HBA-AMW S.B. 2 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 2 By: Brown, J. E. "Buster" Natural Resources 5/7/2001 Engrossed BACKGROUND AND PURPOSE Texas currently faces many water challenges. The 75th Legislature enacted major water planning legislation in 1997. Senate Bill 2 addresses the implementation and financing of the water strategies and recommendations identified in the last four years by the state's 16 regional water planning groups. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Natural Resource Conservation Commission in SECTION 1.01 (Section 9.012, Water Code) and SECTION 2.11 (Section 11.138, Water Code); to the Parks and Wildlife Department in SECTION 2.19 (Section 15.7031, Water Code) and SECTION 2.20 (Section 15.7032, Water Code); to the Texas Water Development Board in SECTION 2.25 (Section 16.053, Water Code), SECTION 2.43 (Section 36.015, Water Code), SECTION 4.01 (Sections 15.903 and 15.907, Water Code), SECTION 4.02 (Section 15.955, Water Code), SECTION 4.09 (Section 15.105, Water Code), and SECTION 6.02; and to the comptroller of public accounts in SECTION 4.03 (Section 15.013, Water Code) of this bill. ANALYSIS Senate Bill 2 amends the Water Code to modify provisions relating to the development and management of the state's water resources. Texas Water Advisory Council S.B. 2 creates the Texas Water Advisory Council (council) and sets forth provisions regarding council composition requirements, member terms, council officers and staff, meetings, and member compensation. The council is charged with the duty to heighten the level of dialogue on significant water policy issues and to provide focus and guidance on state water policy initiatives. The council is required to review, on a fiveyear cycle, the administrative policies and performance standards of certain water authorities and sets forth the review schedule. The council is required to submit a report, not later than December 1 of each evennumbered year, to the governor and the legislature regarding the findings from the reviews of authorities. The bill also establishes provisions regarding the council's acceptance and use of gifts and grants, council funding, public participation, and the council's continuing right of supervision over certain water authorities (SECTIONS 1.01 and 6.02). Water Rights S.B. 2 modifies provisions regarding amendments to water rights, additional requirements for water conservation plans and drought contingency plans, and action on an application to appropriate unappropriated state water (SECTIONS 2.07-2.10). The bill authorizes the Texas Natural Resource Conservation Commission (TNRCC) by rule to authorize the beneficial use, without a permit, of not more than 25 acre-feet of water, for a term not to exceed one year, if the diversion of water will not affect existing water right holders and the user of the water registers the use with TNRCC in the manner required by TNRCC (SECTION 2.11). The bill adds provisions regarding permit exemptions for the temporary storage of water (SECTION 2.12). The bill modifies provisions regarding forfeitures and cancellations of permits for inaction, the effects of a permit on bays and estuaries and instream uses, cancellation in whole or in part of a permit, certified filing, or certificate of adjudication, and TNRCC findings and action on a permit, certified filing, or certificate of adjudication (SECTIONS 2.13-2.16). Texas Water Trust and Water Trust Account S.B. 2 requires the Parks and Wildlife Department (department) to establish the Texas Water Trust (trust) and sets forth provisions regarding water transfers and conditions of water rights and the waiver of application fees for instream-use water rights deposited into the trust (SECTIONS 2.19, 2.21, and 4.04). The bill adds provisions regarding the operation of the trust and the creation of the water trust account (SECTIONS 2.20 and 2.22). The bill requires the department, in consultation with the Texas Water Development Board (board) and TNRCC, to adopt rules governing the process for holding and transferring water rights (SECTION 2.19). The bill authorizes the department to adopt rules necessary for implementation of the trust (SECTION 2.20). Surface Water and Groundwater Management The bill modifies provisions regarding studies, investigations, and surveys of the state's surface and groundwater, the state water plan, regional water plans, and local water planning (SECTIONS 2.23-2.28). The bill requires the board by rule, not later than January 1, 2002, to require a holder of a surface water permit, a certified filing, or a certificate of adjudication for surface water, a holder of a permit for the export of groundwater from a groundwater conservation district, a retail public water supplier, a wholesale water provider, an irrigation district, and any other person who is transporting groundwater or surface water 20 miles or more to report to the board information on certain water pipelines and other facilities that can be used for water conveyance (SECTIONS 2.25 and 6.02). The bill modifies provisions regarding the designation of groundwater management areas, identifying, designating, and delineating priority groundwater management areas, and TNRCC procedures for the designation of a priority groundwater management area and for the protection of groundwater resources (SECTIONS 2.30-2.33 and 2.36). The bill modifies procedures regarding the creation of a water district in a priority groundwater management area and for adding a priority groundwater management area to an existing water district (SECTIONS 2.32, 2.34, 2.35, and 2.44). The bill modifies provisions regarding the ownership of groundwater, the method of creating a groundwater conservation district, notice and public meeting on the creation of a groundwater conservation district, composition of a groundwater conservation district, and a petition to create a groundwater conservation district (SECTIONS 2.38-2.43). The bill modifies provisions regarding the appointment, confirmation and election of directors of a groundwater conservation district and lawsuits involving a groundwater conservation district (SECTIONS 2.45, 2.46, 2.48, and 2.49). The bill adds provisions regarding taxing authority and a director's election for a groundwater conservation in a priority groundwater management area (SECTION 2.47). S.B. 2 modifies provisions regarding rulemaking power and the enforcement of rules in a groundwater conservation district, a groundwater conservation district's comprehensive management plan, the board's review and certification of a groundwater conservation district's comprehensive management plan, and joint planning between groundwater conservation districts in a groundwater management area (SECTIONS 2.50-2.54). The bill adds provisions regarding the failure of a groundwater conservation district to conduct joint planning and the appointment of a receiver for a groundwater conservation district (SECTIONS 2.61 and 2.63). The bill also modifies provisions regarding TNRCC action on the failure of a groundwater district to conduct joint planning, the failure of a groundwater district to submit a comprehensive management plan, or the determination by the state auditor that a groundwater district is not operational (SECTION 2.62). The bill amends provisions regarding permits for water wells, regulation of spacing and production of water wells, and exemptions from, exceptions for, or limitations to water well permit requirements (SECTIONS 2.55-2.57). The bill modifies provisions regarding the transfer of groundwater out of a groundwater conservation district, the authority of a groundwater conservation district to set fees, and groundwater fees and the purchase of groundwater rights (SECTIONS 2.58-2.60). The bill also amends provisions regarding contracts between a water control and improvement district and a municipality (SECTION 2.64). Ratification of Groundwater Conservation Districts S.B. 2 ratifies the following groundwater conservation districts created in 1999 by the 76th Legislature: _Cow Creek Groundwater Conservation District; _Crossroads Groundwater Conservation District; _Hays Trinity Groundwater Conservation District; _Lone Wolf Groundwater Conservation District; _Lost Pines Groundwater Conservation District; _McMullen Groundwater Conservation District; _Middle Pecos Groundwater Conservation District; _Red Sands Groundwater Conservation District; _Refugio Groundwater Conservation District; _Southeast Trinity Groundwater Conservation District; _Texana Groundwater Conservation District; and _Tri-County Groundwater Conservation District (SECTIONS 3.0101-3.1209). Water Infrastructure Funding S.B. 2 creates the Water Infrastructure Fund (infrastructure fund), to be administered by the board, to fund water development projects that will encourage the conservation and development of water resources of the state. The bill sets forth provisions regarding the approval of applications for assistance by the board, applicable financial assistance provisions, and the sale of political subdivision bonds. The bill requires the board to adopt rules necessary to carry out provisions regarding the infrastructure fund, including rules establishing procedures for application for and the award of financial assistance, for the investment of funds, and for the administration of the infrastructure fund not later than January 1, 2002. The bill modifies provisions regarding the transfer of money from the Texas water resource fund to include the provision of funds to the infrastructure fund. The bill also sets forth provisions regarding the funding for local economic development, the authority to establish economic development programs, and obligations for funding an economic development program (SECTIONS 4.01, 4.19, 4.24, and 6.02). Rural Water Assistance Fund The bill sets forth provisions regarding the creation, purpose, and use of the rural water assistance fund (rural fund), procedures for financially assisting rural political subdivisions, and the transfer of money from the water assistance fund and the financial assistance account to the rural fund. The bill requires the board to adopt rules necessary to administer provisions regarding the rural fund, including rules establishing procedures for the application for and award of loans, the distribution of loans, the investment of funds, and the administration of loans and the rural fund not later than January 1, 2002 (SECTIONS 4.02, 4.07, 4.23, and 6.02). S.B. 2 establishes a bottled water surcharge and provides for the assessment of a five cent surcharge from each manufacturer of bottled water in the state for each container of water bottled for retail in the state. The bill requires the comptroller of public accounts to adopt any rules necessary for the administration, payment, collection, and enforcement of the surcharge (SECTION 4.03). The bill modifies provisions regarding the purpose of the Texas water assistance program, provision of financial assistance through the water loan assistance fund, considerations in passing on an application for financial assistance from the water loan assistance fund, approval of such an application, and the method of making financial assistance available from the water loan assistance fund (SECTIONS 4.06 and 4.08-4.11). The bill modifies provisions regarding the use of money in the agricultural soil and water conservation fund and grants to groundwater conservation districts and political subdivisions for equipment purchases, the creation and administration of the state water pollution control revolving fund (revolving fund), financial assistance under the revolving fund, and approval of applications for financial assistance for water pollution control (SECTIONS 4.12, 4.13, and 4.15-4.17). S.B. 2 sets forth provisions regarding the collection of instream flow data, procedures for conducting studies of the state's rivers and streams, and conservation loans for brush control and precipitation enhancement (SECTIONS 4.18 and 4.22). The bill modifies provisions regarding conservation loans (SECTION 4.21). The bill amends the Tax Code to modify provisions regarding certain water conservation initiatives and to add provisions regarding water-related exemptions from limited sales, excise, and use taxes (SECTIONS 4.25 and 4.26). Joint Committee on Water Infrastructure S.B. 2 creates the Joint Committee on Water Infrastructure (committee) to conduct an interim study and make recommendations regarding water marketing, water financing, and water conveyance systems (SECTIONS 5.01 and 5.02). The bill sets forth provisions regarding committee member composition requirements, meetings and hearings, reporting requirements, authorization to and assistance in performing committee duties, committee staff, and committee budget (SECTIONS 5.03-5.10). The bill specifies that provisions regarding the committee expire and the committee is abolished on January 1, 2003 (SECTION 5.11). S.B. 2 repeals law relating to a petition to designate a groundwater management area, notice for designation of a groundwater management area, limitation on rulemaking power of groundwater conservation districts over water wells in certain counties, and the inclusion of a request to create a management area in a petition to create a groundwater conservation district (SECTION 6.01). The bill sets forth findings related to procedural requirements (SECTION 6.03). EFFECTIVE DATE September 1, 2001.