By Armbrister, et al.                                  S.B. No. 699
         77R4859 QS-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the provision of water by the Lower Colorado River
 1-3     Authority to a municipality outside the Colorado River basin.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Chapter 7, Acts of the 43rd Legislature, 4th
 1-6     Called Session, 1934 (Article 8280-107, Vernon's Texas Civil
 1-7     Statutes), is amended by adding Section 28 to read as follows:
 1-8           Sec. 28.  Notwithstanding any other provision of this Act,
 1-9     except Section 27 of this Act, or other law:
1-10           (a)  In this section, "municipality" includes a municipally
1-11     owned utility.
1-12           (b)  Subject to the limitations and restrictions in this
1-13     section, the district may enter into a written contract with a
1-14     municipality located outside the Colorado River watershed to
1-15     distribute and sell water to the municipality.
1-16           (c)  In addition to the district's applicable water rate, the
1-17     district shall charge a municipality a surcharge determined by the
1-18     board of directors according to the terms of the contract to enable
1-19     the district to develop and manage water resources sufficient to
1-20     address the projected needs of the district's water service area
1-21     and the needs of the municipality to the extent agreed in the
1-22     contract.  The board of directors' determination of the surcharge
1-23     is not subject to review or modification by any regulatory agency
1-24     or administrative authority.
 2-1           (d)  The use or reservation of water under a contract
 2-2     authorized by this section may extend for a base period of not more
 2-3     than 50 years.  A contract may provide an option to renew for not
 2-4     more than an additional 30 years.  An option to renew must  require
 2-5     that the municipality progressively reduce the amount of water
 2-6     reserved or used by the municipality during the last 10 years of
 2-7     the renewal term and require that the rate paid by the municipality
 2-8     immediately increase by a factor of five if the municipality does
 2-9     not make the required reduction.  The municipality is not entitled
2-10     to further reservation, use, or delivery of water from the district
2-11     at the conclusion of the contract.
2-12           (e)  The district may not amend a contract to increase the
2-13     volume of water to be sold to a municipality under this section
2-14     unless at least 12 directors vote to approve the amendment after
2-15     having consulted with the county judges of San Saba, Lampasas,
2-16     Burnet, Llano, Blanco, Travis, Bastrop, Fayette, Colorado, Wharton,
2-17     and Matagorda counties.  The directors shall encourage the county
2-18     judges with whom they consult to form a committee to address the
2-19     protection of Colorado River water resources.
2-20           (f)  A contract authorized by this section must require that
2-21     the rate paid by the municipality immediately increase by a factor
2-22     of five if:
2-23                 (1)  the municipality obtains, other than through
2-24     direct negotiations with the district or other than with the
2-25     express written consent of the district or initiates legal
2-26     proceedings in a court or regulatory agency to obtain:
2-27                       (A)  an increase in the amount of surface water
 3-1     taken by the municipality under the terms of the contract; or
 3-2                       (B)  an extension of either the base or renewal
 3-3     periods under Subsection (d); or
 3-4                 (2)  the district is compelled by any authority to
 3-5     reserve, sell, or make available to the municipality more than
 3-6     150,000 acre-feet of water per year or to reserve, sell, or make
 3-7     available to the municipality water beyond the base and renewal
 3-8     periods under Subsection (d).
 3-9           (g)  Within the district's water service area as it existed
3-10     on January 1, 2001, the district must own any personal property,
3-11     fixtures, or appurtenances that are used for making available,
3-12     diverting, or delivering water to a municipality under a contract
3-13     authorized by this section.
3-14           (h)  Water to be provided under a contract authorized by this
3-15     section may not be diverted from the Colorado River at diversion
3-16     points located on the reservoirs that, on the effective date of
3-17     this section, are owned and operated by the district upstream of
3-18     Mansfield Dam.
3-19           (i)  The district may sell no more than a total of 150,000
3-20     acre-feet of water in any year under contracts authorized by this
3-21     section.
3-22           (j)  This section does not authorize:
3-23                 (1)  the district to sell its surface water rights to
3-24     any person or entity for use outside the Colorado River watershed;
3-25     or
3-26                 (2)  a sale or lease of water other than as
3-27     specifically authorized by this section.
 4-1           (k)  The district may not sell groundwater to a municipality
 4-2     under this section.
 4-3           (l)  The district may not contract to distribute or sell
 4-4     water under this section unless the district's board of directors
 4-5     finds that the contract:
 4-6                 (1)  will protect and benefit the lower Colorado River
 4-7     watershed and the district's water service area, including
 4-8     municipal, industrial, agricultural, recreational, and
 4-9     environmental interests;
4-10                 (2)  is consistent with regional water management plans
4-11     filed with the Texas Water Development Board; and
4-12                 (3)  will benefit stored water levels in the district's
4-13     existing reservoirs.
4-14           SECTION 2.  This Act constitutes full authority for a
4-15     municipality or municipally owned utility that enters into a
4-16     contract under that section to enter into a contract with the
4-17     district under Section 28, Chapter 7, Acts of the 43rd Legislature,
4-18     4th Called Session, 1934 (Article 8280-107, Vernon's Texas Civil
4-19     Statutes), as added by this Act.  The payments made under a
4-20     contract authorized by that section must meet the operation and
4-21     maintenance expenses of the municipality's utility system.  A
4-22     municipality or municipally owned utility that enters into a
4-23     contract under that section may use proceeds from the sale of its
4-24     revenue bonds to make any such payments.
4-25           SECTION 3.  This Act takes effect immediately if it receives
4-26     a vote of two-thirds of all the members elected to each house, as
4-27     provided by Section 39, Article III, Texas Constitution.  If this
 5-1     Act does not receive the vote necessary for immediate effect, this
 5-2     Act takes effect September 1, 2001.