Legislative Update

Environmental and Water Law

By Claudia Russell and Susan M. Maxwell

The 88th Texas Legislature resulted in a variety of enacted bills that affect aspects of environmental, water, and utility law practice. Highlights of key bills are summarized in this article. Unless noted otherwise, these bills are effective September 1, 2023.

WATERING INFRASTRUCTURE FUNDING
SB 28—This headline water infrastructure bill provides for two new funds. The New Water Supply for Texas Fund aims to fund 7 million acre-feet of new water supplies by 2033 through a variety of eligible projects, such as aquifer storage and recovery and desalination. The Texas Water Fund would be established as an umbrella fund allowing the Texas Water Development Board, or TWDB, to disburse funds through other programs and funds it administers. A portion of the latter fund would be required to be used for permit-ready projects, a statewide water public awareness program, water conservation, water loss mitigation projects, and infrastructure projects for small municipalities and rural political subdivisions. TWDB would also establish a technical assistance program for rural communities on water loss audits. SB 28 was written in concert with SJR 75, proposing to amend the Texas Constitution to allow these infrastructure investments. Subject to voter approval in November, this dedicated fund would be created with a $1 billion down payment toward those goals and be effective January 1, 2024.

HB 3582—The Flood Infrastructure Fund, or FIF, is updated to repeal certain existing provisions and designate the FIF for remaining Hurricane Harvey funds in the flood plan implementation account. This bill also revises Water Code provisions governing approved uses of the FIF, including flood projects that are part of the initial state flood plan once adopted. A new definition of “rural political subdivision” is established regarding this funding to include nonprofit water supply or sewer service corporations, municipalities with populations of 10,000 or less, counties without larger urban areas, and other political subdivisions demonstrating their rural nature.

AGENCY SUNSEST LEGISLATION
Several major state agencies with jurisdiction over environmental and water matters underwent Sunset review during this cycle. Each agency was continued for an additional term of 12 years, and more complete summaries of legislation affecting each of them can be found in the agencies’ respective final reports on the Sunset Advisory Commission website.

SB 1397——Sunset legislation of the Texas Commission on Environmental Quality, or TCEQ, makes various changes to the Health and Safety Code and the Water Code. The bill expands public notice and outreach requirements related to various types of permits (air, waste, and water), allows for virtual public meetings, and includes other provisions focused on website transparency and alternative forms of electronic notice. TCEQ must establish an enforcement diversion program for small businesses and local governments. A new work plan process is established for re-assessment of adopted environmental flow standards. TCEQ is now required to issue a standard permit to a temporary concrete plant and set out requirements for such batch plants and permits. A new subchapter D is added to Water Code Chapter 28A, requiring TCEQ to develop best management practices, not subject to commission enforcement, for aggregate production operations.

HB 1500—This legislation continues both the Public Utility Commission of Texas, or PUCT, and the Office of Public Utility Counsel. It amends various sections of the Utilities Code and the Water Code and requires various legislative reports for certain generators in the ERCOT power region. Among other things, an owner or operator of an electric generation facility, other than a battery energy storage resource, shall demonstrate to the PUCT the ability of the operator’s portfolio to operate or be available to operate when called on for dispatch at or above the seasonal average generation capability during times of highest reliability risk due to low operation reserves.

HB 1565—The TWDB’s Sunset legislation makes some notable changes regarding the content of cyclically developed regional water plans. The regional water planning groups, or RWPGs, now must include in their regional plans additional information (expenditures of sponsor money and status updates on permit applications and on construction phases) for large water projects, such as reservoirs, interstate water transfers, innovative technology projects, desalination, and others as determined by the TWDB. The RWPGs will now be allowed to plan for a drought worse than the drought of record.

GROUNDWATER
HB 1971—Effective June 9, 2023, this bill amends and adds various provisions in Chapter 36 of the Texas Water Code governing procedures for action on permit and amendment applications of a groundwater conservation district, or GCD. Clarifications are made regarding potential disqualification of a GCD board member based on conflict of interest and regarding quorum requirements for larger GCD boards. New provisions place time limits within which the board must take final action following a contested case hearing on a permit

HB 3059—The existing authority of GCDs, both tax-based districts and fee-based districts, to impose export fees under Chapter 36 or under their own enabling legislation is amended to increase the maximum rates allowed. New provisions effective in January 2024 establish the maximum allowable annual increase of such export fees and expressly limit the GCD’s use of funds from such an export fee increase for costs related to assessing and addressing impacts associated with groundwater development, including maintaining operability of affected wells, developing alternative water supplies, and aquifer monitoring and data collection.

HB 2443—This bill provides express authority for a person with a real property interest in groundwater to petition a GCD where the property interest is located to adopt or modify a rule. The GCD by rule must prescribe the form for such petitions and procedures for their submission, consideration, and disposition, and the GCD is required within 90 days of receipt to either deny a petition or engage in rulemaking consistent with the petition.

HYDROGEN
HB 2847—The Railroad Commission of Texas is granted jurisdiction over pipeline transportation and underground storage of hydrogen. This bill also establishes the Texas Hydrogen Production Policy Council, or THPPC, which is directed to study the development of hydrogen industries in Texas, monitor regional efforts to develop a regional clean hydrogen hub authorized under the federal Infrastructure Investment and Jobs Act, develop a state plan for hydrogen production oversight, and make recommendations to the Legislature about such plan.

HB 4885—This bill calls for TCEQ to establish and administer a grant program as part of the Texas Emissions Reduction Program, with the goal of encouraging adoption of hydrogen infrastructure, vehicles, and equipment.

RECLAIMED WASTEWATER AND WASTE
SB 1289—This bill, effective June 18, 2023, states that under TCEQ rules to be adopted, a wastewater treatment facility that treats domestic wastewater for reuse may dispose of treated wastewater without a permit if the facility disposes through a collection system and has the consent of the operator of the system and treatment facility.

HB 692—Under rules to be adopted, TCEQ could permit land application of dairy waste and disposal of dairy waste from concentrated animal feeding operations into control or retention facilities such as lagoons or playas.

HB 1598—This bill, effective June 18, 2023, states that municipal solid waste facilities will now be subject to current provisions regarding hazardous waste management facilities and local governments prohibited from requiring permits for siting such facilities. This new restriction expressly does not impact county authority to designate certain areas for the processing or disposal of municipal solid waste, authority to prohibit disposal that threatens public health and safety, or authority pertaining to flood plains.

ENFORCEMENT AND FEDERAL LAWS
HB 33—This bill adds a new Chapter 82 to the Texas Natural Resources Code, prohibiting a state agency or its employees from contracting with or in any other manner assisting a federal agency or official regarding enforcement of a federal statute, order, rule, or regulation purporting to regulate oil and gas operations if that federal legal authority does not otherwise exist under state law. The Texas attorney general is required to defend any agency that the federal government may attempt to sue for an action or omission consistent with this requirement. The bill does not prohibit a state agency from (1) implementing a federal law by executing authority delegated to the state agency by a federal agency, or (2) entering into a memorandum of understanding with a federal agency to implement a federal law, if otherwise authorized by state law.

GREENHOUSE GAS EMISSIONS
SB 784—Under this bill, municipalities and other political subdivisions are prohibited from enacting or enforcing an ordinance or other measure that directly regulates greenhouse gas emissions.

CERTIFICATE OF CONVENIENCE AND NECESSITY
SB 893—This bill, effective June 18, 2023, states that the PUCT is allowed in certain situations to correct a certificate of convenience and necessity, or CCN, which sets out service area for water or wastewater service, without observing formal CCN amendment procedures by the commission reissuing the certificate or issuing an endorsement.

CLAUDIA RUSSELL is a partner in Bickerstaff Heath Delgado Acosta in Austin. She helps clients navigate the legislative process.

SUSAN M. MAXWELL is a partner in Bickerstaff Heath Delgado Acosta in Austin. She practices in the areas of water rights law, environmental law, and administrative law.