committee is created

4-33     and shall meet as necessary to carry out the provisions of this

4-34     section.  The committee is composed of one representative from each

4-35     of the following entities, appointed by the administrative head of

4-36     that entity:

4-37                 (1)  the division of emergency management in the office

4-38     of the governor;

4-39                 (2)  the board;

4-40                 (3)  the commission;

4-41                 (4)  the Parks and Wildlife Department;

4-42                 (5)  the Department of Agriculture; and

4-43                 (6)  the Texas Agricultural Extension Service.

4-44           (c)  The governor may designate any other person or a

4-45     representative of any other entity to serve on the committee.

4-46           (d)  The representative of the division of emergency

4-47     management shall serve as chair of the committee.

4-48           (e)  The committee shall be responsible for:

4-49                 (1)  the assessment and public reporting of drought

4-50     monitoring and water supply conditions;

4-51                 (2)  advising the governor on significant drought

4-52     conditions;

4-53                 (3)  recommending specific provisions for a defined

4-54     state response to drought-related disasters for inclusion in the

4-55     state emergency management plan and the state water plan;

4-56                 (4)  advising the regional planning groups on

4-57     drought-related issues in the regional water plans; and

4-58                 (5)  ensuring effective coordination among state,

4-59     local, and federal agencies in drought-response planning.

4-60           (f)  In performing its duties under this section, the drought

4-61     response and monitoring committee shall consider the following

4-62     factors when determining whether a drought exists for the purposes

4-63     of this section:

4-64                 (1)  meteorological conditions and forecasts;

4-65                 (2)  hydrological conditions and forecasts;

4-66                 (3)  water use and demand forecasts;

4-67                 (4)  water supply conditions and forecasts;

4-68                 (5)  the potential impacts of the water shortage

4-69     on:  the public health, safety, and welfare; economic development;

 5-1     and agricultural and natural resources; and

 5-2                 (6)  other factors deemed appropriate by the committee.

 5-3     [EFFECT OF PLAN.  (a)  The state water plan, as formally adopted by

 5-4     the board, shall be a flexible guide to state policy for the

 5-5     development of water resources in this state.]

 5-6           [(b)  The commission shall take the plan into consideration

 5-7     in matters coming before it but is not bound by the plan.]

 5-8           [(c)  Nothing in the state water plan or any amendment or

 5-9     modification of the plan affects any vested right existing before

5-10     August 30, 1965.]

5-11           Sec. 16.056.  [AMENDMENT OF PLAN.  (a)  The board shall

5-12     review the plan biennially to consider any amendment or

5-13     modification that may be needed because of changed conditions.]

5-14           [(b)  The board shall amend or modify the plan as experience

5-15     and changed conditions require after holding a public hearing on

5-16     any amendment or modification in the manner and for the purposes

5-17     provided by Section 16.054 of this code.]

5-18           [(c)  Any amendment or modification adopted by the board

5-19     becomes a part of the plan.]

5-20           [Sec. 16.057.]  FEDERAL ASSISTANCE IN FINANCING REGIONAL

5-21     WATER PLANS [PLAN].  The executive administrator may take all

5-22     necessary action to qualify for federal assistance in financing the

5-23     development and improvement of the regional water plans [plan].

5-24           SECTION 1.03.  Subchapter D, Chapter 11, Water Code, is

5-25     amended by amending Section 11.1271 and adding Section 11.1272 to

5-26     read as follows:

5-27           Sec. 11.1271.  ADDITIONAL REQUIREMENTS:  WATER CONSERVATION

5-28     PLANS.  (a)  The commission shall [may] require the formulation and

5-29     submission of a water conservation plan and the adoption of

5-30     reasonable water conservation measures, as defined by Subdivision

5-31     (8)(B), Section 11.002, of this code.

5-32           (b)  The commission shall require the holder of an existing

5-33     permit, certified filing, or certificate of adjudication for the

5-34     appropriation of surface water in the amount of 1,000 acre-feet a

5-35     year or more to develop, submit, and implement a water conservation

5-36     plan, consistent with the appropriate regional water plan, that

5-37     adopts reasonable water conservation measures as defined by

5-38     Subdivision (8)(B), Section 11.002, of this code.  The requirement

5-39     for a water conservation plan under this section shall not result

5-40     in the need for an amendment to an existing permit, certified

5-41     filing, or certificate of adjudication.

5-42           (c)  The commission shall adopt rules establishing criteria

5-43     and deadlines for submission of water conservation plans.

5-44           Sec. 11.1272.  ADDITIONAL REQUIREMENT:  DROUGHT CONTINGENCY

5-45     PLANS FOR CERTAIN APPLICANTS AND WATER RIGHT HOLDERS.  The

5-46     commission shall by rule require wholesale and retail public water

5-47     suppliers and irrigation districts to develop drought contingency

5-48     plans consistent with the appropriate approved regional water plan

5-49     to be implemented during periods of water shortages and drought.

5-50           SECTION 1.04.  Section 15.401, Water Code, is amended to read

5-51     as follows:

5-52           Sec. 15.401.  PROGRAM CREATION.  The research and planning

5-53     program is created to provide money for research into and planning

5-54     of the proper conservation, management, and development of the

5-55     state's water resources, for regional planning by political

5-56     subdivisions, for facility engineering in economically distressed

5-57     areas, and for flood control planning by political subdivisions.

5-58     The program may also provide money for research and planning by

5-59     Texas political subdivisions related to the proper conservation,

5-60     management, and development of water resources of areas outside

5-61     Texas if such research or planning will result in water being

5-62     available for use in or for the benefit of Texas or will maintain

5-63     and enhance the quality of water in Texas.

5-64           SECTION 1.05.  Subsection (a), Section 15.404, Water Code, is

5-65     amended to read as follows:

5-66           (a)  The board may enter into a contract with any person for

5-67     research into any matter relating to the conservation and

5-68     development of the state's water resources or for research by Texas

5-69     political subdivisions related to the proper conservation and

 6-1     development of water resources of areas outside Texas if such

 6-2     research will result in water being available for use in or for the

 6-3     benefit of Texas or will help maintain and enhance the quality of

 6-4     water in Texas.

 6-5           SECTION 1.06.  Subsection (f), Section 15.406, Water Code, is

 6-6     amended to read as follows:

 6-7           (f)  The board shall adopt rules establishing criteria of

 6-8     eligibility for regional facility planning money that considers:

 6-9                 (1)  the relative need of the political subdivision for

6-10     the money;

6-11                 (2)  the legal authority of the political subdivision

6-12     to plan, develop, and operate regional facilities; [and]

6-13                 (3)  the effect of regional facility planning by the

6-14     political subdivision on overall regional facility planning,

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

6-16     which the political subdivision is located; and

6-17                 (4)  the degree to which the regional facility planning

6-18     by the political subdivision is consistent with an approved

6-19     regional water plan for the area in which the political subdivision

6-20     is located.

6-21           SECTION 1.07.  Subchapter F, Chapter 15, Water Code, is

6-22     amended by adding Section 15.4061 to read as follows:

6-23           Sec. 15.4061.  FUNDING FOR REGIONAL WATER PLANS.  (a)  The

6-24     board may enter into contracts with political subdivisions

6-25     designated as representatives of a regional water planning group

6-26     under Section 16.053(c) of this code to pay from the research and

6-27     planning fund all or part of the cost of developing or revising

6-28     regional water plans as defined in Section 16.053 of this code.

6-29           (b)  A political subdivision may submit, either individually

6-30     or jointly with other political subdivisions, a written application

6-31     to the board for the purpose of funding regional water planning

6-32     from the research and planning fund.

6-33           (c)  The application shall be in the manner and form required

6-34     by board rules and include:

6-35                 (1)  the name of the political subdivision or political

6-36     subdivisions;

6-37                 (2)  a citation to the laws under which the political

6-38     subdivision was created and is operating, including specific

6-39     citation of all laws providing authority to develop and implement a

6-40     regional water plan;

6-41                 (3)  the amount requested from the board for regional

6-42     water planning; and

6-43                 (4)  any other relevant information required by the

6-44     board in its rules or specifically requested by the board.

6-45           (d)  After notice and hearing, the board may award the

6-46     applicant all or part of the requested funds that the board

6-47     considers necessary for the political subdivision to carry out

6-48     regional water planning.

6-49           (e)  If the board grants an application under this section

6-50     and awards funds for regional water planning, the board shall enter

6-51     into a contract with the political subdivision or political

6-52     subdivisions that includes:

6-53                 (1)  a detailed statement of the purpose for which the

6-54     money is to be used;

6-55                 (2)  the total amount of money to be paid by the board

6-56     from the research and planning fund under the contract; and

6-57                 (3)  any other terms and conditions required by the

6-58     board's rules or agreed to by the contracting parties.

6-59           (f)  The board shall adopt rules establishing criteria for

6-60     eligibility for regional water planning money that include:

6-61                 (1)  the relative need of the political subdivision for

6-62     the money;

6-63                 (2)  the legal authority of the political subdivision

6-64     to develop and implement a regional water plan; and

6-65                 (3)  the degree to which regional water planning by the

6-66     political subdivision or political subdivisions will address the

6-67     water supply needs in the regional water planning area.

6-68           (g)  The board shall require that regional water plans

6-69     developed or revised under contracts entered into under this

 7-1     section be made available to the commission and the Parks and

 7-2     Wildlife Department.

 7-3           SECTION 1.08.  The state water plan in effect on the

 7-4     effective date of this Act shall remain in effect until a new state

 7-5     water plan is adopted pursuant to Subsection (a), Section 16.051,

 7-6     Water Code, as amended by Section 1.01 of this Act.

 7-7           ARTICLE 2.  WATER MANAGEMENT, MARKETING, AND TRANSFERS

 7-8           SECTION 2.01.  Section 791.026, Government Code, is amended

 7-9     to read as follows:

7-10           Sec. 791.026.  CONTRACTS FOR WATER SUPPLY AND WASTEWATER

7-11     TREATMENT FACILITIES.  (a)  A municipality, district, or river

7-12     authority of this state may contract with another municipality,

7-13     district, or river authority of this state to obtain or provide

7-14     part or all of:

7-15                 (1)  water supply or wastewater treatment facilities;

7-16     or

7-17                 (2)  a lease or operation of water supply facilities or

7-18     wastewater treatment facilities.

7-19           (b)  The contract may provide that the municipality,

7-20     district, or river authority obtaining one of the services may not

7-21     obtain those services from a source other than a contracting party,

7-22     except as provided by the contract.

7-23           (c)  If a contract includes a term described by Subsection

7-24     (b), payments made under the contract are the paying party's

7-25     operating expenses for its water supply system, wastewater

7-26     treatment facilities, or both.

7-27           (d)  The contract may:

7-28                 (1)  contain terms and extend for any period on which

7-29     the parties agree; [and]

7-30                 (2)  require the purchaser to develop alternative or

7-31     replacement supplies prior to the expiration date of the contract

7-32     and may provide for enforcement of such terms by court order; and

7-33                 (3)  provide that it will continue in effect until

7-34     bonds specified by the contract and any refunding bonds issued to

7-35     pay those bonds are paid.

7-36           (e)  Where a contract sets forth explicit expiration

7-37     provisions, no continuation of the service obligation will be

7-38     implied.

7-39           (f)  Tax revenue may not be pledged to the payment of amounts

7-40     agreed to be paid under the contract.

7-41           (g) [(f)]  The powers granted by this section prevail over a

7-42     limitation contained in another law.

7-43           SECTION 2.02.  Section 11.002, Water Code, is amended by

7-44     amending Subdivision (4) and adding Subdivisions (7), (9), and (10)

7-45     to read as follows:

7-46                 (4)  "Beneficial use" means use of the amount of water

7-47     which is economically necessary for a purpose authorized by this

7-48     chapter, when reasonable intelligence and reasonable diligence are

7-49     used in applying the water to that purpose and shall include

7-50     conserved water.

7-51                 (7)  "Livestock" means bovine, caprine, equine, ovine,

7-52     porcine, ratite, or ruminant animals, poultry, domestic rabbits,

7-53     domesticated game birds, or other animals, whether confined or free

7-54     ranging, raised for human consumption, profit, use, or pleasure.

7-55     The term includes exotic livestock as defined in Section 161.001,

7-56     Agriculture Code.

7-57                 (9)  "Conserved water" means that amount of water saved

7-58     by a holder of an existing permit, certified filing, or certificate

7-59     of adjudication through practices, techniques, and technologies

7-60     that would otherwise be irretrievably lost to all consumptive

7-61     beneficial uses arising from storage, transportation, distribution,

7-62     or application.

7-63                 (10)  "Surplus water" means water in excess of the

7-64     initial or continued beneficial use of the appropriator.

7-65           SECTION 2.03.  Subsection (e), Section 11.023, Water Code, is

7-66     amended to read as follows:

7-67           (e)  The amount of water appropriated for each purpose

7-68     mentioned in this section shall be specifically appropriated for

7-69     that purpose, subject to the preferences prescribed in Section

 8-1     11.024 of this code.  The commission may authorize appropriation of

 8-2     a single amount or volume of water for more than one purpose of

 8-3     use.  In the event that a single amount or volume of water is

 8-4     appropriated for more than one purpose of use, the total amount of

 8-5     water actually diverted for all of the authorized purposes may not

 8-6     exceed the total amount of water appropriated.

 8-7           SECTION 2.04.  Section 11.036, Water Code, is amended to read

 8-8     as follows:

 8-9           Sec. 11.036.  CONSERVED OR STORED WATER:  SUPPLY CONTRACT.

8-10     (a)  A person, association of persons, corporation, or water

8-11     improvement or irrigation district having in possession and control

8-12     any storm water, floodwater, or rainwater that is conserved or

8-13     stored as authorized by this chapter may contract to supply the

8-14     water to any person, association of persons, corporation, or water

8-15     improvement or irrigation district having the right to acquire use

8-16     of the water.

8-17           (b)  The price and terms of the contract shall be just and

8-18     reasonable and without discrimination, and the contract is subject

8-19     to the same revision and control as provided in this code for other

8-20     water rates and charges.  If the contract sets forth explicit

8-21     expiration provisions, no continuation of the service obligation

8-22     will be implied.

8-23           (c)  The terms of a contract may expressly provide that the

8-24     person using the stored or conserved water is required to develop

8-25     alternative or replacement supplies prior to the expiration of the

8-26     contract and may further provide for enforcement of such terms by

8-27     court order.

8-28           (d)  If any person uses the stored or conserved water without

8-29     first entering into a contract with the party that conserved or

8-30     stored it, the user shall pay for the use at a rate determined by

8-31     the commission to be just and reasonable, subject to court review

8-32     as in other cases.

8-33           SECTION 2.05.  Section 11.042, Water Code, is amended to read

8-34     as follows:

8-35           Sec. 11.042.  DELIVERING WATER DOWN BANKS AND BEDS.

8-36     (a)  Under rules prescribed by the commission, a person,

8-37     association of persons, corporation, or water control and

8-38     improvement or irrigation district supplying stored or conserved

8-39     water under contract as provided in this chapter may use the bank

8-40     and bed of any flowing natural stream in the state to convey the

8-41     water from the place of storage to the place of use or to the

8-42     diversion point [plant] of the appropriator.  [The commission shall

8-43     prescribe rules for this purpose.]

8-44           (b)  Except as provided by Subsection (a) of this section, a

8-45     person who wishes to convey and subsequently divert water in a

8-46     watercourse or stream must obtain the prior approval of the

8-47     commission through a bed and banks authorization.  The

8-48     authorization shall allow to be diverted only the amount of water

8-49     put into a watercourse or stream, less carriage losses and subject

8-50     to any special conditions that may address the impact of the

8-51     discharge, conveyance, and diversion on existing permits, certified

8-52     filings, or certificates of adjudication, instream uses, and

8-53     freshwater inflows to bays and estuaries.  Water discharged into a

8-54     watercourse or stream under this chapter shall not cause a

8-55     degradation of water quality to the extent that the stream

8-56     segment's classification would be lowered.  Authorizations under

8-57     this section and water quality authorizations may be approved in a

8-58     consolidated permit proceeding.

8-59           (c)  Nothing in this section shall be construed to affect an

8-60     existing project for which water rights and reuse authorizations

8-61     have been granted by the commission before September 1, 1997.

8-62           SECTION 2.06.  Section 11.046, Water Code, is amended to read

8-63     as follows:

8-64           Sec. 11.046.  RETURN SURPLUS [UNUSED] WATER.  (a)  A person

8-65     who takes or diverts water from a watercourse or [running] stream

8-66     for the purposes authorized by this code shall conduct surplus

8-67     water back to the watercourse or stream from which it was taken if

8-68     the water can be returned by gravity flow and it is reasonably

8-69     practicable to do so.

 9-1           (b)  In granting an application for a water right, the

 9-2     commission may include conditions in the water right providing for

 9-3     the return of surplus water, in a specific amount or percentage of

 9-4     water diverted, and the return point on a watercourse or stream as

 9-5     necessary to protect senior downstream permits, certified filings,

 9-6     or certificates of adjudication or to provide flows for instream

 9-7     uses or bays and estuaries.

 9-8           (c)  Except as specifically provided otherwise in the water

 9-9     right, water appropriated under a permit, certified filing, or

9-10     certificate of adjudication may, prior to its release into a

9-11     watercourse or stream, be beneficially used and reused by the

9-12     holder of a permit, certified filing, or certificate of

9-13     adjudication for the purposes and locations of use provided in the

9-14     permit, certified filing, or certificate of adjudication.  Once

9-15     water has been diverted under a permit, certified filing, or

9-16     certificate of adjudication and then returned to a watercourse or

9-17     stream, however, it is considered surplus water and therefore

9-18     subject to reservation for instream uses or beneficial inflows or

9-19     to appropriation by others unless expressly provided otherwise in

9-20     the permit, certified filing, or certificate of adjudication.

9-21           (d)  Water appropriated under a permit, certified filing, or

9-22     certificate of adjudication which is recirculated within a

9-23     reservoir for cooling purposes shall not be considered to be

9-24     surplus for purposes of this chapter.

9-25           SECTION 2.07.  Section 11.085, Water Code, is amended to read

9-26     as follows:

9-27           Sec. 11.085.  INTERBASIN [INTERWATERSHED] TRANSFERS.  (a)  No

9-28     person may take or divert any state [of the] water from a river

9-29     basin [of the ordinary flow, underflow, or storm flow of any

9-30     stream, watercourse, or watershed] in this state and transfer such

9-31     water to [into] any other river basin [natural stream, watercourse,

9-32     or watershed to the prejudice of any person or property situated

9-33     within the watershed from which the water is proposed to be taken

9-34     or diverted.]

9-35           [(b)  No person may transfer water from one watershed to

9-36     another] without first applying for and receiving a water right or

9-37     an amendment to a permit, certified filing, or certificate of

9-38     adjudication [permit] from the commission authorizing the transfer

9-39     [to do so.  Before issuing such a permit, the commission shall hold

9-40     a hearing to determine the rights that might be affected by the

9-41     transfer.  The commission shall give notice and hold the hearing in

9-42     the manner prescribed by its procedural rules].

9-43           (b)  Prior to taking action on an application for an

9-44     interbasin transfer, the commission shall conduct at least one

9-45     public meeting to receive comments in both the basin of origin of

9-46     the water proposed for transfer and the basin receiving water from

9-47     the proposed transfer.  Notice shall be provided pursuant to

9-48     Subsection (e) of this section.  Any person may present relevant

9-49     information and data at the meeting on the criteria which the

9-50     commission is to consider related to the interbasin transfer.

9-51           (c)  In addition to the public meetings required by

9-52     Subsection (b) of this section, if the application is contested in

9-53     a manner requiring an evidentiary hearing under the rules of the

9-54     commission, the commission shall give notice and hold an

9-55     evidentiary hearing, in accordance with commission rules and

9-56     applicable state law.

9-57           (d)  Notice of an application for an interbasin transfer

9-58     shall be mailed to the following:

9-59                 (1)  all holders of permits, certified filings, or

9-60     certificates of adjudication located in whole or in part in the

9-61     basin of origin;

9-62                 (2)  each county judge of a county located in whole or

9-63     in part in the basin of origin;

9-64                 (3)  each mayor of a city with a population of 1,000 or

9-65     more located in whole or in part in the basin of origin; and

9-66                 (4)  all groundwater conservation districts located in

9-67     whole or in part in the basin of origin.

9-68           (e)  The applicant shall cause the notice of application for

9-69     an interbasin transfer to be published once a week for two

 10-1    consecutive weeks in one or more newspapers having general

 10-2    circulation in each county located in whole or in part in the basin

 10-3    of origin.  The published notice may not be smaller than 96.8

 10-4    square centimeters or 15 square inches with the shortest dimension

 10-5    at least 7.6 centimeters or three inches.  The notice of

 10-6    application and public meetings shall be combined in the mailed and

 10-7    published notices.

 10-8          (f)  The applicant shall pay the cost of notice required to

 10-9    be provided under this section.  The commission by rule may

10-10    establish procedures for payment of those costs.

10-11          (g)  In addition to other requirements of this code relating

10-12    to the review of and action on an application for a new water right

10-13    or amended permit, certified filing, or certificate of

10-14    adjudication, the commission shall:

10-15                (1)  request review and comment on an application for

10-16    an interbasin transfer from each county judge of a county located

10-17    in whole or in part in the basin of origin.  A county judge should

10-18    make comment only after seeking advice from the county

10-19    commissioners court; and

10-20                (2)  give consideration to the comments of each county

10-21    judge of a county located in whole or in part in the basin of

10-22    origin prior to taking action on an application for an interbasin

10-23    transfer.

10-24          (h)  In addition to other requirements of this code relating

10-25    to the review of and action on an application for a new water right

10-26    or amended permit, certified filing, or certificate of

10-27    adjudication, the commission shall weigh the effects of the

10-28    proposed transfer by considering:

10-29                (1)  the need for the water in the basin of origin and

10-30    in the proposed receiving basin based on the period for which the

10-31    water supply is requested, but not to exceed 50 years;

10-32                (2)  factors identified in the applicable approved

10-33    regional water plans which address the following:

10-34                      (A)  the availability of feasible and practicable

10-35    alternative supplies in the receiving basin to the water proposed

10-36    for transfer;

10-37                      (B)  the amount and purposes of use in the

10-38    receiving basin for which water is needed;

10-39                      (C)  proposed methods and efforts by the

10-40    receiving basin to avoid waste and implement water conservation and

10-41    drought contingency measures;

10-42                      (D)  proposed methods and efforts by the

10-43    receiving basin to put the water proposed for transfer to

10-44    beneficial use;

10-45                      (E)  the projected economic impact that is

10-46    reasonably expected to occur in each basin as a result of the

10-47    transfer; and

10-48                      (F)  the projected impacts of the proposed

10-49    transfer that are reasonably expected to occur on existing instream

10-50    uses, water quality, aquatic and riparian habitat, and bays and

10-51    estuaries that must be assessed under Sections 11.147, 11.150, and

10-52    11.152 of this code in each basin.  If the water sought to be

10-53    transferred is currently authorized to be used under an existing

10-54    permit, certified filing, or certificate of adjudication, such

10-55    impacts shall only be considered in relation to that portion of the

10-56    permit, certified filing, or certificate of adjudication proposed

10-57    for transfer and shall be based on historical uses of the permit,

10-58    certified filing, or certificate of adjudication for which

10-59    amendment is sought;

10-60                (3)  proposed mitigation or compensation, if any, to

10-61    the basin of origin by the applicant; and

10-62                (4)  the continued need to use the water for the

10-63    purposes authorized under the existing permit, certified filing, or

10-64    certificate of adjudication, if an amendment to an existing water

10-65    right is sought.

10-66          (i)  The commission may grant, in whole or in part, an

10-67    application for an interbasin transfer only to the extent that the

10-68    detriments to the basin of origin during the proposed transfer

10-69    period are less than the benefits to the receiving basin during the

 11-1    proposed transfer period.

 11-2          (j)  This section does not apply to:

 11-3                (1)  a proposed transfer of less than 3,000 acre-feet

 11-4    of water per annum from the same permit, certified filing, or

 11-5    certificate of adjudication; or

 11-6                (2)  a request for an emergency transfer of water; or

 11-7                (3)  a proposed transfer from a basin to its adjoining

 11-8    coastal basin.

 11-9          (k)  If the transfer of water is based on a contractual sale

11-10    of water, the new water right or amended permit, certified filing,

11-11    or certificate of adjudication authorizing the transfer shall

11-12    contain a condition for a term or period not greater than the

11-13    contract term.

11-14          (l)  The parties to a contract for an interbasin transfer may

11-15    include provisions for compensation and mitigation.  If the party

11-16    from the basin of origin is a government entity, each county judge

11-17    of a county located in whole or in part in the basin of origin may

11-18    provide input on the appropriate compensation and mitigation for

11-19    the interbasin transfer.

11-20          (m)  For the purposes of this section, a basin is designated

11-21    as provided in accordance with Section 16.051 of this code.  A

11-22    basin may not be redesignated in order to allow a transfer or

11-23    diversion of water otherwise in violation of this section.

11-24          (n) [(c)]  A person who takes or diverts water in violation

11-25    of this section is guilty of a misdemeanor and upon conviction is

11-26    punishable by a fine of not [less than $100 nor] more than $10,000

11-27    [$500] or by confinement in the county jail for not more than six

11-28    months.

11-29          (o) [(d)]  A person commits a separate offense each day he

11-30    continues to take or divert water in violation of this section.

11-31          SECTION 2.08.  Subsection (a), Section 11.124, Water Code, is

11-32    amended to read as follows:

11-33          (a)  An application to appropriate unappropriated state water

11-34    must:

11-35                (1)  be in writing and sworn to;

11-36                (2)  contain the name and post-office address of the

11-37    applicant;

11-38                (3)  identify the source of water supply;

11-39                (4)  state the nature and purposes of the proposed use

11-40    or uses and the amount of water to be used for each purpose;

11-41                (5)  state the location and describe the proposed

11-42    facilities;

11-43                (6)  state the time within which the proposed

11-44    construction is to begin; and

11-45                (7)  state the time required for the application of

11-46    water to the proposed use or uses.

11-47          SECTION 2.09.  Subsection (b), Section 11.135, Water Code, is

11-48    amended to read as follows:

11-49          (b)  The permit shall be in writing and attested by the seal

11-50    of the commission, and it shall contain substantially the following

11-51    information:

11-52                (1)  the name of the person to whom the permit is

11-53    issued;

11-54                (2)  the date the permit is issued;

11-55                (3)  the date the original application was filed;

11-56                (4)  the use or purpose for which the appropriation is

11-57    to be made;

11-58                (5)  the amount or volume of water authorized to be

11-59    appropriated for each purpose; if use of the appropriated water is

11-60    authorized for multiple purposes, the permit shall contain a

11-61    special condition limiting the total amount of water that may

11-62    actually be diverted for all of the purposes to the amount of water

11-63    appropriated;

11-64                (6)  a general description of the source of supply from

11-65    which the appropriation is proposed to be made;

11-66                (7)  the time within which construction or work must

11-67    begin and the time within which it must be completed; and

11-68                (8)  any other information the commission prescribes.

11-69          SECTION 2.10.  Subsection (a), Section 11.142, Water Code, is

 12-1    amended to read as follows:

 12-2          (a)  Without obtaining a permit, a person may construct on

 12-3    his own property a dam or reservoir with a normal conservation

 12-4    storage capacity of [to impound or contain] not more than 200

 12-5    acre-feet of water for domestic and livestock purposes.

 12-6          SECTION 2.11.  Sections 11.176 and 11.177, Water Code, are

 12-7    amended to read as follows:

 12-8          Sec. 11.176.  HEARING.  (a)  Except as provided by Subsection

 12-9    (b) of this section, the [The] commission shall hold a hearing and

12-10    shall give the holder of the permit, certified filing, or

12-11    certificate of adjudication and other interested persons an

12-12    opportunity to be heard and to present evidence on any matter

12-13    pertinent to the questions at issue.

12-14          (b)  A hearing on the cancellation of a permit, certified

12-15    filing, or certificate of adjudication as provided by this chapter

12-16    is unnecessary if the right to such hearing is expressly waived by

12-17    the affected holder of a permit, certified filing, or certificate

12-18    of adjudication.

12-19          (c)  A permit, certified filing, or certificate of

12-20    adjudication for a term does not vest in the holder of a permit,

12-21    certified filing, or certificate of adjudication any right to the

12-22    diversion, impoundment, or use of water for longer than the term of

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

12-24    shall expire and be cancelled in accordance with its terms without

12-25    further need for notice or hearing.

12-26          Sec. 11.177.  COMMISSION FINDING; ACTION.  (a)  At the

12-27    conclusion of the hearing, the commission shall cancel the permit,

12-28    certified filing, or certificate of adjudication in whole or in

12-29    part to the extent that it finds that:

12-30                (1)  the water or any portion of the water appropriated

12-31    under the permit, certified filing, or certificate of adjudication

12-32    has not been put to an authorized beneficial use during the 10-year

12-33    period; and

12-34                (2)  the holder has not used reasonable diligence in

12-35    applying the water or the unused portion of the water to an

12-36    authorized beneficial use or is otherwise unjustified in the

12-37    nonuse[; and]

12-38                [(3)  the holder has not been justified in the nonuse

12-39    or does not then have a bona fide intention of putting the water or

12-40    the unused portion of the water to an authorized beneficial use

12-41    within a reasonable time after the hearing].

12-42          (b)  In determining what constitutes reasonable diligence or

12-43    a justified nonuse [and a reasonable time] as used in Subsection

12-44    (a)(2) [(a)(3)] of this section, the commission shall give

12-45    consideration to:

12-46                (1)  whether sufficient water is available in the

12-47    source of supply to meet all or part of the appropriation during

12-48    the 10-year period of nonuse;

12-49                (2)  whether the nonuse is justified by the holder's

12-50    participation in the federal Conservation Reserve Program or a

12-51    similar governmental program as provided by Section 11.173(b)(1) of

12-52    this code;

12-53                (3)  whether the permit, certified filing, or

12-54    certificate of adjudication was obtained to meet demonstrated

12-55    long-term public water supply or electric generation needs as

12-56    evidenced by a water management plan developed by the holder and

12-57    consistent with projections of future water needs contained in the

12-58    state water plan;

12-59                (4)  whether the permit, certified filing, or

12-60    certificate of adjudication was obtained as the result of the

12-61    construction of a reservoir funded, in whole or in part, by the

12-62    holder of the permit, certified filing, or certificate of

12-63    adjudication as part of the  holder's long-term water planning;

12-64                (5)  whether the existing or proposed authorized

12-65    purpose and place of use are consistent with an approved regional

12-66    water plan as provided by Section 16.053 of this code;

12-67                (6)  whether the permit, certified filing, or

12-68    certificate of adjudication has been deposited into the Texas Water

12-69    Bank as provided by Sections 15.7031 and 15.704 of this code or

 13-1    whether it can be shown that the water right or water available

 13-2    under the right is currently being made available for purchase

 13-3    through private marketing efforts; or

 13-4                (7)  whether the permit, certified filing, or

 13-5    certificate of adjudication has been reserved to provide for

 13-6    instream flows or bay and estuary inflows [the expenditures made or

 13-7    obligations incurred by the holder in connection with the permit,

 13-8    certified filing, or certificate of adjudication;]

 13-9                [(2)  the purpose to which the water is to be applied;]

13-10                [(3)  the priority of the purpose;]

13-11                [(4)  the amount of time usually necessary to put water

13-12    to a beneficial use for the same purpose when diligently developed;

13-13    and]

13-14                [(5)  whether at all times during the 10-year period

13-15    there was rainfall adequate to enable the use of all or part of the

13-16    water authorized to be appropriated under the permit, certified

13-17    filing, or certificate of adjudication].

13-18          SECTION 2.12.  Section 15.701, Water Code, is amended to read

13-19    as follows:

13-20          Sec. 15.701.  Definitions.  In this subchapter:

13-21                (1)  "Deposit" means the placement of a water right or

13-22    the right to use water in the water bank for transfer.

13-23                (2)  "Depositor" means a person who deposits or has on

13-24    deposit a water right in the water bank.

13-25                (3)  "Person" includes but is not limited to any

13-26    individual, corporation, organization, government, or governmental

13-27    subdivision or agency, including the board, business trust, estate,

13-28    trust, partnership, association, and any other legal entity.

13-29                (4)  "Transfer" means the conveyance of a water right

13-30    or the right to use water under a water right in any of the

13-31    following manners:

13-32                      (A)  the conveyance of legal title to a water

13-33    right; or

13-34                      (B)  a contract or option contract to allow use

13-35    of a water right.

13-36                (5)  "Trust" means the Texas Water Trust.

13-37                (6)  "Water bank" or "bank" means the Texas Water Bank.

13-38                (7) [(6)]  "Water right" means a right acquired or

13-39    authorized under the laws of this state to impound, divert, or use

13-40    state water, underground water, or water from any source to the

13-41    extent authorized by law.

13-42          SECTION 2.13.  Section 15.702, Water Code, is amended to read

13-43    as follows:

13-44          Sec. 15.702.  Creation of Bank.  The Texas Water Development

13-45    Board shall establish the Texas Water Bank.  The board shall

13-46    administer the water bank to facilitate water transactions [the

13-47    transfer of water from all sources as necessary] to provide sources

13-48    of adequate water supplies for use within the State of Texas.

13-49          SECTION 2.14.  Subsection (a), Section 15.703, Water Code, is

13-50    amended to read as follows:

13-51          (a)  The board may take all actions necessary to operate the

13-52    water bank and to facilitate the transfer of water rights from the

13-53    water bank for future beneficial use including but not limited to:

13-54                (1)  negotiating a sale price and terms acceptable to

13-55    the depositor and purchaser;

13-56                (2)  maintaining a registry of water bank deposits and

13-57    those water users in need of additional supplies;

13-58                (3)  informing water users in need of additional supply

13-59    of water rights available in the bank;

13-60                (4)  encouraging water right holders to implement water

13-61    conservation practices and deposit the right to use the conserved

13-62    water into the bank;

13-63                (5)  establishing requirements for deposit of a water

13-64    right into the water bank including minimum terms for deposit;

13-65                (6)  purchasing, holding, and selling water rights in

13-66    its own name;

13-67                (7)  establishing regional water banks; [and]

13-68                (8)  acting as a clearinghouse for water marketing

13-69    information including water availability, pricing of water

 14-1    transactions, environmental considerations, and potential buyers

 14-2    and sellers of water rights;

 14-3                (9)  preparing and publishing a manual on structuring

 14-4    water transactions;

 14-5                (10)  accepting and holding donations of water rights

 14-6    to meet instream, water quality, fish and wildlife habitat, or bay

 14-7    and estuary inflow needs; and

 14-8                (11)  other actions to facilitate water transactions

 14-9    [transfers].

14-10          SECTION 2.15.  Subchapter K, Chapter 15, Water Code, is

14-11    amended by adding Section 15.7031 to read as follows:

14-12          Sec. 15.7031.  TEXAS WATER TRUST.  (a)  The Texas Water Trust

14-13    is established within the water bank to hold water rights dedicated

14-14    to environmental needs, including instream flows, water quality,

14-15    fish and wildlife habitat, or bay and estuary inflows.

14-16          (b)  The board, in consultation with the Parks and Wildlife

14-17    Department and the commission, shall adopt rules governing the

14-18    process for holding and transferring water rights.

14-19          (c)  The dedication of any water rights placed in trust must

14-20    be reviewed and approved by the commission, in consultation with

14-21    the board and the Parks and Wildlife Department.

14-22          (d)  Water rights may be held in the trust for a term

14-23    specified by contractual agreement or in perpetuity.

14-24          SECTION 2.16.  Section 15.704, Water Code, is amended by

14-25    amending Subsection (a) and adding Subsection (c) to read as

14-26    follows:

14-27          (a)  A [Up to 50 percent of a] water right may be deposited

14-28    in the water bank for an initial term of up to 10 years, unless

14-29    otherwise held in the Texas Water Trust as established under

14-30    Section 15.7031, during which time the water right is exempt from

14-31    cancellation by the commission under the terms of Subchapter E of

14-32    Chapter 11 of this code.  A water right is exempt from cancellation

14-33    under this subsection only once even if it has been transferred or

14-34    redeposited.

14-35          (c)  A contract or option contract to allow use of a water

14-36    right under this subchapter:

14-37                (1)  may include a requirement that the purchaser show

14-38    diligence in pursuing feasible and practicable alternative water

14-39    supplies; and

14-40                (2)  does not vest any right in the purchaser beyond

14-41    the stated terms and conditions of the contract or option contract.

14-42          SECTION 2.17.  (a)  All permits approved by the Texas Natural

14-43    Resource Conservation Commission before the effective date of this

14-44    Act that allow the multiple use of the appropriation of a specific

14-45    amount of water and which are no longer subject to appeal are

14-46    validated in all respects as if they originally had been legally

14-47    authorized or accomplished.

14-48          (b)  This article does not apply to an application for an

14-49    interbasin transfer filed and pending before March 2, 1997.  Any

14-50    subsequent renewals of such applications shall be subject to the

14-51    provisions of this Act.

14-52          (c)  Nothing in this Act shall affect the validity of any

14-53    interbasin transfer permitted or authorized before the effective

14-54    date of this Act.

14-55             ARTICLE 3.  EMERGENCY AUTHORIZATIONS; ENFORCEMENT

14-56          SECTION 3.01.  Subsection (a), Section 11.082, Water Code, is

14-57    amended to read as follows:

14-58          (a)  A person who wilfully takes, diverts, or appropriates

14-59    state water without complying with the applicable requirements of

14-60    this chapter is also liable to a civil penalty of not more than

14-61    $10,000 [$1,000] for each day he continues the taking, diversion,

14-62    or appropriation.

14-63          SECTION 3.02.  Subchapter C, Chapter 11, Water Code, is

14-64    amended by adding Sections 11.0841, 11.0842, and 11.0843 to read as

14-65    follows:

14-66          Sec. 11.0841.  CIVIL REMEDY.  (a)  Nothing in this chapter

14-67    affects the right of any private corporation, individual, or

14-68    political subdivision that has a justiciable interest in pursuing

14-69    any available common-law remedy to enforce a right or to prevent or

 15-1    seek redress or compensation for the violation of a right or

 15-2    otherwise redress an injury.

 15-3          (b)  A district court may award the costs of litigation,

 15-4    including reasonable attorney fees and expert costs, to any

 15-5    political subdivision of the state, private corporation, or

 15-6    individual that is a water right holder and that prevails in a suit

 15-7    for injunctive relief to redress an unauthorized diversion,

 15-8    impoundment, or use of surface water in violation of this chapter

 15-9    or a rule adopted pursuant to this chapter.

15-10          Sec. 11.0842.  ADMINISTRATIVE PENALTY.  (a)  If a person

15-11    violates this chapter, a rule or order adopted under this chapter

15-12    or Section 16.236 of this code, or a permit, certified filing, or

15-13    certificate of adjudication issued under this chapter, the

15-14    commission may assess an administrative penalty against that person

15-15    as provided by this section.  This section and Section 12.052 of

15-16    this code are not applicable to any violation resulting from the

15-17    failure to obtain a permit for the construction of a dam or

15-18    reservoir for domestic and livestock purposes initiated prior to

15-19    March 2, 1997, unless modifications other than repairs are made to

15-20    the dam or reservoir after March 2, 1997.

15-21          (b)  The penalty may be in an amount not to exceed $10,000

15-22    for each day the person is in violation of this chapter, the rule

15-23    or order adopted under this chapter or Section 16.236 of this code,

15-24    or the permit, certified filing, or certificate of adjudication

15-25    issued under this chapter.  Each day a violation continues may be

15-26    considered a separate violation for purposes of penalty assessment.

15-27          (c)  In determining the amount of the penalty, the commission

15-28    shall consider:

15-29                (1)  the nature, circumstances, extent, duration, and

15-30    gravity of the prohibited acts, with special emphasis on the

15-31    impairment of an existing permit, certified filing, or certificate

15-32    of adjudication or the hazard or potential hazard created to the

15-33    health, safety, or welfare of the public;

15-34                (2)  the impact of the violation on the instream uses,

15-35    water quality, fish and wildlife habitat, or beneficial freshwater

15-36    inflows to bays and estuaries;

15-37                (3)  with respect to the alleged violator:

15-38                      (A)  the history and extent of previous

15-39    violations;

15-40                      (B)  the degree of culpability, including whether

15-41    the violation was attributable to mechanical or electrical failures

15-42    and whether the violation could have been reasonably anticipated

15-43    and avoided;

15-44                      (C)  demonstrated good faith, including actions

15-45    taken by the alleged violator to rectify the cause of the violation

15-46    and to compensate affected persons;

15-47                      (D)  any economic benefit gained through the

15-48    violation; and

15-49                      (E)  the amount necessary to deter future

15-50    violations; and

15-51                (4)  any other matters that justice may require.

15-52          (d)  If, after examination of a possible violation and the

15-53    facts surrounding that possible violation, the executive director

15-54    concludes that a violation has occurred, the executive director

15-55    shall issue a preliminary report stating the facts on which that

15-56    conclusion was based, recommending that an administrative penalty

15-57    under this section be imposed on the person charged, and

15-58    recommending the amount of the penalty.  The executive director

15-59    shall base the recommended amount of the proposed penalty on the

15-60    factors provided by Subsection (c) of this section and shall

15-61    analyze each factor for the benefit of the commission.

15-62          (e)  No later than the 10th day after the date on which the

15-63    report is issued, the executive director shall give written notice

15-64    of the report to the person charged with the violation.  The notice

15-65    shall include a brief summary of the charges, a statement of the

15-66    amount of the penalty recommended, and a statement of the right of

15-67    the person charged to a hearing on the occurrence of the violation,

15-68    the amount of the penalty, or both the occurrence of the violation

15-69    and the amount of the penalty.

 16-1          (f)  No later than the 20th day after the date on which

 16-2    notice is received, the person charged may either give to the

 16-3    commission written consent to the executive director's report,

 16-4    including the recommended penalty, or make a written request for a

 16-5    hearing.

 16-6          (g)  If the person charged with the violation consents to the

 16-7    penalty recommended by the executive director or fails to timely

 16-8    respond to the notice, the commission by order shall either assess

 16-9    the penalty or order a hearing to be held on the findings and

16-10    recommendations in the executive director's report.  If the

16-11    commission assesses the penalty recommended by the report, the

16-12    commission shall give written notice of its decision to the person

16-13    charged.

16-14          (h)  If the person charged requests or the commission orders

16-15    a hearing, the commission shall call a hearing and give notice of

16-16    the hearing.  As a result of the hearing, the commission by order

16-17    either may find that a violation has occurred and may assess a

16-18    penalty, may find that a violation has occurred but that no penalty

16-19    should be assessed, or may find that no violation has occurred.

16-20    All proceedings under this subsection are subject to Chapter 2001,

16-21    Government Code.  In making any penalty decision, the commission

16-22    shall analyze each of the factors provided by Subsection (c) of

16-23    this section.

16-24          (i)  The commission shall give notice of its decision to the

16-25    person charged, and if the commission finds that a violation has

16-26    occurred and assesses an administrative penalty, the commission

16-27    shall give written notice to the person charged of its findings, of

16-28    the amount of the penalty, and of the person's right to judicial

16-29    review of the commission's order.  If the commission is required to

16-30    give notice of a penalty under this subsection or Subsection (g) of

16-31    this section, the commission shall file notice of its decision in

16-32    the Texas Register not later than the 10th day after the date on

16-33    which the decision is adopted.

16-34          (j)  Within the 30-day period immediately following the day

16-35    on which the commission's order is final, as provided by Subchapter

16-36    F, Chapter 2001, Government Code, the person charged with the

16-37    penalty shall:

16-38                (1)  pay the penalty in full; or

16-39                (2)  pay the amount of the penalty and file a petition

16-40    for judicial review contesting the occurrence of the violation, the

16-41    amount of the penalty, or both the occurrence of the violation and

16-42    the amount of the penalty; or

16-43                (3)  without paying the amount of the penalty, file a

16-44    petition for judicial review contesting the occurrence of the

16-45    violation, the amount of the penalty, or both the occurrence of the

16-46    violation and the amount of the penalty.

16-47          (k)  Within the 30-day period, a person who acts under

16-48    Subsection (j)(3) of this section may:

16-49                (1)  stay enforcement of the penalty by:

16-50                      (A)  paying the amount of the penalty to the

16-51    court for placement in an escrow account; or

16-52                      (B)  giving to the court a supersedeas bond that

16-53    is approved by the court for the amount of the penalty and that is

16-54    effective until all judicial review of the commission's order is

16-55    final; or

16-56                (2)  request the court to stay enforcement of the

16-57    penalty by:

16-58                      (A)  filing with the court a sworn affidavit of

16-59    the person stating that the person is financially unable to pay the

16-60    amount of the penalty and is financially unable to give the

16-61    supersedeas bond; and

16-62                      (B)  giving a copy of the affidavit to the

16-63    commission by certified mail.

16-64          (l)  If the commission receives a copy of an affidavit under

16-65    Subsection (k)(2) of this section, it may file with the court

16-66    within five days after the date the copy is received a contest to

16-67    the affidavit.  The court shall hold a hearing on the facts alleged

16-68    in the affidavit as soon as practicable and shall stay the

16-69    enforcement of the penalty on finding that the alleged facts are

 17-1    true.  The person who files an affidavit has the burden of proving

 17-2    that the person is financially unable to pay the amount of the

 17-3    penalty and to give a supersedeas bond.

 17-4          (m)  If the person does not pay the amount of the penalty and

 17-5    the enforcement of the penalty is not stayed, the commission may

 17-6    refer the matter to the attorney general for collection of the

 17-7    amount of the penalty.

 17-8          (n)  Judicial review of the order or decision of the

 17-9    commission assessing the penalty shall be under the substantial

17-10    evidence rule and shall be instituted by filing a petition with a

17-11    district court in Travis County, as provided by Subchapter G,

17-12    Chapter 2001, Government Code.

17-13          (o)  A penalty collected under this section shall be

17-14    deposited in the state treasury to the credit of the general

17-15    revenue fund.

17-16          (p)  Notwithstanding any other provision to the contrary, the

17-17    commission may compromise, modify, or remit, with or without

17-18    condition, any penalty imposed under this section.

17-19          (q)  Payment of an administrative penalty under this section

17-20    shall be full and complete satisfaction of the violation for which

17-21    the administrative penalty is assessed and shall preclude any other

17-22    civil or criminal penalty for the same violation.

17-23          Sec. 11.0843.  FIELD CITATION.  (a)  Upon witnessing a

17-24    violation of this chapter or a water right issued under this

17-25    chapter, a watermaster or the watermaster's deputy, as defined by

17-26    commission rule, may issue the alleged violator a field citation

17-27    alleging that a violation has occurred and providing the alleged

17-28    violator the option of either:

17-29                (1)  without admitting to or denying the alleged

17-30    violation, paying an administrative penalty in accordance with the

17-31    predetermined penalty amount established under Subsection (b) of

17-32    this section and taking remedial action as provided in the

17-33    citation; or

17-34                (2)  requesting a hearing on the alleged violation in

17-35    accordance with Section 11.0842 of this code.

17-36          (b)  By rule the commission shall establish penalty amounts

17-37    corresponding to types of violations of this chapter or rules or

17-38    orders adopted or water rights issued under this chapter.

17-39          (c)  A penalty collected under this section shall be

17-40    deposited in the state treasury to the credit of the general

17-41    revenue fund.

17-42          SECTION 3.03.  Section 11.139, Water Code, is amended to read

17-43    as follows:

17-44          Sec. 11.139.  EMERGENCY AUTHORIZATIONS [PERMITS].

17-45    (a)  Except as provided by Section 11.148 of this code, the [The]

17-46    commission may grant an emergency permit, order, or amendment to an

17-47    existing permit, certified filing, or certificate of adjudication

17-48    after notice to the governor [for the diversion and use of water]

17-49    for an initial [a] period of not more than 120 [30] days if the

17-50    commission [it] finds that emergency conditions exist which present

17-51    an imminent threat to [threaten] the public health and[,] safety[,

17-52    and welfare] and which override the necessity to comply with

17-53    established statutory procedures and there are no feasible

17-54    practicable alternatives to the emergency authorization.  Such

17-55    emergency action may be renewed once for not longer than 60 days.

17-56          (b)  A person desiring to obtain an emergency authorization

17-57    under this section shall submit to the commission a sworn

17-58    application containing the following information:

17-59                (1)  a description of the condition of emergency

17-60    justifying the granting of the emergency authorization;

17-61                (2)  a statement setting forth facts which support the

17-62    findings required under this section;

17-63                (3)  an estimate of the dates on which the proposed

17-64    authorization should begin and end;

17-65                (4)  a description of the action sought and the

17-66    activity proposed to be allowed, mandated, or prohibited; and

17-67                (5)  any other statements or information required by

17-68    the commission.

17-69          (c)  If the commission finds the applicant's statement made

 18-1    under Subsection (b) of this section to be correct, the commission

 18-2    may grant emergency authorizations under this section without

 18-3    notice and hearing or with such notice and hearing as the

 18-4    commission considers practicable under the circumstances.

 18-5          (d)  If the commission grants an emergency authorization

 18-6    under this section without a hearing, the authorization shall fix a

 18-7    time and place for a hearing to be held before the commission.  The

 18-8    hearing shall be held as soon after the emergency authorization is

 18-9    granted as is practicable but not later than 20 days after the

18-10    emergency authorization is granted.

18-11          (e)  At the hearing, the commission shall affirm, modify, or

18-12    set aside the emergency authorization.  Any hearing on an emergency

18-13    authorization shall be conducted in accordance with Chapter 2001,

18-14    Government Code, and rules of the commission.

18-15          (f)  If an imminent threat to the public health and safety

18-16    exists which requires emergency action before the commission can

18-17    take action as provided by Subsections (a) through (c) of this

18-18    section and there are no feasible alternatives, the executive

18-19    director may grant an emergency authorization.  If the executive

18-20    director issues an emergency authorization under this subsection,

18-21    the commission shall hold a hearing as provided for in Subsections

18-22    (d) and (e) of this section.  The requirements of Subsection (b) of

18-23    this section shall be satisfied by the applicant before action is

18-24    taken by the executive director on the request for emergency

18-25    authorization.

18-26          (g)  The requirements of Section 11.132 of this code relating

18-27    to the time for notice, newspaper notice, and method of giving a

18-28    person notice do not apply to a hearing held on an application for

18-29    an emergency authorization under this section, but such general

18-30    notice of the hearing shall be given as the commission, under

18-31    Subsections (c) and (e) of this section, considers practicable

18-32    under the circumstances.

18-33          (h)  The commission may grant an emergency authorization

18-34    under this section for the temporary transfer and use of all or

18-35    part of a permit, certified filing, or certificate of adjudication

18-36    for other than domestic or municipal use to a retail or wholesale

18-37    water supplier for public health and safety purposes.  In addition

18-38    to the requirements contained in Subsection (b) of this section,

18-39    the commission may direct that the applicant will timely pay the

18-40    amounts for which the applicant may be potentially liable under

18-41    Subsection (i) of this section and to the extent authorized by law

18-42    will fully indemnify and hold harmless the state, the executive

18-43    director, and the commission from any and all liability for the

18-44    authorization sought.  The commission may order bond or other

18-45    surety in a form acceptable to the commission as a condition for

18-46    such emergency authorization.  The commission may not grant an

18-47    emergency authorization under this section which would cause a

18-48    violation of a federal regulation.

18-49          (i)  The person granted an emergency authorization under

18-50    Subsection (h) of this section is liable to the owner and the

18-51    owner's agent or lessee from whom the use is transferred for the

18-52    fair market value of the water transferred as well as for any

18-53    damages caused by the transfer of use.  If, within 60 days of the

18-54    termination of the authorization, the parties do not agree on the

18-55    amount due, or if full payment is not made, either party may file a

18-56    complaint with the commission to determine the amount due.  The

18-57    commission may use dispute resolution procedures for a complaint

18-58    filed under this subsection.  After exhausting all administrative

18-59    remedies under this subsection, an owner from whom the use is

18-60    transferred may file suit to recover or determine the amount due in

18-61    a district court in the county where the owner resides or has its

18-62    headquarters.  The prevailing party in a suit filed under this

18-63    subsection is entitled to recover court costs and reasonable

18-64    attorney's fees.

18-65          (j)  [An emergency permit may be granted for a period of not

18-66    more than 30 days, and no extension or additional emergency permit

18-67    may be granted at the expiration of the original permit.]

18-68          [(c)  An emergency permit may be granted under this section

18-69    without the necessity to comply with statutory and other procedures

 19-1    required for granting other permits issued by the commission.]

 19-2          [(d)]  The commission may prescribe rules and adopt fees

 19-3    which are necessary to carry out the provisions of this section.

 19-4          (k) [(e)]  An emergency authorization [permit] does not vest

 19-5    in the grantee [permittee] any right to the diversion, impoundment,

 19-6    or [and] use of water and shall expire and be cancelled in

 19-7    accordance with its terms.

 19-8          SECTION 3.04.  Subsection (c), Section 12.052, Water Code, is

 19-9    amended to read as follows:

19-10          (c)  If the owner of a dam that is required to be

19-11    constructed, reconstructed, repaired, or removed in order to comply

19-12    with the rules and orders promulgated under Subsection (a) of this

19-13    section wilfully fails or refuses to comply within the 30-day

19-14    period following the date of the commission's final, nonappealable

19-15    order to do so or if a person wilfully fails to comply with any

19-16    rule or other order issued by the commission under this section

19-17    within the 30-day period following the effective date of the order,

19-18    he is liable to a penalty of not more than $10,000 [$1,000] a day

19-19    for each day he continues to violate this section.  The state may

19-20    recover the penalty by suit brought for that purpose in the

19-21    district court of Travis County.

19-22          SECTION 3.05.  Section 16.236, Water Code, is amended to read

19-23    as follows:

19-24          Sec. 16.236.  CONSTRUCTION OF LEVEE WITHOUT APPROVAL OF

19-25    PLANS; LEVEE SAFETY.  (a)  No person may construct, attempt to

19-26    construct, cause to be constructed, maintain, or cause to be

19-27    maintained any levee or other such improvement on, along, or near

19-28    any stream of this state that is subject to floods, freshets, or

19-29    overflows so as to control, regulate, or otherwise change the

19-30    floodwater of the stream without first obtaining approval of the

19-31    plans by the commission.

19-32          (b)  The commission shall make and enforce rules and orders

19-33    and shall perform all other acts necessary to provide for the safe

19-34    construction, maintenance, repair, and removal of levees located in

19-35    this state.

19-36          (c)  If the owner of a levee that is required to be

19-37    constructed, reconstructed, repaired, or removed to comply with the

19-38    rules and orders promulgated under this section wilfully fails or

19-39    refuses to comply within the 30-day period following the date of an

19-40    order of the commission requiring such action or compliance or if a

19-41    person wilfully fails to comply with any rule or order issued by

19-42    the commission under this section within the 30-day period

19-43    following the effective date of the order, the person is liable for

19-44    a penalty of not more than $10,000 a day for each day the person

19-45    continues to violate this section.  The state may recover the

19-46    penalty by suit brought for that purpose in a district court of

19-47    Travis County.

19-48          (d)  If the commission determines that the existing condition

19-49    of a levee is creating or will cause extensive or severe property

19-50    damage or economic loss to others or is posing an immediate and

19-51    serious threat to human life or health and that other procedures

19-52    available to the commission to remedy or prevent such property

19-53    damage or economic loss will result in unreasonable delay, the

19-54    commission may issue an emergency order, either mandatory or

19-55    prohibitory in nature, directing the owner of the levee to repair,

19-56    modify, maintain, dewater, or remove the levee which the commission

19-57    determines is unsafe.  The emergency order may be issued without

19-58    notice to the levee owner or with notice the commission considers

19-59    practicable under the circumstances.

19-60          (e)  If the commission issues an emergency order under

19-61    authority of this section without notice to the levee owner, the

19-62    commission shall fix a time and place for a hearing, to be held as

19-63    soon as practicable but not later than 20 days after the emergency

19-64    order is authorized, to affirm, modify, or set aside the emergency

19-65    order.  If the nature of the commission's action requires further

19-66    proceedings, those proceedings shall be conducted, as appropriate,

19-67    under Chapter 2001, Government Code.

19-68          (f)  Nothing in this section or in rules or orders adopted by

19-69    the commission shall be construed to relieve an owner or operator

 20-1    of a levee of the legal duties, obligations, or liabilities

 20-2    incident to ownership or operation.

 20-3          (g)  Any person who violates any provision of Subsection (a)

 20-4    of this section is guilty of a Class C misdemeanor and upon

 20-5    conviction is punishable by a fine of not more than $4,000 [$100].

 20-6    A separate offense is committed each day a structure constructed in

 20-7    violation of this section is maintained.

 20-8          (h)  Subsection (a) of this [(c)  At the request of the

 20-9    executive director, the attorney general shall file suit in a

20-10    district court of Travis County to enjoin any violation or

20-11    threatened violation of this section.  In the suit, the attorney

20-12    general may seek to have the illegal levee or other improvement

20-13    removed and the preexisting conditions restored and may also

20-14    collect civil penalties of up to $100 a day for each day a

20-15    violation occurs.]

20-16          [(d)  This] section does not apply to:

20-17                (1)  dams permitted by the commission or recognized as

20-18    valid by final decree in any proceeding begun under Subchapter G,

20-19    Chapter 11, of this code;

20-20                (2)  dams authorized by Section 11.142 of this code;

20-21                (3)  a levee or other improvement within the corporate

20-22    limits of a city or town provided:  (a) plans for the construction

20-23    or maintenance or both must be approved by the city or town as a

20-24    condition precedent to starting the project and (b) the city or

20-25    town requires that such plans be in substantial compliance with

20-26    rules and standards adopted by the commission; or

20-27                (4)  a levee or other improvement within the boundaries

20-28    of any political subdivision which has qualified for the National

20-29    Flood Insurance Program as authorized by the National Flood

20-30    Insurance Act of 1968 (Title 42, U.S.C., Sections 4001-4127)

20-31    provided:  (a) plans for the construction or maintenance or both

20-32    must be approved by the political subdivision which is

20-33    participating in the national flood insurance program as a

20-34    condition precedent to starting the project and (b) the political

20-35    subdivision requires that such plans be in substantial compliance

20-36    with rules and standards adopted by the commission;

20-37                (5)  projects implementing soil and water conservation

20-38    practices set forth in a conservation plan with a landowner or

20-39    operator and approved by the governing board of a soil and water

20-40    conservation district organized under the State Soil Conservation

20-41    Law, as amended (Article 165a-4, Vernon's Texas Civil Statutes),

20-42    provided that the governing board finds the practices do not

20-43    significantly affect stream flooding conditions on, along, or near

20-44    a state stream.

20-45          (i) [(e)]  On projects located within the corporate limits of

20-46    a city or town or within the boundaries of any political

20-47    subdivision which are exempt from the provisions of Subsection (a)

20-48    of this section by Subdivision (3) or (4) of Subsection (h) of this

20-49    section [(d) above], any person whose property is located outside

20-50    of the corporate limits of such city or town or of the boundaries

20-51    of such a political subdivision and whose property is affected or

20-52    potentially affected by the effect of the project on the

20-53    floodwaters of the stream may appeal the decision of such political

20-54    subdivision.  The appeal shall be in writing and shall specify the

20-55    grounds therefor and a copy shall be sent by certified mail to the

20-56    project applicant and to the city or town or such political

20-57    subdivision.  The timely filing of such an appeal with the

20-58    executive director suspends the decision of the city or town or

20-59    political subdivision until a final decision is rendered by the

20-60    commission.  The executive director shall review the complaint and

20-61    investigate the facts surrounding the nature of the complaint.  If

20-62    the executive director finds that the complaint is frivolous or

20-63    nonmeritorious or made solely for purposes of harassment or delay,

20-64    then he shall dismiss the appeal.  Otherwise, the executive

20-65    director shall refer the appeal to the commission which shall after

20-66    due notice hold a hearing to determine whether the project should

20-67    be approved using the standards established by the commission and

20-68    shall hear such appeal de novo under the procedural rules

20-69    established by the commission for other reclamation projects.

 21-1          SECTION 3.06.  Subchapter G, Chapter 16, Water Code, is

 21-2    amended by adding Section 16.237 to read as follows:

 21-3          Sec. 16.237.  ADMINISTRATIVE PENALTY; CIVIL REMEDY.  (a)  If

 21-4    a person violates a commission rule or order adopted under Section

 21-5    16.236 of this code, the commission may assess an administrative

 21-6    penalty against that person as provided by Section 11.0842 of this

 21-7    code.

 21-8          (b)  Nothing in this chapter affects the right of any private

 21-9    corporation, individual, or political subdivision that has a

21-10    justiciable interest in pursuing any available common-law remedy to

21-11    enforce a right or to prevent or seek redress or compensation for

21-12    the violation of a right or otherwise redress an injury.

21-13            ARTICLE 4.  SURFACE WATER AND GROUNDWATER SUPPLIES

21-14          SECTION 4.01.  Subsection (b), Section 11.134, Water Code, is

21-15    amended to read as follows:

21-16          (b)  The commission shall grant the application only if:

21-17                (1)  the application conforms to the requirements

21-18    prescribed by this chapter and is accompanied by the prescribed

21-19    fee;

21-20                (2)  unappropriated water is available in the source of

21-21    supply;

21-22                (3)  the proposed appropriation:

21-23                      (A)  is intended for a [contemplates the

21-24    application of water to any] beneficial use;

21-25                      (B)  does not impair existing water rights or

21-26    vested riparian rights; [and]

21-27                      (C)  is not detrimental to the public welfare;

21-28    [and]

21-29                      (D)  considers the effects of any hydrological

21-30    connection between surface water and groundwater; and

21-31                      (E)  addresses a water supply need in a manner

21-32    that is consistent with the state water plan and an approved

21-33    regional water plan for any area in which the proposed

21-34    appropriation is located, unless the commission determines that

21-35    conditions warrant waiver of this requirement; and

21-36                (4)  the applicant has provided evidence that

21-37    reasonable diligence will be used to avoid waste and achieve water

21-38    conservation as defined by Subdivision (8)(B), Section 11.002, of

21-39    this code.

21-40          SECTION 4.02.  Subchapter D, Chapter 11, Water Code, is

21-41    amended by adding Sections 11.1501 and 11.151 to read as follows:

21-42          Sec. 11.1501.  CONSIDERATION AND REVISION OF PLANS.  In

21-43    considering an application for a permit to store, take, or divert

21-44    surface water, or for an amendment to a permit, certified filing,

21-45    or certificate of adjudication, the commission shall consider the

21-46    state water plan and any approved regional water plan for the area

21-47    or areas in which the water is proposed to be stored, diverted, or

21-48    used.

21-49          Sec. 11.151.  EFFECTS OF PERMITS ON GROUNDWATER.  In

21-50    considering an application for a permit to store, take, or divert

21-51    surface water, the commission shall consider the effects, if any,

21-52    on groundwater or groundwater recharge.

21-53          SECTION 4.03.  Section 11.153, Water Code, is amended by

21-54    amending the section heading and Subsections (a) and (d) to read as

21-55    follows:

21-56          Sec. 11.153.  [PILOT] PROJECTS FOR STORAGE OF APPROPRIATED

21-57    WATER IN AQUIFERS.

21-58          (a)  The commission shall investigate the feasibility of

21-59    storing appropriated water in various types of aquifers around the

21-60    state by encouraging the issuance of temporary or term permits for

21-61    [pilot] demonstration projects for the storage of appropriated

21-62    water for subsequent retrieval and beneficial use [in the following

21-63    aquifers in the specified counties:]

21-64                [(1)  the Anacacho, Austin Chalk, and Glen Rose

21-65    Limestone aquifers in Bexar County and Medina County;]

21-66                [(2)  the Carrizo-Wilcox aquifer in Bexar, Webb, Smith,

21-67    Wood, Rains, and Van Zandt counties;]

21-68                [(3)  the Hickory and Ellenberger aquifers in Gillespie

21-69    County; and]

 22-1                [(4)  the Gulf Coast aquifer in Cameron and Hidalgo

 22-2    counties].

 22-3          (d)  The commission shall only issue a [A] final order

 22-4    granting a permit or amendment to a permit authorizing the storage

 22-5    of appropriated water in aquifers for subsequent beneficial use

 22-6    where completed pilot projects or historically demonstrated

 22-7    projects have been shown to be feasible under the criteria provided

 22-8    in Sections 11.154(c) and (d)[, other than for the pilot projects

 22-9    authorized by this section, may not be issued before June 1, 1999].

22-10          SECTION 4.04.  Subsections (a), (b), (c), and (e), Section

22-11    11.154, Water Code, are amended to read as follows:

22-12          (a)  An application filed with the commission to undertake a

22-13    [pilot] project under Section 11.153 must include:

22-14                (1)  the information required for an application for a

22-15    permit or permit amendment to appropriate state water;

22-16                (2)  all information required for an application for a

22-17    permit for a Class V injection well without requiring a separate

22-18    hearing or notice; and

22-19                (3)  a map or plat showing the injection facility and

22-20    the aquifer in which the water will be stored.

22-21          (b)  If the application is for a permit or permit amendment

22-22    to store appropriated water in a groundwater [an underground water]

22-23    reservoir or a subdivision of a groundwater [an underground water]

22-24    reservoir, as defined by Chapter 36 [52], that is under the

22-25    jurisdiction of a groundwater [an underground water] conservation

22-26    district:

22-27                (1)  the applicant shall:

22-28                      (A)  provide a copy of the application to each

22-29    groundwater [underground water] conservation district that has

22-30    jurisdiction over the reservoir or subdivision;

22-31                      (B)  cooperate with each district [the districts]

22-32    that has [have] jurisdiction over the reservoir or subdivision to

22-33    ensure compliance with the rules of each district;

22-34                      (C)  cooperate with each district that has

22-35    jurisdiction over the reservoir or subdivision to develop rules

22-36    regarding the injection, storage, and withdrawal of appropriated

22-37    water stored in the aquifer; and

22-38                      (D)  comply with the rules governing the

22-39    injection, storage, and [or] withdrawal of appropriated water

22-40    stored in the reservoir or subdivision that are adopted by each [a]

22-41    district that has jurisdiction over the reservoir or subdivision;

22-42    and

22-43                (2)  the commission shall require that any agreement

22-44    the applicant reaches with a district that has jurisdiction over

22-45    the reservoir or subdivision regarding the terms for the injection,

22-46    storage, and withdrawal of appropriated water be included as a

22-47    condition of the permit or permit amendment.

22-48          (c)  On [completion of a pilot project and] receipt of an

22-49    [appropriate] application for a permit or an amendment to an

22-50    existing permit from an applicant with a completed pilot or

22-51    historically demonstrated project, the commission shall evaluate

22-52    the success of the [pilot] project for purposes of issuing a final

22-53    order granting a permit or permit amendment authorizing the storage

22-54    of appropriated water incident to a beneficial use.  The commission

22-55    shall consider whether:

22-56                (1)  the introduction of water into the aquifer will

22-57    alter the physical, chemical, or biological quality of native

22-58    groundwater to a degree that the introduction would:

22-59                      (A)  render groundwater produced from the aquifer

22-60    harmful or detrimental to people, animals, vegetation, or property;

22-61    or

22-62                      (B)  require treatment of the groundwater to a

22-63    greater extent than the native groundwater requires before being

22-64    applied to that beneficial use;

22-65                (2)  the water stored in the receiving aquifer can be

22-66    successfully harvested from the aquifer for beneficial use; and

22-67                (3)  the [permit holder has provided evidence that

22-68    reasonable diligence will be used to protect the] water stored in

22-69    the receiving aquifer will be protected from unauthorized

 23-1    withdrawals to the extent necessary to maximize the permit holder's

 23-2    ability to retrieve and beneficially use the stored water without

 23-3    experiencing unreasonable loss of appropriated water.

 23-4          (e)  A permit to store appropriated water in a groundwater

 23-5    [an underground water] reservoir or subdivision, as defined by

 23-6    Chapter 36 [52], shall provide as a condition to the permit that

 23-7    the permit holder shall:

 23-8                (1)  register the permit holder's injection and

 23-9    recovery wells with a groundwater [an underground water]

23-10    conservation district that has jurisdiction over the reservoir or

23-11    subdivision, if any; and

23-12                (2)  each calendar month, provide the district, if any,

23-13    with a written report showing for the previous calendar month:

23-14                      (A)  the amount of water injected for storage;

23-15    and

23-16                      (B)  the amount of water recaptured for use.

23-17          SECTION 4.05.  Subsection (b), Section 11.155, Water Code, is

23-18    amended to read as follows:

23-19          (b)  The board shall make other studies, investigations, and

23-20    surveys of the aquifers in the state as it considers necessary to

23-21    determine the occurrence, quantity, quality, and availability of

23-22    other aquifers in which water may be stored and subsequently

23-23    retrieved for beneficial use.  The board shall undertake the

23-24    studies, investigations, and surveys in the following order of

23-25    priority:

23-26                (1)  the aquifers described [identified] in Section

23-27    11.153(a);

23-28                (2)  areas designated by the commission as "priority

23-29    groundwater management [critical] areas" under Section 35.008

23-30    [52.053]; and

23-31                (3)  other areas of the state in a priority to be

23-32    determined by the board's ranking of where the greatest need

23-33    exists.

23-34          SECTION 4.06.  Subsection (b), Section 11.173, Water Code, is

23-35    amended to read as follows:

23-36          (b)  A permit, certified filing, or certificate of

23-37    adjudication or a portion of a permit, certified filing, or

23-38    certificate of adjudication is exempt from cancellation under

23-39    Subsection (a) of this section:

23-40                (1)  to the extent of the owner's participation in the

23-41    Conservation Reserve Program authorized by the Food Security Act,

23-42    Pub.L. No. 99-198, Secs. 1231-1236, 99 Stat. 1354, 1509-1514 (1985)

23-43    or a similar governmental program; or

23-44                (2)  if any portion of the water authorized to be used

23-45    pursuant to a permit, certified filing, or certificate of

23-46    adjudication has been used in accordance with a regional water

23-47    [management] plan approved pursuant to Section 16.053 of this code

23-48    [by the commission].

23-49          SECTION 4.07.  Subdivision (6), Section 15.001, Water Code,

23-50    is amended to read as follows:

23-51                (6)  "Project" means:

23-52                      (A)  any undertaking or work to conserve, convey,

23-53    and develop [surface or subsurface] water resources in the state,

23-54    to provide for the maintenance and enhancement of the quality of

23-55    the water of the state, to provide nonstructural and structural

23-56    flood control, drainage, subsidence control, recharge, chloride

23-57    control, brush control, precipitation enhancement, and

23-58    desalinization, and to carry out other purposes defined by board

23-59    rules; [or]

23-60                      (B)  any undertaking or work outside the state to

23-61    provide for the maintenance and enhancement of the quality of water

23-62    by eliminating saline inflow through well pumping and deep well

23-63    injection of brine; or

23-64                      (C)  any undertaking or work by Texas political

23-65    subdivisions or institutions of higher education to conserve,

23-66    convey, and develop water resources in areas outside Texas or to

23-67    provide for the maintenance and enhancement of the quality of the

23-68    water in areas adjoining Texas, if such undertaking or work will

23-69    result in water being available for use in or for the benefit of

 24-1    Texas or will maintain and enhance the quality of water in Texas.

 24-2          SECTION 4.08.  Subsection (b), Section 15.002, Water Code, is

 24-3    amended to read as follows:

 24-4          (b)  The legislature finds that the conventional means of

 24-5    financing projects are inadequate to meet current and anticipated

 24-6    needs of the state.  Therefore, it is the further intent of the

 24-7    legislature to provide a means of coordinating the development of

 24-8    projects [throughout the state] through the board and to provide

 24-9    political subdivisions the maximum opportunity to finance projects

24-10    through programs provided by this chapter.  Projects may be in the

24-11    state or outside the state, provided that out-of-state projects

24-12    must be funded through a Texas political subdivision or an

24-13    institution of higher education and must result in water being

24-14    available for use in or for the benefit of Texas or maintain and

24-15    enhance the quality of water in Texas.

24-16          SECTION 4.09.  Section 17.895, Water Code, is amended by

24-17    amending Subsection (a) and adding Subsection (c) to read as

24-18    follows:

24-19          (a)  The board or lender districts may make conservation

24-20    loans for capital equipment or materials, labor, preparation costs,

24-21    and installation costs:

24-22                (1)  to improve water use efficiency of water delivery

24-23    and application on existing irrigation systems;

24-24                (2)  for preparing irrigated land to be converted to

24-25    dryland conditions; [or]

24-26                (3)  for preparing dryland for more efficient use of

24-27    natural precipitation;

24-28                (4)  for preparing and maintaining land to be used for

24-29    brush control activities, including but not limited to activities

24-30    conducted pursuant to Chapter 203, Agriculture Code; or

24-31                (5)  for implementing precipitation enhancement

24-32    activities in areas of the state where such activities would be, in

24-33    the board's judgment, most effective.

24-34          (c)  The board may make conservation loans to borrower

24-35    districts for the cost of purchasing and installing devices, on

24-36    public or private property, designed to indicate the amount of

24-37    water withdrawn for irrigation purposes.

24-38          SECTION 4.10.  Subdivision (12), Section 35.002, Water Code,

24-39    is amended to read as follows:

24-40                (12)  "Priority groundwater management [Critical] area"

24-41    means an area designated and delineated by the commission as an

24-42    area that is experiencing or is expected to experience critical

24-43    groundwater problems.

24-44          SECTION 4.11.  Section 35.007, Water Code, is amended to read

24-45    as follows:

24-46          Sec. 35.007.  IDENTIFYING, DESIGNATING, AND DELINEATING

24-47    PRIORITY GROUNDWATER MANAGEMENT [CRITICAL] AREAS.  (a)  The

24-48    executive director and the executive administrator shall meet at

24-49    least once a year to identify, based on information gathered by the

24-50    commission and the Texas Water Development Board, those areas of

24-51    the state that are experiencing or that are expected to experience,

24-52    [based on information available to the commission and the Texas

24-53    Water Development Board,] within the immediately following 25-year

24-54    [20-year] period, critical groundwater problems, including

24-55    shortages of surface water or groundwater, land subsidence

24-56    resulting from groundwater withdrawal, and contamination of

24-57    groundwater supplies.

24-58          (b)  If the executive director concludes that an area of the

24-59    state should be considered for designation as a priority

24-60    groundwater management [critical] area, the executive director

24-61    shall prepare a report to the commission.

24-62          (c)  The executive director shall begin preparation of a

24-63    priority groundwater management [critical] area report by

24-64    requesting a study from the executive administrator.  The study

24-65    must:

24-66                (1)  include an appraisal of the hydrogeology of the

24-67    area and matters within the Texas Water Development Board's

24-68    planning expertise relevant to the area;

24-69                (2)  assess the area's immediate, short-term, and

 25-1    long-term water supply and needs; and

 25-2                (3)  [.  The study must] be completed and delivered to

 25-3    the executive director on or before the 180th [90th] day following

 25-4    the date of the request.  If the study is not delivered within this

 25-5    180-day [90-day] period, the executive director may proceed with

 25-6    the preparation of the report.

 25-7          (d)  The executive director shall request a study from the

 25-8    executive director of the Parks and Wildlife Department for the

 25-9    purpose of preparing the report required by this section.  The

25-10    study must:

25-11                (1)  evaluate the potential effects of the designation

25-12    of a priority groundwater management area on an area's natural

25-13    resources; and

25-14                (2)  be completed and delivered to the executive

25-15    director on or before the 180th day following the date of the

25-16    request.  If the study is not delivered within this 180-day period,

25-17    the executive director may proceed with the preparation of the

25-18    report.

25-19          (e)  The report shall include:

25-20                (1)  the recommended delineation of the boundaries of

25-21    any proposed priority groundwater management [critical] area in the

25-22    form of an order [a rule] to be considered for adoption by the

25-23    commission;

25-24                (2)  the reasons and supporting information for or

25-25    against designating the area as a priority groundwater management

25-26    [critical] area;

25-27                (3)  a recommendation regarding whether a district

25-28    should be created in the priority groundwater management [critical]

25-29    area or whether the priority groundwater management [critical] area

25-30    should be added to an existing district;

25-31                (4)  a recommendation as to actions that should be

25-32    considered to conserve natural resources; and

25-33                (5)  any other information that the executive director

25-34    considers helpful to the commission.

25-35          (f) [(e)]  The executive director must complete the report

25-36    and file it with the commission on or before the 240th [210th] day

25-37    following the date on which the executive administrator was

25-38    requested  to produce a study.  The executive director shall make

25-39    the report available for public inspection by providing a copy of

25-40    the report to at least one public library and the county clerk's

25-41    office in each county in which the proposed priority groundwater

25-42    management [critical] area is located and to all districts adjacent

25-43    to the area of the proposed priority groundwater management area.

25-44          (g) [(f)]  To carry out this section, the executive director

25-45    may make necessary studies, hold hearings, solicit and collect

25-46    information, and use information already prepared by the executive

25-47    director or the executive administrator for other purposes.

25-48          SECTION 4.12.  Section 35.008, Water Code, is amended to read

25-49    as follows:

25-50          Sec. 35.008.  PROCEDURES FOR DESIGNATION OF PRIORITY

25-51    GROUNDWATER MANAGEMENT AREA; CONSIDERATION OF CREATION OF DISTRICT

25-52    OR ADDITION OF LAND IN PRIORITY GROUNDWATER MANAGEMENT AREA TO

25-53    EXISTING DISTRICT [CRITICAL AREAS].  (a)  The commission shall

25-54    designate priority groundwater management [critical] areas using

25-55    the procedures provided by this chapter in lieu of those provided

25-56    by [applicable to rulemaking under the Administrative Procedure

25-57    Act,] Subchapter B, Chapter 2001, Government Code[, but if

25-58    procedures required by this chapter are in conflict with that Act,

25-59    this chapter controls].

25-60          (b)  The commission shall call an evidentiary hearing to

25-61    consider:

25-62                (1)  the designation of a priority groundwater

25-63    management area;

25-64                (2)  whether a district should be created over all or

25-65    part of a priority groundwater management area; or

25-66                (3) whether all or part of the land in the priority

25-67    groundwater management area should be added to an existing

25-68    district.

25-69          (c)  Evidentiary hearings shall be held at a location in one

 26-1    of the counties in which the priority groundwater management area

 26-2    is located, or proposed to be located, or in the nearest convenient

 26-3    location if adequate facilities are not available in those

 26-4    counties.

 26-5          (d)  At the hearing, the commission shall hear testimony and

 26-6    receive evidence from affected persons.  The commission shall

 26-7    consider the executive director's report and supporting information

 26-8    and the testimony and evidence received at the hearing.  If the

 26-9    commission considers further information necessary, the commission

26-10    may request such information from any source.

26-11          (e)  The designation of a priority groundwater management

26-12    [critical] area may not be appealed nor may it be challenged under

26-13    the Administrative Procedure Act, Section 2001.038, Government

26-14    Code.

26-15          SECTION 4.13.  Section 35.009, Water Code, is amended to read

26-16    as follows:

26-17          Sec. 35.009.  NOTICE AND HEARING.  (a)  The [In addition to

26-18    the notice required for rulemaking under the Administrative

26-19    Procedure Act, Section 2001.023, Government Code, the] commission

26-20    shall have notice of the hearing published in at least one

26-21    newspaper with general circulation in the county or counties in

26-22    which the area being designated a proposed priority groundwater

26-23    management [critical] area or the area within a priority

26-24    groundwater management area being considered for district creation

26-25    or for addition to an existing district is [to be] located.  Notice

26-26    must be published not later than the 30th day before the date set

26-27    for the commission to consider the designation of the priority

26-28    groundwater management [critical] area, the creation of a district

26-29    in a priority groundwater management area, or the addition of land

26-30    in a priority groundwater management area to an existing district.

26-31          (b)  The notice must include:

26-32                (1)  if applicable, a statement of the general purpose

26-33    and effect of designating the proposed priority groundwater

26-34    management area [critical areas];

26-35                (2)  if applicable, a statement of the general purpose

26-36    and effect of creating a district in the priority groundwater

26-37    management area;

26-38                (3)  if applicable, a statement of the general purpose

26-39    and effect of adding all or part of the land in the priority

26-40    groundwater management area to an existing district;

26-41                (4)  a map generally outlining the boundaries of the

26-42    area being considered for priority groundwater management [proposed

26-43    critical] area designation or the priority groundwater management

26-44    area being considered for district creation or for addition to an

26-45    existing district, or notice of the location at which a copy of the

26-46    map may be examined or obtained;

26-47                (5)  a statement that the executive director's report

26-48    concerning the priority groundwater management area or proposed

26-49    area is available at the commission's main office in Austin, Texas,

26-50    and at regional offices of the commission for regions which include

26-51    territory within the priority groundwater management area or

26-52    proposed priority groundwater management area and that the report

26-53    is available for inspection during regular business hours;

26-54                (6) [(3)]  a description or the name of the locations

26-55    in the affected area at which the commission has provided copies of

26-56    the executive director's report to be made available for public

26-57    inspection;

26-58                (7)  the name and address of each public library, each

26-59    county clerk's office, and each district to which the commission

26-60    has provided copies of the executive director's report; and

26-61                (8) [(4)]  the date, time, and place of the hearing [at

26-62    which the commission will consider the designation of the critical

26-63    areas].

26-64          (c)  The commission shall also give written notice of the

26-65    date, time, place, and purpose of the hearing to the governing body

26-66    of each county, regional water planning group, adjacent groundwater

26-67    district, municipality, river authority, water district, or other

26-68    entity which supplies public drinking water, and of each irrigation

26-69    district, located either in whole or in part in the priority

 27-1    groundwater management area or proposed priority groundwater

 27-2    management area.  The notice must be given before the 30th day

 27-3    preceding the date set for the hearing.

 27-4          SECTION 4.14.  Subsections (b), (c), (d), and (e), Section

 27-5    35.012, Water Code, are amended to read as follows:

 27-6          (b)  If the commission finds that the land and other property

 27-7    in the priority groundwater management [critical] area would

 27-8    benefit from the creation of one or more districts, that there is a

 27-9    public need for one or more districts, and that the creation of one

27-10    or more districts would further the public welfare, the commission

27-11    shall issue an order stating that the creation of one or more

27-12    districts is needed.

27-13          (c)  Following [During the period between] the [date of]

27-14    issuance of a commission order under Subsection (b) [and one year

27-15    after the close of the next regular session of the legislature

27-16    following the issuance of the order], the landowners in the

27-17    priority groundwater management [critical] area may:

27-18                (1)  create one or more districts under Subchapter B,

27-19    Chapter 36;

27-20                (2)  have the area annexed to a district that adjoins

27-21    the area; or

27-22                (3)  create one or more districts through the

27-23    legislative process.

27-24          (d)  The commission shall identify the areas subject to the

27-25    order of the commission issued under Subsection (b) that have not[,

27-26    in the period provided by Subsection (c),] been incorporated into a

27-27    district[,] and shall delineate proposed boundaries of a district

27-28    to include those areas.  If the commission proposes the creation of

27-29    one or more districts, the Texas Agricultural Extension Service

27-30    [commission] shall begin an educational program within such areas

27-31    with the assistance of the Texas Water Development Board, the

27-32    commission, other state agencies, and existing districts to inform

27-33    the residents of the status of the area's water resources and

27-34    management options including possible formation of a district,

27-35    before beginning the procedures for creation of a district provided

27-36    in Subchapter B, Chapter 36.

27-37          (e)  If the commission fails to find that the district would

27-38    be a benefit to the land and other property within the priority

27-39    groundwater management [critical] area, that there is a public need

27-40    for the district, or that creation of the district will further the

27-41    public welfare, the commission shall issue an order stating that a

27-42    district should not be created within the boundaries of the

27-43    priority groundwater management [critical] area.

27-44          SECTION 4.15.  Section 35.013, Water Code, is amended to read

27-45    as follows:

27-46          Sec. 35.013.  ADDING PRIORITY GROUNDWATER MANAGEMENT

27-47    [CRITICAL] AREA TO EXISTING DISTRICT.  (a)  If land in a priority

27-48    groundwater management [critical] area is located adjacent to one

27-49    or more existing districts, the commission, instead of issuing an

27-50    order under Section 35.012, may issue an order recommending that

27-51    the priority groundwater management [critical] area be added to the

27-52    existing district designated by the commission.  In its order, the

27-53    commission must find that the land and other property in the

27-54    priority groundwater management [critical] area and the land in the

27-55    existing district will benefit from the addition of the area, that

27-56    there is a public need to add the priority groundwater management

27-57    [critical] area to the existing district, and that the addition of

27-58    the land to the existing district would further the public welfare.

27-59          (b)  If the executive director recommends that the priority

27-60    groundwater management [critical] area be added to an existing

27-61    district or if the commission considers it possible to add the

27-62    priority groundwater management [critical] area to an adjacent

27-63    existing district, the commission shall give notice to the board of

27-64    the existing district recommended by the executive director or

27-65    considered by the commission to possibly serve the area and to any

27-66    other existing districts adjacent to the priority groundwater

27-67    management [critical] area.

27-68          (c)  The commission shall submit a copy of the order to the

27-69    board of the district to which it is recommending the priority

 28-1    groundwater management [critical] area be added.  The board shall

 28-2    vote on the addition of the priority groundwater management

 28-3    [critical] area to the district and shall advise the commission of

 28-4    the outcome.

 28-5          (d)  If the board votes to accept the addition of the

 28-6    priority groundwater management [critical] area to the district,

 28-7    the board:

 28-8                (1)  may request the Texas Agricultural Extension

 28-9    Service, the commission, the Texas Water Development Board, and

28-10    other state agencies to administer an educational program to inform

28-11    the residents of the status of the area's water resources and

28-12    management options including possible annexation into a district;

28-13    and

28-14                (2)  shall call an election within the priority

28-15    groundwater management [critical] area as delineated by the

28-16    commission to determine if the priority groundwater management

28-17    [critical] area will be added to the district; and

28-18                (3)  [In the order calling the election, the board]

28-19    shall designate election precincts and polling places for the

28-20    elections in the order calling an election under this subsection.

28-21          (e)  The board shall give notice of the election and the

28-22    proposition to be voted on.  The board shall publish notice of the

28-23    election at least one time in one or more newspapers with general

28-24    circulation within the boundaries of the priority groundwater

28-25    management [critical] area.  The notice must be published before

28-26    the 30th day preceding the date set for the election.

28-27          (f)  The ballots for the election shall be printed to provide

28-28    for voting for or against the proposition:  "The inclusion of

28-29    __________ (briefly describe priority groundwater management

28-30    [critical] area) in the __________ District."  If the district has

28-31    outstanding debts or taxes [issued bonds], the proposition shall

28-32    include the following language:  "and assumption by the described

28-33    area of a proportional share of the debts or taxes [outstanding

28-34    indebtedness] of the district."

28-35          (g)  Immediately after the election, the presiding judge of

28-36    each polling place shall deliver the returns of the election to the

28-37    board, and the board shall canvass the returns for the election

28-38    within the priority groundwater management [critical] area and

28-39    declare the results.  If a majority of the voters in the priority

28-40    groundwater management [critical] area voting on the proposition

28-41    vote in favor of the proposition, the board shall declare that the

28-42    priority groundwater management [critical] area is added to the

28-43    district.  If a majority of the voters in the priority groundwater

28-44    management [critical] area voting on the proposition vote against

28-45    adding the priority groundwater management [critical] area to the

28-46    district, the board shall declare that the priority groundwater

28-47    management [critical] area is not added to the district.  The board

28-48    shall file a copy of the election results with the commission.

28-49          (h)  If the voters approve adding the priority groundwater

28-50    management [critical] area to the district, the board of the

28-51    district to which the priority groundwater management [critical]

28-52    area is added shall provide reasonable representation on that board

28-53    compatible with the district's existing scheme of representation.

28-54          (i)  If the proposition is defeated, another election to add

28-55    the priority groundwater management [critical] area to an existing

28-56    district may not be called before the first anniversary of the date

28-57    on which the election on the proposition was held.

28-58          SECTION 4.16.  Subsections (b) and (c), Section 35.014, Water

28-59    Code, are amended to read as follows:

28-60          (b)  The costs of an election to add a priority groundwater

28-61    management [critical] area to an existing district at which the

28-62    voters approve adding the priority groundwater management

28-63    [critical] area to the district shall be paid by the existing

28-64    district.

28-65          (c)  The costs of an election to create a district or add a

28-66    priority groundwater management [critical] area to an existing

28-67    district at which the proposition fails shall be paid by the

28-68    commission.

28-69          SECTION 4.17.  Section 35.015, Water Code, is amended to read

 29-1    as follows:

 29-2          Sec. 35.015.  STATE ASSISTANCE.  [(a)  A political

 29-3    subdivision located in or that has within its boundaries an area or

 29-4    part of an area delineated as a critical area, and in which the

 29-5    qualified voters fail to approve the creation of a district or to

 29-6    join an existing district, shall not be eligible to receive any

 29-7    financial assistance from the state under Chapter 15, 16, or 17 for

 29-8    use within that portion of the critical area not covered by a

 29-9    district.]

29-10          [(b)]  A political subdivision located in an area delineated

29-11    as a priority groundwater management [critical] area, and in which

29-12    qualified voters approve the creation of a district or annexation

29-13    into an existing district, shall be given consideration to receive

29-14    financial assistance from the state under Chapter 17 for funds to

29-15    be used in addressing issues identified in the priority groundwater

29-16    management [critical] area report in the manner provided by

29-17    Sections 17.124 and 17.125[, except that the board is not required

29-18    to make the finding set out in Section 17.125(a)(2)].

29-19          SECTION 4.18.  Section 35.017, Water Code, is amended to read

29-20    as follows:

29-21          Sec. 35.017.  STATE-OWNED LAND.  If state-owned land or a

29-22    portion of state-owned land is located in a priority groundwater

29-23    management [critical] area, the state agency that has management

29-24    and control over that land under the constitution or by statute may

29-25    elect by written agreement with the commission and the district to

29-26    include the state-owned land in the district.  The agreement shall

29-27    be entered into as provided by the Texas Intergovernmental

29-28    Cooperation Act, Chapter 741, Government Code, and may include

29-29    provisions for the payment by the state agency of reasonable fees

29-30    to the district.  If the state does not elect to enter into the

29-31    agreement to include the state-owned land in the district, the

29-32    state agency must establish a groundwater management plan that will

29-33    conserve, protect, and prevent the waste of groundwater on that

29-34    state-owned land.

29-35          SECTION 4.19.  Chapter 35, Water Code, is amended by adding

29-36    Section 35.018 to read as follows:

29-37          Sec. 35.018.  REPORTS.  (a)  No later than January 31 of each

29-38    odd-numbered year, the commission in conjunction with the Texas

29-39    Water Development Board shall prepare and deliver to the governor,

29-40    the lieutenant governor, and the speaker of the house of

29-41    representatives a comprehensive report concerning activities during

29-42    the preceding two years relating to the designation of priority

29-43    groundwater management areas by the commission and the creation and

29-44    operation of districts.

29-45          (b)  The report must include:

29-46                (1)  the names and locations of all priority

29-47    groundwater management areas and districts created or attempted to

29-48    be created on or after November 5, 1985, the effective date of

29-49    Chapter 133 (H.B. No. 2), Acts of the 69th Legislature, Regular

29-50    Session, 1985;

29-51                (2)  the authority under which each priority

29-52    groundwater management area and district was proposed for creation;

29-53                (3)  a detailed analysis of each election held to

29-54    confirm the creation of a district, including analysis of election

29-55    results, possible reasons for the success or failure to confirm the

29-56    creation of a district, and the possibility for future voter

29-57    approval of districts in areas in which attempts to create

29-58    districts failed;

29-59                (4)  a detailed analysis of the activities of each

29-60    district created, including those districts which are implementing

29-61    management plans certified under Section 36.1072;

29-62                (5)  a report on audits performed on districts under

29-63    Section 36.302 and remedial actions taken under Section 36.303;

29-64                (6)  recommendations for changes in this chapter and

29-65    Chapter 36 that will facilitate the creation of priority

29-66    groundwater management areas and the creation and operation of

29-67    districts;

29-68                (7)  a report on educational efforts in newly

29-69    designated priority groundwater management areas; and

 30-1                (8)  any other information and recommendations that the

 30-2    commission considers relevant.

 30-3          SECTION 4.20.  Section 36.001, Water Code, is amended by

 30-4    amending Subdivision (14) and adding Subdivisions (16), (17), and

 30-5    (18) to read as follows:

 30-6                (14)  "Priority groundwater management [Critical] area"

 30-7    means an area designated and delineated by the commission under

 30-8    Chapter 35 as an area experiencing or expected to experience

 30-9    critical groundwater problems.

30-10                (16)  "Loan fund" means the groundwater district loan

30-11    assistance fund created under Section 36.371.

30-12                (17)  "Applicant" means a newly confirmed district

30-13    applying for a loan from the loan fund.

30-14                (18)  "Livestock" means bovine, caprine, equine, ovine,

30-15    porcine, ratite, or ruminant animals, poultry, domestic rabbits,

30-16    domesticated game birds, or other animals, either confined or free

30-17    ranging, raised for human consumption, profit, use, or pleasure.

30-18    The term includes exotic livestock as defined in Section 161.001,

30-19    Agriculture Code.

30-20          SECTION 4.21.  Subsection (c), Section 36.012, Water Code, is

30-21    amended to read as follows:

30-22          (c)  The boundaries of a district must be coterminous with or

30-23    inside the boundaries of a management area or a priority

30-24    groundwater management [critical] area.

30-25          SECTION 4.22.  Subsection (d), Section 36.013, Water Code, is

30-26    amended to read as follows:

30-27          (d)  If a part of the proposed district is not included

30-28    within either a management area or a priority groundwater

30-29    management [critical] area, the petition to create a district may

30-30    also contain a request to create a management area.  A request to

30-31    create a management area must comply with the requirements for a

30-32    petition in Section 35.005, and may be acted on by the commission

30-33    separately from the petition to create the district.

30-34          SECTION 4.23.  Subchapter B, Chapter 36, Water Code, is

30-35    amended by adding Section 36.0151 to read as follows:

30-36          Sec. 36.0151.  CREATION OF DISTRICT FOR PRIORITY GROUNDWATER

30-37    MANAGEMENT AREA.  (a)  If the commission proposes that a district

30-38    be created under Section 35.012(d), it shall in its order creating

30-39    the district provide that temporary directors be appointed under

30-40    Section 36.016 and that an election be called by the temporary

30-41    directors to confirm the creation of the district and to elect

30-42    permanent directors.

30-43          (b)  The commission shall notify the county commissioners

30-44    court of each county with territory in the district of the

30-45    district's creation as soon as practicable after issuing the order

30-46    creating the district.

30-47          SECTION 4.24.  Section 36.016, Water Code, is amended to read

30-48    as follows:

30-49          Sec. 36.016.  APPOINTMENT OF TEMPORARY DIRECTORS.  (a)  If

30-50    the commission grants a petition to create a district under Section

30-51    36.015 or after the commission dissolves a district's board under

30-52    Section 36.303, it shall appoint five temporary directors.

30-53          (b)  If the commission creates a district under Section

30-54    36.0151, the county commissioners court or courts of the county or

30-55    counties that contain the area of the district shall, within 90

30-56    days after receiving notification by the commission under Section

30-57    36.0151(b), appoint five temporary directors, or more if the

30-58    district contains the territory of more than five counties, for the

30-59    district's board using the method provided by Section 36.0161.  A

30-60    county commissioners court shall not make any appointments after

30-61    the expiration of the 90-day period.  If fewer than five temporary

30-62    directors have been appointed at the expiration of the period, the

30-63    commission shall appoint additional directors so that the board has

30-64    at least five members.

30-65          (c)  Temporary directors appointed under this section [who]

30-66    shall serve until the initial directors are elected and have

30-67    qualified for office or until the voters fail to approve the

30-68    creation of the district.

30-69          (d) [(b)]  If an appointee of the commission or of a county

 31-1    commissioners court fails to qualify or if a vacancy occurs in the

 31-2    office of temporary director, the commission or the county

 31-3    commissioners court, as appropriate, shall appoint an individual to

 31-4    fill the vacancy.

 31-5          (e) [(c)]  As soon as all temporary directors have qualified,

 31-6    the directors shall meet, take the oath of office, and elect a

 31-7    chairman and vice chairman from among their membership.  The

 31-8    chairman shall preside at all meetings of the board and, in the

 31-9    chairman's absence, the vice chairman shall preside.

31-10          SECTION 4.25.  Subchapter B, Chapter 36, Water Code, is

31-11    amended by adding Section 36.0161 to read as follows:

31-12          Sec. 36.0161.  METHOD FOR APPOINTING TEMPORARY DIRECTORS FOR

31-13    DISTRICT IN PRIORITY GROUNDWATER MANAGEMENT AREA.  (a)  If a

31-14    district in a priority groundwater management area is:

31-15                (1)  contained within one county, the county

31-16    commissioners court of that county shall appoint five temporary

31-17    directors for the district;

31-18                (2)  contained within two counties, the county

31-19    commissioners court of each county shall appoint at least one

31-20    temporary director, with the appointments of the three remaining

31-21    directors to be apportioned as provided by Subsection (b);

31-22                (3)  contained within three counties, the county

31-23    commissioners court of each county shall appoint at least one

31-24    temporary director, with the appointments of the two remaining

31-25    directors to be apportioned as provided by Subsection (b);

31-26                (4)  contained within four counties, the county

31-27    commissioners court of each county shall appoint at least one

31-28    temporary director, with the appointment of the remaining director

31-29    to be apportioned as provided by Subsection (b); or

31-30                (5)  contained within five or more counties, the county

31-31    commissioners court of each county shall appoint one temporary

31-32    director.

31-33          (b)(1)  In this subsection, "estimated groundwater use" means

31-34    the estimate of groundwater use in acre-feet developed by the

31-35    commission under Subsection (c) for the area of a county that is

31-36    within the district.

31-37                (2)  The apportionment of appointments under Subsection

31-38    (a) shall be made by the commission so as to reflect, as closely as

31-39    possible, the proportion each county's estimated groundwater use

31-40    bears to the sum of the estimated groundwater use for the district

31-41    as determined under Subsection (c).  The commission shall by rule

31-42    determine the method it will use to implement this subdivision.

31-43          (c)  If a district for which temporary directors are to be

31-44    appointed is contained within two, three, or four counties, the

31-45    commission shall develop an estimate of annual groundwater use in

31-46    acre-feet for each county area within the district.

31-47          SECTION 4.26.  Subchapter D, Chapter 36, Water Code, is

31-48    amended by amending Section 36.107 and adding Sections 36.1071,

31-49    36.1072, and 36.1073 to read as follows:

31-50          Sec. 36.107.  RESEARCH [AND PLANNING].  [(a)]  A district may

31-51    carry out any research projects deemed necessary by the board.

31-52          Sec. 36.1071.  MANAGEMENT PLAN.  (a)[(b)]  Following notice

31-53    and hearing, the district shall, in coordination with surface water

31-54    management entities on a regional basis, develop a comprehensive

31-55    management plan which addresses the following management goals, as

31-56    applicable:

31-57                (1)  providing the most efficient use of groundwater;

31-58                (2)  controlling and preventing waste of groundwater;

31-59                (3)  controlling and preventing subsidence;

31-60                (4)  addressing conjunctive surface water management

31-61    issues; and

31-62                (5)  addressing natural resource issues.

31-63          (b)  A district management plan, or any amendments to a

31-64    district management plan, adopted after the Texas Water Development

31-65    Board approval of a regional water plan for the region in which the

31-66    district is located shall be consistent with the regional water

31-67    plan.

31-68          (c)  The commission and the Texas Water Development Board

31-69    shall provide technical assistance to a district in the development

 32-1    of the management plan required under Subsection (a) which may

 32-2    include, if requested by the district, a preliminary review and

 32-3    comment on the plan prior to final approval by the board.  If such

 32-4    review and comment by the commission is requested, the commission

 32-5    shall provide comment not later than 30 days from the date the

 32-6    request is received.

 32-7          (d)  The commission shall provide technical assistance to a

 32-8    district during its initial operational phase.

 32-9          (e)  In the management plan described under Subsection (a),

32-10    the district shall:

32-11                (1)  identify the performance standards and management

32-12    objectives under which the district will operate to achieve the

32-13    management goals identified under Subsection (a);

32-14                (2)  specify, in as much detail as possible, the

32-15    actions, procedures, performance, and avoidance that are or may be

32-16    necessary to effect the plan, including specifications and proposed

32-17    rules;

32-18                (3)  include estimates of the following:

32-19                      (A)  the existing total usable amount of

32-20    groundwater in the district;

32-21                      (B)  the amount of groundwater being used within

32-22    the district on an annual basis;

32-23                      (C)  the annual amount of recharge, if any, to

32-24    the groundwater resources within the district and how natural or

32-25    artificial recharge may be increased; and

32-26                      (D)  the projected water supply and demand for

32-27    water within the district; and

32-28                (4)  address water supply needs in a manner that is not

32-29    in conflict with the appropriate approved regional water plan if a

32-30    regional water plan has been approved under Section 16.053 [for the

32-31    most efficient use of the groundwater, for controlling and

32-32    preventing waste of groundwater, and for controlling and preventing

32-33    subsidence.  The plan may be reviewed annually but must be reviewed

32-34    by the board at least once every five years].

32-35          (e)  [(c)  The district shall specify in the management plan,

32-36    in as much detail as possible, the acts, procedures, performance,

32-37    and avoidance that are or may be necessary to effect the plan,

32-38    including specifications and proposed rules.]  The district shall

32-39    adopt rules necessary to implement the management plan.

32-40          (f)  The board shall adopt amendments to the management plan

32-41    as necessary.  Amendments to the management plan shall be adopted

32-42    after notice and hearing and shall otherwise comply with the

32-43    requirements of this section.

32-44          Sec. 36.1072.  TEXAS WATER DEVELOPMENT BOARD REVIEW AND

32-45    CERTIFICATION OF MANAGEMENT PLAN.  (a)  A [The] district shall, not

32-46    later than two years after the creation of the district or, if the

32-47    district required confirmation, after the election confirming the

32-48    district's creation, submit [file a copy of] the management plan

32-49    required under Section 36.1071 to [and the rules with] the Texas

32-50    Water Development Board for review and certification [commission].

32-51          (b)  Within 60 days of receipt of a management plan adopted

32-52    under Section 36.1071, the Texas Water Development Board shall

32-53    certify a management plan if the plan is administratively complete.

32-54    A management plan is administratively complete when it contains the

32-55    information required to be submitted under Section 36.1071.  The

32-56    Texas Water Development Board may determine that conditions justify

32-57    waiver of the requirements under Section 36.1071(e)(4).

32-58          (c)  Once a determination that a management plan is

32-59    administratively complete has been made:

32-60                (1)  the Texas Water Development Board may not revoke

32-61    the determination that a management plan is administratively

32-62    complete;

32-63                (2)  the Texas Water Development Board may request

32-64    additional information from the district if the information is

32-65    necessary to clarify, modify, or supplement previously submitted

32-66    material; and

32-67                (3)  a request for additional information does not

32-68    render the management plan incomplete.

32-69          (d)  A management plan takes effect on certification by the

 33-1    Texas Water Development Board.

 33-2          (e)  The board may review the plan annually and must review

 33-3    and readopt the plan with or without revisions at least once every

 33-4    five years.

 33-5          (f)  If the Texas Water Development Board does not certify

 33-6    the management plan, the Texas Water Development Board shall

 33-7    provide to the district, in writing, the reasons for its action.

 33-8    Not later than the 180th day after the date a district receives

 33-9    notice that its management plan has not been certified, the

33-10    district may submit a revised management plan for review and

33-11    certification.  The commission shall not take enforcement action

33-12    against a district under Subchapter I until the later of the

33-13    expiration of the 180-day period or the date the Texas Water

33-14    Development Board has taken final action withholding certification

33-15    of a revised management plan.

33-16          Sec. 36.1073.  AMENDMENT TO MANAGEMENT PLAN.  Any amendment

33-17    to the management plan shall be submitted to the Texas Water

33-18    Development Board within 60 days following adoption of the

33-19    amendment by the district's board.  The Texas Water Development

33-20    Board shall review and certify any amendment which substantially

33-21    affects the management plan in accordance with the procedures

33-22    established under Section 36.1072.

33-23          SECTION 4.27.  Subsection (a), Section 36.108, Water Code, is

33-24    amended to read as follows:

33-25          (a)  If two or more districts are located within the

33-26    boundaries of the same management area, each district shall prepare

33-27    a comprehensive management plan as required by Section 36.1071

33-28    [36.107] covering that district's respective territory.  On

33-29    completion of the plan, each district shall forward a copy of the

33-30    new revised management plan to the other districts in the

33-31    management area.

33-32          SECTION 4.28.  Section 36.113, Water Code, is amended to read

33-33    as follows:

33-34          Sec. 36.113.  PERMITS FOR WELLS.  (a)  A district shall

33-35    require permits for the drilling, equipping, or completing of

33-36    wells[,] or for substantially altering the size of wells or well

33-37    pumps.

33-38          (b)  A district shall require that an application for a

33-39    permit be in writing and sworn to.

33-40          (c)  A district may require that the following be included in

33-41    the permit application:

33-42                (1)  the name and mailing address of the applicant and

33-43    the owner of the land on which the well will be located;

33-44                (2)  if the applicant is other than the owner of the

33-45    property, documentation establishing the applicable authority to

33-46    construct and operate a well for the proposed use;

33-47                (3)  a statement of the nature and purpose of the

33-48    proposed use and the amount of water to be used for each purpose;

33-49                (4)  a water conservation plan or a declaration that

33-50    the applicant will comply with the district's management plan;

33-51                (5)  the location of each well and the estimated rate

33-52    at which water will be withdrawn;

33-53                (6)  a water well closure plan or a declaration that

33-54    the applicant will comply with well plugging guidelines and report

33-55    closure to the commission; and

33-56                (7)  a drought contingency plan.

33-57          (d)  Before granting or denying a permit, the district shall

33-58    consider whether:

33-59                (1)  the application conforms to the requirements

33-60    prescribed by this chapter and is accompanied by the prescribed

33-61    fees;

33-62                (2)  the proposed use of water unreasonably affects

33-63    existing groundwater and surface water resources;

33-64                (3)  the proposed use of water is dedicated to any

33-65    beneficial use;

33-66                (4)  the proposed use of water is consistent with the

33-67    district's certified water management plan;

33-68                (5)  the applicant has agreed to avoid waste and

33-69    achieve water conservation; and

 34-1                (6)  the applicant has agreed that reasonable diligence

 34-2    will be used to protect groundwater quality and that the applicant

 34-3    will follow well plugging guidelines at the time of well closure.

 34-4          (e)  Permits may be issued subject to the rules promulgated

 34-5    by the district and subject to terms and provisions with reference

 34-6    to the drilling, equipping, completion, or alteration of wells or

 34-7    pumps that may be necessary to [conserve the groundwater,] prevent

 34-8    waste and achieve water conservation, minimize as far as

 34-9    practicable the drawdown of the water table or the reduction of

34-10    artesian pressure, lessen interference between wells, or control

34-11    and prevent subsidence.

34-12          (f)  A district may require that changes in the withdrawal

34-13    and use of groundwater under a permit not be made without the prior

34-14    approval of a permit amendment issued by the district.

34-15          SECTION 4.29.  Subchapter D, Chapter 36, Water Code, is

34-16    amended by adding Section 36.1131 to read as follows:

34-17          Sec. 36.1131.  ELEMENTS OF PERMIT.  (a)  A permit issued by

34-18    the district to the applicant under Section 36.113 shall state the

34-19    terms and provisions prescribed by the district.

34-20          (b)  The permit may include:

34-21                (1)  the name and address of the person to whom the

34-22    permit is issued;

34-23                (2)  the location of the well;

34-24                (3)  the date the permit is to expire if no well is

34-25    drilled;

34-26                (4)  a statement of the purpose for which the well is

34-27    to be used;

34-28                (5)  a requirement that the water withdrawn under the

34-29    permit be put to beneficial use at all times;

34-30                (6)  the location of the use of the water from the

34-31    well;

34-32                (7)  a water well closure plan or a declaration that

34-33    the applicant will comply with well plugging guidelines and report

34-34    closure to the commission;

34-35                (8)  the conditions and restrictions, if any, placed on

34-36    the rate and amount of withdrawal;

34-37                (9)  any conservation-oriented methods of drilling and

34-38    operating prescribed by the district;

34-39                (10)  a drought contingency plan prescribed by the

34-40    district; and

34-41                (11)  other terms and conditions as provided by Section

34-42    36.113.

34-43          SECTION 4.30.  Subchapter E, Chapter 36, Water Code, is

34-44    amended by adding Sections 36.159, 36.160, and 36.161 to read as

34-45    follows:

34-46          Sec. 36.159.  GROUNDWATER DISTRICT MANAGEMENT PLAN FUNDS.

34-47    The Texas Water Development Board may allocate funds from the

34-48    research and planning fund created under Subchapter F, Chapter 15,

34-49    to a district to conduct initial data collections under this

34-50    chapter, to develop and implement a long-term management plan under

34-51    Section 36.1071, and to participate in regional water plans.

34-52          Sec. 36.160.  FUNDS.  The Texas Water Development Board, the

34-53    commission, the Parks and Wildlife Department, the Texas

34-54    Agricultural Extension Service, and institutions of higher

34-55    education may allocate funds to carry out the objectives of this

34-56    chapter and Chapter 35, which include but are not limited to:

34-57                (1)  conducting initial and subsequent studies and

34-58    surveys under Sections 36.106, 36.107, and 36.109;

34-59                (2)  providing appropriate education in affected areas

34-60    identified in Section 35.007 relating to the problems and issues

34-61    concerning water management that may arise;

34-62                (3)  processing priority groundwater management area

34-63    evaluations under this chapter and Chapter 35;

34-64                (4)  providing technical and administrative assistance

34-65    to newly created districts under this chapter and Chapter 35;

34-66                (5)  covering the costs of newspaper notices required

34-67    under Sections 35.009 and 36.014 and failed elections in accordance

34-68    with Sections 35.014(c), 36.017(h), and 36.019; and

34-69                (6)  providing for assistance from the Parks and

 35-1    Wildlife Department to the Texas Water Development Board or a

 35-2    district for the purpose of assessing fish and wildlife resource

 35-3    habitat needs as they may apply to overall management plan goals

 35-4    and objectives of the district.

 35-5          Sec. 36.161.  ELIGIBILITY FOR FUNDING.  (a)  The Texas Water

 35-6    Development Board may provide funds under Sections 36.159 and

 35-7    36.160, Chapters 15, 16, and 17, and Subchapter L of this chapter

 35-8    to a district if the Texas Water Development Board determines that

 35-9    such funding will allow the district to comply or continue to

35-10    comply with provisions of this chapter.

35-11          (b)  The Texas Water Development Board may, after notice and

35-12    hearing, discontinue funding described in Subsection (a) if the

35-13    Texas Water Development Board finds that the district is not using

35-14    the funds to comply with the provisions of this chapter.

35-15          (c)  The Texas Water Development Board, when considering a

35-16    discontinuance under Subsection (b), shall give written notice of

35-17    the hearing to the district at least 20 days before the date set

35-18    for the hearing.  The hearing shall be conducted in accordance with

35-19    Chapter 2001, Government Code, or the rules of the respective

35-20    agency.  General notice of the hearing shall be given in accordance

35-21    with the rules of the agency.

35-22          (d)  The Texas Water Development Board may delegate to the

35-23    State Office of Administrative Hearings the responsibility to

35-24    conduct a hearing under this section.

35-25          SECTION 4.31.  Subchapter G, Chapter 36, Water Code, is

35-26    amended by adding Section 36.206 to read as follows:

35-27          Sec. 36.206.  DISTRICT FEES.  (a)  A temporary board may set

35-28    user fees to pay for the creation and initial operation of a

35-29    district, until such time as the district creation has been

35-30    confirmed and a permanent board has been elected by a majority vote

35-31    of the qualified voters voting in the district in an election

35-32    called for those purposes.

35-33          (b)  The rate of fees set for agricultural uses shall be no

35-34    more than 20 percent of the rate applied to municipal uses.

35-35          SECTION 4.32.  Subchapter I, Chapter 36, Water Code, is

35-36    amended to read as follows:

35-37      SUBCHAPTER I.  PERFORMANCE REVIEW AND DISSOLUTION [OF DISTRICT]

35-38          Sec. 36.301.  FAILURE TO SUBMIT A MANAGEMENT PLAN.  If a

35-39    board fails to submit a management plan or to receive certification

35-40    of its management plan under Section 36.1072 or fails to submit or

35-41    receive certification of an amendment to the management plan under

35-42    Section 36.1073, the commission shall take appropriate action under

35-43    Section 36.303.

35-44          Sec. 36.302.  DETERMINATION OF WHETHER DISTRICT IS

35-45    OPERATIONAL.  (a)  The commission shall make a determination of

35-46    whether a district is actively engaged in achieving the objectives

35-47    of the district's management plan based on an audit of the

35-48    district's performance under the plan.  The commission shall

35-49    conduct such audits following the first anniversary of the initial

35-50    certification of the plan by the Texas Water Development Board

35-51    under Section 36.1072 and following the end of every five-year

35-52    period thereafter.

35-53          (b)  If the commission finds under Subsection (a) that the

35-54    district is not operational, the commission shall take appropriate

35-55    action under Section 36.303.

35-56          Sec. 36.303.  ACTION BY COMMISSION.  (a)  After notice and

35-57    hearing in accordance with Chapter 2001, Government Code, the

35-58    commission may take actions the commission deems appropriate to

35-59    enforce compliance with rules or orders of the commission or

35-60    provisions of this chapter, including:

35-61                (1)  issuing an order requiring the district to take

35-62    certain actions or to refrain from taking certain actions;

35-63                (2)  dissolving the board in accordance with Sections

35-64    36.305 and 36.307;

35-65                (3)  removing the district's taxing authority; or

35-66                (4)  dissolving the district in accordance with

35-67    Sections 36.304, 36.305, and 36.308.

35-68          (b)  In addition to actions identified under Subsection (a),

35-69    the commission may recommend to the legislature, based upon the

 36-1    report required by Section 35.018 of this code, actions the

 36-2    commission deems necessary to accomplish comprehensive management

 36-3    in the district.

 36-4          Sec. 36.304 [36.301].  DISSOLUTION OF DISTRICT.  (a)  The

 36-5    [After notice and hearing, the] commission may dissolve a district

 36-6    that:

 36-7                (1)  is not operational, as determined under Section

 36-8    36.302 [has been inactive for a period of three consecutive years];

 36-9    and

36-10                (2)  has no outstanding bonded indebtedness.

36-11          (b)  A district composed of territory entirely within one

36-12    county may be dissolved even if the district [it] has outstanding

36-13    indebtedness that matures after the year in which the district is

36-14    dissolved, whereupon the commissioners court shall levy and collect

36-15    taxes on all taxable property in the district in an amount

36-16    sufficient to pay the principal of and interest on the indebtedness

36-17    when due.  The taxes shall be levied and collected in the same

36-18    manner as county taxes.

36-19          [(c)  A district is considered active if:]

36-20                [(1)  the district has a board as required by

36-21    Subchapter D;]

36-22                [(2)  the board holds regularly scheduled meetings and

36-23    has on file minutes of its meetings;]

36-24                [(3)  the district has developed and filed with the

36-25    commission a management plan for the district;]

36-26                [(4)  the district has copies of drillers' logs on

36-27    file;]

36-28                [(5)  the district has on file well permits issued by

36-29    the district; and]

36-30                [(6)  the district has on file annual district audits.]

36-31          Sec. 36.305 [36.302].  NOTICE OF HEARING FOR DISSOLUTION OF

36-32    BOARD OR DISTRICT.  (a)  The commission shall give notice of the

36-33    [dissolution] hearing for dissolution of a district or of a board

36-34    which briefly describes the reasons for the proceeding.

36-35          (b)  The notice shall be published once each week for two

36-36    consecutive weeks before the day of hearing in a [some] newspaper

36-37    having general circulation in the county or counties in which the

36-38    district is located.  The first publication shall be 30 days before

36-39    the day of the hearing.

36-40          (c)  The commission shall give notice of the hearing by first

36-41    class mail addressed to the directors of the district according to

36-42    the last record on file with the executive director.

36-43          Sec. 36.306 [36.303].  INVESTIGATION.  The executive director

36-44    shall investigate the facts and circumstances of any violations of

36-45    any rule or order of the commission or any provisions of this

36-46    chapter and shall prepare and file a written report with the

36-47    commission and district and include any actions the executive

36-48    director believes the commission should take under Section 36.303.

36-49          Sec. 36.307.  ORDER OF DISSOLUTION OF BOARD.  If the

36-50    commission enters an order to dissolve the board, the commission

36-51    shall notify the county commissioners court of each county which

36-52    contains territory in the district and the commission shall provide

36-53    that temporary directors be appointed under Section 36.016 to serve

36-54    until an election for a new board can be held under Section 36.017,

36-55    provided, however, that district confirmation shall not be required

36-56    for continued existence of the district and shall not be an issue

36-57    in the election  [the district to be dissolved and the result of

36-58    the investigation shall be included in a written report].

36-59          [Sec. 36.304.  ORDER OF DISSOLUTION.  The commission may

36-60    enter an order dissolving the district at the conclusion of the

36-61    hearing if it finds that the district has performed none of the

36-62    functions for which it was created for a period of three

36-63    consecutive years before the day of the proceeding and that the

36-64    district has no outstanding bonded indebtedness.]

36-65          Sec. 36.308 [36.305].  CERTIFIED COPY OF ORDER.  The

36-66    commission shall file a certified copy of the order of dissolution

36-67    of the district in the deed records of the county or counties in

36-68    which the district is located.  If the district was created by a

36-69    special Act of the legislature, the commission shall file a

 37-1    certified copy of the order of dissolution with the secretary of

 37-2    state.

 37-3          Sec. 36.309 [36.306].  APPEALS.  [(a)]  Appeals from any [a]

 37-4    commission order [dissolving a district] shall be filed and heard

 37-5    in the district court of any of the counties in which the land is

 37-6    located.

 37-7          [(b)  The trial on appeal shall be de novo and the

 37-8    substantial evidence rule shall not apply.]

 37-9          Sec. 36.310 [36.307].  ASSETS ESCHEAT TO STATE.  Upon the

37-10    dissolution of a district by the commission, all assets of the

37-11    district shall be sold at public auction and the proceeds given to

37-12    the county if it is a single-county district.  If it is a

37-13    multicounty district, the proceeds shall be divided with the

37-14    counties in proportion to the surface land area in each county

37-15    served by the district [escheat to the State of Texas.  The assets

37-16    shall be administered by the state treasurer and shall be disposed

37-17    of in the manner provided by Chapter 72, Property Code].

37-18          SECTION 4.33.  Subsection (b), Section 36.325, Water Code, is

37-19    amended to read as follows:

37-20          (b)  The petition must be signed by:

37-21                (1)  a majority of the landowners in the territory;

37-22                (2)  at least 50 landowners if the number of landowners

37-23    is more than 50; or

37-24                (3)  the commissioners court of the county in which the

37-25    area is located if the area is identified as a priority groundwater

37-26    management [critical] area or includes the entire county.  The

37-27    petition must describe the land by legal description or by metes

37-28    and bounds or by lot and block number if there is a recorded plat

37-29    of the area to be included in the district.

37-30          SECTION 4.34.  Section 36.331, Water Code, is amended to read

37-31    as follows:

37-32          Sec. 36.331.  ANNEXATION OF NONCONTIGUOUS TERRITORY.  Land

37-33    not contiguous to the existing boundaries of a district may not be

37-34    added to or annexed to a district unless the land is located either

37-35    within the same management area, priority groundwater management

37-36    [critical] area, or a groundwater subdivision designated by the

37-37    commission or its predecessors.

37-38          SECTION 4.35.  Chapter 36, Water Code, is amended by adding

37-39    Subchapter L to read as follows:

37-40         SUBCHAPTER L.  GROUNDWATER DISTRICT LOAN ASSISTANCE FUND

37-41          Sec. 36.371.  GROUNDWATER DISTRICT LOAN ASSISTANCE FUND.

37-42    (a)  The groundwater district loan assistance fund is created, to

37-43    be funded by direct appropriation and by the Texas Water

37-44    Development Board from the water assistance fund.

37-45          (b)  Repayments of loans shall be deposited in the water

37-46    assistance fund.

37-47          Sec. 36.372.  FINANCIAL ASSISTANCE.  (a)  The loan fund may

37-48    be used by the Texas Water Development Board to provide loans to

37-49    newly confirmed districts and legislatively created districts that

37-50    do not require a confirmation election to pay for their creation

37-51    and initial operations.

37-52          (b)  The Texas Water Development Board shall establish rules

37-53    for the use and administration of the loan fund.

37-54          Sec. 36.373.  APPLICATION FOR ASSISTANCE.  (a)  In an

37-55    application to the Texas Water Development Board for financial

37-56    assistance from the loan fund, the applicant shall include:

37-57                (1)  the name of the district and its board members;

37-58                (2)  a citation of the law under which the district

37-59    operates and was created;

37-60                (3)  a description of the initial operations;

37-61                (4)  the total start-up cost of the initial operations;

37-62                (5)  the amount of state financial assistance

37-63    requested;

37-64                (6)  the plan for repaying the total cost of the loan;

37-65    and

37-66                (7)  any other information the Texas Water Development

37-67    Board may require to perform its duties and protect the public

37-68    interest.

37-69          (b)  The Texas Water Development Board may not accept an

 38-1    application for a loan from the loan fund unless it is submitted in

 38-2    affidavit form by the applicant's board.  The Texas Water

 38-3    Development Board shall prescribe the affidavit form in its rules.

 38-4          (c)  The rules implementing this section shall not restrict

 38-5    or prohibit the Texas Water Development Board from requiring

 38-6    additional factual material from an applicant.

 38-7          Sec. 36.374.  APPROVAL OF APPLICATION.  The Texas Water

 38-8    Development Board, by resolution, may approve an application if it

 38-9    finds that:

38-10                (1)  granting financial assistance to the applicant

38-11    will serve the public interest; and

38-12                (2)  the revenue pledged by the applicant from district

38-13    taxes and fees and other sources will be sufficient to meet all the

38-14    obligations assumed by the applicant.

38-15          SECTION 4.36.  Subsection (g), Section 151.318, Tax Code, is

38-16    amended to read as follows:

38-17          (g)  Each person engaged in manufacturing, processing,

38-18    fabricating, or repairing tangible personal property for ultimate

38-19    sale is entitled to a refund or a reduction in the amount of tax

38-20    imposed by this chapter as provided by Subsection (h) for the

38-21    purchase of machinery, equipment, and replacement parts or

38-22    accessories with a useful life in excess of six months if the

38-23    equipment is:

38-24                (1)  used or consumed in or during the actual

38-25    manufacturing, processing, fabrication, or repair of tangible

38-26    personal property for ultimate sale, and the use or consumption of

38-27    the property is necessary or essential to the manufacturing,

38-28    processing, fabrication, or repair operation, or to a pollution

38-29    control process; or

38-30                (2)  specifically installed to:

38-31                      (A)  reduce water use and wastewater flow volumes

38-32    from the manufacturing, processing, fabrication, or repair

38-33    operation;

38-34                      (B)  reuse and recycle wastewater streams

38-35    generated within the manufacturing, processing, fabrication, or

38-36    repair operation; or

38-37                      (C)  treat wastewater from another industrial or

38-38    municipal source for the purpose of replacing existing freshwater

38-39    sources in the manufacturing, processing, fabrication, or repair

38-40    operation.

38-41          SECTION 4.37.  (a)  Sections 35.010, 35.011, and 35.016,

38-42    Water Code, are repealed.

38-43          (b)  Section 5.02, Chapter 133, Acts of the 69th Legislature,

38-44    Regular Session, 1985, is repealed.

38-45          SECTION 4.38.  (a)  In this section, "district" means a

38-46    groundwater conservation district created under Section 52, Article

38-47    III, or Section 59, Article XVI, Texas Constitution, that has the

38-48    authority to regulate the spacing of water wells, the production

38-49    from water wells, or both.

38-50          (b)  Notwithstanding the time limitation under Subsection

38-51    (a), Section 36.1072, Water Code, as added by this Act, and

38-52    notwithstanding any provision to the contrary in prior law, a

38-53    district which was created or, if the district required a

38-54    confirmation election, a district whose creation was confirmed

38-55    before the effective date of this Act shall submit a management

38-56    plan for certification under Section 36.1072, Water Code, as added

38-57    by this Act, to the Texas Water Development Board not later than

38-58    September 1, 1998.

38-59          SECTION 4.39.  An area designated as a critical area under

38-60    Chapter 35, Water Code, as it existed before the effective date of

38-61    this Act, or under other prior law, shall be known and referred to

38-62    as a priority groundwater management area on or after the effective

38-63    date of this Act.

38-64          SECTION 4.40.  Not later than September 1, 1998, the Texas

38-65    Natural Resource Conservation Commission must, under Chapter 35,

38-66    Water Code, as amended by this Act, make all designations of

38-67    priority groundwater management areas for which critical area

38-68    reports were required to have been completed before the effective

38-69    date of this Act under Section 35.007, Water Code, as that section

 39-1    existed immediately before the effective date of this Act.

 39-2           ARTICLE 5.  FINANCIAL ASSISTANCE FOR WATER NEEDS AND

 39-3                               CONSERVATION

 39-4          SECTION 5.01.  Section 15.431, Water Code, is amended by

 39-5    amending Subsection (d) and adding Subsection (g) to read as

 39-6    follows:

 39-7          (d)  Money appropriated by the legislature to be maintained

 39-8    as principal in the fund, $10 million of the money transferred to

 39-9    that fund by H.B. No. 2, Acts of the 69th Legislature, Regular

39-10    Session, 1985, and half of the money earned as interest on the

39-11    money held as principal in the agricultural trust fund shall be

39-12    maintained as principal.  Money maintained as principal in the

39-13    agricultural trust fund may [not] be used by the board to make

39-14    conservation loans to borrower districts and loans to lender

39-15    districts for the purposes listed in Section 17.895 of this code.

39-16    Loans and conservation loans made under this subchapter are subject

39-17    to the provisions of Sections 17.896 through 17.903 of this code.

39-18    Repayments of principal and interest on loans and conservation

39-19    loans made under this subchapter shall be deposited in the

39-20    agricultural trust fund [spent for any purpose].

39-21          (g)  In this section, "borrower district," "conservation

39-22    loan," "individual borrower," "lender district," and "loan" have

39-23    the meanings assigned those terms by Section 17.871 of this code.

39-24          SECTION 5.02.  Section 16.189, Water Code, is amended to read

39-25    as follows:

39-26          Sec. 16.189.  LEASE PAYMENTS.  In leasing a state facility

39-27    for a term of years, the board shall require [annual] payments that

39-28    will recover over the lease period not less than the total of:

39-29                (1)  all [the annual] principal and interest

39-30    requirements applicable to the debt incurred by the state in

39-31    acquiring the facility; and

39-32                (2)  the state's [annual] cost for operation,

39-33    maintenance, and rehabilitation of the facility.

39-34          SECTION 5.03.  Chapter 17, Water Code, is amended by adding

39-35    Subchapter L to read as follows:

39-36          SUBCHAPTER L.  WATER FINANCIAL ASSISTANCE BOND PROGRAM

39-37          Sec. 17.951.  DEFINITIONS.  In this subchapter:

39-38                (1)  "Fund" means the Texas Water Development Fund II.

39-39                (2)  "Resolution" means any resolution or order

39-40    approved by the board authorizing the issuance of water financial

39-41    assistance bonds.

39-42          Sec. 17.952.  ISSUANCE OF WATER FINANCIAL ASSISTANCE BONDS.

39-43    The board by resolution may provide for the issuance of water

39-44    financial assistance bonds, which shall be general obligation bonds

39-45    of the state, in an aggregate principal amount not to exceed the

39-46    principal amount authorized to be issued by Section 49-d-8, Article

39-47    III, Texas Constitution.

39-48          Sec. 17.953.  CONDITIONS FOR ISSUANCE OF WATER FINANCIAL

39-49    ASSISTANCE BONDS.  (a)  Water financial assistance bonds may be

39-50    issued as various series and issues.

39-51          (b)  Water financial assistance bonds may mature, serially or

39-52    otherwise, not later than 50 years after the date on which they are

39-53    issued.

39-54          (c)  Water financial assistance bonds may be issued as bonds,

39-55    notes, or other obligations as permitted by law and may be in the

39-56    form and denominations and be issued in the manner and under the

39-57    terms, conditions, and details as provided by resolution.

39-58          (d)  Water financial assistance bonds may be sold at public

39-59    or private sale at a price or prices and on terms determined by the

39-60    board.

39-61          (e)  Water financial assistance bonds shall be signed and

39-62    executed as provided by resolution.

39-63          (f)  Water financial assistance bonds may bear no interest or

39-64    bear interest at a rate or rates determined in accordance with law.

39-65          (g)  Rates of interest on water financial assistance bonds

39-66    may be fixed, variable, floating, adjustable, or otherwise, as

39-67    determined by the board or determined pursuant to any contractual

39-68    arrangements approved by the board.  The resolution may provide for

39-69    the payment of interest at any time or the periodic determination

 40-1    of interest rates or interest rate periods.

 40-2          Sec. 17.954.  BOND ENHANCEMENT AGREEMENTS; PAYMENT OF

 40-3    EXPENSES.  (a)  The board at any time and from time to time may

 40-4    enter into one or more bond enhancement agreements that the board

 40-5    determines to be necessary or appropriate to place the obligation

 40-6    of the board, as represented by the water financial assistance

 40-7    bonds, in whole or in part, on the interest rate, currency, cash

 40-8    flow, or other basis desired by the board.  A bond enhancement

 40-9    agreement is an agreement for professional services and shall

40-10    contain the terms and conditions and be for the period that the

40-11    board approves.

40-12          (b)  The fees and expenses of the board in connection with

40-13    the issuance of water financial assistance bonds and the providing

40-14    of financial assistance to political subdivisions may be paid from

40-15    money in the fund, provided that any payments due from the board

40-16    under a bond enhancement agreement, other than fees and expenses,

40-17    that relate to the payment of debt service on water financial

40-18    assistance bonds constitute payments of principal of and interest

40-19    on the water financial assistance bonds.

40-20          (c)  Bond enhancement agreements may include, on terms and

40-21    conditions approved by the board, interest rate swap agreements;

40-22    currency swap agreements; forward payment conversion agreements;

40-23    agreements providing for payments based on levels of or changes in

40-24    interest rates or currency exchange rates; agreements to exchange

40-25    cash flows or a series of payments; agreements, including options,

40-26    puts, or calls, to hedge payment, currency, rate, spread, or other

40-27    exposure; or other agreements that further enhance the

40-28    marketability, security, or creditworthiness of water financial

40-29    assistance bonds.

40-30          Sec. 17.955.  PERSONS DESIGNATED TO ACT AS AGENTS OF BOARD.

40-31    (a)  In the resolution the board may delegate authority to one or

40-32    more officers, employees, or agents designated by the board to act

40-33    on behalf of the board during the time any series of water

40-34    financial assistance bonds are outstanding to:

40-35                (1)  fix dates, prices, interest rates, amortization

40-36    schedules, redemption features, and interest payment periods;

40-37                (2)  perform duties and obligations of the board under

40-38    a bond enhancement agreement; and

40-39                (3)  perform other procedures specified in the

40-40    resolution.

40-41          (b)  The person designated by the board may adjust the

40-42    interest on water financial assistance bonds and perform all duties

40-43    described in a bond enhancement agreement as necessary to permit

40-44    the water financial assistance bonds to be sold or resold at par in

40-45    conjunction with secondary market transactions.

40-46          Sec. 17.956.  TEXAS WATER DEVELOPMENT FUND II.  The fund is a

40-47    special fund in the state treasury, and all water financial

40-48    assistance bond proceeds shall be deposited in the state treasury

40-49    to the credit of the fund.  The fund shall contain a "state

40-50    participation account," an "economically distressed areas program

40-51    account," and a "financial assistance account," and proceeds from

40-52    the sale of water financial assistance bonds issued for the purpose

40-53    of providing financial assistance to political subdivisions shall

40-54    be credited to such accounts as provided by resolution by the

40-55    board.  By resolution, the board may create additional accounts

40-56    within the fund as the board determines are necessary or convenient

40-57    for the administration of the fund.

40-58          Sec. 17.957.  STATE PARTICIPATION ACCOUNT.  (a)  The Texas

40-59    Water Development Fund II state participation account, referred to

40-60    as the "state participation account," is an account established

40-61    within the fund in the state treasury.  Transfers shall be made

40-62    from this account as provided by this subchapter.

40-63          (b)  The state participation account is composed of:

40-64                (1)  money and assets attributable to water financial

40-65    assistance bonds designated by the board as issued for projects

40-66    described in Section 16.131;

40-67                (2)  money from the sale, transfer, or lease of a

40-68    project described in Subdivision (1) that was acquired,

40-69    constructed, reconstructed, developed, or enlarged with money from

 41-1    the state participation account;

 41-2                (3)  payments received under a bond enhancement

 41-3    agreement with respect to water financial assistance bonds

 41-4    designated by the board as issued for projects described in Section

 41-5    16.131;

 41-6                (4)  investment income earned on money on deposit in

 41-7    the state participation account; and

 41-8                (5)  any other funds, regardless of their source, that

 41-9    the board directs be deposited to the credit of the state

41-10    participation account.

41-11          (c)  Money on deposit in the state participation account may

41-12    be used by the board for projects described in Section 16.131 in

41-13    the manner that the board determines necessary for the

41-14    administration of the fund.

41-15          Sec. 17.958.  ECONOMICALLY DISTRESSED AREAS PROGRAM ACCOUNT.

41-16    (a)  The Texas Water Development Fund II economically distressed

41-17    areas program account, referred to as the "economically distressed

41-18    areas program account," is an account established within the fund

41-19    in the state treasury.  Transfers shall be made from this account

41-20    as provided by this subchapter.

41-21          (b)  The economically distressed areas program account is

41-22    composed of:

41-23                (1)  money and assets attributable to water financial

41-24    assistance bonds designated by the board as issued for projects

41-25    described in Subchapter K;

41-26                (2)  money provided by the federal government, the

41-27    state, political subdivisions, and private entities for the purpose

41-28    of paying debt service on water financial assistance bonds issued

41-29    for purposes provided by Subchapter K;

41-30                (3)  payments received under a bond enhancement

41-31    agreement with respect to water financial assistance bonds

41-32    designated by the board as issued for purposes provided by

41-33    Subchapter K;

41-34                (4)  investment income earned on money on deposit in

41-35    the economically distressed areas program account; and

41-36                (5)  any other funds, regardless of their source, that

41-37    the board directs be deposited to the credit of the economically

41-38    distressed areas program account.

41-39          (c)  Money on deposit in the economically distressed areas

41-40    program account may be used by the board for purposes provided by

41-41    Subchapter K in the manner that the board determines necessary for

41-42    the administration of the fund.

41-43          Sec. 17.959.  FINANCIAL ASSISTANCE ACCOUNT.  (a)  The Texas

41-44    Water Development Fund II water financial assistance account,

41-45    referred to as the "financial assistance account," is an account

41-46    established within the fund in the state treasury.  Transfers shall

41-47    be made from this account as provided by this subchapter.

41-48          (b)  The financial assistance account is composed of:

41-49                (1)  money and assets attributable to water financial

41-50    assistance bonds designated by the board as issued for purposes

41-51    described in Section 49-d-8, Article III, Texas Constitution, other

41-52    than for purposes described in Sections 17.957 and 17.958;

41-53                (2)  payments received under a bond enhancement

41-54    agreement with respect to water financial assistance bonds

41-55    designated by the board as issued for purposes described in Section

41-56    49-d-8, Article III, Texas Constitution, other than for purposes

41-57    described in Sections 17.957 and 17.958;

41-58                (3)  investment income earned on money on deposit in

41-59    the financial assistance account; and

41-60                (4)  any other funds, regardless of their source, that

41-61    the board directs be deposited to the credit of the financial

41-62    assistance account.

41-63          (c)  Money on deposit in the financial assistance account may

41-64    be used by the board for any one or more of the purposes described

41-65    in Section 49-d-8, Article III, Texas Constitution, other than for

41-66    purposes described in Sections 17.957 and 17.958, in the manner

41-67    that the board determines necessary for the administration of the

41-68    fund.

41-69          Sec. 17.960.  BOND RESOLUTIONS.  (a)  In the resolution, the

 42-1    board may make additional covenants with respect to water financial

 42-2    assistance bonds and may provide for:

 42-3                (1)  the flow of funds;

 42-4                (2)  the establishment of accounts and subaccounts

 42-5    within the fund that the board determines are necessary for the

 42-6    administration of the fund;

 42-7                (3)  at the discretion of the board, the payment of

 42-8    fees and expenses of the board in connection with providing

 42-9    financial assistance to political subdivisions as the board

42-10    determines are necessary for the administration of the fund;

42-11                (4)  the maintenance, investment, and management of

42-12    money within the fund and any accounts established by resolution by

42-13    the board; and

42-14                (5)  any other provisions and covenants that the board

42-15    determines are necessary for the administration of the fund.

42-16          (b)  The board may invest and reinvest money in the fund and

42-17    any account therein in any obligations or securities as provided by

42-18    the resolution or by rule adopted by the board.

42-19          (c)  The board may adopt and have executed other proceedings,

42-20    agreements, or trust agreements or instruments necessary in the

42-21    issuance of water financial assistance bonds, including, without

42-22    limitation, bond enhancement agreements.

42-23          Sec. 17.961.  TRANSFERS TO REVOLVING FUNDS.  (a)  In order to

42-24    implement and administer a revolving loan program established under

42-25    Title VI of the Federal Water Pollution Control Act (33 U.S.C.

42-26    Section 1381 et seq.), the board may direct the comptroller to

42-27    transfer amounts from the financial assistance account to the state

42-28    water pollution control revolving fund created by Section 15.601 to

42-29    provide financial assistance pursuant to this subchapter.

42-30          (b)  In order to implement and administer a revolving loan

42-31    program established by any other federal legislation, including,

42-32    without limitation, Title XIV of the federal Public Health Service

42-33    Act, or any federal agency program under which an additional state

42-34    revolving fund, as defined in Section 15.602, has been established,

42-35    the board may direct the comptroller to transfer amounts from the

42-36    financial assistance account to such additional state revolving

42-37    fund to provide financial assistance pursuant to this subchapter.

42-38          (c)  The board shall use the state water pollution control

42-39    revolving fund in accordance with Section 15.604(a)(4) and Section

42-40    603(d)(4), Federal Water Pollution Control Act (33 U.S.C. Section

42-41    1383), as a source of revenue to be deposited in accordance with

42-42    this subchapter for the payment of principal and interest on water

42-43    financial assistance bonds issued by the board, the proceeds of

42-44    which are deposited into the state water pollution control

42-45    revolving fund, and to make payments under a bond enhancement

42-46    agreement with respect to principal or interest on the water

42-47    financial assistance bonds.

42-48          (d)  In the event amounts are transferred to any additional

42-49    state revolving fund, as defined in Section 15.602, pursuant to

42-50    Subsection (b), the board shall, to the extent permitted by the

42-51    federal legislation or federal agency program under which such

42-52    additional state revolving fund was established, use the additional

42-53    state revolving fund as a source of revenue to be deposited in

42-54    accordance with this subchapter for the payment of principal and

42-55    interest on water financial assistance bonds issued by the board,

42-56    the proceeds of which are deposited into the additional state

42-57    revolving fund, and to make payments under a bond enhancement

42-58    agreement with respect to principal or interest on the water

42-59    financial assistance bonds.

42-60          Sec. 17.962.  STATE APPROVALS.  (a)  Water financial

42-61    assistance bonds may not be issued under this subchapter unless

42-62    such issuance has been reviewed and approved by the bond review

42-63    board.

42-64          (b)  The proceedings relating to the water financial

42-65    assistance bonds issued under this subchapter are subject to review

42-66    and approval by the attorney general in the same manner and with

42-67    the same effect as provided by Chapter 656, Acts of the 68th

42-68    Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas

42-69    Civil Statutes).

 43-1          (c)  After approval by the attorney general of the

 43-2    proceedings relating to water financial assistance bonds issued

 43-3    under this subchapter, registration of the proceedings by the

 43-4    comptroller, and delivery of the water financial assistance bonds

 43-5    to the purchasers, the water financial assistance bonds are

 43-6    incontestable and constitute general obligations of the state.

 43-7          Sec. 17.963.  PAYMENT OF BOARD OBLIGATIONS.  (a)  The board

 43-8    shall cooperate with the comptroller to develop procedures for the

 43-9    payment of principal and interest on water financial assistance

43-10    bonds and any obligation under a bond enhancement agreement, as the

43-11    same become due and owing.

43-12          (b)  If there is not enough money in any account of the fund

43-13    available to pay the principal and interest on water financial

43-14    assistance bonds issued for such account, including money to make

43-15    payments by the board under a bond enhancement agreement with

43-16    respect to principal or interest on such water financial assistance

43-17    bonds, the board shall notify the comptroller of such occurrence,

43-18    and the comptroller shall transfer out of the first money coming

43-19    into the state treasury not otherwise appropriated by the

43-20    constitution the amount required to pay the obligations of the

43-21    board that are due and owing.  The comptroller shall make the

43-22    transfers required by Section 49-d-8, Article III, Texas

43-23    Constitution, and this subchapter in the manner specified in the

43-24    resolution.

43-25          Sec. 17.964.  ELIGIBLE SECURITY.  Water financial assistance

43-26    bonds are eligible to secure deposits of public funds of the state

43-27    and political subdivisions of the state.  Water financial

43-28    assistance bonds are lawful and sufficient security for deposits to

43-29    the extent of their face value.

43-30          Sec. 17.965.  LEGAL INVESTMENTS.  Water financial assistance

43-31    bonds are legal and authorized investments for:

43-32                (1)  banks;

43-33                (2)  savings banks;

43-34                (3)  trust companies;

43-35                (4)  savings and loan associations;

43-36                (5)  insurance companies;

43-37                (6)  fiduciaries;

43-38                (7)  trustees;

43-39                (8)  guardians; and

43-40                (9)  sinking funds and other public funds of the state

43-41    and its agencies and of political subdivisions of the state.

43-42          Sec. 17.966.  MUTILATED, LOST, OR DESTROYED BONDS.  The board

43-43    may provide for the replacement of mutilated, lost, or destroyed

43-44    water financial assistance bonds.

43-45          Sec. 17.967.  REFUNDING BONDS.  (a)  The board by resolution

43-46    may provide for the issuance of water financial assistance bonds to

43-47    refund outstanding bonds and water financial assistance bonds

43-48    issued under this chapter and federal contractual obligations

43-49    incurred under Section 49-d, Article III, Texas Constitution.

43-50          (b)  The board may sell the refunding water financial

43-51    assistance bonds and use the proceeds to retire any of the

43-52    outstanding obligations described in Subsection (a), exchange the

43-53    refunding water financial assistance bonds for the outstanding

43-54    bonds or water financial assistance bonds, or refund any of the

43-55    outstanding obligations described in Subsection (a) in the manner

43-56    provided by any other applicable statute, including Chapter 503,

43-57    Acts of the 54th Legislature, 1955 (Article 717k, Vernon's Texas

43-58    Civil Statutes), and Chapter 784, Acts of the 61st Legislature,

43-59    Regular Session, 1969 (Article 717k-3, Vernon's Texas Civil

43-60    Statutes).

43-61          Sec. 17.968.  SALE OF POLITICAL SUBDIVISION BONDS BY THE

43-62    BOARD; USE OF PROCEEDS.  (a)  The board may sell or dispose of

43-63    political subdivision bonds purchased with money in the fund to any

43-64    person, including the Texas Water Resources Finance Authority, and

43-65    the board, in such manner as it shall determine, may apply the

43-66    proceeds of the sale of political subdivision bonds held by the

43-67    board to:

43-68                (1)  pay debt service on water financial assistance

43-69    bonds issued under this subchapter; or

 44-1                (2)  provide financial assistance to political

 44-2    subdivisions for any one or more of the purposes authorized by

 44-3    Section 49-d-8, Article III, Texas Constitution.

 44-4          (b)  The board shall sell the political subdivision bonds at

 44-5    the price and under the terms that it determines to be reasonable.

 44-6          Sec. 17.969.  TAX EXEMPT BONDS.  Since the board is

 44-7    performing an essential governmental function in the exercise of

 44-8    the powers conferred on it by this chapter, water financial

 44-9    assistance bonds issued under this subchapter and the interest and

44-10    income from the water financial assistance bonds, including any

44-11    profit made on the sale of water financial assistance bonds, and

44-12    all fees, charges, gifts, grants, revenues, receipts, and other

44-13    money received or pledged to pay or secure the payment of water

44-14    financial assistance bonds are free from taxation and assessments

44-15    of every kind by this state and any city, county, district,

44-16    authority, or other political subdivision of this state.

44-17          Sec. 17.970.  ENFORCEMENT BY MANDAMUS.  Payment of water

44-18    financial assistance bonds and obligations incurred under bond

44-19    enhancement agreements and performance of official duties

44-20    prescribed by Section 49-d-8, Article III, Texas Constitution, and

44-21    this subchapter may be enforced in a court of competent

44-22    jurisdiction by mandamus or other appropriate proceedings.

44-23          Sec. 17.971.  SUBCHAPTER CUMULATIVE OF OTHER LAWS.  (a)  This

44-24    subchapter is cumulative of other laws on the subject, and the

44-25    board may use provisions of other applicable laws in the issuance

44-26    of water financial assistance bonds and the execution of bond

44-27    enhancement agreements, but this subchapter is wholly sufficient

44-28    authority for the issuance of water financial assistance bonds, the

44-29    execution of bond enhancement agreements, and the performance of

44-30    all other acts and procedures authorized by this subchapter.

44-31          (b)  In addition to other authority granted by this

44-32    subchapter, the board may exercise the authority granted to the

44-33    governing body of an issuer with regard to the issuance of

44-34    obligations under Chapter 656, Acts of the 68th Legislature,

44-35    Regular Session, 1983 (Article 717q, Vernon's Texas Civil

44-36    Statutes).

44-37          (c)  In exercising the powers granted to the board under this

44-38    subchapter, the board may exercise any powers granted to it under

44-39    this chapter and Chapter 16 including the powers described in

44-40    Subchapters D, E, F, G, and K, notwithstanding any provision in

44-41    this chapter or Chapter 16 that may be inconsistent with or in

44-42    conflict with the provisions of this subchapter as a result of the

44-43    establishment of the fund as a fund separate and distinct from the

44-44    existing Texas Water Development Fund, it being the intent of the

44-45    legislature that the financial assistance made available to

44-46    political subdivisions under this subchapter, in pursuance of the

44-47    authority granted by Section 49-d-8, Article III, Texas

44-48    Constitution, be provided by the board in the manner the board

44-49    deems necessary to achieve the purposes of Section 49-d-8, Article

44-50    III, Texas Constitution, and notwithstanding any other existing

44-51    provisions in this chapter or Chapter 16, the provisions of this

44-52    chapter and Chapter 16 shall be inclusive of the provisions of this

44-53    subchapter and Section 49-d-8, Article III, Texas Constitution.

44-54          SECTION 5.04.  Subdivision (7), Section 17.001, Water Code,

44-55    is amended to read as follows:

44-56                (7)  "Water supply project" means:

44-57                      (A)  any engineering undertaking or work to

44-58    conserve and develop [surface or subsurface] water resources of the

44-59    state, including the control, storage, and preservation of its

44-60    storm water and floodwater and the water of its rivers and streams

44-61    for all useful and lawful purposes by the acquisition, improvement,

44-62    extension, or construction of dams, reservoirs, brush control,

44-63    precipitation enhancement, desalinization, and other water storage

44-64    and conservation projects, which may include flood storage,

44-65    including underground storage projects, filtration and water

44-66    treatment plants, including any system necessary to transport water

44-67    from storage to points of distribution or from storage to

44-68    filtration and treatment plants, including facilities for

44-69    transporting water therefrom to wholesale purchasers or to retail

 45-1    purchasers as authorized by Section 17.072(c) of this code, by the

 45-2    acquisition, by purchase of rights in [underground] water, by the

 45-3    drilling of wells, or for any one or more of these purposes or

 45-4    methods; [or]

 45-5                      (B)  any engineering undertaking or work outside

 45-6    the state to provide for the maintenance and enhancement of the

 45-7    quality of water by eliminating saline inflow through well pumping

 45-8    and deep well injection of brine if such undertaking or work

 45-9    results in water being available for use in or for the benefit of

45-10    Texas; or

45-11                      (C)  any undertaking or work by Texas political

45-12    subdivisions to conserve, convey, or develop water resources in

45-13    areas outside Texas if such undertaking or work results in water

45-14    being available for use in or for the benefit of Texas.

45-15          SECTION 5.05.  Section 17.001, Water Code, is amended by

45-16    amending Subdivision (17) and adding Subdivision (25) to read as

45-17    follows:

45-18                (17)  "Financial assistance" means any loan of funds

45-19    from the water supply account, the water quality enhancement

45-20    account, or the flood control account to a political subdivision

45-21    for construction of a water supply project, including projects

45-22    referenced in the state water plan, treatment works, or flood

45-23    control measures through the purchase of bonds or other obligations

45-24    of the political subdivision, and any loan of funds the source of

45-25    which is the proceeds from water financial assistance bonds.

45-26                (25)  "Water financial assistance bonds" means the

45-27    Texas Water Development Bonds authorized to be issued by Section

45-28    49-d-8, Article III, Texas Constitution, and dedicated to use for

45-29    the purposes described in that section.

45-30          SECTION 5.06.  Section 17.011, Water Code, is amended by

45-31    adding Subsection (c) to read as follows:

45-32          (c)  Notwithstanding any other provision of this section, the

45-33    board by resolution may issue water financial assistance bonds for

45-34    any one or more of the purposes described in Section 49-d-8,

45-35    Article III, Texas Constitution, in an aggregate principal amount

45-36    not to exceed the amount of bonds authorized by Section 49-d-8,

45-37    Article III, Texas Constitution, in accordance with the provisions

45-38    of Subchapter L.

45-39          SECTION 5.07.  Section 17.0111, Water Code, is amended to

45-40    read as follows:

45-41          Sec. 17.0111.  DEDICATION OF CERTAIN BONDS.  No more than

45-42    $250,000,000 in principal [Fifty percent of the] amount of bonds

45-43    authorized by Article III, Section 49-d-7, of the Texas

45-44    Constitution, and issued under either that section or Article III,

45-45    Section 49-d-8, of the Texas Constitution, may be [is] dedicated to

45-46    the purposes provided by Subchapter K [of this chapter].

45-47          SECTION 5.08.  Section 17.182, Water Code, is amended to read

45-48    as follows:

45-49          Sec. 17.182.  PROCEEDS FROM SALE.  Unless used to pay debt

45-50    service on bonds issued under this chapter, the proceeds from the

45-51    sale of political subdivision bonds held by the board either shall

45-52    be credited to the account from which financial assistance was made

45-53    to the political subdivision, except that accrued interest shall be

45-54    credited to the interest and sinking fund, or shall be deposited to

45-55    the credit of the Texas Water Development Fund II, established

45-56    within the state treasury pursuant to Section 49-d-8, Article III,

45-57    Texas Constitution.  However, no such proceeds shall be deposited

45-58    to the credit of the Texas Water Development Fund II unless the

45-59    executive administrator certifies to the board that the transfer of

45-60    such proceeds into the Texas Water Development Fund II will not

45-61    cause the board, in the fiscal year the transfer is made, to direct

45-62    the comptroller to transfer out of the first money coming into the

45-63    state treasury during that fiscal year funds sufficient for the

45-64    payment of principal of or interest on water development bonds,

45-65    other than water development bonds issued for the purposes

45-66    described in Subsection (e), Section 49-d-7, Article III, Texas

45-67    Constitution, coming due in that fiscal year.

45-68          SECTION 5.09.  Section 17.278, Water Code, is amended to read

45-69    as follows:

 46-1          Sec. 17.278.  FINDINGS REGARDING PERMITS.  If an application

 46-2    includes a proposal for a wastewater treatment plant, the board may

 46-3    not deliver funds for the wastewater treatment plant until the

 46-4    applicant has obtained a permit for the construction and operation

 46-5    of the plant and approval of the plans and specifications for the

 46-6    plant from the commission.  If an application includes a proposal

 46-7    for a wastewater treatment plant that is located outside the

 46-8    jurisdiction of this state and that is not subject to the

 46-9    permitting authority of the commission, the board may not deliver

46-10    funds for the wastewater treatment plant until after the board

46-11    reviews the plans and specifications in coordination with the

46-12    commission and finds that the wastewater treatment plant is capable

46-13    of producing effluent that will meet federal and Texas-approved

46-14    water quality standards and if effluent produced will result in

46-15    water being available for use in or for the benefit of Texas.

46-16          SECTION 5.10.  Sections 44.007 through 44.010, Agriculture

46-17    Code, are amended to read as follows:

46-18          Sec. 44.007.  LINKED DEPOSIT PROGRAM.  (a)  The board shall

46-19    establish a linked deposit program to encourage commercial lending

46-20    for the enhanced production, processing, and marketing of certain

46-21    agricultural crops and for the financing [purchase] of water

46-22    conservation projects or equipment for agricultural production

46-23    purposes.

46-24          (b)  The board shall promulgate rules for the loan portion of

46-25    the linked deposit program.  The rules must include:

46-26                (1)  a list of the categories of crops customarily

46-27    grown in Texas;

46-28                (2)  a list of crops that are alternative agricultural

46-29    crops;

46-30                (3)  a list of crops the production of which has

46-31    declined markedly because of natural disasters; and

46-32                (4)  identification of projects and [the] types of

46-33    equipment considered as water conservation projects or equipment

46-34    for agricultural production purposes.

46-35          (c)  In order to participate in the linked deposit program,

46-36    an eligible lending institution may solicit loan applications from

46-37    eligible borrowers.

46-38          (d)  After reviewing an application and determining that the

46-39    applicant is eligible and creditworthy, the eligible lending

46-40    institution shall send the application for a linked deposit loan to

46-41    the board.

46-42          (e)  The eligible lending institution shall certify the

46-43    interest rate applicable to the specific eligible borrower and

46-44    attach it to the application sent to the board.

46-45          (f)  After reviewing each linked deposit loan application,

46-46    the board shall recommend to the comptroller [state treasurer] the

46-47    acceptance or rejection of the application.

46-48          (g)  After acceptance of the application, the comptroller

46-49    [state treasurer] shall place a linked deposit with the applicable

46-50    eligible lending institution for the period the comptroller

46-51    [treasurer] considers appropriate.  The comptroller [state

46-52    treasurer] may not place a deposit for a period extending beyond

46-53    the state fiscal biennium in which it is placed.  Subject to the

46-54    limitation described by Section 44.010 of this chapter, the

46-55    comptroller [treasurer] may place time deposits at an interest rate

46-56    described by Section 44.001(5)(A) of this chapter, notwithstanding

46-57    any order of the State Depository Board to the contrary.

46-58          (h)  Before the placing of a linked deposit, the eligible

46-59    lending institution and the state, represented by the comptroller

46-60    [state treasurer] and the board, shall enter into a written deposit

46-61    agreement containing the conditions on which the linked deposit is

46-62    made.

46-63          (i)  If a lending institution holding linked deposits ceases

46-64    to be a state depository, the comptroller [state treasurer] may

46-65    withdraw the linked deposits.

46-66          (j)  The board may adopt rules that create a procedure for

46-67    determining priorities for loans granted under this chapter.  Each

46-68    rule adopted must state the policy objective of the rule.  The

46-69    policy objectives of the rules may include preferences to:

 47-1                (1)  achieve adequate geographic distribution of loans;

 47-2                (2)  assist certain industries;

 47-3                (3)  encourage certain practices including water

 47-4    conservation; and

 47-5                (4)  encourage value-added processing of agricultural

 47-6    products.

 47-7          Sec. 44.008.  COMPLIANCE.  (a)  On accepting a linked

 47-8    deposit, an eligible lending institution must loan money to

 47-9    eligible borrowers in accordance with the deposit agreement and

47-10    this chapter.  The eligible lending institution shall forward a

47-11    compliance report to the board.

47-12          (b)  The board shall monitor compliance with this chapter and

47-13    inform the comptroller [state treasurer] of noncompliance on the

47-14    part of an eligible lending institution.

47-15          Sec. 44.009.  STATE LIABILITY PROHIBITED.  The state is not

47-16    liable to an eligible lending institution for payment of the

47-17    principal, interest, or any late charges on a loan made to an

47-18    eligible borrower.  A delay in payment or default on a loan by an

47-19    eligible borrower does not affect the validity of the deposit

47-20    agreement.  Linked deposits are not an extension of the state's

47-21    credit within the meaning of any state constitutional prohibition.

47-22          Sec. 44.010.  LIMITATIONS IN PROGRAM.  (a)  At any one time,

47-23    not more than $15 [$5] million, of which $10 million may only be

47-24    used to finance water conservation projects, may be placed in

47-25    linked deposits under this chapter.

47-26          (b)  The maximum amount of a loan under this chapter to

47-27    process and market Texas agricultural crops is $500,000.  The

47-28    maximum amount of a loan under this chapter to produce alternative

47-29    agricultural crops in this state is $250,000.  The maximum amount

47-30    of a loan under this chapter to finance [purchase] water

47-31    conservation projects or equipment for agricultural production

47-32    purposes is $250,000.

47-33          (c)  A loan granted pursuant to this chapter must be applied

47-34    to the purchase or lease of land, equipment, seed, fertilizer,

47-35    direct marketing facilities, or processing facilities, or to

47-36    payment for professional services.

47-37          (d)  A loan granted pursuant to this chapter, when used to

47-38    finance eligible water conservation projects or equipment, may be

47-39    applied to existing debt resulting from the financing of water

47-40    conservation projects or equipment for agricultural purposes as

47-41    defined by board rule.

47-42          SECTION 5.11.  Subchapter B, Chapter 11, Tax Code, is amended

47-43    by adding Section 11.32 to read as follows:

47-44          Sec. 11.32.  CERTAIN WATER CONSERVATION INITIATIVES.  The

47-45    governing body of a taxing unit by official action of the governing

47-46    body adopted in the manner required by law for official actions may

47-47    exempt from taxation part or all of the assessed value of property

47-48    on which approved water conservation initiatives have been

47-49    implemented.  For purposes of this section, approved water

47-50    conservation initiatives shall be designated pursuant to an

47-51    ordinance or other law adopted by the governing unit.

47-52          SECTION 5.12.  Chapter 2155.44, Government Code, is amended

47-53    by adding Subsection (d) to read as follows:

47-54          (d)  The commission and all state agencies making purchase of

47-55    vegetation for landscaping purposes, including plants, shall give

47-56    preference to vegetation native to Texas if the cost to the state

47-57    and the quality are equal.

47-58                 ARTICLE 6.  SMALL COMMUNITIES ASSISTANCE

47-59          SECTION 6.01.  Section 5.311, Water Code, is amended to read

47-60    as follows:

47-61          Sec. 5.311.  DELEGATION OF RESPONSIBILITY.  (a)  The

47-62    commission may delegate to an administrative law judge of the State

47-63    Office of Administrative Hearings the responsibility to hear any

47-64    matter before the commission and to issue interlocutory orders

47-65    related to interim rates under Chapter 13.

47-66          (b)  Except as provided in Subsection (a), the [The]

47-67    administrative law judge shall report to the commission on the

47-68    hearing in the manner provided by law.

47-69          SECTION 6.02.  Subdivisions (11), (21), and (24), Section

 48-1    13.002, Water Code, are amended to read as follows:

 48-2                (11)  "Member" means a person who holds a membership in

 48-3    a water supply or sewer service corporation and [who either

 48-4    receives water or sewer utility service from the corporation or] is

 48-5    a record owner of a fee simple title to property in an area served

 48-6    by a water supply or sewer service corporation or a person who is

 48-7    granted a membership and who either currently receives or will be

 48-8    eligible to receive water or sewer utility service from the

 48-9    corporation.  In determining member control of a water supply or

48-10    sewer service corporation, a person is entitled to only one vote

48-11    regardless of the number of memberships the person owns.

48-12                (21)  "Service" means any act [done, rendered, or]

48-13    performed, anything furnished or supplied, and any facilities or

48-14    lines committed or [facility] used[, furnished, or supplied] by a

48-15    retail public utility in the performance of its duties under this

48-16    chapter to its patrons, employees, other retail public utilities,

48-17    and the public, as well as the interchange of facilities between

48-18    two or more retail public utilities.

48-19                (24)  "Water supply or sewer service corporation" means

48-20    a nonprofit[, member-owned, member-controlled] corporation

48-21    organized and operating under Chapter 76, Acts of the 43rd

48-22    Legislature, 1st Called Session, 1933 (Article 1434a, Vernon's

48-23    Texas Civil Statutes) that provides potable water service or sewer

48-24    service for compensation and that has adopted and is operating in

48-25    accordance with by-laws or articles of incorporation which ensure

48-26    that it is member-owned and member-controlled.  The term does not

48-27    include a corporation that provides retail water or sewer service

48-28    to a person who is not a member, except that the corporation may

48-29    provide retail water or sewer service to a person who is not a

48-30    member if the person only builds on or develops property to sell to

48-31    another and the service is provided on an interim basis before the

48-32    property is sold.

48-33          SECTION 6.03.  Section 13.181, Water Code, is amended to read

48-34    as follows:

48-35          Sec. 13.181.  POWER TO ENSURE COMPLIANCE; RATE REGULATION.

48-36    (a)  Except for the provisions of Section 13.192, this subchapter

48-37    shall apply only to a utility and shall not be applied to

48-38    municipalities, counties, districts, or water supply or sewer

48-39    service corporations.

48-40          (b)  Subject to this chapter, the commission has all

48-41    authority and power of the state to ensure compliance with the

48-42    obligations of utilities under this chapter.  For this purpose the

48-43    regulatory authority may fix and regulate rates of utilities,

48-44    including rules and regulations for determining the classification

48-45    of customers and services and for determining the applicability of

48-46    rates.  A rule or order of the regulatory authority may not

48-47    conflict with the rulings of any federal regulatory body.  [Except

48-48    Section 13.192, this subchapter shall apply only to a utility and

48-49    shall not be applied to municipalities, counties, districts, or

48-50    water supply or sewer service corporations.]  The commission may

48-51    adopt rules which authorize a utility which is permitted under

48-52    Section 13.242(c) to provide service without a certificate of

48-53    public convenience and necessity to request or implement a rate

48-54    increase and operate according to rules, regulations, and standards

48-55    of service other than those otherwise required under this chapter

48-56    provided that rates are just and reasonable for customers and the

48-57    utility and that service is safe, adequate, efficient, and

48-58    reasonable.

48-59          SECTION 6.04.  Section 13.183, Water Code, is amended by

48-60    adding Subsection (c) to read as follows:

48-61          (c)  To ensure that retail customers receive a higher quality

48-62    or more reliable water or sewer service, to encourage

48-63    regionalization, or to maintain financially stable and technically

48-64    sound utilities, the regulatory authority may develop methodologies

48-65    for water or sewer rates based on factors other than rate of return

48-66    and those specified in Section 13.185.  Overall revenues determined

48-67    pursuant to an alternate methodology developed under this section

48-68    must provide revenues to the utility that satisfy the requirements

48-69    of Subsection (a).  In determining to use alternate ratemaking

 49-1    methodologies, the regulatory authority shall assure that rates,

 49-2    operations, and services are just and reasonable to the consumers

 49-3    and to the utilities.

 49-4          SECTION 6.05.  Subsection (a), Section 13.184, Water Code, is

 49-5    amended to read as follows:

 49-6          (a)  Unless the commission establishes alternate rate

 49-7    methodologies in accordance with Section 13.183(c), the commission

 49-8    [The regulatory authority] may not prescribe any rate that will

 49-9    yield more than a fair return on the invested capital used and

49-10    useful in rendering service to the public.  The governing body of a

49-11    municipality exercising its original jurisdiction over rates and

49-12    services may use alternate ratemaking methodologies established by

49-13    ordinance or by commission rule in accordance with Section

49-14    13.183(c).  Unless the municipal regulatory authority uses

49-15    alternate ratemaking methodologies established by ordinance or by

49-16    commission rule in accordance with Section 13.183(c), it may not

49-17    prescribe any rate that will yield more than a fair return on the

49-18    invested capital used and useful in rendering service to the

49-19    public.

49-20          SECTION 6.06.  Subsection (a), Section 13.185, Water Code, is

49-21    amended to read as follows:

49-22          (a)  Unless alternate methodologies are adopted as provided

49-23    in Sections 13.183(c) and 13.184(a), the [The] components of

49-24    invested capital and net income shall be determined according to

49-25    the rules stated in this section.

49-26          SECTION 6.07.  Subchapter G, Chapter 13, Water Code, is

49-27    amended by adding Section 13.241 to read as follows:

49-28          Sec. 13.241.  GRANTING OR AMENDING CERTIFICATES.  (a)  In

49-29    determining whether to grant or amend a certificate of public

49-30    convenience and necessity, the commission shall ensure that the

49-31    applicant possesses the financial, managerial, and technical

49-32    capability to provide continuous and adequate service.

49-33          (b)  For water utility service, the commission shall ensure

49-34    that the applicant:

49-35                (1)  is capable of providing drinking water that meets

49-36    the requirements of Chapter 341, Health and Safety Code, and

49-37    requirements of this code; and

49-38                (2)  has access to an adequate supply of water.

49-39          (c)  For sewer utility service, the commission shall ensure

49-40    that the applicant is capable of meeting the commission's design

49-41    criteria for sewer treatment plants and the requirements of this

49-42    code.

49-43          (d)  Before the commission grants a new or amended

49-44    certificate of convenience and necessity  for an area which would

49-45    require construction of a physically separate water or sewer

49-46    system, the applicant must demonstrate that regionalization or

49-47    consolidation with another retail public utility is not

49-48    economically feasible.

49-49          SECTION 6.08.  Section 13.246, Water Code, is amended to read

49-50    as follows:

49-51          Sec. 13.246.  NOTICE AND HEARING; ISSUANCE, AMENDMENT, OR

49-52    REFUSAL; FACTORS CONSIDERED.  (a)  If an application for a

49-53    certificate of public convenience and necessity is filed, the

49-54    commission shall cause notice of the application to be given to

49-55    affected parties and, if requested, shall fix a time and place for

49-56    a hearing and give notice of the hearing.  Any person affected by

49-57    the application may intervene at the hearing.

49-58          (b)  The commission may grant applications and issue

49-59    certificates only if the commission finds that a certificate is

49-60    necessary for the service, accommodation, convenience, or safety of

49-61    the public.  The commission may issue a certificate as requested,

49-62    or refuse to issue it, or issue it for the construction of only a

49-63    portion of the contemplated system or facility or extension, or for

49-64    the partial exercise only of the right or privilege and may impose

49-65    special conditions necessary to ensure that continuous and adequate

49-66    service is provided.

49-67          (c)  Certificates of convenience and necessity shall be

49-68    granted or amended on a nondiscriminatory basis after consideration

49-69    by the commission of the adequacy of service currently provided to

 50-1    the requested area, the need for additional service in the

 50-2    requested area, the effect of the granting of a certificate on the

 50-3    recipient of the certificate and on any retail public utility of

 50-4    the same kind already serving the proximate area, the ability of

 50-5    the applicant to provide adequate service, the feasibility of

 50-6    obtaining service from an adjacent retail public utility, the

 50-7    financial stability of the applicant, including, if applicable, the

 50-8    adequacy of the applicant's debt-equity ratio, environmental

 50-9    integrity, and the probable improvement of service or lowering of

50-10    cost to consumers in that area resulting from the granting of the

50-11    certificate.

50-12          (d)  The commission may require that an applicant for a

50-13    certificate of convenience and necessity demonstrate adequate

50-14    financial, managerial, and technical capability for providing

50-15    continuous and adequate service to the requested area and any areas

50-16    currently certificated to the applicant.

50-17          (e)  The commission may require an applicant utility to

50-18    provide a bond or other financial assurance in a form and amount

50-19    specified by the commission to ensure that continuous and adequate

50-20    utility service is provided.

50-21          (f)  Where applicable, in addition to the other factors in

50-22    this section the commission shall consider the efforts of the

50-23    applicant to extend service to any economically distressed areas

50-24    located within the service areas certificated to the applicant.

50-25    For the purposes of this subsection, "economically distressed area"

50-26    has the meaning assigned by Section 15.001.

50-27          SECTION 6.09.  Section 13.253, Water Code, is amended to read

50-28    as follows:

50-29          Sec. 13.253.  IMPROVEMENTS IN SERVICE; INTERCONNECTING

50-30    SERVICE.  After notice and hearing, the commission may:

50-31                (1)  order any retail public utility that is required

50-32    by law to possess a certificate of public convenience and necessity

50-33    or any retail public utility that possesses a certificate of public

50-34    convenience and necessity and is located in an affected county as

50-35    defined in Section 16.341 to:

50-36                      (A)  provide specified improvements in its

50-37    service in a defined area if service in that area is inadequate or

50-38    is substantially inferior to service in a comparable area and it is

50-39    reasonable to require the retail public utility to provide the

50-40    improved service; or

50-41                      (B)  develop, implement, and follow financial,

50-42    managerial, and technical practices that are acceptable to the

50-43    commission to ensure that continuous and adequate service is

50-44    provided to any areas currently certificated to the retail public

50-45    utility if the retail public utility has not provided continuous

50-46    and adequate service to any of those areas;

50-47                (2)  order two or more public utilities or water supply

50-48    or sewer service corporations to establish specified facilities for

50-49    [the] interconnecting service; [or]

50-50                (3)  order a public utility or water supply or sewer

50-51    service corporation that has not demonstrated that it can provide

50-52    continuous and adequate service from its drinking water source or

50-53    sewer treatment facility to obtain service sufficient to meet its

50-54    obligation to provide continuous and adequate service on at least a

50-55    wholesale basis from another consenting utility service provider;

50-56    or

50-57                (4)  issue an emergency order, with or without a

50-58    hearing, under Section 13.041 [of this code].

50-59          SECTION 6.10.  Section 13.254, Water Code, is amended to read

50-60    as follows:

50-61          Sec. 13.254.  REVOCATION OR AMENDMENT OF CERTIFICATE.

50-62    (a)  The commission at any time after notice and hearing may revoke

50-63    or amend any certificate of public convenience and necessity with

50-64    the written consent of the certificate holder or if it finds that:

50-65                (1)  the certificate holder has never provided, is no

50-66    longer providing, or has failed to provide continuous and adequate

50-67    service in the area, or part of the area, covered by the

50-68    certificate;

50-69                (2)  in an affected county as defined in Section

 51-1    16.341, the cost of providing service by the certificate holder is

 51-2    so prohibitively expensive as to constitute denial of service,

 51-3    provided that, for commercial developments or for residential

 51-4    developments started after September 1, 1997, in an affected county

 51-5    as defined in Section 16.341, the fact that the cost of obtaining

 51-6    service from the currently certificated retail public utility makes

 51-7    the development economically unfeasible does not render such cost

 51-8    prohibitively expensive in the absence of other relevant factors;

 51-9                (3)  the certificate holder has agreed in writing to

51-10    allow another retail public utility to provide service within its

51-11    service area, except for an interim period, without amending its

51-12    certificate; or

51-13                (4)  the certificate holder has failed to file a cease

51-14    and desist action pursuant to Section 13.252 within 180 days of the

51-15    date that it became aware that another retail public utility was

51-16    providing service within its service area, unless the certificate

51-17    holder demonstrates good cause for its failure to file such action

51-18    within the 180 days.

51-19          (b)  Upon written request from the certificate holder, the

51-20    executive director may cancel the certificate of a utility or water

51-21    supply corporation authorized by rule to operate without a

51-22    certificate of public convenience and necessity under Section

51-23    13.242(c).

51-24          (c)  If the certificate of any retail public utility is

51-25    revoked or amended, the commission may require one or more retail

51-26    public utilities with their consent to provide service in the area

51-27    in question.  The order of the commission shall not be effective to

51-28    transfer property.

51-29          (d)  A retail public utility may not in any way render retail

51-30    water or sewer service directly or indirectly to the public in an

51-31    area that has been decertified under this section without the

51-32    consent of the retail public utility that previously held the

51-33    certificate of convenience and necessity without providing

51-34    compensation for any property that the commission determines is

51-35    rendered useless or valueless to the decertified retail public

51-36    utility as a result of the decertification.

51-37          (e)  The determination of the monetary amount of

51-38    compensation, if any, shall be determined at the time another

51-39    retail public utility seeks to provide service in the previously

51-40    decertified area and before service is actually provided.

51-41          (f)  The monetary amount shall be determined by a qualified

51-42    individual or firm serving as independent appraiser selected by the

51-43    executive director after considering the recommendations of the

51-44    decertified retail public utility and the retail public utility

51-45    seeking to serve the area.  The determination of compensation by

51-46    the independent appraiser shall be binding on the commission.  The

51-47    costs of the independent appraiser shall be borne by the retail

51-48    public utility seeking to serve the area.

51-49          (g)  For the purpose of implementing this section, the value

51-50    of real property shall be determined according to the standards set

51-51    forth in Chapter 21, Property Code, governing actions in eminent

51-52    domain and the value of personal property shall be determined

51-53    according to the factors in this subsection.  The factors ensuring

51-54    that the compensation to a retail public utility for the taking,

51-55    damaging, or loss of personal property, including the retail public

51-56    utility's business, is just and adequate shall at a minimum

51-57    include:  the impact on the existing indebtedness of the retail

51-58    public utility and its ability to repay that debt; the value of the

51-59    service facilities of the retail public utility located within the

51-60    area in question; the amount of any expenditures for planning,

51-61    design, or construction of service facilities that are allocable to

51-62    service to the area in question; the amount of the retail public

51-63    utility's contractual obligations allocable to the area in

51-64    question; any demonstrated impairment of service or increase of

51-65    cost to consumers of the retail public utility remaining after the

51-66    decertification; the impact on future revenues and expenses of the

51-67    retail public utility; necessary and reasonable legal expenses and

51-68    professional fees; factors relevant to maintaining the current

51-69    financial integrity of the retail public utility; and other

 52-1    relevant factors.

 52-2          (h)  The commission shall determine whether payment of

 52-3    compensation shall be in a lump sum or paid out over a specified

 52-4    period of time.  If there were no current customers in the area

 52-5    decertified and no immediate loss of revenues or if there are other

 52-6    valid reasons determined by the commission, installment payments as

 52-7    new customers are added in the decertified area may be an

 52-8    acceptable method of payment.

 52-9          SECTION 6.11.  Section 13.301, Water Code, is amended to read

52-10    as follows:

52-11          Sec. 13.301.  REPORT OF SALE, MERGER, ETC.; INVESTIGATION;

52-12    DISALLOWANCE OF TRANSACTION.  (a)  A utility or a water supply or

52-13    sewer service corporation, on or before the 120th day before the

52-14    effective date of a sale, acquisition, lease, or rental of a water

52-15    or sewer system that is required by law to possess a certificate of

52-16    public convenience and necessity or the effective date of a merger

52-17    or consolidation with such a utility or water supply or sewer

52-18    service corporation, shall:

52-19                (1)  file a written application with [notify] the

52-20    commission; and

52-21                (2)  [give public notice] unless public notice is

52-22    waived by the executive director for good cause shown, give public

52-23    notice of the action [at least 120 days before the effective date

52-24    of any sale, acquisition, lease, or rental of any water or sewer

52-25    system required by law to possess a certificate of public

52-26    convenience and necessity or of any merger or consolidation with

52-27    such a utility or water supply or sewer service corporation].

52-28          (b)  The commission may require that the person purchasing or

52-29    acquiring the water or sewer system demonstrate adequate financial,

52-30    managerial, and technical capability for providing continuous and

52-31    adequate service to the requested area and any areas currently

52-32    certificated to the person.

52-33          (c)  If the person purchasing or acquiring the water or sewer

52-34    system cannot demonstrate adequate financial capability, the

52-35    commission may require that the person provide a bond or other

52-36    financial assurance in a form and amount specified by the

52-37    commission to ensure continuous and adequate utility service is

52-38    provided.

52-39          (d)  The commission shall, with or without a public hearing,

52-40    investigate the sale, acquisition, lease, or rental to determine

52-41    whether the transaction will serve the public interest.

52-42          (e) [(c)]  Before the expiration of the 120-day notification

52-43    period, the executive director shall notify all known parties to

52-44    the transaction of the executive director's decision whether to

52-45    request that the commission hold a public hearing to determine if

52-46    the transaction will serve the public interest.  The executive

52-47    director may request a hearing if:

52-48                (1)  the application filed with [notification to] the

52-49    commission or the public notice was improper;

52-50                (2)  the person purchasing or acquiring the water or

52-51    sewer system has not demonstrated adequate financial, managerial,

52-52    and technical capability for providing continuous and adequate

52-53    service to the service area being acquired and to any areas

52-54    currently certificated to the person [is inexperienced as a utility

52-55    service provider];

52-56                (3)  the person or an affiliated interest of the person

52-57    purchasing or acquiring the water or sewer system has a history of:

52-58                      (A)  noncompliance with the requirements of the

52-59    commission or the Texas Department of Health; or

52-60                      (B)  [of] continuing mismanagement or misuse of

52-61    revenues as a utility service provider;

52-62                (4)  the person purchasing or acquiring the water or

52-63    sewer system cannot demonstrate the financial ability to provide

52-64    the necessary capital investment to ensure the provision of

52-65    continuous and adequate service to the customers of the water or

52-66    sewer system; or

52-67                (5)  there are concerns that the transaction may not

52-68    serve the public interest, after the application of the

52-69    considerations provided by Section 13.246(c) for determining

 53-1    whether to grant a certificate of convenience and necessity.

 53-2          (f) [(d)]  Unless the executive director requests that a

 53-3    public hearing be held, the sale, acquisition, lease, or rental may

 53-4    be completed as proposed:

 53-5                (1)  at the end of the 120-day period; or

 53-6                (2)  [may be completed] at any time after the executive

 53-7    director notifies the utility or water supply or sewer service

 53-8    corporation that a hearing will not be requested.

 53-9          (g)  If a hearing is requested or if the utility or water

53-10    supply or sewer service corporation fails to make the application

53-11    as [provide the] required [notification] or to provide public

53-12    notice, the sale, acquisition, lease, or rental may not be

53-13    completed unless the commission determines that the proposed

53-14    transaction serves the public interest.

53-15          (h)  A sale, acquisition, lease, or rental of any water or

53-16    sewer system required by law to possess a certificate of public

53-17    convenience and necessity that is not completed in accordance with

53-18    the provisions of this section is void.

53-19          (i) [(e)]  This section does not apply to:

53-20                (1)  the purchase of replacement property; or

53-21                (2)  [to] a transaction under Section 13.255 of this

53-22    code.

53-23          (j) [(f)]  If a public utility facility or system is sold and

53-24    the facility or system was partially or wholly constructed with

53-25    customer contributions in aid of construction derived from specific

53-26    surcharges approved by the regulatory authority over and above

53-27    revenues required for normal operating expenses and return, the

53-28    public utility may not sell or transfer any of its assets, its

53-29    certificate of convenience and necessity, or its controlling

53-30    interest in an incorporated utility, unless the utility provides to

53-31    the purchaser or transferee before the date of the sale or transfer

53-32    a written disclosure relating to the contributions.  The disclosure

53-33    must contain, at a minimum, the total dollar amount of the

53-34    contributions and a statement that the contributed property or

53-35    capital may not be included in invested capital or allowed

53-36    depreciation expense by the regulatory authority in rate-making

53-37    proceedings.

53-38          (k) [(g)]  A utility or a water supply or sewer service

53-39    corporation that proposes to sell, assign, lease, or rent its

53-40    facilities shall notify the other party to the transaction of the

53-41    requirements of this section before signing an agreement to sell,

53-42    assign, lease, or rent its facilities.

53-43          SECTION 6.12.  Section 13.302, Water Code, is amended to read

53-44    as follows:

53-45          Sec. 13.302.  PURCHASE OF VOTING STOCK IN ANOTHER PUBLIC

53-46    UTILITY:  REPORT.  (a)  A utility may not purchase voting stock in

53-47    another utility doing business in this state and a person may not

53-48    acquire a controlling interest in a utility doing business in this

53-49    state unless the person or utility files a written application with

53-50    [notifies] the commission [of the proposed purchase or acquisition]

53-51    not later than the 61st day before the date on which the

53-52    transaction is to occur.

53-53          (b)  The commission may require that a person acquiring a

53-54    controlling interest in a utility demonstrate adequate financial,

53-55    managerial, and technical capability for providing continuous and

53-56    adequate service to the requested area and any areas currently

53-57    certificated to the person.

53-58          (c)  If the person acquiring a controlling interest cannot

53-59    demonstrate adequate financial capability, the commission may

53-60    require that the person provide a bond or other financial assurance

53-61    in a form and amount specified by the commission to ensure

53-62    continuous and adequate utility service is provided.

53-63          (d)  The executive director may request that the commission

53-64    hold a public hearing on the transaction if the executive director

53-65    believes that a criterion [criteria] prescribed by Section

53-66    13.301(e) [13.301(c) of this code] applies.

53-67          (e) [(c)]  Unless the executive director requests that a

53-68    public hearing be held, the purchase or acquisition may be

53-69    completed as proposed:

 54-1                (1)  at the end of the 60-day period; or

 54-2                (2)  [may be completed] at any time after the executive

 54-3    director notifies the person or utility that a hearing will not be

 54-4    requested.

 54-5          (f)  If a hearing is requested or if the person or utility

 54-6    fails to make the application to the commission as [provide the]

 54-7    required [notification to the commission], the purchase or

 54-8    acquisition may not be completed unless the commission determines

 54-9    that the proposed transaction serves the public interest.  A

54-10    purchase or acquisition that is not completed in accordance with

54-11    the provisions of this section is void.

54-12          SECTION 6.13.  Section 13.412, Water Code, is amended by

54-13    amending Subsections (a) and (b) and adding Subsections (f) and (g)

54-14    to read as follows:

54-15          (a)  At the request of the commission, the attorney general

54-16    shall bring suit for the appointment of a receiver to collect the

54-17    assets and carry on the business of a water or sewer utility that:

54-18                (1)  has abandoned operation of its facilities;

54-19                (2)  informs the commission that the owner is

54-20    abandoning the system;

54-21                (3)  [or] violates a final order of the commission; or

54-22                (4)  allows any property owned or controlled by it to

54-23    be used in violation of a final order of the commission.

54-24          (b)  The court shall appoint a receiver if an appointment is

54-25    necessary:

54-26                (1)  to guarantee the collection of assessments, fees,

54-27    penalties, or interest;

54-28                (2)  to guarantee continuous and adequate [continued]

54-29    service to the customers of the utility; or

54-30                (3)  to prevent continued or repeated violation of the

54-31    final order.

54-32          (f)  For purposes of this section and Section 13.4132,

54-33    abandonment may include but is not limited to:

54-34                (1)  failure to pay a bill or obligation owed to a

54-35    retail public utility or to an electric or gas utility with the

54-36    result that the utility service provider has issued a notice of

54-37    discontinuance of necessary services;

54-38                (2)  failure to provide appropriate water or wastewater

54-39    treatment so that a potential health hazard results;

54-40                (3)  failure to adequately maintain facilities,

54-41    resulting in potential health hazards, extended outages, or

54-42    repeated service interruptions;

54-43                (4)  failure to provide customers adequate notice of a

54-44    health hazard or potential health hazard;

54-45                (5)  failure to secure an alternative available water

54-46    supply during an outage;

54-47                (6)  displaying a pattern of hostility towards or

54-48    repeatedly failing to respond to the commission or the utility's

54-49    customers; and

54-50                (7)  failure to provide the commission with adequate

54-51    information on how to contact the utility for normal business and

54-52    emergency purposes.

54-53          (g)  Notwithstanding Section 64.021, Civil Practice and

54-54    Remedies Code, a receiver appointed under this section may seek

54-55    commission approval to acquire the water or sewer utility's

54-56    facilities and transfer the utility's certificate of convenience

54-57    and necessity.  The receiver must apply in accordance with

54-58    Subchapter H.

54-59          SECTION 6.14.  Subsections (a) and (c), Section 13.4132,

54-60    Water Code, are amended to read as follows:

54-61          (a)  The commission, after providing to the utility notice

54-62    and an opportunity to be heard by the commissioners at a commission

54-63    meeting [for a hearing], may authorize a willing person to

54-64    temporarily manage and operate a utility if the utility:

54-65                (1)  [that] has discontinued or abandoned operations or

54-66    the provision of services; or

54-67                (2)  has been or is being referred to the attorney

54-68    general for the appointment of a receiver under Section 13.412 [of

54-69    this code].

 55-1          (c)  A person appointed under this section has the powers and

 55-2    duties necessary to ensure the continued operation of the utility

 55-3    and the provision of continuous and adequate services to customers,

 55-4    including the power and duty to:

 55-5                (1)  read meters;

 55-6                (2)  bill for utility services;

 55-7                (3)  collect revenues;

 55-8                (4)  disburse funds; [and]

 55-9                (5)  access all system components; and

55-10                (6)  request rate increases.

55-11          SECTION 6.15.  Section 15.602, Water Code, is amended to read

55-12    as follows:

55-13          Sec. 15.602.  DEFINITIONS.  In this subchapter:

55-14                (1)  "Additional state revolving fund" means any state

55-15    revolving fund hereafter established by the board to provide

55-16    financial assistance to political subdivisions for public works in

55-17    accordance with a capitalization grant program hereafter

55-18    established by a federal agency or otherwise authorized by federal

55-19    law.

55-20                (2)  "Authorized investments" means any authorized

55-21    investments described in Section 404.024, Government Code.

55-22                (3)  "Community water system" means a public water

55-23    system that:

55-24                      (A)  serves at least 15 service connections used

55-25    by year-round residents of the area served by the system; or

55-26                      (B)  regularly serves at least 25 year-round

55-27    residents.

55-28                (4)  "Construction" shall have the meaning assigned by

55-29    the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.).

55-30                (5)  "Disadvantaged community" means an area meeting

55-31    criteria established by board rule, which criteria shall be based

55-32    on measures that may include single-family residential property

55-33    valuation, income levels of residents of the area, or other

55-34    similarly appropriate measures.

55-35                (6) [(4)]  "Federal Act" means the Federal Water

55-36    Pollution Control Act, as amended (33 U.S.C. 1251 et seq.).

55-37                (7)  "Nonprofit noncommunity water system" means a

55-38    public water system that is not operated for profit and that:

55-39                      (A)  is owned by a political subdivision or

55-40    nonprofit entity; and

55-41                      (B)  is not a community water system.

55-42                (8) [(5)]  "Political subdivision" means a

55-43    municipality, intermunicipal, interstate, or state agency, [or] any

55-44    other public entity eligible for assistance under this subchapter,

55-45    or a nonprofit water supply corporation created and operating under

55-46    Chapter 76, Acts of the 43rd Legislature, 1st Called Session, 1933

55-47    (Article 1434a, Vernon's Texas Civil Statutes), if such entity is

55-48    eligible for financial assistance under federal law establishing

55-49    the state revolving fund or an additional state revolving fund.

55-50                (9)  "Public water system" means a system that is owned

55-51    by any person and that meets the definition of public water system

55-52    in the Safe Drinking Water Act.

55-53                (10) [(6)]  "Public works" means any project to

55-54    acquire, construct, improve, repair, or otherwise provide any

55-55    buildings, structures, facilities, equipment, or other real or

55-56    personal property or improvements designed for public use,

55-57    protection, or enjoyment undertaken by a political subdivision and

55-58    paid for, in whole or in part, out of public funds.

55-59                (11) [(7)]  "Revolving fund" means the state water

55-60    pollution control revolving fund.

55-61                (12)  "Safe Drinking Water Act" means Title XIV of the

55-62    federal Public Health Service Act, commonly known as the Safe

55-63    Drinking Water Act, as amended (42 U.S.C. Section 300f et seq.).

55-64                (13)  "Safe drinking water revolving fund" means the

55-65    fund established by the board as an additional state revolving fund

55-66    to provide  financial assistance in accordance with the federal

55-67    program established pursuant to the provisions of the Safe Drinking

55-68    Water Act.

55-69                (14) [(8)]  "Treatment works" has the meaning

 56-1    established by the federal act and the eligible components of the

 56-2    management programs established by Sections 319 and 320 of the

 56-3    federal act.

 56-4          SECTION 6.16.  Subchapter J, Chapter 15, Water Code, is

 56-5    amended by adding Section 15.6041 to read as follows:

 56-6          Sec. 15.6041.  FINANCIAL ASSISTANCE UNDER THE SAFE DRINKING

 56-7    WATER REVOLVING FUND.  (a)  The safe drinking water revolving fund

 56-8    shall be administered by the board under this subchapter and rules

 56-9    adopted by the board.  The safe drinking water revolving fund shall

56-10    be held and administered by the board in the same manner as

56-11    provided by Section 15.603, except that the safe drinking water

56-12    revolving fund shall be held and administered in accordance with

56-13    the Safe Drinking Water Act and shall be used to provide financial

56-14    assistance in accordance with that act and in the manner provided

56-15    by rules adopted by the board:

56-16                (1)  to political subdivisions for community water

56-17    systems and for nonprofit noncommunity water systems;

56-18                (2)  to persons other than political subdivisions for

56-19    community water systems or nonprofit noncommunity water systems

56-20    from the account established by Subsection (b)(1);

56-21                (3)  to persons, including political subdivisions, for

56-22    service to disadvantaged communities from the account established

56-23    by Subsection (b)(2); and

56-24                (4)  for other purposes authorized by the Safe Drinking

56-25    Water Act.

56-26          (b)  In addition to other accounts the board may establish in

56-27    the safe drinking water revolving fund, the board shall establish

56-28    the following separate accounts:

56-29                (1)  the community/noncommunity water system financial

56-30    assistance account, to be used solely for providing financial

56-31    assistance to persons, other than political subdivisions, providing

56-32    services through a community water system or a nonprofit

56-33    noncommunity water system, which account shall be composed solely

56-34    of funds appropriated by the legislature, funds provided as gifts

56-35    or grants by the United States government, interest earnings on

56-36    amounts credited to the account, and repayments of loans made from

56-37    the account; and

56-38                (2)  the disadvantaged community account, to be used

56-39    solely for providing financial assistance under the terms of

56-40    Subsections (c) and (d), which account shall be composed solely of

56-41    funds appropriated by the legislature, funds provided as gifts or

56-42    grants by the United States government, interest earnings on

56-43    amounts credited to the account, and repayments of loans made from

56-44    the account.

56-45          (c)  The board may provide financial assistance from the

56-46    disadvantaged community account to:

56-47                (1)  a political subdivision:

56-48                      (A)  that is a disadvantaged community; or

56-49                      (B)  for a project serving an area that:

56-50                            (i)  is located outside the boundaries of

56-51    the political subdivision; and

56-52                            (ii)  meets the definition of a

56-53    disadvantaged community; or

56-54                (2)  an owner of a community water system that is

56-55    ordered by the commission to provide service to a disadvantaged

56-56    community, provided that the financial assistance is for the sole

56-57    purpose of providing service to a disadvantaged community.

56-58          (d)  In providing financial assistance from the disadvantaged

56-59    community account, the board shall determine the amount of a loan

56-60    which the political subdivision cannot repay based on affordability

56-61    criteria established by the board by rule.  The board shall forgive

56-62    repayment of that portion of the principal of the loan which the

56-63    board determines the political subdivision cannot repay.  Financial

56-64    assistance from the disadvantaged community account may not exceed

56-65    the allowable percentage of the amount of the capitalization grant

56-66    received by the state pursuant to the Safe Drinking Water Act.

56-67          SECTION 6.17.  Subsections (c) and (g), Section 15.603, Water

56-68    Code, are amended to read as follows:

56-69          (c)  The revolving fund consists of money derived from

 57-1    federal grants, direct appropriations, investment earnings on

 57-2    amounts credited to the revolving fund, and, at the board's

 57-3    discretion, from any and all sources available [to provide the

 57-4    required state match for the purposes of this subchapter].

 57-5          (g)  The revolving fund and any accounts established in the

 57-6    revolving fund shall be kept and maintained by or at the direction

 57-7    of the board and do not constitute and are not a part of the State

 57-8    Treasury.  However, at the direction of the board, the revolving

 57-9    fund or accounts in the revolving fund may be kept and held in

57-10    escrow and in trust by the comptroller [State Treasurer] for and on

57-11    behalf of the board, shall be used only as provided by this

57-12    subchapter, and pending such use shall be invested in authorized

57-13    investments as provided by any order, resolution, or rule of the

57-14    board.  Legal title to money and investments in the revolving fund

57-15    is in the board unless or until paid out as provided by this

57-16    subchapter, the federal act, and the rules of the board.  The

57-17    comptroller [State Treasurer], as custodian, shall administer the

57-18    funds strictly and solely as provided by this subchapter and in the

57-19    orders, resolutions, and rules, and the state shall take no action

57-20    with respect to the revolving fund other than that specified in

57-21    this subchapter, the federal act, and the rules of the board.

57-22          SECTION 6.18.  Subsection (a), Section 341.031, Health and

57-23    Safety Code, is amended to read as follows:

57-24          (a)  Public drinking water must be free from deleterious

57-25    matter and must comply with the standards established by the

57-26    commission[, the United States Public Health Service,] or the

57-27    United States Environmental Protection Agency.  The commission may

57-28    adopt and enforce rules to implement the federal Safe Drinking

57-29    Water Act (42 U.S.C. Section 300f et seq.).

57-30          SECTION 6.19.  Subchapter C, Chapter 341, Health and Safety

57-31    Code, is amended by adding Section 341.0315 to read as follows:

57-32          Sec. 341.0315.  PUBLIC DRINKING WATER SUPPLY SYSTEM

57-33    REQUIREMENTS.  (a)  To preserve the public health, safety, and

57-34    welfare, the commission shall ensure that public drinking water

57-35    supply systems:

57-36                (1)  supply safe drinking water in adequate quantities;

57-37                (2)  are financially stable; and

57-38                (3)  are technically sound.

57-39          (b)  The commission shall encourage and promote the

57-40    development and use of regional and areawide drinking water supply

57-41    systems.

57-42          (c)  Each public drinking water supply system shall provide

57-43    an adequate and safe drinking water supply.  The supply must meet

57-44    the requirements of Section 341.031 and commission rules.

57-45          (d)  The commission shall consider compliance history in

57-46    determining issuance of new permits, renewal permits, and permit

57-47    amendments for a public drinking water system.

57-48          SECTION 6.20.  Subchapter C, Chapter 341, Health and Safety

57-49    Code, is amended by amending Section 341.035 and adding Sections

57-50    341.0351 through 341.0356 to read as follows:

57-51          Sec. 341.035.  APPROVED PLANS REQUIRED FOR PUBLIC WATER

57-52    SUPPLIES.  (a)  Except as provided by Subsection (d), a person may

57-53    not begin construction of a public drinking water supply system

57-54    unless the executive director of the commission approves:

57-55                (1)  a business plan for the system; and

57-56                (2)  the plans and specifications for the system.

57-57          (b)  The prospective owner or operator of the system must

57-58    submit to the executive director a business plan that demonstrates

57-59    that the owner or operator of the proposed system has available the

57-60    financial, managerial, and technical capability to ensure future

57-61    operation of the system in accordance with applicable laws and

57-62    rules.  The executive director:

57-63                (1)  shall review the business plan; and

57-64                (2)  may order the prospective owner or operator of the

57-65    system to provide adequate financial assurance of ability to

57-66    operate the system in accordance with applicable laws and rules, in

57-67    the form of a bond or as specified by the commission, unless the

57-68    executive director finds that the business plan demonstrates

57-69    adequate financial capability.

 58-1          (c)  The prospective owner or operator of the proposed system

 58-2    shall provide to the commission [A person contemplating

 58-3    establishing a drinking water supply system for public use must

 58-4    submit] completed plans and specifications for review and approval

 58-5    in accordance with commission rules.

 58-6          (d)  A person is not required to file a business plan under

 58-7    Subsection (a) or (b) if the person:

 58-8                (1)  is a county;

 58-9                (2)  is a retail public utility as defined by Section

58-10    13.002, Water Code, unless that person is a utility as defined by

58-11    that section; or

58-12                (3)  has executed an agreement with a political

58-13    subdivision to transfer the ownership and operation of the water

58-14    supply system to the political subdivision [to the commission

58-15    before construction of the system.  The commission shall approve

58-16    plans that conform to the state's water safety laws.  The water

58-17    supply system may be established only on the commission's

58-18    approval].

58-19          Sec. 341.0351.  NOTIFICATION OF SYSTEM CHANGES.  [(b)]  Any

58-20    person [agency], including a municipality, supplying a drinking

58-21    water service to the public that intends to make a material or

58-22    major change in a water supply system that may affect the sanitary

58-23    features of that utility must give written notice of that intention

58-24    to the commission before making the change.

58-25          Sec. 341.0352.  ADVERTISED QUALITY OF WATER SUPPLY.  [(c)]  A

58-26    water supply system owner, manager, or operator or an agent of a

58-27    water supply system owner, manager, or operator may not advertise

58-28    or announce a water supply as being of a quality other than the

58-29    quality that is disclosed by the commission's latest rating.

58-30          Sec. 341.0353.  DRINKING WATER SUPPLY COMPARATIVE RATING

58-31    INFORMATION.  [(d)]  The commission shall assemble and tabulate all

58-32    necessary information [data] relating to public drinking water

58-33    supplies at least once each year and as often during the year as

58-34    conditions demand or justify.  The information [data] forms the

58-35    basis of an official comparative rating of public drinking water

58-36    supply systems.

58-37          Sec. 341.0354.  HIGHWAY SIGNS FOR APPROVED SYSTEM RATING.

58-38    [(e)]  A water supply system that attains an approved rating is

58-39    entitled to erect signs of a design approved by the commission on

58-40    highways approaching the municipality in which the water supply

58-41    system is located.  The signs shall be immediately removed on

58-42    notice from the commission if the water supply system does not

58-43    continue to meet the specified standards.

58-44          Sec. 341.0355.  FINANCIAL ASSURANCE FOR CERTAIN SYSTEMS.

58-45    (a)  The commission may require the owner or operator of a public

58-46    drinking water supply system that was constructed without the

58-47    approval required by Section 341.035, that has a history of

58-48    noncompliance with this subchapter or commission rules, or that is

58-49    subject to a commission enforcement action to:

58-50                (1)  provide the executive director of the commission

58-51    with a business plan that demonstrates that the system has

58-52    available the financial, managerial, and technical resources

58-53    adequate to ensure future operation of the system in accordance

58-54    with applicable laws and rules; and

58-55                (2)  provide adequate financial assurance of the

58-56    ability to operate the system in accordance with applicable laws

58-57    and rules in the form of a bond or as specified by the commission.

58-58          (b)  If the commission relies on rate increases or customer

58-59    surcharges as the form of financial assurance, such funds shall be

58-60    deposited in an escrow account and released only with the approval

58-61    of the commission.

58-62          Sec. 341.0356.  ORDER TO STOP OPERATIONS.  (a)  A public

58-63    water supply system shall stop operations on receipt of a written

58-64    notification of the executive director of the commission or an

58-65    order of the commission issued under this section.

58-66          (b)  The executive director or the commission may order a

58-67    public water supply system to stop operations if:

58-68                (1)  the system was constructed without the approval

58-69    required by Section 341.035; or

 59-1                (2)  the executive director determines that the system

 59-2    presents an imminent health hazard.

 59-3          (c)  A notification or order issued under this section may be

 59-4    delivered by facsimile, by personal service, or by mail.

 59-5          (d)  A water supply system subject to notification or an

 59-6    order under this section, on written request, is entitled to an

 59-7    opportunity to be heard by the commissioners at a commission

 59-8    meeting.

 59-9          (e)  The public water supply system may not resume operations

59-10    until the commission, the executive director, or a court authorizes

59-11    the resumption.

59-12          SECTION 6.21.  Subsections (a) and (b), Section 341.047,

59-13    Health and Safety Code, are amended to read as follows:

59-14          (a)  A person commits an offense if the person:

59-15                (1)  violates a provision of Section 341.031;

59-16                (2)  violates a provision of Section 341.032(a) or (b);

59-17                (3)  violates a provision of Section 341.033(a)-(f);

59-18                (4)  constructs a drinking water supply system without

59-19    submitting completed plans and specifications as required by

59-20    Section 341.035(c) [341.035(a)];

59-21                (5)  begins construction of [establishes] a drinking

59-22    water supply system without the commission's approval as required

59-23    by Section 341.035(a);

59-24                (6)  violates a provision of Section 341.0351 or

59-25    341.0352 [341.035(b) or (c)];

59-26                (7)  fails to remove a sign as required by Section

59-27    341.0354 [341.035(e)]; or

59-28                (8)  violates a provision of Section 341.036.

59-29          (b)  An offense under Subsection (a) is a Class C misdemeanor

59-30    [punishable by a fine of not less than $100].

59-31          SECTION 6.22.  Subsections (b) through (i), Section 341.048,

59-32    Health and Safety Code, are amended to read as follows:

59-33          (b)  A person who causes, suffers, allows, or permits a

59-34    violation under this subchapter shall be assessed a civil penalty

59-35    of not less than $50 nor more than $10,000 [$500] for each

59-36    violation.  Each day of a continuing violation is a separate

59-37    violation.

59-38          (c)  [If it is shown on a trial of the defendant that the

59-39    defendant has previously been assessed a civil penalty under this

59-40    section within a year before the date on which the violation being

59-41    tried occurred, the defendant shall be assessed a civil penalty of

59-42    not less than $50 nor more than $1,000 for each subsequent

59-43    violation under this subchapter.  Each day of a continuing

59-44    violation is a separate violation.]

59-45          [(d)]  If it appears that a person has violated, is

59-46    violating, or threatens to violate a provision under this

59-47    subchapter, the commission, a county, or a municipality may

59-48    institute a civil suit in a district court for:

59-49                (1)  injunctive relief to restrain the person from

59-50    continuing the violation or threat of violation;

59-51                (2)  the assessment and recovery of a civil penalty; or

59-52                (3)  both injunctive relief and a civil penalty.

59-53          (d) [(e)]  The commission is a necessary and indispensable

59-54    party in a suit brought by a county or municipality under this

59-55    section.

59-56          (e) [(f)]  On the commission's request, the attorney general

59-57    shall institute a suit in the name of the state for injunctive

59-58    relief, to recover a civil penalty, or for both injunctive relief

59-59    and civil penalty.

59-60          (f) [(g)]  The suit may be brought in:

59-61                (1)  Travis County;

59-62                (2)  [, in] the county in which the defendant resides;

59-63    or

59-64                (3)  [, or in] the county in which the violation or

59-65    threat of violation occurs.

59-66          (g) [(h)]  In a suit under this section to enjoin a violation

59-67    or threat of violation of this subchapter, the court shall grant

59-68    the state, county, or municipality, without bond or other

59-69    undertaking, any injunction that the facts may warrant including

 60-1    temporary restraining orders, temporary injunctions after notice

 60-2    and hearing, and permanent injunctions.

 60-3          (h) [(i)]  Civil penalties recovered in a suit brought under

 60-4    this section by a county or municipality shall be equally divided

 60-5    between:

 60-6                (1)  the state; and

 60-7                (2)  the county or municipality that first brought the

 60-8    suit.

 60-9          SECTION 6.23.  Subsection (a), Section 341.049, Health and

60-10    Safety Code, is amended to read as follows:

60-11          (a)  If a person causes, suffers, allows, or permits a

60-12    violation of this subchapter or a rule or order adopted under this

60-13    subchapter, the commission may assess a penalty against that person

60-14    as provided by this section.  The penalty shall not be less than

60-15    $50 nor more than $10,000 [$500] for each violation.  Each day of a

60-16    continuing violation may be considered a separate violation.

60-17            ARTICLE 7.  WATER DATA COLLECTION AND DISSEMINATION

60-18          SECTION 7.01.  Section 16.012, Water Code, is amended to read

60-19    as follows:

60-20          Sec. 16.012.  STUDIES, INVESTIGATIONS, SURVEYS.  (a)  The

60-21    executive administrator shall make studies, investigations, and

60-22    surveys of the occurrence, quantity, quality, and availability of

60-23    the surface water and groundwater of this state and shall, in

60-24    cooperation with other entities of the state, guide the development

60-25    of a statewide water resource data collection and dissemination

60-26    network.  For these purposes the board [staff] shall collect,

60-27    receive, analyze, [and] process, and facilitate access to basic

60-28    data and summary information concerning [the] water resources of

60-29    the state and provide guidance regarding data formats and

60-30    descriptions required to access and understand Texas water resource

60-31    data.

60-32          (b)  The executive administrator shall:

60-33                (1)  determine suitable locations for future water

60-34    facilities, including reservoir sites;

60-35                (2)  determine suitable, cost-effective water supply

60-36    alternatives on a regional basis;

60-37                (3)  locate land best suited for irrigation;

60-38                (4) [(3)]  make estimates of the cost of proposed

60-39    irrigation works and the improvement of reservoir sites;

60-40                (5) [(4)]  examine and survey reservoir sites; [and]

60-41                (6)  monitor [(5)  investigate] the effects of fresh

60-42    water inflows upon the bays and estuaries of Texas;

60-43                (7)  monitor instream flows;

60-44                (8)  lead a statewide effort, in coordination with

60-45    federal, state, and local governments, institutions of higher

60-46    education, and other interested parties, to develop a network for

60-47    collecting and disseminating water resource-related information

60-48    that is sufficient to support assessment of ambient water

60-49    conditions statewide;

60-50                (9)  make recommendations for optimizing the efficiency

60-51    and effectiveness of water resource data collection and

60-52    dissemination as necessary to ensure that basic water resource data

60-53    are maintained and available for Texas;

60-54                (10)  make basic data and summary information developed

60-55    under this subsection accessible to state agencies and other

60-56    interested persons; and

60-57                (11)  cooperate with the Texas Agricultural Extension

60-58    Service to facilitate development and delivery of educational

60-59    programs as appropriate for rural and urban water users.

60-60          (c)  In performing the duties required under Subdivisions

60-61    (1), (4), (5), (6), and (7) of Subsection (b), the executive

60-62    administrator shall consider advice from the Parks and Wildlife

60-63    Department.

60-64          (d)  All entities of the state, including institutions of

60-65    higher education, that collect or use water data or information

60-66    shall cooperate with the board in the development of a coordinated,

60-67    efficient, and effective statewide water resource data collection

60-68    and dissemination network.

60-69          (e)  The executive administrator shall keep full and proper

 61-1    records of his work, observations, data, and calculations, all of

 61-2    which are the property of the state.

 61-3          (f) [(d)]  In performing his duties under this section, the

 61-4    executive administrator shall assist the commission in carrying out

 61-5    the purposes and policies stated in Section 12.014 of this code.

 61-6          (g)  No later than December 31, 1999, the commission shall

 61-7    obtain or develop an updated water availability model for six river

 61-8    basins as determined by the commission.  The commission shall

 61-9    obtain or develop an updated water availability model for all

61-10    remaining river basins no later than December 31, 2001.

61-11          (h)  Within 90 days of completing a water availability model

61-12    for a river basin, the commission shall provide to all holders of

61-13    existing permits, certified filings, and certificates of

61-14    adjudication in that river basin the projected amount of water that

61-15    would be available:  during a drought of record; when flows are at

61-16    75 percent of normal; and when flows are at 50 percent of normal.

61-17          (i)  Within 90 days of completing a water availability model

61-18    for a river basin, the commission shall provide to each regional

61-19    water planning group created under Section 16.051 of this code in

61-20    that river basin the projected amount of water that would be

61-21    available if cancellation procedures were instigated under the

61-22    provisions of Subchapter E, Chapter 11 of this code.

61-23          (j)  Within 90 days of completing a water availability model

61-24    for a river basin, the commission, in coordination with the Parks

61-25    and Wildlife Department, shall determine the maximum amount of

61-26    municipal effluent that may be reused without causing harm to

61-27    existing water rights, instream uses, and freshwater inflows to

61-28    bays and estuaries.  Within 30 days of making this determination,

61-29    the commission shall provide the projections to each regional water

61-30    planning group created under Section 16.051 of this code in that

61-31    river basin.

61-32          SECTION 7.02.  Section 16.021, Water Code, is amended to read

61-33    as follows:

61-34          Sec. 16.021.  TEXAS NATURAL RESOURCES INFORMATION SYSTEM.

61-35    (a)  The executive administrator shall establish the Texas Natural

61-36    Resources Information System (TNRIS) to serve Texas agencies and

61-37    citizens as a centralized clearinghouse and referral center for

61-38    natural resource, census, and other socioeconomic data [as a

61-39    centralized information system incorporating all Texas natural

61-40    resource data, socioeconomic data related to natural resources, or

61-41    indexes related to that data that is collected by state agencies or

61-42    other entities].

61-43          (b)  The Texas Geographic Information Council (TGIC) [Natural

61-44    Resources Information System Task Force] is created to provide

61-45    strategic planning and coordination in the acquisition and use of

61-46    geo-spatial data and related technologies in the State of Texas.

61-47    The executive administrator and the executive director of the

61-48    Department of Information Resources shall designate entities to be

61-49    members of the TGIC.  The chief administrative officer of each

61-50    member entity shall select one representative to serve on the TGIC.

61-51    The duties of the TGIC shall include providing guidance to the

61-52    executive administrator in carrying out his duties under this

61-53    section and guidance to the Department of Information Resources for

61-54    development of rules related to statewide geo-spatial data and

61-55    technology standards.  [The task force is composed of one

61-56    representative from each state agency designated by the executive

61-57    administrator.  The executive administrator shall designate a state

61-58    agency as a participant in the task force if the agency collects or

61-59    uses natural resource and related socioeconomic data.

61-60    Representatives of each designated agency shall be selected by the

61-61    chief administrative officer of that agency.]

61-62          (c)  Under the guidance of the TGIC [Texas Natural Resources

61-63    Information System Task Force], the executive administrator shall:

61-64                (1)  further develop [and implement] the Texas Natural

61-65    Resources Information System by promoting and providing for

61-66    effective acquisition, archiving, documentation, indexing, and

61-67    dissemination of natural resource and related digital and

61-68    nondigital data and information;

61-69                (2)  obtain information in response to disagreements

 62-1    regarding names and name spellings for natural and cultural

 62-2    features in the state and provide this information to the Board on

 62-3    Geographic Names of the United States Department of the Interior;

 62-4                (3)  make recommendations to the Board on Geographic

 62-5    Names of the United States Department of the Interior for naming

 62-6    any natural or cultural feature subject to the limitations provided

 62-7    by Subsection (d) of this section;

 62-8                (4)  make recommendations to the Department of

 62-9    Information Resources to adopt and promote standards that

62-10    facilitate sharing of digital natural resource data and related

62-11    socioeconomic data among federal, state, and local governments and

62-12    other interested parties;

62-13                (5)  acquire and disseminate natural resource and

62-14    related socioeconomic data describing the Texas-Mexico border

62-15    region; and

62-16                (6)  coordinate, conduct, and facilitate the

62-17    development, maintenance, and use of mutually compatible statewide

62-18    digital base maps depicting natural resources and man-made

62-19    features.

62-20          (d)  A recommendation may not be made under Subdivision (3)

62-21    of Subsection (c) of this section for:

62-22                (1)  a feature previously named under statutory

62-23    authority or recognized by an agency of the federal government, the

62-24    state, or a political subdivision of the state;

62-25                (2)  a feature located on private property for which

62-26    consent of the property owner cannot be obtained; or

62-27                (3)  naming a natural or cultural feature for a living

62-28    person.

62-29          SECTION 7.03.  On September 1, 1997, the Texas Natural

62-30    Resources Information System Task Force and the Texas Geographic

62-31    Information Systems Planning Council are merged into the Texas

62-32    Geographic Information Council.  All designated member agencies of

62-33    both predecessor entities shall continue to serve as member

62-34    agencies of the Texas Geographic Information Council.

62-35          ARTICLE 8.  REPEALER; EFFECTIVE DATE; SAVING; EMERGENCY

62-36          SECTION 8.01.  Section 11.028, Water Code, is repealed.

62-37          SECTION 8.02.  (a)  Except as provided by Subsections (b)

62-38    through (f) of this section, this Act takes effect September 1,

62-39    1997.

62-40          (b)  This section and Sections 2.03, 2.08, 2.09, 2.17, and

62-41    3.03 of this Act take effect immediately.

62-42          (c)  Section 4.36 of this Act takes effect on the first day

62-43    of the first calendar quarter beginning on or after the date that

62-44    it may take effect under Section 39, Article III, Texas

62-45    Constitution.

62-46          (d)  The change in law made by Section 4.36 of this Act to

62-47    Section 151.318, Tax Code, does not affect taxes imposed before the

62-48    effective date of Section 4.36 of this Act, and the law in effect

62-49    before the effective date of that section is continued in effect

62-50    for purposes of liability for and collection of those taxes.

62-51          (e)  Sections 5.03, 5.05 through 5.08, and 5.11 of this Act

62-52    take effect on the date on which the constitutional amendment

62-53    proposed by S.J.R. No. 17, 75th Legislature, Regular Session, 1997,

62-54    takes effect.  If that amendment is not approved by the voters,

62-55    those sections have no effect.

62-56          (f)  The change in law made by Section 5.11 of this Act to

62-57    Subchapter B, Chapter 11, Tax Code, does not affect taxes imposed

62-58    before the effective date of Section 5.11 of this Act, and the law

62-59    in effect before the effective date of that section is continued in

62-60    effect for purposes of liability for and collection of those taxes.

62-61          SECTION 8.03.  (a)  The requirement of Section 341.035,

62-62    Health and Safety Code, as amended by Section 6.20 of this Act,

62-63    that certain persons must provide the executive director of the

62-64    Texas Natural Resource Conservation Commission with a business

62-65    plan, applies only to the prospective owner or operator of a public

62-66    drinking water supply system for which construction begins on or

62-67    after September 1, 1997.

62-68          (b)  Section 341.0355, Health and Safety Code, as added by

62-69    Section 6.20 of this Act, applies to the owner or operator of a

 63-1    public drinking water supply system regardless of the date

 63-2    construction of the system began.

 63-3          SECTION 8.04.  (a)  A change in law made by this Act that

 63-4    applies to a criminal, civil, or administrative penalty applies

 63-5    only to an offense committed or a violation that occurs on or after

 63-6    the effective date of this Act.  For the purposes of this Act, an

 63-7    offense is committed or a violation occurs before the effective

 63-8    date of this Act if any element of the offense or violation occurs

 63-9    before that date.

63-10          (b)  An offense committed or violation that occurs before the

63-11    effective date of this Act is covered by the law in effect when the

63-12    offense was committed or the violation occurred, and the former law

63-13    is continued in effect for this purpose.

63-14          SECTION 8.05.  The importance of this legislation and the

63-15    crowded condition of the calendars in both houses create an

63-16    emergency and an imperative public necessity that the

63-17    constitutional rule requiring bills to be read on three several

63-18    days in each house be suspended, and this rule is hereby suspended,

63-19    and that this Act take effect and be in force according to its

63-20    terms, and it is so enacted.

63-21                                 * * * * *