TO:	Honorable Brooks Landgraf, Chair, House Committee on Environmental Regulation

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB1682 by Morales Shaw (Relating to the disposition and use of the state's portion of civil penalties recovered in suits brought by local governments for violations of certain laws under the jurisdiction of, or rules adopted or orders or permits issued by, the Texas Commission on Environmental Quality.), As Introduced

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026	($650,000)
2027	($650,000)
2028	($650,000)
2029	($650,000)
2030	($650,000)

Fiscal Year	Probable Revenue Gain/(Loss) from General Revenue Fund 1	Probable Revenue Gain/(Loss) from New Other Fund - Special Environmental Remediation Fund
2026	($650,000)	$650,000
2027	($650,000)	$650,000
2028	($650,000)	$650,000
2029	($650,000)	$650,000
2030	($650,000)	$650,000

The bill would amend the Water Code to create the new Special Environmental Remediation Fund (SERF) to be administered by the Texas Commission on Environmental Quality (TCEQ). The SERF is a fund within the treasury outside the General Revenue Fund. The bill would create a new program to expend the funds deposited to the account and would require that fund may only be used for environmental remediation projects.

The bill would require that TCEQ adopt specific rules to implement the program including eligibility criteria, grant application procedures, guidelines for grant amounts, and procedures for monitoring the use of grant funding.

The bill would require the state's portion of certain civil penalties under Section 7.107 of the Water Code, collected for wastewater violations, to be deposited into this account.

The bill would transfer the deposit of revenue collected from certain civil penalties recovered from specific lawsuits brought by local governments that are currently deposited to the General Revenue Fund to the SERF. Based on information provided by the Comptroller of Public Accounts (CPA) and TCEQ, this analysis assumes that the amount of revenue collected would not be affected by the provisions of the bill.

Under the provisions of the bill, the SERF would receive half all funds recovered from the lawsuits brought by local governments. Based on information provided by TCEQ and the CPA, the state share of civil penalties collected in fiscal year 2024 was $1,300,000. Since the bill would require half of the state portion of civil penalty revenue be deposited to the SERF, CPA and TCEQ estimate that $650,000 annually would be deposited to the SERF. The table above reflects an increase in funding that would be allocated to the SERF with a resulting equivalent decrease in General Revenue.

This analysis assumes that costs to the SERF for qualifying environmental projects cannot be determined because the definition of a qualifying environmental project has not been set by TCEQ and thus the number of eligible projects and the timing and funding for any eligible projects is unknown.

Based on information provided by TCEQ, it is assumed that any costs associated with implementing the provisions of this bill could be absorbed using existing resources.

Note: This legislation would do one or more of the following: create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either with or outside of the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


May 1, 2025