SB 7

relating to the oversight and financing of certain water
infrastructure matters under the jurisdiction of the Texas Water
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
(3)  "Project" means a water supply development,
treatment, or conveyance project eligible to receive financial
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
(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
(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
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
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
SECTION 1.2.  Section 15.153, Water Code, is amended by
amending Subsection (b) and adding Subsections (e) and (f) to read
(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
(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
(ii)  a permit for the storage, taking, or
diversion of state water has been issued by the commission under
(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);
(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
(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
SECTION 1.3.  Section 15.504(f), Water Code, is amended to
(f)  The board may use not more than two percent of the fund
(1)  the necessary and reasonable expenses of the board
(2)  the expenses described by Section 6.304 [not to
SECTION 1.4.  Section 15.502(b), Water Code, is amended to
(b)  The board may use the fund only to transfer money to:
(1)  the water assistance fund established under
(2)  the new water supply for Texas fund established
(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
(5)  a revolving fund established under Subchapter J;
(6)  the rural water assistance fund established under
(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
(1)  money transferred or deposited to the credit of
(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
(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
(4)  money from gifts, grants, or donations to the
(5)  money returned from any authorized transfer.
SECTION 1.6.  Section 15.504(c), Water Code, is amended to
(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
(2)  projects for which all required state or federal
permitting has been substantially completed, as determined by the
(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
(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
(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
(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
(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
(9)  preparing and publishing a manual on structuring
(10)  accepting and holding donations of water rights
to meet instream, water quality, fish and wildlife habitat, or bay
(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
(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
(1)  reservoirs and storm water retention basins for
water supply, flood protection, and groundwater recharge;
(2)  facilities for the transmission and treatment of
(3)  treatment works as defined by Section 17.001;
(4)  interregional water supply projects selected
(5)  projects described by Section 15.153(b)(1).
SECTION 1.9.  The following provisions of the Water Code are
ARTICLE 2.  LEGISLATIVE OVERSIGHT
SECTION 2.1.  Section 15.431(a)(1), Water Code, is amended
(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
(1)  the comptroller, or a person designated by the
(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,
(A)  a member of the committee of the house of
representatives having primary jurisdiction over appropriations;
(B)  the chair of the committee of the house of
representatives having primary jurisdiction over water resources;
(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
[(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
(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
(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
(g)  As needed, the [The] advisory committee shall submit
comments and recommendations to the board regarding the use of
(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
(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
[(8)  an evaluation of the overall operation, function,
(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
(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
(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
(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
(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
(6)  the activities, findings, and recommendations of
the Office of Water Supply Conveyance Coordination established
(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
SECTION 2.3.  The following provisions of the Water Code are
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
(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.
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.