Legislative Update 10th Annual North Central Chapter of Texas AWWA

Drinking Water Seminar October 28, 2011 Presented by:

Martin C. Rochelle [email protected] 816 Congress Avenue (512) 322-5810 Suite 1900 Kristen O Fancher Austin, Texas 78701 [email protected] (512) 322-5800 (512) 322-5804 (512) 472-0532 Fax www.lglawfirm.com ©Lloyd Gosselink Rochelle & Townsend, P.C.

Major Themes During 82nd

• Redistricting

• Budget

• Water (Surprise?)

• Sunset Process

©Lloyd Gosselink Rochelle & Townsend, P.C.

82nd Legislature – Budget and Redistricting • Budget – $172.3 Billion for Biennium – Projected >$20 Billion Dollar Budget Shortfall – Cuts in Services and State Agency Budgets • Redistricting – – Texas House – U.S. House

©Lloyd Gosselink Rochelle & Townsend, P.C.

82nd Legislature Statistics (Regular Session)

Bill Type Filed Passed House Bills 3865 797 Senate Bills 1931 582 House Joint Resolutions 154 3 Senate Joint Resolutions 53 8 House Concurrent Resolutions 173 101 Senate Concurrent Resolutions 60 41 Totals 6236 1532

©Lloyd Gosselink Rochelle & Townsend, P.C.

November 2010 Election Results

Senate House

19 Republicans 101 Republicans 12 Democrats 49 Democrats

2 Freshmen Members 35 Freshmen Members

©Lloyd Gosselink Rochelle & Townsend, P.C.

House Natural Resources Committee Chairman: Allan Ritter - Nederland Vice Chair: Tracy O. King - Batesville Membership: Marva Beck - Centerville Brandon Creighton - Conroe Chuck Hopson - Jacksonville Jim Keffer - Granbury - Eddie Lucio III - San Benito - San Antonio Doug Miller - New Braunfels Walter "Four" Price - Amarillo

©Lloyd Gosselink Rochelle & Townsend, P.C.

House Environmental Regulation Committee

Chairman: Wayne Smith - Baytown Vice Chair: Jessica Farrar - Houston Membership: Jose Aliseda - Beeville Lon Burnam - Forth Worth Warren Chisum - Pampa Kelly Hancock - Forth Worth Ken Legler - Pasadena Lanham Lyne - Wichita Falls Ron Reynolds - Missouri City

©Lloyd Gosselink Rochelle & Townsend, P.C.

Senate Natural Resources Committee

Chairman: Troy Fraser - Horseshoe Bay Vice Chair: Craig Estes - Wichita Falls Membership: Bob Deuell - Greenville Robert Duncan - Lubbock Kevin Eltife - Tyler Glenn Hegar, Jr. - Katy Juan “Chuy” Hinojosa - Mission Mike Jackson - La Porte Robert Nichols - Jacksonville Kel Seliger - Amarillo Carlos Uresti - San Antonio

©Lloyd Gosselink Rochelle & Townsend, P.C.

Sunset Advisory Commission: Background

• In 1977, the Texas Legislature created the Sunset Advisory Commission to identify and eliminate waste, duplication, and inefficiency in government agencies

• The 12-member body of legislators and public members are appointed by the Lt. Governor and Speaker of the House

• The Commission seeks public input through hearings on every agency under Sunset review and recommends actions on each agency to the full Legislature

©Lloyd Gosselink Rochelle & Townsend, P.C.

Sunset Advisory Commission Members

Senate Members: House Members: • Glenn Hegar, Jr., Chair • , Vice • Juan "Chuy" Hinojosa Chair • Joan Huffman • Carl Isett • Robert Nichols • Linda Harper-Brown • John Whitmire • • Charles McMahen, Public • Byron Cook Member • Lamont Jefferson, Public Member

©Lloyd Gosselink Rochelle & Townsend, P.C.

TCEQ Sunset Bill

• HB 2694 (Wayne Smith / Huffman)

– Establishes requirement that each person who holds a water right or or otherwise uses state water must maintain water use information on a monthly basis during those months of use

– Gives TCEQ Executive Director the authority to take steps to address drought conditions, such as temporarily suspend the right to divert and/or adjust the allocation of water between water rights holders in light of their respective priority and purpose of use – Directs TCEQ to define the “public interest” in order for OPIC to intervene as party to contested case hearings

©Lloyd Gosselink Rochelle & Townsend, P.C.

TCEQ Sunset Bill Continued…

• HB 2694 (Wayne Smith / Huffman)

– Also requires TCEQ to exempt dams of a certain size and specification from dam safety requirements

– Requires TCEQ to adopt a general enforcement policy

– Continues TCEQ until 2023 and abolishes the On-Site Wastewater Treatment Research Council

©Lloyd Gosselink Rochelle & Townsend, P.C.

TWDB Sunset Bill • SB 660 (Hinojosa and Hegar/Ritter) – Requires that the State Water Plan include an evaluation of the progress made in meeting the state's future water needs and an analysis of the number of projects included in previous plan that received financial assistance

– Requires TWDB and TCEQ, in consultation with the Water Conservation Advisory Council, to develop a uniform methodology for water use and conservation

– Continues TWDB for another 12 years and makes significant changes to the GMA process and Chapter 13 of the Water Code

©Lloyd Gosselink Rochelle & Townsend, P.C.

Overview of Legislation Impacting Water Industry • Water Usage/Conservation • Water Audits • CCN • TCEQ Education Requirements • Groundwater • Contamination and Injection Well Notice • Fracking Disclosure

©Lloyd Gosselink Rochelle & Townsend, P.C.

Overview of Legislation Impacting Water Industry Continued… • TWDB Funding Authority • Rainwater Harvesting • Don’t Mess With Texas Water Campaign • Rural Water Assistance Fund • Dam Safety Standards • Glass Containers in Riverbeds • On-Site Sewage

©Lloyd Gosselink Rochelle & Townsend, P.C.

Water Usage / Conservation Legislation

• SB 181 (Shapiro/Laubenberg)

– Amends Chapter 16, Water Code, to require the TWDB to work with TCEQ to develop a uniform way to calculate and report municipal water use

– Also authorizes TWDB to develop a data collection and reporting program for utilities and municipalities with 3,300 or more connections and requires the TWDB to submit a biennial report to the legislature on the data collected

©Lloyd Gosselink Rochelle & Townsend, P.C.

Water Audits Legislation

• HB 3090 (Creighton/Nichols)

– Requires a water utility that receives financial assistance from TWDB to perform an annual water audit that calculates the utility’s system water loss during the preceding year

– Audit must be filed with TWDB

©Lloyd Gosselink Rochelle & Townsend, P.C.

Certificates of Convenience and Necessity (CCN) Legislation • SB 573 (Nichols/Creighton) – Revisions to Chapter 13 of the Water Code that address water and wastewater certificates of convenience and necessity (CCNs)

– For municipalities with populations of 500,000 or more, TCEQ may grant water and wastewater CCNs within the ETJ of a municipality without consent if certain conditions are met, including:  the municipality does not have the ability to provide service or the municipality has failed to make a good faith effort to provide service

©Lloyd Gosselink Rochelle & Townsend, P.C.

Certificates of Convenience and Necessity (CCN) Continued… • SB 573 (Nichols/Creighton) – A municipality’s CCN cannot be extended beyond its ETJ if a landowner located wholly or partially outside the ETJ elects to exclude some or all of the property within the proposed service area (Note that this has limited application)

– A landowner now has ability to remove its property from an existing CCN through new CCN decertification process  Must own 25 acres and petition granted within 60 days of submission if petition meets requirements

©Lloyd Gosselink Rochelle & Townsend, P.C.

Certificates of Convenience and Necessity (CCN) Continued… • SB 573 (Nichols/Creighton) – Only available for properties located in 33 counties (with high population) – Counties subject to this new CCN decertification process: Wise Dallas Burnet Comal Denton Montgomery Williamson Hays Collin Liberty Bastrop Blanco Rockwall Chambers Caldwell Bexar Kaufman Galveston Guadalupe Travis Ellis Brazoria Wilson Smith Johnson Fort Bend Atascosa Parker Waller Bandera Tarrant Harris Kendall

©Lloyd Gosselink Rochelle & Townsend, P.C.

TCEQ Education Legislation

• HB 965 (Callegari/Hegar)

– TCEQ now must recognize Internet-based continuing education programs, including those for licensed operators

©Lloyd Gosselink Rochelle & Townsend, P.C.

Groundwater Legislation of Interest

• SB 332 – Groundwater Ownership – Provides for ownership interest in groundwater by a landowner beneath the surface as real property and the right of the landowner to drill and produce groundwater, but not in a specific amount • SB 737 and SB 660 (TWDB Sunset Bill) – Focus is on Desired Future Conditions (DFCs) and establishes new process for adopting DFCs • SB 693 – New process for permit hearings at SOAH

©Lloyd Gosselink Rochelle & Townsend, P.C.

Groundwater Legislation of Interest Continued…

• SB 692/693 – clean up of permit exemptions language

• SB 313 – process for creating a GCD in a Priority Groundwater Management Area (PGMA)

©Lloyd Gosselink Rochelle & Townsend, P.C.

Notice of Contamination to GCDs

• SB 430 (Nichols/Christian)

– Requires the Executive Director of the TCEQ to provide written notice of groundwater contamination to a GCD with jurisdiction in the contaminated area

©Lloyd Gosselink Rochelle & Townsend, P.C.

Injection Well Notices to GCDs

• HB 444 (Creighton/Nichols)

– Increased notification requirements in Chapter 27 of Water Code for applications for injection wells to dispose of industrial and municipal waste

– GCDs to receive notice of applications, draft permits, and contested case hearing notices

©Lloyd Gosselink Rochelle & Townsend, P.C.

Hydraulic Fracturing Disclosure • HB 3328 – Establishes a regulatory framework by which the make-up of fluids used in hydraulic fracturing must be publicly disclosed (www.fracfocus.org)

©Lloyd Gosselink Rochelle & Townsend, P.C.

TWDB Funding Authority Legislation • HB 1732/SJR 4 – Enables TWDB to implement a revolving $6 billion program to fund water and wastewater infrastructure projects in Texas

– SJR 4 provides that a constitutional amendment will be on the ballot to authorize the revolving bond program in November

©Lloyd Gosselink Rochelle & Townsend, P.C.

Rainwater Harvesting Legislation

• HB 3372 (/Jackson)

– Requires the TCEQ and Texas Department of Health to develop rules for rainwater harvesting systems that can be used for indoor potable purposes and can be connected to a public water system

©Lloyd Gosselink Rochelle & Townsend, P.C.

Rainwater Harvesting & Water Conservation Legislation • HB 3391 (Doug Miller/Seliger)

– The bill amends numerous provisions to encourage the use of rainwater harvesting systems in Texas

©Lloyd Gosselink Rochelle & Townsend, P.C.

Don’t Mess With Texas Water

• HB 451 (Lucio III/Hegar) – Establishes a “Don’t Mess with Texas Water” program to prevent illegal dumping that affects surface water – TCEQ, with the cooperation of TxDOT, is required to place signs at major highway water crossings that notify drivers of a toll-free number to call to report illegal dumping to law enforcement – Local governments may participate in the program

©Lloyd Gosselink Rochelle & Townsend, P.C.

Rural Water Assistance Fund Legislation • SB 360 (Frasier/Creighton)

– Makes substantial changes to Chapter 15 of the Water Code relating to the composition and use of money in the Rural Water Assistance Fund

©Lloyd Gosselink Rochelle & Townsend, P.C.

Dam Safety Legislation

• HB 2694 (Wayne Smith/Huffman)

– Flexibility in the enforcement of state dam safety standards on private property in rural areas that are classified as low hazard

©Lloyd Gosselink Rochelle & Townsend, P.C.

Glass Containers in Riverbeds

• HB 218 (Gallego/Uresti)

– Makes it a criminal offense to knowingly possess a glass container on a state-owned riverbed

– Does not apply to those cleaning up the riverbed, sampling for scientific purposes or those who live adjacent to the riverbed

©Lloyd Gosselink Rochelle & Townsend, P.C.

On-Site Sewage Disposal Systems

• HB 240 (Parker/Nelson)

– Amends Health and Safety Code to require the TCEQ to adopt rules governing the installation of on-site sewage disposal systems to prevent accidental or unintentional access

©Lloyd Gosselink Rochelle & Townsend, P.C.

Other Water-Related Legislation of Interest • SB 333 – WSC election proceedings and qualification of directors • SB 449/SJR 16 – Ag tax exemption to include water stewardship if passed through constitutional amendment election • SB 569 – RV parks must receive same rates as other commercial businesses • SB 1140 – WCIDs can pay property damages caused by sewage backups

©Lloyd Gosselink Rochelle & Townsend, P.C.

Agency Rulemaking

• Expect active TCEQ and TWDB rulemaking dockets in response to water legislation and Sunset bills • In particular:

– TWDB rules to address new groundwater DFC process and state water plan requirements – TCEQ rules to address water conservation and usage requirements and new rainwater harvesting requirements – TCEQ rules to address on-site sewage disposal systems and TCEQ approach to enforcement

©Lloyd Gosselink Rochelle & Townsend, P.C.

Agency Rulemaking Continued…

– TCEQ rules related to adjustment of water rights and water rights curtailment during droughts or other emergency situations – TCEQ rules to establish the factors the OPIC must consider before deciding to represent the “public interest” in a TCEQ proceeding – TCEQ rules to define the agency’s approach to enforcement – TCEQ rules related to contested case hearings that prohibit discovery of a party following that party’s pre-filing of testimony – RCT rules related to hydraulic fracturing disclosure

©Lloyd Gosselink Rochelle & Townsend, P.C.

QUESTIONS?

Thank You For Coming

Martin C. Rochelle [email protected] (512) 322-5810 Kristen O Fancher [email protected] (512) 322-5804

©Lloyd Gosselink Rochelle & Townsend, P.C.