H.B. No. 2767
 
 
 
 
AN ACT
  relating to the powers, duties, and administration of groundwater
  conservation districts; amending provisions that authorize fees.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 36.001, Water Code, is amended by
  amending Subdivisions (8) and (16) and adding Subdivision (31) to
  read as follows:
               (8)  "Waste" means any one or more of the following:
                     (A)  withdrawal of groundwater from a groundwater
  reservoir at a rate and in an amount that causes or threatens to
  cause intrusion into the reservoir of water unsuitable for
  agricultural, gardening, domestic, or stock raising purposes;
                     (B)  the flowing or producing of wells from a
  groundwater reservoir if the water produced is not used for a
  beneficial purpose;
                     (C)  escape of groundwater from a groundwater
  reservoir to any other reservoir or geologic strata that does not
  contain groundwater;
                     (D)  pollution or harmful alteration of
  groundwater in a groundwater reservoir by saltwater or by other
  deleterious matter admitted from another stratum or from the
  surface of the ground;
                     (E)  willfully [wilfully] or negligently causing,
  suffering, or allowing groundwater to escape into any river, creek,
  natural watercourse, depression, lake, reservoir, drain, sewer,
  street, highway, road, or road ditch, or onto any land other than
  that of the owner of the well unless such discharge is authorized by
  permit, rule, or order issued by the commission under Chapter 26;
                     (F)  groundwater pumped for irrigation that
  escapes as irrigation tailwater onto land other than that of the
  owner of the well unless permission has been granted by the occupant
  of the land receiving the discharge; or
                     (G)  for water produced from an artesian well,
  "waste" also has the meaning assigned by Section 11.205.
               (16)  "Loan fund" means the groundwater conservation 
  district loan assistance fund created under Section 36.371.
               (31)  "Operating permit" as used in this chapter means
  any type of permit issued by a district that relates to the
  operation of or production from a water well, which may include
  authorization to drill or complete a water well if the district
  does not require a separate permit for drilling or completing a
  water well.
         SECTION 2.  Section 36.017(i), Water Code, is amended to
  read as follows:
         (i)  If a majority of the votes cast at the election are
  against the levy of a maintenance tax, the district shall set
  [production] fees authorized by this chapter to pay for the
  district's regulation of groundwater in the district[, including
  fees based on the amount of water to be withdrawn from a well].
         SECTION 3.  Section 36.0171(h), Water Code, is amended to
  read as follows:
         (h)  If the majority of the votes cast at the election are
  against the levy of a maintenance tax, the district shall set
  [production] fees authorized by this chapter in accordance with
  Section 35.013(g-1) to pay for the district's regulation of
  groundwater in the district[, including fees based on the amount of
  water to be withdrawn from a well].
         SECTION 4.  Section 36.058, Water Code, is amended to read as
  follows:
         Sec. 36.058.  CONFLICTS OF INTEREST. A director of a
  district is subject to the provisions of Chapters [Chapter] 171 and
  176, Local Government Code, relating to the regulation of conflicts
  of officers of local governments.
         SECTION 5.  Section 36.061(a), Water Code, is amended to
  read as follows:
         (a)  Subject to the law governing the district, the board
  shall adopt the following in writing:
               (1)  a code of ethics for district directors, officers,
  employees, and persons who are engaged in handling investments for
  the district;
               (2)  a policy relating to travel expenditures;
               (3)  a policy relating to district investments that
  ensures that:
                     (A)  purchases and sales of investments are
  initiated by authorized individuals, conform to investment
  objectives and regulations, and are properly documented and
  approved; and
                     (B)  periodic review is made of district
  investments to evaluate investment performance and security;
               (4)  policies and procedures for selection,
  monitoring, or review and evaluation of professional services; and
               (5)  policies that ensure a better use of management
  information, including:
                     (A)  budgets for use in planning and controlling
  cost; and
                     (B)  an audit or finance committee of the board.[;
  and
                     [(C)     uniform reporting requirements that use
  "Audits of State and Local Governmental Units" as a guide on audit
  working papers and that uses "Governmental Accounting and Financial
  Reporting Standards."]
         SECTION 6.  Section 36.116(c), Water Code, is amended to
  read as follows:
         (c)  In regulating the production of groundwater based on
  tract size or acreage, a district may consider the service needs or
  service area of a retail public [water] utility. For the purposes
  of this subsection, "retail public [water] utility" shall have the
  meaning provided by [at] Section 13.002.
         SECTION 7.  Sections 36.117(a) and (d), Water Code, are
  amended to read as follows:
         (a)  A district by rule may provide an exemption from the
  district's requirement to obtain [a drilling permit, an operating
  permit, or] any [other] permit required by this chapter or the
  district's rules.
         (d)  A district may cancel a previously granted exemption[,]
  and may require an operating permit for or restrict production from
  a well and assess any appropriate fees[,] if:
               (1)  [the well is located in the Hill Country Priority
  Groundwater Management Area and] the groundwater withdrawals that
  were exempted under Subsection (b)(1) are no longer used solely for
  domestic use or to provide water for livestock or poultry;
               (2)  the groundwater withdrawals that were exempted
  under Subsection (b)(2) are no longer used solely to supply water
  for a rig that is actively engaged in drilling or exploration
  operations for an oil or gas well permitted by the Railroad
  Commission of Texas; or
               (3)  the groundwater withdrawals that were exempted
  under Subsection (b)(3) are no longer necessary for mining
  activities or are greater than the amount necessary for mining
  activities specified in the permit issued by the Railroad
  Commission of Texas under Chapter 134, Natural Resources Code.
         SECTION 8.  Section 36.122(e), Water Code, is amended to
  read as follows:
         (e)  The district may impose an export [a reasonable] fee or
  surcharge [for an export fee] using one of the following methods:
               (1)  a fee negotiated between the district and the
  exporter [transporter];
               (2)  a rate not to exceed the equivalent of the
  district's tax rate per hundred dollars of valuation for each
  thousand gallons of water exported from [transferred out of] the
  district or 2.5 cents per thousand gallons of water, if the district
  assesses a tax rate of less than 2.5 cents per hundred dollars of
  valuation; or
               (3)  for a fee-based district, a 50 percent [export]
  surcharge, in addition to the district's production fee, for water
  exported from [transferred out of] the district.
         SECTION 9.  Sections 36.153(a), (b), and (d), Water Code,
  are amended to read as follows:
         (a)  Annually and subject to Subsection (c), the board shall
  have an audit made of the financial condition of the district. The
  district audit shall be performed according to the generally
  accepted government auditing standards adopted by the American
  Institute of Certified Public Accountants.
         (b)  Financial statements shall be prepared in accordance
  with generally accepted accounting principles as adopted by the
  American Institute of Certified Public Accountants. The annual
  audit and other district records must be open to inspection during
  regular business hours at the principal office of the district.
         (d)  A financially dormant district may elect not to conduct
  an audit and instead submit to the executive director a financial
  dormancy affidavit [instead of complying with the audit
  requirements of Section 49.191].
         SECTION 10.  Section 36.157(a), Water Code, is amended to
  read as follows:
         (a)  A district, or the county or counties where the district
  is to be located, may pay all costs and expenses necessarily
  incurred in the creation and organization of a district, including
  legal fees and other incidental expenses, and may reimburse any
  person, including a county, for money advanced for these purposes.
         SECTION 11.  Section 36.159, Water Code, is amended to read
  as follows:
         Sec. 36.159.  GROUNDWATER CONSERVATION DISTRICT MANAGEMENT
  PLAN FUNDS. The Texas Water Development Board may allocate funds
  from the water assistance fund to a district to:
               (1)  conduct initial data collections under this
  chapter;
               (2)  [, to] develop and implement a long-term
  management plan under Section 36.1071;[,] and
               (3)  [to] participate in regional water plans.
         SECTION 12.  Sections 36.205(f) and (g), Water Code, are
  amended to read as follows:
         (f)  A district, including a district described under
  Subsection (d), may assess a production fee under Subsection (c)
  and an export fee under Subsection (g), if applicable, for any water
  produced under an exemption under Section 36.117 if that water is
  subsequently sold to another person.
         (g)  A district may assess an export [a transportation] fee
  under Section 36.122.
         SECTION 13.  Section 36.206(a), Water Code, is amended to
  read as follows:
         (a)  A temporary board may set [user] fees authorized by this
  chapter to pay for the creation and initial operation of a district,
  until such time as the district creation has been confirmed and a
  permanent board has been elected by a majority vote of the qualified
  voters voting in the district in an election called for those
  purposes.
         SECTION 14.  Section 36.207, Water Code, is amended to read
  as follows:
         Sec. 36.207.  USE OF [PERMIT] FEES [AUTHORIZED BY SPECIAL
  LAW].  A district may use funds obtained from administrative,
  production, or export [permit] fees collected under a [pursuant to
  the] special law governing the district or this chapter for any
  purpose consistent with the district's approved management plan,
  including, without limitation, making grants, loans, or
  contractual payments to achieve, facilitate, or expedite
  reductions in groundwater pumping or the development or
  distribution of alternative water supplies.
         SECTION 15.  Section 36.251, Water Code, is amended to read
  as follows:
         Sec. 36.251.  SUIT AGAINST DISTRICT. (a) A person, firm,
  corporation, or association of persons affected by and dissatisfied
  with any [provision or with any] rule or order made by a district,
  including an appeal of a decision on a permit application, is
  entitled to file a suit against the district or its directors to
  challenge the validity of the law, rule, or order.
         (b)  Only the district, the applicant, and parties to a
  contested case hearing may participate in an appeal of a decision on
  the application that was the subject of that contested case
  hearing. An appeal of a decision on a permit application must
  include the applicant as a necessary party. 
         (c)  The suit shall be filed in a court of competent
  jurisdiction in any county in which the district or any part of the
  district is located. The suit may only be filed after all
  administrative appeals to the district are final.
         SECTION 16.  Section 36.3011, Water Code, is amended to read
  as follows:
         Sec. 36.3011.  COMMISSION INQUIRY AND ACTION REGARDING
  DISTRICT DUTIES. (a) In this section, "affected person" means, with
  respect to a management area: 
               (1)  an owner of land in the management area;
               (2)  a groundwater conservation district or subsidence
  district in or adjacent to the management area;
               (3)  a regional water planning group with a water
  management strategy in the management area; 
               (4)  a person who holds or is applying for a permit from
  a district in the management area;
               (5)  a person with a legally defined interest in
  groundwater in the management area; or 
               (6)  any other person defined as affected by commission
  rule. 
         (b)  An affected person may file a petition with the
  commission requesting an inquiry for any of the following reasons:
               (1)  a district fails to submit its management plan to
  the executive administrator;
               (2)  a district fails to participate in the joint
  planning process under Section 36.108;
               (3)  a district fails to adopt rules; 
               (4)  a district fails to adopt the applicable desired
  future conditions adopted by the management area at a joint
  meeting; 
               (5)  a district fails to update its management plan
  before the second anniversary of the adoption of desired future
  conditions by the management area;
               (6)  a district fails to update its rules to implement
  the applicable desired future conditions before the first
  anniversary of the date it updated its management plan with the
  adopted desired future conditions; 
               (7)  the rules adopted by a district are not designed to
  achieve the adopted desired future conditions;
               (8)  the groundwater in the management area is not
  adequately protected by the rules adopted by a district; or
               (9)  the groundwater in the management area is not
  adequately protected due to the failure of a district to enforce
  substantial compliance with its rules.
         (c)  Not later than the 90th day after the date the petition
  is filed, the commission shall review the petition and either: 
               (1)  dismiss the petition if the commission finds that
  the evidence is not adequate to show that any of the conditions
  alleged in the petition exist; or
               (2)  select a review panel as provided in Subsection
  (d).
         (d)  If the petition is not dismissed under Subsection (c),
  the commission shall appoint a review panel consisting of a
  chairperson and four other members. A director or general manager
  of a district located outside the management area that is the
  subject of the petition may be appointed to the review panel. The
  commission may not appoint more than two members of the review panel
  from any one district. The commission also shall appoint a
  disinterested person to serve as a nonvoting recording secretary
  for the review panel. The recording secretary may be an employee of
  the commission. The recording secretary shall record and document
  the proceedings of the panel. 
         (e)  Not later than the 120th day after appointment, the
  review panel shall review the petition and any evidence relevant to
  the petition and, in a public meeting, consider and adopt a report
  to be submitted to the commission. The commission may direct the
  review panel to conduct public hearings at a location in the
  management area to take evidence on the petition. The review panel
  may attempt to negotiate a settlement or resolve the dispute by any
  lawful means.
         (f)  In its report, the review panel shall include: 
               (1)  a summary of all evidence taken in any hearing on
  the petition;
               (2)  a list of findings and recommended actions
  appropriate for the commission to take and the reasons it finds
  those actions appropriate; and 
               (3)  any other information the panel considers
  appropriate.
         (g)  The review panel shall submit its report to the
  commission.
         (h)  Not later than the 45th day after receiving the review
  panel's report under this section [Section 36.1082], the executive
  director or the commission shall take action to implement any or all
  of the panel's recommendations.  The commission may take any action
  against a district it considers necessary in accordance with
  Section 36.303 if the commission finds that:
               (1)  the district has failed to submit its management
  plan to the executive administrator;
               (2)  the district has failed to participate in the
  joint planning process under Section 36.108;
               (3)  the district has failed to adopt rules;
               (4)  the district has failed to adopt the applicable
  desired future conditions adopted by the management area at a joint
  meeting;
               (5)  the district has failed to update its management
  plan before the second anniversary of the adoption of desired
  future conditions by the management area;
               (6)  the district has failed to update its rules to
  implement the applicable desired future conditions before the first
  anniversary of the date it updated its management plan with the
  adopted desired future conditions;
               (7)  the rules adopted by the district are not designed
  to achieve the desired future conditions adopted by the management
  area during the joint planning process;
               (8)  the groundwater in the management area is not
  adequately protected by the rules adopted by the district; or
               (9)  the groundwater in the management area is not
  adequately protected because of the district's failure to enforce
  substantial compliance with its rules.
         SECTION 17.  Section 36.303(a), Water Code, is amended to
  read as follows:
         (a)  If Section [36.108,] 36.301, 36.3011, or 36.302(f)
  applies, the commission, after notice and hearing in accordance
  with Chapter 2001, Government Code, shall take action the
  commission considers appropriate, including:
               (1)  issuing an order requiring the district to take
  certain actions or to refrain from taking certain actions;
               (2)  dissolving the board in accordance with Sections
  36.305 and 36.307 and calling an election for the purpose of
  electing a new board;
               (3)  requesting the attorney general to bring suit for
  the appointment of a receiver to collect the assets and carry on the
  business of the groundwater conservation district; or
               (4)  dissolving the district in accordance with
  Sections 36.304, 36.305, and 36.308.
         SECTION 18.  Section 36.321, Water Code, is amended to read
  as follows:
         Sec. 36.321.  ADDING LAND BY PETITION OF LANDOWNER. Subject
  to Section 36.331, the [The] owner of land not already in
  [contiguous to] a district may file with the board a notarized
  petition requesting that the owner's land be included in the
  district. The petition must describe the land by legal description
  or by metes and bounds or by lot and block number if there is a
  recorded plat of the area to be included in the district.
         SECTION 19.  Section 36.325, Water Code, is amended to read
  as follows:
         Sec. 36.325.  ADDING CERTAIN TERRITORY BY PETITION. (a)
  Landowners of a defined area of territory not already in a district
  may file with any district a petition requesting inclusion in that
  district and, subject to Section 36.331, the defined area of
  territory is not required to be contiguous with that district.
         (b)  The petition must be signed by:
               (1)  a majority of the landowners in the territory;
               (2)  at least 50 landowners if the number of landowners
  is more than 50; or
               (3)  the commissioners court of the county in which the
  area is located if the area is identified as a priority groundwater
  management area or includes the entire county.
         (c)  The petition must describe the land by legal description
  or by metes and bounds or by lot and block number if there is a
  recorded plat of the area to be included in the district.
         SECTION 20.  Section 36.328(a), Water Code, is amended to
  read as follows:
         (a)  Annexation of the territory by petition filed under
  Section 36.325 is not final until ratified by a majority vote of the
  voters in the territory to be added. An election in the existing
  district accepting the addition of land is not required.
         SECTION 21.  The heading to Subchapter L, Chapter 36, Water
  Code, is amended to read as follows:
  SUBCHAPTER L. GROUNDWATER CONSERVATION DISTRICT LOAN ASSISTANCE
  FUND
         SECTION 22.  Section 36.371, Water Code, is amended to read
  as follows:
         Sec. 36.371.  GROUNDWATER CONSERVATION DISTRICT LOAN
  ASSISTANCE FUND. (a) The groundwater conservation district loan
  assistance fund is created, to be funded by direct appropriation
  and by the Texas Water Development Board from the water assistance
  fund.
         (b)  Repayments of loans shall be deposited in the water
  assistance fund.
         SECTION 23.  Section 36.1082, Water Code, is repealed.
         SECTION 24.  This Act takes effect immediately if it
  receives a vote of two-thirds of all the members elected to each
  house, as provided by Section 39, Article III, Texas Constitution.  
  If this Act does not receive the vote necessary for immediate
  effect, this Act takes effect September 1, 2015.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 2767 was passed by the House on April
  30, 2015, by the following vote:  Yeas 138, Nays 1, 1 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 2767 was passed by the Senate on May
  20, 2015, by the following vote:  Yeas 31, Nays 0.
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor