By: Perry, et al. S.B. No. 7               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.  Chapter 6, Water Code, is amended by adding   Subchapter H to read as follows:   SUBCHAPTER H. OFFICE OF WATER SUPPLY CONVEYANCE COORDINATION          Sec. 6.300.  DEFINITIONS. In this subchapter:                (1)  "Fund" means the New Water Supply for Texas Fund   established by Chapter 15, Subchapter C-1.                (2)  "Office" means the Office of Water Supply   Conveyance Coordination.                (3)  "Project" means a water supply development,   treatment, or conveyance project eligible to receive financial   assistance from the board.          Sec. 6.301.  PURPOSE OF OFFICE. (a) The office is created   within the board for the purposes of:                (1)  facilitating joint planning and coordination by   and between project sponsors, the Texas Department of   Transportation, river authorities, retail public utilities,   electric utilities, counties, municipalities, special purpose   districts, common carriers, and other entities, as applicable, to   reduce the necessity of any exercise of the power of eminent domain   to obtain interests in real property for the development of   infrastructure to transport water that is made available by a   project by using preexisting transportation and utility easements;                (2)  facilitating 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)  facilitating the development of standards and   guidance to ensure potential interconnectivity and   interoperability between different systems developed to transport   water from different projects;                (4)  facilitating 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)  taking other action recommended or requested by   the board to facilitate potential interconnectivity and   interoperability between different infrastructure implemented to   transport water from different projects.          (b)  When developing guidance and best practices under   Subsection (a)(2), the office shall, where practicable, plan for   the incorporation of excess capacity into infrastructure to   transport water that is made available by a project to facilitate   the potential transportation of additional water supplies from new   sources to meet new water demands after the initial construction of   the infrastructure.          Sec. 6.302.  USE OF PROFESSIONAL AND CONSULTING SERVICES   AUTHORIZED. (a) Subject to the approval of the board, the office   may procure professional and consulting services to achieve a   purpose described by Section 6.301.          (b)  Chapter 2254, Government Code, applies to the   procurement of professional and consulting services by the office.          Sec. 6.303.  FORMATION OF AD HOC COMMITTEES AUTHORIZED. The   office, with the approval of the board, may convene one or more ad   hoc committees comprised 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 deemed appropriate by the office to   advise and assist the office in fulfilling any purpose described by   Section 6.301, including in drafting any guidance or best practices   described by Section 6.301.          Sec. 6.304.  PAYMENT OF EXPENSES FROM WATER FUND. Pursuant   to Section 15.504(f), the board shall pay from the Water Fund:                (1)  the necessary and reasonable administrative   expenses of the office, including staffing expenses; and                (2)  the necessary and reasonable expenses for the   procurement of professional and consulting services under Section   6.302.          SECTION 1.2.  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)  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;                      (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;                (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 lease of that right   from its owner.          SECTION 1.3.  Section 15.504(f), Water Code, is amended to   read as follows:          (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 6.304 [not to   exceed two percent].          SECTION 1.4.  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.          SECTION 1.5.  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 49-d-16, Article III, 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 1.6.  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, 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 1.7.  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 1.8.  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 1.9.  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)  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 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; or                      (C)  have significant health, safety, or   environmental protection violations according to commission data;                (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];                (6)  the activities, findings, and recommendations of   the Office of Water Supply Conveyance Coordination established   under Subchapter H, Chapter 6.          (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 Section 6.118 to read as follows:          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:                            (i)  endure significant boil water notices;                            (ii)  have water losses that meet or exceed   the threshold established by rule under Section 16.0121; or                            (iii)  have significant health, safety, or   environmental protection violations according to commission data;                (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.   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 and insurance premium 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.