TO:	Honorable Jim Keffer, Chair, House Committee on Natural Resources
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB4123 by Nevárez (Relating to the creation of the Val Verde County Groundwater Conservation District; providing authority to impose fees and taxes.), As Introduced

The Legislative Budget Board, in cooperation with the Texas Water Development Board (TWDB) and the Texas Commission on Environmental Quality (TCEQ), has determined that:
 
House Bill 4123, as authored by Representative Poncho Nevarez, would create, subject to a confirmation election, the Val Verde County Groundwater Conservation District (District) in Val Verde County 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.   
 
Population - The Val Verde GCD will be comprised of Val Verde County.  In the 2010 Census the total population of the county was 48,879.
     
The Val Verde County population projections approved for the 2016 Region J Water Plan projects the population to grow to 54,694 in 2020, 60,389 in 2030 and 65,902 in 2040.
 
 Location - The proposed district would be composed of all territory within Val Verde County upon a successful confirmation election within the county.
 
Comments on Powers/Duties Different from Similar Types of Districts - Unlike general law GCDs, the bill provides that within 45 days of the effective date, the Commissioners Court of Val Verde County appoint two temporary directors, the Del Rio City Council appoint two temporary directors, and the Val Verde County Judge and Mayor of Del Rio jointly appoint one temporary director. The temporary directors are required to hold an organizational meeting as soon as practicable and are required to schedule and hold an election to confirm creation of the District. The temporary directors serve until they become the initial directors if creation of the District is confirmed, or until the District is dissolved on September 1, 2020, if creation of the District is not confirmed. The temporary directors are authorized to hold a subsequent confirmation election no sooner than one year after a failed confirmation election. If the District is confirmed, a directors' election will be held on the November uniform election date of the first even-numbered year to elect one director for an at-large position, one director from commissioner's precincts two and three, and one director from commissioners precincts one and four. The City Council of the City of Del Rio shall appoint one director and the Commissioners Court of Val Verde County shall appoint one director. The five directors shall draw lots to determine two- and four-year terms and shall serve staggered four-year terms thereafter. District directors will make an appointment if there is a vacancy on the board and are not entitled to receive fees of office. Under the Water Code, general law GCD directors are elected by the single-precinct method, may receive fees of office not to exceed $250 a day or $9,000 a year, and subsequent confirmation elections are not authorized
 
In addition to the purpose provided to general law GCDs under Water Code, Chapter 36, the bill provides that purpose of the District is to regulate the transport of groundwater out of the boundaries of the District; to regulate pumping in the District to protect spring flow, base flow and drawdown; to implement conservation plans and pumping reduction when conditions warrant action to protect spring flow, base flow and drawdown; and to manage the issuance of permits, by requiring studies and groundwater availability model analysis of permit applications, that include conservation triggers that mitigate impact to spring flow, base flow or drawdown. The bill provides that the District by rule must require a person to obtain a permit to pump groundwater unless exempted and regulate the terms of a transfer of groundwater out of the District. The District's rules must: be consistent with Water Code, 36.122 provisions relating to the transfer of groundwater out of a GCD and reasonable export fees as provided by the bill; provide for the reduction or curtailment of groundwater pumping to protect spring flow, base flow or drawdown; and not in any event seek to curtail usage or production under a water right as defined in Water Code, 11.002(5), including under the Del Rio Certificate of Adjudication. The District must grant the City of Del Rio a permit to annually pump from the city wells a cumulative volume of groundwater solely for in-District use that is not less than the greatest water usage in a calendar year before the District is confirmed. The District must grant similar permits to the other existing political subdivisions in the District. The bill provides that a well that is not capable of producing more than 72,000 gallons of groundwater a day for in-District uses is exempt from permit requirements. The District may require exempt well be registered with the District.
 
Unlike general law GCDs, the District may not purchase, sell, transport, or distribute surface water or groundwater for any purpose and may not exercise the power of eminent domain. The District must develop a specific model to be used in conjunction with joint planning responsibilities and must use a model and study named in the bill until a subsequent model and study is determined by the board to be more appropriate. The District may create a water conservation initiative described by Tax Code, 11.32. 
 
Unlike general law GCDs, the District may not levy ad valorem taxes at any rate that exceeds five cents on each $100 of assessed valuation of taxable property. The rollback provisions of Tax Code, 26.04, 26.05 and 26.06 do not apply to the District and instead the District must follow the requirements of Water Code, 49.236. The District is authorized to set reasonable and equitable groundwater production fees for permitted wells, reasonable export fees for groundwater transported outside of the District, and fees for administrative functions. The District is not authorized to impose a production fee on water used or produced under a water right as defined in Water Code, 11.002(5), including under the Del Rio Certificate of Adjudication.
 
Overlapping Services - The boundaries of the District are coextensive with the boundaries of Val Verde County. GCD functions do not conflict with services provided by other types of water districts or utilities.
 
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.

Water Use - HB 4123 specifies that "the district has all of the rights, powers, privileges, authority, functions, and duties provided by the general law of this state, including Chapter 36, Water Code, applicable to groundwater conservation districts created under Section 59, Article XVI, Texas Constitution".
 
Within Val Verde County, 92 Percent of the total water use was groundwater (Edwards-Trinity Plateau Aquifer) in 2012. Ninety-six percent of all the groundwater pumping was for municipal use.