H.B. No. 2294
    1-1                                AN ACT
    1-2  relating to the regulation of groundwater; granting the power of
    1-3  eminent domain.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  The caption of Title 2, Water Code, is amended to
    1-6  read as follows:
    1-7                TITLE 2.  <STATE> WATER ADMINISTRATION
    1-8        SECTION 2.  Title 2, Water Code, is amended by adding
    1-9  Subtitle E to read as follows:
   1-10                  SUBTITLE E.  GROUNDWATER MANAGEMENT
   1-11                   CHAPTER 35.  GROUNDWATER STUDIES
   1-12        Sec. 35.001.  PURPOSE.  In order to provide for the
   1-13  conservation, preservation, protection, recharging, and prevention
   1-14  of waste of the groundwater, and of groundwater reservoirs or their
   1-15  subdivisions, and to control subsidence caused by withdrawal of
   1-16  water from those groundwater reservoirs or their subdivisions,
   1-17  consistent with the objectives of Section 59, Article XVI, Texas
   1-18  Constitution, groundwater management areas may be created as
   1-19  provided by this chapter.
   1-20        Sec. 35.002.  DEFINITIONS.  In this chapter:
   1-21              (1)  "District" means any district or authority created
   1-22  under Section 52, Article III, or Section 59, Article XVI, Texas
   1-23  Constitution, that has the authority to regulate the spacing of
   1-24  water wells, the production from water wells, or both.
    2-1              (2)  "Commission" means the Texas Natural Resource
    2-2  Conservation Commission.
    2-3              (3)  "Executive director" means the executive director
    2-4  of the commission.
    2-5              (4)  "Executive administrator" means the executive
    2-6  administrator of the Texas Water Development Board.
    2-7              (5)  "Groundwater" means water percolating below the
    2-8  surface of the earth.
    2-9              (6)  "Groundwater reservoir" means a specific
   2-10  subsurface water-bearing reservoir having ascertainable boundaries
   2-11  containing groundwater.
   2-12              (7)  "Subdivision of a groundwater reservoir" means a
   2-13  definable part of a groundwater reservoir in which the groundwater
   2-14  supply will not be appreciably affected by withdrawing water from
   2-15  any other part of the reservoir, as indicated by known geological
   2-16  and hydrological conditions and relationships and on foreseeable
   2-17  economic development at the time the subdivision is designated or
   2-18  altered.
   2-19              (8)  "Subsidence" means the lowering in elevation of
   2-20  the land surface caused by withdrawal of groundwater.
   2-21              (9)  "Board" means the board of directors of a
   2-22  district.
   2-23              (10)  "Director" means a member of a board.
   2-24              (11)  "Management area" means an area designated and
   2-25  delineated by the commission as an area suitable for management of
   2-26  groundwater resources.
   2-27              (12)  "Critical area" means an area designated and
    3-1  delineated by the commission as an area that is experiencing or is
    3-2  expected to experience critical groundwater problems.
    3-3              (13)  "Political subdivision" means a county,
    3-4  municipality, or other body politic or corporate of the state,
    3-5  including a district or authority created under Section 52, Article
    3-6  III, or Section 59, Article XVI, Texas Constitution, a state
    3-7  agency, or a nonprofit water supply corporation created under
    3-8  Chapter 76, Acts of the 43rd Legislature, 1st Called Session, 1933
    3-9  (Article 1434a, Vernon's Texas Civil Statutes).
   3-10        Sec. 35.003.  SURFACE WATER LAWS NOT APPLICABLE.  The laws
   3-11  and administrative rules relating to the use of surface water do
   3-12  not apply to groundwater.
   3-13        Sec. 35.004.  DESIGNATION OF MANAGEMENT AREAS.  (a)  On its
   3-14  own motion from time to time, or on receiving a petition, the
   3-15  commission may designate groundwater management areas.  Each
   3-16  management area shall be designated with the objective of providing
   3-17  the most suitable area for the management of the groundwater
   3-18  resources.  To the extent feasible, the management area shall
   3-19  coincide with the boundaries of a groundwater reservoir or a
   3-20  subdivision of a groundwater reservoir.  The commission also may
   3-21  consider other factors, including the boundaries of political
   3-22  subdivisions.
   3-23        (b)  On the request of any person interested in the petition,
   3-24  or on the request of the commission, the executive director shall
   3-25  prepare available evidence relating to the configuration of a
   3-26  groundwater management area.  Before making the designation, the
   3-27  commission shall consider the evidence prepared by the executive
    4-1  director and other evidence submitted at the hearing.
    4-2        (c)  The commission may alter the boundaries of designated
    4-3  management areas as required by future conditions and as justified
    4-4  by factual data.  An alteration of boundaries does not invalidate
    4-5  the previous creation of any district.
    4-6        (d)  The commission shall designate groundwater management
    4-7  areas using the procedures applicable to rulemaking under the
    4-8  Administrative Procedure Act, Subchapter B, Chapter 2001,
    4-9  Government Code.
   4-10        Sec. 35.005.  PETITION TO DESIGNATE A GROUNDWATER MANAGEMENT
   4-11  AREA.  (a)  A petition may be submitted to the commission for the
   4-12  sole purpose of requesting that the commission designate a
   4-13  management area for all or part of one or more counties.
   4-14        (b)  A petition filed pursuant to this section must be signed
   4-15  by:
   4-16              (1)  a majority of the landowners in the proposed
   4-17  management area; or
   4-18              (2)  if there are more than 50 landowners in the
   4-19  proposed management area, at least 50 of those landowners.
   4-20        (c)  A petition filed pursuant to this section must contain
   4-21  the following statement:
   4-22        "Petitioners request that the Texas Natural Resource
   4-23  Conservation Commission designate a groundwater management area to
   4-24  include all or part of ______________ County (counties).  The
   4-25  management area shall be designated with the objective of providing
   4-26  the most suitable area for the management of groundwater resources
   4-27  of the part of the state in which a district is to be located.
    5-1  Petitioners understand that this petition requests only the
    5-2  designation of a management area, but that all or part of the land
    5-3  in the management area designated may later be added to an existing
    5-4  groundwater conservation district or become a new groundwater
    5-5  conservation district, as provided by Chapter 36 of the Water
    5-6  Code."
    5-7        (d)  A petition shall include a map that shows the location
    5-8  of the proposed management area and may include any other
    5-9  information desired by the petitioners concerning the proposed
   5-10  management area.
   5-11        (e)  The petitioners shall file the petition with the
   5-12  executive director for review in accordance with the rules of the
   5-13  commission.  The petitioners shall supply any additional
   5-14  information requested by the commission or the executive director.
   5-15        (f)  The commission shall act on the petition within a
   5-16  reasonable amount of time.
   5-17        Sec. 35.006.  NOTICE FOR DESIGNATION OF MANAGEMENT AREA.  (a)
   5-18  In addition to the notice required under the Administrative
   5-19  Procedure Act, Section 2001.023, Government Code, the petitioners
   5-20  shall have notice published in at least one newspaper with general
   5-21  circulation in the county or counties in which the proposed
   5-22  management area is to be located.  Notice must be published not
   5-23  later than the 30th day before the date set for the commission to
   5-24  consider the designation of the management area.
   5-25        (b)  The notice must include:
   5-26              (1)  a statement of the general purpose and effect of
   5-27  designating the proposed management area;
    6-1              (2)  a map generally outlining the boundaries of the
    6-2  proposed management area or notice of the location at which a copy
    6-3  of the map may be examined or obtained; and
    6-4              (3)  the time and place at which the commission will
    6-5  consider the designation of the management area.
    6-6        (c)  If the commission designates a management area on its
    6-7  own motion, the commission shall give the same notice as required
    6-8  of the petitioner under this section.
    6-9        Sec. 35.007.  IDENTIFYING, DESIGNATING, AND DELINEATING
   6-10  CRITICAL AREAS.  (a)  The executive director and the executive
   6-11  administrator shall meet at least once a year to identify those
   6-12  areas of the state that are experiencing or that are expected to
   6-13  experience, based on information available to the commission and
   6-14  the Texas Water Development Board, within the immediately following
   6-15  20-year period, critical groundwater problems, including shortages
   6-16  of surface or groundwater, land subsidence resulting from
   6-17  groundwater withdrawal, and contamination of groundwater supplies.
   6-18        (b)  If the executive director concludes that an area of the
   6-19  state should be considered for designation as a critical area, the
   6-20  executive director shall prepare a report to the commission.
   6-21        (c)  The executive director shall begin preparation of a
   6-22  critical area report by requesting a study from the executive
   6-23  administrator.  The study must include an appraisal of the
   6-24  hydrogeology of the area and matters within the Texas Water
   6-25  Development Board's planning expertise relevant to the area.  The
   6-26  study must be completed and delivered to the executive director on
   6-27  or before the 90th day following the date of the request.  If the
    7-1  study is not delivered within this 90-day period, the executive
    7-2  director may proceed with the preparation of the report.
    7-3        (d)  The report shall include:
    7-4              (1)  the recommended delineation of the boundaries of
    7-5  any proposed critical area in the form of a rule to be considered
    7-6  for adoption by the commission;
    7-7              (2)  the reasons and supporting information for or
    7-8  against designating the area as a critical area;
    7-9              (3)  a recommendation regarding whether a district
   7-10  should be created in the critical area or whether the critical area
   7-11  should be added to an existing district;
   7-12              (4)  any other information that the executive director
   7-13  considers helpful to the commission.
   7-14        (e)  The executive director must complete the report and file
   7-15  it with the commission on or before the 210th day following the
   7-16  date on which the executive administrator was requested to produce
   7-17  a study.  The executive director shall make the report available
   7-18  for public inspection by providing a copy of the report to at least
   7-19  one library in each county in which the proposed critical area is
   7-20  located.
   7-21        (f)  To carry out this section, the executive director may
   7-22  make necessary studies, hold hearings, solicit and collect
   7-23  information, and use information already prepared by the executive
   7-24  director or the executive administrator for other purposes.
   7-25        Sec. 35.008.  PROCEDURES FOR DESIGNATION OF CRITICAL AREAS.
   7-26  (a)  The commission shall designate critical areas using the
   7-27  procedures applicable to rulemaking under the Administrative
    8-1  Procedure Act, Subchapter B, Chapter 2001, Government Code, but if
    8-2  procedures required by this chapter are in conflict with that Act,
    8-3  this chapter controls.
    8-4        (b)  The designation of a critical area may not be appealed
    8-5  nor may it be challenged under the Administrative Procedure Act,
    8-6  Section 2001.038, Government Code.
    8-7        Sec. 35.009.  NOTICE AND HEARING.  (a)  In addition to the
    8-8  notice required for rulemaking under the Administrative Procedure
    8-9  Act, Section 2001.023, Government Code, the commission shall have
   8-10  notice published in at least one newspaper with general circulation
   8-11  in the county or counties in which the proposed critical area is to
   8-12  be located.  Notice must be published not later than the 30th day
   8-13  before the date set for the commission to consider the designation
   8-14  of the critical area.
   8-15        (b)  The notice must include:
   8-16              (1)  a statement of the general purpose and effect of
   8-17  designating the proposed critical areas;
   8-18              (2)  a map generally outlining the boundaries of the
   8-19  proposed critical area or notice of the location at which a copy of
   8-20  the map may be examined or obtained;
   8-21              (3)  a description or the name of the locations at
   8-22  which the commission has provided copies of the executive
   8-23  director's report to be made available for public inspection; and
   8-24              (4)  the date, time, and place at which the commission
   8-25  will consider the designation of the critical areas.
   8-26        Sec. 35.010.  CONSIDERATION OF CREATION OF DISTRICT OR
   8-27  ADDITION OF LAND IN CRITICAL AREA TO EXISTING DISTRICT.  (a)
    9-1  Following its designation of a critical area, the commission may
    9-2  call a hearing to consider:
    9-3              (1)  whether a district should be created over all or
    9-4  part of a critical area; or
    9-5              (2)  whether all or part of the land in the critical
    9-6  area should be added to an existing district.
    9-7        (b)  Evidentiary hearings shall be held at a location in one
    9-8  of the counties in which the critical area is located or in the
    9-9  nearest convenient location if adequate facilities are not
   9-10  available in the critical area.
   9-11        (c)  At the hearing, the commission shall hear testimony and
   9-12  receive evidence from all interested parties.  The commission shall
   9-13  consider the executive director's report and supporting information
   9-14  and the testimony and evidence received at the hearing.  If the
   9-15  commission considers further information necessary, it may request
   9-16  it from any source.
   9-17        Sec. 35.011.  NOTICE OF HEARING TO CREATE DISTRICT OR ADD
   9-18  CRITICAL AREA TO EXISTING DISTRICT.  (a)  The commission shall have
   9-19  notice of the hearing published in a newspaper with general
   9-20  circulation in the county or counties in which the area being
   9-21  considered for district creation or addition to an existing
   9-22  district is located.  Notice must be published not later than the
   9-23  30th day before the date of the hearing.
   9-24        (b)  The notice must include:
   9-25              (1)  a general statement of the nature and purpose of
   9-26  the district that may be created in the critical area;
   9-27              (2)  if applicable, a statement that all or part of the
   10-1  land in the critical area could be added to an existing district;
   10-2              (3)  a map generally outlining the boundaries of the
   10-3  critical area being considered for district creation or addition to
   10-4  an existing district or notice of the location at which a copy of
   10-5  the map may be examined or obtained;
   10-6              (4)  a statement that the full executive director's
   10-7  report concerning the critical area in question is available at the
   10-8  commission's main office in Austin, Texas, and that the report is
   10-9  available for inspection during regular business hours;
  10-10              (5)  the name and address of each library in the
  10-11  proposed critical area to which the commission has provided copies
  10-12  of the executive director's report; and
  10-13              (6)  the date, time, and place of the hearing.
  10-14        (c)  The commission also shall give written notice of the
  10-15  date, time, place, and purpose of the hearing to the governing body
  10-16  of each political subdivision located either partially or entirely
  10-17  in the critical area.  The notice must be given before the 30th day
  10-18  preceding the date set for the hearing.
  10-19        Sec. 35.012.  COMMISSION ORDER.  (a)  At the conclusion of
  10-20  its hearing and considerations, the commission shall issue an order
  10-21  stating its findings and conclusions.
  10-22        (b)  If the commission finds that the land and other property
  10-23  in the critical area would benefit from the creation of one or more
  10-24  districts, that there is a public need for one or more districts,
  10-25  and that the creation of one or more districts would further the
  10-26  public welfare, the commission shall issue an order stating that
  10-27  the creation of one or more districts is needed.
   11-1        (c)  During the period between the date of issuance of a
   11-2  commission order under Subsection (b) and one year after the close
   11-3  of the next regular session of the legislature following the
   11-4  issuance of the order, the landowners in the critical area may:
   11-5              (1)  create one or more districts under Subchapter B,
   11-6  Chapter 36;
   11-7              (2)  have the area annexed to a district that adjoins
   11-8  the area; or
   11-9              (3)  create one or more districts through the
  11-10  legislative process.
  11-11        (d)  The commission shall identify the areas subject to the
  11-12  order of the commission issued under Subsection (b) that have not,
  11-13  in the period provided by Subsection (c), been incorporated into a
  11-14  district, and shall delineate proposed boundaries of a district to
  11-15  include those areas.  If the commission proposes the creation of
  11-16  one or more districts, the commission shall begin the procedures
  11-17  for creation of a district provided in Subchapter B, Chapter 36.
  11-18        (e)  If the commission fails to find that the district would
  11-19  be a benefit to the land and other property within the critical
  11-20  area, that there is a public need for the district, or that
  11-21  creation of the district will further the public welfare, the
  11-22  commission shall issue an order stating that a district should not
  11-23  be created within the boundaries of the critical area.
  11-24        (f)  An order of the commission issued under this section may
  11-25  not be appealed.
  11-26        Sec. 35.013.  ADDING CRITICAL AREA TO EXISTING DISTRICT.  (a)
  11-27  If land in a critical area is located adjacent to one or more
   12-1  existing districts, the commission, instead of issuing an order
   12-2  under Section 35.012, may issue an order recommending that the
   12-3  critical area be added to the existing district designated by the
   12-4  commission.  In its order, the commission must find that the land
   12-5  and other property in the critical area and the land in the
   12-6  existing district will benefit from the addition of the area, that
   12-7  there is a public need to add the critical area to the existing
   12-8  district, and that the addition of the land to the existing
   12-9  district would further the public welfare.
  12-10        (b)  If the executive director recommends that the critical
  12-11  area be added to an existing district or if the commission
  12-12  considers it possible to add the critical area to an adjacent
  12-13  existing district, the commission shall give notice to the board of
  12-14  the existing district recommended by the executive director or
  12-15  considered by the commission to possibly serve the area and to any
  12-16  other existing districts adjacent to the critical area.
  12-17        (c)  The commission shall submit a copy of the order to the
  12-18  board of the district to which it is recommending the critical area
  12-19  be added.  The board shall vote on the addition of the critical
  12-20  area to the district and shall advise the commission of the
  12-21  outcome.
  12-22        (d)  If the board votes to accept the addition of the
  12-23  critical area to the district, the board shall call an election
  12-24  within the critical area as delineated by the commission to
  12-25  determine if the critical area will be added to the district.  In
  12-26  the order calling the election, the board shall designate election
  12-27  precincts and polling places for the elections.
   13-1        (e)  The board shall give notice of the election and the
   13-2  proposition to be voted on.  The board shall publish notice of the
   13-3  election at least one time in one or more newspapers with general
   13-4  circulation within the boundaries of the critical area.  The notice
   13-5  must be published before the 30th day preceding the date set for
   13-6  the election.
   13-7        (f)  The ballots for the election shall be printed to provide
   13-8  for voting for or against the proposition:  "The inclusion of
   13-9  __________ (briefly describe critical area) in the __________
  13-10  District."  If the district has issued bonds, the proposition shall
  13-11  include the following language:  "and assumption by the described
  13-12  area of a proportional share of the outstanding indebtedness of the
  13-13  district."
  13-14        (g)  Immediately after the election, the presiding judge of
  13-15  each polling place shall deliver the returns of the election to the
  13-16  board, and the board shall canvass the returns for the election
  13-17  within the critical area and declare the results.  If a majority of
  13-18  the voters in the critical area voting on the proposition vote in
  13-19  favor of the proposition, the board shall declare that the critical
  13-20  area is added to the district.  If a majority of the voters in the
  13-21  critical area voting on the proposition vote against adding the
  13-22  critical area to the district, the board shall declare that the
  13-23  critical area is not added to the district.  The board shall file a
  13-24  copy of the election results with the commission.
  13-25        (h)  If the voters approve adding the critical area to the
  13-26  district, the board of the district to which the critical area is
  13-27  added shall provide reasonable representation on that board
   14-1  compatible with the district's existing scheme of representation.
   14-2        (i)  If the proposition is defeated, another election to add
   14-3  the critical area to an existing district may not be called before
   14-4  the first anniversary of the date on which the election on the
   14-5  proposition was held.
   14-6        Sec. 35.014.  COSTS OF ELECTIONS.  (a)  The costs of an
   14-7  election to create a district at which a district is authorized to
   14-8  be created shall be paid by the district.
   14-9        (b)  The costs of an election to add a critical area to an
  14-10  existing district at which the voters approve adding the critical
  14-11  area to the district shall be paid by the existing district.
  14-12        (c)  The costs of an election to create a district or add a
  14-13  critical area to an existing district at which the proposition
  14-14  fails shall be paid by the commission.
  14-15        Sec. 35.015.  STATE ASSISTANCE.  (a)  A political subdivision
  14-16  located in or that has within its boundaries an area or part of an
  14-17  area delineated as a critical area, and in which the qualified
  14-18  voters fail to approve the creation of a district or to join an
  14-19  existing district, shall not be eligible to receive any financial
  14-20  assistance from the state under Chapter 15, 16, or 17 for use
  14-21  within that portion of the critical area not covered by a district.
  14-22        (b)  A political subdivision located in an area delineated as
  14-23  a critical area, and in which qualified voters approve the creation
  14-24  of a district or annexation into an existing district, shall be
  14-25  given consideration to receive financial assistance from the state
  14-26  under Chapter 17 for funds to be used in addressing issues
  14-27  identified in the critical area report in the manner provided by
   15-1  Sections 17.124 and 17.125, except that the board is not required
   15-2  to make the finding set out in Section 17.125(a)(2).
   15-3        Sec. 35.016.  EXEMPTION FROM CHAPTER.  (a)  This chapter does
   15-4  not apply to any active groundwater conservation district or to
   15-5  land within an active groundwater conservation district.
   15-6        (b)  A district is considered active if it meets the
   15-7  requirements in Section 36.301(c).
   15-8        Sec. 35.017.  STATE-OWNED LAND.  If state-owned land or a
   15-9  portion of state-owned land is located in a critical area, the
  15-10  state agency that has management and control over that land under
  15-11  the constitution or by statute may elect by written agreement with
  15-12  the commission and the district to include the state-owned land in
  15-13  the district.  The agreement shall be entered into as provided by
  15-14  the Texas Intergovernmental Cooperation Act, Chapter 741,
  15-15  Government Code, and may include provisions for the payment by the
  15-16  state agency of reasonable fees to the district.  If the state does
  15-17  not elect to enter into the agreement to include the state-owned
  15-18  land in the district, the state agency must establish a groundwater
  15-19  management plan that will conserve, protect, and prevent the waste
  15-20  of groundwater on that state-owned land.
  15-21            CHAPTER 36.  GROUNDWATER CONSERVATION DISTRICTS
  15-22                   SUBCHAPTER A.  GENERAL PROVISIONS
  15-23        Sec. 36.001.  DEFINITIONS.  In this chapter:
  15-24              (1)  "District" means any district or authority created
  15-25  under Section 52, Article III, or Section 59, Article XVI, Texas
  15-26  Constitution, that has the authority to regulate the spacing of
  15-27  water wells, the production from water wells, or both.
   16-1              (2)  "Commission" means the Texas Natural Resource
   16-2  Conservation Commission.
   16-3              (3)  "Executive director" means the executive director
   16-4  of the commission.
   16-5              (4)  "Executive administrator" means the executive
   16-6  administrator of the Texas Water Development Board.
   16-7              (5)  "Groundwater" means water percolating below the
   16-8  surface of the earth.
   16-9              (6)  "Groundwater reservoir" means a specific
  16-10  subsurface water-bearing reservoir having ascertainable boundaries
  16-11  containing groundwater.
  16-12              (7)  "Subdivision of a groundwater reservoir" means a
  16-13  definable part of a groundwater reservoir in which the groundwater
  16-14  supply will not be appreciably affected by withdrawing water from
  16-15  any other part of the reservoir, as indicated by known geological
  16-16  and hydrological conditions and relationships and on foreseeable
  16-17  economic development at the time the subdivision is designated or
  16-18  altered.
  16-19              (8)  "Waste" means any one or more of the following:
  16-20                    (A)  withdrawal of groundwater from a groundwater
  16-21  reservoir at a rate and in an amount that causes or threatens to
  16-22  cause intrusion into the reservoir of water unsuitable for
  16-23  agricultural, gardening, domestic, or stock raising purposes;
  16-24                    (B)  the flowing or producing of wells from a
  16-25  groundwater reservoir if the water produced is not used for a
  16-26  beneficial purpose;
  16-27                    (C)  escape of groundwater from a groundwater
   17-1  reservoir to any other reservoir or geologic strata that does not
   17-2  contain groundwater;
   17-3                    (D)  pollution or harmful alteration of
   17-4  groundwater in a groundwater reservoir by saltwater or by other
   17-5  deleterious matter admitted from another stratum or from the
   17-6  surface of the ground;
   17-7                    (E)  wilfully or negligently causing, suffering,
   17-8  or allowing groundwater to escape into any river, creek, natural
   17-9  watercourse, depression, lake, reservoir, drain, sewer, street,
  17-10  highway, road, or road ditch, or onto any land other than that of
  17-11  the owner of the well unless such discharge is authorized by
  17-12  permit, rule, or order issued by the commission under Chapter 26;
  17-13                    (F)  groundwater pumped for irrigation that
  17-14  escapes as irrigation tailwater onto land other than that of the
  17-15  owner of the well unless permission has been granted by the
  17-16  occupant of the land receiving the discharge; or
  17-17                    (G)  for water produced from an artesian well,
  17-18  "waste" has the meaning assigned by Section 11.205.
  17-19              (9)  "Use for a beneficial purpose" means use for:
  17-20                    (A)  agricultural, gardening, domestic, stock
  17-21  raising, municipal, mining, manufacturing, industrial, commercial,
  17-22  recreational, or pleasure purposes;
  17-23                    (B)  exploring for, producing, handling, or
  17-24  treating oil, gas, sulphur, or other minerals; or
  17-25                    (C)  any other purpose that is useful and
  17-26  beneficial to the user.
  17-27              (10)  "Subsidence" means the lowering in elevation of
   18-1  the land surface caused by withdrawal of groundwater.
   18-2              (11)  "Board" means the board of directors of a
   18-3  district.
   18-4              (12)  "Director" means a member of a board.
   18-5              (13)  "Management area" means an area designated and
   18-6  delineated by the commission under Chapter 35 as an area suitable
   18-7  for management of groundwater resources.
   18-8              (14)  "Critical area" means an area designated and
   18-9  delineated by the commission under Chapter 35 as an area
  18-10  experiencing or expected to experience critical groundwater
  18-11  problems.
  18-12              (15)  "Political subdivision" means a county,
  18-13  municipality, or other body politic or corporate of the state,
  18-14  including a district or authority created under Section 52, Article
  18-15  III, or Section 59, Article XVI, Texas Constitution, a state
  18-16  agency, or a nonprofit water supply corporation created under
  18-17  Chapter 76, Acts of the 43rd Legislature, 1st Called Session, 1933
  18-18  (Article 1434a, Vernon's Texas Civil Statutes).
  18-19        Sec. 36.002.  OWNERSHIP OF GROUNDWATER.  The ownership and
  18-20  rights of the owners of the land and their lessees and assigns in
  18-21  groundwater are hereby recognized, and nothing in this code shall
  18-22  be construed as depriving or divesting the owners or their lessees
  18-23  and assigns of the ownership or rights, subject to rules
  18-24  promulgated by a district.
  18-25            (Sections 36.003-36.010 reserved for expansion
  18-26                 SUBCHAPTER B.  CREATION OF DISTRICT
  18-27        Sec. 36.011.  METHOD OF CREATING DISTRICT.  (a)  A
   19-1  groundwater conservation district may be created under and subject
   19-2  to the authority, conditions, and restrictions of Section 59,
   19-3  Article XVI, Texas Constitution.
   19-4        (b)  The commission has exclusive jurisdiction over the
   19-5  delineation of management areas and the creation of districts.
   19-6        Sec. 36.012.  COMPOSITION OF DISTRICT.  (a)  A district may
   19-7  include all or part of one or more counties, cities, districts, or
   19-8  other political subdivisions.
   19-9        (b)  A district may not include territory located in more
  19-10  than one county except on a majority vote of the voters residing
  19-11  within the territory in each county sought to be included in the
  19-12  district at an election called for that purpose.
  19-13        (c)  The boundaries of a district must be coterminous with or
  19-14  inside the boundaries of a management area or a critical area.
  19-15        (d)  A district may consist of separate bodies of land
  19-16  separated by land not included in the district.
  19-17        (e)  A majority of the voters in a segregated area must
  19-18  approve the creation of the district before that area may be
  19-19  included in the district.
  19-20        Sec. 36.013.  PETITION TO CREATE DISTRICT.  (a)  A petition
  19-21  requesting creation of a district must be filed with the executive
  19-22  director for review and submission to the commission.
  19-23        (b)  The petition filed pursuant to this section must be
  19-24  signed by:
  19-25              (1)  a majority of the landowners within the proposed
  19-26  district, as indicated by the county tax rolls; or
  19-27              (2)  if there are more than 50 landowners in the
   20-1  proposed district, at least 50 of those landowners.
   20-2        (c)  The petition must include:
   20-3              (1)  the name of the proposed district;
   20-4              (2)  the area and boundaries of the proposed district,
   20-5  including a map generally outlining the boundaries of the proposed
   20-6  district;
   20-7              (3)  the purpose or purposes of the district;
   20-8              (4)  a statement of the general nature of any projects
   20-9  proposed to be undertaken by the district, the necessity and
  20-10  feasibility of the work, and the estimated costs of those projects
  20-11  according to the persons filing the projects if the projects are to
  20-12  be funded by the sale of bonds or notes; and
  20-13              (5)  any additional terms or conditions that restrict
  20-14  the powers of the district from those provided in this chapter.
  20-15        (d)  If a part of the proposed district is not included
  20-16  within either a management area or a critical area, the petition to
  20-17  create a district may also contain a request to create a management
  20-18  area.  A request to create a management area must comply with the
  20-19  requirements for a petition in Section 35.005, and may be acted on
  20-20  by the commission separately from the petition to create the
  20-21  district.
  20-22        Sec. 36.014.  NOTICE AND HEARING ON DISTRICT CREATION.  (a)
  20-23  The notice of hearing on a petition must include a statement of the
  20-24  nature and purpose of the proposed district and the date, time, and
  20-25  place of hearing.
  20-26        (b)  The notice must be posted on the bulletin board used for
  20-27  posting legal notices in each county in which all or part of the
   21-1  proposed district is to be located.
   21-2        (c)  Notice of the hearing shall be published in a newspaper
   21-3  with general circulation in the county or counties in which the
   21-4  proposed district is to be located.  Notice must be published not
   21-5  later than the 30th day before the date of the hearing.
   21-6        (d)  If the petition contains a request to create a
   21-7  management area in all or part of the proposed district, the notice
   21-8  must also be given in accordance with the requirements in Section
   21-9  35.006 for the designation of management areas.
  21-10        Sec. 36.015.  FINDINGS.  (a)  If the commission finds that a
  21-11  district is feasible and practicable, that it would be a benefit to
  21-12  the land in the district, and that it would be a public benefit or
  21-13  utility, the commission shall issue an order containing these
  21-14  findings granting the petition.
  21-15        (b)  If the commission finds that a district is not feasible
  21-16  and practicable, that it would not be a benefit to the land in the
  21-17  district, that it would not be a public benefit or utility, or that
  21-18  it is not needed, the commission by order shall deny the petition.
  21-19        (c)  The commission may adjust the boundaries of the proposed
  21-20  district to exclude any land that would not be benefited by
  21-21  inclusion in the district and is not necessary to the district for
  21-22  proper regulation of the groundwater reservoir.
  21-23        (d)  If the commission grants the petition to create the
  21-24  district, it shall direct in its order creating the district that
  21-25  an election be called by the temporary directors to confirm the
  21-26  creation of the district and to elect permanent directors.
  21-27        (e)  The refusal to grant a petition to create a district
   22-1  does not invalidate or affect the designation of any management
   22-2  area requested in the same petition.
   22-3        (f)  The commission shall act on the petition within a
   22-4  reasonable amount of time.
   22-5        Sec. 36.016.  APPOINTMENT OF TEMPORARY DIRECTORS.  (a)  If
   22-6  the commission grants a petition to create a district, it shall
   22-7  appoint five temporary directors who shall serve until the initial
   22-8  directors are elected and have qualified for office or until the
   22-9  voters fail to approve the creation of the district.
  22-10        (b)  If an appointee of the commission fails to qualify or if
  22-11  a vacancy occurs in the office of temporary director, the
  22-12  commission shall appoint an individual to fill the vacancy.
  22-13        (c)  As soon as all temporary directors have qualified, the
  22-14  directors shall meet, take the oath of office, and elect a chairman
  22-15  and vice chairman from among their membership.  The chairman shall
  22-16  preside at all meetings of the board and, in the chairman's
  22-17  absence, the vice chairman shall preside.
  22-18        Sec. 36.017.  CONFIRMATION AND DIRECTORS' ELECTION.  (a)  Not
  22-19  later than the 60th day after the date all temporary directors have
  22-20  been appointed and have qualified, the temporary directors shall
  22-21  meet and order an election to be held within the boundaries of the
  22-22  proposed district to approve the creation of the district and to
  22-23  elect permanent directors.
  22-24        (b)  In the order calling the election, the temporary
  22-25  directors shall designate election precincts and polling places for
  22-26  the election.  In designating the polling places, the temporary
  22-27  directors shall consider the needs of all voters for conveniently
   23-1  located polling places.
   23-2        (c)  The temporary directors shall publish notice of the
   23-3  election at least one time in at least one newspaper with general
   23-4  circulation within the boundaries of the proposed district.  The
   23-5  notice must be published before the 30th day preceding the date of
   23-6  the election.
   23-7        (d)  The ballot for the election must be printed to  provide
   23-8  for  voting  for  or  against  the  proposition:  "The creation of
   23-9  the ____________ Groundwater Conservation District."  If the
  23-10  district levies a maintenance tax for payment of its expenses, the
  23-11  proposition shall include the following language:  "and the levy of
  23-12  a maintenance tax at a rate not to exceed ______ cents for each
  23-13  $100 of assessed valuation."
  23-14        (e)  Immediately after the election, the presiding judge of
  23-15  each polling place shall deliver the returns of the election to the
  23-16  temporary board, and the board shall canvass the returns and
  23-17  declare the result.  The board shall file a copy of the election
  23-18  result with the commission.
  23-19        (f)  If a majority of the votes cast at the election favor
  23-20  the creation of the district, the temporary board shall declare the
  23-21  district created and shall enter the result in its minutes.
  23-22        (g)  If a majority of the votes cast at the election are
  23-23  against the creation of the district, the temporary board shall
  23-24  declare the district defeated and shall enter the result in its
  23-25  minutes.
  23-26        (h)  If the majority of the votes cast at the election are
  23-27  against the creation of the district, the district shall have no
   24-1  further authority, except that any debts incurred shall be paid and
   24-2  the organization of the district shall be maintained until all the
   24-3  debts are paid.
   24-4        Sec. 36.018.  INCLUSION OF MUNICIPALITY.  (a)  If part of the
   24-5  territory to be included in a district is located in a
   24-6  municipality, a separate voting district may not be established in
   24-7  the municipality for the purpose of determining whether the
   24-8  municipality as a separate area is to be included in the district.
   24-9        (b)  If for any other reason the territory in a municipality
  24-10  is established as a separate voting district, the failure by the
  24-11  voters in the municipal territory to confirm the creation of the
  24-12  district or the annexation of territory to a district does not
  24-13  prevent the territory in the municipality from being included in
  24-14  the district.
  24-15        Sec. 36.019.  CONFIRMATION ELECTION IN DISTRICT INCLUDING
  24-16  LAND IN MORE THAN ONE COUNTY.  A district, the major portion of
  24-17  which is located in one county, may not be organized to include
  24-18  land in another county unless the election held in the other county
  24-19  to confirm and ratify the creation of the district is approved by a
  24-20  majority of the voters of the other county voting in an election
  24-21  called for that purpose.
  24-22        Sec. 36.020.  BOND AND TAX PROPOSAL.  (a)  At an election to
  24-23  create a district, the temporary directors may include a
  24-24  proposition for the issuance of bonds or notes, the levy of taxes
  24-25  to retire all or part of the bonds or notes, and the levy of a
  24-26  maintenance tax.  The maintenance tax rate may not exceed 50 cents
  24-27  on each $100 of assessed valuation.
   25-1        (b)  The board shall include in any bond and tax proposition
   25-2  the maximum amount of bonds or notes to be issued and their maximum
   25-3  maturity date.
   25-4        Sec. 36.021.  NOTIFICATION OF COUNTY CLERK.  Within 30 days
   25-5  following the creation of a district or any amendment to the
   25-6  boundaries of a district, the board of directors shall file with
   25-7  the county clerk of each county in which all or part of the
   25-8  district is located a certified copy of the description of the
   25-9  boundaries of the district.  Each county clerk shall record the
  25-10  certified copy of the boundaries in the property records of that
  25-11  county.
  25-12            (Sections 36.022-36.050 reserved for expansion
  25-13                     SUBCHAPTER C.  ADMINISTRATION
  25-14        Sec. 36.051.  BOARD OF DIRECTORS.  (a)  The governing body of
  25-15  a district is the board of directors, which shall consist of not
  25-16  fewer than five and not more than 11 directors elected for
  25-17  four-year terms.  The number of directors may be changed as
  25-18  determined by the board when territory is annexed by the district.
  25-19        (b)  A member of a governing body of another political
  25-20  subdivision is ineligible for appointment or election as a
  25-21  director.  A director is disqualified and vacates the office of
  25-22  director if the director is appointed or elected as a member of the
  25-23  governing body of another political subdivision.  This subsection
  25-24  does not apply to any district with a population less than 50,000.
  25-25        (c)  Vacancies in the office of director shall be filled by
  25-26  appointment of the board.  If the vacant office is not scheduled
  25-27  for election for longer than two years at the time of the
   26-1  appointment, the board shall order an election for the unexpired
   26-2  term to be held as part of the next regularly scheduled director's
   26-3  election.  The appointed director's term shall end on qualification
   26-4  of the director elected at that election.
   26-5        Sec. 36.052.  OTHER LAWS NOT APPLICABLE.  Other laws
   26-6  governing the administration or operations of districts created
   26-7  under Section 52, Article III, or Section 59, Article XVI, Texas
   26-8  Constitution, shall not apply to any district governed by this
   26-9  chapter.  This chapter prevails over any other law in conflict or
  26-10  inconsistent with this chapter, except any special law governing a
  26-11  specific district shall prevail over this chapter.
  26-12        Sec. 36.053.  QUORUM.  A majority of the membership of the
  26-13  board constitutes a quorum for any meeting, and a concurrence of a
  26-14  majority of the entire membership of the board is sufficient for
  26-15  transacting any business of the district.
  26-16        Sec. 36.054.  OFFICERS.  (a)  After a district is created and
  26-17  the directors have qualified, the board shall meet, elect a
  26-18  president, vice president, secretary, and any other officers or
  26-19  assistant officers as the board may deem necessary and begin the
  26-20  discharge of its duties.
  26-21        (b)  After each directors' election, the board shall meet and
  26-22  elect officers.
  26-23        (c)  The president is the chief executive officer of the
  26-24  district, presides at all meetings of the board, and shall execute
  26-25  all documents on behalf of the district.  The vice president shall
  26-26  act as president in case of the absence or disability of the
  26-27  president.  The secretary is responsible for seeing that all
   27-1  records and books of the district are properly kept and shall
   27-2  attest the president's signature on all documents.
   27-3        (d)  The board may appoint another director, the general
   27-4  manager, or any employee as assistant or deputy secretary to assist
   27-5  the secretary, and any such person shall be entitled to certify as
   27-6  to the authenticity of any record of the district, including but
   27-7  not limited to all proceedings relating to bonds, contracts, or
   27-8  indebtedness of the district.
   27-9        (e)  After any election or appointment of a director, a
  27-10  district shall notify the executive director within 30 days after
  27-11  the date of the election or appointment of the name and mailing
  27-12  address of the director chosen and the date that director's term of
  27-13  office expires.  The executive director shall provide forms to the
  27-14  district for such purpose.
  27-15        Sec. 36.055.  SWORN STATEMENT, BOND, AND OATH OF OFFICE.  (a)
  27-16  As soon as practicable after a director is elected or appointed,
  27-17  that director shall make the sworn statement prescribed by the
  27-18  constitution for public office.
  27-19        (b)  As soon as practicable after a director has made the
  27-20  sworn statement, and before beginning to perform the duties of
  27-21  office, that director shall take the oath of office prescribed by
  27-22  the constitution for public officers.
  27-23        (c)  Before beginning to perform the duties of office, each
  27-24  director shall execute a bond for $10,000 payable to the district
  27-25  and conditioned on the faithful performance of that director's
  27-26  duties.  All bonds of the directors shall be approved by the board
  27-27  and paid for by the district.
   28-1        (d)  The sworn statement, bond, and oath shall be filed with
   28-2  the district and retained in its records.  A duplicate original of
   28-3  the sworn statement and the oath shall also be filed with the
   28-4  secretary of state within 10 days after their execution and need
   28-5  not be filed before the new director begins to perform the duties
   28-6  of office.
   28-7        Sec. 36.056.  GENERAL MANAGER.  (a)  The board may employ or
   28-8  contract with a person to perform such services as general manager
   28-9  for the district as the board may from time to time specify.  The
  28-10  board may delegate to the general manager full authority to manage
  28-11  and operate the affairs of the district subject only to orders of
  28-12  the board.
  28-13        (b)  The board may delegate to the general manager the
  28-14  authority to employ all persons necessary for the proper handling
  28-15  of the business and operation of the district and to determine the
  28-16  compensation to be paid all employees other than the general
  28-17  manager.
  28-18        (c)  Except in a district that is composed of the territory
  28-19  of more than one county, a director may be employed as general
  28-20  manager of the district.  The compensation of a general manager who
  28-21  also serves as a director shall be established by the other
  28-22  directors.
  28-23        Sec. 36.057.  MANAGEMENT OF DISTRICT.  (a)  The board shall
  28-24  be responsible for the management of all the affairs of the
  28-25  district.  The district shall employ or contract with all persons,
  28-26  firms, partnerships, corporations, or other entities, public or
  28-27  private, deemed necessary by the board for the conduct of the
   29-1  affairs of the district, including, but not limited to, engineers,
   29-2  attorneys, financial advisors, operators, bookkeepers, tax
   29-3  assessors and collectors, auditors, and administrative staff.
   29-4        (b)  The board shall set the compensation and terms for
   29-5  consultants.
   29-6        (c)  In selecting attorneys, engineers, auditors, financial
   29-7  advisors, or other professional consultants, the district shall
   29-8  follow the procedures provided in the Professional Services
   29-9  Procurement Act, Subchapter A, Chapter 2254, Government Code.
  29-10        (d)  The board shall require an officer, employee, or
  29-11  consultant who collects, pays, or handles any funds of the district
  29-12  to furnish good and sufficient bond, payable to the district, in an
  29-13  amount determined by the board to be sufficient to safeguard the
  29-14  district.  The bond shall be conditioned on the faithful
  29-15  performance of that person's duties and on accounting for all funds
  29-16  and property of the district.  Such bond shall be signed or
  29-17  endorsed by a surety company authorized to do business in the
  29-18  state.
  29-19        (e)  The board may pay the premium on surety bonds required
  29-20  of officials, employees, or consultants of the district out of any
  29-21  available funds of the district, including proceeds from the sale
  29-22  of bonds.
  29-23        (f)  The board may adopt bylaws to govern the affairs of the
  29-24  district to perform its purposes.  The board may, by resolution,
  29-25  authorize its general manager or other employee to execute
  29-26  documents on behalf of the district.
  29-27        (g)  The board shall also have the right to purchase all
   30-1  materials, supplies, equipment, vehicles, and machinery needed by
   30-2  the district to perform its purposes.
   30-3        Sec. 36.058.  CONFLICTS OF INTEREST.  A director of a
   30-4  district is subject to the provisions of Chapter 171, Local
   30-5  Government Code, relating to the regulation of conflicts of
   30-6  officers of local governments.
   30-7        Sec. 36.059.  GENERAL ELECTIONS.  (a)  All elections shall be
   30-8  generally conducted in accordance with the Election Code except as
   30-9  otherwise provided for by this chapter.  Write-in candidacies for
  30-10  any district office shall be governed by Subchapter C, Chapter 146,
  30-11  Election Code.
  30-12        (b)  The directors of the district shall be elected according
  30-13  to the precinct method as defined by Chapter 12, page 1105, Special
  30-14  Laws, Acts of the 46th Legislature, Regular Session, 1939.  To be
  30-15  qualified to be elected as a director, a person must be a
  30-16  registered voter  in the precinct  that the person represents.  If
  30-17  any part of a municipal corporation is a part of one precinct, then
  30-18  no part of the municipal corporation shall be included in another
  30-19  precinct, except that a municipal corporation having a population
  30-20  of more than 200,000 may be divided between two or more precincts.
  30-21  In a multicounty district, not more than two of the five precincts
  30-22  may include the same municipal corporation or part of the same
  30-23  municipal corporation.
  30-24        Sec. 36.060.  FEES OF OFFICE; REIMBURSEMENT.  (a)  A director
  30-25  is entitled to receive fees of office of not more than $100 a day
  30-26  for each day the director actually spends performing the duties of
  30-27  a director.  The fees of office may not exceed $6,000 a year.
   31-1        (b)  Each director is also entitled to receive reimbursement
   31-2  of actual expenses reasonably and necessarily incurred while
   31-3  engaging in activities on behalf of the district.
   31-4        (c)  In order to receive fees of office and to receive
   31-5  reimbursement for expenses, each director shall file with the
   31-6  district a verified statement showing the number of days actually
   31-7  spent in the service of the district and a general description of
   31-8  the duties performed for each day of service.
   31-9        Sec. 36.061.  POLICIES.  (a)  Subject to the law governing
  31-10  the district, the board shall adopt the following in writing:
  31-11              (1)  a code of ethics for district directors, officers,
  31-12  employees, and persons who are engaged in handling investments for
  31-13  the district;
  31-14              (2)  a policy relating to travel expenditures;
  31-15              (3)  a policy relating to district investments that
  31-16  ensures that:
  31-17                    (A)  purchases and sales of investments are
  31-18  initiated by authorized individuals, conform to investment
  31-19  objectives and regulations, and are properly documented and
  31-20  approved; and
  31-21                    (B)  periodic review is made of district
  31-22  investments to evaluate investment performance and security;
  31-23              (4)  policies and procedures for selection, monitoring,
  31-24  or review and evaluation of professional services;
  31-25              (5)  policies that ensure a better use of management
  31-26  information, including:
  31-27                    (A)  budgets for use in planning and controlling
   32-1  cost;
   32-2                    (B)  an audit or finance committee of the board;
   32-3  and
   32-4                    (C)  uniform reporting requirements that use
   32-5  "Audits of State and Local Governmental Units" as a guide  on audit
   32-6  working papers and that uses "Governmental Accounting and Financial
   32-7  Reporting Standards."
   32-8        (b)  The state auditor may audit the financial transactions
   32-9  of any district if the state auditor determines that the audit is
  32-10  necessary.
  32-11        Sec. 36.062.  OFFICES AND MEETING PLACES.  (a)  The board
  32-12  shall designate from time to time and maintain one or more regular
  32-13  offices for conducting the business of the district  and
  32-14  maintaining the records of the district.  Such offices may be
  32-15  located either inside or outside the district's boundaries as
  32-16  determined in the discretion of the board.
  32-17        (b)  The board  shall designate one or more places inside or
  32-18  outside the district for conducting the meetings of the board.
  32-19        Sec. 36.063.  NOTICE OF MEETINGS.  Notice of meetings of  the
  32-20  board shall be given as set forth in the Open Meetings  Act,
  32-21  Chapter 551, Government Code.  Neither failure to provide notice of
  32-22  a regular meeting nor an insubstantial defect in notice of any
  32-23  meeting shall affect the validity of any action taken at the
  32-24  meeting.
  32-25        Sec. 36.064.  MEETINGS.  (a)  The board  shall hold regular
  32-26  meetings at least quarterly.  It may hold meetings at other times
  32-27  as required for the business of the district.
   33-1        (b)  Meetings  shall be conducted and notice of meetings
   33-2  shall be posted in accordance with the Open Meetings Act, Chapter
   33-3  551, Government Code.  A meeting of a committee of the board, or a
   33-4  committee composed of representatives of more than one board, where
   33-5  less than a quorum of any one board is present is not subject to
   33-6  the provisions of the Open Meetings Act, Chapter 551, Government
   33-7  Code.
   33-8        Sec. 36.065.  RECORDS.  (a)  The board shall keep a complete
   33-9  account of all its meetings and proceedings and shall preserve its
  33-10  minutes, contracts, records, notices, accounts, receipts, and other
  33-11  records in a safe place.
  33-12        (b)  The records of each district are the property of the
  33-13  district and are subject to Chapter 552, Government Code.
  33-14        (c)  The preservation, storage, destruction, or other
  33-15  disposition of the records of each district is subject to the
  33-16  requirements of Chapter 201, Local Government Code, and rules
  33-17  adopted thereunder.
  33-18        Sec. 36.066.  SUITS.  (a)  A district may sue and be sued in
  33-19  the courts of this state in the name of the district by and through
  33-20  its board.  All courts shall take judicial notice of the creation
  33-21  of the district and of its boundaries.
  33-22        (b)  Any court in the state rendering judgment for debt
  33-23  against a district may order the board to levy, assess, and collect
  33-24  taxes or assessments to pay the judgment.
  33-25        (c)  The president or the general manager of any district
  33-26  shall be the agent of the district on whom process, notice, or
  33-27  demand required or permitted by law to be served upon a district
   34-1  may be served.
   34-2        (d)  Except as provided in Subsection (e), no suit may be
   34-3  instituted in any court of this state contesting:
   34-4              (1)  the validity of the creation and boundaries of a
   34-5  district;
   34-6              (2)  any bonds or other obligations issued by a
   34-7  district; or
   34-8              (3)  the validity or the authorization of a contract
   34-9  with the United States by a district.
  34-10        (e)  The matters listed in Subsection (d) may be judicially
  34-11  inquired into at any time and determined in any suit brought by the
  34-12  State of Texas through the attorney general.  The action shall be
  34-13  brought on good cause shown, except where otherwise provided by
  34-14  other provisions of this code or by the Texas Constitution.  It is
  34-15  specifically provided, however, that no such proceeding shall
  34-16  affect the validity of or security for any bonds or other
  34-17  obligations theretofore issued by a district if such bonds or other
  34-18  obligations have been approved by the attorney general.
  34-19        (f)  A district shall not be required to give bond for
  34-20  appeal, injunction, or costs in any suit to which it is a party and
  34-21  shall not be required to deposit more than the amount of any award
  34-22  in any eminent domain proceeding.
  34-23        (g)  If the district prevails in any suit other than a suit
  34-24  in which it voluntarily intervenes, it may, in the same action,
  34-25  recover reasonable fees for attorneys, expert witnesses, and other
  34-26  costs incurred by the district before the court.  The amount of the
  34-27  attorney's fees shall be fixed by the court.
   35-1        Sec. 36.067.  CONTRACTS.  (a)  A district shall contract, and
   35-2  be contracted with, in the name of the district.
   35-3        (b)  A district may purchase property from any other
   35-4  governmental entity by negotiated contract without the necessity of
   35-5  securing appraisals or advertising for bids.
   35-6        Sec. 36.068.  EMPLOYEE BENEFITS.  (a)  The board may provide
   35-7  for and administer retirement, disability, and death compensation
   35-8  funds for the employees of the district.
   35-9        (b)  The board may establish a public retirement system in
  35-10  accordance with the provisions of Chapter 810, Government Code.
  35-11  The board may also provide for a deferred compensation plan
  35-12  described by Section 457 of the Internal Revenue Code of 1986 (26
  35-13  U.S.C. Section 457).
  35-14        (c)  The board may include hospitalization and medical
  35-15  benefits to its employees as part of the compensation paid to the
  35-16  officers and employees and may adopt any plan, rule, or regulation
  35-17  in connection with it and amend or change the plan, rule, or
  35-18  regulation as it may determine.
  35-19            (Sections 36.069-36.100 reserved for expansion
  35-20                   SUBCHAPTER D.  POWERS AND DUTIES
  35-21        Sec. 36.101.  RULEMAKING POWER.  (a)  A district may make and
  35-22  enforce rules to provide for conserving, preserving, protecting,
  35-23  and recharging of the groundwater or of a groundwater reservoir or
  35-24  its subdivisions in order to control subsidence or prevent waste of
  35-25  groundwater and to carry out the powers and duties provided by this
  35-26  chapter.
  35-27        (b)  After notice and hearing, the board shall adopt and
   36-1  enforce rules to implement this chapter, including rules governing
   36-2  procedure before the board.  Notice in this section shall include
   36-3  publication of the agenda of the hearing in one or more newspapers
   36-4  of general circulation in the county or counties in which the
   36-5  district is located.
   36-6        (c)  The board shall compile its rules and make them
   36-7  available for use and inspection at the district's principal
   36-8  office.
   36-9        Sec. 36.102.  ENFORCEMENT OF RULES.  (a)  A district may
  36-10  enforce this chapter and its rules by injunction, mandatory
  36-11  injunction, or other appropriate remedy in a court of competent
  36-12  jurisdiction.
  36-13        (b)  The board may set reasonable civil penalties for breach
  36-14  of any rule of the district that shall not exceed the jurisdiction
  36-15  of a justice court as provided by Section 27.031, Government Code.
  36-16        (c)  A penalty under this section is in addition to any other
  36-17  penalty provided by the law of this state and may be enforced by
  36-18  complaints filed in the appropriate court of jurisdiction in the
  36-19  county in which the district's principal office or meeting place is
  36-20  located.
  36-21        (d)  If the district prevails in any suit to enforce its
  36-22  rules, it may, in the same action, recover reasonable fees for
  36-23  attorneys, expert witnesses, and other costs incurred by the
  36-24  district before the court.  The amount of the attorney's fees shall
  36-25  be fixed by the court.
  36-26        Sec. 36.103.  IMPROVEMENTS AND FACILITIES.  (a)  A district
  36-27  may build, acquire, or obtain by any lawful means any property
   37-1  necessary for the district to carry out its purpose and the
   37-2  provisions of this chapter.
   37-3        (b)  A district may:
   37-4              (1)  acquire land to erect dams or to drain lakes,
   37-5  draws, and depressions;
   37-6              (2)  construct dams;
   37-7              (3)  drain lakes, depressions, draws, and creeks;
   37-8              (4)  install pumps and other equipment necessary to
   37-9  recharge a groundwater reservoir or its subdivision; and
  37-10              (5)  provide necessary facilities for the purchase,
  37-11  sale, transportation, and distribution of water.
  37-12        Sec. 36.104.  PURCHASE, SALE, TRANSPORTATION, AND
  37-13  DISTRIBUTION OF WATER.  A district may purchase, sell, transport,
  37-14  and distribute surface water or groundwater for any purpose.
  37-15        Sec. 36.105.  EMINENT DOMAIN.  (a)  A district may exercise
  37-16  the power of eminent domain to acquire by condemnation a fee simple
  37-17  or other interest in property if that property interest is
  37-18  necessary to the exercise of the authority conferred by this
  37-19  chapter.
  37-20        (b)  The power of eminent domain authorized in this section
  37-21  may not be used for the condemnation of land for the purpose of
  37-22  acquiring rights to groundwater, surface water or water rights.
  37-23        (c)  The district must exercise the power of eminent domain
  37-24  in the manner provided by Chapter 21, Property Code, but the
  37-25  district is not required to deposit a bond as provided by Section
  37-26  21.021(a), Property Code.
  37-27        (d)  In a condemnation proceeding brought by a district, the
   38-1  district is not required to pay in advance or give bond or other
   38-2  security for costs in the trial court, to give bond for the
   38-3  issuance of a temporary restraining order or a temporary
   38-4  injunction, or to give bond for costs or supersedeas on an appeal
   38-5  or writ of error.
   38-6        (e)  In exercising the power of eminent domain, if the
   38-7  district requires relocating, raising, lowering, rerouting,
   38-8  changing the grade, or altering the construction of any railroad,
   38-9  highway, pipeline, or electric transmission or distribution,
  38-10  telegraph, or telephone lines, conduits, poles, or facilities, the
  38-11  district must bear the actual cost of relocating, raising,
  38-12  lowering, rerouting, changing the grade, or altering the
  38-13  construction to provide comparable replacement without enhancement
  38-14  of facilities after deducting the net salvage value derived from
  38-15  the old facility.
  38-16        Sec. 36.106.  SURVEYS.  A district may make surveys of the
  38-17  groundwater reservoir or subdivision and surveys of the facilities
  38-18  for development, production, transportation, distribution, and use
  38-19  of the water, in order to determine the quantity of water available
  38-20  for production and use and to determine the improvements,
  38-21  development, and recharging needed by a reservoir or its
  38-22  subdivision.
  38-23        Sec. 36.107.  RESEARCH AND PLANNING.  (a)  A district may
  38-24  carry out any research projects deemed necessary by the board.
  38-25        (b)  Following notice and hearing, the district shall develop
  38-26  a comprehensive management plan for the most efficient use of the
  38-27  groundwater, for controlling and preventing waste of groundwater,
   39-1  and for controlling and preventing subsidence.  The plan may be
   39-2  reviewed annually but must be reviewed by the board at least once
   39-3  every five years.
   39-4        (c)  The district shall specify in the management plan, in as
   39-5  much detail as possible, the acts, procedures, performance, and
   39-6  avoidance that are or may be necessary to effect the plan,
   39-7  including specifications and proposed rules.  The district shall
   39-8  adopt rules necessary to implement the management plan.  The
   39-9  district shall file a copy of the management plan and the rules
  39-10  with the commission.
  39-11        Sec. 36.108.  JOINT PLANNING IN MANAGEMENT AREA.  (a)  If two
  39-12  or more districts are located within the boundaries of the same
  39-13  management area, each district shall prepare a comprehensive
  39-14  management plan as required by Section 36.107 covering that
  39-15  district's respective territory.  On completion of the plan, each
  39-16  district shall forward a copy of the new revised management plan to
  39-17  the other districts in the management area.
  39-18        (b)  The board of directors of each district in the
  39-19  management area may, by resolution, call a joint meeting with the
  39-20  boards of directors of the other districts in the management area
  39-21  to review the management plans and accomplishments for the
  39-22  management area.  The boards shall meet to consider the plans
  39-23  individually and shall compare them to other management plans then
  39-24  in force in the management area.  In reviewing the management
  39-25  plans, the boards shall consider:
  39-26              (1)  the goals of each management plan and its impact
  39-27  on planning throughout the management area;
   40-1              (2)  the effectiveness of the measures established by
   40-2  each management plan for conserving and protecting groundwater and
   40-3  preventing waste, and the effectiveness of these measures in the
   40-4  management area generally; and
   40-5              (3)  any other matters that the boards consider
   40-6  relevant to the protection and conservation of groundwater and the
   40-7  prevention of waste in the management area.
   40-8        (c)  A joint meeting of the boards of directors must be held
   40-9  in accordance with the Open Meetings Act, Chapter 551, Government
  40-10  Code.  Notice of the meeting shall be given in accordance with the
  40-11  requirements for notice of district board of directors meetings
  40-12  under that Act.  In addition, notice of the meeting shall be
  40-13  published not later than the 30th day before the date of the
  40-14  scheduled meeting in a newspaper with general circulation in each
  40-15  county in the management area.
  40-16        (d)  A district in the management area may file a petition
  40-17  with the commission requesting an inquiry if the petitioner
  40-18  district believes that:
  40-19              (1)  another district in the management area has failed
  40-20  to adopt rules;
  40-21              (2)  the groundwater in the management area is not
  40-22  adequately protected by the rules adopted by another district; or
  40-23              (3)  the groundwater in the management area is not
  40-24  adequately protected due to the failure of another district to
  40-25  enforce substantial compliance with its rules.
  40-26        (e)  Not later than the 90th day after the date the petition
  40-27  is filed, the commission shall review the petition and either:
   41-1              (1)  dismiss it if it finds that the evidence is not
   41-2  adequate to show that any of the conditions alleged in the petition
   41-3  exist; or
   41-4              (2)  select a review panel as provided in Subsection
   41-5  (f).
   41-6        (f)  The commission may appoint a review panel consisting of
   41-7  a chairman and four other members.  A director or general manager
   41-8  of a district located outside the management area that is the
   41-9  subject of the petition may be appointed to the review panel.  The
  41-10  commission may not appoint more than two members of the review
  41-11  panel from any one district.  The commission also shall appoint a
  41-12  disinterested person to serve as a nonvoting recording secretary
  41-13  for the review panel.  The recording secretary may be an employee
  41-14  of the commission.  The recording secretary shall record and
  41-15  document the proceedings of the panel.
  41-16        (g)  Not later than the 120th day after appointment, the
  41-17  review panel shall review the petition and any evidence relevant to
  41-18  the petition and, in a public meeting, prepare a report to the
  41-19  commission.  The commission may direct the review panel to conduct
  41-20  public hearings at a location in the management area to take
  41-21  evidence on the petition.  The review panel may attempt to
  41-22  negotiate a settlement or resolve the dispute by any lawful means.
  41-23        (h)  In its report, the review panel shall include:
  41-24              (1)  a summary of all evidence taken in any hearing on
  41-25  the petition;
  41-26              (2)  a list of findings and recommended actions
  41-27  appropriate for the commission to take and the reasons it finds
   42-1  those actions appropriate; and
   42-2              (3)  any other information the panel considers
   42-3  appropriate.
   42-4        Sec. 36.109.  COLLECTION OF INFORMATION.  A district may
   42-5  collect any information the board deems necessary, including
   42-6  information regarding the use of groundwater, water conservation,
   42-7  and the practicability of recharging a groundwater reservoir.
   42-8        Sec. 36.110.  PUBLICATION OF PLANS AND INFORMATION.  A
   42-9  district may publish its plans and the information it develops,
  42-10  bring them to the attention of the users of groundwater in the
  42-11  district, and encourage the users to adopt and use them.
  42-12        Sec. 36.111.  RECORDS AND REPORTS.  The district shall
  42-13  require that records be kept and reports be made of the drilling,
  42-14  equipping, and completing of water wells and of the production and
  42-15  use of groundwater.
  42-16        Sec. 36.112.  DRILLERS' LOGS.  A district shall require that
  42-17  accurate drillers' logs be kept of water wells and that copies of
  42-18  drillers' logs and electric logs be filed with the district.
  42-19        Sec. 36.113.  PERMITS FOR WELLS.  A district shall require
  42-20  permits for the drilling, equipping, or completing of wells, or for
  42-21  substantially altering the size of wells or well pumps.  Permits
  42-22  may be issued subject to the rules promulgated by the district and
  42-23  subject to terms and provisions with reference to the drilling,
  42-24  equipping, completion, or alteration of wells or pumps that may be
  42-25  necessary to conserve the groundwater, prevent waste, minimize as
  42-26  far as practicable the drawdown of the water table or the reduction
  42-27  of artesian pressure, lessen interference between wells, or control
   43-1  and prevent subsidence.
   43-2        Sec. 36.114.  PERMIT:  APPLICATION AND HEARING.  The district
   43-3  shall promptly consider and pass on each application for a permit.
   43-4  If, within 20 days after the date it is submitted, an application
   43-5  has not been passed on or set for a hearing on a specific date, the
   43-6  applicant may petition the district court of the county where the
   43-7  land is located for a writ of mandamus to compel the district to
   43-8  act on the application or set a date for a hearing on the
   43-9  application.  A hearing shall be held within 35 days after the
  43-10  setting of the date and the district shall act on the application
  43-11  within 35 days after the date of the hearing.
  43-12        Sec. 36.115.  DRILLING OR ALTERING WELL WITHOUT PERMIT.  (a)
  43-13  No person, firm, or corporation may drill a well without first
  43-14  obtaining a permit from the district.
  43-15        (b)  No person, firm, or corporation may alter the size of a
  43-16  well or well pump such that it would bring that well under the
  43-17  jurisdiction of the district without first obtaining a permit from
  43-18  the district.
  43-19        (c)  No person, firm, or corporation may operate a well
  43-20  without first obtaining a permit from the district.
  43-21        (d)  A violation occurs on the first day the drilling,
  43-22  alteration, or operation begins and continues each day thereafter
  43-23  until the appropriate permits are approved.
  43-24        Sec. 36.116.  REGULATION OF SPACING AND PRODUCTION.  In order
  43-25  to minimize as far as practicable the drawdown of the water table
  43-26  or the reduction of artesian pressure, to control subsidence, or to
  43-27  prevent waste, a district may provide for the spacing of water
   44-1  wells and may regulate the production of wells.
   44-2        Sec. 36.117.  EXCEPTIONS; LIMITATIONS.  (a)  A district may
   44-3  not require a permit for:
   44-4              (1)  drilling or producing from a well either drilled,
   44-5  completed, or equipped so that it is incapable of producing more
   44-6  than 25,000 gallons of groundwater a day;
   44-7              (2)  the drilling or alteration of the size of a well
   44-8  or to restrict the production of a well if the water produced or to
   44-9  be produced from the well is used or to be used to supply the
  44-10  domestic needs of 10 or fewer households and a person who is a
  44-11  member of each household is either the owner of the well, a person
  44-12  related to the owner or a member of the owner's household within
  44-13  the second degree by consanguinity, or an employee of the owner;
  44-14              (3)  the drilling or alteration of the size of a well
  44-15  or to restrict the production from the well if the water produced
  44-16  or to be produced from the well is used or to be used to provide
  44-17  water for feeding livestock and poultry connected with farming,
  44-18  ranching, or dairy enterprises;
  44-19              (4)  water wells to supply water for hydrocarbon
  44-20  production activities, regardless of whether those wells are
  44-21  producing, that are associated with any well permitted by the
  44-22  Railroad Commission of Texas drilled before September 1, 1985; or
  44-23              (5)  jet wells used for domestic needs.
  44-24        (b)  The board shall adopt rules determining the
  44-25  applicability of Subsection (a)(3) to facilities used primarily for
  44-26  feeding livestock.
  44-27        (c)  The district shall not deny the owner of a tract of
   45-1  land, or his lessee, who has no well equipped to produce more than
   45-2  25,000 gallons a day on the tract, either a permit to drill a well
   45-3  on his land or the privilege to produce groundwater from his land,
   45-4  subject to the rules of the district.
   45-5        (d)  A district may not restrict the production of any well
   45-6  equipped to produce 25,000 gallons or less a day.
   45-7        (e)  Nothing in this chapter applies to wells drilled for
   45-8  oil, gas, sulphur, uranium, or brine, or for core tests, or for
   45-9  injection of gas, saltwater, or other fluid, or for any other
  45-10  purpose, under permits issued by the Railroad Commission of Texas.
  45-11  A district may not require a permit to drill a well to supply water
  45-12  for drilling any of these wells permitted by the Railroad
  45-13  Commission of Texas.  Any well that ceases to be used for these
  45-14  purposes and is then used as an ordinary water well is subject to
  45-15  the rules of the district.
  45-16        (f)  Water wells exempted under this section shall be
  45-17  equipped and maintained so as to conform to the district's rules
  45-18  requiring installation of casing, pipe, and fittings to prevent the
  45-19  escape of groundwater from a groundwater reservoir to any reservoir
  45-20  not containing groundwater and to prevent the pollution or harmful
  45-21  alteration of the character of the water in any groundwater
  45-22  reservoir.
  45-23        (g)  A district shall require water wells exempted under this
  45-24  section to be registered with the district.  All exempt water wells
  45-25  shall be equipped and maintained so as to conform to the district's
  45-26  rules requiring installation of casing, pipe, and fittings to
  45-27  prevent the escape of groundwater from a groundwater reservoir to
   46-1  any reservoir not containing groundwater and to prevent the
   46-2  pollution or harmful alteration of the character of the water in
   46-3  any groundwater reservoir.
   46-4        Sec. 36.118.  OPEN OR UNCOVERED WELLS.  (a)  A district may
   46-5  require the owner or lessee of land on which an open or uncovered
   46-6  well is located to keep the well permanently closed or capped with
   46-7  a covering capable of sustaining weight of at least 400 pounds,
   46-8  except when the well is in actual use.
   46-9        (b)  As used in this section, "open or uncovered well" means
  46-10  an artificial excavation dug or drilled for the purpose of
  46-11  exploring for or producing water from the groundwater reservoir and
  46-12  is not capped or covered as required by this chapter.
  46-13        (c)  If the owner or lessee fails or refuses to close or cap
  46-14  the well in compliance with this chapter in accordance with
  46-15  district rules, any person, firm, or corporation employed by the
  46-16  district may go on the land and close or cap the well safely and
  46-17  securely.
  46-18        (d)  Reasonable expenses incurred by the district in closing
  46-19  or capping a well constitute a lien on the land on which the well
  46-20  is located.
  46-21        (e)  The lien arises and attaches upon recordation in the
  46-22  deed records of the county where the well is located an affidavit,
  46-23  executed by any person conversant with the facts, stating the
  46-24  following:
  46-25              (1)  the existence of the well;
  46-26              (2)  the legal description of the property on which the
  46-27  well is located;
   47-1              (3)  the approximate location of the well on the
   47-2  property;
   47-3              (4)  the failure or refusal of the owner or lessee,
   47-4  after notification, to close the well within 10 days after the
   47-5  notification;
   47-6              (5)  the closing of the well by the district, or by an
   47-7  authorized agent, representative, or employee of the district; and
   47-8              (6)  the expense incurred by the district in closing
   47-9  the well.
  47-10        (f)  Nothing in this section affects the enforcement of
  47-11  Subchapter A, Chapter 756, Health and Safety Code.
  47-12        Sec. 36.119.  ILLEGAL DRILLING AND OPERATION OF WELL; CITIZEN
  47-13  SUIT.  (a)  Drilling a well without a required permit or operating
  47-14  a well at a higher rate of production than the rate approved for
  47-15  the well is declared to be illegal, wasteful per se, and a
  47-16  nuisance.
  47-17        (b)  A person who has an estate in land adjacent to the land
  47-18  on which the well is located, or a part that lies within one-half
  47-19  mile of the well, may sue in a court of competent jurisdiction to
  47-20  restrain or enjoin the illegal drilling or operation, or both.  The
  47-21  suit may be brought with or without the joinder of the district.
  47-22        (c)  The aggrieved party may also sue for damages for
  47-23  injuries suffered by reason of the illegal operation and for other
  47-24  relief to which they may be entitled.  In a suit for damages, the
  47-25  existence or operation of a well in violation of the rules of the
  47-26  district is prima facie evidence of illegal drainage.
  47-27        (d)  The suit may be brought in the county where the illegal
   48-1  well is located or in the county where all or part of the affected
   48-2  land is located.
   48-3        (e)  The remedies provided by this section are cumulative of
   48-4  other remedies available to the individual or the district.
   48-5        (f)  A suit brought under this section shall be advanced for
   48-6  trial and determined as expeditiously as possible.  The court shall
   48-7  not grant a postponement or continuance, including a first motion,
   48-8  except for reasons considered imperative by the court.
   48-9        Sec. 36.120.  INFORMATION.  On request of the executive
  48-10  director or the executive administrator, the district shall make
  48-11  available information that it acquires concerning the groundwater
  48-12  resources within its jurisdiction.  The district shall also provide
  48-13  information to the commission and Texas Water Development Board
  48-14  concerning its plans and activities in conserving and protecting
  48-15  groundwater resources.  On request of a district, the executive
  48-16  director and the executive administrator shall provide information
  48-17  they acquire concerning the groundwater resources within the
  48-18  district's jurisdiction.
  48-19        Sec. 36.121.  LIMITATION ON RULEMAKING POWER OF DISTRICTS
  48-20  OVER WELLS IN CERTAIN COUNTIES.  Except as provided by Section
  48-21  36.117, a district that is created under this chapter on or after
  48-22  September 1, 1991, shall exempt from regulation under this chapter
  48-23  a well and any water produced or to be produced by a well that is
  48-24  located in a county that has a population of 14,000 or less if the
  48-25  water is to be used solely to supply a municipality that has a
  48-26  population of 115,000 or less and the rights to the water produced
  48-27  from the well are owned by a political subdivision that is not a
   49-1  municipality, or by a municipality that has a population of 93,000
   49-2  or less, and that purchased, owned, or held rights to the water
   49-3  before the date on which the district was created, regardless of
   49-4  the date the well is drilled or the water is produced.  The
   49-5  district may not prohibit the political subdivision or municipality
   49-6  from transporting produced water inside or outside the district's
   49-7  boundaries.
   49-8            (Sections 36.122-36.150 reserved for expansion
   49-9                   SUBCHAPTER E.  DISTRICT FINANCES
  49-10        Sec. 36.151.  EXPENDITURES.  (a)  A district's money may be
  49-11  disbursed only by check, draft, order, or other instrument.
  49-12        (b)  Disbursements shall be signed by at least two directors,
  49-13  except the board may by resolution allow certain employees of the
  49-14  district, or a combination of employees and directors, to sign
  49-15  disbursements on behalf of the board.
  49-16        (c)  The board may by resolution allow disbursements to be
  49-17  transferred by federal reserve wire system to accounts in the name
  49-18  of the district.
  49-19        Sec. 36.152.  FISCAL YEAR.  (a)  The district shall be
  49-20  operated on the basis of a fiscal year established by the board.
  49-21        (b)  The fiscal year may not be changed during a period in
  49-22  which revenue bonds of the district are outstanding or more than
  49-23  once in a 24-month period.
  49-24        Sec. 36.153.  ANNUAL AUDIT.  (a)  Annually, the board shall
  49-25  have an audit made of the financial condition of the district.
  49-26        (b)  The annual audit and other district records must be open
  49-27  to inspection during regular business hours at the principal office
   50-1  of the district.
   50-2        Sec. 36.154.  ANNUAL BUDGET.  (a)  The board shall prepare
   50-3  and approve an annual budget.
   50-4        (b)  The budget shall contain a complete financial statement,
   50-5  including a statement of:
   50-6              (1)  the outstanding obligations of the district;
   50-7              (2)  the amount of cash on hand to the credit of each
   50-8  fund of the district;
   50-9              (3)  the amount of money received by the district from
  50-10  all sources during the previous year;
  50-11              (4)  the amount of money available to the district from
  50-12  all sources during the ensuing year;
  50-13              (5)  the amount of the balances expected at the end of
  50-14  the year in which the budget is being prepared;
  50-15              (6)  the estimated amount of revenues and balances
  50-16  available to cover the proposal budget; and
  50-17              (7)  the estimated tax rate or fee revenues that will
  50-18  be required.
  50-19        (c)  The annual budget may be amended on the board's
  50-20  approval.
  50-21        Sec. 36.155.  DEPOSITORY.  (a)  The board shall name one or
  50-22  more banks to serve as depository for the district funds.
  50-23        (b)  District funds, other than those transmitted to a bank
  50-24  for payment of bonds issued by the district, shall be deposited as
  50-25  received with the depository bank and shall remain on deposit.
  50-26  This subsection does not limit the power of the board to place a
  50-27  portion of the district's funds on time deposit or to purchase
   51-1  certificates of deposit.
   51-2        (c)  To the extent that funds in the depository are not
   51-3  insured by the Federal Deposit Insurance Corporation, they shall be
   51-4  secured in the manner provided by law for the security of funds by
   51-5  the Public Funds Collateral Act, Chapter 2257, Government Code.
   51-6        Sec. 36.156.  INVESTMENTS.  (a)  Funds of the district may be
   51-7  invested and reinvested in accordance with the provisions of the
   51-8  Public Funds Investment Act, Chapter 2256, Government Code.
   51-9        (b)  The board, by resolution, may provide that an authorized
  51-10  representative of the district may invest and reinvest the funds of
  51-11  the district and provide for money to be withdrawn from the
  51-12  appropriate accounts of the district for investments on such terms
  51-13  as the board considers advisable.
  51-14        Sec. 36.157.  REPAYMENT OF ORGANIZATIONAL EXPENSES.  (a)  A
  51-15  district may pay all costs and expenses necessarily incurred in the
  51-16  creation and organization of a district, including legal fees and
  51-17  other incidental expenses, and may reimburse any person for money
  51-18  advanced for these purposes.
  51-19        (b)  Payments may be made from money obtained from the sale
  51-20  of bonds first issued by the district or out of maintenance taxes
  51-21  or other revenues of the district.
  51-22        Sec. 36.158.  GRANTS.  A district may make or accept grants,
  51-23  gratuities, advances, or loans in any form to or from any source
  51-24  approved by the board, including any governmental entity, and may
  51-25  enter into contracts, agreements, and covenants in connection with
  51-26  grants, gratuities, advances, or loans that the board considers
  51-27  appropriate.
   52-1            (Sections 36.159-36.170 reserved for expansion
   52-2                    SUBCHAPTER F.  BONDS AND NOTES
   52-3        Sec. 36.171.  ISSUANCE OF BONDS AND NOTES.  (a)  The board
   52-4  may issue and sell bonds and notes in the name of the district for
   52-5  any lawful purpose of the district.  A district may not issue bonds
   52-6  unless the commission determines that the project to be financed by
   52-7  the bonds is feasible and issues an order approving the issuance of
   52-8  the bonds.  This section does not apply to refunding bonds.
   52-9        (b)  A district may submit to the commission a written
  52-10  application for investigation of feasibility.  An engineer's report
  52-11  describing the project, including the data, profiles, maps, plans,
  52-12  and specifications prepared in connection with the report, must be
  52-13  submitted with the application.
  52-14        (c)  The executive director shall examine the application and
  52-15  the report and shall inspect the project area.  The district shall,
  52-16  on request, supply the executive director with additional data and
  52-17  information necessary for an investigation of the application, the
  52-18  engineer's report, and the project.
  52-19        (d)  The executive director shall prepare a written report on
  52-20  the project and include suggestions, if any, for changes or
  52-21  improvements in the project.  The executive director shall retain a
  52-22  copy of the report and send a copy of the report to both the
  52-23  commission and the district.
  52-24        (e)  The commission shall consider the application, the
  52-25  engineer's report, the executive director's report, and any other
  52-26  evidence allowed by commission rule to be considered in determining
  52-27  the feasibility of the project.
   53-1        (f)  The commission shall determine whether the project to be
   53-2  financed by the bonds is feasible and issue an order either
   53-3  approving or disapproving, as appropriate, the issuance of the
   53-4  bonds.  The commission shall retain a copy of the order and send a
   53-5  copy of the order to the district.
   53-6        (g)  Notwithstanding any provision of this code to the
   53-7  contrary, the commission may approve the issuance of bonds of a
   53-8  district without the submission of plans and specifications of the
   53-9  improvements to be financed with the bonds.  The commission may
  53-10  condition the approval on any terms or conditions considered
  53-11  appropriate by the commission.
  53-12        Sec. 36.172.  MANNER OF REPAYMENT OF BONDS AND NOTES.  The
  53-13  board may provide for the payment of principal of and interest on
  53-14  the bonds and notes in any one of the following manners:
  53-15              (1)  from the levy and collection of ad valorem taxes
  53-16  on taxable property within the district;
  53-17              (2)  from fees;
  53-18              (3)  by pledging all or any part of the designated
  53-19  revenues from the ownership or operation of the district's works,
  53-20  improvements, and facilities and from the sale, transportation, and
  53-21  distribution of water; or
  53-22              (4)  from any combination of these sources.
  53-23        Sec. 36.173.  ADDITIONAL SECURITY FOR BONDS AND NOTES.  (a)
  53-24  The bonds and notes may be additionally secured by a deed of trust
  53-25  or mortgage lien on part or all of the physical properties of the
  53-26  district and rights appurtenant to those properties, vesting in the
  53-27  trustee power to sell the properties for payment of the
   54-1  indebtedness, power to operate the properties, and all other powers
   54-2  necessary for the further security of the bonds and notes.
   54-3        (b)  The trust indenture, regardless of the existence of the
   54-4  deed trust or mortgage lien on the properties, may contain
   54-5  provisions established by the board for the security of the bonds
   54-6  and notes and the preservation of the trust estate, may make
   54-7  provisions for amendment or modification, and may make provisions
   54-8  for investment of funds of the district.
   54-9        (c)  A purchaser under a sale under the deed trust or
  54-10  mortgage lien shall be absolute owner of the properties and rights
  54-11  purchased and may maintain and operate them.
  54-12        Sec. 36.174.  FORM OF BONDS OR NOTES.  (a)  A district may
  54-13  issue its bonds or notes in various series or issues.
  54-14        (b)  Bonds or notes may mature serially or otherwise not more
  54-15  than 50 years from their date and shall bear interest at any rate
  54-16  permitted by the constitution and laws of this state.
  54-17        (c)  A district's bonds, notes, and interest coupons, if any,
  54-18  are investment securities under the terms of Chapter 8, Business &
  54-19  Commerce Code, and may be issued registrable as to principal or as
  54-20  to both principal and interest and may be made redeemable before
  54-21  maturity, at the option of the district, or may contain a mandatory
  54-22  redemption provision.
  54-23        (d)  A district's bonds and notes may be issued in the form,
  54-24  denominations, and manner and under the terms, conditions, and
  54-25  details, and shall be signed and executed as provided by the board
  54-26  in the resolution or order authorizing their issuance.
  54-27        Sec. 36.175.  PROVISIONS OF BONDS AND NOTES.  (a)  In the
   55-1  orders or resolutions authorizing the issuance of bonds or notes,
   55-2  including refunding bonds, the board may provide for the flow of
   55-3  funds, the establishment and maintenance of the interest and
   55-4  sinking fund, the reserve fund, and other funds.  The board may
   55-5  make additional covenants with respect to bonds or notes, pledged
   55-6  revenues, and the operation and maintenance of those works,
   55-7  improvements, and facilities, of which the revenue is pledged.
   55-8        (b)  The orders or resolutions of the board authorizing the
   55-9  issuance of bonds or notes may also prohibit the further issuance
  55-10  of bonds, notes, or other obligations payable from the pledged
  55-11  revenue or may reserve the right to issue additional bonds or notes
  55-12  to be secured by a pledge of and payable from the revenue on a
  55-13  parity with or subordinate to the lien and pledge in support of the
  55-14  bonds or notes being issued.
  55-15        (c)  The orders or resolutions of the board issuing bonds or
  55-16  notes may contain other provisions and covenants as the board may
  55-17  determine.
  55-18        (d)  The board may adopt and have executed any other
  55-19  proceeding or instruments necessary and convenient in the issuance
  55-20  of bonds or notes.
  55-21        Sec. 36.176.  REFUNDING BONDS.  (a)  A district may issue
  55-22  bonds to refund all or any part of its outstanding bonds or notes,
  55-23  including matured but unpaid interest coupons.
  55-24        (b)  Refunding bonds shall mature serially or otherwise not
  55-25  more than 50 years from their date and shall bear interest at any
  55-26  rate or rates permitted by the constitution and laws of the state.
  55-27        (c)  Refunding bonds may be payable from the same source as
   56-1  the bonds or notes being refunded or from other additional sources.
   56-2        (d)  The refunding bonds must be approved by the attorney
   56-3  general as in the case of other bonds or notes and shall be
   56-4  registered by the comptroller on the surrender and cancellation of
   56-5  the bonds or notes being refunded.
   56-6        (e)  The orders or resolutions authorizing the issuance of
   56-7  the refunding bonds may provide that they be sold and the proceeds
   56-8  deposited in the place or places at which the bonds or notes being
   56-9  refunded are payable, in which case the refunding bonds may be
  56-10  issued before the cancellation of the bonds or notes being
  56-11  refunded.  If refunding bonds are issued before cancellation of the
  56-12  other bonds or notes, an amount sufficient to pay the principal of
  56-13  and interest on the bonds or notes being refunded to their maturity
  56-14  dates, or to their option dates if the bonds or notes have been
  56-15  duly called for payment prior to maturity according to their terms,
  56-16  shall be deposited in the place or places at which the bonds or
  56-17  notes being refunded are payable.  The comptroller shall register
  56-18  the refunding bonds without the surrender and cancellation of bonds
  56-19  or notes being refunded.
  56-20        (f)  A refunding may be accomplished in one or in several
  56-21  installment deliveries.  Refunding bonds and their interest coupons
  56-22  are investment securities under Chapter 8, Business & Commerce
  56-23  Code.
  56-24        (g)  In lieu of the method set forth in Subsections (a)-(f),
  56-25  a district may refund bonds, notes, or other obligations as
  56-26  provided by the general laws of the state.
  56-27        Sec. 36.177.  BONDS AND NOTES AS INVESTMENTS.  District bonds
   57-1  and notes are legal and authorized investments for:
   57-2              (1)  banks;
   57-3              (2)  savings banks;
   57-4              (3)  trust companies;
   57-5              (4)  savings and loan associations;
   57-6              (5)  insurance companies;
   57-7              (6)  fiduciaries;
   57-8              (7)  trustees;
   57-9              (8)  guardians; and
  57-10              (9)  sinking funds of cities, counties, school
  57-11  districts, and other political subdivisions of the state and other
  57-12  public funds of the state and its agencies, including the permanent
  57-13  school fund.
  57-14        Sec. 36.178.  BONDS AND NOTES AS SECURITY FOR DEPOSITS.
  57-15  District bonds and notes are eligible to secure deposits of public
  57-16  funds of the state and cities, counties, school districts, and
  57-17  other political subdivisions of the state.  The bonds or notes are
  57-18  lawful and sufficient security for deposits to the extent of their
  57-19  value when accompanied by all unmatured coupons.
  57-20        Sec. 36.179.  TAX STATUS OF BONDS AND NOTES.  Since a
  57-21  district governed by this chapter is a public entity performing an
  57-22  essential public function, bonds and notes issued by the district,
  57-23  any transaction relating to the bonds and notes, and profits made
  57-24  in the sale of the bonds and notes, are free from taxation by the
  57-25  state or by any city, county, special district, or other political
  57-26  subdivision of the state.
  57-27        Sec. 36.180.  ELECTION.  (a)  Bonds or notes secured in whole
   58-1  or in part by taxes may not be issued by the district until
   58-2  authorized by a majority vote of the qualified voters of the
   58-3  district at an election called for that purpose.
   58-4        (b)  The board may order an election, and the order calling
   58-5  the election shall state the nature and the date of the election,
   58-6  the hours during which the polls will be open, the location of the
   58-7  polling places, the amount of bonds or notes to be authorized, and
   58-8  the maximum maturity of the bonds or notes.
   58-9        (c)  At an election to authorize bonds or notes payable
  58-10  wholly from ad valorem taxes, the ballots must be printed to
  58-11  provide for voting for or against the proposition:  "The issuance
  58-12  of (bonds or notes) and the levy of taxes for payment of the (bonds
  58-13  or notes)."  At any election to authorize bonds or notes payable
  58-14  from both ad valorem taxes and revenues, the ballots must be
  58-15  printed to provide for voting for or against:  "The issuance of
  58-16  (bonds or notes) and the pledge of net revenues and the levy of ad
  58-17  valorem taxes adequate to provide for the payment of the (bonds or
  58-18  notes)."
  58-19        (d)  The board shall canvass the returns and declare the
  58-20  results of the election.  If a majority of the votes cast at the
  58-21  election favor the issuance of the bonds or notes, the bonds or
  58-22  notes may be issued by the board, but if a majority of the votes
  58-23  cast at the election do not favor issuance of the bonds or notes,
  58-24  the bonds or notes may not be issued.
  58-25        Sec. 36.181.  APPROVAL BY ATTORNEY GENERAL; REGISTRATION BY
  58-26  COMPTROLLER.  (a)  Bonds and notes issued by a district must be
  58-27  submitted to the attorney general for examination.
   59-1        (b)  If the attorney general finds that the bonds or notes
   59-2  have been authorized in accordance with law, the attorney general
   59-3  shall approve them, and they shall be registered by the
   59-4  comptroller.
   59-5        (c)  After the approval and registration of bonds or notes,
   59-6  the bonds or notes are incontestable in any court or other forum,
   59-7  for any reason, and are valid and binding obligations in accordance
   59-8  with their terms for all purposes.
   59-9            (Sections 36.182-36.200 reserved for expansion
  59-10                   SUBCHAPTER G.  DISTRICT REVENUES
  59-11        Sec. 36.201.  LEVY OF TAXES.  (a)  The board may annually
  59-12  levy taxes to pay the bonds issued by the district that are payable
  59-13  in whole or in part by taxes.
  59-14        (b)  The board may annually levy taxes to pay the maintenance
  59-15  and operating expenses of the district at a rate not to exceed 50
  59-16  cents on each $100 of assessed valuation.
  59-17        (c)  The board may not levy a tax to pay the maintenance and
  59-18  operating expenses of the district under this section until the tax
  59-19  is approved by a majority of the electors voting at an election in
  59-20  the district held for that purpose.  The district may:
  59-21              (1)  hold an election for approval of the tax at the
  59-22  same time and in conjunction with an election to authorize bonds,
  59-23  following the procedures applicable to a bond election; or
  59-24              (2)  hold a separate election for approval of the tax
  59-25  in accordance with Subsection (d).
  59-26        (d)  An order calling a separate election for approval of a
  59-27  tax under this section must be issued at least 15 days before the
   60-1  date of the election, and the election notice must be published at
   60-2  least twice in a newspaper of general circulation in the district.
   60-3  The first publication of the notice must be at least 14 days before
   60-4  the date of the election.
   60-5        Sec. 36.202.  BOARD AUTHORITY.  (a)  The board may levy taxes
   60-6  for the entire year in which the district is created.
   60-7        (b)  If territory is added to or annexed by the district, the
   60-8  board may levy taxes in the new territory for the entire year in
   60-9  which the territory is added or annexed.
  60-10        (c)  The board shall levy taxes on all property in the
  60-11  district subject to district taxation.
  60-12        Sec. 36.203.  TAX RATE.  In setting the tax rate, the board
  60-13  shall take into consideration the income of the district from
  60-14  sources other than taxation.  On determination of the amount of tax
  60-15  required to be levied, the board shall make the levy and certify it
  60-16  to the tax assessor-collector.
  60-17        Sec. 36.204.  TAX APPRAISAL, ASSESSMENT AND COLLECTION.  (a)
  60-18  The Tax Code governs the appraisal, assessment, and collection of
  60-19  district taxes.
  60-20        (b)  The board may provide for the appointment of a tax
  60-21  assessor-collector for the district or may contract for the
  60-22  assessment and collection of taxes as provided by the Tax Code.
  60-23        Sec. 36.205.  AUTHORITY TO SET FEES.  (a)  A district may set
  60-24  fees for administrative acts of the district, such as filing
  60-25  applications.  Fees set by a district may not unreasonably exceed
  60-26  the cost to the district of performing the administrative function
  60-27  for which the fee is charged.
   61-1        (b)  A district shall set and collect fees for all services
   61-2  provided outside the boundaries of the district.
   61-3        (c)  Fees based on the amount of water to be withdrawn from a
   61-4  well shall not exceed:
   61-5              (1)  one dollar per acre foot for water used for the
   61-6  purpose of irrigating agricultural crops; or
   61-7              (2)  17 cents per thousand gallons for water used for
   61-8  any other purpose.
   61-9        (d)  A district affected by Subsection (c)(2) that also may
  61-10  assess a water use fee against a specific municipality shall assess
  61-11  an amount not to exceed 60 percent of the total funding of the
  61-12  district received from water use fees assessed against that
  61-13  municipality and other nonexempt users in the district.  This
  61-14  subsection shall take precedence over all prior enactments.
  61-15        (e)  Subsection (c) does not apply to the following
  61-16  districts:
  61-17              (1)  the Edwards Aquifer Authority;
  61-18              (2)  the Fort Bend Subsidence District; or
  61-19              (3)  the Harris-Galveston Coastal Subsidence District.
  61-20            (Sections 36.206-36.250 reserved for expansion
  61-21                    SUBCHAPTER H.  JUDICIAL REVIEW
  61-22        Sec. 36.251.  SUIT AGAINST DISTRICT.  A person, firm,
  61-23  corporation, or association of persons affected by and dissatisfied
  61-24  with any provision or with any rule or order made by a district is
  61-25  entitled to file a suit against the district or its directors to
  61-26  challenge the validity of the law, rule, or order.  The suit shall
  61-27  be filed in a court of competent jurisdiction in any county in
   62-1  which the district or any part of the district is located.  The
   62-2  suit may only be filed after all administrative appeals to the
   62-3  district are final.
   62-4        Sec. 36.252.  SUIT TO BE EXPEDITED.  A suit brought under
   62-5  this subchapter shall be advanced for trial and determined as
   62-6  expeditiously as possible.  No postponement or continuance shall be
   62-7  granted except for reasons considered imperative by the court.
   62-8        Sec. 36.253.  TRIAL OF SUIT.  The burden of proof is on the
   62-9  petitioner, and the challenged law, rule, order, or act shall be
  62-10  deemed prima facie valid.  The review on appeal is governed by the
  62-11  substantial evidence rule as defined by Section 2001.174,
  62-12  Government Code.
  62-13        Sec. 36.254.  SUBCHAPTER CUMULATIVE.  The provisions of this
  62-14  subchapter do not affect other legal or equitable remedies that may
  62-15  be available.
  62-16            (Sections 36.255-36.300 reserved for expansion
  62-17                SUBCHAPTER I.  DISSOLUTION OF DISTRICT
  62-18        Sec. 36.301.  DISSOLUTION.  (a)  After notice and hearing,
  62-19  the commission may dissolve a district that:
  62-20              (1)  has been inactive for a period of three
  62-21  consecutive years; and
  62-22              (2)  has no outstanding bonded indebtedness.
  62-23        (b)  A district composed of territory entirely within one
  62-24  county may be dissolved even if it has outstanding indebtedness
  62-25  that matures after the year in which the district is dissolved,
  62-26  whereupon the commissioners court shall levy and collect taxes on
  62-27  all taxable property in the district in an amount sufficient to pay
   63-1  the principal of and interest on the indebtedness when due.  The
   63-2  taxes shall be levied and collected in the same manner as county
   63-3  taxes.
   63-4        (c)  A district is considered active if:
   63-5              (1)  the district has a board as required by Subchapter
   63-6  D;
   63-7              (2)  the board holds regularly scheduled meetings and
   63-8  has on file minutes of its meetings;
   63-9              (3)  the district has developed and filed with the
  63-10  commission a management plan for the district;
  63-11              (4)  the district has copies of drillers' logs on file;
  63-12              (5)  the district has on file well permits issued by
  63-13  the district; and
  63-14              (6)  the district has on file annual district audits.
  63-15        Sec. 36.302.  NOTICE OF HEARING.  (a)  The commission shall
  63-16  give notice of the dissolution hearing which briefly describes the
  63-17  reasons for the proceeding.
  63-18        (b)  The notice shall be published once each week for two
  63-19  consecutive weeks before the day of hearing in some newspaper
  63-20  having general circulation in the county or counties in which the
  63-21  district is located.  The first publication shall be 30 days before
  63-22  the day of the hearing.
  63-23        (c)  The commission shall give notice of the hearing by first
  63-24  class mail addressed to the directors of the district according to
  63-25  the last record on file with the executive director.
  63-26        Sec. 36.303.  INVESTIGATION.  The executive director shall
  63-27  investigate the facts and circumstances of the district to be
   64-1  dissolved and the result of the investigation shall be included in
   64-2  a written report.
   64-3        Sec. 36.304.  ORDER OF DISSOLUTION.  The commission may enter
   64-4  an order dissolving the district at the conclusion of the hearing
   64-5  if it finds that the district has performed none of the functions
   64-6  for which it was created for a period of three consecutive years
   64-7  before the day of the proceeding and that the district has no
   64-8  outstanding bonded indebtedness.
   64-9        Sec. 36.305.  CERTIFIED COPY OF ORDER.  The commission shall
  64-10  file a certified copy of the order of dissolution of the district
  64-11  in the deed records of the county or counties in which the district
  64-12  is located.  If the district was created by a special Act of the
  64-13  legislature, the commission shall file a certified copy of the
  64-14  order of dissolution with the secretary of state.
  64-15        Sec. 36.306.  APPEALS.  (a)  Appeals from a commission order
  64-16  dissolving a district shall be filed and heard in the district
  64-17  court of any of the counties in which the land is located.
  64-18        (b)  The trial on appeal shall be de novo and the substantial
  64-19  evidence rule shall not apply.
  64-20        Sec. 36.307.  ASSETS ESCHEAT TO STATE.  Upon the dissolution
  64-21  of a district by the commission, all assets of the district shall
  64-22  escheat to the State of Texas.  The assets shall be administered by
  64-23  the state treasurer and shall be disposed of in the manner provided
  64-24  by Chapter 72, Property Code.
  64-25            (Sections 36.308-36.320 reserved for expansion
  64-26              SUBCHAPTER J.  ADDING TERRITORY TO DISTRICT
  64-27        Sec. 36.321.  ADDING LAND BY PETITION OF LANDOWNER.  The
   65-1  owner of land contiguous to a district may file with the board a
   65-2  notarized petition requesting that the owner's land be included in
   65-3  the district.  The petition must describe the land by legal
   65-4  description or by metes and bounds or by lot and block number if
   65-5  there is a recorded plat of the area to be included in the
   65-6  district.
   65-7        Sec. 36.322.  ASSUMPTION OF BONDS.  If the district has
   65-8  bonds, notes, or other obligations outstanding or bonds payable in
   65-9  whole or in part from taxation that have been voted but are
  65-10  unissued, the petitioner shall assume its share of the outstanding
  65-11  bonds, notes, or other obligations and any voted but unissued tax
  65-12  bonds of the district, and the property shall be assessed an ad
  65-13  valorem tax at the same rate as that set for the existing district
  65-14  to pay for outstanding bonds and for the maintenance and operation
  65-15  of the district.
  65-16        Sec. 36.323.  HEARING AND DETERMINATION OF PETITION.  (a)
  65-17  The board shall hear and consider the petition and may add to the
  65-18  district the land described in the petition if it is considered to
  65-19  be to the advantage of the petitioner and to the existing district.
  65-20        (b)  If the district has bonds payable in whole or in part
  65-21  from taxation that are voted but unissued at the time of the
  65-22  annexation, the board may issue the voted but unissued bonds even
  65-23  though the boundaries of the district have been altered since the
  65-24  authorization of the bonds.
  65-25        Sec. 36.324.  RECORDING PETITION.  A petition that is granted
  65-26  which adds land to the district shall be recorded in the office of
  65-27  the county clerk of the county or counties in which the land is
   66-1  located and the county or counties in which the existing district's
   66-2  principal office is located.
   66-3        Sec. 36.325.  ADDING CERTAIN TERRITORY BY PETITION.  (a)
   66-4  Landowners of a defined area of territory not already in a district
   66-5  may file with any district a petition requesting inclusion in that
   66-6  district.
   66-7        (b)  The petition must be signed by:
   66-8              (1)  a majority of the landowners in the territory;
   66-9              (2)  at least 50 landowners if the number of landowners
  66-10  is more than 50; or
  66-11              (3)  the commissioners court of the county in which the
  66-12  area is located if the area is identified as a critical area or
  66-13  includes the entire county.  The petition must describe the land by
  66-14  legal description or by metes and bounds or by lot and block number
  66-15  if there is a recorded plat of the area to be included in the
  66-16  district.
  66-17        Sec. 36.326.  HEARING ON PETITION.  The board by order shall
  66-18  set the time and place of separate hearings on the petition to
  66-19  include the territory in the district.  At least one hearing shall
  66-20  be held in the existing district and one hearing shall be held in
  66-21  the territory to be added.
  66-22        Sec. 36.327.  RESOLUTION TO ADD TERRITORY.  If the board
  66-23  finds after the hearing on the petition that the addition of the
  66-24  land would benefit the district and the territory to be added, it
  66-25  may add the territory to the district by resolution.  The board
  66-26  does not have to include all the territory described in the
  66-27  petition if it finds that a modification or change is necessary or
   67-1  desirable.
   67-2        Sec. 36.328.  ELECTION TO RATIFY ANNEXATION OF LAND.  (a)
   67-3  Annexation of the territory is not final until ratified by a
   67-4  majority vote of the voters in the territory to be added.  An
   67-5  election in the existing district accepting the addition of land is
   67-6  not required.
   67-7        (b)  The ballots for the election shall be printed to provide
   67-8  for voting for or against the proposition:  "The inclusion of
   67-9  (briefly describe additional area) in the __________ District."  If
  67-10  the district levies a property tax for payment of its maintenance
  67-11  and operating expenses, the proposition shall include the following
  67-12  language:  "and the levy of a tax on property at a rate not to
  67-13  exceed _____ cents on each $100 of assessed valuation for payment
  67-14  of maintenance and operating expenses of the district."
  67-15        (c)  The amount of the tax included in the proposition shall
  67-16  be the maximum amount that the district is authorized to levy.  If
  67-17  the district has outstanding or authorized bonded indebtedness, the
  67-18  proposition shall include language providing for the assumption by
  67-19  the additional area of a proportional share of the bonded
  67-20  indebtedness of the district.
  67-21        Sec. 36.329.  NOTICE AND PROCEDURE OF ELECTION.  The notice
  67-22  of the election, the manner and the time of giving the notice, the
  67-23  manner of holding the election, and qualifications of the voters
  67-24  are governed by the Election Code.
  67-25        Sec. 36.330.  LIABILITY OF ADDED TERRITORY.  The added
  67-26  territory shall bear its pro rata share of indebtedness or taxes
  67-27  that may be owed, contracted, or authorized by the district to
   68-1  which it is added.
   68-2        Sec. 36.331.  ANNEXATION OF NONCONTIGUOUS TERRITORY.  Land
   68-3  not contiguous to the existing boundaries of a district may not be
   68-4  added to or annexed to a district unless the land is located either
   68-5  within the same management area, critical area, or a groundwater
   68-6  subdivision designated by the commission or its predecessors.
   68-7            (Sections 36.332-36.350 reserved for expansion
   68-8               SUBCHAPTER K.  CONSOLIDATION OF DISTRICTS
   68-9        Sec. 36.351.  CONSOLIDATION OF DISTRICTS.  (a)  Two or more
  68-10  districts may consolidate into one district.
  68-11        (b)  Adjacent districts may consolidate portions of either
  68-12  district if one district relinquishes land within that district to
  68-13  the jurisdiction of the other district.
  68-14        (c)  A consolidation under this subchapter occurs if the
  68-15  board of each involved district adopts a resolution containing the
  68-16  terms and conditions of the consolidation.
  68-17        Sec. 36.352.  TERMS AND CONDITIONS OF CONSOLIDATION.  (a)
  68-18  The terms and conditions for consolidation shall include:
  68-19              (1)  adoption of a name for the district;
  68-20              (2)  the number and apportionment of directors to serve
  68-21  on the board;
  68-22              (3)  the effective date of the consolidation;
  68-23              (4)  an agreement on finances for the consolidated
  68-24  district, including disposition of funds, property, and other
  68-25  assets of each district;
  68-26              (5)  transfer of all permits issued in the area that is
  68-27  the subject of the consolidation to the consolidated district; and
   69-1              (6)  an agreement on governing the districts during the
   69-2  transition period, including selection of officers.
   69-3        (b)  The terms and conditions for consolidation may include:
   69-4              (1)  assumption by each district of the other
   69-5  district's bonds, notes, voted but unissued bonds, or other
   69-6  obligations;
   69-7              (2)  an agreement to levy taxes to pay for bonds;
   69-8              (3)  any other terms of conditions agreed upon by the
   69-9  board of each district.
  69-10        Sec. 36.353.  NOTICE AND HEARING ON CONSOLIDATION.  (a)  Each
  69-11  board shall publish notice and hold a public hearing within that
  69-12  district on the terms and conditions for consolidation of the
  69-13  districts.
  69-14        (b)  After the hearing, the board may, by resolution, approve
  69-15  the terms and conditions for consolidation and enter an order
  69-16  consolidating the districts.
  69-17        Sec. 36.354.  ELECTIONS TO APPROVE CONSOLIDATION.  (a)  An
  69-18  election to ratify the consolidation is required unless the
  69-19  districts to be consolidated meet the following requirements:
  69-20              (1)  the districts have not authorized or issued bonds
  69-21  and do not levy or assess taxes; or
  69-22              (2)  the consolidation would not result in any
  69-23  additional taxing or bonding authority for any of the districts,
  69-24  and would not require any district to contribute to the debt
  69-25  payments of any other district.
  69-26        (b)  The board shall order an election in each district to be
  69-27  consolidated only after the board of each district has agreed on
   70-1  the terms and conditions of consolidation.  The directors of each
   70-2  district shall order the election to be held on the same day in
   70-3  each district.  The election shall be held and notice given in the
   70-4  manner provided by the Election Code.
   70-5        (c)  The ballots for the election shall be printed to provide
   70-6  for voting for or against the proposition:  "The consolidation of
   70-7  (names of the districts to be consolidated) in the __________
   70-8  District."  If the district levies a property tax for payment of
   70-9  its bonded indebtedness, the proposition shall include the
  70-10  following language:  "and the levy of a tax on property at a rate
  70-11  not to exceed _____ cents on each $100 of assessed valuation for
  70-12  payment of bonds."  If the district levies a property tax for
  70-13  payment of its maintenance and operating expenses, the proposition
  70-14  shall include the following language:  "and the levy of a tax on
  70-15  property at a rate not to exceed _____ cents on each $100 of
  70-16  assessed valuation for payment of maintenance and operating
  70-17  expenses of the district."
  70-18        (d)  A district may be consolidated only if a majority of the
  70-19  electors in each district vote in favor of the consolidation.  If
  70-20  more than two districts are consolidating, failure of any one
  70-21  district to ratify the consolidation shall not prevent the
  70-22  consolidation of the other districts.
  70-23        Sec. 36.355.  GOVERNING CONSOLIDATED DISTRICTS.  (a)  After
  70-24  two or more districts are consolidated, they become one district
  70-25  and are governed as one district.
  70-26        (b)  During the transition period, the officers of each
  70-27  district shall continue to act jointly as officers of the original
   71-1  districts to settle the affairs of their respective districts.
   71-2        (c)  If the consolidated district elects directors, directors
   71-3  for the consolidated district shall be elected in the same manner
   71-4  and for the same term as directors elected at a confirmation
   71-5  election.  The directors' election shall be set for the next
   71-6  regular election.
   71-7        Sec. 36.356.  DEBTS OF ORIGINAL DISTRICTS.  (a)  After two or
   71-8  more districts are consolidated, the consolidated district shall
   71-9  protect the debts of the original districts and shall assure that
  71-10  the debts are not impaired.  If the consolidated district has
  71-11  taxing authority, the debts may be paid by taxes levied on the land
  71-12  in the original districts as if they had not consolidated or from
  71-13  contributions from the consolidated district on terms stated in the
  71-14  consolidation agreement.
  71-15        (b)  If the consolidated district has taxing authority and
  71-16  assumes the bonds, notes, and other obligations of the original
  71-17  districts, taxes may be levied uniformly on all taxable property
  71-18  within the consolidated district to pay the debts.
  71-19        Sec. 36.357.  ASSESSMENT AND COLLECTION OF TAXES.  If the
  71-20  consolidated district has taxing authority, the district shall
  71-21  assess and collect taxes on property on all property in the
  71-22  district for maintenance and operation of the district.
  71-23        Sec. 36.358.  VOTED BUT UNISSUED BONDS.  If either district
  71-24  has voted but unissued bonds payable in whole or in part from
  71-25  taxation assumed by the consolidated district, the consolidated
  71-26  district may issue the voted but unissued bonds in the name of the
  71-27  consolidated district and levy a uniform tax on all taxable
   72-1  property in the consolidated district to pay for the bonds.
   72-2        Sec. 36.359.  FILING OF ORDER WITH COUNTY CLERK AND EXECUTIVE
   72-3  DIRECTOR.  A consolidation order issued by the board shall be kept
   72-4  in the records of the consolidated district, recorded in the office
   72-5  of the county clerk in each of the counties in the consolidated
   72-6  district, and filed with the executive director.
   72-7        SECTION 3.  Section 151.003(b), Water Code, is amended to
   72-8  read as follows:
   72-9        (b)  Except as provided in this subsection, an adjoining
  72-10  county may be added to the district on application of the
  72-11  commissioners court of the adjoining county and by complying with
  72-12  the procedures provided in Subchapter K, Chapter 36 <Sections
  72-13  55.730-55.744 of this code, to the extent that those provisions are
  72-14  applicable>.  Any county added to the district under this
  72-15  subsection is subject to the jurisdiction of the board and this
  72-16  chapter, and two members shall be added to the board.  One shall be
  72-17  chosen by the commissioners court of the county added to the
  72-18  district and one shall be chosen by the mayor of the city that has
  72-19  the largest population in the county that is added.  The two new
  72-20  members shall draw lots to establish staggered terms of office.
  72-21        SECTION 4.  Section 151.005(a), Water Code, is amended to
  72-22  read as follows:
  72-23        (a)  The district has all of the rights, powers, privileges,
  72-24  authority, functions, and duties provided by the general law of
  72-25  this state, including Chapter 36 <Chapters 50 and 52 of this code>,
  72-26  applicable to groundwater <underground water> conservation
  72-27  districts created under Article XVI, Section 59, of the Texas
   73-1  Constitution.
   73-2        SECTION 5.  Section 151.005(c), Water Code, is amended to
   73-3  read as follows:
   73-4        (c)  Sections 36.104, 36.114, 36.117, 36.201, 36.202, 36.203,
   73-5  and 36.204 <52.1511, 52.156, 52.167, 52.168, 52.170, and 52.173 of
   73-6  this code> and Subchapter I, Chapter 36, <Subchapters B, C, H, I,
   73-7  J, and K of Chapter 52 of this code> do not apply to the district.
   73-8        SECTION 6.  Chapter 52, Water Code, is repealed.
   73-9        SECTION 7.  An election conducted by a district formerly
  73-10  governed by Chapter 52, Water Code, on August 14, 1993, at which
  73-11  voters in the district approved the levy of taxes for the
  73-12  district's maintenance and operating expenses, is validated in all
  73-13  respects as of the date on which the election occurred.  A
  73-14  district's levy and collection of taxes, as approved by that
  73-15  election, and a district's subsequent acts and proceedings may not
  73-16  be held invalid on the grounds that the district was not authorized
  73-17  to levy the taxes or conduct the election.
  73-18        SECTION 8.  This Act takes effect September 1, 1995, and
  73-19  applies to all actions by a district or board taken after that
  73-20  date. Any provision of this Act relating to suits to which a
  73-21  district governed by this Act is a party shall only apply to suits
  73-22  filed on or after the effective date of this Act.
  73-23        SECTION 9.  The importance of this legislation and the
  73-24  crowded condition of the calendars in both houses create an
  73-25  emergency and an imperative public necessity that the
  73-26  constitutional rule requiring bills to be read on three several
  73-27  days in each house be suspended, and this rule is hereby suspended.