A Wrap on the 88th Regular Session of the Texas Legislature but Special Sessions Continue

by Madison Huerta and Ty Embrey

While the 88th Regular Session of the Texas Legislature ended when the state legislators adjourned Sine Die on May 29, the work for the state legislators appears to be far from over. The House and Senate adjourned without passing legislation related to property taxes, border security, and public education. As a result, Governor Abbott immediately called the Legislature back for the first called Special Session that started on May 30. Although Governor Abbott has decided there is still work to be done by the 88th Texas Legislature, many laws were passed during the Regular Session that will impact the daily lives of Texans and the operations of municipalities and special districts around Texas.

In this session, legislators grappled with legislation to address many of the significant issues facing Texas. As we can tell from our every-day lives, many of those issues result from an exploding population and growing economy. In addition to these overarching issues, legislation was passed to continue the operations of several state regulatory agencies that impact the every-day lives of Texans, to invest in future water supply, and to increase transparency in environmental permitting. Starting with the state budget, this article focuses on the legislation that was passed by the Texas Legislature that affects Lloyd Gosselink’s clients.

I. House Bill (“HB”) 1: The Biennial Budget

Among the 8,000+ bills filed during this Regular Session, the passage of the biennial state budget, which will fund the Texas government for the next two fiscal years, is among the most important. The historic $321.3 billion budget takes advantage of Texas’s unprecedented budget surplus by allocating over $17 billion for property tax relief, investing $5.1 billion in border security, giving retired teachers a $3.4 billion cost-of-living adjustment, and reserving $1.4 billion for school safety measures. It also appropriates $1.5 billion to a new Texas Broadband Infrastructure Fund, $1 billion to a new Texas Water Fund, $625 million to the Flood Infrastructure Fund, and $125 million to the Clean Water State Revolving Fund.

II. Continuing Key Texas’s Regulatory Agencies: TCEQ, TWDB, and PUC

During the 88th Regular Session, the Legislature voted to continue the operations of Texas Commission on Environmental Quality (“TCEQ”), Texas Water Development Board (“TWDB”), and Public Utility Commission of Texas (“PUC”). Each agency was reviewed by the Texas Sunset Advisory Commission (the “Sunset Commission”) – a commission of ten state legislators and two private citizens – during the interim legislative period. Based on a comprehensive review of agency functions, the Sunset Commission recommended changes to both agency management and statutory authority. These recommended changes were incorporated into legislation that was finally passed by the Legislature and signed by Governor Abbott.

Texas Commission on Environmental Quality. Senate Bill (“SB”) 1397 will take effect September 1, 2023, and continues the TCEQ for another 12 years. Generally, the bill requires TCEQ to provide outreach and education related to public participation in the permitting process for its air, waste, and water programs; to post permit applications on its website; to increase the amount of the maximum daily administrative penalty for a violation from $25,000 to $40,000; to implement new permitting procedures related to public notice and security at meetings; and to develop criteria for classifying a repeat violator with respect to a person’s compliance history.

Further, SB 1397 requires TCEQ to establish a standard permit for temporary concrete plants; to extend the period for public comment and requesting a contested case hearing for permit applications under the Texas Clean Air Act; to ensure the environmental flows advisory group periodically reviews the flow standards for each river basin and bay system; and to provide notice of the creation of certain water districts to the corresponding state representative and state senator. Lastly, the bill makes changes to TCEQ Commissioner training requirements and to the separation of TCEQ and staff responsibilities.

Texas Water Development Board. HB 1565 will take effect September 1, 2023. In addition to continuing the agency for 12 more years, the bill makes changes to improve the efficiency of TWDB’s project review process.

Public Utility Commission. The PUC Sunset legislation, HB 1500, goes into effect on September 1, 2023 and continues the agency for only 6 more years at which time the agency will be reviewed again by the Sunset Commission. Initially, HB 1500 focused solely on the management and productivity of the PUC. However, it was amended late in the Regular Session to include several other electric bills. A more in-depth summary of HB 1500 can be found on page 5 in Utility Takeaways from the 88th Legislative Session. Regarding the PUC’s oversight of water and wastewater, the bill continues to authorize the PUC’s regulation of water and sewer service and creates some time limits when the PUC adopts an emergency order to address a failing water or wastewater utility.

III. Notable Passed Legislation

A. Legislation Affecting Municipalities

HB 2127 passed by the 88th Legislature addresses the pre-emption of municipal and county regulation of multiple economic and daily activities despite significant push back from local governments. HB 2127 prohibits a city from regulating activity already regulated by certain state codes including the Agriculture, Business & Commerce, Finance, Insurance, Labor, Natural Resources, Occupations, and Property Codes. Other notable bills affecting municipalities include SB 2038 that creates a pathway for residents and landowners to request release of an area from a municipality’s extraterritorial jurisdiction either by petition or election, and HB 4082 that defines what is considered a public work for purposes of issuing certificates of obligation or anticipation notes.

B. Legislation Affecting Special Districts & Open Government

HB 2815 makes significant updates to state statutes governing conservation and reclamation districts to which Chapter 49 of the Texas Water Code is applicable. These updates include an increase in the fees of office for district board directors as well as revised district requirements related to public notice, director confirmation and election, bond authorization, and division. In addition to HB 2815, several other bills were passed relating to open government matters that will affect many special districts:

• HB 1893 requires governmental entities to adopt a policy prohibiting the installation or use of TikTok on any device owned or leased by the entity and requiring the removal of TikTok from those devices;
• HB 3033 amends the Government Code to require the timely release of public information, to specify certain information related to elections is subject to disclosure, and to streamline the open records request process; and
• HB 3440 requires governmental bodies to post meeting agendas on the Internet.

C. Legislation Affecting Water & Water Infrastructure

The 88th Regular Session was an important session for water policy and additional investment in water infrastructure in Texas. The first ever Water Caucus was formed and supported the effort to pass SB 28 authored by Senator Charles Perry and Representative Tracy King. The historical legislation allocates $1 billion for the creation of the Texas Water Fund and the New Water Supply for Texas Fund (collectively, the “Funds”). These Funds will be used to finance new water supply projects involving desalination, produced water, aquifer storage and recovery, and the development of infrastructure to transport new water supplies. A portion of these Funds will also be used to address failing water infrastructure in rural political subdivisions and municipalities. Before SB 28 can fully take effect, the voters of Texas must approve the creation of these Funds during the November 2023 general elections.

The 88th Regular Session also saw the passage of legislation affecting the regulation of surface water and groundwater. A few of these bills are highlighted below:

(1) Surface Water

• SB 1289 authorizes a facility to dispose of treated wastewater without a permit and directs TCEQ to create rules for the disposal of reclaimed wastewater.
• HB 2460 requires the TCEQ to work on updated water availability models (“WAMs”) for the Guadalupe, Lavaca, Nueces, San Antonio, San Jacinto, and Trinity River basins. Unfortunately, the Texas Legislature did not provide any funding in the state budget for the TCEQ’s effort to update the WAMs, so the immediate path forward for the implementation of HB 2460 is being discussed.
• HB 3810 requires a nonindustrial public water supply system to issue a do-not-use advisory, do-not-consume advisory, or boil water notice upon the occurrence of certain unplanned conditions.

(2) Groundwater

• SB 2440 requires that certain plat applications for the subdivision of land include groundwater availability certifications by municipalities and counties.
• HB 1971 speeds up the timeline for when a groundwater conservation district must act on a permit or permit amendment application and makes changes related to quorum and the disqualification of board members.
• HB 3059 increases the maximum export fee a groundwater conservation district may charge for the export of groundwater to 20 cents per 1,000 gallons with annual increases and allows fees to be used for the maintenance and operation of wells.
• HB 3278 increases the transparency of the groundwater management area (“GMA”) process and revises procedures relating to the compilation, submission, and accessibility of information by a groundwater conservation district after the public comment period on proposed desired future conditions.

IV. Lloyd Gosselink at the Legislature

During the Regular Session, Lloyd Gosselink worked on behalf of multiple clients to protect the clients’ interests at the Texas Legislature and, in many cases, to work with legislators to get bills passed. These bills included legislation related to the eligibility of board directors, permissible ballot proposition language in a tax election, a district conversion, and the process for a municipality to approve a change order. Our team also worked with legislators and stakeholders to secure $10 million in funding for the plugging and remediation of abandoned wells in Pecos County. Lloyd Gosselink has a long history at the Texas Legislature and is proud to help our clients successfully navigate the legislative process.

V. What’s Next for the 88th Texas Legislature?

In addition to the two Special Called Sessions that have been held this summer to address property tax issues and border security issues, Governor Abbott is expected to call an additional Special Called Session this fall focused on public education issues. Additionally, the Texas Senate announced that Attorney General Paxton’s impeachment trial will begin September 5, 2023. This announcement comes after the Texas House of Representatives voted to impeach Attorney General Paxton after hours of debate on the House floor and upon a recommendation of the House General Investigating Committee.

The Governmental Relations Practice Group is proud of our accomplishments on behalf of Lloyd Gosselink’s clients during the Regular Session and stands ready to help our clients with any legislative issues they may have both now and in the future.

Madison Huerta is an Associate in the Firm’s Governmental Relations, Water, and Districts Practice Groups and Ty Embrey is Chair of the Firm’s Governmental Relations Practice Group and a member of the Firm’s Water, Districts, and Air and Waste Practice Groups. If you have any questions concerning Legislative tracking and monitoring services or legislative consulting services, please contact Madison at 512.322.5825 or mhuerta@lglawfirm.com, or Ty at 512.322.5829 or tembrey@lglawfirm.com.