Harris Water Bill Ranks Every Retail Utility Every 10 Years

The text as introduced · 3,862 words

89R17900 TYPED

By: Harris
H.B. No. 16

A BILL TO BE ENTITLED

AN ACT

relating to the oversight and financing of certain water

infrastructure matters under the jurisdiction of the Texas Water

Development Board.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. WATER INFRASTRUCTURE DEVELOPMENT

SECTION 1.1. Section 15.153(b), Water Code, is amended to

read as follows:

(b) The fund may be used to:

(1) provide financial assistance to political

subdivisions to develop water supply projects that create new water

sources for the state, including:

(A) desalination projects, including marine and

brackish water desalination;

(B) produced water treatment projects, other

than projects that are only for purposes of oil and gas exploration;

(C) aquifer storage and recovery projects; [ and ]

(D) reservoir projects for which:

(i) a permit for the discharge of dredged or

fill material has been issued by the United States secretary of the

army under Section 404, Federal Water Pollution Control Act (33

U.S.C. Section 1344); and

(ii) a permit for the storage, taking, or

diversion of state water has been issued by the commission under

Section 11.121; and

(E) the development of infrastructure to

transport or integrate into a water supply system water that is made

available by a project described by this subdivision; and

(F) potable water reuse projects;

(2) make transfers from the fund:

(A) to the state water implementation fund for

Texas established under Subchapter G or the Texas Water Development

Fund II established under Subchapter L, Chapter 17; and

(B) for a purpose described by Subdivision (1);

[ and ]

(3) make transfers from the fund to the water bank

account established under Section 15.707 ; and

(4) make transfers from the fund:

(A) to the Texas Water Development Fund II state

participation account established under Section 17.957; and

(B) for a purpose described by Subdivision (1) .

SECTION 1.2. Section 15.502(b), Water Code, is amended to

read as follows:

(b) The board may use the fund only to transfer money to:

(1) the water assistance fund established under

Subchapter B;

(2) the new water supply for Texas fund established

under Subchapter C-1;

(3) the state water implementation fund for Texas

established under Subchapter G;

(4) the state water implementation revenue fund for

Texas established under Subchapter H;

(4-a) the flood infrastructure fund established under

Subchapter I;

(5) a revolving fund established under Subchapter J;

(6) the rural water assistance fund established under

Subchapter R;

(7) the statewide water public awareness account

established under Section 16.027;

(8) the Texas Water Development Fund II water

financial assistance account established under Section 17.959;

[ and ]

(9) the Texas Water Development Fund II state

participation account established under Section 17.957 ;

(10) the water access assessment account established

under Section 16.028;

(11) the agricultural water conservation fund; and

(12) the economically distressed areas program

account .

SECTION 1.3. Section 15.502(e), Water Code, is amended to

read as follows:

(e) The fund consists of:

(1) money transferred or deposited to the credit of

the fund by law, including :

(A) money transferred or deposited to the fund as

provided by Section 7-e, Article VIII, Texas Constitution;

(B) money appropriated by the legislature

directly to the fund ; and

(C) money from any source transferred or

deposited to the credit of the fund as authorized by law;

(2) any other revenue that the legislature by statute

dedicates for deposit to the credit of the fund;

(3) investment earnings and interest earned on amounts

credited to the fund;

(4) money from gifts, grants, or donations to the

fund; and

(5) money returned from any authorized transfer.

SECTION 1.4. Section 15.504(c), Water Code, is amended to

read as follows:

(c) The board shall ensure that a portion of the money

transferred from the fund is used for:

(1) water and wastewater infrastructure projects,

prioritized by risk or need as described by the water access

assessment required under Section 6.116 , for:

(A) rural political subdivisions; and

(B) municipalities with a population of less than

150,000;

(2) projects for which all required state or federal

permitting has been substantially completed, as determined by the

board;

(3) the statewide water public awareness program

established under Section 16.026;

(4) water conservation strategies; and

(5) water loss mitigation projects.

SECTION 1.5. Section 15.703(a), Water Code, is amended to

read as follows:

(a) The board may take all actions necessary to operate the

water bank and to facilitate the transfer of water rights from the

water bank for future beneficial use , including but not limited to:

(1) negotiating a sale price and terms acceptable to

the depositor and purchaser;

(2) maintaining a registry of water bank deposits and

those water users in need of additional supplies;

(3) informing water users in need of additional supply

of water rights available in the bank;

(4) encouraging water right holders to implement water

conservation practices and deposit the right to use the conserved

water into the bank;

(5) establishing requirements for deposit of a water

right into the water bank , including minimum terms for deposit;

(6) purchasing, holding, and transferring water or

water rights in its own name , including purchasing, holding, and

transferring water or water rights originating outside this state

for the purpose of providing water for the use or benefit of this

state ;

(7) establishing regional water banks;

(8) acting as a clearinghouse for water marketing

information including water availability, pricing of water

transactions, environmental considerations, and potential buyers

and sellers of water rights;

(9) preparing and publishing a manual on structuring

water transactions;

(10) accepting and holding donations of water rights

to meet instream, water quality, fish and wildlife habitat, or bay

and estuary inflow needs;

(11) entering into contracts with persons to pay for

feasibility studies or the preparation of plans and specifications

relating to water conservation efforts or to estimate the amount of

water that would be saved through conservation efforts; and

(12) other actions to facilitate water transactions.

SECTION 1.6. Section 16.131(a), Water Code, is amended to

read as follows:

(a) The board may use the state participation account of the

development fund to encourage optimum regional and interregional

development of projects , including the design, acquisition, lease,

construction, reconstruction, development, or enlargement in whole

or part of:

(1) reservoirs and storm water retention basins for

water supply, flood protection, and groundwater recharge;

(2) facilities for the transmission and treatment of

water;

(3) treatment works as defined by Section 17.001;

[ and ]

(4) interregional water supply projects selected

under Section 16.145 ; and

(5) projects described by Section 15.153(b)(1) .

SECTION 1.7. The following provisions of the Water Code are

repealed:

(1) Section 16.131(c); and

(2) Section 16.146(h).

ARTICLE 2. LEGISLATIVE OVERSIGHT

SECTION 2.1. Section 15.431(a)(1), Water Code, is amended

to read as follows:

(1) "Advisory committee" means the [ State Water

Implementation Fund for ] Texas Water Fund Advisory Committee.

SECTION 2.2. Section 15.438, Water Code, is transferred to

Subchapter A, Chapter 15, Water Code, redesignated as Section

15.009, Water Code, and amended to read as follows:

Sec. 15.009 [ 15.438 ]. TEXAS WATER FUND ADVISORY COMMITTEE.

(a) The [ State Water Implementation Fund for ] Texas Water Fund

Advisory Committee is composed of the following eight [ seven ]

members:

(1) the comptroller, or a person designated by the

comptroller;

(2) the chair of the committee of the senate having

primary jurisdiction over water resources;

(3) the chair of the committee of the house of

representatives having primary jurisdiction over water resources;

(4) two [ three ] members of the senate appointed by the

lieutenant governor, including at least one [ :

[ (A) a ] member of the committee of the senate

having primary jurisdiction over matters relating to finance;

(5) two [ and

[ (B) the chair of the committee of the senate

having primary jurisdiction over water resources; and

[ (3) three ] members of the house of representatives

appointed by the speaker of the house of representatives, including

at least one [ :

[ (A) a ] member of the committee of the house of

representatives having primary jurisdiction over appropriations;

and

(6) the director of the Texas Division of Emergency

Management or the successor in function to that entity, or a person

designated by that person, who serves as a nonvoting member

[ (B) the chair of the committee of the house of

representatives having primary jurisdiction over water resources ].

(b) The board [ following persons ] shall designate agency

personnel to serve as staff support for the advisory committee[ :

(1) the deputy executive administrator of the board

who is responsible for water science and conservation or a person

who holds an equivalent position at the agency, or a person

designated by that person;

(2) the deputy executive administrator of the board

who is responsible for water resources planning and information or

a person who holds an equivalent position at the agency, or a person

designated by that person; and

(3) the chief financial officer of the board, or a

person who holds an equivalent position at the agency ].

(c) A [ An appointed ] member of the advisory committee

designated under Subsection (a)(1) or (6) or appointed under

Subsection (a)(4) or (5) serves at the will of the person who

designated or appointed the member.

(d) The members of the advisory committee described by

Subsections (a)(2) and (3) serve as [ lieutenant governor shall

appoint a ] co-presiding officers [ officer ] of the [ advisory ]

committee [ from among the members appointed by the lieutenant

governor, and the speaker of the house of representatives shall

appoint a co-presiding officer of the committee from among the

members appointed by the speaker ].

(e) The advisory committee may hold public hearings, formal

meetings, or work sessions. Either co-presiding officer of the

advisory committee may call a public hearing, formal meeting, or

work session of the advisory committee at any time. The advisory

committee may not take formal action at a public hearing, formal

meeting, or work session unless a quorum of the committee is

present.

(f) Except as otherwise provided by this subsection, a

member of the advisory committee is not entitled to receive

compensation for service on the committee or reimbursement for

expenses incurred in the performance of official duties as a member

of the committee. Service on the advisory committee by a member of

the senate or house of representatives is considered legislative

service for which the member is entitled to reimbursement and other

benefits in the same manner and to the same extent as for other

legislative service.

(g) As needed, the [ The ] advisory committee shall submit

comments and recommendations to the board regarding the use of

money in :

(1) the state water implementation fund for Texas

established under Subchapter G [ fund ] for use by the board in

adopting rules under Section 15.439 and in adopting policies and

procedures under Section 15.441 ;

(2) the Texas water fund established under Subchapter

H-1 for use by the board in adopting rules under Section 15.507;

(3) the flood infrastructure fund established under

Subchapter I for use by the board in adopting rules under Section

15.537; and

(4) the Texas infrastructure resiliency fund

established under Section 16.452 for use by the board in adopting

rules under Section 16.460 [ The submission must include:

[ (1) comments and recommendations on rulemaking

related to the prioritization of projects in regional water plans

and the state water plan in accordance with Section 15.437;

[ (2) comments and recommendations on rulemaking

related to establishing standards for determining whether projects

meet the criteria provided by Section 15.434(b);

[ (3) an evaluation of the available programs for

providing financing for projects included in the state water plan

and guidelines for implementing those programs, including

guidelines for providing financing for projects included in the

state water plan that are authorized under Subchapter Q or R of this

chapter, Subchapter E or F, Chapter 16, or Subchapter J, Chapter 17;

[ (4) an evaluation of the lending practices of the

board and guidelines for lending standards;

[ (5) an evaluation of the use of funds by the board to

provide support for financial assistance for water projects,

including support for the purposes described by Section 15.435(c);

[ (6) an evaluation of whether premium financing

programs should be established within the funds described by

Section 15.435 to serve the purposes of this subchapter, especially

in connection with projects described by Section 15.434(b);

[ (7) an evaluation of methods for encouraging

participation in the procurement process by companies domiciled in

this state or that employ a significant number of residents of this

state; and

[ (8) an evaluation of the overall operation, function,

and structure of the fund ].

(h) The advisory committee shall review the overall

operation, function, and structure of each fund listed in

Subsection (g) [ the fund ] at least semiannually [ and may provide

comments and recommendations to the board on any matter ].

(i) The advisory committee may :

(1) provide comments and recommendations to the board

on any matter;

(2) review the overall operation, function, and

structure of any fund established under this chapter or Chapter 16

that is not listed in Subsection (g); and

(3) adopt rules, procedures, and policies as needed to

administer this section and implement its responsibilities.

(j) Chapter 2110, Government Code, does not apply to the

size, composition, or duration of the advisory committee.

(k) The advisory committee is not subject to Chapter 325,

Government Code (Texas Sunset Act). [ Unless continued in existence

as provided by that chapter, the advisory committee is abolished

and this section expires September 1, 2035. ]

(l) As needed, the [ The ] advisory committee shall make

recommendations to the board regarding information to be posted on

the board's Internet website relating to the funds listed in

Subsection (g) [ under Section 15.440(b) ].

(m) The advisory committee shall evaluate and may provide

comments or recommendations on the feasibility of the state owning,

constructing, and operating water supply projects, including

reservoirs and major water supply conveyance infrastructure,

through existing financial assistance programs under Subchapter E

of this chapter, Subchapter E or F, Chapter 16, or other mechanisms.

(n) The executive administrator shall provide an annual

report to the advisory committee on:

(1) the board's progress towards expanding state and

regional water supply portfolios, including:

(A) the annual financial commitments by program

for water supply projects and management strategies;

(B) the net amount of water projected to be

developed, conserved, or reclaimed through those annual

commitments;

(C) the amount of water developed, conserved, or

reclaimed through the completion of state-funded water supply

projects or management strategies during the prior fiscal year; and

(D) state and regional achievement towards

completing water supply projects and management strategies that

address water shortages during a drought of record as described

within the most recent state and regional water plans;

(2) the board's progress towards providing financial

assistance for drinking water and clean water utilities that are

eligible for state financial assistance, and:

(A) endure a significant number of boil water

notices;

(B) have water losses that meet or exceed the

threshold established by rule under Section 16.0121;

(C) have significant health, safety, or

environmental protection violations according to commission data;

or

(D) identified as failing or at risk of failing

according to the water risk assessment required under 6.116;

(3) the estimated aggregate value of the savings

provided to customers through the board's financial assistance

programs;

(4) [ (1) ] the board's compliance with statewide annual

goals relating to historically underutilized businesses; and

(5) [ (2) ] the participation level of historically

underutilized businesses in projects that receive funding related

to a bond enhancement agreement under Subchapter G [ this

subchapter ].

(o) If the aggregate level of participation by historically

underutilized businesses in projects that receive funding related

to a bond enhancement agreement under Subchapter G [ this

subchapter ] does not meet statewide annual goals adopted under

Chapter 2161, Government Code, the advisory committee shall make

recommendations to the board to improve the participation level.

(p) Notwithstanding the requirements of Sec. 551.008,

Government Code, the advisory committee shall have a right of

access to all records that relate to the administration of the funds

described in this section that are maintained by any entity under

contract with the board.

SECTION 2.3. The following provisions of the Water Code are

repealed:

(1) Section 15.506;

(2) Section 15.540;

(3) Section 16.451(1); and

(4) Section 16.456.

ARTICLE 3. PERFORMANCE AND ACCOUNTABILITY

SECTION 3.1. Subchapter D, Chapter 6, Water Code, is

amended by adding Sections 6.116, 6.117, and 6.118 to read as

follows:

Sec. 6.116. WATER ACCESS ASSESSMENT. (a) In this section:

(1) "Access assessment" means the water access

assessment established under this section.

(2) "Utility" means a retail public utility, as

defined by Section 13.002.

(b) The board by rule and in consultation with the

commission, the Public Utilities Commission of Texas, and

institutions of higher education, as defined by Section 61.003,

Education Code, shall establish:

(1) a water access assessment to determine the extent

of water access needs among utilities in this state; and

(2) a schedule that ensures that an access assessment

is conducted not less than once every 10 years for each utility.

(c) The access assessment must identify utilities that are

failing or at risk of failing through a ranking system that

evaluates and assigns numerical values to factors including:

(1) the overall condition of the utility's

infrastructure, including:

(A) the utility system's age;

(B) the presence of lead service lines;

(C) the presence of cast-iron pipes more than 30

years old;

(D) the utility's rates of water loss;

(E) the number of interconnections to other

systems; and

(F) susceptibility to extreme weather;

(2) availability of water to the utility, including

the utility's:

(A) number of water sources;

(B) drought and water shortage risk;

(C) groundwater production sustainability; and

(D) reliance on bottled or hauled water;

(3) the quality of the utility's water, including

whether the utility has any drinking water quality standard

violations;

(4) affordability of services the utility provides, as

determined by:

(A) median income of households the utility

serves;

(B) the average monthly amount the utility bills

to its customers relative to the average monthly billing amounts

among similarly sized utilities;

(C) rural areas the utility serves; and

(D) disadvantaged areas the utility serves; and

(5) the financial, managerial, and technical capacity

of the utility as indicated by factors including:

(A) certification violations of the utility's

operators;

(B) the utility's monitoring and reporting

violations;

(C) the utility's absence of a qualified

workforce; and

(D) the ratio of the utility's revenues to its

operating expenses.

(d) For each utility that an access assessment identifies as

failing or at risk of failing, the board shall send notice of the

identification to:

(1) the utility;

(2) the commission;

(3) the Public Utility Commission of Texas; and

(4) each standing committee of the legislature with

primary jurisdiction over the board.

(e) The board shall make available on its Internet website

the result of an access assessment performed under this section.

(f) In implementing this section, the board may:

(1) consult with the commission and the Public Utility

Commission of Texas in the development of category risk factors,

associated rankings of factors, and the development of scoring

thresholds for identifying utilities that are failing or at risk of

failing;

(2) reevaluate the risk factors and the factors'

associated numerical values every two years;

(3) enter into a memorandum of understanding with the

commission, the Public Utility Commission of Texas, and the

Department of State Health Services for the open transfer and

sharing of utilities' data, including critical infrastructure

data; and

(4) contract or otherwise partner with an institution

of higher education for the purposes of conducting a water access

assessment.

Sec. 6.117. PUBLIC INFORMATION. (a) The board shall

develop and maintain on its Internet website a publicly available

tool by which a person may obtain information regarding:

(1) state progress towards implementing water supply

projects and water management strategies that address potential

water supply shortfalls during a repeat of a drought of record as

described within the most recent state water plan;

(2) how many water utilities are classified as either

failing or at risk of failing as determined by an assessment

conducted under Section 6.116; and

(3) the proportion of failing or at-risk utilities

that have taken steps to no longer be classified as failing or at

risk of failing.

(b) The board shall update the information required to be

maintained under Subsection (a) not less than once a year.

Sec. 6.118. ANNUAL REPORT. (a) In this section, "Texas

water fund" means the fund established under Section 49-d-16,

Article III, Texas Constitution, as proposed by S.J.R. 75, 88th

Legislature, Regular Session, 2023.

(b) Not later than December 31 of each even-numbered year,

the board shall submit to the legislature a report that describes:

(1) the allocation of money from the Texas water fund

to other eligible board-administered funds;

(2) water supply projects within the state water plan

that have received funding commitments in the preceding biennium;

(3) the provision of financial assistance in the

preceding biennium from the Texas water fund to water and

wastewater systems that have been classified as failing or at risk

of failing as determined by an assessment conducted under Section

6.116;

(4) the state's progress towards closing anticipated

water infrastructure funding gaps;

(5) the state's progress towards closing potential

water supply deficits during a repeat of a drought of record;

(6) the state's progress towards fixing aging or

deteriorating water and wastewater systems; and

(7) the positive economic impact attributable to each

project receiving financial assistance from the Texas water fund.

SECTION 3.2. Subchapter B, Chapter 16, Water Code, is

amended by adding Section 16.028 to read as follows:

Sec. 16.028. WATER ACCESS ASSESSMENT ACCOUNT. (a) The

water access assessment account is an account in the general

revenue fund. The account consists of:

(1) money appropriated to the board for deposit to the

credit of the account;

(2) money transferred by the board to the credit of the

account from other funds available to the board;

(3) money from gifts or grants to the account from any

source, including the federal government, an educational

institution, or a private donor;

(4) proceeds from the sale of educational or public

awareness materials, publications, and other items deposited to the

credit of the account; and

(5) interest earned on the investment of money in the

account and depository interest allocable to the account.

(b) The account may be used by the board to develop,

administer, and implement the water access assessment established

by Section 6.116.

ARTICLE 4. EFFECTIVE DATES

SECTION 4.1. This Act takes effect January 1, 2026, but only

if the constitutional amendment proposed by the 89th Legislature,

Regular Session, 2025, providing for the dedication of certain

sales and use tax revenue to the Texas water fund is approved by the

voters. If that constitutional amendment is not approved by the

voters, this Act has no effect.