By Lewis of Orange                                    H.B. No. 3290
         2001S0519/3                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the development and management of the water resources
 1-3     of the state, including the ratification of the creation of certain
 1-4     groundwater conservation districts; providing penalties.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6                   ARTICLE 1.  TEXAS WATER POLICY COUNCIL
 1-7           SECTION 1.01.  Subtitle A, Title 2, Water Code, is amended by
 1-8     adding Chapter 9 to read as follows:
 1-9                   CHAPTER 9.  TEXAS WATER POLICY COUNCIL
1-10           Sec. 9.001.  DEFINITION.  In this chapter:
1-11                 (1)  "Authority" means an entity listed in Section
1-12     9.010(b).
1-13                 (2)  "Board" means the governing body of an authority.
1-14                 (3)  "Commission" means the Texas Natural Resource
1-15     Conservation Commission.
1-16                 (4)  "Council" means the Texas Water Policy Council.
1-17           Sec. 9.002.  CREATION AND MEMBERSHIP.  (a)  The council is
1-18     composed of seven members as follows:
1-19                 (1)  the chairman, or a board member designated by the
1-20     chairman, of the Texas Water Development Board;
1-21                 (2)  the chairman, or a commissioner designated by the
1-22     chairman, of the commission;
1-23                 (3)  the chairman, or a commissioner designated by the
1-24     chairman, of the Parks and Wildlife Commission;
1-25                 (4)  the commissioner of agriculture; and
 2-1                 (5)  three members of the general public, appointed by
 2-2     the governor.
 2-3           (b)  Council members may not delegate participation or
 2-4     council duties to staff.
 2-5           Sec. 9.003.  TERMS.  (a)  Except for the commissioner of
 2-6     agriculture, council members who are officials of state agencies
 2-7     serve terms as determined by the chairman of each agency.
 2-8           (b)  Council members who are members of the general public
 2-9     serve staggered six-year terms with the term of one member expiring
2-10     August 31 of each odd-numbered year.
2-11           (c)  Council members may be reappointed to serve additional
2-12     terms.
2-13           (d)  A vacancy on the council shall be filled by appointment
2-14     by the original appointing authority for the unexpired term.
2-15           Sec. 9.004.  OFFICERS OF THE COUNCIL.  (a)  The governor
2-16     shall appoint a council member as the chair of the council for a
2-17     two-year term expiring May 31 of each even-numbered year.
2-18           (b)  The council shall have a secretary of the council who,
2-19     by virtue of the position, shall be a full-time employee of the
2-20     commission but shall serve at the pleasure of the council and be
2-21     accountable only to the council.
2-22           Sec. 9.005.  COUNCIL STAFF.  On request by the council, the
2-23     commission and the Texas Water Development Board shall provide any
2-24     staff other than the secretary of the council necessary to assist
2-25     the council in the performance of its duties.
2-26           Sec. 9.006.  MEETINGS.  (a)  The council shall meet at least
 3-1     once in each calendar quarter.  Four members shall constitute a
 3-2     quorum sufficient to conduct meetings and the business of the
 3-3     council.
 3-4           (b)  The council is subject to Chapters 551 and 2001,
 3-5     Government Code.
 3-6           Sec. 9.007.  COMPENSATION OF MEMBERS.  (a)  Members of the
 3-7     council shall serve without compensation but may be reimbursed by
 3-8     legislative appropriation for actual and necessary expenses related
 3-9     to the performance of council duties.
3-10           (b)  Reimbursements under Subsection (a) shall be subject to
3-11     the approval of the chair.
3-12           Sec. 9.008.  POWERS AND DUTIES OF COUNCIL.  (a)  The council
3-13     shall:
3-14                 (1)  provide guidance on state surface water and
3-15     groundwater policy initiatives, including:
3-16                       (A)  clarifying groundwater management;
3-17                       (B)  providing flexibility and incentives for
3-18     water desalination, brush control, regionalization, weather
3-19     modification projects, and public-private partnerships relating to
3-20     water projects;
3-21                       (C)  financing of surface water and groundwater
3-22     projects;
3-23                       (D)  development of water conservation and
3-24     drought management projects;
3-25                       (E)  implementation of approved regional and
3-26     state water plans;
 4-1                       (F)  conjunctive use and management of surface
 4-2     water and groundwater;
 4-3                       (G)  protection of environmental needs, including
 4-4     instream flows, freshwater inflows, and fish and wildlife habitats;
 4-5                       (H)  ensuring commonality of technical data and
 4-6     information such as joint agency studies, freshwater inflow
 4-7     recommendations, surface water and groundwater availability models,
 4-8     and instream flow recommendations developed by the Parks and
 4-9     Wildlife Department, the commission, and the Texas Water
4-10     Development Board; and
4-11                       (I)  encouraging the use of supplemental
4-12     environmental projects for water infrastructure needs and enhancing
4-13     the aquatic environment and habitat in enforcement proceedings at a
4-14     state agency or political subdivision;
4-15                 (2)  act as a policy liaison regarding the roles of,
4-16     the relationships among, and the ongoing duties of local, regional,
4-17     state, federal, and international water management entities,
4-18     including groundwater districts, river authorities and compacts,
4-19     regional water planning groups, and member agencies of the council;
4-20                 (3)  coordinate a unified state position on federal and
4-21     international water issues;
4-22                 (4)  act as an advocate for, and assist in the
4-23     prioritizing of, projects recommended by regional water planning
4-24     groups; and
4-25                 (5)  create a process for developing future groundwater
4-26     management standards for each aquifer.
 5-1           (b)  The council may not:
 5-2                 (1)  regulate water use, water quality, or any other
 5-3     aspect of water resource management;
 5-4                 (2)  plan or construct water resource projects, or have
 5-5     such projects planned or constructed; or
 5-6                 (3)  grant or loan any funds for the construction of
 5-7     water resource projects.
 5-8           (c)  The council shall evaluate the need for and, if
 5-9     appropriate, develop a strategy for reorganizing or improving the
5-10     efficiency of local, regional, and state water management entities
5-11     and agencies.
5-12           Sec. 9.009.  REPORT.  Not later than December 1 of each
5-13     even-numbered year, the council shall submit a report to the
5-14     governor, lieutenant governor, and speaker of the house of
5-15     representatives and to the senate and house standing committees
5-16     with primary responsibility over water resource management and
5-17     financing.  The report shall include findings of the council made
5-18     in the periodic reviews of authorities during the preceding
5-19     two-year period and any other findings and recommendations the
5-20     council considers necessary.
5-21           Sec. 9.010.  REVIEW OF AUTHORITIES.  (a)  On a five-year
5-22     cycle, the council shall review authorities based on the
5-23     administrative policies provided by Section 9.012 and performance
5-24     standards described in Section 9.011.  The reviews shall be
5-25     conducted of groups described in Subsection (b), with group 1 being
5-26     reviewed at the council's first quarterly meeting of the five-year
 6-1     period and group 2 being reviewed at the council's third quarterly
 6-2     meeting of the period.  The council shall continue in numerical
 6-3     order to review one group at every other quarterly meeting until
 6-4     all ten groups have been reviewed and then shall recommence the
 6-5     cycle.
 6-6           (b)  Authorities shall be reviewed under Subsection (a) in
 6-7     the following groups:
 6-8                 (1)  in group 1, Northeast Texas Municipal Water
 6-9     District, Titus County Fresh Water Supply District No. 1, and
6-10     Franklin County Water District;
6-11                 (2)  in group 2, Angelina and Neches River Authority,
6-12     Lower Neches Valley Authority, Sabine River Authority, and Upper
6-13     Neches River Municipal Water Authority;
6-14                 (3)  in group 3, Red River Authority of Texas, Sulphur
6-15     River Municipal Water District, and Sulphur River Basin Authority;
6-16                 (4)  in group 4, San Jacinto River Authority, Gulf
6-17     Coast Water Authority, and North Harris County Regional Water
6-18     Authority;
6-19                 (5)  in group 5, North Texas Municipal Water District,
6-20     Tarrant Regional Water District, Trinity River Authority of Texas,
6-21     and Dallas County Utility and Reclamation District;
6-22                 (6)  in group 6, Brazos River Authority, West Central
6-23     Texas Municipal Water District, and North Central Texas Municipal
6-24     Water Authority;
6-25                 (7)  in group 7, Guadalupe-Blanco River Authority,
6-26     Lavaca-Navidad River Authority, Lower Colorado River Authority, and
 7-1     Upper Guadalupe River Authority;
 7-2                 (8)  in group 8, Nueces River Authority, San Antonio
 7-3     River Authority, and Bexar-Medina-Atascosa Counties Water Control
 7-4     and Improvement District No. 1;
 7-5                 (9)  in group 9, Colorado River Municipal Water
 7-6     District, Central Colorado River Authority, and Upper Colorado
 7-7     River Authority; and
 7-8                 (10)  in group 10, Canadian River Municipal Water
 7-9     Authority, Mackenzie Municipal Water Authority, and White River
7-10     Municipal Water District.
7-11           Sec. 9.011.  PERFORMANCE STANDARDS.  (a)  The council shall
7-12     review and assess an authority described by Section 9.010 according
7-13     to whether the authority:
7-14                 (1)  has complied with Section 9.012;
7-15                 (2)  is performing its mission, key functions, and
7-16     duties and is appropriately exercising its powers;
7-17                 (3)  has defined goals for its mission and has measures
7-18     for meeting those goals;
7-19                 (4)  works with local government effectively;
7-20                 (5)  has current and future funding resources to
7-21     achieve its mission, goals, objectives, and performance targets and
7-22     is appropriately using the funding resources;
7-23                 (6)  has an internal auditor;
7-24                 (7)  administers and manages the various funds in the
7-25     authority's budget properly;
7-26                 (8)  ensures that its functions do not duplicate those
 8-1     of other entities and describes how it avoids such duplication; and
 8-2                 (9)  has an adequate self-evaluation process.
 8-3           (b)  In addition to the review and assessment considerations
 8-4     under Subsection (a), the council shall consider whether:
 8-5                 (1)  the governing structure that guides board
 8-6     activities is set out in a document that is efficient and workable
 8-7     for achieving the mission and key functions of the authority;
 8-8                 (2)  the authority's planning functions, including
 8-9     strategic planning, business plans, the policy-making body's
8-10     planning functions, and the authority's role in regional water
8-11     planning groups, are efficient and workable for achieving the
8-12     mission and key functions of the authority;
8-13                 (3)  the primary role and responsibilities of the
8-14     policy-making body are clearly set out and the members of the body
8-15     are qualified to perform their duties;
8-16                 (4)  the policy-making body uses subcommittees or
8-17     advisory committees to carry out its duties and, if so, whether:
8-18                       (A)  the members are qualified to accomplish
8-19     their duties; and
8-20                       (B)  the committees are used appropriately;
8-21                 (5)  the policy-making body and any subcommittees or
8-22     advisory committees obtain input from the public regarding issues
8-23     under the authority's jurisdiction and whether this information is
8-24     incorporated into the operations of the authority;
8-25                 (6)  the authority's permitted water resources are
8-26     operated in a manner that achieves conservation of that resource
 9-1     and protects environmental needs in accordance with environmental
 9-2     requirements of permits, including instream flow and freshwater
 9-3     inflow needs;
 9-4                 (7)  if the authority charges for water or electricity,
 9-5     the authority establishes an appropriate rate structure; and
 9-6                 (8)  if the authority operates water or wastewater
 9-7     treatment plants, the plants are regional in nature.
 9-8           (c)  Prior to its five-year review under Section 9.010, an
 9-9     authority shall assess its compliance with the standards described
9-10     by this section and shall report the results to the council for use
9-11     during the review.
9-12           Sec. 9.012.  ADMINISTRATIVE POLICIES FOR AUTHORITIES.
9-13     (a)  Each authority subject to this chapter shall submit to the
9-14     council a copy of its administrative policies and any subsequent
9-15     amendments adopted by its board.
9-16           (b)  The council shall file copies of the administrative
9-17     policies and shall make them available for public inspection.
9-18           (c)  The council may request additional documents from an
9-19     authority or inspect records at the office of the authority to
9-20     determine compliance with the adopted administrative policies.
9-21           (d)  The following provisions shall be incorporated into the
9-22     administrative policies adopted by the authorities subject to these
9-23     rules:
9-24                 (1)  Code of ethics.  The administrative policies shall
9-25     mandate compliance with the following standards:
9-26                       (A)  Chapter 171, Local Government Code, relating
 10-1    to conflicts of interest with a business entity in which a local
 10-2    public official has a substantial interest;
 10-3                      (B)  Chapter 573, Government Code, relating to
 10-4    nepotism;
 10-5                      (C)  Chapter 572, Government Code, relating to
 10-6    standards of conduct, personal financial disclosure, and conflict
 10-7    of interest; and
 10-8                      (D)  Section 52, Article III, Texas Constitution,
 10-9    relating to the prohibition on granting public money or a thing of
10-10    value to any individual, association, or corporation.
10-11                (2)  Travel expenses.  The administrative policies
10-12    shall provide for reimbursing authority officials for necessary and
10-13    reasonable travel expenses incurred while conducting business or
10-14    performing official duties or assignments.  A board may adopt
10-15    additional policies which further define the criteria for necessary
10-16    and reasonable travel expenses and which provide procedures for the
10-17    reimbursement of expenses.
10-18                (3)  Investments.  The administrative policies shall
10-19    provide compliance with:
10-20                      (A)  Chapters 2256 and 2257, Government Code; and
10-21                      (B)  any other statute applicable to the
10-22    investment of an authority's funds.
10-23                (4)  Professional services policy.  The administrative
10-24    policies shall provide for compliance with Subchapter A, Chapter
10-25    2254, Government Code, which prohibits the selection of
10-26    professional services based on competitive bids, and shall further
 11-1    provide that:
 11-2                      (A)  a list be maintained of at least three
 11-3    qualified persons or firms for each area of professional service
 11-4    used by the authority; and
 11-5                      (B)  the prequalified persons or firms be sent a
 11-6    request for proposal for any contract award for a new project that
 11-7    is expected to exceed $25,000.
 11-8                (5)  Industrial development bonds and pollution control
 11-9    bonds.  The administrative policies shall reference any industrial
11-10    development corporation associated with an authority and shall
11-11    provide for compliance with the memorandum issued by the state
11-12    auditor on October 7, 1988, relating to the disclosure of
11-13    industrial development and pollution control bonds.
11-14                (6)  Management policies.  The administrative policies
11-15    shall provide for:
11-16                      (A)  an independent management audit to be
11-17    conducted every five years and submitted to the executive director
11-18    of the commission and the council or to an internal audit office to
11-19    be established and to report to the authority's board of directors;
11-20    and
11-21                      (B)  compliance with the provisions of Chapter
11-22    2161, Government Code, relating to contracting with historically
11-23    underutilized businesses and providing equal employment
11-24    opportunities.
11-25          Sec. 9.013.  GIFTS AND GRANTS.  The council may accept gifts
11-26    and grants from any source to carry out the purposes of this
 12-1    chapter.  The use of gifts and grants other than legislative
 12-2    appropriations is subject only to limitations contained in the gift
 12-3    or grant.
 12-4          Sec. 9014.  FUNDING.  (a)  The interagency water policy
 12-5    account is a special account in the general revenue fund.
 12-6          (b)  The interagency water policy account consists of
 12-7    legislative appropriations, gifts and grants received under Section
 12-8    9.013, and other money required by law to be deposited in the
 12-9    account.
12-10          (c)  Funds in the interagency water policy account may be
12-11    used only as provided by this chapter.
12-12          Sec. 9.015.  CONTINUING RIGHT OF SUPERVISION.  Nothing in
12-13    this chapter shall affect the continuing right of supervision over
12-14    authorities by the commission as provided by Section 12.081.
12-15                 ARTICLE 2.  SURFACE WATER AND GROUNDWATER
12-16                          CONJUNCTIVE MANAGEMENT;
12-17                           REGULATORY INCENTIVES
12-18          SECTION 2.01.  Section 11.002, Water Code, is amended by
12-19    adding Subdivisions (7), (11), (12), and (13) to read as follows:
12-20                (7)  "Instream use" means the use of state water for
12-21    fisheries, aesthetics, water quality protection, aquatic and
12-22    riparian wildlife habitat, freshwater inflows for bays and
12-23    estuaries, and any other similar use recognized by law.  An
12-24    instream use is a beneficial use of water.
12-25                (11)  "River basin" means a river or coastal basin
12-26    designated by the board as a river basin under Section 16.051.  The
 13-1    term does not include waters of the bays or arms of the Gulf of
 13-2    Mexico.
 13-3                (12)  "Agriculture" means any of the following
 13-4    activities:
 13-5                      (A)  cultivating the soil;
 13-6                      (B)  producing crops for human food, animal feed,
 13-7    or planting seed or for the production of fibers;
 13-8                      (C)  floriculture, viticulture, silviculture, and
 13-9    horticulture, including the cultivation of plants in containers or
13-10    nonsoil media;
13-11                      (D)  raising, feeding, or keeping animals for the
13-12    production of food or fiber, leather, pelts, or other tangible
13-13    products having a commercial value;
13-14                      (E)  wildlife management; and
13-15                      (F)  planting cover crops, including cover crops
13-16    cultivated for transplantation, or leaving land idle for the
13-17    purpose of participating in any governmental program or normal crop
13-18    or livestock rotation procedure.
13-19                (13)  "Agricultural use" means any use or activity
13-20    involving agriculture, including irrigation.
13-21          SECTION 2.02.  Subsection (a), Section 11.023, Water Code, is
13-22    amended to read as follows:
13-23          (a)  State water may be appropriated, stored, or diverted
13-24    for:
13-25                (1)  domestic and municipal uses, including water for
13-26    sustaining human life and the life of domestic animals;
 14-1                (2)  industrial uses, meaning processes designed to
 14-2    convert materials of a lower order of value into forms having
 14-3    greater usability and commercial value, including the development
 14-4    of power by means other than hydroelectric;
 14-5                (3)  agricultural uses [irrigation];
 14-6                (4)  mining and recovery of minerals;
 14-7                (5)  hydroelectric power;
 14-8                (6)  navigation;
 14-9                (7)  recreation and pleasure;
14-10                (8)  [stock raising;]
14-11                [(9)]  public parks; [and]
14-12                (9) [(10)]  game preserves; and
14-13                (10)  instream uses.
14-14          SECTION 2.03.  Section 11.024, Water Code, is amended to read
14-15    as follows: 
14-16          Sec. 11.024.  APPROPRIATION:  PREFERENCES.  In order to
14-17    conserve and properly utilize state water, the public welfare
14-18    requires not only recognition of beneficial uses but also a
14-19    constructive public policy regarding the preferences between these
14-20    uses, and it is therefore declared to be the public policy of this
14-21    state that in appropriating state water preference shall be given
14-22    to the following uses in the order named:
14-23                (1)  domestic and municipal uses, including water for
14-24    sustaining human life and the life of domestic animals, it being
14-25    the public policy of the state and for the benefit of the greatest
14-26    number of people that in the appropriation of water as herein
 15-1    defined, the appropriation of water for domestic and municipal uses
 15-2    shall be and remain superior to the rights of the state to
 15-3    appropriate the same for all other purposes;
 15-4                (2)  industrial uses, meaning processes designed to
 15-5    convert materials of a lower order of value into forms having
 15-6    greater usability and commercial value, including the development
 15-7    of power by means other than hydroelectric;
 15-8                (3)  irrigation;
 15-9                (4)  mining and recovery of minerals;
15-10                (5)  hydroelectric power;
15-11                (6)  navigation;
15-12                (7)  instream uses;
15-13                (8)  recreation and pleasure; and
15-14                (9) [(8)]  other beneficial uses.
15-15          SECTION 2.04.  Subsections (p) and (s) through (v), Section
15-16    11.085, Water Code, are amended to read as follows:
15-17          (p)  [For the purposes of this section, a basin is designated
15-18    as provided in accordance with Section 16.051 of this code.]  A
15-19    river basin may not be redesignated in order to allow a transfer or
15-20    diversion of water otherwise in violation of this section.
15-21          (s)  [Any proposed transfer of all or a portion of a water
15-22    right under this section is junior in priority to water rights
15-23    granted before the time application for transfer is accepted for
15-24    filing.]
15-25          [(t)  Any proposed transfer of all or a portion of a water
15-26    right under this section from a river basin in which two or more
 16-1    river authorities or water districts created under Section 59,
 16-2    Article XVI, Texas Constitution, have written agreements or permits
 16-3    that provide for the coordinated operation of their respective
 16-4    reservoirs to maximize the amount of water for beneficial use
 16-5    within their respective water services areas shall be junior in
 16-6    priority to water rights granted before the time application for
 16-7    transfer is accepted for filing.]
 16-8          [(u)]  An appropriator of water for municipal purposes in the
 16-9    basin of origin may, at the appropriator's option, be a party in
16-10    any hearings under this section.
16-11          (t) [(v)]  The provisions of this section, except Subsection
16-12    (a), do not apply to:
16-13                (1)  a proposed transfer which in combination with any
16-14    existing transfers totals less than 3,000 acre-feet of water per
16-15    annum from the same permit, certified filing, or certificate of
16-16    adjudication;
16-17                (2)  a request for an emergency transfer of water;
16-18                (3)  a proposed transfer from a basin to its adjoining
16-19    coastal basin; [or]
16-20                (4)  a proposed transfer from a basin to a county or
16-21    municipality or the municipality's retail service area that is
16-22    partially within the basin for use in that part of the county or
16-23    municipality and the municipality's retail service area not within
16-24    the basin; or
16-25                (5)  a proposed transfer of newly developed water
16-26    introduced into the basin through seawater desalination.
 17-1          SECTION 2.05.  Subsection (b), Section 11.1271, Water Code,
 17-2    is amended to read as follows:
 17-3          (b)  The commission shall require the holder of an existing
 17-4    permit, certified filing, or certificate of adjudication for the
 17-5    appropriation of surface water in the amount of 1,000 acre-feet a
 17-6    year or more for municipal, industrial, and other uses, and 10,000
 17-7    acre-feet a year or more for irrigation uses, to develop, submit,
 17-8    and implement a water conservation plan, consistent with the state
 17-9    [appropriate approved regional] water plan, that adopts reasonable
17-10    water conservation measures as defined by Subdivision (8)(B),
17-11    Section 11.002[, of this code].  The requirement for a water
17-12    conservation plan under this section shall not result in the need
17-13    for an amendment to an existing permit, certified filing, or
17-14    certificate of adjudication.
17-15          SECTION 2.06.  Subsection (a), Section 11.1272, Water Code,
17-16    is amended to read as follows:
17-17          (a)  The commission shall by rule require wholesale and
17-18    retail public water suppliers and irrigation districts to develop
17-19    drought contingency plans consistent with the state [appropriate
17-20    approved regional] water plan to be implemented during periods of
17-21    water shortages and drought.
17-22          SECTION 2.07.  Subsection (b), Section 11.134, Water Code, is
17-23    amended to read as follows:
17-24          (b)  The commission shall grant the application only if:
17-25                (1)  the application conforms to the requirements
17-26    prescribed by this chapter and is accompanied by the prescribed
 18-1    fee;
 18-2                (2)  unappropriated water is available in the source of
 18-3    supply;
 18-4                (3)  the proposed appropriation:
 18-5                      (A)  is intended for a beneficial use;
 18-6                      (B)  does not impair existing water rights or
 18-7    vested riparian rights;
 18-8                      (C)  is not detrimental to the public welfare;
 18-9                      (D)  considers the assessments performed under
18-10    Sections 11.147(d) and (e) and Sections 11.150, 11.151, and 11.152
18-11    [effects of any hydrological connection between surface water and
18-12    groundwater]; and
18-13                      (E)  addresses a water supply need in a manner
18-14    that is consistent with the state water plan and an approved
18-15    regional water plan [for any area in which the proposed
18-16    appropriation is located], unless the commission determines that
18-17    conditions warrant waiver of this requirement; and
18-18                (4)  the applicant has provided evidence that
18-19    reasonable diligence will be used to avoid waste and achieve water
18-20    conservation as defined by Subdivision (8)(B), Section 11.002[, of
18-21    this code].
18-22          SECTION 2.08.  Subsection (a), Section 11.138, Water Code, is
18-23    amended to read as follows:
18-24          (a)  The commission may issue temporary permits for
18-25    beneficial purposes to the extent that they do not interfere with
18-26    or adversely affect prior appropriations or vested rights on the
 19-1    stream from which water is to be diverted under such temporary
 19-2    permit.  The commission may, by appropriate order, authorize any
 19-3    member of the commission to approve and issue temporary permits
 19-4    without notice and hearing if it appears to such issuing party that
 19-5    sufficient water is available at the proposed point of diversion to
 19-6    satisfy the requirements of the temporary permit as well as all
 19-7    existing rights.  No temporary permit issued without notice and
 19-8    hearing shall authorize more than 10 acre-feet of water, nor may it
 19-9    be for a term in excess of one year.  The commission by rule may
19-10    authorize the beneficial use, without a permit, of not more than 25
19-11    acre-feet of water, for a term not to exceed one year, if the
19-12    diversion of water will not affect existing water right holders and
19-13    the user of the water registers the use with the commission in the
19-14    manner required by the commission.
19-15          SECTION 2.09.  Subsection (a), Section 11.142, Water Code, is
19-16    amended to read as follows:
19-17          (a)  Without obtaining a permit, a person may construct on
19-18    the person's [his] own property a dam or reservoir with normal
19-19    storage of not more than 200 acre-feet of water for domestic and
19-20    livestock purposes.  A person who temporarily stores more than 200
19-21    acre-feet of water in a dam or reservoir described by this
19-22    subsection is not required to obtain a permit for the dam or
19-23    reservoir if the person can demonstrate that the person has not
19-24    stored in the dam or reservoir more than 200 acre-feet of water on
19-25    average in any 12-month period.
19-26          SECTION 2.10.  Section 11.146, Water Code, is amended by
 20-1    adding Subsection (g) to read as follows:
 20-2          (g)  This section does not apply to a permit for construction
 20-3    of a reservoir designed for the storage of more than 75,000
 20-4    acre-feet of water.
 20-5          SECTION 2.11.  Section 11.1501, Water Code, is amended to
 20-6    read as follows:
 20-7          Sec. 11.1501.  CONSIDERATION AND REVISION OF PLANS.  In
 20-8    considering an application for a permit to store, take, or divert
 20-9    surface water, or for an amendment to a permit, certified filing,
20-10    or certificate of adjudication, the commission shall consider the
20-11    state water plan [and any approved regional water plan for the area
20-12    or areas in which the water is proposed to be stored, diverted, or
20-13    used].
20-14          SECTION 2.12.  Subsection (b), Section 11.173, Water Code, is
20-15    amended to read as follows:
20-16          (b)  A permit, certified filing, or certificate of
20-17    adjudication or a portion of a permit, certified filing, or
20-18    certificate of adjudication is exempt from cancellation under
20-19    Subsection (a) of this section:
20-20                (1)  to the extent of the owner's participation in the
20-21    Conservation Reserve Program authorized by the Food Security Act,
20-22    Pub.L. No. 99-198, Secs. 1231-1236, 99 Stat. 1354, 1509-1514 (1985)
20-23    or a similar governmental program; [or]
20-24                (2)  if any portion of the water authorized to be used
20-25    pursuant to a permit, certified filing, or certificate of
20-26    adjudication has been used in accordance with the state [a
 21-1    regional] water plan adopted [approved] pursuant to Section 16.051;
 21-2                (3)  if the permit, certified filing, or certificate of
 21-3    adjudication was obtained to meet demonstrated long-term public
 21-4    water supply or electric generation needs as evidenced by a water
 21-5    management plan developed by the holder and is consistent with
 21-6    projections of future water needs contained in the state water
 21-7    plan;
 21-8                (4)  if the permit, certified filing, or certificate of
 21-9    adjudication was obtained as the result of the construction of a
21-10    reservoir funded, in whole or in part, by the holder of the permit,
21-11    certified filing, or certificate of adjudication as part of the
21-12    holder's long-term water planning; or
21-13                (5)  if the water right has been converted to an
21-14    instream use for fish and wildlife habitat purposes [16.053 of this
21-15    code].
21-16          SECTION 2.13.  Subsection (b), Section 11.177, Water Code, is
21-17    amended to read as follows:
21-18          (b)  In determining what constitutes reasonable diligence or
21-19    a justified nonuse as used in Subsection (a)(2) [of this section],
21-20    the commission shall give consideration to:
21-21                (1)  whether sufficient water is available in the
21-22    source of supply to meet all or part of the appropriation during
21-23    the 10-year period of nonuse;
21-24                (2)  whether the nonuse is justified by the holder's
21-25    participation in the federal Conservation Reserve Program or a
21-26    similar governmental program as provided by Section 11.173(b)(1)
 22-1    [of this code];
 22-2                (3)  [whether the permit, certified filing, or
 22-3    certificate of adjudication was obtained to meet demonstrated
 22-4    long-term public water supply or electric generation needs as
 22-5    evidenced by a water management plan developed by the holder and
 22-6    consistent with projections of future water needs contained in the
 22-7    state water plan;]
 22-8                [(4)  whether the permit, certified filing, or
 22-9    certificate of adjudication was obtained as the result of the
22-10    construction of a reservoir funded, in whole or in part, by the
22-11    holder of the permit, certified filing, or certificate of
22-12    adjudication as part of the holder's long-term water planning;]
22-13                [(5)]  whether the existing or proposed authorized
22-14    purpose and place of use are consistent with the state [an approved
22-15    regional] water plan as provided by Section 16.051 [16.053 of this
22-16    code];
22-17                (4) [(6)]  whether the permit, certified filing, or
22-18    certificate of adjudication has been deposited into the Texas Water
22-19    Bank as provided by Sections 15.7031 and 15.704 of this code or
22-20    whether it can be shown that the water right or water available
22-21    under the right is currently being made available for purchase
22-22    through private marketing efforts; or
22-23                (5) [(7)]  whether the permit, certified filing, or
22-24    certificate of adjudication has been reserved to provide for
22-25    instream flows or bay and estuary inflows.
22-26          SECTION 2.14.  Section 16.012, Water Code, is amended by
 23-1    adding Subsections (l) and (m) to read as follows:
 23-2          (l)  The executive administrator shall obtain or develop
 23-3    groundwater availability models for major and minor aquifers in
 23-4    coordination with regional water planning groups created under
 23-5    Section 16.053 that overlie the aquifers.  On completing a
 23-6    groundwater availability model for an aquifer, the executive
 23-7    administrator shall provide the model to each groundwater
 23-8    conservation district and each regional water planning group
 23-9    created under Section 16.053 overlying that aquifer.
23-10          (m)  The executive administrator shall conduct surveys of
23-11    persons using groundwater and surface water at intervals determined
23-12    appropriate by the executive administrator to gather data to be
23-13    used for long-term water supply planning.  Recipients of the survey
23-14    shall complete and return the survey to the executive
23-15    administrator.  Persons who fail to timely return the survey shall
23-16    not be eligible for funding from the board for board programs and
23-17    shall be ineligible to obtain permits, permit amendments, or permit
23-18    renewals from the commission under Chapter 11.
23-19          SECTION 2.15.  Subsections (a), (f), (g), and (h), Section
23-20    16.051, Water Code, are amended to read as follows:
23-21          (a)  No later than January 5, 2002, and before the end of
23-22    each successive five-year period after that date [every five years
23-23    thereafter], the board shall prepare, develop, formulate, and adopt
23-24    a comprehensive state water plan that incorporates the regional
23-25    water plans approved under Section 16.053 to the extent the board
23-26    determines that such plans provide for the efficient use and
 24-1    development of the groundwater and surface water resources of the
 24-2    state.  The state water plan shall provide for the orderly
 24-3    development, management, and conservation of water resources and
 24-4    preparation for and response to drought conditions, in order that
 24-5    sufficient water will be available at a reasonable cost to ensure
 24-6    public health, safety, and welfare; further economic development;
 24-7    and protect the agricultural and natural resources of the entire
 24-8    state.
 24-9          (f)  The legislature may designate a[:]
24-10                [(1)]  river or stream segment of unique ecological
24-11    value.  This designation solely means that a state agency or
24-12    political subdivision of the state may not finance the construction
24-13    of a reservoir in a stream segment designated by the legislature
24-14    under this subsection.
24-15          (g)  The legislature may designate a[; or]
24-16                [(2)]  site of unique value for the construction of a
24-17    reservoir.
24-18          [(g)]  A state agency or political subdivision of the state
24-19    may not obtain a fee title or an easement that would[:]
24-20                [(1)  destroy the unique ecological value of a river or
24-21    stream segment designated by the legislature under Subsection (f)
24-22    of this section; or]
24-23                [(2)]  significantly prevent the construction of a
24-24    reservoir on a site designated by the legislature under [Subsection
24-25    (f) of] this subsection [section].
24-26          (h)  The board, the commission, or the Parks and Wildlife
 25-1    Department or a political subdivision affected by an action taken
 25-2    in violation of Subsections (f) and [Subsection] (g) [of this
 25-3    section] may bring a cause of action to remedy or prevent the
 25-4    violation.  A cause of action brought under this subsection must be
 25-5    filed in a district court in Travis County or in the county in
 25-6    which the action is proposed or occurring.
 25-7          SECTION 2.16.  Subsections (d) and (e), Section 16.053, Water
 25-8    Code, are amended to read as follows:
 25-9          (d)  The board shall provide guidelines for the consideration
25-10    of existing regional planning efforts by regional water planning
25-11    groups.  The board shall provide guidelines for the format in which
25-12    information shall be presented in the regional water plans.  The
25-13    board by rule shall require a holder of a surface water permit, a
25-14    certified filing, or a certificate of adjudication for surface
25-15    water, a holder of a permit for the export of groundwater from a
25-16    groundwater conservation district, a retail public water supplier,
25-17    a wholesale water provider, and an irrigation district to report to
25-18    the board information on certain water pipelines and other
25-19    facilities that can be used for water conveyance.  Nothing in the
25-20    initial planning effort shall prevent development of a management
25-21    plan or project where local or regional needs require action prior
25-22    to completion of the initial regional water plan under this
25-23    section.
25-24          (e)  Each regional water planning group shall submit to the
25-25    board a regional water plan that:
25-26                (1)  is consistent with the guidance principles for the
 26-1    state water plan adopted by the board under Section 16.051(d);
 26-2                (2)  provides information based on data provided or
 26-3    approved by the board in a format consistent with the guidelines
 26-4    provided by the board under Subsection (d);
 26-5                (3)  identifies:
 26-6                      (A)  each source of water supply in the regional
 26-7    water planning area in accordance with the guidelines provided by
 26-8    the board under Subsections (d) and (f);
 26-9                      (B)  factors specific to each source of water
26-10    supply to be considered in determining whether to initiate a
26-11    drought response; [and]
26-12                      (C)  actions to be taken as part of the response;
26-13    and
26-14                      (D)  information on water pipelines and other
26-15    facilities that can be used for water conveyance as provided by
26-16    board rules and guidelines;
26-17                (4)  has specific provisions for water management
26-18    strategies to be used during a drought of record;
26-19                (5)  includes but is not limited to consideration of
26-20    the following:
26-21                      (A)  any existing water or drought planning
26-22    efforts addressing all or a portion of the region;
26-23                      (B)  certified groundwater conservation district
26-24    management plans and other plans submitted under Section 16.054;
26-25                      (C)  all potentially feasible water management
26-26    strategies, including but not limited to improved conservation,
 27-1    reuse, and management of existing water supplies, acquisition of
 27-2    available existing water supplies, and development of new water
 27-3    supplies;
 27-4                      (D)  protection of existing water rights in the
 27-5    region;
 27-6                      (E)  opportunities for and the benefits of
 27-7    developing regional water supply facilities or providing regional
 27-8    management of water supply facilities;
 27-9                      (F)  appropriate provision for environmental
27-10    water needs and for the effect of upstream development on the bays,
27-11    estuaries, and arms of the Gulf of Mexico and the effect of plans
27-12    on navigation;
27-13                      (G)  provisions in Section 11.085(k)(1) if
27-14    interbasin transfers are contemplated;
27-15                      (H)  voluntary transfer of water within the
27-16    region using, but not limited to, regional water banks, sales,
27-17    leases, options, subordination agreements, and financing
27-18    agreements; and
27-19                      (I)  emergency transfer of water under Section
27-20    11.139, including information on the part of each permit, certified
27-21    filing, or certificate of adjudication for nonmunicipal use in the
27-22    region that may be transferred without causing unreasonable damage
27-23    to the property of the nonmunicipal water rights holder; and
27-24                (6)  identifies river and stream segments of unique
27-25    ecological value and sites of unique value for the construction of
27-26    reservoirs that the regional water planning group recommends for
 28-1    protection under Section 16.051.
 28-2          SECTION 2.17.  Subdivision (8), Subsection (h), Section
 28-3    16.053, Water Code, is amended to read as follows:
 28-4                (8)  Notice required by Subdivision (1), (3), or (6) of
 28-5    this subsection or by Section 16.0531 must be:
 28-6                      (A)  published once in a newspaper of general
 28-7    circulation in each county located in whole or in part in the
 28-8    regional water planning area before the 30th day preceding the date
 28-9    of the public meeting or hearing; and
28-10                      (B)  mailed to:
28-11                            (i)  each mayor of a municipality with a
28-12    population of 1,000 or more that is located in whole or in part in
28-13    the regional water planning area;
28-14                            (ii)  each county judge of a county located
28-15    in whole or in part in the regional water planning area;
28-16                            (iii)  each special or general law district
28-17    or river authority with responsibility to manage or supply water in
28-18    the regional water planning area;
28-19                            (iv)  each retail public utility that:
28-20                                  (a)  serves any part of the regional
28-21    water planning area; or
28-22                                  (b)  receives water from the regional
28-23    water planning area; and
28-24                            (v)  each holder of record of a permit,
28-25    certified filing, or certificate of adjudication for the use of
28-26    surface water the diversion of which occurs in the regional water
 29-1    planning area.
 29-2          SECTION 2.18.  Subsection (j), Section 16.053, Water Code, is
 29-3    amended to read as follows:
 29-4          (j)  The board may provide financial assistance to political
 29-5    subdivisions under Subchapters E and F of this chapter, Subchapters
 29-6    C, D, E, F, and J, Chapter 15, and Subchapters D, I, K, and L,
 29-7    Chapter 17, for water supply projects only if:
 29-8                (1)  the board determines that the needs to be
 29-9    addressed by the project will be addressed in a manner that is
29-10    consistent with the state water plan; and
29-11                (2)  beginning January 5, 2002, the board[:]
29-12                      [(A)]  has approved a regional water plan as
29-13    provided by Subsection (i), and any required updates of the plan,
29-14    for the region of the state that includes the area benefiting from
29-15    the proposed project[; and]
29-16                      [(B)  determines that the needs to be addressed
29-17    by the project will be addressed in a manner that is consistent
29-18    with that regional water plan].
29-19          SECTION 2.19.  Subchapter A, Chapter 16, Water Code, is
29-20    amended by adding Sections 16.0531 and 16.0532 to read as follows:
29-21          Sec. 16.0531.  GROUNDWATER MANAGEMENT STANDARD.  (a)  As part
29-22    of a regional water plan required by Section 16.053(e), each
29-23    regional water planning group shall adopt a groundwater management
29-24    standard for each source of groundwater that is a source of water
29-25    for the regional planning area in accordance with the guidelines
29-26    provided by Sections 16.053(d) and (f).
 30-1          (b)  The groundwater management standards shall describe the
 30-2    desired condition of the groundwater source as indicated by indices
 30-3    of quantity of water in the source, quality of water produced from
 30-4    the source, or subsidence of the land surface.  The groundwater
 30-5    management standard shall describe this condition for various time
 30-6    periods throughout the planning period.
 30-7          (c)  A regional water planning group shall consider the
 30-8    groundwater management standards contained in certified groundwater
 30-9    conservation plans submitted to the regional water planning group
30-10    under Section 16.054.
30-11          (d)  Prior to the adoption of groundwater management
30-12    standards, a regional water planning group shall, after providing
30-13    notice in accordance with Section 16.053(h)(8), hold at least one
30-14    public meeting at a central location to gather suggestions and
30-15    recommendations from the public about what issues to consider with
30-16    regard to groundwater management standards.
30-17          Sec. 16.0532.  GROUNDWATER WITHDRAWAL RATE.  (a)  Each
30-18    regional water planning group shall determine groundwater
30-19    withdrawal rates based on the groundwater management standard
30-20    adopted under Section 16.0531(a) for each source of groundwater
30-21    that is a source of water for the regional water planning area in
30-22    accordance with the guidelines provided by Sections 16.053(d) and
30-23    (f).  The regional water planning groups shall use groundwater
30-24    availability modeling information provided by the executive
30-25    administrator to determine these rates.
30-26          (b)  The groundwater withdrawal rate shall be the maximum
 31-1    rate of production that will allow the groundwater management
 31-2    standard to be realized.
 31-3          (c)  A groundwater withdrawal rate shall be set for various
 31-4    time periods throughout the planning period.
 31-5          (d)  The regional water planning group shall consider the
 31-6    groundwater withdrawal rates contained in certified groundwater
 31-7    conservation plans submitted to the regional water planning group
 31-8    under Section 16.054.
 31-9          SECTION 2.20.  Subsections (a), (c), and (d), Section 16.054,
31-10    Water Code, are amended to read as follows:
31-11          (a)  It is the policy of the state that water resource
31-12    management, water conservation, and drought planning should occur
31-13    on an ongoing basis.  The board, commission, and Parks and Wildlife
31-14    Department shall make available where appropriate technical and
31-15    financial assistance for such planning.  In addition, the
31-16    Department of Agriculture may provide input and assistance, as
31-17    appropriate, for local water [such] planning.
31-18          (c)  When preparing a plan to be submitted under this
31-19    section, a person shall consider the implementation of a
31-20    desalination program if practicable.
31-21          (d)  The regional water planning group shall consider any
31-22    plan submitted under this section when preparing the regional water
31-23    plan under Section 16.053 of this code.
31-24          (e)  After January 5, 2002, when [(d)  When] preparing
31-25    individual water plans that address drought or the development,
31-26    management, or conservation of water resources from the holders of
 32-1    existing permits, certified filings, or certificates of
 32-2    adjudication, the water suppliers, groundwater districts, special
 32-3    districts, irrigation districts, and other water users should
 32-4    ensure that the plan is not in conflict with the state [applicable
 32-5    approved regional] water plan [for their region].
 32-6          SECTION 2.21.  Subsection (b), Section 18.081, Water Code, is
 32-7    amended to read as follows:
 32-8          (b)  The commission may [shall], if requested by at least 25
 32-9    persons, hold at least one public meeting [hearing] in the area
32-10    where the operation is to be conducted prior to the issuance of a
32-11    permit.
32-12          SECTION 2.22.  Subdivision (11), Section 35.002, Water Code,
32-13    is amended to read as follows:
32-14                (11)  "Management area" means an area designated and
32-15    delineated by the Texas Water Development Board [commission] as an
32-16    area suitable for management of groundwater resources.
32-17          SECTION 2.23.  Section 35.004, Water Code, is amended to read
32-18    as follows:
32-19          Sec. 35.004.  DESIGNATION OF MANAGEMENT AREAS.  (a)  The
32-20    Texas Water Development Board, with assistance and cooperation from
32-21    the commission, shall designate groundwater management areas
32-22    covering all major and minor aquifers in the state.  The initial
32-23    designation of management areas shall be completed by September 1,
32-24    2003 [On its own motion from time to time, or on receiving a
32-25    petition, the commission may designate groundwater management
32-26    areas].  Each management area shall be designated with the
 33-1    objective of providing the most suitable area for the management of
 33-2    the groundwater resources.  To the extent feasible, the management
 33-3    area shall coincide with the boundaries of a groundwater reservoir
 33-4    or a subdivision of a groundwater reservoir.  The Texas Water
 33-5    Development Board [commission] also may consider other factors,
 33-6    including the boundaries of political subdivisions.
 33-7          (b)  [On the request of any person interested in the
 33-8    petition, or on the request of the commission, the executive
 33-9    director shall prepare available evidence relating to the
33-10    configuration of a groundwater management area.  Before making the
33-11    designation, the commission shall consider the evidence prepared by
33-12    the executive director and other evidence submitted at the hearing.]
33-13          [(c)]  The Texas Water Development Board [commission] may
33-14    alter the boundaries of designated management areas as required by
33-15    future conditions and as justified by factual data.  An alteration
33-16    of boundaries does not invalidate the previous creation of any
33-17    district.
33-18          (c) [(d)]  The Texas Water Development Board [commission]
33-19    shall designate groundwater management areas using the procedures
33-20    applicable to rulemaking under [the Administrative Procedure Act,
33-21    Subchapter B,] Chapter 2001, Government Code.
33-22          SECTION 2.24.  Subsections (a) and (f), Section 35.007, Water
33-23    Code, are amended to read as follows:
33-24          (a)  The executive director and the executive administrator
33-25    shall meet periodically [at least once a year] to identify, based
33-26    on information gathered by the commission and the Texas Water
 34-1    Development Board, those areas of the state that are experiencing
 34-2    or that are expected to experience, within the immediately
 34-3    following 25-year period, critical groundwater problems, including
 34-4    shortages of surface water or groundwater, land subsidence
 34-5    resulting from groundwater withdrawal, and contamination of
 34-6    groundwater supplies.  By September 1, 2005, the commission, with
 34-7    assistance and cooperation from the Texas Water Development Board,
 34-8    shall complete the initial designation of priority groundwater
 34-9    management areas across all major and minor aquifers of the state
34-10    for all areas that meet the criteria for such designation.  The
34-11    studies may be prioritized considering information from the
34-12    regional planning process, information from the Texas Water
34-13    Development Board groundwater management areas and groundwater
34-14    conservation districts, and any other information available.  After
34-15    the initial designation of priority groundwater management areas,
34-16    the commission and the Texas Water Development Board shall annually
34-17    review the need for additional designations as provided by this
34-18    subsection.
34-19          (f)  The report shall include:
34-20                (1)  the recommended delineation of the boundaries of
34-21    any proposed priority groundwater management area in the form of an
34-22    order to be considered for adoption by the commission;
34-23                (2)  the reasons and supporting information for or
34-24    against designating the area as a priority groundwater management
34-25    area;
34-26                (3)  a recommendation regarding whether one or more
 35-1    districts [a district] should be created in the priority
 35-2    groundwater management area, [or whether] the priority groundwater
 35-3    management area should be added to an existing district, or a
 35-4    combination of those actions should be taken;
 35-5                (4)  a recommendation as to actions that should be
 35-6    considered to conserve natural resources;
 35-7                (5)  an evaluation of information or studies submitted
 35-8    to the executive director under Subsection (c); and
 35-9                (6)  any other information that the executive director
35-10    considers helpful to the commission.
35-11          SECTION 2.25.  Section 35.008, Water Code, is amended to read
35-12    as follows:
35-13          Sec. 35.008.  PROCEDURES FOR DESIGNATION OF PRIORITY
35-14    GROUNDWATER MANAGEMENT AREA; CONSIDERATION OF CREATION OF NEW
35-15    DISTRICT OR ADDITION OF LAND IN PRIORITY GROUNDWATER MANAGEMENT
35-16    AREA TO EXISTING DISTRICT; COMMISSION ORDER.  (a)  The commission
35-17    shall designate priority groundwater management areas using the
35-18    procedures provided by this chapter in lieu of those provided by
35-19    Subchapter B, Chapter 2001, Government Code.
35-20          (b)  The commission shall call an evidentiary hearing to
35-21    consider:
35-22                (1)  the designation of a priority groundwater
35-23    management area; and
35-24                (2)  whether one or more districts [a district] should
35-25    be created over all or part of a priority groundwater management
35-26    area,[; or]
 36-1                [(3)  whether] all or part of the land in the priority
 36-2    groundwater management area should be added to an existing
 36-3    district, or a combination of those actions should be taken.
 36-4          (c)  Evidentiary hearings shall be held at a location in one
 36-5    of the counties in which the priority groundwater management area
 36-6    is located, or proposed to be located, or in the nearest convenient
 36-7    location if adequate facilities are not available in those
 36-8    counties.
 36-9          (d)  At the hearing, the commission shall hear testimony and
36-10    receive evidence from affected persons.  Affected persons shall
36-11    include landowners and well owners in the proposed priority
36-12    groundwater management area.  The commission shall consider the
36-13    executive director's report and supporting information and the
36-14    testimony and evidence received at the hearing.  If the commission
36-15    considers further information necessary, the commission may request
36-16    such information from any source.
36-17          (e)  Any evidentiary hearing shall be concluded not later
36-18    than the 75th day after the date notice of the hearing is
36-19    published.
36-20          (f)  At the conclusion of the hearing and the commission's
36-21    considerations, the commission shall issue an order stating its
36-22    findings and conclusions, including whether a priority groundwater
36-23    management area should be designated in the area and
36-24    recommendations regarding district creation as set forth in
36-25    Subsection (g).
36-26          (g)  The commission's order designating a priority
 37-1    groundwater management area must recommend that the area be covered
 37-2    by a district in any of the following ways:
 37-3                (1)  creation of one or more new districts;
 37-4                (2)  addition of the land in the priority groundwater
 37-5    management area to one or more existing districts; or
 37-6                (3)  a combination of actions under Subdivisions (1)
 37-7    and (2).
 37-8          (h)  In recommending the boundaries of a district or
 37-9    districts under Subsection (g), the commission shall give
37-10    preference to boundaries that are coterminous with those of the
37-11    priority groundwater management area, but may recommend district
37-12    boundaries along existing political subdivision boundaries at the
37-13    discretion of the commission to facilitate district creation and
37-14    confirmation.
37-15          (i)  The designation of a priority groundwater management
37-16    area may not be appealed nor may it be challenged under [the
37-17    Administrative Procedure Act,] Section 2001.038, Government Code.
37-18          SECTION 2.26.  Subsections (a) and (b), Section 35.009, Water
37-19    Code, are amended to read as follows:
37-20          (a)  The commission shall have notice of the hearing
37-21    published in at least one newspaper with general circulation in the
37-22    county or counties in which the area proposed for designation as a
37-23    priority groundwater management area [or the area within a priority
37-24    groundwater management area being considered for district creation
37-25    or for addition to an existing district] is located.  Notice must
37-26    be published not later than the 30th day before the date set for
 38-1    the hearing [commission to consider the designation of the priority
 38-2    groundwater management area, the creation of a district in a
 38-3    priority groundwater management area, or the addition of land in a
 38-4    priority groundwater management area to an existing district].
 38-5          (b)  The notice must include:
 38-6                (1)  if applicable, a statement of the general purpose
 38-7    and effect of designating the proposed priority groundwater
 38-8    management area;
 38-9                (2)  if applicable, a statement of the general purpose
38-10    and effect of creating a new district in the priority groundwater
38-11    management area;
38-12                (3)  if applicable, a statement of the general purpose
38-13    and effect of adding all or part of the land in the priority
38-14    groundwater management area to an existing district;
38-15                (4)  a map generally outlining the boundaries of the
38-16    area being considered for priority groundwater management area
38-17    designation [or the priority groundwater management area being
38-18    considered for district creation or for addition to an existing
38-19    district,] or notice of the location at which a copy of the map may
38-20    be examined or obtained;
38-21                (5)  a statement that the executive director's report
38-22    concerning the priority groundwater management area or proposed
38-23    area is available at the commission's main office in Austin, Texas,
38-24    and at regional offices of the commission for regions which include
38-25    territory within the priority groundwater management area or
38-26    proposed priority groundwater management area and that the report
 39-1    is available for inspection during regular business hours;
 39-2                (6)  a description or the name of the locations in the
 39-3    affected area at which the commission has provided copies of the
 39-4    executive director's report to be made available for public
 39-5    inspection;
 39-6                (7)  the name and address of each public library, each
 39-7    county clerk's office, and each district to which the commission
 39-8    has provided copies of the executive director's report; and
 39-9                (8)  the date, time, and place of the hearing.
39-10          SECTION 2.27.  Section 35.012, Water Code, is amended to read
39-11    as follows:
39-12          Sec. 35.012.  CREATION OF DISTRICT IN PRIORITY GROUNDWATER
39-13    MANAGEMENT AREA [COMMISSIONER ORDER].  (a)  [At the conclusion of
39-14    its hearing and considerations, the commission shall issue an] [order
39-15    stating its findings and conclusions.]
39-16          [(b)  If the commission finds that the land and other
39-17    property in the priority groundwater management area would benefit
39-18    from the creation of one or more districts, that there is a public
39-19    need for one or more districts, and that the creation of one or
39-20    more districts would further the public welfare, the commission
39-21    shall issue an order stating that the creation of one or more
39-22    districts is needed.]
39-23          [(c)]  Following the issuance of a commission order under
39-24    Section 35.008 designating a priority groundwater management area
39-25    and recommending the creation of one or more districts, or the
39-26    addition of land to an existing district [Subsection (b)], the
 40-1    landowners in the priority groundwater management area may:
 40-2                (1)  create one or more districts under Subchapter B,
 40-3    Chapter 36;
 40-4                (2)  have the area annexed to a district that adjoins
 40-5    the area; or
 40-6                (3)  create one or more districts through the
 40-7    legislative process.
 40-8          (b)  Within two years, but no sooner than 120 days, from the
 40-9    date on which the commission issues an order under Section 35.008
40-10    designating a priority groundwater management area, for those areas
40-11    that are not within a district, the commission shall:
40-12                (1)  create one or more new districts under Section
40-13    36.0151;
40-14                (2)  recommend that the areas, or a portion of the
40-15    areas, be added to an existing district under Section 35.013; or
40-16                (3)  take any combination of the actions under
40-17    Subdivisions (1) and (2).
40-18          (c)  Following the issuance of a commission order under
40-19    Section 35.008 [(d)  The commission shall identify the areas
40-20    subject to the order of the commission issued under Subsection (b)
40-21    that have not been incorporated into a district and shall delineate
40-22    proposed boundaries of a district to include those areas.  If the
40-23    commission proposes the creation of one or more districts], the
40-24    Texas Agricultural Extension Service shall begin an educational
40-25    program within such areas with the assistance and cooperation of
40-26    the Texas Water Development Board, the commission, the Department
 41-1    of Agriculture, other state agencies, and existing districts to
 41-2    inform the residents of the status of the area's water resources
 41-3    and management options including possible formation of a district[,
 41-4    before beginning the procedures for creation of a district provided
 41-5    in Subchapter B, Chapter 36].  The county commissioners court of
 41-6    each county in the priority groundwater management area shall form
 41-7    a steering committee to provide assistance to the Texas
 41-8    Agricultural Extension Service in accomplishing the goals of the
 41-9    education program within the area.
41-10          [(e)  If the commission fails to find that the district would
41-11    be a benefit to the land and other property within the priority
41-12    groundwater management area, that there is a public need for the
41-13    district, or that creation of the district will further the public
41-14    welfare, the commission shall issue an order stating that a
41-15    district should not be created within the boundaries of the
41-16    priority groundwater management area.]
41-17          [(f)  An order of the commission issued under this section
41-18    may not be appealed.]
41-19          SECTION 2.28.  Section 35.013, Water Code, is amended to read
41-20    as follows:
41-21          Sec. 35.013.  ADDING PRIORITY GROUNDWATER MANAGEMENT AREA TO
41-22    EXISTING DISTRICT.  (a)  [If land in a priority groundwater
41-23    management area is located adjacent to one or more existing
41-24    districts, the commission, instead of issuing an order under
41-25    Section 35.012, may issue an order recommending that the priority
41-26    groundwater management area be added to the existing district
 42-1    designated by the commission.  In its order, the commission must
 42-2    find that the land and other property in the priority groundwater
 42-3    management area and the land in the existing district will benefit
 42-4    from the addition of the area, that there is a public need to add
 42-5    the priority groundwater management area to the existing district,
 42-6    and that the addition of the land to the existing district would
 42-7    further the public welfare.]
 42-8          [(b)]  If the commission in its order under Section 35.008
 42-9    [executive director] recommends that the priority groundwater
42-10    management area, or a portion of the priority groundwater
42-11    management area, be added to an existing district [or if the
42-12    commission considers it possible to add the priority groundwater
42-13    management area to an adjacent existing district], the commission
42-14    shall give notice to the board of the existing district recommended
42-15    in its order [by the executive director or considered by the
42-16    commission to possibly serve the area] and to any other existing
42-17    districts adjacent to the priority groundwater management area.
42-18          (b) [(c)]  The commission shall submit a copy of the order to
42-19    the board of the district to which it is recommending the priority
42-20    groundwater management area be added.  The board shall vote on the
42-21    addition of the priority groundwater management area to the
42-22    district and shall advise the commission of the outcome.
42-23          (c) [(d)]  If the board votes to accept the addition of the
42-24    priority groundwater management area to the district, the board:
42-25                (1)  may request the Texas Agricultural Extension
42-26    Service, the commission, and the Texas Water Development Board,
 43-1    with the cooperation and assistance of the Department of
 43-2    Agriculture and other state agencies, to administer an educational
 43-3    program to inform the residents of the status of the area's water
 43-4    resources and management options including possible annexation into
 43-5    a district;
 43-6                (2)  shall call an election within the priority
 43-7    groundwater management area, or portion of the priority groundwater
 43-8    management area, as delineated by the commission to determine if
 43-9    the priority groundwater management area will be added to the
43-10    district; and
43-11                (3)  shall designate election precincts and polling
43-12    places for the elections in the order calling an election under
43-13    this subsection.
43-14          (d) [(e)]  The board shall give notice of the election and
43-15    the proposition to be voted on.  The board shall publish notice of
43-16    the election at least one time in one or more newspapers with
43-17    general circulation within the boundaries of the priority
43-18    groundwater management area.  The notice must be published before
43-19    the 30th day preceding the date set for the election.
43-20          (e) [(f)]  The ballots for the election shall be printed to
43-21    provide for voting for or against the proposition:  "The inclusion
43-22    of __________ (briefly describe priority groundwater management
43-23    area) in the __________ District."  If the district has outstanding
43-24    debts or taxes, the proposition shall include the following
43-25    language:  "and assumption by the described area of a proportional
43-26    share of the debts or taxes of the district."
 44-1          (f) [(g)]  Immediately after the election, the presiding
 44-2    judge of each polling place shall deliver the returns of the
 44-3    election to the board, and the board shall canvass the returns for
 44-4    the election within the priority groundwater management area and
 44-5    declare the results.  If a majority of the voters in the priority
 44-6    groundwater management area voting on the proposition vote in favor
 44-7    of the proposition, the board shall declare that the priority
 44-8    groundwater management area is added to the district.  If a
 44-9    majority of the voters in the priority groundwater management area
44-10    voting on the proposition vote against adding the priority
44-11    groundwater management area to the district, the board shall
44-12    declare that the priority groundwater management area is not added
44-13    to the district.  The board shall file a copy of the election
44-14    results with the commission.
44-15          (g) [(h)]  If the voters approve adding the priority
44-16    groundwater management area to the district, the board of the
44-17    district to which the priority groundwater management area is added
44-18    shall provide reasonable representation on that board compatible
44-19    with the district's existing scheme of representation.
44-20          (h) [(i)]  If the proposition is defeated, or if the board of
44-21    the existing district votes not to accept the addition of the area
44-22    to the district, then the commission shall, except as provided
44-23    under Subsection (i), create under Section 36.0151 one or more
44-24    districts covering the priority groundwater management area within
44-25    one year of the date on which the proposition is defeated or the
44-26    board votes not to accept the area. []
 45-1          (i)  For an area which is not feasible for the creation of
 45-2    one or more districts as determined in the commission's findings
 45-3    under Section 35.008, the commission shall include in its report
 45-4    under Section 35.018 recommendations for the future management of
 45-5    the priority groundwater management area.
 45-6          (j)  Another [another] election to add the priority
 45-7    groundwater management area to an existing district may not be
 45-8    called before the first anniversary of the date on which the
 45-9    election on the proposition was held.
45-10          SECTION 2.29.  Subsection (c), Section 35.018, Water Code, is
45-11    amended to read as follows:
45-12          (c)  If the commission determines that a district created
45-13    under Chapter 36 is not appropriate for, or capable of, the
45-14    protection of the groundwater resources for a particular management
45-15    area or priority groundwater management area, the commission may
45-16    recommend in its report to the legislature the creation of a
45-17    special district or amendment of an existing district.  [(1)  If
45-18    voters fail to create a groundwater district in a priority
45-19    groundwater management area or if voters fail to add the priority
45-20    groundwater management area to an existing groundwater district,
45-21    the report shall include recommendations for the future management
45-22    of the priority groundwater management area.  The recommendations
45-23    may include but are not limited to the following:]
45-24                      [(A)  creation of a groundwater district by the
45-25    legislature;]
45-26                      [(B)  annexation of a priority groundwater
 46-1    management area into an existing district by the legislature; or]
 46-2                      [(C)  management of the priority groundwater
 46-3    management area by the nearest regional office of the commission.
 46-4    The commission may be authorized to:]
 46-5                            [(i)  adopt spacing and annual per acre
 46-6    pumping restrictions;]
 46-7                            [(ii)  issue well permits in accordance
 46-8    with Sections 36.113 and 36.1131;]
 46-9                            [(iii)  prevent waste and protect the
46-10    quality of groundwater in accordance with Sections
46-11    36.001(8)(A)-(G);]
46-12                            [(iv)  levy administrative penalties for
46-13    violations; and]
46-14                            [(v)  collect fees in accordance with
46-15    Sections 36.206(a) and (b).]
46-16                [(2)  If the commission is required by the legislature
46-17    to manage the priority groundwater management area, a new election
46-18    may not be called for three years from the date of the last
46-19    election.]
46-20          SECTION 2.30.  Section 36.001, Water Code, is amended by
46-21    amending Subdivision (13) and adding Subdivisions (18), (19), and
46-22    (20) to read as follows:
46-23                (13)  "Management area" means an area designated and
46-24    delineated by the Texas Water Development Board [commission] under
46-25    Chapter 35 as an area suitable for management of groundwater
46-26    resources.
 47-1                (18)  "River basin" means a river or coastal basin as
 47-2    designated as a river basin by the board under Section 16.051.  The
 47-3    term does not include waters of the bays or arms of the Gulf of
 47-4    Mexico.
 47-5                (19)  "Agriculture" means any of the following
 47-6    activities:
 47-7                      (A)  cultivating the soil;
 47-8                      (B)  producing crops for human food, animal feed,
 47-9    or planting seed or for the production of fibers;
47-10                      (C)  floriculture, viticulture, silviculture, and
47-11    horticulture, including the cultivation of plants in containers or
47-12    nonsoil media;
47-13                      (D)  raising, feeding, or keeping animals for the
47-14    production of food or fiber, leather, pelts, or other tangible
47-15    products having a commercial value;
47-16                      (E)  wildlife management; and
47-17                      (F)  planting cover crops, including cover crops
47-18    cultivated for transplantation, or leaving land idle for the
47-19    purpose of participating in any governmental program or normal crop
47-20    or livestock rotation procedure.
47-21                (20)  "Agricultural use" means any use or activity
47-22    involving agriculture, including irrigation.
47-23          SECTION 2.31.  Section 36.002, Water Code, is amended to read
47-24    as follows:
47-25          Sec. 36.002.  OWNERSHIP OF GROUNDWATER.  The ownership and
47-26    rights of the owners of the land and their lessees and assigns in
 48-1    groundwater are hereby recognized, and nothing in this code shall
 48-2    be construed as depriving or divesting the owners or their lessees
 48-3    and assigns of the ownership or rights, except as such rights may
 48-4    be limited or altered by [subject to] rules promulgated by a
 48-5    district.
 48-6          SECTION 2.32.  Subsection (b), Section 36.011, Water Code, is
 48-7    amended to read as follows:
 48-8          (b)  The commission has exclusive jurisdiction over the
 48-9    [delineation of management areas and the] creation of districts.
48-10          SECTION 2.33.  Section 36.012, Water Code, is amended by
48-11    adding Subsection (f) to read as follows:
48-12          (f)  This section does not apply to districts created under
48-13    Section 36.0151.
48-14          SECTION 2.34.  Section 36.014, Water Code, is amended to read
48-15    as follows:
48-16          Sec. 36.014.  NOTICE AND HEARING ON DISTRICT CREATION.
48-17    (a)  If a petition is filed under Section 36.013, the commission
48-18    shall give notice of an application as required by Section
48-19    49.011(a) and shall [may] conduct an evidentiary [a] hearing in a
48-20    central location within the area of the proposed district on the
48-21    application not later than the 120th day after the date the
48-22    commission issues notice [if the commission determines that a
48-23    hearing is necessary] under Section 49.011(a).
48-24          (b)  At the evidentiary hearing, the commission shall receive
48-25    evidence from affected persons [If the petition contains a request
48-26    to create a management area in all or part of the proposed
 49-1    district, the notice must also be given in accordance with the
 49-2    requirements in Section 35.006 for the designation of management
 49-3    areas].
 49-4          SECTION 2.35.  Section 36.015, Water Code, is amended to read
 49-5    as follows:
 49-6          Sec. 36.015.  CREATION OF A DISTRICT BY PETITION; COMMISSION
 49-7    FINDING AND ORDER [FINDINGS].  (a)  After the completion of an
 49-8    evidentiary hearing held under Section 36.014, [If] the commission
 49-9    shall consider the evidence received at the hearing.  If the
49-10    commission considers further information necessary, the commission
49-11    may request such information from any source [finds that a district
49-12    is feasible and practicable, that it would be a benefit to the land
49-13    in the district, and that it would be a public benefit or utility,
49-14    the commission shall issue an order containing these findings
49-15    granting the petition].
49-16          (b)  Within 120 days of the date the commission held the
49-17    evidentiary hearing under Section 36.014, the commission shall:
49-18                (1)  make a finding whether the proposed district is
49-19    feasible and practicable, that it would be a benefit to the land in
49-20    the district, and that it would be a public benefit or utility; and
49-21                (2)  issue an order, based on the finding, either
49-22    granting or denying the petition filed under Section 36.013 [If the
49-23    commission finds that a district is not feasible and practicable,
49-24    that it would not be a benefit to the land in the district, that it
49-25    would not be a public benefit or utility, or that it is not needed,
49-26    the commission by order shall deny the petition].
 50-1          (c)  If the commission issues an order denying the petition,
 50-2    the commission shall provide the petitioners, in writing, the
 50-3    reasons for the action.
 50-4          (d)  The commission may adjust the boundaries of the proposed
 50-5    district to exclude any land that would not be benefited by
 50-6    inclusion in the district and is not necessary to the district for
 50-7    proper regulation of the groundwater reservoir.  In delineating
 50-8    district boundaries, the commission shall give preference to
 50-9    boundary lines that are coterminous with those of a groundwater
50-10    management area, but may delineate such boundaries along existing
50-11    political subdivision boundaries at the discretion of the
50-12    commission to facilitate district creation and confirmation.
50-13          (e) [(d)]  If the commission grants the petition to create
50-14    the district, it shall direct in its order creating the district
50-15    that an election be called by the temporary directors to confirm
50-16    the creation of the district and to elect permanent directors.
50-17          (f)  If the petition requests additional terms or conditions
50-18    restricting the powers of the district that are different from the
50-19    terms or conditions provided by this chapter and the commission
50-20    finds that the requested restriction of powers would still allow
50-21    the district to properly manage the groundwater resources within
50-22    the district, the commission may specify in its order creating the
50-23    district the powers provided in this chapter that do not apply to
50-24    the district.
50-25          (g) [(e)]  The refusal to grant a petition to create a
50-26    district does not invalidate or affect the designation of any
 51-1    management area [requested in the same petition].
 51-2          [(f)  The commission shall act on the petition within a
 51-3    reasonable amount of time.]
 51-4          SECTION 2.36.  Subsection (a), Section 36.0151, Water Code,
 51-5    is amended to read as follows:
 51-6          (a)  If the commission is required to create [proposes that]
 51-7    a district [be created] under Section 35.012(b) [35.012(d)], it
 51-8    shall, without an evidentiary hearing, issue an order creating the
 51-9    district and shall provide in its order [creating the district
51-10    provide] that temporary directors be appointed under Section 36.016
51-11    and that an election be called by the temporary directors to
51-12    authorize the district to assess taxes [confirm the creation of the
51-13    district] and to elect permanent directors.
51-14          SECTION 2.37.  The section heading and Subsections (a) and
51-15    (d), Section 36.017, Water Code, are amended to read as follows:
51-16          Sec. 36.017.  CONFIRMATION AND DIRECTORS' ELECTION FOR
51-17    DISTRICT IN A MANAGEMENT AREA.  (a)  For a district created under
51-18    Section 36.015, not [Not] later than the 120th [60th] day after the
51-19    date all temporary directors have been appointed and have
51-20    qualified, the temporary directors shall meet and order an election
51-21    to be held within the boundaries of the proposed district to
51-22    approve the creation of the district and to elect permanent
51-23    directors.
51-24          (d)  The ballot for the election must be printed to provide
51-25    for voting for or against the proposition:  "The creation of the
51-26    ____________ Groundwater Conservation District."  If the district
 52-1    levies a maintenance tax for payment of its expenses, then an
 52-2    additional [the] proposition shall be included with [include] the
 52-3    following language:  "The [and the] levy of a maintenance tax at a
 52-4    rate not to exceed ______ cents for each $100 of assessed
 52-5    valuation."
 52-6          SECTION 2.38.  Subchapter B, Chapter 36, Water Code, is
 52-7    amended by adding Section 36.0171 to read as follows:
 52-8          Sec. 36.0171.  TAX AUTHORITY AND DIRECTORS' ELECTION FOR
 52-9    DISTRICT IN A PRIORITY GROUNDWATER MANAGEMENT AREA.  (a)  For a
52-10    district created under Section 36.0151, not later than the 120th
52-11    day after the date all temporary directors have been appointed and
52-12    have qualified, the temporary directors shall meet and order an
52-13    election to be held within the boundaries of the proposed district
52-14    to authorize the district to assess taxes and to elect permanent
52-15    directors.
52-16          (b)  In the order calling the election, the temporary
52-17    directors shall designate election precincts and polling places for
52-18    the election.  In designating the polling places, the temporary
52-19    directors shall consider the needs of all voters for conveniently
52-20    located polling places.
52-21          (c)  The temporary directors shall publish notice of the
52-22    election at least once in at least one newspaper with general
52-23    circulation within the boundaries of the proposed district.  The
52-24    notice must be published before the 30th day preceding the date of
52-25    the election.
52-26          (d)  The ballot for the election must be printed to provide
 53-1    for voting for or against the proposition:  "The levy of a
 53-2    maintenance tax by the ________________ Groundwater Conservation
 53-3    District at a rate not to exceed ______ cents for each $100 of
 53-4    assessed valuation."
 53-5          (e)  Immediately after the election, the presiding judge of
 53-6    each polling place shall deliver the returns of the election to the
 53-7    temporary board, and the board shall canvass the returns and
 53-8    declare the result.  The board shall file a copy of the election
 53-9    result with the commission.
53-10          (f)  If a majority of the votes cast at the election favor
53-11    the levy of a maintenance tax, the temporary board shall declare
53-12    the levy approved and shall enter the result in its minutes.
53-13          (g)  If a majority of the votes cast at the election are
53-14    against the levy of a maintenance tax, the temporary board shall
53-15    declare the levy defeated and shall enter the result in its
53-16    minutes.
53-17          (h)  If the majority of the votes cast at the election are
53-18    against the levy of a maintenance tax, the district shall set
53-19    permit fees to pay for the district's regulation of groundwater in
53-20    the district, including fees based on the amount of water to be
53-21    withdrawn from a well.
53-22          SECTION 2.39.  Section 36.019, Water Code, is amended to read
53-23    as follows:
53-24          Sec. 36.019.  CONFIRMATION ELECTION IN DISTRICT INCLUDING
53-25    LAND IN MORE THAN ONE COUNTY.  (a)  A district, the major portion
53-26    of which is located in one county, may not be organized to include
 54-1    land in another county unless the election held in the other county
 54-2    to confirm and ratify the creation of the district is approved by a
 54-3    majority of the voters of the other county voting in an election
 54-4    called for that purpose.
 54-5          (b)  This section does not apply to districts created under
 54-6    Section 36.0151.
 54-7          SECTION 2.40.  Subsection (g), Section 36.066, Water Code, is
 54-8    amended to read as follows:
 54-9          (g)  If the district prevails in any suit other than a suit
54-10    in which it voluntarily intervenes, the district may seek and the
54-11    court shall grant [it may], in the same action, recovery [recover
54-12    reasonable fees] for attorney's fees [attorneys], costs for expert
54-13    witnesses, and other costs incurred by the district before the
54-14    court.  The amount of the attorney's fees shall be fixed by the
54-15    court.
54-16          SECTION 2.41.  Subsection (a), Section 36.101, Water Code, is
54-17    amended to read as follows:
54-18          (a)  A district may make and enforce rules, including rules
54-19    limiting groundwater production based on tract size or the spacing
54-20    of wells, to provide for conserving, preserving, protecting, and
54-21    recharging of the groundwater or of a groundwater reservoir or its
54-22    subdivisions in order to control subsidence or prevent waste of
54-23    groundwater and to carry out the powers and duties provided by this
54-24    chapter.
54-25          SECTION 2.42.  Subsections (b) and (d), Section 36.102, Water
54-26    Code, are amended to read as follows:
 55-1          (b)  The board by rule may set reasonable civil penalties for
 55-2    breach of any rule of the district [that shall] not to exceed
 55-3    $5,000 per day per violation, and each day of a continuing
 55-4    violation constitutes a separate violation.  In addition to this
 55-5    penalty or any other penalty provided by law, the district may seek
 55-6    and the court shall grant a penalty equal to 115 percent of the
 55-7    economic benefit gained from the violation [the jurisdiction of a
 55-8    justice court as provided by Section 27.031, Government Code].
 55-9          (d)  If the district prevails in any suit to enforce its
55-10    rules, the district may seek and the court shall grant [it may], in
55-11    the same action, recovery [recover reasonable fees] for attorney's
55-12    fees [attorneys], costs for expert witnesses, and other costs
55-13    incurred by the district before the court.  The amount of the
55-14    attorney's fees shall be fixed by the court.
55-15          SECTION 2.43.  Section 36.1071, Water Code, is amended by
55-16    amending Subsections (a), (b), and (e) and adding Subsection (h) to
55-17    read as follows:
55-18          (a)  Following notice and hearing, the district shall, in
55-19    coordination with surface water management entities on a regional
55-20    basis, develop a comprehensive management plan which addresses the
55-21    following management goals, as applicable:
55-22                (1)  providing the most efficient use of groundwater
55-23    including conservation;
55-24                (2)  controlling and preventing waste of groundwater;
55-25                (3)  controlling and preventing subsidence;
55-26                (4)  addressing conjunctive surface water management
 56-1    issues; [and]
 56-2                (5)  addressing natural resource issues; and
 56-3                (6)  addressing drought conditions[].
 56-4          (b)  After January 5, 2002, a [A] district management plan,
 56-5    or any amendments to a district management plan, [adopted after the
 56-6    Texas Water Development Board approval of a regional water plan for
 56-7    the region in which the district is located] shall be consistent
 56-8    with the state [regional] water plan.
 56-9          (e)  In the management plan described under Subsection (a),
56-10    the district shall:
56-11                (1)  identify the performance standards and management
56-12    objectives under which the district will operate to achieve the
56-13    management goals identified under Subsection (a);
56-14                (2)  specify, in as much detail as possible, the
56-15    actions, procedures, performance, and avoidance that are or may be
56-16    necessary to effect the plan, including specifications and proposed
56-17    rules;
56-18                (3)  include estimates of the following:
56-19                      (A)  the existing total usable amount of
56-20    groundwater in the district;
56-21                      (B)  the amount of groundwater being used within
56-22    the district on an annual basis;
56-23                      (C)  the annual amount of recharge, if any, to
56-24    the groundwater resources within the district and how natural or
56-25    artificial recharge may be increased; [and]
56-26                      (D)  the projected surface water supply and
 57-1    demand for water within the district; and
 57-2                      (E)  the groundwater withdrawal rates based on
 57-3    groundwater management standards adopted under Subdivision (5)
 57-4    using groundwater availability modeling information as provided by
 57-5    the executive administrator;
 57-6                (4)  address water supply needs in a manner that is not
 57-7    in conflict with the appropriate approved regional water plan if a
 57-8    regional water plan has been approved under Section 16.053; and
 57-9                (5)  adopt the groundwater management standard for each
57-10    source of groundwater in the district as provided by Subsection
57-11    (h).
57-12          (h)  The groundwater management standard shall describe the
57-13    desired condition of the groundwater source as indicated by indices
57-14    of quantity of water in the source, quality of water produced from
57-15    the source, and subsidence of the land surface for various periods
57-16    throughout the time period covered by the plan.
57-17          SECTION 2.44.  Section 36.108, Water Code, is amended to read
57-18    as follows:
57-19          Sec. 36.108.  JOINT PLANNING IN MANAGEMENT AREA.  (a)  If two
57-20    or more districts are located within the boundaries of the same
57-21    management area, each district shall prepare a comprehensive
57-22    management plan as required by Section 36.1071 covering that
57-23    district's respective territory.  On completion and certification
57-24    of the plan as required by Section 36.1072, each district shall
57-25    forward a copy of the new or revised management plan to the other
57-26    districts in the management area.  The boards of the districts
 58-1    shall consider the plans individually and shall compare them to
 58-2    other management plans then in force in the management area.
 58-3          (b)  The board of directors of each district in the
 58-4    management area may, by resolution, call for [a] joint planning
 58-5    [meeting] with [the boards of directors of] the other districts in
 58-6    the management area to review the management plans and
 58-7    accomplishments for the management area.  [The boards shall meet to
 58-8    consider the plans individually and shall compare them to other
 58-9    management plans then in force in the management area.]  In
58-10    reviewing the management plans, the boards shall consider:
58-11                (1)  the goals of each management plan and its impact
58-12    on planning throughout the management area;
58-13                (2)  the effectiveness of the measures established by
58-14    each management plan for conserving and protecting groundwater and
58-15    preventing waste, and the effectiveness of these measures in the
58-16    management area generally; and
58-17                (3)  any other matters that the boards consider
58-18    relevant to the protection and conservation of groundwater and the
58-19    prevention of waste in the management area.
58-20          (c)  If a [A] joint meeting of the boards of directors is
58-21    called, the meeting must be held in accordance with [the Open
58-22    Meetings Act,] Chapter 551, Government Code.  Notice of the meeting
58-23    shall be given in accordance with the requirements for notice of
58-24    district board of directors meetings under that Act.  In addition,
58-25    notice of the meeting shall be published not later than the 30th
58-26    day before the date of the scheduled meeting in a newspaper with
 59-1    general circulation in each county in the management area.
 59-2          (d)  A district in the management area may file with good
 59-3    cause a petition with the commission requesting an inquiry if the
 59-4    petitioner district adopted a resolution calling for joint
 59-5    planning, and the other district or districts either refused to
 59-6    join in the planning process or the process failed to result in
 59-7    adequate planning, and the petition provides evidence [believes]
 59-8    that:
 59-9                (1)  another district in the management area has failed
59-10    to adopt rules;
59-11                (2)  the groundwater in the management area is not
59-12    adequately protected by the rules adopted by another district; [or]
59-13                (3)  the groundwater in the management area is not
59-14    adequately protected due to the failure of another district to
59-15    enforce substantial compliance with its rules; or
59-16                (4)  the depletion rate in an aquifer exceeds the rate
59-17    of depletion projected in the adopted regional water plan or in the
59-18    districts' management plans[].
59-19          (e)  Not later than the 90th day after the date the petition
59-20    is filed, the commission shall review the petition and either:
59-21                (1)  dismiss it if it finds that the evidence is not
59-22    adequate to show that any of the conditions alleged in the petition
59-23    exist; or
59-24                (2)  select a review panel as provided in Subsection
59-25    (f).
59-26          (f)  If the petition is not dismissed under Subsection (e),
 60-1    the [The] commission shall [may] appoint a review panel consisting
 60-2    of a chairman and four other members.  A director or general
 60-3    manager of a district located outside the management area that is
 60-4    the subject of the petition may be appointed to the review panel.
 60-5    The commission may not appoint more than two members of the review
 60-6    panel from any one district.  The commission also shall appoint a
 60-7    disinterested person to serve as a nonvoting recording secretary
 60-8    for the review panel.  The recording secretary may be an employee
 60-9    of the commission.  The recording secretary shall record and
60-10    document the proceedings of the panel.
60-11          (g)  Not later than the 120th day after appointment, the
60-12    review panel shall review the petition and any evidence relevant to
60-13    the petition and, in a public meeting, consider and adopt [prepare]
60-14    a report to be submitted to the commission.  The commission may
60-15    direct the review panel to conduct public hearings at a location in
60-16    the management area to take evidence on the petition.  The review
60-17    panel may attempt to negotiate a settlement or resolve the dispute
60-18    by any lawful means.
60-19          (h)  In its report, the review panel shall include:
60-20                (1)  a summary of all evidence taken in any hearing on
60-21    the petition;
60-22                (2)  a list of findings and recommended actions
60-23    appropriate for the commission to take and the reasons it finds
60-24    those actions appropriate; and
60-25                (3)  any other information the panel considers
60-26    appropriate.
 61-1          (i)  The review panel shall submit its report to the
 61-2    commission.
 61-3          (j)  Districts located within the same management areas or in
 61-4    adjacent management areas may contract to jointly conduct studies
 61-5    or research, or to construct projects, under terms and conditions
 61-6    that the districts consider beneficial.  Such joint efforts may
 61-7    include studies of groundwater availability and quality, aquifer
 61-8    modeling, and the interaction of groundwater and surface water;
 61-9    educational programs; the purchase and sharing of equipment; and
61-10    the implementation of projects to make groundwater available to
61-11    users in the districts, including aquifer recharge, brush control,
61-12    weather modification, desalination, regionalization, and treatment
61-13    or conveyance facilities.  The districts may contract under their
61-14    existing authorizations including those of Chapter 791, Government
61-15    Code, provided, however, that their contracting authority is not
61-16    limited by Sections 791.011(c)(2) and 791.011(d)(3) and Section
61-17    791.014, Government Code.
61-18          SECTION 2.45.  Section 36.116, Water Code, is amended to read
61-19    as follows:
61-20          Sec. 36.116.  REGULATION OF SPACING AND PRODUCTION.  In order
61-21    to minimize as far as practicable the drawdown of the water table
61-22    or the reduction of artesian pressure, to control subsidence, to
61-23    prevent interference between wells, to prevent degradation of water
61-24    quality, or to prevent waste, a district by rule may regulate:
61-25                (1)  [provide for] the spacing of water wells by:
61-26                      (A)  requiring all water wells to be spaced a
 62-1    certain distance from property lines or adjoining wells;
 62-2                      (B)  requiring wells with a certain production
 62-3    capacity, pump size, or other characteristic related to the
 62-4    construction or operation of a well to be spaced a certain distance
 62-5    from property lines or adjoining wells; or
 62-6                      (C)  imposing spacing requirements adopted by the
 62-7    board; and
 62-8                (2)  the production of groundwater by:
 62-9                      (A)  limiting total annual production;
62-10                      (B)  limiting the amount of water produced based
62-11    on acreage or tract size;
62-12                      (C)  limiting the amount of water that may be
62-13    produced from a maximum number of acres assigned by the district to
62-14    an authorized well site;
62-15                      (D)  limiting the maximum amount of water that
62-16    may be produced from a number of acres assigned by a district on
62-17    the basis of acre-feet per acre or gallons per minute per acre for
62-18    an authorized well site; or
62-19                      (E)  setting other production limits adopted by
62-20    the district [and may regulate the production of wells].
62-21          SECTION 2.46.  Section 36.122, Water Code, is amended to read
62-22    as follows:
62-23          Sec. 36.122.  TRANSFER OF GROUNDWATER OUT OF DISTRICT.
62-24    (a)  If a permit or an amendment to a permit under Section 36.113
62-25    proposes to transfer groundwater outside of a district's
62-26    boundaries, the district may also consider the provisions of this
 63-1    section in determining whether to grant or deny the permit.
 63-2          (b)  A district may promulgate rules requiring a person to
 63-3    obtain a permit or an amendment to a permit under Section 36.113
 63-4    from the district for the transfer of groundwater out of the
 63-5    district to:
 63-6                (1)  increase, on or after March 2, 1997, the amount of
 63-7    groundwater to be transferred under a continuing arrangement in
 63-8    effect before that date; or
 63-9                (2)  transfer groundwater out of the district on or
63-10    after March 2, 1997, under a new arrangement.
63-11          (c)  The district may not impose more restrictive permit
63-12    conditions on transporters than the district imposes on existing
63-13    in-district use.
63-14          (d) [(b)]  The district may impose a reasonable fee for
63-15    processing an application [for a permit] under this section.  The
63-16    fee may not exceed fees that the district imposes for processing
63-17    other applications under Section 36.113.  An application filed to
63-18    comply with this section shall be considered and processed under
63-19    the same procedures as other applications for permits under Section
63-20    36.113 and shall be combined with applications filed to obtain a
63-21    permit for in-district water use under Section 36.113 from the same
63-22    applicant.
63-23          (e)  The district may impose a reasonable fee or surcharge
63-24    for an export fee not to exceed:
63-25                (1)  a fee negotiated between the district and the
63-26    transporter;
 64-1                (2)  the equivalent of the district's tax rate per
 64-2    hundred dollars of valuation for each thousand gallons of water
 64-3    transferred out of the district or 2.5 cents per thousand gallons
 64-4    of water, if the district assesses a tax rate of less than 2.5
 64-5    cents per hundred dollars of valuation; or
 64-6                (3)  for a fee-based district, an additional 50 percent
 64-7    export surcharge, in addition to the district's production fee, for
 64-8    water transferred out of the district.
 64-9          (f)  A district may not impose a fee under Subsection (e) on
64-10    withdrawal of water from land owned prior to March 1, 2001, by a
64-11    political subdivision if the political subdivision pays a tax
64-12    mitigation fee under Section 36.206(c)
64-13          [(c)  Before issuing a permit under this section, the
64-14    district must give notice of the application and hold a public
64-15    hearing.]
64-16          [(d)  In determining whether to issue a permit under this
64-17    section, the district shall consider:]
64-18                [(1)  the availability of water in the district and in
64-19    the proposed receiving area during the period for which the water
64-20    supply is requested;]
64-21                [(2)  the availability of feasible and practicable
64-22    alternative supplies to the applicant;]
64-23                [(3)  the amount and purposes of use in the proposed
64-24    receiving area for which water is needed;]
64-25                [(4)  the projected effect of the proposed transfer on
64-26    aquifer conditions, depletion, subsidence, or effects on existing
 65-1    permit holders or other groundwater users within the district; and]
 65-2                [(5)  the approved regional water plan and certified
 65-3    district management plan].
 65-4          (g) [(e)]  The district may not deny a permit based on the
 65-5    fact that the applicant seeks to transfer groundwater outside of
 65-6    the district [limit a permit issued under this section if
 65-7    conditions in Subsection (d) warrant the limitation].
 65-8          (h) [(f)]  In addition to conditions provided by Section
 65-9    36.1131, the permit shall specify:
65-10                (1)  the amount of water that may be transferred out of
65-11    the district; and
65-12                (2)  the period for which the water may be transferred.
65-13          (i)  The period specified by Subsection (h)(2) shall be:
65-14                (1)  five years if construction of a conveyance system
65-15    has not been initiated prior to the issuance of the permit; or
65-16                (2)  30 years if construction of a conveyance system
65-17    has been initiated prior to the issuance of the permit.
65-18          (j)  A term of five years under Subsection (i) shall
65-19    automatically be extended to 30 years if construction of a
65-20    conveyance system is begun before the expiration of the initial
65-21    five-year term.
65-22          (k)  In its determination of whether to renew a permit issued
65-23    under this section, the district shall consider relevant and
65-24    current data for the conservation of groundwater resources and
65-25    shall consider the permit in the same manner it would consider any
65-26    other permit in the district.
 66-1          (l)  A district is prohibited from using revenues obtained
 66-2    under Subsection (e) to prohibit the transfer of groundwater
 66-3    outside of a district.
 66-4          (m)  A district that charges a fee under Subsection (e) shall
 66-5    provide 50 percent of any revenues resulting from such fee to the
 66-6    water infrastructure fund annually beginning September 1, 2002.
 66-7          (n) [(g)  A district may not prohibit the export of
 66-8    groundwater if the purchase was in effect on or before June 1,
 66-9    1997.]
66-10          [(h)]  This section applies only to a transfer of water that
66-11    is initiated or increased after March 1, 2001 [the effective date
66-12    of this section].
66-13          (o) [(i)]  A district shall adopt rules as necessary to
66-14    implement this section.
66-15          SECTION 2.47.  Section 36.206, Water Code, is amended by
66-16    adding Subsection (c) to read as follows:
66-17          (c)  Political subdivisions that own property that is
66-18    suitable for groundwater development shall annually pay a district
66-19    in which the property is located a fee that is equal to the taxes
66-20    that would be paid to the district if the land were not owned by a
66-21    political subdivision.
66-22          SECTION 2.48.  Subchapter I, Chapter 36, Water Code, is
66-23    amended by adding Section 36.3011 to read as follows:
66-24          Sec. 36.3011.  FAILURE OF A DISTRICT TO CONDUCT JOINT
66-25    PLANNING.  (a)  If the board of a district within a common
66-26    management area fails to forward a copy of its new or revised
 67-1    certified management plan under Section 36.108, the commission
 67-2    shall take appropriate action under Section 36.303.
 67-3          (b)  Within 45 days after receiving the review panel's report
 67-4    under Section 36.108, the executive director or the commission
 67-5    shall take action to implement any or all of the panel's
 67-6    recommendations.  If the commission finds that a district in the
 67-7    joint planning area has failed to adopt rules, the groundwater in
 67-8    the management area is not adequately protected by the rules
 67-9    adopted by the district, or the groundwater in the management area
67-10    is not adequately protected because of the district's failure to
67-11    enforce substantial compliance with its rules, the commission may
67-12    take any action it considers necessary in accordance with Section
67-13    36.303.
67-14          SECTION 2.49.  Subsection (a), Section 36.303, Water Code, is
67-15    amended to read as follows:
67-16          (a)  If Section 36.108, 36.301, or 36.302(f) applies, the
67-17    commission, after notice and hearing in accordance with Chapter
67-18    2001, Government Code, shall take action the commission considers
67-19    appropriate, including:
67-20                (1)  issuing an order requiring the district to take
67-21    certain actions or to refrain from taking certain actions;
67-22                (2)  dissolving the board in accordance with Sections
67-23    36.305 and 36.307 and calling an election for the purpose of
67-24    electing a new board;
67-25                (3)  requesting the attorney general to bring suit for
67-26    the appointment of a receiver to collect the assets and carry on
 68-1    the business of the groundwater conservation district [removing the
 68-2    district's taxing authority]; or
 68-3                (4)  dissolving the district in accordance with
 68-4    Sections 36.304, 36.305, and 36.308.
 68-5          SECTION 2.50.  Subchapter I, Chapter 36, Water Code, is
 68-6    amended by adding Section 36.3035 to read as follows:
 68-7          Sec. 36.3035.  APPOINTMENT OF A RECEIVER.  (a)  If the
 68-8    attorney general brings a suit for the appointment of a receiver
 68-9    for a district, a district court shall appoint a receiver if an
68-10    appointment is necessary to protect the assets of the district.
68-11          (b)  The receiver shall execute a bond in an amount to be set
68-12    by the court to ensure the proper performance of the receiver's
68-13    duties.
68-14          (c)  After appointment and execution of bond, the receiver
68-15    shall take possession of the assets of the district specified by
68-16    the court.
68-17          (d)  Until discharged by the court, the receiver shall
68-18    perform the duties that the court directs to preserve the assets
68-19    and carry on the business of the district and shall strictly
68-20    observe the final order involved.
68-21          (e)  On a showing of good cause by the district, the court
68-22    may dissolve the receivership and order the assets and control of
68-23    the business returned to the district.
68-24          SECTION 2.51.  Section 51.149, Water Code, is amended to read
68-25    as follows:
68-26          Sec. 51.149.  CONTRACTS.  (a)  No approvals other than those
 69-1    specified in Subsection (c) and in Section 1, Chapter 778, Acts of
 69-2    the 74th Legislature, Regular Session, 1995, need be obtained in
 69-3    order for a contract between a district and a municipality to be
 69-4    valid, binding, and enforceable against all parties to the
 69-5    contract.  After approval by a majority of the electors voting at
 69-6    an election conducted in the manner of a bond election, a district
 69-7    may make payments under a contract from taxes for debt that does
 69-8    not exceed 30 years.
 69-9          (b) [(d)]  A contract may provide that the district will make
69-10    payments under the contract from proceeds from the sale of notes or
69-11    bonds, from taxes, from any other income of the district, or from
69-12    any combination of these.
69-13          (c) [(e)]  A district may make payments under a contract from
69-14    taxes, other than maintenance taxes, after the provisions of the
69-15    contract have been approved by a majority of the electors voting at
69-16    an election held for that purpose.
69-17          (d) [(f)]  Any contract election may be held at the same time
69-18    as and in conjunction with an election to issue bonds, and the
69-19    procedure for calling the election, giving notice, conducting the
69-20    election, and canvassing the returns shall be the same as the
69-21    procedure for a bond election.
69-22                    ARTICLE 3.  DISTRICT RATIFICATIONS
69-23           PART 1.  COW CREEK GROUNDWATER CONSERVATION DISTRICT
69-24          SECTION 3.101.  CREATION.  (a)  A groundwater conservation
69-25    district to be known as the Cow Creek Groundwater Conservation
69-26    District is created in Kendall County, subject to approval at a
 70-1    confirmation election under Section 3.109 of this part.  The
 70-2    district is a governmental agency and a body politic and corporate.
 70-3          (b)  The district is created under and is essential to
 70-4    accomplish the purposes of Section 59, Article XVI, Texas
 70-5    Constitution.
 70-6          (c)  The district may develop and implement regulatory,
 70-7    conservation, and recharge programs that preserve and protect
 70-8    groundwater resources located in the district.
 70-9          SECTION 3.102.  DEFINITIONS.  In this part:
70-10                (1)  "District" means the Cow Creek Groundwater
70-11    Conservation District.
70-12                (2)  "Retail public utility" means a retail public
70-13    utility as defined by Section 13.002, Water Code, that is providing
70-14    service in the district on September 1, 2001.
70-15                (3)  "Well" means any excavation drilled or dug into
70-16    the ground that may intercept or penetrate a water-bearing stratum
70-17    or formation.
70-18          SECTION 3.103.  BOUNDARIES.  The boundaries of the district
70-19    are coextensive with the boundaries of Kendall County.
70-20          SECTION 3.104.  FINDING OF BENEFIT.  All of the land and
70-21    other property included within the boundaries of the district will
70-22    benefit from the works and projects that are to be accomplished by
70-23    the district under powers conferred by Section 59, Article XVI,
70-24    Texas Constitution.  The district is created to serve a public use
70-25    and benefit.
70-26          SECTION 3.105.  POWERS.  Except as otherwise provided by this
 71-1    part, the district has all of the rights, powers, privileges,
 71-2    authority, functions, and duties provided by the general law of the
 71-3    state, including Chapter 36, Water Code, applicable to groundwater
 71-4    conservation districts created under Section 59, Article XVI, Texas
 71-5    Constitution.  This part prevails over any provision of general law
 71-6    that is in conflict or inconsistent with this part.
 71-7          SECTION 3.106.  ELECTION OF DIRECTORS.  (a)  The directors of
 71-8    the district shall be elected according to the commissioners
 71-9    precinct method as provided by this part.
71-10          (b)  One director shall be elected by the qualified voters of
71-11    the entire district and one director shall be elected from each
71-12    county commissioners precinct by the qualified voters of that
71-13    precinct.
71-14          (c)  A person shall indicate on the application for a place
71-15    on the ballot the precinct that the person seeks to represent or
71-16    that the person seeks to represent the district at large.
71-17          SECTION 3.107.  BOARD OF DIRECTORS.  (a)  The district is
71-18    governed by a board of five directors.
71-19          (b)  A vacancy in the office of director shall be filled by
71-20    appointment of the board until the next election for directors.  At
71-21    the next election for directors, a person shall be elected to fill
71-22    the position.  If the position is not scheduled to be filled at the
71-23    election, the person elected to fill the position shall serve only
71-24    for the remainder of the unexpired term.
71-25          (c)  To be eligible to serve as director from a county
71-26    commissioners precinct, a person must be a registered voter in the
 72-1    precinct from which the person is elected or appointed.  To be
 72-2    eligible to serve as director at large, a person must be a
 72-3    registered voter in the district.
 72-4          SECTION 3.108.  TEMPORARY DIRECTORS.  (a)  The temporary
 72-5    board of directors shall be appointed by the county commissioners
 72-6    court.  A temporary director will be appointed from each
 72-7    commissioners precinct, and one temporary director will be a
 72-8    director at large.
 72-9          (b)  If a temporary director fails to qualify for office, the
72-10    temporary directors who have qualified shall appoint a person to
72-11    fill the vacancy.  If at any time there are fewer than three
72-12    qualified temporary directors, the Texas Natural Resource
72-13    Conservation Commission shall appoint the necessary number of
72-14    persons to fill all vacancies on the board.
72-15          SECTION 3.109.  CONFIRMATION AND INITIAL DIRECTORS ELECTION.
72-16    (a)  The temporary board of directors shall call and hold an
72-17    election to confirm establishment of the district and to elect five
72-18    initial directors.
72-19          (b)  Section 41.001(a), Election Code, does not apply to a
72-20    confirmation and initial directors election held as provided by
72-21    this section.
72-22          (c)  If a majority of the votes cast at the election favor
72-23    the creation of the district, the temporary directors shall declare
72-24    the district created.  If a majority of the votes cast at the
72-25    election are against the creation of the district, the temporary
72-26    directors shall declare the district defeated.  The temporary
 73-1    directors shall file a copy of the election results with the Texas
 73-2    Natural Resource Conservation Commission.
 73-3          (d)  If a majority of the votes cast at the election are
 73-4    against the creation of the district, the temporary directors may
 73-5    call and hold subsequent elections to confirm establishment of the
 73-6    district and to elect initial directors.  A subsequent election may
 73-7    not be held earlier than the first anniversary of the date on which
 73-8    the previous election was held.  If the district is not created
 73-9    before September 1, 2006, this part expires on that date.
73-10          (e)  Section 36.017(a), Water Code, does not apply to the
73-11    district.
73-12          (f)  Except as provided by this section, a confirmation and
73-13    directors election must be conducted as provided by Sections
73-14    36.017(b)-(h), Water Code, and the Election Code.
73-15          SECTION 3.110.  INITIAL DIRECTORS.  (a)  A person who wishes
73-16    to be a candidate for the office of initial director may file an
73-17    application with the temporary board of directors to have the
73-18    candidate's name printed on the ballot as provided by Section 3.106
73-19    of this part.
73-20          (b)  At the confirmation and initial directors election, the
73-21    temporary board of directors shall have the names of the five
73-22    persons serving as temporary directors placed on the ballot by
73-23    commissioners precinct and as at-large director, together with the
73-24    name of any candidate filing for the office of director as provided
73-25    by this section.
73-26          (c)  If the district is created at the election, the
 74-1    temporary directors, at the time the vote is canvassed, shall
 74-2    declare the candidate receiving the most votes for each
 74-3    commissioners precinct or for the at-large director to be elected
 74-4    as the initial directors.
 74-5          (d)  The initial directors for Precincts 2 and 3 shall serve
 74-6    as initial directors until the first regular meeting of the board
 74-7    of directors held after the first permanent directors election
 74-8    under Section 3.112 of this part.  The initial directors for
 74-9    Precincts 1 and 4 and the initial director representing the
74-10    district at large shall serve as initial directors until the first
74-11    regular meeting of the board of directors held after the second
74-12    permanent directors election under Section 3.112 of this part.
74-13          SECTION 3.111.  SERVICE OF DIRECTORS.  (a)  Temporary
74-14    directors serve until the temporary directors become initial
74-15    directors under Section 3.110 of this part or until this part
74-16    expires under Section 3.109, whichever occurs earlier.
74-17          (b)  Initial directors serve until permanent directors are
74-18    elected under Section 3.112 of this part.
74-19          (c)  Permanent directors serve staggered four-year terms.
74-20          (d)  A director serves until the director's successor has
74-21    qualified.
74-22          (e)  Each director must qualify to serve as director in the
74-23    manner provided by Section 36.055, Water Code.
74-24          SECTION 3.112.  ELECTION OF PERMANENT DIRECTORS.  Beginning
74-25    in the second year after the year in which the district is
74-26    authorized to be created at a confirmation election, an election
 75-1    shall be held in the district on the first Saturday in May every
 75-2    two years to elect the appropriate number of directors to the
 75-3    board.
 75-4          SECTION 3.113.  ADDITIONAL AUTHORITY.  (a)  The district may
 75-5    contract with one or more state agencies or other governmental
 75-6    bodies, including a county, a river authority, or another district,
 75-7    to carry out any function of the district.
 75-8          (b)  The district may require a drilling permit before a new
 75-9    well is drilled or an existing well is substantially altered.
75-10    Notwithstanding an exemption for a well under Section 36.117, Water
75-11    Code, written authorization granted by the district must be
75-12    received before a new well is drilled or an existing well is
75-13    substantially altered.
75-14          (c)  The district may participate in the construction,
75-15    implementation, and maintenance of best management practices for
75-16    water resource management in the district and may engage in and
75-17    promote the acceptance of best management practices through
75-18    education efforts sponsored by the district.  Construction,
75-19    implementation, and maintenance of best management practices must
75-20    address water quantity and quality practices such as brush
75-21    management, prescribed grazing, recharge structures, water and silt
75-22    detention and retention structures, plugging of abandoned wells,
75-23    rainwater harvesting, and other treatment measures for the
75-24    conservation of water resources.
75-25          (d)  Reasonable fees, as determined by the district, may be
75-26    imposed on an annual basis on each nonexempt well.  The district
 76-1    shall adopt any rules necessary for the assessment and collection
 76-2    of fees under this subsection.
 76-3          (e)  The district may use money collected from fees:
 76-4                (1)  in any manner necessary for the management and
 76-5    operation of the district;
 76-6                (2)  to pay all or part of the principal of and
 76-7    interest on district bonds or notes; and
 76-8                (3)  for any purpose consistent with the district's
 76-9    certified water management plan.
76-10          (f)  The district shall grant an exemption or other relief
76-11    from ad valorem taxes on property on which a water conservation
76-12    initiative has been implemented.  The district shall adopt rules to
76-13    implement this subsection.  A retail public utility shall receive
76-14    the same exemption or relief from ad valorem taxes on property as
76-15    any other customer of the district would receive.
76-16          (g)  As a water conservation initiative to encourage retail
76-17    public utilities to obtain water supplies from sources other than
76-18    groundwater, the district shall grant an exemption or other relief
76-19    from ad valorem taxes on property served by a retail public utility
76-20    based on (i) the percentage of potable water supplied within the
76-21    district by the retail public utility from sources other than
76-22    groundwater compared to the total water supplied by the retail
76-23    public utility for the preceding year and (ii) the percentage of
76-24    wastewater effluent produced by the retail public utility that is
76-25    used as reclaimed water within the district compared to the total
76-26    wastewater effluent produced by the retail public utility for the
 77-1    preceding year.  The  district may consider the impact of floods
 77-2    and equipment breakage on the retail public utility's ability to
 77-3    supply water from sources other than groundwater.  The total amount
 77-4    of the exemption or other relief from ad valorem taxes shall not
 77-5    exceed one half of the tax levied by the district.
 77-6          SECTION 3.114.  PROHIBITED ACTS.  The district may not:
 77-7                (1)  impose an ad valorem property tax for
 77-8    administrative, operation, or maintenance expenses that exceeds the
 77-9    lesser of the rate approved by the majority of the qualified voters
77-10    voting in the election authorizing the tax, or three cents per $100
77-11    valuation;
77-12                (2)  require the owner of a well used solely for
77-13    domestic or livestock purposes to install a meter or measuring
77-14    device on the well;
77-15                (3)  sell, transport, or export groundwater outside the
77-16    district; or
77-17                (4)  enter into any contract or engage in any action to
77-18    supply water to any person in the service area of any municipality
77-19    or retail public utility located in the district, except with the
77-20    consent of the municipality or retail public utility.
77-21          SECTION 3.115.  VALIDATION.  An act or proceeding heretofore
77-22    taken by or on behalf of the district, as created and organized
77-23    under Chapter 1331, Acts of the 76th Legislature, Regular Session,
77-24    1999, is conclusively presumed, as of the date it occurred, to be
77-25    valid and to have occurred in accordance with all applicable laws,
77-26    and all actions are in all things validated, ratified, and
 78-1    confirmed in all respects by this part.
 78-2           PART 2.  CROSSROADS GROUNDWATER CONSERVATION DISTRICT
 78-3          SECTION 3.201.  RATIFICATION OF CREATION.  The creation by
 78-4    Chapter 1331, Acts of the 76th Legislature, Regular Session, 1999,
 78-5    of the Crossroads Groundwater Conservation District in Victoria
 78-6    County is ratified as required by Section 15(a) of that chapter,
 78-7    subject to approval at a confirmation election under Section 3.207
 78-8    of this part.  The district is a governmental agency and a body
 78-9    politic and corporate.
78-10          SECTION 3.202.  DEFINITIONS.  In this part:
78-11                (1)  "District" means the Crossroads Groundwater
78-12    Conservation District.
78-13                (2)  "Board" means the district's board of directors.
78-14          SECTION 3.203.  LEGISLATIVE FINDINGS.  The legislature finds
78-15    that:
78-16                (1)  the organization of the district is feasible and
78-17    practicable;
78-18                (2)  all of the land to be included in, and the
78-19    residents of, the district will benefit from the creation of the
78-20    district;
78-21                (3)  there is a public necessity for the district; and
78-22                (4)  the creation of the district will provide a
78-23    benefit and utility to the public.
78-24          SECTION 3.204.  BOUNDARIES.  The district is composed of all
78-25    the territory located within Victoria County.
78-26          SECTION 3.205.  APPLICATION OF CHAPTER 36, WATER CODE;
 79-1    GENERAL POWERS AND DUTIES.  Except to the extent of any conflict
 79-2    with this part or as specifically limited by this part, the
 79-3    district is governed by and subject to Chapter 36, Water Code, and
 79-4    may exercise all of the powers contained in that chapter, including
 79-5    the power to issue bonds and levy and collect taxes and the power
 79-6    of eminent domain.  The district shall exercise all of the duties
 79-7    provided by Chapter 36, Water Code.
 79-8          SECTION 3.206.  TEMPORARY DIRECTORS.  (a)  On September 1,
 79-9    2001, the following persons are designated as temporary directors
79-10    of the district:
79-11                (1)  Place 1:  Mark Dierlam
79-12                (2)  Place 2:  Rocky Sanders
79-13                (3)  Place 3:  S. F. Ruschhaupt, III
79-14                (4)  Place 4:  Joseph Dial
79-15                (5)  Place 5:  Stephen Diebel
79-16                (6)  Place 6:  Jerry James
79-17                (7)  Place 7:  Denise McCue
79-18          (b)  If a temporary director fails to qualify for office or
79-19    if a vacancy occurs in the office of temporary director for any
79-20    reason, the Victoria County Commissioners Court shall appoint
79-21    persons to fill vacancies in Places 1-4 and the city council of the
79-22    City of Victoria shall appoint persons to fill vacancies in Places
79-23    5-7.
79-24          (c)  The temporary directors shall select from their members
79-25    persons to serve as chairman, vice-chairman, and secretary.
79-26          (d)  The temporary directors shall serve until they shall
 80-1    have declared the district created, at which time they become the
 80-2    initial directors of the district under Section 3.209 of this part.
 80-3          (e)  To be qualified to serve as a temporary director, a
 80-4    person must be a resident of Victoria County and at least 18 years
 80-5    of age.
 80-6          SECTION 3.207.  CREATION ELECTION.  (a)  Not later than
 80-7    October 1, 2001, and without the necessity of having a petition
 80-8    presented, the temporary directors shall meet and shall call an
 80-9    election to be held not later than January 1, 2002, within the
80-10    boundaries of the proposed district to approve the creation of the
80-11    district.
80-12          (b)  Section 41.001(a), Election Code, does not apply to an
80-13    election called under this section.
80-14          (c)  The ballot for the election shall be printed to provide
80-15    for or against the following propositions:
80-16                (1)  the creation of the Crossroads Groundwater
80-17    Conservation District in Victoria County; and
80-18                (2)  the levy and collection of a property tax in the
80-19    district.
80-20          (d)  The temporary board may include other propositions on
80-21    the ballot that it considers necessary.
80-22          (e)  If a majority of votes cast at the election favor the
80-23    creation of the district, the temporary directors shall declare the
80-24    district created.  If a majority of the votes cast at the election
80-25    are against the creation of the district, the temporary directors
80-26    shall declare the district defeated.  The temporary directors shall
 81-1    file a copy of the election results with the Texas Natural Resource
 81-2    Conservation Commission.
 81-3          (f)  If the creation of the district is defeated, further
 81-4    elections may be called and held after the first anniversary of the
 81-5    most recent creation election.  If the district is not created by
 81-6    September 1, 2006, this part expires.
 81-7          SECTION 3.208.  INITIAL DIRECTORS.  (a)  On approval of the
 81-8    creation of the district under Section 3.207 of this part, the
 81-9    temporary directors become the initial directors of the district
81-10    and shall serve on the board for terms as provided by Subsection
81-11    (b) of this section; provided that within 60 days after the
81-12    creation of the district, the Victoria County Commissioners Court
81-13    may replace any director in Places 1-4 and the city council of the
81-14    City of Victoria may replace any director in Places 5-7.
81-15          (b)  The persons serving as directors for Places 1, 3, 5, and
81-16    7 shall serve as directors for four years following the creation of
81-17    the district.  The persons serving as directors for Places 2, 4,
81-18    and 6 shall serve as directors for two years following the creation
81-19    of the district.
81-20          (c)  If, for any reason, an appointed director is not
81-21    qualified to take office at the first regular meeting of the board
81-22    following his or her appointment, the director for that place shall
81-23    continue to serve until a successor has qualified.
81-24          SECTION 3.209.  BOARD OF DIRECTORS.  (a)  The board of
81-25    directors of the district is composed of seven members.
81-26          (b)  The directors shall select from their members persons to
 82-1    serve as chairman, vice-chairman, and secretary.
 82-2          SECTION 3.210.  QUALIFICATIONS OF BOARD MEMBERS.  To be
 82-3    qualified for appointment as a director, a person must be a
 82-4    resident of the district and must be at least 18 years of age.
 82-5          SECTION 3.211.  TERM OF OFFICE.  (a)  Except for the
 82-6    temporary and initial directors of the district, directors shall
 82-7    serve for terms of four years.
 82-8          (b)  Upon the expiration of the terms of directors or any
 82-9    vacancy during a term, the Victoria County Commissioners Court
82-10    shall appoint persons to serve in Places 1-4 and the city council
82-11    of the City of Victoria shall appoint persons to serve in Places
82-12    5-7.
82-13          (c)  A vacancy in the office of director shall be filled by
82-14    appointment for the remainder of the term.
82-15          SECTION 3.212.  LIMITATION ON TAXATION.  The district may not
82-16    impose an ad valorem tax at a rate that exceeds two cents on the
82-17    $100 valuation of taxable property in the district.
82-18          PART 3.  HAYS TRINITY GROUNDWATER CONSERVATION DISTRICT
82-19          SECTION 3.301.  CREATION AND RATIFICATION.  (a)  A
82-20    groundwater conservation district to be known as the Hays Trinity
82-21    Groundwater Conservation District created by Chapter 1331, Acts of
82-22    the 76th Legislature, Regular Session, 1999, in a portion of Hays
82-23    County subject to approval at a confirmation election under Section
82-24    10 of that chapter, is affirmed, ratified, and validated by this
82-25    part.  The district is a governmental agency and a body politic and
82-26    corporate.
 83-1          (b)  The district is created under and is essential to
 83-2    accomplish the purposes of Section 59, Article XVI, Texas
 83-3    Constitution.
 83-4          SECTION 3.302.  DEFINITION.  In this part, "district" means
 83-5    the Hays Trinity Groundwater Conservation District.
 83-6          SECTION 3.303.  BOUNDARIES.  The boundaries of the district
 83-7    are coextensive with the boundaries of Hays County, save and except
 83-8    any areas in Hays County that are currently within another
 83-9    groundwater conservation district with the authority to require
83-10    permit for the drilling or alteration of wells for the withdrawal
83-11    of groundwater.  Within 30 days of its initial meeting and prior to
83-12    holding any confirmation election, the district shall cause a
83-13    description of its boundaries to be prepared and filed with the
83-14    county clerk of Hays County and the Texas Natural Resource
83-15    Conservation Commission.
83-16          SECTION 3.304.  FINDING OF BENEFIT.  All of the land and
83-17    other property included within the boundaries of the district will
83-18    benefit from the works and projects that are to be accomplished by
83-19    the district under powers conferred by Section 59, Article XVI,
83-20    Texas Constitution.  The district is created to serve a public use
83-21    and benefit.
83-22          SECTION 3.305.  POWERS.  (a)  Except as provided by this
83-23    part, the district has all the rights, powers, privileges,
83-24    authority, functions, and duties provided by the general law of the
83-25    state, including Chapter 36, Water Code, applicable to groundwater
83-26    conservation districts created under Section 59, Article XVI, Texas
 84-1    Constitution.  Chapter 49, Water Code, does not apply to the
 84-2    district.  This part prevails over any provision of general law
 84-3    that is in conflict or inconsistent with this part.
 84-4          (b)  The rights, powers, privileges, authority, functions,
 84-5    and duties of the district are subject to the continuing right of
 84-6    supervision of the state, to be exercised by and through the Texas
 84-7    Natural Resources Conservation Commission.
 84-8          (c)  The district has the power to limit the transfer of
 84-9    groundwater out of the district, including the power to prohibit
84-10    the transfer.
84-11          (d)  The district does not have authority to enter property
84-12    to inspect an exempt well without the property owner's permission.
84-13          (e)  The Hays County Commissioners Court, by resolution, may
84-14    require an election to be conducted within six months to affirm or
84-15    reverse a decision of the board of directors of the district.
84-16          (f)  The district shall not have the power to require well
84-17    construction standards for residential wells higher than state
84-18    standards for such wells.
84-19          SECTION 3.306.  EXEMPTIONS.  (a)  The following wells are
84-20    exempt from Chapter 36, Water Code, rules and shall not be
84-21    regulated, permitted, or metered by the district:
84-22                (1)  a well used to satisfy the domestic needs of a
84-23    single private residential household and producing less than 25,000
84-24    gallons per day; and
84-25                (2)  a well used for conventional farming and ranching
84-26    activities, not to include intensive operations such as
 85-1    aquaculture, livestock feedlots, and poultry operations.
 85-2          (b)  A well used for conventional farming and ranching
 85-3    activities, excluding intensive operations such as aquaculture,
 85-4    livestock feedlots, and poultry operations, is not required to
 85-5    obtain construction authorization.
 85-6          SECTION 3.307.  FISCAL RESPONSIBILITIES.  (a)  The district
 85-7    shall each year cause a budget to be prepared showing the proposed
 85-8    expenditures and disbursements and the estimated receipts and
 85-9    collections for the following fiscal year and shall hold a public
85-10    hearing on the proposed budget after publication of a notice of
85-11    hearing in a newspaper of general circulation in the county at
85-12    least once not less than 10 days prior to the date set for the
85-13    hearing.  Any person who is a taxpayer of the district shall have
85-14    the right to appear at the time and place designated in the notice
85-15    and be heard with reference to any item shown in the proposed
85-16    budget.  The proposed budget shall also show the amount of revenues
85-17    expected to be collected during that fiscal year.
85-18          (b)  At the written request of the Hays County Commissioners
85-19    Court, the county auditor shall audit the performance of the
85-20    district.  The court may request a general audit of the performance
85-21    of the district or may request an audit of only one or more
85-22    particular duties, practices, functions, or other district matters.
85-23          SECTION 3.308.  BOARD OF DIRECTORS.  (a)  The district is
85-24    governed by a board of five elected directors.
85-25          (b)  Directors must reside in or own real property in the
85-26    district.
 86-1          (c)  Each director must qualify to serve as director in the
 86-2    manner provided by Section 36.055, Water Code.
 86-3          (d)  Directors other than initial directors serve staggered
 86-4    two-year terms.
 86-5          (e)  A director serves until the director's successor has
 86-6    qualified.
 86-7          (f)  If there is a vacancy on the board, the Hays County
 86-8    Commissioners Court shall appoint a director to serve the remainder
 86-9    of the term.
86-10          (g)  The Hays County Commissioners Court shall appoint a
86-11    director to succeed a director on or before the date the director's
86-12    term expires.
86-13          (h)  A director may not receive a salary or other
86-14    compensation for service as a director but may be reimbursed for
86-15    actual expenses of attending meetings at the rate in effect for
86-16    employees of Hays County.
86-17          SECTION 3.309.  APPOINTMENT AND TERMS OF INITIAL DIRECTORS.
86-18    Not later than October 1, 2001, the Hays County Commissioners Court
86-19    shall appoint:
86-20                (1)  two directors to serve terms expiring February 1,
86-21    2002;
86-22                (2)  two directors to serve terms expiring February 1,
86-23    2003; and
86-24                (3)  one director to serve a term expiring February 1,
86-25    2004.
86-26          SECTION 3.310.  CONFIRMATION ELECTION.  (a)  The initial
 87-1    board of directors shall call and hold an election to confirm
 87-2    establishment of the district not later than September 1, 2001.
 87-3          (b)  Section 41.001(a), Election Code, does not apply to a
 87-4    confirmation election held as provided by this section.
 87-5          (c)  Except as provided by this section, a confirmation
 87-6    election must be conducted as provided by Sections 36.017(b)-(h),
 87-7    Water Code, and the Election Code.
 87-8          (d)  If the establishment of the district has not been
 87-9    confirmed at an election held under this section before
87-10    September 1, 2003, this part expires on that date.
87-11          SECTION 3.311.  FUNDING AUTHORITY.  (a)  The district may
87-12    levy or collect a fee, not to exceed $300, for construction
87-13    authorization for new wells completed after September 1, 2001,
87-14    except as prohibited by Section 3.306(b).
87-15          (b)  The district may levy or collect a water utility service
87-16    connection fee, not to exceed $300, for all new water service
87-17    connections made after September 1, 2001.  This fee may not be
87-18    charged on connection fees to a water utility that has surface
87-19    water as its sole source of water.
87-20          PART 4.  MIDDLE PECOS GROUNDWATER CONSERVATION DISTRICT
87-21          SECTION 3.401.  RATIFICATION OF CREATION.  The creation by
87-22    Chapter 1331, Acts of the 76th Legislature, Regular Session, 1999,
87-23    of the Middle Pecos Groundwater Conservation District in Pecos
87-24    County is ratified, as required by Section 15(a) of that chapter,
87-25    subject to approval at a confirmation election under Section 3.407
87-26    of this part.
 88-1          SECTION 3.402.  DEFINITION.  In this part, "district" means
 88-2    the Middle Pecos Groundwater Conservation District.
 88-3          SECTION 3.403.  BOUNDARIES.  The boundaries of the district
 88-4    are coextensive with the boundaries of Pecos County.
 88-5          SECTION 3.404.  GENERAL POWERS.  (a)  The district has all of
 88-6    the rights, powers, privileges, authority, functions, and duties
 88-7    provided by the general law of this state, including Chapter 36,
 88-8    Water Code, applicable to groundwater conservation districts
 88-9    created under Section 59, Article XVI, Texas Constitution.  This
88-10    part prevails over any provision of general law that is in conflict
88-11    or inconsistent with this part, including any provision of Chapter
88-12    1331, Acts of the 76th Legislature, Regular Session, 1999.
88-13          (b)  Notwithstanding Subsection (a) of this section, the
88-14    following provisions prevail over a conflicting or inconsistent
88-15    provision of this part:
88-16                (1)  Sections 36.1071-36.108, Water Code;
88-17                (2)  Sections 36.159-36.161, Water Code; and
88-18                (3)  Subchapter I, Chapter 36, Water Code.
88-19          (c)  Section 36.121, Water Code, does not apply to the
88-20    district.
88-21          (d)  The district may restrict or prohibit the transfer of
88-22    groundwater from the district.
88-23          (e)  The rights, powers, privileges, authority, functions,
88-24    and duties of the district are not subject to the continuing right
88-25    of supervision of the state through the Texas Natural Resource
88-26    Conservation Commission.
 89-1          SECTION 3.405.  BOARD OF DIRECTORS.  (a)  The district is
 89-2    governed by a board of 11 directors.
 89-3          (b)  Temporary directors serve until initial directors are
 89-4    elected under Section 3.407 of this part.
 89-5          (c)  Initial directors serve until permanent directors are
 89-6    elected under Section 3.408 of this part.
 89-7          (d)  Permanent directors serve staggered four-year terms.
 89-8          (e)  Each director must qualify to serve as director in the
 89-9    manner provided by Section 36.055, Water Code.
89-10          (f)  A director serves until the director's successor has
89-11    qualified.
89-12          (g)  If there is a vacancy on the board, the remaining
89-13    directors shall appoint a director to serve the remainder of the
89-14    term.  If at any time there are fewer than three qualified
89-15    directors, the Pecos County Commissioners Court shall appoint the
89-16    necessary number of persons to fill all the vacancies on the board.
89-17          (h)  A director may not receive a salary or other
89-18    compensation for service as a director but may be reimbursed for
89-19    actual expenses of attending meetings at the rate in effect for
89-20    employees of Pecos County.
89-21          SECTION 3.406.  METHOD OF ELECTING DIRECTORS.  (a)  The
89-22    directors of the district shall be elected according to the method
89-23    provided by this section.
89-24          (b)  One director shall be elected by the qualified voters of
89-25    the entire district, two directors shall be elected from each
89-26    county commissioners precinct by the qualified voters of that
 90-1    precinct, one director shall be elected from the city of Iraan by
 90-2    the qualified voters of that city, and one director shall be
 90-3    elected from the city of Fort Stockton by the qualified voters of
 90-4    that city.
 90-5          (c)  To be qualified to be a candidate for or to serve as a
 90-6    director at large, a person must be a registered voter in the
 90-7    district.  To be a candidate for or to serve as director from a
 90-8    county commissioners precinct or a city, a person must be a
 90-9    registered voter of that precinct or city, as applicable.
90-10          (d)  A person shall indicate on the application for a place
90-11    on the ballot:
90-12                (1)  the precinct or city that the person seeks to
90-13    represent; or
90-14                (2)  that the person seeks to represent the district at
90-15    large.
90-16          (e)  At the first election after the county commissioners
90-17    precincts are redrawn under Section 18, Article V, Texas
90-18    Constitution, eight new directors shall be elected to represent the
90-19    precincts.  The directors elected shall draw lots to determine
90-20    which four directors serve two-year terms and which four directors
90-21    serve four-year terms.
90-22          SECTION 3.407.  CONFIRMATION AND INITIAL DIRECTORS ELECTION.
90-23    (a)  The temporary board of directors shall call and hold an
90-24    election to confirm establishment of the district and to elect
90-25    initial directors.
90-26          (b)  At the confirmation and initial directors election, the
 91-1    temporary board of directors shall have placed on the ballot the
 91-2    name of any candidate filing for an initial director position and
 91-3    blank spaces to write in the names of other persons.  A temporary
 91-4    director who is qualified to be a candidate under Sections 3.405
 91-5    and 3.406 of this part may file for an initial director position.
 91-6          (c)  Section 41.001(a), Election Code, does not apply to a
 91-7    confirmation and initial directors election held as provided by
 91-8    this section.
 91-9          (d)  Except as provided by this section, a confirmation and
91-10    initial directors election must be conducted as provided by
91-11    Sections 36.017(b)-(h), Water Code, and the Election Code.
91-12          (e)  The elected initial directors shall draw lots to
91-13    determine their terms.  One director from each county commissioners
91-14    precinct and the director from the district at large serve terms
91-15    that expire on the date of the first election held under Section
91-16    3.408 of this part.  The remaining directors serve terms that
91-17    expire on the date of the second election held under Section 3.408
91-18    of this part.
91-19          (f)  If the majority of the votes cast at an election held
91-20    under this section is against the confirmation of the district, the
91-21    temporary directors may call another election under this section
91-22    not later than August 31, 2003.
91-23          SECTION 3.408.  ELECTION OF DIRECTORS.  On the first Saturday
91-24    in May of the first even-numbered year after the year in which the
91-25    district is authorized to be created at a confirmation election and
91-26    on the first Saturday in May of each subsequent second year, an
 92-1    election shall be held in the district to elect the appropriate
 92-2    number of directors.
 92-3          SECTION 3.409.  EXPIRATION DATE.  If the creation of the
 92-4    district is not confirmed at a confirmation election held under
 92-5    Section 3.407 of this part before September 1, 2003, the district
 92-6    is dissolved and this part expires on that date.
 92-7            PART 5.  REFUGIO GROUNDWATER CONSERVATION DISTRICT
 92-8          SECTION 3.501.  RATIFICATION OF CREATION.  The creation by
 92-9    Chapter 1331, Acts of the 76th Legislature, Regular Session, 1999,
92-10    of the Refugio Groundwater Conservation District in Refugio County
92-11    is ratified, as required by Section 15(a) of that chapter, subject
92-12    to approval at a confirmation election under Section 3.507 of this
92-13    part.
92-14          SECTION 3.502.  DEFINITION.  In this part, "district" means
92-15    the Refugio Groundwater Conservation District.
92-16          SECTION 3.503.  BOUNDARIES.  The boundaries of the district
92-17    are coextensive with the boundaries of Refugio County.
92-18          SECTION 3.504.  GENERAL POWERS.  (a)  The district has all of
92-19    the rights, powers, privileges, authority, functions, and duties
92-20    provided by the general law of this state, including Chapter 36,
92-21    Water Code, applicable to groundwater conservation districts
92-22    created under Section 59, Article XVI, Texas Constitution.  This
92-23    part prevails over any provision of general law that is in conflict
92-24    or inconsistent with this part, including any provision of Chapter
92-25    1331, Acts of the 76th Legislature, Regular Session, 1999.
92-26          (b)  Notwithstanding Subsection (a) of this section, the
 93-1    following provisions prevail over a conflicting or inconsistent
 93-2    provision of this Act:
 93-3                (1)  Sections 36.1071-36.108, Water Code;
 93-4                (2)  Sections 36.159-36.161, Water Code; and
 93-5                (3)  Subchapter I, Chapter 36, Water Code.
 93-6          SECTION 3.505.  BOARD OF DIRECTORS.  (a)  The district is
 93-7    governed by a board of five directors.
 93-8          (b)  Temporary directors serve until initial directors are
 93-9    elected under Section 3.507 of this part.
93-10          (c)  Initial directors serve until permanent directors are
93-11    elected under Section 3.508 of this part.
93-12          (d)  Permanent directors serve staggered four-year terms.
93-13          (e)  Each director must qualify to serve as director in the
93-14    manner provided by Section 36.055, Water Code.
93-15          (f)  A director serves until the director's successor has
93-16    qualified.
93-17          (g)  If a director fails to qualify for office or if there is
93-18    at any time a vacancy on the temporary board of directors, the
93-19    commissioners court shall appoint a person to fill the vacancy.
93-20          SECTION 3.506.  METHOD OF ELECTING DIRECTORS:  COMMISSIONERS
93-21    PRECINCTS.  (a)  The directors of the district shall be elected
93-22    according to the commissioners precinct method as provided by this
93-23    section.
93-24          (b)  One director shall be elected by the qualified voters of
93-25    the entire district, and one director shall be elected from each
93-26    county commissioners precinct by the qualified voters of that
 94-1    precinct.
 94-2          (c)  To be qualified to be a candidate for or to serve as
 94-3    director at large, a person must be a registered voter in the
 94-4    district.  To be a candidate for or to serve as director from a
 94-5    county commissioners precinct, a person must be a registered voter
 94-6    of that precinct.
 94-7          (d)  A person shall indicate on the application for a place
 94-8    on the ballot:
 94-9                (1)  the precinct that the person seeks to represent;
94-10    or
94-11                (2)  that the person seeks to represent the district at
94-12    large.
94-13          (e)  At the first election after the county commissioners
94-14    precincts are redrawn under Section 18, Article V, Texas
94-15    Constitution, four new directors shall be elected to represent the
94-16    precincts.  The directors elected shall draw lots to determine
94-17    which two directors serve two-year terms and which two directors
94-18    serve four-year terms.
94-19          SECTION 3.507.  CONFIRMATION AND INITIAL DIRECTORS ELECTION.
94-20    (a)  The temporary board of directors shall call and hold an
94-21    election to confirm establishment of the district and to elect
94-22    initial directors.
94-23          (b)  At the confirmation and initial directors election, the
94-24    temporary board of directors shall have placed on the ballot the
94-25    name of any candidate filing for an initial director position and
94-26    blank spaces to write in the names of other persons.  A temporary
 95-1    director who is qualified to be a candidate under Sections 3.505
 95-2    and 3.506 of this part may file for an initial director position.
 95-3          (c)  Section 41.001(a), Election Code, does not apply to a
 95-4    confirmation and initial directors election held as provided by
 95-5    this section.
 95-6          (d)  Except as provided by this section, a confirmation and
 95-7    initial directors election must be conducted as provided by
 95-8    Sections 36.017(b)-(h), Water Code, and the Election Code.
 95-9          SECTION 3.508.  ELECTION OF DIRECTORS.  (a)  On the first
95-10    Saturday in May of the first even-numbered year after the year in
95-11    which the district is authorized to be created at a confirmation
95-12    election, an election shall be held in the district for the
95-13    election of three directors to serve four-year terms and two
95-14    directors to serve two-year terms.
95-15          (b)  On the first Saturday in May of each subsequent second
95-16    year following the election, the appropriate number of directors
95-17    shall be elected.
95-18          SECTION 3.509.  ADDITIONAL POWERS.  (a)  Except as provided
95-19    by Subsection (b) of this section, the district by rule shall
95-20    prohibit the sale of groundwater outside the district.
95-21          (b)  The district may not prohibit the sale of groundwater
95-22    outside the district by Refugio County.
95-23          SECTION 3.510.  EXPIRATION OF PART IF DISTRICT NOT CONFIRMED.
95-24    This part expires on September 1, 2003, if, before that date, the
95-25    establishment of the district has not been confirmed at a
95-26    confirmation election held under Section 3.507 of this part.
 96-1       PART 6.  SOUTHEAST TRINITY GROUNDWATER CONSERVATION DISTRICT
 96-2          SECTION 3.601.  PURPOSE.  The purpose of this part is to
 96-3    ratify the Southeast Trinity Groundwater Conservation District, a
 96-4    locally controlled groundwater district, to protect, recharge, and
 96-5    prevent the waste of groundwater and to control subsidence of water
 96-6    from the groundwater reservoirs.
 96-7          SECTION 3.602.  RATIFICATION.  (a)  The Southeast Trinity
 96-8    Groundwater Conservation District is ratified.
 96-9          (b)  The district is a governmental agency and a body politic
96-10    and corporate.
96-11          (c)  The district is created and ratified under and is
96-12    essential to accomplish the purposes of Section 59, Article XVI,
96-13    Texas Constitution.
96-14          SECTION 3.603.  BOUNDARIES.  The boundaries of the  district
96-15    are:
96-16          BEGINNING at the point of intersection of the Bexar County -
96-17    Comal County - Kendall County line:
96-18          THENCE following the meanders of the Cibolo Creek, the Bexar
96-19    County - Comal County line in an Easterly direction to the point of
96-20    intersection with latitude 29  40':
96-21          THENCE along 29  40' in a Southeasterly direction to the
96-22    point of intersection with Farm to Market Road 3009:
96-23          THENCE with the centerline of Farm to Market Road 3009 in a
96-24    Southerly direction to the point of intersection with the
96-25    centerline of Schoenthal Road:
96-26          THENCE with the centerline of Schoenthal Road in a
 97-1    Northeasterly direction to the point of intersection with the
 97-2    centerline of Farm to Market Road 1863:
 97-3          THENCE with the centerline of Farm to Market Road 1863 in an
 97-4    Easterly direction to the point of intersection with the centerline
 97-5    of Mission Valley Road:
 97-6          THENCE with the centerline of Mission Valley Road in a
 97-7    Northeasterly direction to the point of intersection with the
 97-8    centerline of State Highway 46;
 97-9          THENCE with the centerline of State Highway 46 in a
97-10    Northwesterly direction to the point of intersection with the
97-11    centerline of Hueco Springs Loop Road:
97-12          THENCE with the centerline of Hueco Springs Loop Road in a
97-13    Northeasterly then Easterly direction to the point of intersection
97-14    with the centerline of River Road:
97-15          THENCE with the centerline of River Road in a Northeasterly
97-16    direction to the point of intersection with the Guadalupe River at
97-17    the First Crossing:
97-18          THENCE following the meanders of the Guadalupe River in a
97-19    Northerly direction to the point of intersection of the centerlines
97-20    of the Guadalupe River and Deep Creek:
97-21          (Note:  the next four paragraphs coincide with the Southern
97-22    boundary of Comal County Voters Precinct 18)
97-23          THENCE along the meanders of Deep Creek in a Northeasterly
97-24    direction to the point of intersection of the centerline of Deep
97-25    Creek and the South line of the G. F. Lawrence Survey No. 33,
97-26    Abstract No. 358:
 98-1          THENCE with the South line of the G. F. Lawrence Survey No.
 98-2    33, Abstract No. 358 in a Northeasterly, Southeasterly, and
 98-3    Northeasterly direction to the point of intersection of the South
 98-4    centerline of Farm to Market Road 306 being at approximately
 98-5    Engineers Station 397+98.3:
 98-6          THENCE with the centerline of Farm to Market Road 306 in a
 98-7    Southeasterly direction to the point of intersection of the
 98-8    centerlines of Farm to Market Road 306 and the William Pfeuffer
 98-9    private ranch road:
98-10          THENCE with the approximate bearing N 69o E and approximate
98-11    distance 5,000 feet to an angle point in the Comal County - Hayes
98-12    County Line:
98-13          THENCE with the Comal County - Hays County line in a
98-14    Northwesterly direction to the point of intersection of the Comal
98-15    County - Hays County line with the Comal County - Blanco County
98-16    line:
98-17          THENCE with the Comal County - Blanco County line in a
98-18    Southwesterly direction to the point of intersection of the Comal
98-19    County - Blanco County - Kendall County line, continuing with the
98-20    Comal County - Kendall County line in a Southwesterly direction to
98-21    point of intersection of the Kendall County - Comal County - Bexar
98-22    County line being the Point of Beginning.
98-23          SECTION 3.604.  DEFINITIONS.  In this part:
98-24                (1)  "District" means the Southeast Trinity Groundwater
98-25    Conservation District;
98-26                (2)  "Board" means the board of directors of the
 99-1    district; and
 99-2                (3)  "Commission" means the Texas Natural Resource
 99-3    Conservation Commission.
 99-4          SECTION 3.605.  FINDING OF BENEFIT.  All of the land and
 99-5    other property included within the boundaries of the district will
 99-6    benefit from the works and projects that are to be accomplished by
 99-7    the district under powers conferred by Section 59, Article XVI,
 99-8    Texas Constitution.  The district is created to serve a public use
 99-9    and benefit.
99-10          SECTION 3.606.  AUTHORITY OF DISTRICT.  (a)  Except as
99-11    provided by this section or otherwise by this part, the district
99-12    has the same permitting and general management powers as those
99-13    granted under Chapter 36, Water Code.
99-14          (b)  Chapter 49, Water Code, does not apply to the district.
99-15          (c)  The district has no regulatory jurisdiction over the
99-16    Edwards Aquifer or any surface water supply.
99-17          (d)  The board of directors of the district by rule may
99-18    impose reasonable fees, including fees for groundwater transported
99-19    out of the district, on each groundwater well in the district that
99-20    is not exempt from regulation by the district, based on the amount
99-21    of water withdrawn from the well.  The fees may be assessed
99-22    annually, based on the size of column pipe used in the wells, pump
99-23    capacity, or actual, authorized, or anticipated pumpage, to pay the
99-24    maintenance and operating expenses of the district's regulation of
99-25    groundwater.
99-26          (e)  The district may not assess an ad valorem property tax
 100-1   for administrative, operation, and maintenance expenses unless
 100-2   approved by a majority of the qualified voters voting in an
 100-3   election authorizing the tax.
 100-4         (f)  Any district conservation fee paid by a retail public
 100-5   utility to the district shall be:
 100-6               (1)  collected by the retail public utility directly as
 100-7   a regulatory fee from the customers of the utility and paid to the
 100-8   district; and
 100-9               (2)  shown as a separate line item on the customer's
100-10   bill.
100-11         (g)  Fees shall not be assessed for groundwater withdrawn
100-12   from the Edwards Aquifer.
100-13         (h)  The district shall determine which classes of wells are
100-14   exempt from permitting requirements.
100-15         (i)  The district may not require a permit for:
100-16               (1)  the drilling of or producing from a well either
100-17   drilled, completed, or equipped so that it is capable of producing
100-18   less than 10,000 gallons of water per day; or
100-19               (2)  the drilling of or alteration of the size of a
100-20   well or to restrict the production of a well if the water produced
100-21   or to be produced from the well is or will be used to supply the
100-22   domestic needs of five or fewer households in which a person who is
100-23   a member of each household is either the owner of the well, a
100-24   person related to the owner or to a member of the owner's household
100-25   within the second degree by consanguinity, or an employee of the
100-26   owner.
 101-1         (j)  The district may construct according to, implement, and
 101-2   maintain best management practices in the district and may engage
 101-3   in and promote acceptance of best management practices through
 101-4   education efforts sponsored by the district for the purposes of
 101-5   water quality and water availability practices such as brush
 101-6   management, recharge enhancement, water and silt detention and
 101-7   retention structures, plugging of abandoned wells, and other
 101-8   treatment measures for the conservation of groundwater resources.
 101-9         SECTION 3.607.  BOARD OF DIRECTORS.  (a)  The district is
101-10   governed by a board of five directors.
101-11         (b)  Temporary directors have been appointed by Comal County
101-12   Commissioners Court and will serve until initial directors are
101-13   elected under Section 3.608 of this part.
101-14         (c)  The temporary directors are:
101-15               (1)  Christian Dullnig;
101-16               (2)  Ernest T. Lee;
101-17               (3)  Jill Sondeen;
101-18               (4)  Larry Hull; and,
101-19               (5)  Stovy Bowlin.
101-20         (d)  Initial directors will be elected at a confirmation
101-21   election and will serve until permanent directors are elected under
101-22   Section 3.609 of this part.
101-23         (e)  Permanent directors serve staggered four-year terms.
101-24         (f)  The directors shall be elected from four precincts, and
101-25   one director will represent the district at large.  No more than
101-26   two precincts may be in a single municipality.
 102-1         (g)  A member of the board must reside in and be a registered
 102-2   voter in the precinct from which the person is elected or appointed
 102-3   if representing a precinct or must reside and be registered to vote
 102-4   in the district if representing the district at large.
 102-5         (h)  Directors may serve consecutive terms.
 102-6         (i)  In an election for board members, a write-in vote may
 102-7   not be counted unless the name written in appears on the list of
 102-8   write-in candidates.  A declaration of write-in candidacy must be
 102-9   filed not later than 5 p.m. of the 45th day before election day.
102-10         (j)  Vacancies in the office of director shall be filled by
102-11   appointment of the board.  If the vacant office is not scheduled
102-12   for election within the next two years at the time of the
102-13   appointment, the board shall order an election for the unexpired
102-14   term to be held as part of the next regularly scheduled directors
102-15   election.  The appointed director's term shall end on qualification
102-16   of the director elected at that election.
102-17         SECTION 3.608.  CONFIRMATION ELECTION AND ELECTION OF INITIAL
102-18   DIRECTORS.  (a)  As soon as practicable after September 1, 2001,
102-19   the temporary board of directors may set the date for, call, and
102-20   hold an election:
102-21               (1)  to confirm establishment of the district;
102-22               (2)  to elect five initial directors; and
102-23               (3)  for the authority to tax.
102-24         (b)  The election shall be held on the first authorized
102-25   election date after the U.S. Department of Justice has pre-cleared
102-26   this part.  The district shall contract with the county clerk of
 103-1   Comal County to conduct the election.
 103-2         (c)  The elected initial directors shall draw lots to
 103-3   determine their terms so that:
 103-4               (1)  two of the initial directors serve two-year terms
 103-5   that expire on the uniform election date in November of the second
 103-6   year after the date the initial directors were elected; and
 103-7               (2)  the remaining three initial directors serve
 103-8   four-year terms that expire on the uniform election date in
 103-9   November of the fourth year after the year in which the initial
103-10   directors were elected.
103-11         (d)  Section 41.001(a), Election Code, does not apply to a
103-12   confirmation and directors election held as provided by this
103-13   section.
103-14         (e)  Except as provided by this section, a confirmation and
103-15   directors election must be conducted as provided by Sections
103-16   36.017(b)-(h), Water Code, and the Election Code.
103-17         (f)  The Comal County Commissioners Court shall pay the
103-18   expenses of conducting the confirmation and initial directors
103-19   election, subject to reimbursement from available revenues if the
103-20   establishment of the district is confirmed or from funds allocated
103-21   under Section 36.160, Water Code, if the establishment of the
103-22   district is defeated.
103-23         (g)  If the district is defeated, the temporary directors may
103-24   call and hold subsequent elections to confirm establishment of the
103-25   district.  A subsequent election may not be held earlier than the
103-26   first anniversary of the date on which the previous election was
 104-1   held.  If the district has not been confirmed at an election held
 104-2   under this section before the fourth anniversary of the effective
 104-3   date of this part, the district is dissolved on that date, except
 104-4   that any debts incurred shall be paid and the organization of the
 104-5   district shall be maintained until all debts are paid.
 104-6         SECTION 3.609.  ELECTION OF REGULAR DIRECTORS.  (a)  On the
 104-7   uniform election date in November of the second year after the year
 104-8   in which the initial directors were elected, an election shall be
 104-9   held in the district to elect two regular directors for the
104-10   positions of the two initial directors serving two-year terms.
104-11         (b)  On the uniform election date in November of each
104-12   subsequent second year following the election held under Subsection
104-13   (a) of this section, an election shall be held to elect the
104-14   appropriate number of regular directors to the board.
104-15         SECTION 3.610.  COORDINATION.  The district may coordinate
104-16   activities with other groundwater districts that regulate the
104-17   Trinity Aquifer for the purposes of conjunctively managing the
104-18   common resource.
104-19         SECTION 3.611.  MODIFICATION OF DISTRICT.  The district may
104-20   be modified only under Subchapter J, Chapter 36, Water Code, and by
104-21   subsequent acts of the legislature.
104-22         SECTION 3.612.  STATUTORY INTERPRETATION.  Except as
104-23   otherwise provided by this part, if there is a conflict between
104-24   this part and Chapter 36, Water Code, this part controls.
104-25            PART 7.  TEXANA GROUNDWATER CONSERVATION DISTRICT
104-26         SECTION 3.701.  RATIFICATION OF CREATION.  The creation by
 105-1   Chapter 1331, Acts of the 76th Legislature, Regular Session, 1999,
 105-2   of the Texana Groundwater Conservation District in Jackson County
 105-3   is ratified as required by Section 15(a) of that Act, subject to
 105-4   approval at a confirmation election under Section 3.707 of this
 105-5   part.
 105-6         SECTION 3.702.  DEFINITION.  In this part, "district" means
 105-7   the Texana Groundwater Conservation District.
 105-8         SECTION 3.703.  BOUNDARIES.  The boundaries of the district
 105-9   are coextensive with the boundaries of Jackson County.
105-10         SECTION 3.704.  GENERAL POWERS.  (a)  The district has all of
105-11   the rights, powers, privileges, authority, functions, and duties
105-12   provided by the general law of the state, including Chapter 36,
105-13   Water Code, applicable to groundwater conservation districts
105-14   created under Section 59, Article XVI, Texas Constitution.  This
105-15   part prevails over any provision of general law that is in conflict
105-16   or inconsistent with this part, including any provision of Chapter
105-17   1331, Acts of the 76th Legislature, Regular Session, 1999.
105-18         (b)  Notwithstanding Subsection (a) of this section, the
105-19   following provisions prevail over a conflicting or inconsistent
105-20   provision of this part:
105-21               (1)  Sections 36.1071-36.108, Water Code;
105-22               (2)  Sections 36.159-36.161, Water Code; and
105-23               (3)  Subchapter I, Chapter 36, Water Code.
105-24         SECTION 3.705.  BOARD OF DIRECTORS.  (a)  The district is
105-25   governed by a board of seven directors.
105-26         (b)  Temporary directors serve until initial directors are
 106-1   elected under Section 3.707 of this part.
 106-2         (c)  Initial directors serve until permanent directors are
 106-3   elected under Section 3.708 of this part.
 106-4         (d)  Permanent directors serve staggered four-year terms.
 106-5         (e)  Each director must qualify to serve as director in the
 106-6   manner provided by Section 36.055, Water Code.
 106-7         (f)  A director serves until the director's successor has
 106-8   qualified.
 106-9         (g)  If there is a vacancy on the board, the remaining
106-10   directors shall appoint a director to serve the remainder of the
106-11   term.
106-12         (h)  A director may not receive a salary or other
106-13   compensation for service as a director but may be reimbursed for
106-14   actual expenses of attending meetings at the rate in effect for
106-15   employees of Jackson County.
106-16         SECTION 3.706.  METHOD OF ELECTING DIRECTORS:  COMMISSIONERS
106-17   PRECINCTS.  (a)  The directors of the district shall be elected
106-18   according to the commissioners precinct method as provided by this
106-19   section.
106-20         (b)  Three directors shall be elected by the electors of the
106-21   entire district, and one director shall be elected from each county
106-22   commissioners precinct by the electors of that precinct.
106-23         (c)  To be qualified to be a candidate for or to serve as a
106-24   director at large, a person must be a registered voter in the
106-25   district.  To be a candidate for or to serve as director from a
106-26   county commissioners precinct, a person must be a registered voter
 107-1   of that precinct.
 107-2         (d)  A person shall indicate on the application for a place
 107-3   on the ballot:
 107-4               (1)  the precinct that the person seeks to represent;
 107-5   or
 107-6               (2)  that the person seeks to represent the district at
 107-7   large.
 107-8         (e)  At the first election after the county commissioners
 107-9   precincts are redrawn under Section 18, Article V, Texas
107-10   Constitution, four new directors shall be elected to represent the
107-11   precincts.  The directors elected shall draw lots to determine
107-12   which two directors serve two-year terms and which two directors
107-13   serve four-year terms.
107-14         SECTION 3.707.  CONFIRMATION AND INITIAL DIRECTORS ELECTION.
107-15   (a)  The temporary board of directors shall call and hold an
107-16   election to confirm establishment of the district and to elect
107-17   initial directors.
107-18         (b)  At the confirmation and initial directors election, the
107-19   temporary board of directors shall have placed on the ballot the
107-20   name of any candidate filing for an initial director position and
107-21   blank spaces to write in the names of other persons.  A temporary
107-22   director who is qualified to be a candidate under Sections 3.705
107-23   and 3.706 of this part may file for an initial director position.
107-24         (c)  Section 41.001(a), Election Code, does not apply to a
107-25   confirmation and initial directors election held as provided by
107-26   this section.
 108-1         (d)  Except as provided by this section, a confirmation and
 108-2   initial directors election must be conducted as provided by
 108-3   Sections 36.017(b)-(h), Water Code, and the Election Code.
 108-4         (e)  If the majority of the votes cast at an election held
 108-5   under this section is against the confirmation of the district, the
 108-6   temporary directors may not call another election under this
 108-7   section before the first anniversary of that election.
 108-8         SECTION 3.708.  ELECTION OF DIRECTORS.  (a)  On the first
 108-9   Saturday in May of the first even-numbered year after the year in
108-10   which the district is authorized to be created at a confirmation
108-11   election, an election shall be held in the district for the
108-12   election of two directors at large and two directors representing
108-13   precincts to serve four-year terms and one director at large and
108-14   two directors representing precincts to serve two-year terms.
108-15         (b)  On the first Saturday in May of each subsequent second
108-16   year following the election, the appropriate number of directors
108-17   shall be elected.
108-18         SECTION 3.709.  LIMITATION ON TAXATION.  The district may not
108-19   levy or collect an ad valorem tax at a rate that exceeds two cents
108-20   on each $100 valuation of taxable property in the district.
108-21         SECTION 3.710.  CONTRACTS WITH GOVERNMENT ENTITIES.  (a)  The
108-22   district may contract with other government entities.
108-23         (b)  The district may contract with other governmental
108-24   entities, including river authorities located in the district, for
108-25   the performance of any or all district functions.  A river
108-26   authority with which the district contracts under this section may
 109-1   perform district functions as provided by the contract.
 109-2               ARTICLE 4.  WATER INFRASTRUCTURE FINANCING
 109-3         SECTION 4.01.  Chapter 15, Water Code, is amended by adding
 109-4   Subchapter O to read as follows:
 109-5                SUBCHAPTER O.  WATER INFRASTRUCTURE FUND
 109-6         Sec. 15.901.  DEFINITIONS.  In this subchapter:
 109-7               (1)  "Eligible political subdivision" means:
 109-8                     (A)  a municipality;
 109-9                     (B)  a county;
109-10                     (C)  a river authority or special law district
109-11   that is listed in Section 9.010(b);
109-12                     (D)  a water improvement district;
109-13                     (E)  an irrigation district;
109-14                     (F)  a water control and improvement district;
109-15   and
109-16                     (G)  a groundwater district with a groundwater
109-17   management plan certified by the board under Section 36.1072.
109-18               (2)  "Fund" means the water infrastructure fund.
109-19               (3)  "Metropolitan statistical area" means an area so
109-20   designated by the United States Office of Management and Budget.
109-21               (4)  "Political subdivision bonds" means bonds or other
109-22   obligations issued by a political subdivision to fund a project and
109-23   purchased by the board from money in the fund.
109-24               (5)  "Project" means any undertaking or work, including
109-25   planning and design activities and work to obtain regulatory
109-26   authority, to conserve, convey, and develop water resources of the
 110-1   state, including any undertaking or work done outside the state
 110-2   that the board determines will result in water being available for
 110-3   use in or for the benefit of the state.
 110-4         Sec. 15.902.  FINDINGS.  The legislature finds that:
 110-5               (1)  the creation of the fund and the administration of
 110-6   the fund by the board will encourage the conservation and
 110-7   development of the water resources of the state;
 110-8               (2)  the use of the fund is in furtherance of the
 110-9   public purpose of conserving and developing the water resources of
110-10   the state; and
110-11               (3)  the use of the fund for the purposes provided by
110-12   this subchapter is for the benefit of both the state and the
110-13   political subdivisions to which the board makes financial
110-14   assistance available in accordance with this subchapter and
110-15   constitutes a program under, and is in furtherance of the public
110-16   purposes set forth in, Section 52-a, Article III, Texas
110-17   Constitution.
110-18         Sec. 15.903.  WATER INFRASTRUCTURE FUND.  (a)  The water
110-19   infrastructure fund is created as a special account in the general
110-20   revenue fund to be administered by the board under this subchapter
110-21   and under rules adopted by the board.  The fund shall be available
110-22   to fund the implementation of water projects recommended through
110-23   the state and regional water planning processes under Sections
110-24   16.051 and 16.053.
110-25         (b)  The fund consists of:
110-26               (1)  appropriations from the legislature;
 111-1               (2)  the annual water rights fee, as provided by
 111-2   Section 11.1352;
 111-3               (3)  the water fee, as provided by Section 15.013;
 111-4               (4)  one-half of revenues from export fees imposed by
 111-5   any district under Section 36.122;
 111-6               (5)  tax receipts collected from the sale of domestic
 111-7   sewage service, as provided by Section 151.801(f), Tax Code;
 111-8               (6)  any other fees or sources of revenue that the
 111-9   legislature may dedicate for deposit to the fund;
111-10               (7)  repayments of loans made from the fund;
111-11               (8)  interest earned on money credited to the fund;
111-12               (9)  depository interest allocable to the fund in the
111-13   general revenue fund;
111-14               (10)  money from gifts, grants, or donations to the
111-15   fund;
111-16               (11)  money from revenue bonds or other sources
111-17   designated by the board; and
111-18               (12)  proceeds from the sale of any political
111-19   subdivision bonds or obligations held in the fund and not otherwise
111-20   pledged to the discharge, repayment, or redemption of revenue bonds
111-21   or other bonds, the proceeds of which were placed in the fund.
111-22         Sec. 15.904.  USE OF WATER INFRASTRUCTURE FUND.  (a)  The
111-23   board may use the fund:
111-24               (1)  to make loans to political subdivisions at or
111-25   below market interest rates for projects;
111-26               (2)  to make grants, low-interest loans, or zero
 112-1   interest loans to political subdivisions for projects to serve
 112-2   areas outside metropolitan statistical areas in order to ensure
 112-3   that the projects are implemented, or for projects to serve
 112-4   economically distressed areas;
 112-5               (3)  to make loans at or below market interest rates
 112-6   for planning and design costs, permitting costs, and other costs
 112-7   associated with state or federal regulatory activities with respect
 112-8   to a project;
 112-9               (4)  as a source of revenue or security for the payment
112-10   of principal and interest on bonds issued by the board if the
112-11   proceeds of the sale of the bonds will be deposited in the fund;
112-12   and
112-13               (5)  to pay the necessary and reasonable expenses of
112-14   the board in administering the fund.
112-15         (b)  Funding under Subsection (a)(2) or under Subsection
112-16   (a)(3) may not exceed 10 percent of the amount of financial
112-17   assistance budgeted by the board to be made available from the fund
112-18   in a fiscal year.
112-19         (c)  Principal and interest payments on loans made under
112-20   Subsection (a)(3) may be deferred for a maximum of 10 years or
112-21   until construction of the project is completed, whichever is
112-22   earlier.
112-23         Sec. 15.905.  APPROVAL OF APPLICATIONS.  (a)  On review and
112-24   recommendation by the executive administrator, the board by
112-25   resolution may approve an application if the board finds that:
112-26               (1)  the application and the assistance applied for
 113-1   meet the requirements of this subchapter and board rules;
 113-2               (2)  the revenue or taxes, or both the revenue and
 113-3   taxes, pledged by the applicant will be sufficient to meet all the
 113-4   obligations assumed by the political subdivision; and
 113-5               (3)  the project will meet water needs in a manner
 113-6   consistent with the state and regional water plans as required by
 113-7   Section 16.053(j).
 113-8         (b)  For an application under this subchapter, a program of
 113-9   water conservation through a more effective use of water shall be
113-10   required in the same manner as for approval of an application for
113-11   financial assistance under Section 15.106.
113-12         (c)  The board may deliver funds for the portion of a loan or
113-13   grant for a project relating to surface water development, other
113-14   than for planning and design costs, permitting costs, and other
113-15   costs associated with federal and state regulatory activities with
113-16   respect to a project, only if the executive administrator makes a
113-17   written finding:
113-18               (1)  that the applicant proposing surface water
113-19   development has the necessary water rights authorizing it to
113-20   appropriate and use the water that the project will provide; or
113-21               (2)  that an applicant proposing groundwater
113-22   development has the right to use water that the project will
113-23   provide.
113-24         Sec. 15.906.  APPLICABLE PROVISIONS.  The provisions of
113-25   Subchapter E, Chapter 17, apply to financial assistance made
113-26   available from the fund; provided, however, that the board may also
 114-1   execute contracts as necessary to evidence grant agreements.
 114-2         Sec. 15.907.  RULES.  The board shall adopt rules necessary
 114-3   to carry out this subchapter, including rules establishing
 114-4   procedures for application for and for the award of financial
 114-5   assistance, for the investment of funds, and for the administration
 114-6   of the fund.
 114-7         Sec. 15.908.  SALE OF POLITICAL SUBDIVISION BONDS.  (a)  The
 114-8   board may sell or dispose of political subdivision bonds at the
 114-9   price and under the terms that the board determines to be
114-10   reasonable.
114-11         (b)  The board may sell political subdivision bonds without
114-12   making a previous offer to the political subdivision that issued
114-13   the bonds and without advertising, soliciting, or receiving bids
114-14   for sale.
114-15         (c)  Notwithstanding other provisions of this chapter, the
114-16   board may sell to the Texas Water Resources Finance Authority any
114-17   political subdivision bonds purchased with money in the fund and
114-18   may apply the proceeds of a sale in the manner provided by this
114-19   section.
114-20         (d)  Proceeds from the sale of political subdivision bonds
114-21   under this section shall be deposited in the fund for use as
114-22   provided by Section 15.904.
114-23         (e)  As part of a sales agreement with the Texas Water
114-24   Resources Finance Authority, the board by contract may agree to
114-25   perform the functions required to ensure that the political
114-26   subdivision pays the debt service on political subdivision bonds
 115-1   sold and observes the conditions and requirements stated in those
 115-2   bonds.
 115-3         (f)  The board may exercise any powers necessary to carry out
 115-4   the authority granted by this section, including the authority to
 115-5   contract with any person to accomplish the purposes of this
 115-6   section.
 115-7         Sec. 15.909.  FUNDING FOR LOCAL ECONOMIC DEVELOPMENT.
 115-8   (a)  The board may use the fund to provide financial assistance to
 115-9   an eligible political subdivision to enable the political
115-10   subdivision to fund loans and grants for projects that develop and
115-11   diversify its local economy, consistent with the terms and
115-12   conditions set forth in a program adopted by the governing body of
115-13   the political subdivision under authority granted by Section
115-14   15.910.
115-15         (b)  The board may not purchase political subdivision bonds
115-16   issued for the purposes described by Subsection (a) that are
115-17   secured in whole or in part by a pledge of ad valorem taxes unless
115-18   the political subdivision submits evidence satisfactory to the
115-19   board that the issuance of the bonds has been approved by the
115-20   citizens of the political subdivision voting at an election held
115-21   for the purposes described in Section 15.910.
115-22         Sec. 15.910.  AUTHORITY TO ESTABLISH ECONOMIC DEVELOPMENT
115-23   PROGRAMS.  (a)  An eligible political subdivision may establish
115-24   economic development programs and make loans and grants of public
115-25   funds to assist in providing projects within the political
115-26   subdivision.  The authority granted to a political subdivision to
 116-1   make loans and grants in accordance with this section constitutes a
 116-2   program in furtherance of the public purposes provided by Section
 116-3   52-a, Article III, Texas Constitution.
 116-4         (b)  Financial assistance received from the fund may be used
 116-5   by an eligible political subdivision to make loans or grants to
 116-6   persons for projects that the political subdivision finds will
 116-7   conserve and develop the water resources of the political
 116-8   subdivision and assist in diversifying and developing the economy
 116-9   of the political subdivision and the state.
116-10         (c)  In exercising the authority granted by this section, the
116-11   governing body of an eligible political subdivision may determine
116-12   the terms and conditions governing the loan or grant of money and
116-13   determine whether to approve an agreement with a person who
116-14   receives a loan or grant.
116-15         Sec. 15.911.  An eligible political subdivision may not sell
116-16   or incur obligations to fund an economic development program
116-17   established under authority granted by Section 15.910 that are
116-18   payable in whole or in part from ad valorem taxes unless the
116-19   residents of the political subdivision, voting at an election held
116-20   for the purpose, approve the issuance of obligations to fund an
116-21   economic development program for the provision of loans or grants
116-22   to persons to construct projects that will conserve and develop the
116-23   water resources of the political subdivision and assist in
116-24   developing and diversifying the local economy.
116-25         SECTION 4.02.  Chapter 15, Water Code, is amended by adding
116-26   Subchapter P to read as follows:
 117-1               SUBCHAPTER P.  RURAL WATER ASSISTANCE FUND
 117-2         Sec. 15.951.  PURPOSE.  The legislature finds that the rural
 117-3   areas of the state, characterized by small populations extended
 117-4   over disproportionately large service areas, require a means of
 117-5   financing water projects in addition to those established by other
 117-6   provisions of this chapter.
 117-7         Sec. 15.952.  DEFINITIONS.  In this subchapter:
 117-8               (1)  "Federal agency" means an agency or other entity
 117-9   of the United States Department of Agriculture or an agency or
117-10   entity that is acting through or on behalf of that department.
117-11               (2)  "Fund" means the rural water assistance fund
117-12   established under this subchapter.
117-13               (3)  "Rural political subdivision" means:
117-14                     (A)  a nonprofit water supply or sewer service
117-15   corporation, district, or municipality with a service area of
117-16   10,000 or less in population or that otherwise qualifies for
117-17   financing from a federal agency; or
117-18                     (B)  a county in which no urban area exceeds
117-19   50,000 in population.
117-20               (4)  "State agency" means an agency or other entity of
117-21   the state, including the Department of Agriculture and the Texas
117-22   Department of Housing and Community Affairs and any agency or
117-23   authority that is acting through or on behalf of the Department of
117-24   Agriculture or the Texas Department of Housing and Community
117-25   Affairs.
117-26         Sec. 15.953.  CREATION OF FUND.  The rural water assistance
 118-1   fund is created as a special account in the general revenue fund.
 118-2   The fund consists of:
 118-3               (1)  money directly appropriated to the board;
 118-4               (2)  repayment of principal and interest from loans
 118-5   made from the fund not otherwise needed as a source of revenue
 118-6   pursuant to Section 17.9615(b);
 118-7               (3)  money transferred by the board from any and all
 118-8   sources available; and
 118-9               (4)  interest earned on the investment of money in the
118-10   fund.
118-11         Sec. 15.954.  USE OF FUND.  (a)  The fund may be used to
118-12   provide low-interest loans to rural political subdivisions for
118-13   water or water-related projects, including the purchase of well
118-14   fields, the purchase or lease of rights to produce groundwater, and
118-15   interim financing of construction projects.
118-16         (b)  The fund may be used to enable a rural political
118-17   subdivision to obtain water supplied by larger political
118-18   subdivisions or to finance the consolidation or regionalizing of
118-19   neighboring political subdivisions, or both.
118-20         (c)  The fund may be used to finance an outreach and
118-21   technical assistance program to assist rural political subdivisions
118-22   in obtaining assistance through the fund.  The board may use money
118-23   in the fund to contract for such outreach and technical assistance.
118-24         (d)  The fund may be used to buy down interest rates on
118-25   loans.
118-26         (e)  A rural political subdivision may enter into an
 119-1   agreement with a federal agency or a state agency to submit a joint
 119-2   application for financial assistance under this subchapter.
 119-3         (f)  A nonprofit water supply or sewer service corporation is
 119-4   exempt from payment of any sales tax that may be incurred under
 119-5   other law or ordinance for any project financed by the fund.
 119-6         (g)  The fund may be used as a source of revenue for the
 119-7   payment of principal and interest on water financial assistance
 119-8   bonds issued by the board if the proceeds of the sale of these
 119-9   bonds will be deposited into the rural water assistance fund.
119-10         Sec. 15.955.  FINANCIAL ASSISTANCE.  (a)  The board shall
119-11   adopt rules necessary to administer this subchapter, including
119-12   rules establishing procedures for the application for and award of
119-13   loans, the distribution of loans, the investment of funds, and the
119-14   administration of loans and the fund.
119-15         (b)  The board shall not deliver funds pursuant to an
119-16   application for financial assistance until the executive
119-17   administrator makes a finding:
119-18               (1)  that an applicant proposing surface water
119-19   development has the necessary water rights authorizing it to
119-20   appropriate and use the water which the project will provide; or
119-21               (2)  that an applicant proposing groundwater
119-22   development has the right to use water that the project will
119-23   provide.
119-24         (c)  In passing on an application from a rural political
119-25   subdivision for financial assistance, the board shall consider:
119-26               (1)  the needs of the area to be served by the project,
 120-1   the benefit of the project to the area, the relationship of the
 120-2   project to the overall state water needs, and the relationship of
 120-3   the project to the state water plan; and
 120-4               (2)  the availability of revenue to the rural political
 120-5   subdivision from all sources for the ultimate repayment of the cost
 120-6   of the water supply project, including all interest.
 120-7         (d)  The board by resolution may approve an application if,
 120-8   after considering the factors listed in Subsection (c) and other
 120-9   relevant factors, the board finds:
120-10               (1)  that the public interest is served by state
120-11   assistance in the project; and
120-12               (2)  that the revenue or taxes pledged by the rural
120-13   political subdivision will be sufficient to meet all the
120-14   obligations assumed by the rural political subdivision during the
120-15   succeeding period of not more than 50 years.
120-16         (e)  A program of water conservation for the more efficient
120-17   use of water shall be required in the same manner as required for
120-18   approval of an application for financial assistance under Section
120-19   15.106.
120-20         (f)  Sections 17.183-17.187 apply to the construction of
120-21   projects funded pursuant to this subchapter.
120-22         SECTION 4.03.  Subchapter D, Chapter 11, Water Code, is
120-23   amended by adding Section 11.1352 to read as follows:
120-24         Sec. 11.1352.  ANNUAL WATER RIGHTS FEE.  (a)  The commission
120-25   shall assess a fee for water rights held under the authority of
120-26   this chapter and specified under Subsection (b).  A fee shall not
 121-1   be assessed for water rights for municipal use.  The fee shall be
 121-2   paid annually and is based on the amount of the water authorized to
 121-3   be used.
 121-4         (b)  Fees under this section shall be assessed for the
 121-5   following uses and shall not exceed the following amounts:
 121-6               (1)  industrial:  50 cents per authorized acre-foot;
 121-7               (2)  irrigation:  10 cents per authorized acre-foot;
 121-8               (3)  other consumptive freshwater uses:  50 cents per
 121-9   acre-foot; and
121-10               (4)  hydro-power:  one hundredth of one cent per
121-11   kilowatt produced.
121-12         (c)  Fees collected under this section shall be deposited to
121-13   a special fund known as the water infrastructure fund established
121-14   by Section 15.903.
121-15         (d)  A water right holder within the jurisdiction of a
121-16   watermaster authorized under this chapter who pays a fee to
121-17   reimburse the watermaster for the expenses of that office is not
121-18   subject to a fee for a water right under this section.
121-19         (e)  To receive funding in accordance with Subchapter O,
121-20   Chapter 15, a political subdivision as defined under Chapter 15
121-21   holding a water right located in an area under the jurisdiction of
121-22   a watermaster in accordance with Subsection (d) must pay fees in
121-23   accordance with Subsection (b) and Subchapter O, Chapter 15.
121-24         (f)  A groundwater conservation district must pay annual fees
121-25   in accordance with Section 15.010 to receive funding under that
121-26   section.  The fees shall be for the following uses and may not
 122-1   exceed the following amounts:
 122-2               (1)  industrial:  50 cents per acre-foot;
 122-3               (2)  irrigation:  10 cents per acre-foot; and
 122-4               (3)  all others:  50 cents per acre-foot.
 122-5         SECTION 4.04.  Subchapter B, Chapter 15, Water Code, is
 122-6   amended by adding Section 15.013 to read as follows:
 122-7         Sec. 15.013.  WATER FEE.  (a)  Each county shall annually
 122-8   remit to the comptroller for deposit to the water infrastructure
 122-9   fund a water fee in an amount equal to one dollar per county
122-10   resident as determined by the most recent federal census.
122-11         (b)  A county may collect this fee from its residents in a
122-12   manner and in amounts determined by the county.
122-13         SECTION 4.05.  Subsection (a), Section 15.002, Water Code, is
122-14   amended to read as follows:
122-15         (a)  The legislature finds that it is in the public interest
122-16   and to the benefit of the general public of the state to encourage
122-17   and to assist in the planning and construction of projects to
122-18   develop and conserve the storm water and floodwater as well as the
122-19   ordinary flows of the rivers and streams of the state, to maintain
122-20   and enhance the quality of the water of the state, to provide
122-21   protection to the state's citizens from the floodwater of the
122-22   rivers and streams of the state, to provide drainage, subsidence
122-23   control, public beach nourishment, recharge, chloride control,
122-24   brush control, weather modification, regionalization, and
122-25   desalination [desalinization], to provide for the management of
122-26   aquatic vegetation, and other purposes as provided by law or board
 123-1   rule.
 123-2         SECTION 4.06.  Subsection (b), Section 15.011, Water Code, is
 123-3   amended to read as follows:
 123-4         (b)  After notice and hearing and subject to any limitations
 123-5   established by the General Appropriations Act, the board may
 123-6   transfer money from the fund to the loan fund created under
 123-7   Subchapter C of this chapter, the storage acquisition fund created
 123-8   under Subchapter E of this chapter, the research and planning fund
 123-9   created under Subchapter F of this chapter, the hydrographic survey
123-10   account created under Subchapter M of this chapter, provided the
123-11   hydrographic survey account transfer does not exceed $425,000,
123-12   [and] the aquatic vegetation management fund created under
123-13   Subchapter N of this chapter, and the rural water assistance fund
123-14   created under Subchapter P.
123-15         SECTION 4.07.  Subsections (a) and (b), Section 15.102, Water
123-16   Code, are amended to read as follows:
123-17         (a)  The loan fund may be used by the board to provide loans
123-18   of financial assistance to political subdivisions, federal
123-19   agencies, or both political subdivisions and federal agencies
123-20   acting jointly for the construction, acquisition, improvement, or
123-21   enlargement of projects involving water conservation, water
123-22   development, or water quality enhancement, providing nonstructural
123-23   and structural flood control, or drainage, project recreation lands
123-24   and revenue-generating recreational improvements within any
123-25   watershed, or providing recharge, chloride control, subsidence
123-26   control, brush control, weather modification, regionalization, or
 124-1   desalination [desalinization] as provided by legislative
 124-2   appropriations, this chapter, and the board rules.
 124-3         (b)  The loan fund may also be used by the board to provide
 124-4   grants for:
 124-5               (1)  projects that include supplying water and
 124-6   wastewater services in economically distressed areas, including
 124-7   projects involving retail distribution of those services; and
 124-8               (2)  desalination, brush control, weather modification,
 124-9   regionalization, and projects providing regional water quality
124-10   enhancement services as defined by board rule, including regional
124-11   conveyance systems.
124-12         SECTION 4.08.  Section 15.105, Water Code, is amended to read
124-13   as follows:
124-14         Sec. 15.105.  CONSIDERATIONS IN PASSING ON APPLICATION.  In
124-15   passing on an application for financial assistance from the loan
124-16   fund, the board shall consider but is not limited to:
124-17               (1)  the needs of the area to be served by the project
124-18   and the benefit of the project to the area in relation to the needs
124-19   of other areas requiring state assistance in any manner and the
124-20   benefits of those projects to the other areas;
124-21               (2)  the availability of revenue to the applicant from
124-22   all sources for the ultimate repayment of the cost of the project,
124-23   including all interest;
124-24               (3)  the relationship of the project to overall
124-25   statewide needs;
124-26               (4)  the ability of the applicant to finance the
 125-1   project without state assistance; [and]
 125-2               (5)  for applications for grants for economically
 125-3   distressed areas, the regulatory efforts by the county in which the
 125-4   project is located to control the construction of subdivisions that
 125-5   lack basic utility services; and
 125-6               (6)  for applications for grants under Section
 125-7   15.102(b)(2), the ability of the applicant to construct the project
 125-8   without the grant, and the benefits of the project to water and
 125-9   wastewater needs of the state.  The board shall pass rules which
125-10   shall further define the eligibility of grants under this
125-11   subchapter.
125-12         SECTION 4.09.  Subsection (a), Section 15.106, Water Code, is
125-13   amended to read as follows:
125-14         (a)  The board, by resolution, may approve an application for
125-15   financial assistance [a loan] if after considering the factors
125-16   listed in Section 15.105 of this code and any other relevant
125-17   factors, the board finds:
125-18               (1)  that the public interest requires state
125-19   participation in the project; and
125-20               (2)  that in its opinion the revenue or taxes pledged
125-21   by the political subdivision will be sufficient to meet all the
125-22   obligations assumed by the political subdivision.
125-23         SECTION 4.10.  Section 15.107, Water Code, is amended to read
125-24   as follows:
125-25         Sec. 15.107.  METHOD OF MAKING [LOANS OF] FINANCIAL
125-26   ASSISTANCE AVAILABLE.  (a)  The board may make financial assistance
 126-1   available to successful applicants in any manner that it considers
 126-2   economically feasible including:
 126-3               (1)  contracts or agreements with a political
 126-4   subdivision for the payment of the principal of or interest on or
 126-5   both the principal of and interest on bonds or other obligations
 126-6   issued or to be issued by the political subdivision;
 126-7               (2)  contracts or agreements with a political
 126-8   subdivision for the purpose of providing the political
 126-9   subdivision's share of any cost-sharing required as a participant
126-10   in or local sponsor of any federal project; [or]
126-11               (3)  purchase of the bonds or other obligations of a
126-12   political subdivision for the purpose of completely or partially
126-13   financing the project for which the application is being submitted;
126-14   or
126-15               (4)  contracts or agreements for the receipt of funds
126-16   and performance of obligations in relation to any grant of funds
126-17   provided by the board.
126-18         (b)  Contracts or agreements entered into under Subdivision
126-19   (1) of Subsection (a) of this section may cover all or any part of
126-20   the debt service requirements in a given year and may cover debt
126-21   service requirements in as many years of an issue as the board
126-22   considers appropriate.
126-23         (c)  In a determination on a loan for financial assistance,
126-24   the board may approve interest deferral or the capitalization of
126-25   interest costs and may approve periods of repayment for the loans
126-26   of up to 50 years.
 127-1         SECTION 4.11.  Subsection (f), Section 15.406, Water Code, is
 127-2   amended to read as follows:
 127-3         (f)  The board shall adopt rules establishing criteria of
 127-4   eligibility for regional facility planning money that considers:
 127-5               (1)  the relative need of the political subdivision for
 127-6   the money;
 127-7               (2)  the legal authority of the political subdivision
 127-8   to plan, develop, and operate regional facilities;
 127-9               (3)  the effect of regional facility planning by the
127-10   political subdivision on overall regional facility planning,
127-11   development, and operation in the state and within the area in
127-12   which the political subdivision is located; and
127-13               (4)  the degree to which the regional facility planning
127-14   by the political subdivision is consistent with the state [an
127-15   approved regional] water plan [for the area in which the political
127-16   subdivision is located].
127-17         SECTION 4.12.  Section 15.434, Water Code, is amended to read
127-18   as follows:
127-19         Sec. 15.434.  USE OF MONEY IN FUND.  Money deposited to the
127-20   credit of the agricultural soil and water conservation fund, on
127-21   appropriation by the legislature to the board, the Department of
127-22   Agriculture, the State Soil and Water Conservation Board, the Texas
127-23   Agricultural Experiment Station, the Texas Agricultural Extension
127-24   Service, public colleges and universities, and other state agencies
127-25   shall be used for the following purposes:
127-26               (1)  agricultural water conservation technical
 128-1   assistance programs;
 128-2               (2)  agricultural water conservation, education, and
 128-3   demonstration programs;
 128-4               (3)  purchase of equipment, including demonstration and
 128-5   educational equipment;
 128-6               (4)  grants made to groundwater [underground water]
 128-7   conservation districts and political subdivisions for the purchase
 128-8   of equipment under programs established by Subchapter H of this
 128-9   chapter;
128-10               (5)  research in water utilization and conservation
128-11   including artificial recharge and secondary recovery of groundwater
128-12   [underground water];
128-13               (6)  desalination [desalinization];
128-14               (7)  weather modification;
128-15               (8)  technical assistance programs for developing
128-16   on-farm soil and water conservation plans developed jointly by
128-17   landowners and operators and local soil and water conservation
128-18   districts, as provided by Subchapter H, Chapter 201, Agriculture
128-19   Code;
128-20               (9)  research and demonstration relating to the
128-21   production of native and low-water-use plants and water-efficient
128-22   crops;
128-23               (10)  a pilot program for low-interest loans for the
128-24   purchase of agricultural water conservation systems established by
128-25   Subchapter I of this chapter; [and]
128-26               (11)  research, demonstration, and education relating
 129-1   to brush control; and
 129-2               (12)  regionalization.
 129-3         SECTION 4.13.  Section 15.471, Water Code, is amended to read
 129-4   as follows:
 129-5         Sec. 15.471.  GRANTS; PURPOSES.  The board may make grants of
 129-6   money to groundwater [underground water] conservation districts, to
 129-7   political subdivisions, and to other districts created under
 129-8   Article III, Sections 52(b)(1) and (2), or Article XVI, Section 59,
 129-9   of the Texas Constitution for purchasing equipment required for:
129-10               (1)  measurement and evaluation of irrigation systems
129-11   and agricultural water conservation practices on irrigated land,
129-12   dryland, and rangeland;
129-13               (2)  demonstration of efficient irrigation systems and
129-14   agricultural water conservation practices on irrigated land,
129-15   dryland, and rangeland;
129-16               (3)  testing and evaluation of water quality and the
129-17   suitability of water from groundwater or surface water resources
129-18   for irrigation, rural domestic use, livestock, or agricultural
129-19   industry use;
129-20               (4)  demonstration of efficient or sound chemical
129-21   application and evaluation or demonstration of systems which will
129-22   prevent contamination of groundwater and surface water from
129-23   chemicals and other substances used in agriculture; or
129-24               (5)  measurement and data collection related to the
129-25   conservation of groundwater resources.
129-26         SECTION 4.14.  Section 15.602, Water Code, is amended by
 130-1   adding a new Subdivision (8) and redesignating existing
 130-2   Subdivisions (8) through (14) to read as follows:
 130-3               (8)  "Person" means an individual, corporation,
 130-4   partnership, association, state, municipality, commission, or
 130-5   political subdivision of a state or any interstate body, as defined
 130-6   by Section 502 of the federal act, including a political
 130-7   subdivision as defined by this subchapter, if the person is
 130-8   eligible for financial assistance under federal law establishing
 130-9   the revolving fund.
130-10               (9)  "Political subdivision" means a municipality,
130-11   intermunicipal, interstate, or state agency, any other public
130-12   entity eligible for assistance under this subchapter, or a
130-13   nonprofit water supply corporation created and operating under
130-14   Chapter 67, if such entity is eligible for financial assistance
130-15   under federal law establishing the state revolving fund or an
130-16   additional state revolving fund.
130-17               (10) [(9)]  "Public water system" means a system that
130-18   is owned by any person and that meets the definition of public
130-19   water system in the Safe Drinking Water Act.
130-20               (11) [(10)]  "Public works" means any project to
130-21   acquire, construct, improve, repair, or otherwise provide any
130-22   buildings, structures, facilities, equipment, or other real or
130-23   personal property or improvements designed for public use,
130-24   protection, or enjoyment undertaken by a political subdivision and
130-25   paid for, in whole or in part, out of public funds.
130-26               (12) [(11)]  "Revolving fund" means the state water
 131-1   pollution control revolving fund.
 131-2               (13) [(12)]  "Safe Drinking Water Act" means Title XIV
 131-3   of the federal Public Health Service Act, commonly known as the
 131-4   Safe Drinking Water Act, as amended (42 U.S.C. Section 300f et
 131-5   seq.).
 131-6               (14) [(13)]  "Safe drinking water revolving fund" means
 131-7   the fund established by the board as an additional state revolving
 131-8   fund to provide financial assistance in accordance with the federal
 131-9   program established pursuant to the provisions of the Safe Drinking
131-10   Water Act.
131-11               (15) [(14)]  "Treatment works" has the meaning
131-12   established by the federal act and the eligible components of the
131-13   management programs established by Sections 319 and 320 of the
131-14   federal act.
131-15         SECTION 4.15.  Subsection (a), Section 15.603, Water Code, is
131-16   amended to read as follows:
131-17         (a)  The revolving fund is held separately from other funds
131-18   by the board outside the State Treasury to provide financial
131-19   assistance to political subdivisions for construction of treatment
131-20   works and to persons for nonpoint source pollution control and
131-21   estuary management projects.
131-22         SECTION 4.16.  Subsection (a), Section 15.604, Water Code, is
131-23   amended to read as follows:
131-24         (a)  The board may use the revolving fund for financial
131-25   assistance only as provided by the federal act:
131-26               (1)  to make loans, on the conditions that:
 132-1                     (A)  those loans are made at or below market
 132-2   interest rates, including interest-free loans, at terms not to
 132-3   exceed 20 years;
 132-4                     (B)  principal and interest payments will begin
 132-5   not later than one year after completion of any treatment works and
 132-6   all loans will be fully amortized not later than 20 years after
 132-7   completion of the treatment works;
 132-8                     (C)  the recipient of a loan will establish a
 132-9   dedicated source of revenue for repayment of loans; and
132-10                     (D)  the revolving fund will be credited with all
132-11   payments of principal of and interest on all loans;
132-12               (2)  to buy or refinance the debt obligation of
132-13   political subdivisions at or below market rates if the debt
132-14   obligations were incurred after March 7, 1985;
132-15               (3)  to guarantee or purchase insurance for political
132-16   subdivisions if the guarantee or insurance would improve access to
132-17   market credit or reduce interest rates;
132-18               (4)  as a source of revenue or security for the payment
132-19   of principal and interest on bonds issued by the state if the
132-20   proceeds of the sale of those bonds will be deposited in the
132-21   revolving fund;
132-22               (5)  to provide loan guarantees to similar revolving
132-23   funds established by municipalities or intermunicipal agencies;
132-24               (6)  to earn interest on revolving fund accounts;
132-25               (7)  for the reasonable costs of administering the
132-26   revolving fund and conducting activities provided for by Title VI
 133-1   of the federal act, except that those amounts may not exceed the
 133-2   amount authorized under Title VI of the federal act; [and]
 133-3               (8)  to provide financial assistance to persons for a
 133-4   nonpoint source pollution control project pursuant to Section 319
 133-5   of the federal act or for an estuary management project pursuant to
 133-6   Section 320 of the federal act; and
 133-7               (9)  for other purposes as provided by the federal act.
 133-8         SECTION 4.17.  Section 15.607, Water Code, is amended to read
 133-9   as follows:
133-10         Sec. 15.607.  APPROVAL OF APPLICATION.  On review of
133-11   recommendations by the executive administrator, the board by
133-12   resolution may approve an application if the board finds that in
133-13   its opinion the revenue or taxes or both revenue and taxes pledged
133-14   by the applicant will be sufficient to meet all the obligations
133-15   assumed by the applicant [political subdivision] and that the
133-16   application and assistance applied for meet the requirements of the
133-17   federal act and state law.  A program of water conservation for the
133-18   more effective use of water shall be required in the same manner as
133-19   required for approval of an application for financial assistance
133-20   under Section 15.106 of this code.
133-21         SECTION 4.18.  Subsection (c), Section 17.853, Water Code, is
133-22   amended to read as follows:
133-23         (c)  The board may use the fund only:
133-24               (1)  to provide state matching funds for federal funds
133-25   provided to the state water pollution control revolving fund or to
133-26   any additional state revolving fund created under Subchapter J,
 134-1   Chapter 15;
 134-2               (2)  to provide financial assistance from the proceeds
 134-3   of taxable bond issues to water supply corporations organized under
 134-4   Chapter 67, and other participants;
 134-5               (3)  to provide financial assistance to participants
 134-6   for the construction of water supply projects and treatment works;
 134-7               (4)  to provide financial assistance for an interim
 134-8   construction period to participants for projects for which the
 134-9   board will provide long-term financing through the water
134-10   development fund; [and]
134-11               (5)  to provide financial assistance for water supply
134-12   and sewer service projects in economically distressed areas as
134-13   provided by Subchapter K, Chapter 17, to the extent the board can
134-14   make that assistance without adversely affecting the current or
134-15   future integrity of the fund or of any other financial assistance
134-16   program of the board; and
134-17               (6)  to provide funds to the water infrastructure fund
134-18   created under Section 15.903.
134-19         SECTION 4.19.  Subdivisions (2) and (6), Section 17.871,
134-20   Water Code, are amended to read as follows:
134-21               (2)  "Borrower district" means a political subdivision,
134-22   including a district or authority created under Article III,
134-23   Sections 52(b)(1) and (2), or Article XVI, Section 59, of the Texas
134-24   Constitution, that receives or is eligible to receive a
134-25   conservation loan from the board for a purpose described by Section
134-26   17.895 or 17.8955 [improvement to district facilities].
 135-1               (6)  "Lender district" means a political subdivision,
 135-2   including a soil and water conservation district under Chapter 201,
 135-3   Agriculture Code, a groundwater [an underground water] conservation
 135-4   district created under Article XVI, Section 59, of the Texas
 135-5   Constitution, or a district or authority created under Article III,
 135-6   Section 52(b)(1), or Article XVI, Section 59, of the Texas
 135-7   Constitution authorized to supply water for irrigation purposes,
 135-8   that is eligible to receive or that receives a loan from the board
 135-9   for the purpose of making conservation loans to individual
135-10   borrowers.
135-11         SECTION 4.20.  Section 17.895, Water Code, is amended to read
135-12   as follows:
135-13         Sec. 17.895.  CONSERVATION LOANS.  (a)  This section applies
135-14   only to a conservation loan from a lender district that is:
135-15               (1)  a soil and water conservation district under
135-16   Chapter 201, Agriculture Code;
135-17               (2)  a groundwater conservation district created under
135-18   Section 59, Article XVI, Texas Constitution; or
135-19               (3)  a district or authority created under Section
135-20   52(b)(1), Article III, or Section 59, Article XVI, Texas
135-21   Constitution.
135-22         (b)  The board or a lender district [districts] may make
135-23   conservation loans for capital equipment or materials, labor,
135-24   preparation costs, and installation costs:
135-25               (1)  to improve water use efficiency of water delivery
135-26   and application on existing irrigation systems;
 136-1               (2)  for preparing irrigated land to be converted to
 136-2   dryland conditions; and
 136-3               (3)  for preparing dryland for more efficient use of
 136-4   natural precipitation[;]
 136-5               [(4)  for preparing and maintaining land to be used for
 136-6   brush control activities, including but not limited to activities
 136-7   conducted pursuant to Chapter 203, Agriculture Code; or]
 136-8               [(5)  for implementing precipitation enhancement
 136-9   activities in areas of the state where such activities would be, in
136-10   the board's judgment, most effective].
136-11         (c) [(b)]  Conservation loans for the purposes listed in
136-12   Subsection (b) [(a)] may be made by lender districts to individual
136-13   borrowers for use on private property or by the board to borrower
136-14   districts [for use on district facilities].
136-15         (d) [(c)]  The board may make conservation loans to borrower
136-16   districts for the cost of purchasing and installing devices, on
136-17   public or private property, designed to indicate the amount of
136-18   water withdrawn for irrigation purposes.
136-19         (e) [(d)]  For purposes of this section, the board or lender
136-20   districts may seek the advice of the Department of Agriculture
136-21   regarding the feasibility of a project for which a conservation
136-22   loan is sought.
136-23         SECTION 4.21.  Subchapter J, Chapter 17, Water Code, is
136-24   amended by adding Section 17.8955 to read as follows:
136-25         Sec. 17.8955.  CONSERVATION LOANS FOR BRUSH CONTROL AND
136-26   PRECIPITATION ENHANCEMENT.  (a)  The board or a lender district may
 137-1   make a conservation loan for capital equipment or materials, labor,
 137-2   preparation costs, and installation costs for:
 137-3               (1)  preparing and maintaining land to be used for
 137-4   brush control activities, including activities conducted under
 137-5   Chapter 203, Agriculture Code; or
 137-6               (2)  implementing precipitation enhancement activities
 137-7   in areas of the state where those activities would be, in the
 137-8   board's judgment, most effective.
 137-9         (b)  A conservation loan for a purpose listed in Subsection
137-10   (a) may be made by a lender district to an individual borrower for
137-11   use on private property or by the board to a borrower district.
137-12         SECTION 4.22.  Subchapter L, Chapter 17, Water Code, is
137-13   amended by adding Section 17.9615 to read as follows:
137-14         Sec. 17.9615.  TRANSFERS TO RURAL WATER ASSISTANCE FUND.
137-15   (a)  The board may direct the comptroller to transfer amounts from
137-16   the financial assistance account to the rural water assistance fund
137-17   created by Subchapter P, Chapter 15, to provide financial
137-18   assistance pursuant to this subchapter for the purposes provided in
137-19   Section 15.954.
137-20         (b)  The board shall use the rural water assistance fund as a
137-21   source of revenue to be deposited in accordance with this
137-22   subchapter for the payment of principal and interest on water
137-23   financial assistance bonds issued by the board, the proceeds of
137-24   which are to be deposited into the rural water assistance fund and
137-25   to be used to make payments under a bond enhancement agreement with
137-26   respect to principal or interest on the water financial assistance
 138-1   bonds.
 138-2         SECTION 4.23.  Section 11.32, Tax Code, is amended to read as
 138-3   follows:
 138-4         Sec. 11.32.  CERTAIN WATER CONSERVATION INITIATIVES.  The
 138-5   governing body of a taxing unit by official action of the governing
 138-6   body adopted in the manner required by law for official actions may
 138-7   exempt from taxation part or all of the assessed value of property
 138-8   on which approved water conservation initiatives, desalination
 138-9   projects, or brush control initiatives have been implemented.  For
138-10   purposes of this section, approved water conservation,
138-11   desalination, and brush control initiatives shall be designated
138-12   pursuant to an ordinance or other law adopted by the governing
138-13   unit.
138-14         SECTION 4.24.  Subsection (a), Section 151.0048, Tax Code, is
138-15   amended to read as follows:
138-16         (a)  Except as provided by Subsection (b), "real property
138-17   service" means:
138-18               (1)  landscaping;
138-19               (2)  the care and maintenance of lawns, yards, or
138-20   ornamental trees or other plants;
138-21               (3)  the removal or collection of garbage, rubbish, or
138-22   other solid waste other than:
138-23                     (A)  hazardous waste;
138-24                     (B)  industrial solid waste;
138-25                     (C)  waste material that results from an activity
138-26   associated with the exploration, development, or production of oil,
 139-1   gas, geothermal resources, or any other substance or material
 139-2   regulated by the Railroad Commission of Texas under Section 91.101,
 139-3   Natural Resources Code;
 139-4                     (D)  [domestic sewage or] an irrigation return
 139-5   flow, to the extent the [sewage or] return flow does not constitute
 139-6   garbage or rubbish; and
 139-7                     (E)  industrial discharges subject to regulation
 139-8   by permit issued pursuant to Chapter 26, Water Code;
 139-9               (4)  building or grounds cleaning, janitorial, or
139-10   custodial services;
139-11               (5)  a structural pest control service covered by
139-12   Section 2, Texas Structural Pest Control Act (Article 135b-6,
139-13   Vernon's Texas Civil Statutes); [or]
139-14               (6)  the surveying of real property;
139-15               (7)  domestic sewage service; or
139-16               (8)  domestic potable water service.
139-17         SECTION 4.25.  Section 151.315, Tax Code, is amended to read
139-18   as follows:
139-19         Sec. 151.315.  WATER.  Except as provided in Section
139-20   151.0048(a)(8), water [Water] is exempted from the taxes imposed by
139-21   this chapter.
139-22         SECTION 4.26.  Subchapter H, Chapter 151, Tax Code, is
139-23   amended by adding Section 151.355 to read as follows:
139-24         Sec. 151.355.  WATER-RELATED EXEMPTIONS.  The following are
139-25   exempted from taxes imposed by this chapter:
139-26               (1)  rainwater harvesting equipment or supplies, water
 140-1   recycling and reuse equipment or supplies, or other equipment,
 140-2   services, or supplies used to reduce or eliminate water use;
 140-3               (2)  equipment, services, or supplies used for
 140-4   desalination of surface water or groundwater;
 140-5               (3)  equipment, services, or supplies used for brush
 140-6   control designed to enhance the availability of water;
 140-7               (4)  equipment, services, or supplies used for
 140-8   precipitation enhancement;
 140-9               (5)  equipment, services, or supplies used to construct
140-10   or operate a water or wastewater system certified by the Texas
140-11   Natural Resource Conservation Commission as a regional system; and
140-12               (6)  equipment, services, or supplies used to construct
140-13   or operate a water supply or wastewater system by a private entity
140-14   as a public-private partnership, as certified by the political
140-15   subdivision that is a party to the project.
140-16         SECTION 4.27.  Section 151.801, Tax Code, is amended by
140-17   adding Subsection (f) to read as follows:
140-18         (f)  The proceeds due the state from the collection of the
140-19   taxes imposed by this chapter on the sale of domestic sewage
140-20   service and domestic potable water service shall be deposited in
140-21   the general revenue fund to the credit of the water infrastructure
140-22   fund.
140-23        ARTICLE 5.  REPEALER; TRANSITION; SAVING; EFFECTIVE DATE
140-24         SECTION 5.01.  (a)  Sections 35.005 and 35.006 and Subsection
140-25   (d), Section 36.013, Water Code, are repealed.
140-26         (b)  Chapter 453, Acts of the 73rd Legislature, Regular
 141-1   Session, 1993, is repealed on the date the results of an election
 141-2   confirming the establishment of the Hays Trinity Groundwater
 141-3   Conservation District, as ratified by Part 3, Article 3 of this
 141-4   Act, are canvassed.
 141-5         SECTION 5.02.  (a)  The changes in law made by this Act to
 141-6   Section 11.085, Water Code, apply to an application for a water
 141-7   right, or an amendment to a permit, certified filing, or
 141-8   certificate of adjudication authorizing an interbasin transfer of
 141-9   water, that is accepted for filing on or after the effective date
141-10   of this Act.  An application for a water right, or an amendment to
141-11   a permit, certified filing, or certificate of adjudication
141-12   authorizing an interbasin transfer of water, that is accepted for
141-13   filing before the effective date of this Act is governed by the law
141-14   in effect immediately before that date, and that law is continued
141-15   in effect for that purpose.
141-16         (b)  The changes in law made by this Act by amending Section
141-17   17.895, Water Code, and adding Section 17.8955, Water Code, apply
141-18   only to a conservation loan for which an application is filed on or
141-19   after the effective date of this Act.  A conservation loan for
141-20   which an application was filed before the effective date of this
141-21   Act is governed by the law in effect immediately before that date,
141-22   and that law is continued in effect for that purpose.
141-23         (c)  Not later than January 1, 2002, the Texas Water Policy
141-24   Council, as created by this Act, shall adopt rules necessary to
141-25   implement the provisions of Chapter 9, Water Code, as added by this
141-26   Act.
 142-1         (d)  The Texas Water Policy Council shall review the first
 142-2   group described under Section 9.010, Water Code, as added by this
 142-3   Act, at the third quarterly meeting held by the council.
 142-4         (e)  Not later than January 1, 2002, the Texas Water
 142-5   Development Board shall adopt rules to administer Subchapter O,
 142-6   Chapter 15, Water Code, as added by this Act, including rules
 142-7   establishing procedures for applications for and for the awarding
 142-8   of financial assistance for water projects, for the investment of
 142-9   funds, and for the administration of the water infrastructure fund
142-10   created by this Act.
142-11         (f)  Not later than January 1, 2002, the Texas Water
142-12   Development Board shall adopt rules to administer Subchapter P,
142-13   Chapter 15, Water Code, as added by this Act, including
142-14   establishing procedures for the application for and award of loans,
142-15   the distribution of loans, the investment of funds, and the
142-16   administration of loans and the fund.
142-17         (g)  Not later than January 1, 2002, the Texas Water
142-18   Development Board shall adopt rules requiring a holder of a surface
142-19   water permit, certified filing, or certificate of adjudication for
142-20   surface water, a holder of a permit for the export of groundwater
142-21   from a groundwater conservation district, a retail public water
142-22   supplier, a wholesale water provider, and an irrigation district to
142-23   report to the board information on certain water pipelines and
142-24   other facilities that can be used for water conveyance.
142-25         SECTION 5.03.  FINDINGS RELATED TO PROCEDURAL REQUIREMENTS.
142-26   (a)  The proper and legal notice of the intention to introduce this
 143-1   Act, setting forth the general substance of this Act, has been
 143-2   published as provided by law, and the notice and a copy of this Act
 143-3   have been furnished to all persons, agencies, officials, or
 143-4   entities to which they are required to be furnished by the
 143-5   constitution and other laws of this state, including the governor,
 143-6   who has submitted the notice and Act to the Texas Natural Resource
 143-7   Conservation Commission.
 143-8         (b)  The Texas Natural Resource Conservation Commission has
 143-9   filed its recommendations relating to this Act with the governor,
143-10   lieutenant governor, and speaker of the house of representatives
143-11   within the required time.
143-12         (c)  All requirements of the constitution and laws of the
143-13   state and the rules and procedures of the legislature with respect
143-14   to the notice, introduction, and passage of this Act are fulfilled
143-15   and accomplished.
143-16         SECTION 5.04.  If any provision of this Act or its
143-17   application to any person or circumstance is held invalid, the
143-18   invalidity does not affect other provisions or applications of this
143-19   Act that can be given effect without the invalid provision or
143-20   application, and to this end the provisions of this Act are
143-21   declared to be severable.
143-22         SECTION 5.05.  This Act takes effect September 1, 2001.