By Cook, Puente, Turner of Coleman                    H.B. No. 1629
         77R7426 QS-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the provision of water by the Lower Colorado River
 1-3     Authority to a municipality outside the Colorado River basin.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Chapter 7, Acts of the 43rd Legislature, 4th
 1-6     Called Session, 1934 (Article 8280-107, Vernon's Texas Civil
 1-7     Statutes), is amended by adding Section 28 to read as follows:
 1-8           Sec. 28.  Notwithstanding any other provision of this Act or
 1-9     other law:
1-10           (a)  In this section:
1-11                 (1)  "Municipality" includes a municipally owned
1-12     utility.
1-13                 (2)  "Water service area" means the area in which the
1-14     district is authorized to use, distribute, and sell water on
1-15     January 1, 2001.
1-16           (b)  Subject to the limitations and restrictions in this
1-17     section, the district may enter into a written contract with a
1-18     municipality located outside the water service area to distribute
1-19     and sell water to the municipality.
1-20           (c)  In addition to the district's applicable water rate, the
1-21     district shall charge a municipality a surcharge determined by the
1-22     board of directors according to the terms of the contract to enable
1-23     the district to develop and manage water resources sufficient to
1-24     address the projected needs of the district's water service area
 2-1     and the needs of the municipality to the extent agreed in the
 2-2     contract.  The board of directors' determination of the surcharge
 2-3     is not subject to review or modification by any regulatory agency
 2-4     or administrative authority.
 2-5           (d)  The use or reservation of water under a contract
 2-6     authorized by this section may extend for a base period of not more
 2-7     than 50 years.  A contract may provide an option to renew for not
 2-8     more than an additional 30 years.  An option to renew must  require
 2-9     that the municipality progressively reduce the amount of water
2-10     reserved or used by the municipality during the last 10 years of
2-11     the renewal term and require that the rate paid by the municipality
2-12     immediately increase by a factor of five if the municipality does
2-13     not make the required reduction.  The municipality is not entitled
2-14     to further reservation, use, or delivery of water from the district
2-15     at the conclusion of the contract.
2-16           (e)  A contract authorized by this section must require that
2-17     the then current rate paid by the municipality immediately increase
2-18     by a factor of five if:
2-19                 (1)  the municipality initiates legal proceedings in a
2-20     court or regulatory agency to obtain, or obtains, other than
2-21     through direct negotiations with the district or other than with
2-22     the express written consent of the district:
2-23                       (A)  an increase in the amount of surface water
2-24     taken by the municipality under this section; or
2-25                       (B)  an extension of either the base or renewal
2-26     periods under Subsection (d); or
2-27                 (2)  the district is compelled by any authority to
 3-1     reserve, sell, or make available to the municipality more than
 3-2     150,000 acre-feet of water per year or to reserve, sell, or make
 3-3     available to the municipality water beyond the base and renewal
 3-4     periods under Subsection (d).
 3-5           (f)  Within the water service area, the district must own any
 3-6     personal property, fixtures, or appurtenances that are used for
 3-7     making available, diverting, or delivering water to a municipality
 3-8     under a contract authorized by this section.
 3-9           (g)  Water to be provided under a contract authorized by this
3-10     section may not be diverted from the Colorado River at diversion
3-11     points located on the reservoirs that, on the effective date of
3-12     this section, are owned and operated by the district upstream of
3-13     Mansfield Dam.
3-14           (h)  The district may sell no more than a total of 150,000
3-15     acre-feet of water in any year under contracts authorized by this
3-16     section.
3-17           (i)  This section does not authorize:
3-18                 (1)  the district to sell its surface water rights to
3-19     any person or entity for use outside the water service area; or
3-20                 (2)  a sale or lease of water other than as
3-21     specifically authorized by this section.
3-22           (j)  The district may not sell groundwater to a municipality
3-23     under this section.
3-24           (k)  The district may not contract to distribute or sell
3-25     water under this section unless the district's board of directors
3-26     finds that the contract:
3-27                 (1)  will protect and benefit the district's water
 4-1     service area, including municipal, industrial, agricultural,
 4-2     recreational, and environmental interests;
 4-3                 (2)  is consistent with regional water management plans
 4-4     filed with the Texas Water Development Board; and
 4-5                 (3)  will benefit stored water levels in the district's
 4-6     existing reservoirs.
 4-7           SECTION 2.  This Act constitutes full authority for a
 4-8     municipality or municipally owned utility  to enter into a contract
 4-9     with the district under Section 28, Chapter 7, Acts of the 43rd
4-10     Legislature, 4th Called Session, 1934 (Article 8280-107, Vernon's
4-11     Texas Civil Statutes), as added by this Act.  The payments made
4-12     under a contract authorized by that section are operation and
4-13     maintenance expenses of the municipality's utility system.  A
4-14     municipality or municipally owned utility that enters into a
4-15     contract under that section may use proceeds from the sale of its
4-16     revenue bonds to make any such payments.
4-17           SECTION 3.  This Act takes effect immediately if it receives
4-18     a vote of two-thirds of all the members elected to each house, as
4-19     provided by Section 39, Article III, Texas Constitution.  If this
4-20     Act does not receive the vote necessary for immediate effect, this
4-21     Act takes effect September 1, 2001.