Part 10.
TEXAS WATER DEVELOPMENT BOARD
Chapter 367.
AGRICULTURAL WATER CONSERVATION PROGRAM
The Texas Water Development Board (the board) proposes the repeal
of 31 TAC Chapter 367, Subchapter A, §§367.1 - 367.3 and §§367.21
- 367.30, Subchapter B, §§367.40 - 367.51, Subchapter C, §§367.71
- 367.77, concerning the Agricultural Water Conservation Program (AWCP). The
board also proposes new Chapter 367, §§367.1 - 367.14, concerning
Agricultural Water Conservation Program (AWCP). The proposed repeal and new
sections reflect changes to the Texas Water Code enacted by the 78th Legislature
which consolidate three existing agricultural water conservation programs
into one program.
The current AWCP is composed of three subchapters that were created at
different times and provide different types of financial assistance from different
funding sources. Current Chapter 367, Subchapter A, §§367.1 - 367.3
and §§367.21 - 367.30, provides grants to political subdivisions
for the purchase of equipment used in agricultural production that conserves
water. Pursuant to former Water Code Chapter 15, Subchapters G and H, the
primary source of funds for this program was the agricultural soil and water
conservation fund from transfers from the agricultural trust fund. Current
Chapter 367, Subchapter B, §§367.40 - 367.51 provides loans to political
subdivisions for the political subdivision to purchase and install equipment
used in agricultural production that conserves water. This subchapter also
provides loans to political subdivisions so that the political subdivision
can provide loans to individuals to purchase and install equipment used in
agricultural production that conserves water. Pursuant to the applicable statutes
and board rule, in the event of the default on a loan by an individual made
by a political subdivision under this program, the board will share in 50%
of the loss from the default. Pursuant to Water Code Chapter 17, Subchapter
J, the source of funds for this program was the agricultural water conservation
fund, which was primarily funded through the sale of bonds by the board. Current
Chapter 367, Subchapter C, §§367.71 - 367.77 provides grants to
state agencies for purposes specified in legislative appropriations and is
funded through the sale of bonds as authorized in Water Code Chapter 17, Subchapter
J. Senate Bill 1053 of the 78th legislative sessions consolidated all the
money in the agricultural soil and water conservation fund and the agricultural
trust fund into the agricultural water conservation fund. Senate Bill 1053
repealed Water Code Chapter 15 Subchapters G, H, and I as well as amending
Water Code Chapter 17, Subchapter J. As amended, Water Code Chapter 17, Subchapter
J now identifies conservation programs and projects and authorizes the board
to provide grants to state agencies for such programs and projects. Newly
amended Water Code Chapter 17, Subchapter J also authorizes the board to provide
grants and loans to political subdivisions for such programs and projects.
The authority to make loans to political subdivisions includes the authority
to loan funds to political subdivisions which may, in turn, make loans to
individuals for conservation projects as was authorized before Senate Bill
1053. The statute, however, does not authorize the board to share any of the
loss that may result in a default by an individual to the political subdivision
as was authorized before Senate Bill 1053. With the consolidation of all the
accounts into one fund, the board proposes to repeal 31 TAC Chapter 367 and
propose new 31 TAC Chapter 367 to eliminate its subchapters, consolidate all
the activities previously performed in the separate subchapters into one chapter,
and fund these activities from the agricultural water conservation fund.
The board proposes to new §367.1 to add the board authority to provide
loans and to change the reference from Water Code Chapter 15, Subchapter H
to Chapter 17, Subchapter J. The new section is intended to reflect that statutory
policy for the AWCP is derived from Water Code Chapter 17, Subchapter J and
that this policy includes providing loans in addition to grants. This reflects
authority found in current rules in Chapter 367 Subchapter B which is proposed
for repeal.
The board proposes new §367.2 to include new definitions for the terms
conservation program, conservation project, construction, eligible cost, fund,
and person. New Water Code §17.897 sets out the activities that are associated
with conservation programs and identifies the costs associated with those
activities which will be eligible for payment under the AWCP. The board proposes
new §367.2(2) to define conservation program using the same language
as Water Code §17.897 so that the board utilizes all the specific statutory
authority available to fund conservation program activities. Additionally,
new Water Code §17.899 authorizes grants to state agencies for a conservation
program that provides funding to a political subdivision or person for conservation
projects. Since this authority further defines the scope of conservation programs,
the board proposes to include the language in proposed new §367.2(2).
Proposed new §367.2(2)(E) identifies a program that is administered by
a political subdivision to provide a loan to a person for a conservation project
to the definition of conservation program. The board proposes new §367.2(3)
to define conservation project with the same language used in new Water Code §17.898
that identifies activities that are associated with conservation projects.
The board proposes a definition of conservation project using the same language
as Water Code §17.898 so that the board uses the statutory authority
available in funding conservation project activities. The board proposes new §367.2(4)
to define construction. Board funding may include paying the costs of construction
of conservation projects. When eligible costs of construction are included
in an application for a grant or loan, additional information to evaluate
the application is appropriate because construction costs typically represent
a substantial part of a project budget and therefore consume a greater share
of the financial assistance available from the board. In order to identify
the circumstances in which the additional information is appropriate, the
board proposes to define construction to be actual construction, alteration
or repair of a fixed improvement on real property that requires plans or designs
prepared by a licensed professional engineer. The board proposes to define
construction in the instances which require the involvement of a engineer
licensed by the state because it is these instances in which the construction
activity is identifiably significant. By defining construction in relation
to the involvement of a licensed engineer, the construction activity for the
project achieves a level that additional information and review by the board
is appropriate. The board proposes new §367.2(5) to define eligible cost.
The new section will define eligible cost the same as Water Code §17.897
and §17.898 as amended, which include subsections that identify costs
elements which the board may finance when making grants or loans for conservation
programs or projects, respectively. This will allow the board to provide the
fullest extent of the financial assistance that is authorized by statute.
The board proposes new §367.2(7) to define fund as the agricultural water
conservation fund authorized by the Texas Constitution so that the source
of funds can be readily identified in this chapter. The board proposes to
amend current §367.2(4), which defines political subdivision, to be proposed
new §367.2(9) and to include changes to the definition so it corresponds
to the definition of political subdivision in new Water Code §17.871(6).
In doing so, these rules will identify the entities to which the board may
provide financial assistance consistent with its statutory authority.
The board proposes to repeal the current §367.3 due to the repeal
Water Code §15.435. In its place, the board proposes new §367.3
that identifies the eligible uses of money in the fund that is available to
state agencies and political subdivisions. The language of this provision
is the same as the language in new Water Code §17.899 in regard to the
uses of the fund which involve providing assistance to state agencies and
political subdivisions.
The board proposes new §367.4 to establish a procedure that will identify
the money that the board determines is appropriately made available for grants
and loans each year. Proposed new §367.4(a) requires the executive administrator
to report to the board the amount of money available in the fund and to recommend
an amount from the available funds to be used as grants and loans. The subsection
as proposed will allow the board to be informed of the management of the fund
at least annually or more frequently at the discretion of the board. Proposed
new §367.4(b) provides for the board to approve the final allocations
of money from the fund for different purposes. Proposed new §367.4(c)
sets out the method for the board to solicit grant application based on the
money that the board in its discretion might make available from the fund.
The proposed new subsection specifies that the notice will identify the amount
of funds that are available, the types of programs or projects that are being
solicited, any additional application requirements not already identified
elsewhere in the chapter, the methodology by which the board will select between
competing applications, any requirements that will be a part of the grant
award, and the due date for the applications. This procedure allows the board
the flexibility to propose potential programs and projects annually to address
the state's needs that have become apparent at the time of consideration.
Proposed new §367.4(d) provides that state agencies and political subdivisions
can submit requests for grant funds even if there is not a request for grant
applications pending. Under this proposed new subsection, the board can periodically
review unsolicited grants proposals and may provide funds for those programs
or projects. This proposed new subsection allows the board to act on programs
and projects that it had not considered but that the board determines require
immediate or special attention.
The board proposes new §367.5 to identify the minimum application
requirements applicable to requests for funding from the AWCP. Most of these
requirements are identical to or similar to provisions currently in place
for applications for loans and grants from the board's various agricultural
water conservation programs. Proposed new §367.5(a) requires that all
applications include the name of the applying entity, the legal authority
that created the entity and under which it currently operates, the names of
the people that are authorized to act for the entity. This new subsection
proposes that the person or people authorized to act for the entity submit
a sworn affidavit, a certified resolution, or certified minutes from such
person or persons stating the amount of the request, authorizing the submission
of the application, and designating an individual to be the contact person
for the grant application and to be responsible for the completion of the
terms of the grant. This new subsection as proposed also requires that the
application include a map or description of the area in which the applicant
is authorized to act and a description of the proposed program or project
to include where and when the activity will occur. The proposed new subsection
will also require that the application include a budget identifying the total
cost of the program or project, a cost for each significant element, and identification
of other sources of funds. This proposed new subsection will also require
that the application identify the proposed benefits from the project, a description
of the applicant's water conservation efforts, and a water conservation water
management strategy from the approved regional water plan of the area of the
state of the project or state water plan that will be implemented by the use
of the grant. An application meeting these requirements will provide the board
with the minimum information necessary for the board to consider the information
required by statute, making the findings required by statute, and to meet
its fiduciary responsibilities with respect to the allocation of state resources.
Proposed new §367.5(a)(12) adds an additional application requirement
to include any other information that may be specifically requested by the
executive administrator or the board. In those instances that the general
application materials do not provide sufficient information for the board
to perform its obligations for the fund under the statutes, this proposed
paragraph provides the board a method to solicit additional information for
the application. Proposed new §367.5(b) provides that applications for
conservation program or project loans must include fiscal information identifying
the applicant's proposed repayment methods in addition to the requirements
included in proposed new §367.5(a). Proposed new §367.5(b) also
provides that if the political subdivision intends to use the board's loan
to provide loans to persons, then the application from the political subdivision
shall include a description of the conservation projects which will be funded
by the loans provided to the political subdivision's applicants, the standards
for and procedures applied to loan applications, and a sample or adequate
description of the agreement pursuant to which the funds will be provided.
This information is consistent with the information that is currently requested
for such loans and insures that the board fulfills its fiduciary duties with
respect to the use of state funds.
The board proposes new §367.6, which is substantially similar to current §367.48(1),
to require applications that request financial assistance for projects which
will result in construction, as defined, to include an engineering feasibility
report signed and sealed by a professional engineer licensed in the State
of Texas. This proposed new section requires that the feasibility report include
a project description and estimated cost, an alternatives analysis, sufficient
information for the board to evaluate the engineering feasibility of the project
together with the maps and drawings to locate and describe the project area,
a statement regarding whether there will be surface or subsurface disturbance
of soil, and other information as may be reasonably required by the executive
administrator. This report allows the board to insure the feasibility of a
proposed construction project.
The board proposes new §367.7, which is substantially the same as
current §367.49 for agricultural water conservation loans, to provide
that applications for funds which will be used for construction that results
in surface or subsurface soil disturbance or alteration of existing vegetation
will include environmental assessments. This proposed section specifically
allows an applicant to submit an environmental assessment performed for any
other state or federal agency in satisfaction of the requirements of this
section. To prepare an assessment under this section, the applicant will submit
preliminary information sufficient for the executive administrator to determine
if any environmental regulations, as defined in the section, are affected.
If no such regulations are affected, the executive administrator will notify
the regulatory agencies, as defined, that the project will be categorically
excluded and so inform the board upon application consideration. If the preliminary
project information indicates that some but not all environmental regulations
are affected, the executive administrator will notify the applicant and the
regulatory agencies that some environmental regulations are unaffected and
further review will not occur while some environmental regulations are affected
and further review is required. For this mid-level review, either the applicant
or the executive administrator, at the election of the applicant, will develop
further information or an action plan to coordinate adequate compliance for
the affected environmental regulations. If the preliminary project information
indicates that all environmental regulations are affected, the executive administrator
will notify the applicant and the regulatory agencies that a full review is
required. Either the applicant or the executive administrator, at the election
of the applicant, will develop all the required information or an action plan
to coordinate adequate compliance with all the affected environmental regulations.
At the completion of either the mid-level or full review, the completed environmental
assessment will be a part of a complete application. This section as proposed
insures that the board receives the minimum information necessary to insure
that money provided from the fund for construction will not result in the
violation of existing environmental regulations. This proposed new section
contains the same requirements for an environmental assessment required for
the board's other state funded financial assistance programs as set out in
31 TAC §363.14.
The board proposes new §367.8 to identify the standards by which the
board will review a grant application from a state agency. Proposed new §367.8(a)
provides that the board will consider the commitment of the state agency to
water conservation and the benefits that will be derived from the grant. These
considerations are included because they are the considerations required by
new Water Code §17.900. Proposed new §367.8(b) identifies the findings
that must be made by the board in order to approve a grant application of
a state agency. The findings, as proposed, are that the grant funds will supplement
rather than replace funds available to the state agency from other sources
and the grant will further water conservation in the state. These two findings
are included because they are the statutory findings required in Water Code §17.900.
A third finding required by Water Code §17.900 is that the public interest
will be served by the grant. The board proposes that a factor which must be
included in this finding is that the grant must serve the public interest
by assisting in the implementation of a water conservation water management
strategy identified in the most recent applicable regional water plan or state
water plan. Proposed new §367.8(c) provides that when a legislative appropriation
requires additional or different considerations or findings by the board,
the board will comply with those legislative requirements, which is also consistent
with Water Code §17.900. Proposed new §367.8(d) proposes that upon
approval of a grant by the board, the executive administrator will be required
to execute a grant contract with the state agency that incorporates terms
and conditions that will effectuate the purpose and intent of the grant approved
by the board. The flexibility obtained by the board by annually proposing
grants for programs and projects necessary results in different expectations
for those programs and projects. Consequently, this section proposes to assign
the duty and obligation to the executive administrator to negotiate the appropriate
terms and conditions for each program and project to be implemented with the
state agency through written agreement to achieve the objectives of the board.
The board proposes new §367.9 to identify the standards by which the
board will review a grant application from a political subdivision. Proposed
new §367.9(a) provides that the board will consider the political subdivision's
use of other available funding for the proposed grant activity, the willingness
of the applicant to raise its own revenues, the political subdivision's commitment
to water conservation, and the benefits that will derived from the grant,
all of which are the considerations required by new Water Code §17.902.
Proposed new §367.9(b) identifies the findings that must be made by the
board in order to approve a grant application of a political subdivision.
The findings, as proposed, are that the grant funds will supplement rather
than replace funds available to the political subdivision from other sources
and the grant will further water conservation in the state. These two findings
are verbatim the statutory findings required in Water Code §17.902. A
third finding required by that statutory provision is that the public interest
will be served by the grant. The board proposes that a factor which must be
included in this finding is that the grant must serve the public interest
by assisting in the implementation of a water conservation water management
strategy identified in the most recent applicable regional water plan or state
water plan. New §367.9(c) proposes that upon approval of a grant by the
board, the executive administrator will be required to execute a grant contract
with the state agency that incorporates terms and conditions that will effectuate
the purpose and intent of the grant approved by the board. The flexibility
obtained by the board by annually proposing grants for programs and projects
necessary results in different expectations for those programs and projects.
Consequently, this section proposes to assign the duty and obligation to the
executive administrator to negotiate the appropriate terms and conditions
for each program and project to be implemented with the political subdivision
through written agreement to achieve the objectives of the board.
The board proposes new §367.10 to identify the standards by which
the board will review a loan application from a political subdivision. Proposed
new §367.10(a) provides that the board will consider the political subdivision's
ability to repay the loan and whether the loan will further water conservation,
which are the considerations required by new Water Code §17.9021. Proposed
new §367.10(b) identifies the findings that must be made by the board
in order to approve a loan application of a political subdivision. The findings,
as proposed, are that the public interest will be served by providing the
loan, the political subdivision has the ability to repay the loan and that
the loan will further water conservation in the state. These findings are
verbatim the statutory findings required by Water Code §17.9021. As authorized
by new Water Code §17.9022, proposed new §367.10(c) provides that
the board may make the loan available in any feasible manner to include the
purchase of the political subdivision's bonds or the execution of a loan agreement.
The board proposes new §367.11 to identify the maturity and interest
rates for loans approved under this chapter. Proposed new §367.11(a)
provides that the maturity will be determined by the board. Proposed new §367.11(b)
provides that the interest rate will be equal to the interest rate for an
U.S. Treasury note with a twelve-month maturity on the date that rates are
set. Proposed new §367.11(c) and (d) identifies the time schedule in
which the interest rate will be identified for the applicant.
Proposed new §367.12(a) states the intention of the board that the
provisions of this section will apply specific procedures to conservation
projects that involve construction, as that term is defined in the chapter.
Proposed new subsection (b) provides that prior to release of funds for construction
activities, the executive administrator will review and provide written approval
of plans and specifications for the construction work. Additionally, if the
construction is to be performed pursuant to construction contracts, the subsection
requires certain provisions to be included in the contracts and that the contracts
will be reviewed and approved by the executive administrator prior to release
of funds for construction. Proposed new subsection (c) authorizes the closing
of the loan and release of funds for the payment of planning and design or
other non-construction costs if the construction funds are escrowed. Proposed
new subsection (d) provides that after the construction contract is awarded,
the applicant shall insure adequate project inspection, obtain assurances
from the project engineer that the project is properly constructed, allow
the executive administrator to inspect the project, and take corrective action
as may be necessary to complete the project. Proposed new subsection (e) provides
that the applicant shall notify the executive administrator of project completion,
that the executive administrator will confirm completion and authorize the
release of retainage for the construction contract. Proposed new subsection
(f) specifically notes that none of the activity described in this section
for the executive administrator shall create any liability from the construction
activity for the state.
Proposed new §367.13 provides that substantial changes to a program
or project, including an increase on funds required from the board, will require
board approval and that all other changes will must be approved by the executive
administrator.
Proposed new §367.14 sets forth reporting requirements for loan recipients.
Current provisions of §367.51 provide that the board will share 50% of
the costs with a political subdivision of a default by an individual that
has received a loan from a political subdivision. Consistent with the changes
in the Water Code as the result of Senate Bill 1053, the provisions contained
in §367.51 have been repealed.
Melanie Callahan, Director of Fiscal Services, has determined that for
the first five-year period the repeal and new sections are in effect there
will be fiscal implications on state and local government as a result of enforcement
and administration of the repeal and new sections. Particularly, the state
will no longer share the costs of default with a local government entity that
has received from the board makes a loan person for a conservation project
and that person defaults. The participation of a local government in this
program is discretionary and the occurrences of default are unpredictable.
Therefore, there are no adequate means to estimate the cost to local government
for these rule changes. Since the inception of the program, the local government
and the board have sustained equal losses totaling about $50,931 with the
first write-off occurring in FY 2001.
Ms. Callahan has also determined that for the first five years the repeal
and new sections, as proposed, are in effect the public benefit as a result
of enforcing the repeal and new sections will be to make them consistent with
recent legislative changes which clarify and streamline the board's program
and provides the board with increased flexibility in implementing the program
and its agricultural conservation efforts. Ms. Callahan has determined there
will not be economic costs to small businesses or individuals required to
comply with the repeal and new sections as proposed.
It is estimated that the repeal and new sections will not adversely affect
local economies because the rule pertains to a voluntary program and will
be utilized by governmental entities to access the benefits of a non-repayable
financial assistance program administered by the board.
Comments on the proposal will be accepted for 30 days following publication
and may be submitted to Jonathan Steinberg, Deputy Counsel, Texas Water Development
Board, P.O. Box 13231, Austin, Texas, 78711-3231, by e-mail to jonathan.steinberg@twdb.state.tx.us
or by fax at (512) 463-5580.
Subchapter A. GRANTS FOR EQUIPMENT PURCHASES
31 TAC §§367.1 - 367.3, 367.21 - 367.30
(Editor's note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the Texas Water Development Board or in the Texas Register office, Room
245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The repeal is proposed under the authority of the
Texas Water Code §6.101 which provides the Texas Water Development Board
with the authority to adopt rules necessary to carry out the powers and duties
in the Texas Water Code and other laws of the State, and §17.903 which
requires the board to adopt rules necessary to carry out the provisions of
Subchapter J, Chapter 17.
The statutory provisions affected by the repeal are Texas Water Code §17.895
and §17.8955.
§367.1.Policy Statement.
§367.2.Definitions.
§367.3.Guidelines.
§367.21.Purpose.
§367.22.Entities Eligible for Grants.
§367.23.Equipment Eligible for Grants.
§367.24.Matching Grant Requirements.
§367.25.Applications.
§367.26.Priority in Expenditure of Funds.
§367.27.Approval of Grants.
§367.28.Management of Grant Funds.
§367.29.Reports by Recipients.
§367.30.Annual Report to Board by Executive Administrator.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on December 17, 2003.
TRD-200308635
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: February 18, 2004
For further information, please call: (512) 475-2052
31 TAC §§367.40 - 367.51
(Editor's note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the Texas Water Development Board or in the Texas Register office, Room
245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The repeal is proposed under the authority of the
Texas Water Code §6.101 which provides the Texas Water Development Board
with the authority to adopt rules necessary to carry out the powers and duties
in the Texas Water Code and other laws of the State, and §17.903 which
requires the board to adopt rules necessary to carry out the provisions of
Subchapter J, Chapter 17.
The statutory provisions affected by the repeal are Texas Water Code §17.895
and §17.8955.
§367.40.Policy Statement.
§367.41.Definitions.
§367.42.Use of Fund.
§367.43.Conservation Loans.
§367.44.Procedure and Method for Setting Interest Rates.
§367.45.Applications.
§367.46.Approval of Applications.
§367.47.Priority in Expenditure of Funds.
§367.48.Engineering Requirements.
§367.49.Environmental Assessment.
§367.50.Default and Foreclosure by Lender Districts.
§367.51.Reporting Requirements.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed
with the Office of the Secretary of State on December 17, 2003.
TRD-200308636
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: February 18, 2004
For further information, please call: (512) 475-2052
31 TAC §§367.71 - 367.77
(Editor's note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the Texas Water Development Board or in the Texas Register office, Room
245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The repeal is proposed under the authority of the
Texas Water Code §6.101 which provides the Texas Water Development Board
with the authority to adopt rules necessary to carry out the powers and duties
in the Texas Water Code and other laws of the State, and §17.903 which
requires the board to adopt rules necessary to carry out the provisions of
Subchapter J, Chapter 17.
The statutory provisions affected by the repeal are Texas Water Code §17.895
and §17.8955.
§367.71.Policy Statement.
§367.72.Definitions.
§367.73.Purpose.
§367.74.Applications.
§367.75.Approval of Grant Applications.
§367.76.Grant Agreement.
§367.77.Annual Report to Board by Executive Administrator.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed
with the Office of the Secretary of State on December 17, 2003.
TRD-200308638
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: February 18, 2004
For further information, please call: (512) 475-2052
Subchapter B. AGRICULTURAL WATER CONSERVATION LOAN PROGRAM
Subchapter C. GRANTS TO STATE AGENCIES
Chapter 367.
AGRICULTURAL WATER CONSERVATION PROGRAM