By: Perry, et al. S.B. No. 7
(In the Senate - Filed March 13, 2025; March 17, 2025, read
first time and referred to Committee on Water, Agriculture and
Rural Affairs; March 27, 2025, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 9, Nays 0;
March 27, 2025, sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR S.B. No. 7 By: Johnson
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 1.01. Chapter 6, Water Code, is amended by adding
Subchapter H to read as follows:
SUBCHAPTER H. WATER SUPPLY CONVEYANCE COORDINATION
Sec. 6.301. DEFINITION. In this subchapter, "project"
means a water supply development, treatment, or conveyance project
eligible to receive financial assistance from the board.
Sec. 6.302. RESPONSIBILITIES OF BOARD. (a) The board
shall:
(1) for the development of infrastructure to transport
water that is made available by a project, facilitate joint
planning and coordination between project sponsors, governmental
entities, utilities, common carriers, and other entities, as
applicable, to:
(A) maximize the use of existing transportation
and utility easements; and
(B) minimize the exercise of the power of eminent
domain to obtain interests in real property;
(2) facilitate the development of guidance and best
practices for the standardization of the specifications,
materials, and components used to design and construct
infrastructure to transport water;
(3) facilitate the development of standards and
guidance to ensure potential interconnectivity and
interoperability between different systems developed to transport
water from different projects;
(4) facilitate the development of mechanical and
technical standards for the integration of water that is made
available by a project into a water supply system or into
infrastructure to transport water that is made available by a
project, as applicable; and
(5) take other action the board determines necessary
to facilitate interconnectivity and interoperability between
different infrastructure developed to transport water from
different projects.
(b) When developing guidance and best practices under
Subsection (a)(2), the board shall, if practicable, recommend
building excess capacity into infrastructure to transport water to
facilitate the transportation of additional water supplies that are
developed after the initial construction of the infrastructure.
Sec. 6.303. USE OF PROFESSIONAL AND CONSULTING SERVICES
AUTHORIZED. (a) The board may procure professional and consulting
services to achieve a purpose described by Section 6.302.
(b) Chapter 2254, Government Code, applies to the
procurement of professional and consulting services by the board.
Sec. 6.304. FORMATION OF AD HOC COMMITTEES AUTHORIZED. The
board may convene one or more ad hoc committees composed of
representatives of current or potential project sponsors, the Texas
Department of Transportation, river authorities, retail public
utilities, electric utilities, counties, municipalities, special
purpose districts, common carriers, and other entities considered
appropriate by the board to advise and assist the board in
fulfilling any purpose described by Section 6.302, including in
drafting any guidance or best practices described by that section.
Sec. 6.305. PAYMENT OF EXPENSES FROM WATER FUND. Pursuant
to Section 15.504(f), the board shall pay from the Texas water fund:
(1) the necessary and reasonable administrative
expenses, including staffing expenses, incurred in administering
its responsibilities under this subchapter; and
(2) the necessary and reasonable expenses for the
procurement of professional and consulting services under Section
6.303.
SECTION 1.02. Section 11.036, Water Code, is amended by
adding Subsection (e) to read as follows:
(e) This section does not apply to a transfer of water or
water rights originating from outside this state under Section
15.703(a)(6) to any person having the right to acquire use of the
water.
SECTION 1.03. Section 15.153, Water Code, is amended by
amending Subsection (b) and adding Subsections (e) and (f) 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) the required land has already been
acquired;
(ii) 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
(iii) 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:
(i) water that is made available by a
project described by this subdivision; or
(ii) surface water for which a permit for
the storage, taking, or diversion of state water has been issued by
the commission under Section 11.121;
(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).
(e) Infrastructure developed to transport water under
Subsection (b)(1)(E) may not be used to transport groundwater
produced from a well within this state that, at the time of
production, had a total dissolved solids concentration of less than
3,000 milligrams per liter.
(f) Money from the fund may be used to acquire another
person's right acquired or authorized in accordance with state law
to impound, divert, or use state water only by a water supply
contract or a lease of that right from its owner.
SECTION 1.04. Sections 15.502(b) and (e), Water Code, are
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.
(e) The fund consists of:
(1) money transferred or deposited to the credit of
the fund by law, including:
(A) money appropriated by the legislature
directly to the fund; and
(B) 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; and
(4) money from gifts, grants, or donations to the
fund[; and
[(5) money returned from any authorized transfer].
SECTION 1.05. Effective January 1, 2026, 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 credit
of 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; and
(4) money from gifts, grants, or donations to the
fund[; and
[(5) money returned from any authorized transfer].
SECTION 1.06. Section 15.504, Water Code, is amended by
amending Subsections (c) and (f) and adding Subsection (f-1) 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, 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.
(f) The board may use not more than two percent of the fund
to pay for:
(1) the necessary and reasonable expenses of the board
in administering the fund; and
(2) the expenses described by Section 6.305 [not to
exceed two percent].
(f-1) The board may enter into an agreement with the
commission to pay from the fund the necessary and reasonable
staffing expenses, not to exceed $2 million, incurred by the
commission on or before August 31, 2027, for the review of permit
applications for water supply projects receiving financial
assistance from the fund. This subsection expires September 1,
2028.
SECTION 1.07. Section 15.505, Water Code, is amended to
read as follows:
Sec. 15.505. TRANSFER OF MONEY. (a) Notwithstanding any
other law:
(1) the board may[:
[(A)] transfer money from the fund into any other
fund or account described by Section 15.502(b); and
[(B) restore to the fund money transferred from
the fund and deposited to the credit of a fund or account described
by Section 15.502(b); and]
(2) a fund or account described by Section 15.502(b)
may accept a transfer of money made under this subchapter.
(b) The board may not restore to the fund money transferred
from the fund and deposited to the credit of a fund or account
described by Section 15.502(b).
SECTION 1.08. 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 1.09. 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 1.10. 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 2.01. Section 15.431(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 2.02. 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) three members of the senate appointed by the
lieutenant governor, including:
(A) a member of the committee of the senate
having primary jurisdiction over matters relating to finance; 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:
(A) a member of the committee of the house of
representatives having primary jurisdiction over appropriations;
and
(B) the chair of the committee of the house of
representatives having primary jurisdiction over water resources;
and
(4) 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 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) An appointed or designated member of the advisory
committee serves at the will of the person who appointed or
designated the member.
(d) The lieutenant governor shall appoint a co-presiding
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 toward expanding state and
regional water supply portfolios, including:
(A) the financial commitments made by the board
in support of water supply projects and management strategies over
the preceding year;
(B) the net amount of water projected to be
developed, conserved, or reclaimed through the financial
commitments described by Paragraph (A); and
(C) the progress made over the preceding year
toward closing potential water supply deficits during a drought of
record as described in the most recently adopted state water plan by
the completion of water supply projects and the implementation of
management strategies that received financial commitments from the
board;
(2) the financial assistance provided for water and
wastewater treatment facilities;
(3) the board's compliance with statewide annual goals
relating to historically underutilized businesses; [and]
(4) [(2)] the participation level of historically
underutilized businesses in projects that receive funding related
to a bond enhancement agreement under Subchapter G; and
(5) the activities undertaken by the board to meet its
responsibilities relating to water supply conveyance coordination
established under Subchapter H, Chapter 6 [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 Section 552.008, Government Code, the
advisory committee may access 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 2.03. 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 3.01. Subchapter D, Chapter 6, Water Code, is
amended by adding Section 6.116 to read as follows:
Sec. 6.116. BIENNIAL 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 transfer of money from the Texas water fund to
other eligible board-administered funds in the preceding biennium;
(2) water supply projects included in the most
recently adopted state water plan that received funding commitments
from the board in the preceding biennium;
(3) the commitment of financial assistance in the
preceding biennium from the Texas water fund for water and
wastewater systems that have water losses that meet or exceed the
threshold established by rule under Section 16.0121; and
(4) the state's progress toward closing potential
water supply deficits during a drought of record as described in the
most recently adopted state water plan.
(c) The board shall publish the report described by
Subsection (b) on the board's Internet website.
ARTICLE 4. EFFECTIVE DATES
SECTION 4.01. (a) Except as otherwise provided by this
Act, this Act takes effect September 1, 2025.
(b) Section 1.05 of this Act takes effect January 1, 2026,
but only if the constitutional amendment proposed by S.J.R. 66,
89th Legislature, Regular Session, 2025, is approved by the voters.
If that amendment is not approved by the voters, Section 1.05 of
this Act has no effect.
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