TO:	Honorable Charles Perry, Chair, Senate Committee on Agriculture, Water & Rural Affairs
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB1920 by Flynn (Relating to the Palo Duro River Authority, following recommendations of the Sunset Advisory Commission.), As Engrossed

The Legislative Budget Board, in cooperation with the Texas Water Development Board (TWDB) and the Texas Commission on Environmental Quality (TCEQ), has determined that:
 
This bill converts Palo Duro River Authority into Palo Duro Water District (District).

Population - Palo Duro River Authority is proposed to be changed to a conservation and reclamation district, hereby known as Palo Duro Water District. Based on the territory mentioned in HB1920, the proposed district consists of all of the territory contained within the counties of Hansford and Moore and the City of Stinnett. The 2010 Census population estimate for the territory is 29,398.
     
The total population of the proposed territory in the 2017 State Water Plan is projected to grow to 33,667 in 2020, 37,760 in 2030 and 41,958 in 2040.
 
Location - The proposed new territory for the district would be composed of all territory within the counties of Hansford and Moore and the City of Stinnett.
 
The proposed district's area is approximately 1,838 square miles in the Texas panhandle.
 
Comments on Powers/Duties Different from Similar Types of Districts: The House Engrossed version of the bill on page 3, line 2 adds back "The Authority is not authorized to develop or otherwise acquire underground sources of water." 
 
In Section 1 of the CS, Section 5 was revised to break language into two subsections ((a) and (b)).  The text in subsection (a) is reworded for clarity with no substantive changes from the filed version.  The language in subsection (b) remains the same as the filed version; Section 24 is revised to define "he" as the Attorney General; Section 29 of the CS added the following Sections: Section 1B is added to define member entity as a county or municipality that is a member of the District. Section 3A is added to allow the District to develop and generate energy by means of renewable energy resources and to distribute and sell the electric energy to: an entity that operates in the Electric Reliability Council of Texas power region, an entity that operates in the Southwest Power Pool power region or an electric cooperative, as defined by Section 161.002, Utilities code, that operates in this state. Section 3B is added to clarify that the entities identified in Section 3A, are not required to build a new transmission line and that grid interconnection does not subject the entities to the jurisdiction of the Federal Energy Regulatory Commission and does not affect the jurisdiction of the Federal Energy Regulatory Commission over an entity which the commission already has jurisdiction. Section 3C is added to allow the District to lease hunting rights on property owned by the District, and to lease property owned by the District for any recreational purpose; the additions to the CS were pulled from HB 1603 filed by Representative Price filed this session.
 
The Palo Duro River Authority was created by Chapter 438, Acts of the 63rd Legislature, Regular Session, 1973. The Authority holds certificate of adjudication no. 01-3803 which authorizes the Authority to maintain a dam and reservoir on Palo Duro Creek. The water in Palo Duro Creek and impounded in the reservoir is subject to the Canadian River Compact Commission. The Authority recently underwent a Sunset Review. This bill is intended to incorporate the recommendations of the Sunset Advisory Commission pursuant to that review; the Bill proposes: implement the Sunset Review recommendations by amending, Chapter 438, Acts of the 63rd Legislature, Regular Session, 1973 as follows: the Palo Duro River Authority of Texas, would be converted to a "Water District." All instances of references to "authority" are amended to read "district." Section 1, et seq of the Act; the jurisdiction for the entity is expanded to include Moore County and City of Stinnett. Section 2 of the Act; the District is empowered to act outside its boundaries.  Section 3 of the Act; the term for a director on the board is amended to be two-year staggered terms that expire on December 31 of each year. Section 17 of the Act; the bill would disallow the commissioners court of Hutchinson County from appointing a director to the board and would authorize the city council for the City of Stinnett to appoint a director to the board. Section 17(b) of the Act; provision is repealed which prevented the detachment of territory after issuance of bonds payable from revenue or taxes. Section 23(a) of the Act; provision is repealed which stated that all taxes levied for any purpose constitute a lien on the property. Section 27 of the Act; the language "after giving consideration to any revenues that may be pledged to the payment of bonds" is struck from Section 28(h) of the Act; definitions for Board, Commission, Director, and District are added. Proposed new Section 1B of the Act; a new section creating procedures for a county or municipality to withdraw from the district or for the district to dissolve is added. The procedures for withdrawal or dissolution require: notice of intent to withdraw in a resolution by a member county or city or the District; a public hearing on the resolution within 30 days; a financial agreement must be made which provides for sufficient revenue for maintaining the Palo Duro Reservoir and transfer of the dam to an entity that assumes responsibility for the maintenance of the dam and liability for actions related to the dam; an opportunity for public comment on the financial agreement; and a two-thirds vote by the board in favor of the withdrawal or dissolution. Proposed new Section 13A; new sections relating to operation of the board of the District including: a requirement that the District provide the public with a reasonable opportunity to appear before the board and speak at the meetings; provisions for considering the financial interest of a director in a contract under consideration by members of the board; a procedure for consideration of charges and removal of a board member for inefficiency, neglect of duty, or misconduct; and a requirement that a board member complete training regarding the functions and authority of the District prior to being allowed to vote or deliberate on the board - persons currently on the board of the Authority would be exempt from the training until January 1, 2018.  Proposed new Section 19A-19D; a requirement that the board develop and implement policies that separate policymaking responsibilities of the board and management responsibilities of the general manager. Proposed new Section 19E; a requirement that the District maintain procedures for acting on complaints, make information available describing the procedures, and periodically notify complainants of the status of their complaints. Proposed new Section 19F; a requirement that the District develop a policy of encouraging negotiated rulemaking procedures and alternative dispute resolution for resolution of internal and external disputes. Proposed new Section 19G; the Bill requires for the Governor to submit notice of the intent to introduce this Act to the TCEQ, and for the TCEQ to file recommendations with Governor, the Lieutenant Governor, and the Speakers of the House of Representatives and Senate. Section 13 of the Bill.  Section 11 of the Bill repeals 10 provisions of the Act as follows: Chapter 438, Act of the 63rd Legislature, Section 1A, which made the Authority subject to review by the Sunset Commission; chapter 438, Act of the 63rd Legislature, Section 2A, which allows the Authority to call an election to annex Moore County; chapter 438, Act of the 63rd Legislature, Section 2B, which annexed the City of Stinnett; chapter 438, Act of the 63rd Legislature, Section 4, which allows the Authority to acquire land and easements by eminent domain; chapter 438, Act of the 63rd Legislature, Section 13(e), which allows a county to detach from the Authority prior to issuance of bonds; chapter 438, Act of the 63rd Legislature, Section 28(i), which authorized an ad valorem tax of $1 per $100 valuation of taxable property chapter 438, Act of the 63rd Legislature, Section 30, which declared that the Authority is essential to the purposes of Section 59, Article 16 of the Texas Constitution; chapter 115, Act of the 64th Legislature, Section 9, which provided proof of publication of constitutional notice; chapter 17, Act of the 68th Legislature, Section 6, which provided proof of publication of constitutional notice; chapter 651, Act of the 70th Legislature, Section 4, which provided proof of publication of constitutional notice. The Act takes effect September 1, 2017.
 
Overlapping Services:  TCEQ does not have mapping information for water and/or wastewater providers because this function was transferred from the TCEQ to the Public Utility Commission on September 1, 2014.  As a result, TCEQ is unaware of possible overlapping service providers.
 
TCEQ's Supervision:  As with general law districts, the TCEQ will have general supervisory authority, including bond review authority and review of financial reports.
 
Water Use - Within the proposed territory, 100 percent of the total water use was groundwater (Ogallala Aquifer) in 2014. One percent of all the groundwater use was for municipal purposes.