BILL ANALYSIS

S.B. 565

By: Perry

Natural Resources

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The bill sponsor has informed the committee that small system consolidation is frequently the best available option to rehabilitate badly distressed, small, most often rural water systems but that these smaller systems often are also out of compliance with drinking and clean water standards set by the Texas Commission on Environmental Quality (TCEQ), disincentivizing larger systems from taking over and integrating the small systems. The bill sponsor has also informed the committee that the 88th Texas Legislature passed H.B. 3232 to provide safe harbor protections for larger water systems that take over and integrate small systems, but that following passage of the bill some of those larger systems expressed concern that, due to the ambiguity of the term "regional service" as used in the bill, not all types of larger systems would be eligible for the safe harbor agreement with the TCEQ.

S.B. 565 seeks to address this issue, and to implement a recommendation made in the Interim Report to the Senate of the 89th Texas Legislature by the Texas Senate Committee on Water, Agriculture, and Rural Affairs, by revising provisions relating to a compliance agreement for the suspension of an enforcement action against a regional water supply, sewer, wastewater treatment, or solid waste disposal service for certain violations in order to clarify that any kind of retail public utility can enter into the agreement.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

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

S.B. 565 amends the Water Code to revise the provision that authorizes the Texas Commission on Environmental Quality (TCEQ) to enter into a compliance agreement with a regional water supply, sewer, wastewater treatment, or solid waste disposal service under which the TCEQ will not initiate an enforcement action against the regional service for existing or anticipated violations resulting from the operation by the regional service of a water supply, sewer, wastewater treatment, or solid waste disposal service operated by or for a municipality or county that is being integrated into the regional service by doing the following:

· including a regional service area and an unincorporated service area as entities that may operate the service that is being integrated or for whom the service is operated; and

· specifying that the regional service being integrated into is a service administered by another entity, including a retail public utility, other than the entity operating the service that is being integrated or for whom that service is operated.

S.B. 565 revises the provision that authorizes the TCEQ to enter into a compliance agreement with a regional water supply, sewer, or wastewater treatment service under which the TCEQ will not initiate an enforcement action against the regional service for existing or anticipated violations resulting from the operation by the regional service of a water supply, sewer, or wastewater treatment service operated by a retail public utility, other than a municipality or county, that is being integrated into the regional service, which is administered by another entity, by specifying that such other entity includes a separate retail public utility.

EFFECTIVE DATE

September 1, 2025.