S.B. 738 78(R)    BILL ANALYSIS


S.B. 738
By: Duncan
Natural Resources
Committee Report (Amended)



BACKGROUND AND PURPOSE 

Chapter 36, Water Code, authorizes a groundwater conservation district to
adopt rules and issue permits related to the regulation and management of
groundwater resources located within its boundaries.  Although Chapter 36
sets forth a requirement that rules be adopted only after notice and
hearing, as well as makes a reference to a hearings process for permit
applications, the statute is silent on most aspects of the exact nature of
the notice and hearings process that districts should utilize in
rulemaking and permit consideration.  Because groundwater conservation
districts are not subject to the Administrative Procedures Act, it is
necessary to clarify and prescribe the notice and hearings process to be
utilized by the districts.  It is also necessary to clarify that, where
appropriate, groundwater conservation districts may utilize alternative
dispute resolution (ADR) procedures in the permitting process in order to
facilitate resolution of conflicts and minimize costs for both the
district and parties to a permit hearing.  This bill sets forth uniform
procedures to be utilized by groundwater conservation districts regarding
the notice and hearings process for both rulemaking hearings and permit
application hearings and clarifies that districts may utilize ADR
procedures. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

SECTION 1. Amends Section 36.101, Water Code, by amending Subsection (b)
and adding Subsections (d), (e), (f), (g), (h),and (i), as follows:  
(b) Deletes text requiring notice in this section to include publication
of the water conservation district board's agenda in one or more
newspapers.  
(d) Requires the district's general manager or the board of directors of a
district (board), not later than 10th day before a rulemaking hearing, to
take certain actions, regarding notice. 
(e) Requires the notice to provided by Subsection (d) to include the time,
date, and location of the hearing, a brief explanation of the subject of
the hearing and a location at which a copy of the proposed rules may be
reviewed or copied.  
(f) Requires the presiding officer to conduct a rulemaking hearing in the
fashion the presiding officer deems to be appropriate to obtain
information and testimony regarding the proposed rules as conveniently and
expeditiously as possible without prejudicing the rights of any person at
the hearing.  
(g) Sets forth requirements related to the recordation of a rulemaking
hearing, authorizes the assessment of costs for a court reporter
transcription. 
(h) Authorizes a person to submit a request for notice of a rulemaking
hearing; limits the effectiveness of the request to a period of one year;
provides that a person must submit a new request after a request expires. 
(i)Provides that failure to provide certain notice does not invalidate any
action taken by a district at a hearing. 
SECTION 2. Amends Section 36.113, Water Code, as follows: Sec. 36.113. New
heading: PERMITS FOR WELLS; PERMIT AMENDMENTS.  
(a) Adds well operation to the list of activities for which a district
shall require a permit. Authorizes the district to require that a change
in the withdrawal or use of groundwater under a permit issued by the
district may not be made unless the district has first  approved a permit
amendment authorizing the change. Prohibits a district from requiring a
permit or permit amendment for well maintenance or repair in certain
instances. 
(b) Requires a district to require that an application for a permit or
permit amendment be in writing and sworn to.  
 (c) Makes a conforming change. 
 (d) Makes a conforming change. 
(e) Authorizes the district to impose more restrictive permits conditions
on new permit applications and permit amendment applications to increase
use by historic users if the limitations meet certain standards. Makes
conforming and nonsubstantive changes.  
(f) Authorizes the permits and permit amendments to be issued subject to
the rules promulgated by the district and subject to terms and provisions
with reference to drilling, equipping, completion, alternation, or
operation of, or production of groundwater from, wells or pumps that may
be necessary to prevent waste and achieve water conservation, minimize as
far as practicable the drawdown of the water table or the reduction of
artesian pressure, lessen interference between wells, or control and
prevent subsidence.  
(g) Authorizes a district to require certain proof of groundwater usage by
an existing or historic user if the district implements Section 36.113(e)
or 36.116(b), Water Code. 
(h) Authorizes a district in implementing Subsection (g),(1) to issue a
permit for existing or historic use based on an extrapolation of use for
certain users; (2) to issue a permit for use based on agricultural
irrigation based on either the maximum annual use or the acreage irrigated
during the period established under Subsection (g). 
(i) Provides that an annual report of groundwater use previously submitted
to a state agency is admissible as evidence of existing or historic use
under Subsection (g) or (h). 
(j) Provides that a district may not discriminate against land or wells
enrolled or participating in the federal conservation reserve program.
Sets forth certain rules a district could adopt that shall not be
considered discriminatory for purposes of Chapter 36, Water Code.  Deletes
existing Section 36.113(g), Water Code, which has been moved to Section
36.113(a). 
SECTION 3.  Amends Subchapter D, Chapter 36, Water Code, by adding Section
36.1132 as follows: 
 Sec. 36.1132 DEFINED HISTORIC USE PERIODS FOR CERTAIN DISTRICTS.
(a) Provides that this section only applies to certain groundwater
conservation districts that fall with certain specified criteria. 
(b) Provides that a district, in implementing Sections 36.113(e) or
36.116(b), Water Code, may require an existing or historic user to prove
the maximum annual amount of groundwater applied to a beneficial use
during the period from: (1) June 1, 1972, to December 31,1991; or (2)
January 1, 1992, to January 7, 2003. 
(c) Requires a district to issue a permit under Subsection (b) to certain
users based on an extrapolation of their use. 
(d) Provides that, if a district limits or permitted production in a
certain manner, a district shall proportionately reduce such production
equally among classes of users in the following order, with all reductions
that can be made in one class being made in that class before proceeding
with limitations or reductions in the next subsequent class: (1) new
users, except as provided by Subdivision (2); (2) the class of users
described by Subsections (b)(1) and (c) or any new user who was issued a
permit by the district on or before May 1, 2003; and (3) the class of
users described by Subsection (b) (2).  
 
SECTION 4. Amends Section 36.114, Water Code, as follows:
Sec. 36.114. New heading: PERMIT; PERMIT AMENDMENT; APPLICATION AND
HEARING. (a) Requires the district by rule to determine each activity
regulated by the district for which a permit or permit amendment is
required.  
(b) Requires the district by rule to determine whether a hearing on the
permit or permit amendment application is required, for each activity for
which the district determines a permit or permit amendment is required
under Subsection (a).  
(c) Requires the board, for all applications for which a hearing is not
required under Subsection (b), to act on the application at a meeting as
defined by Section 551.001(4) (defining meeting), Government Code, unless
the board by rule has delegated to the general manager the authority to
act on the application.  
(d) Requires the district to promptly consider and act on each
administratively complete  application for a permit or permit amendment as
provided by Subsection (c) or Subchapter M.  
(e) Authorizes the applicant, if, within 60 days, rather than 30 days,
after the date an administratively complete application is submitted, the
application fails to be acted on or set for hearing on specific date, to
petition the district court of the county where the land is located for a
writ of mandamus to compel the district to act on the application or set a
date for a hearing on the application, as appropriate. Makes
nonsubstantive changes.  
(f) Requires the initial hearing, for applications requiring a hearing to
be held within 35 days after the setting of the date and requires the
district to act on the application within 60 days, rather than 35 days,
after the date the final hearing on the application is concluded.  
 (g) Creates new subsection from existing text. 
 (h) Creates new subsection from existing text. 
SECTION 5. Amends Subchapter L, Chapter 36, Water Code, by adding 36.3705,
as follows:  
 Sec. 36.3705. DEFINITION. Defines "applicant." 
SECTION 6. Amends Chapter 36, Water Code, by adding Subchapter M, as
follows:  
SUBCHAPTER M. PERMIT AND PERMIT AMENDMENT APPLICATIONS; NOTICE AND HEARING
PROCESS  
 Sec. 36.401. DEFINITION. Defines "applicant." 
Sec. 36.402. APPLICABILITY. Provides that this subchapter applies to the
notice and hearing process used by a district for permit and permit
amendment applications, except as provided by Section 36.415.  
Sec. 36.403. SCHEDULING OF HEARING. (a) Requires the district's general
manager or board to schedule a hearing on permit or permit applications
received by the district as necessary, as provided by Section 36.114.  
(b) Authorizes the general manager or board to schedule more than one
application for consideration at a hearing.  
(c) Requires a hearing to be held at the district office or regular
meeting location of the board provides for hearings to be held at a
different location in the district.  
(d) Authorizes the hearing to be held in conjunction with a regularly
scheduled board meeting.  
Sec. 36.404. NOTICE. (a) Requires the general manager or the board to give
notice of each hearing on an application for a permit or permit amendment.
 (b) Requires the notice to include certain information. 
(c) Requires the general manager or the board, not later than the 10th day
before the date of a hearing, to take certain actions.  
(d) Clarifies that a person may submit to the district a written request
for notice of a hearing on a permit or permit amendment application and
that such a request is effective for one year from the date the request is
received by the district.  
(e) Provides that failure to provide notice does not invalidate any action
taken by the district at the hearing. 
Sec. 36.405. HEARING REGISTRATION. Authorizes the district to require each
person who participates in a hearing to submit a hearing registration form
stating certain information.  
Sec. 36.406. HEARING PROCEDURES. (a) Requires a hearing to be conducted in
a certain manner.  
(b) Requires the board president or the hearings examiner to serve as the
presiding officer at the hearing.  
 (c) Requires the presiding officer to follow certain procedures. 
(d) Authorizes any interested person, including the general manager or a
district employee, to testify or present evidence at the hearing, unless
the district or the presiding officer establishes certain restrictive
measures.  
(e) Authorizes the presiding officer to allow testimony to be submitted in
writing and to require that the written testimony be sworn to.  
(f) Authorizes the presiding officer to allow a person who testifies at a
hearing to supplement the testimony given at the hearing by filing
additional written materials with the board or hearings examiner by the
10th day after the date of the hearing if no decision has been made by the
board.  
(g) Authorizes the presiding officer, at his or her discretion, to issue
an order at any time  before the board takes certain actions under Section
36.411, notwithstanding any other provision of this section, if authorized
by rules of the district.  
Sec. 36.407. EVIDENCE. (a) Requires the presiding officer to admit
evidence if it is relevant to an issue at the hearing.  
(b) Authorizes the presiding officer to exclude evidence that is
irrelevant, immaterial, or unduly repetitious.  
Sec. 36.408. RECORDING. (a) Requires the presiding officer to prepare and
keep a record of each hearing in the form of minutes, audio or video
recording, court reporter transcription.  Provides that the hearing shall
be transcribed by a court reporter based on the request of any party to
the contested hearing. Authorizes the presiding officer, if a hearing is
transcribed at the request of a party to the hearing, to assess the costs
associated with producing the transcript to one or more parties. Provides
that the presiding officer may exclude a party from further participation
in a hearing for failure to pay in a timely manner any costs associated
with a court reporter transcription which were assessed against that
party. 
(b) Provides that if a hearing is uncontested, the presiding officer may
substitute the report required under Section 36.410 for a method of
recording the described in Subsection (a).   
Sec. 36.409. CONTINUANCE. Authorizes the presiding officer to continue a
hearing from time to time and from place to place without providing notice
under Section 36.404. Requires the presiding officer to provide notice of
the continued hearing by regular mail to persons who submitted a hearing
registration form under Section 36.405, if the presiding officer continues
a hearing without announcing at the hearing the time, date, and location
of the continued hearing.  
Sec. 36.410. REPORT. (a) Requires the presiding officer to submit a report
to the board by the 30th day after the date a hearing is concluded, unless
the hearing was conducted by a quorum of the board. Requires the presiding
officer, if the hearing was conducted by a quorum of the board, to
determine at his or her discretion whether to prepare and submit a report
under this section.  
 (b) Requires the report to include certain information. 
(c) Authorizes a person who participated in the hearing to submit a
written request to review a copy of the report and submit to the board
written exceptions to the report.  
(d) Requires the presiding officer or general manager to mail a copy of
the report to each person who requests to review the report under
Subsection (c).  
 Sec. 36.411. BOARD ACTION. Requires the board to act on a permit or
permit  
amendment application by the 60th day after the date the hearing on the
application is concluded.  
Sec.36.412. REQUEST FOR REHEARING AND APPEAL. (a) Authorizes an applicant
to appeal a decision of the board on a permit or permit amendment
application by requesting a rehearing before the board by the 20th day
after the date of the board's decision.  
(b) Requires a request for hearing to filed in the district office and to
state the grounds for the request.  
(c) Requires the board, if the board grants a request for rehearing, to
schedule the rehearing by the 45th day after the day of the request is
granted.  
(d) Provides that the failure of the board to grant or deny a request for
rehearing before the 91st day after the request is submitted constitutes a
denial of the request.  
Sec. 36.413. DECISION; WHEN FINAL. (a) Provides that under certain
circumstances, a decision of the board on a permit or permit amendment
application hearing is final.  
(b) Provides that a decision by the board on a permit or permit amendment
application is appealable if the decision is final under Subsection
(a)(2). 
Sec. 36.414. ADDITIONAL PROCEDURES. Requires a district by rule to adopt
procedural rules to implement this subchapter and authorizes it to adopt
notice and hearing procedures in addition to those provided by this
subchapter.  
Sec. 36.415. HEARINGS CONDUCTED BY STATE OFFICE OF ADMINISTRATIVE
HEARINGS. Provides that this subchapter does not apply to a hearing
conducted by the State Office of Administrative Hearings under Section
2003.021(b)(4) (Office), Government Code. Requires the hearing to be
conducted as provided by Subchapters C, D, and F, Chapter 2001, Government
Code, if a district contracts with the State Office of  Administrative
Hearings to conduct a hearing.  
Sec. 36.416. ALTERNATIVE DISPUTE RESOLUTION. Authorizes a district by rule
to develop and use alternative dispute resolution procedures in the manner
provided for governmental bodies under Chapter 2009 (Alternative Dispute
Resolution for Use by Governmental Bodies), Government Code.  
Sec. 36.417. NONAPPLICABILITY OF CHAPTER 2001, GOVERNMENT CODE. Provides
that except as provided by Section 36.415, Chapter 2001, Government Code
is not applicable to a hearing under this chapter.  
SECTION 7. Repealer: Section 36.001(17), Water Code (defining applicant). 
SECTION 8. (a) Sets forth legislative findings.
           (b) Provides that changes made by this Act do not effect
certain powers and actions.  
          (c) Clarifies that a district may require certain wells
previously exempt from permitting by district rule but not under Chapter
36 to comply with the permitting procedures and rules of the district, as
amended.  Clarifies that this subsection applies to certain actions but
not other certain actions. 
          (d) Provides that a district that issues permits under certain
sections of Chapter 36 may issue permits to certain electric entities
based on certain activities.      
SECTION 9. Makes application of this Act prospective. 

SECTION 10. Effective date: September 1, 2003. 


EFFECTIVE DATE

September 1, 2003


EXPLANATION OF AMENDMENTS

Committee Amendment No.1.  In Section 36.113, Water Code, strikes proposed
Subchapter (j), dealing with historic use of land or wells on land
enrolled in the federal conservation reserve program.   

Committee Amendment No.2. In proposed Subsection (d) of proposed Section
36.406, Water Code, between "Any" and "person" strikes "interested".  In
proposed Subsection (d) of proposed Section 36.406, Water Code, between
"employee," and "may" inserts "who is determined by the presiding officer
to be an affected party,".  In proposed Subsection (d) of proposed Section
36.406, Water Code, strikes "unless:" and substitutes "along with their
witnesses and experts." In proposed Subsection (d) of proposed Section
36.406, Water Code, strikes "(1) the district by rule limits testimony or
the presentation of evidence to persons that the district determines to be
affected by the subject matter of the hearing; or (2) the presiding
officer, under authority granted to the presiding officer by district
rule, limits testimony or the presentation of evidence to persons who, in
the presiding officer's determination, are affected by the subject matter
of the hearing." 
 
Committee Amendment No.3. In proposed Section 36.410, Water Code, after
"section." inserts "If the application is contested, the presiding officer
shall prepare and submit a report to the board under this section, and any
board action on the application shall be accompanied by the report." 
 
Committee Amendment No. 4. Clarifies in Subsection (f) of Section 36.113,
Water Code, that a district may not limit by rule the operation or
production of groundwater under an existing permit, unless such rule is
uniformly applied to all existing permits of the same type or class issued
by the district. 

Committee Amendment No.5.  In proposed Section 36.412, Water Code, inserts
new Subchapter (e) by adding "(e) If an application for which a hearing
was not held is denied by the board, the applicant will be entitled to
request a rehearing on the application as a contested application." and
inserts in Subchapter (b) "the minimum quantity, rate of production or
other grounds for  which" a permit amendment application is required.    

Committee Amendment No.6. Inserts a new SECTION 5 to the bill to add a new
subsection (e) to Section 36.116, Water Code, to provide that when a
district is regulating the production of groundwater and selecting a
method under Section 36.116(a)(2), the district shall consider the
hydrogeological conditions of the aquifer or aquifers in the district. 

Committee Amendment No.7. In Subdivision (2) of Section 8 of the bill,
between "may" and "include" inserts "or may not".