by Ty Embrey and Troupe Brewer

The Texas Legislature wrapped up its Regular Session when it adjourned sine die on May 29th after many long days of legislative debate and action. For many observers of the Texas Legislature, the 2017 Regular Session will be remembered as one of the most contentious and acrimonious sessions in many years. The difficult nature of the Regular Session was reflected in the bill passage rate, which was one of the lowest percentages in some time. While 6,631 bills were filed during the Regular Session and only 1,211 bills ultimately passed. Then Governor Abbott ended up vetoing 50 of the 1,211 bills that were passed by the Texas Legislature.

The Texas Legislature did pass some major legislation during the Regular Session, including legislation to address immigration enforcement (sanctuary cities), windstorm insurance, foster care system reform, and statewide ban on texting while driving. The Legislature also approved the one bill the Legislature is required by the Texas Constitution to approve, when the Legislature approved a $217 billion budget to address the expenses of the State of Texas for the next two years.

Several bills that were important to Governor Abbott, Lieutenant Governor Patrick, and Speaker Straus did not pass during the Regular Session. As a result, Governor Abbott announced that he would call a Special Session to start on July 18th for the Legislature to work on 20 issues that Governor Abbott believes need to be addressed. Under the Texas Constitution, the Special Session could extend up to 30 days but the Legislature could adjourn before the end of the 30-day time period.

This article summarizes the significant legislation that impacted groundwater, surface water, water utility, and environmental issues.

I. Groundwater

The Texas Water Conservation Association (“TWCA”) reassembled its Groundwater Stakeholder Committee this interim, and that group developed and supported eleven bills related to groundwater regulation and development in Texas. Ultimately, five of those bills were passed by the Legislature and one bill was vetoed by Governor Abbott. Those bills and a few other bills related to groundwater are discussed below.

Legislation successfully passed by the Legislature and signed into law by Gov. Abbott:

House Bill (“HB”) 2215 (Price) – “DFC Adoption” – This is a TWCA consensus bill. HB 2215 amends the Texas Water Code (“TWC”) as it pertains to the process and the timeline for adopting desired future conditions (“DFC”) by groundwater conservation districts (“GCDs”) within groundwater management areas (“GMAs”). Specifically, HB 2215 makes amendments to TWC Chapters 16 and 36, primarily to amend the deadline for the upcoming round of DFC adoption. The bill removes the previous DFC adoption deadline of September 1, 2010, and inserts a new deadline of January 5, 2022 for the next round of DFC planning. The bill also includes language requiring that GMAs propose and adopt subsequent DFCs “before the end of each successive five-year period after that date.” Effective Date – Immediately.

Senate Bill (“SB”) 864 (Perry) – “Notice to GCD of Alternative Supply” – This was a TWCA consensus bill. This bill requires the notice of a water rights application under TWC § 11.132 to identify any proposed alternative source of water, other than state water, that the applicant has identified in the application. SB 864 adds notice requirements if the applicant proposes to use groundwater from a well within a GCD as an alternative source of water. In such an application, notice must be provided to each GCD with jurisdiction over the proposed groundwater production not less than 30 days before the date the Texas Commission on Environmental Quality (“TCEQ”) takes action on the application. This bill also amends TWC § 11.135(b) to require a water right permit to include information about any alternative source of water that is not state water. If a public hearing is held on the application and the notice identifies groundwater from a well located in a GCD as a proposed alternative source, that notice must also be sent to the GCD in which the well is located and published at least 20 days before the hearing date stated in the notice in a newspaper of general circulation in each county in which the GCD is located. Effective Date – 9/1/2017.

SB 865 (Perry) – “Authorization for Electronic Banking” – This is a TWCA consensus bill. SB 865 amends TWC § 36.151 to allow payroll disbursements to be made by electronic deposit, to except such electronic deposits from the requirement that disbursements of district funds be signed by two directors, and to allow a district, by resolution, to transfer funds by federal reserve wire or electronic means to any account. Effective Date – Immediately.

SB 1009 (Perry) – “Administratively Complete Permit Applications” – This is a TWCA consensus bill. SB 1009 inserts the word “only” into TWC § 36.113(c) to make the list of information that may be required for an administratively complete application an exhaustive list. SB 1009 also adds a provision to that list to allow a GCD to require in a permit application any other information “required by district rule,” as long as that rule was in place at the time the application was submitted, and as long as that rule is “reasonably related” to an issue that a district is authorized to consider under TWC Chapter 36. Lastly, SB 1009 amends TWC § 36.114 to state that an application is administratively complete if it contains all the information set forth in §§ 36.113 and 36.1131, and that a district shall not require that additional information be included in an application for a determination of administrative completeness. Effective Date – 9/1/2017.

Legislation finally passed but vetoed by Governor Abbott:

HB 2377 (Larson) – “Brackish Groundwater Permitting” – As a follow-up to Chairman Larson’s HB 30 from last session that required TWDB to study and report on “brackish groundwater production zones,” HB 2377 sought to guide GCDs in the permitting requirements for production permits from those zones designated by TWDB. However, HB 2377 was vetoed by Governor Abbott, who stated that
“[w]hile the development of brackish water resources as a potential means of meeting our state’s future water needs is important, House Bill 2377 went about it the wrong way.”

HB 2378 (Larson) – “Export Permits” – This was a TWCA consensus bill. HB 2378 provided that a term for a groundwater transport permit issued by a GCD shall be automatically extended on or before its expiration to a term not shorter than the term of the associated operating permit for the production of groundwater that was in effect at the time of the extension. The transport permit term also would have been extended for each additional term for which the associated operating permit was renewed. However, HB 2378 was vetoed by Governor Abbott, who stated that the bill would effectively exclude “the public, potentially in perpetuity, from the decisions of a groundwater conservation district” and would “reduce transparency and inhibit the district’s ability to respond to changed circumstances over time.”

HB 3025 (King) – “Plugging or Repairing of Abandoned and Deteriorated Wells” – HB 3025 amended Chapter 36 of the Water Code to provide that GCDs may require landowners to plug abandoned wells, and shall require landowners to plug or repair deteriorated wells in a manner sufficient to prevent groundwater contamination. The bill also provided a specific timeline for such action, and allowed GCD personnel to enter onto property to plug or repair wells if the landowner failed to act. However, Governor Abbott vetoed HB 3025, stating that the bill gave GCDs “greater discretion to infringe on private property rights and impose costs on landowners” and that the “legitimate need to repair deteriorated wells should be addressed in a way that provides more protections for landowners.”

Legislation that failed to pass the Legislature:

HB 31 (Larson) – Omnibus groundwater bill
HB 180 (Lucio III) – Remove state auditor review of GCD Management Plans
HB 3028 (Burns) – Groundwater ownership/rights
HB 3043 (Workman)/SB 1528 (Creighton) – DFC joint planning process and advisory committees
HB 3166 (Lucio III) – Creates definition for “modeled sustainable groundwater pumping”
HB 3417 (King, T.) – Consideration of registered wells in permitting new production
HB 4050 (Larson) – Export permit overhaul
HB 4122 (Kacal) – Transfer of property into single GCD
SB 862 (Perry) – “Loser pays”
SB 1053 (Perry) – Appeal of DFCs
SB 1392 (Perry) – Omnibus Chapter 36 bill

II. Surface Water/Water Utility

In the context of surface water and water utility legislation, those bills were more successful than legislation pertaining to groundwater. TWCA formed a Surface Water Legislative Committee, and that group developed two pieces of consensus legislation that successfully passed. Those bills and others pertaining to water and water utilities are discussed in more detail below.

Legislation successfully passed:

HB 544 (Anderson) – “Use of Rural Water Assistance Fund for Planning” – HB 544 amends TWC Chapter 15 to authorize Texas Water Development Board (“TWDB”) to use the Rural Water Assistance Fund for planning (in addition to existing uses of outreach, financial, and technical assistance) to assist rural entities to obtain and use financing. The bill also expands language to authorize financing from any source for a purpose described by Chapter 15. Effective Date – Immediately.

HB 965 (Springer) – “Water Utility Restrictions on Correctional Facilities” – HB 965 amends TWC Chapter 13 to allow retail public utilities to require correctional facilities to comply with water conservation measures. These changes apply only to a correctional facility operated by the Texas Department of Criminal Justice (“TDCJ”) or operated under contract with the TDCJ. The provisions of HB 965 apply to such facilities unless TDCJ submits a statement that conservation would unreasonably increase costs or endanger health and safety. Effective Date – Immediately.

HB 1573 (Price) – “Water Loss Audits & TWDB Training” – HB 1573 amends TWC Chapter 16 to require persons performing annual water loss audits for retail public utilities providing potable water to receive specialized training on performing such audits. The bill requires TWDB to make training available for free on its website, and TWDB may provide training in person or by video or a “functionally similar and widely available medium.” Training provided under this bill must include comprehensive knowledge of water utility systems and terminology and any tools available for analyzing audit results. Effective Date – 9/1/2017.

HB 1648 (Price) – “Water Conservation Coordinator” – HB 1648 amends TWC Chapter 13, requiring retail public utilities providing potable water to more than 3,300 connections to designate a “water conservation coordinator” to assist in developing and implementing the utility’s water conservation plan. Such utilities must inform TWDB in writing as to who is their designated water conservation coordinator. Effective Date – 9/1/2017.

HB 3177 (Lucio III) – “Uncontested Matters and ED Appeals” – HB 3177 is a TWCA consensus bill that amends TWC Chapter 5 to provide that a surface water permit application or request may be delegated to the TCEQ Executive Director (“ED”) for action if each person who requested a contested case hearing (“CCH”) has withdrawn the request for a CCH without condition; withdrawn the request for a CCH conditioned only on the withdrawal of all other hearing requests; or agreed in writing to the action to be taken by the ED. The bill also adds a procedure to file a petition for review of a decision to delegate an application or request to the ED. An affected person may submit a petition to review, set aside, modify, or suspend such a ruling, order, or decision no later than either: (1) 30 days after the effective date of the decision; or (2) if the decision was appealed to the full commission, the earlier of the date the commission denied the appeal or the date the appeal is overruled by operation of law. Effective Date – 9/1/2017.

HB 3735 (Frank) – “Chapter 11 Clean-Up” – HB 3735 is a TWCA consensus bill that amends TWC Chapter 11 and serves as a water rights application “clean-up” bill. HB 3735 amends the map and plat requirements for an application for appropriation of state water by authorizing TCEQ to prescribe the form and necessary information for the submission of a map or plat. HB 3735 amends TWC § 11.128 to eliminate any reference to an exemption from the fee associated with a permit application to use state water. The bill also amends TWC § 11.134 to provide that, in determining whether an appropriation is detrimental to the public welfare, TCEQ must consider only the factors that are within the jurisdiction and expertise of TCEQ as established by Chapter 11. Lastly, HB 3735 includes provisions from HB 2894/SB 1430 that failed to pass, which add language to § 11.122 to grant the holder of a water right that begins using desalinated seawater after acquiring the water right a right to expedited consideration of an application to make certain amendments to the water right. Effective Date – 9/1/2017.

SB 347 (Watson) – “Open Government Laws & RWPGs” – SB 347 requires that Regional Water Planning Groups (“RWPG”), and any committee or subcommittee of a RWPG, be subject to the Open Meetings Act and the Public Information Act as they are embodied in the Texas Government Code. Effective Date – 9/1/2017.

SB 1511 (Perry) – “Water Planning & Chapter 16 Amendments” – SB 1511 amends TWC Chapter 16 to require the State Water Plan (“SWP”) to include information on projects deemed high priority by TWDB to receive financial assistance in the previous SWP, including discussing the extent to which projects were implemented in the decade in which they were needed and identifying impediments to implementing projects not implemented in the decade in which they were needed. SB 1511 also adds representatives from the State Soil and Water Conservation Board as ex officio members of each Regional Water Planning Group (“RWPG”).

The bill requires RWPGs to amend approved their regional plans to exclude water management strategies or projects that become “infeasible,” and consider substitution of another strategy/project that will meet the need. The bill provides that a project is “infeasible” if its sponsor has not formally approved expenditures to construct related infrastructure or filed applications for permits required on a schedule consistent with the implementation of a strategy/project by the time it is needed as identified in a Regional Water Plan. Lastly, SB 1511 authorizes “simplified” planning of every other 5-year planning cycle if no significant changes to water availability, supply, and demand have occurred. Effective Date – 9/1/2017.

Legislation that failed to pass:

HB 3742 (Phelan) – Surface Water Right Contested Case Hearing Clean-up
SB 696 (Perry) –Water Availability Modeling Update

III. Air & Waste

Many bills pertaining to air and waste regulation, including the regulation of landfills and tire scraps, were filed but failed to pass or were vetoed by Governor Abbott. Language continuing the life of the Texas Emissions Reduction Plan (“TERP”) was finally passed, after several attempts, through the passage of SB 1731 (Birdwell).

Legislation finally passed but vetoed by Governor Abbott:

SB 570 (Rodriguez) – Omnibus Scrap Tire Bill. SB 570 required a used or scrap tire generator, which included a tire dealer, junkyard, or fleet operator, to store used or scrap tires in a secure manner that locks the tires during nonbusiness hours. A seller could have contracted for the transportation of used or scrap tires only with a transporter or tire processor who was registered with TCEQ and had filed evidence of financial assurance. A civil penalty for a violation of not less than $500 a day could have been imposed for each violation and a separate penalty imposed for each day a violation occurred. Additionally, the bill required a transporter of used or scrap tires and certain tire processors to register annually with TCEQ, maintain and submit transportation records to TCEQ, and provide evidence of financial assurance to TCEQ, unless they met one of several exceptions.

Legislation that failed to pass:

HB 2958 (Thompson) – As filed, this bill would have created a two-year moratorium on all permitting activity for municipal solid waste facilities in Texas. This bill was later revised and required the TCEQ to conduct a study on the permitting and regulatory process for municipal solid waste facilities in Texas.

Conclusion

The Texas Legislature will begin its interim work once the Legislature has completed its work in one or more Special Sessions. Legislators will begin to hold committee hearings this fall to work on the interim charges assigned to the various House and Senate committees by the Speaker and Lieutenant Governor. Legislators will also invest significant amounts of time in the election process with party primary elections fast approaching in the spring of 2018 and the general elections occurring in November 2018. We will keep you informed of the legislative developments that occur in Austin until the legislators convene in January 2019 for the next Regular Session.

Ty Embrey is a Principal in the Firm’s Water and Districts Practice Groups and Troupe Brewer is an Associate in the Firm’s Water, Litigation, and Districts Practice Groups. If you have any questions concerning legislative issues or would like additional information concerning the Firm’s legislative tracking and monitoring services or legislative consulting services, please contact Ty at 512.322.5829 or tembrey@lglawfirm.com, or Troupe at 512.322.5858 or tbrewer@lglawfirm.com.

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