The Legislative Budget Board in cooperation with the Water Development Board (TWDB) and Texas Commission on Environmental Quality (TCEQ), has determined the following:

Subject to a confirmation election, the bill would  create the Lower Trinity Groundwater Conservation District (District) in Liberty, Polk, and San Jacinto counties providing for the powers, duties, administration, operations and financing of the District. The bill authorizes the District with specific powers and duties and with those of Texas Water Code, Chapter 36, related to the general law for Groundwater Conservation Districts (GCDs).

1) Population- The three-county region is expected to grow 18% from 133,533 people in the 2000 Census to a projected total of 157,445 in 2010. Liberty County grows from 70,154 to 81,930. Polk County grows from 41,133 to 48,072. San Jacinto County grows from 22,246 to 27,443.

2) Location & Size- The District’s boundaries would be coextensive with the boundaries of Liberty, Polk and San Jacinto counties. The District would be established at it confirmation election if a majority of votes in at least one county favor creation of the District. A county would be included in the District only if a majority of the votes cast in the county favor creation of the District.

3) Powers- Similar to GCDs under Texas Water Code, Chapter 36, with some exceptions as noted below.

4) District Finances- Unlike general law GCDs under Texas Water Code, Chapter 36, the District is not authorized to levy ad valorem taxes or to issue or sell bonds or notes to be repaid with taxes. Similar to general law GCDs, the District would be authorized to assess an annual production fee on each well for which a permit is issued by the District. District fees would be based on the amount of water withdrawn from wells and would be capped at five cents per 1,000 gallons of water for any purpose. Wells used exclusively for agricultural purposes, including irrigation, are exempt from District production fees. Under Chapter 36, general law GCDs are authorized to finance operation and maintenance costs and bond repayment through either the levy of taxes or through the assessment of production fees. Under Chapter 36, annual production fees may not exceed $1 per acre-foot of water used for agricultural purposes or $10 per acre-foot of water used for any other purpose. Under general law for GCDs operating under Chapter 36, the District may assess fees for administrative services and for the export of groundwater out of the District.

5) Board of Directors- General law GCDs under Texas Water Code, Chapter 36, have 5 to 11 directors elected by the general precinct method who serve staggered four-year terms. In some general law GCD creation cases, commissioners courts are provided 90 days to appoint temporary directors. Temporary directors for the District are appointed and are responsible for scheduling and conducting the District’s confirmation election. Within 45 days of the effective date of the Act, seven appointments to the temporary board are to be made as follows: the commissioners courts of Liberty and San Jacinto counties each appoint one director to represent rural water utilities or forestry or agriculture interests and the commissioners court of Polk County appoints one director to represent rural water utilities or large industrial interests, the three commissioners courts jointly appoint one director to represent the area interests of forestry or agriculture or landowners, and the incorporated municipalities of each county jointly appoint one director. The temporary directors become the initial directors if the District is confirmed by the voters. If the voters of a county do not confirm creation of the District, the temporary directors appointed from the county and the temporary director appointed jointly by the three commissioners courts are removed from office and the commissioners court of the county or counties that confirm creation of the district appoint one initial director to represent forestry or agriculture or landowner interests. There would be seven directors if the voters in all three counties confirm creation of the District, five directors if the voters in only two counties confirm the District, and three directors if the voters in only one county confirm the District. Initial director terms expire on December 31 in 2006, 2007, and 2008 and are determined by drawing lots. The appropriate number of permanent directors would be appointed by either the commissioners court or courts or incorporated municipalities to three-year terms as initial director terms expire.

6) Eminent Domain- Unlike general law GCDs under Texas Water Code, Chapter 36, the District is not authorized to exercise the power of eminent domain.

7) Ability to Tax- Unlike general law GCDs under Texas Water Code, Chapter 36, the District is not authorized to levy ad valorem taxes.

8) Ability to Exclude Property- As with general law for GCDs, there are no provisions to exclude territory from the District.

9) Overlapping Services- There are no other GCDs in Liberty, Polk or San Jacinto counties. The primary functions of GCDs are conservation and management of groundwater resources through data collection, rules and well permitting within their boundaries. These functions do not conflict with the services provided by the other water utilities or districts in the same area. The District's boundaries include the service areas of other water utilities and districts with Certificates of Convenience and Necessity (CCN). The other known water supply or sewer-service corporations, investor-owned utilities, or local water districts or authorities in the District are listed in Attachment 1.

10) Adequacy of Boundary Description- The District’s boundaries would be the same as the county boundaries for Liberty, Polk and San Jacinto counties and form a closure. The District is located in Groundwater Management Area 14 designated by the Texas Water Development Board primarily for the northern part of the Gulf Coast aquifer. Liberty, Polk and San Jacinto counties are not located within a Priority Groundwater Management Area designated by the TCEQ.

11) Comments on Powers /Duties Different from Similar Types of Districts- Unlike general law GCDs under Texas Water Code, Chapter 36, the bill provides that adjacent counties may petition to be added to the District by resolution of a commissioners court. The bill provides that if a county is added to the District, the directors may change the number of directors so that an equal number of directors is appointed from each county and one director is appointed jointly by the counties in the District. Under general law, ability to petition to be added to a GCD is provided to either a majority of landowners in a defined area, at least 50 landowners in a defined area, or to the commissioners court of a county in a designated priority groundwater management area if the area seeking to be added to the district includes the entire county. Unlike general law GCDs, the bill provides the director jointly appointed by the county commissioners courts is the presiding officer. Unlike general law GCDs where directors are entitled to receive $150 per day of service up to a maximum of $9,000 per year, the directors of the District are not entitled to receive compensation for service. Unlike general law GCDs, the District may not require a permit for wells used solely for domestic or livestock purposes or a well that is incapable of producing more than 25,000 gallons per day (gpd). Under Chapter 36, domestic, livestock, or poultry wells on tracts of land larger than 10 acres incapable of producing 25,000 gpd are exempt from general law GCD permitting. The bill provides the Act would take effect immediately if passed by a two-thirds majority in each house. If passed otherwise, the Act would take effect September 1, 2005. The District would be dissolved on September 1, 2007 if it is not confirmed by the voters by this date, and Special District Local Laws Code, Chapter 8807 would then expire on September 1, 2010.

12) TCEQ’s Supervision- Same as general law GCDs, including bond review authority. The TCEQ’s supervision authority as it is related to the District’s development and implementation of a management plan would be the same as for general law GCDs. As with general law GCDs, the District would not have to comply with TCEQ financial auditing requirements.

13) State Water Plan Objectives-Water Use: In all three counties, groundwater is a significant source of water. Within Liberty County, 47% of the total year 2000 water use was groundwater, nearly half of that going to municipal users. Within Polk County, 68 percent of total year 2000 water use was groundwater, 85 percent of the groundwater for municipal purposes. Finally, within San Jacinto County, 76 percent of the total year 2000 water use was groundwater, 94 percent of the groundwater for municipal purposes. The proposed district would be located over the Gulf Coast Aquifer. Board staff finds that creation of the proposed district is not in conflict with the State Water Plan objectives of promoting the efficient use of local groundwater resources and the implementation of practices and programs to effectively manage local groundwater resources.