TO:	Honorable Troy Fraser, Chair, Senate Committee on Natural Resources
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	SB1840 by Nichols (Relating to the creation of the Deep East Texas Groundwater Conservation District; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.), Committee Report 1st House, Substituted

The Legislative Budget Board, in cooperation with the Texas Water Development Board (TWDB) and the Texas Commission on Environmental Quality (TCEQ), has determined that:
 
Senate Bill 1840, as authored by Senator Robert Nichols, would create, subject to a confirmation election, the Deep East Texas Groundwater Conservation District (District) in Sabine, San Augustine, and Shelby Counties with the powers and duties of Water Code, Chapter 36 related to the general law for groundwater conservation districts (GCDs). The purpose of the District is to benefit property by providing for the conservation, preservation, protection, recharging, and prevention of waste of groundwater, and to control subsidence caused by the withdrawal of groundwater under powers conferred by Article XVI, Section 59 of the Texas Constitution. Creation of the District is subject to a confirmation election.   
 
1  Population – The Deep East Texas GCD will be comprised of one or more of the following counties: Sabine, San Augustine, and Shelby.  In the 2012 State Water Plan, the total population of all three counties is projected to grow from 44,639 in 2000 to 47,526 in 2010 to 49,902 in 2020.  The 2010 Census count for the three counties was 45,147.
 
Individually, Sabine County is projected to grow from 10,469 in 2000 to 11,280 in 2010 and 11,743 in 2020; the 2010 Census count was 10,834.  San Augustine County is projected to grow from 8,946 in 2000 to 9,715 in 2010 and 9,911 in 2020; the 2010 Census count was 8,865.  Shelby County is projected to grow from 25,224 in 2000 to 26,531 in 2010 to 28,248 in 2020; the 2010 Census count was 25,448.
 
2)  Location – The proposed district would be composed of all territory within Sabine, San Augustine, and Shelby counties upon a successful confirmation election within each county.  If the proposition is confirmed in two counties, the creation of the district is confirmed.  If the proposition is confirmed in only one county, the district may be created in that county upon a vote by the county commissioner's court.
 
 
3) Comments on Powers/Duties Different from Similar Types of Districts – Unlike general law GCDs, the bill provides that the three county judges will appoint seven temporary directors within 90 days of the effective date of the Act. Each county judge will appoint two temporary directors that are residents of the county, and the three county judges will appoint one temporary director from the District at large. The temporary directors must hold an organizational meeting as soon as practicable after appointment, and must schedule and hold an election to confirm creation of the District before September 1, 2015. Creation of the District must be confirmed by the voters of each county for the county to be included in the District. If the creation of the District is confirmed in two or more counties, the District is created. If the creation of the District is confirmed in only one county, the commissioners court of that county must hold two public hearings on the matter and, within 60 days of the confirmation election, vote on whether to confirm creation of the District or not. The District would be dissolved on September 1, 2015, if it is not confirmed by this date and the temporary directors would serve until all incurred debts are paid and assets transferred to each county in proportion to the county's contributions.
           
If creation of the District is confirmed, the temporary directors from the included counties will become initial permanent directors. If the District has fewer than three counties, the county judges in the District will appoint the at large initial permanent director. If the District has only one county, the county judge may also appoint two initial permanent directors to represent the county. The three, five, or seven initial permanent directors will draw lots to serve terms ending December 21, 2015, and December 31, 2017. Subsequent permanent directors will be appointed by the county judge or judges, and serve four-year terms. Vacancies on the board would be filled by the county judge or judges. The bill provides that directors may not receive fees of office but may be reimbursed for reasonable expenses incurred while engaged in board activities.
           
The bill provides that a commissioners court of an adjacent county may, by resolution, petition the District for the county to be added, and for the county to be added if voters of the county approve a proposition to be added. The bill provides that any District resolution requesting legislation to amend the District's authority be first provided to the commissioners court of the counties in the District.
           
Under the Water Code, general law GCD directors are elected by the single-precinct method, vacancies are filled by the board, and directors may receive fees of office not to exceed $150 a day or $9,000 a year.
           
Unlike general law GCDs, the District may not exercise the power of eminent domain, purchase groundwater rights for any purpose, or produce groundwater for the purpose of sale. The District may not require a meter to be placed on a well that is incapable of producing more than 25,000 gallons per day. The District may not levy a tax that exceeds $0.05 per $100 assessed valuation. Consistent with Water Code, Chapter 36, the District, by rule, may permit and regulate the transfer of groundwater out of the District. The District must refund permit application fees if the permit relates to a well that is incapable of producing more than 25,000 gallons per day, or the permit has complied with the applicable law and District rules.
 
4) Overlapping Services - There are no other GCDs in Sabine, San Augustine, and Shelby Counties. GCD functions do not conflict with services provided by other types of water districts or utilities.
 
5) TCEQ's Supervision - As with general law GCDs, the TCEQ will have general supervisory authority, including bond review authority and authority as it is related to the District's development and implementation of a management plan; the District would not have to comply with TCEQ financial auditing requirements.
 
 
6)  Water Use – Within the three counties, 40 percent of the total water use was groundwater (Carrizo-Wilcox, Sparta, and Yegua-Jackson, Gulf Coast aquifers) in 2010.  Sixty nine percent of the groundwater pumping was for municipal use.
 
Individually, within Sabine County, 60 percent of the total water use was groundwater in 2010; 71 percent of the groundwater was for municipal use.  Within San Augustine County, 40 percent of the total water use was groundwater in 2010; 71 percent of the groundwater was for municipal use.  Within Shelby County, 34 percent of the total water use was groundwater in 2010; 68 percent of the groundwater was for municipal use.