The Texas Natural Resource Conservation Commission (TNRCC or commission) adopts amendments to §§288.1, 288.2, 288.4, 288.5, and new §288.20, related to Drought Contingency Plans for Municipal Uses by Public Water Suppliers, new §288.21, related to Drought Contingency Plans for Irrigation Use, new §288.22, related to Drought Contingency Plans for Wholesale Water Suppliers, and new §288.30, related to Required Plans. Sections 288.1, 288.2, 288.4, 288.5, 288.20, 288.21, 288.22, and 288.30 are adopted with changes to the proposed text as published in the October 9, 1998, issue of the Texas Register (23 TexReg 102780).

EXPLANATION OF ADOPTED RULE

The purpose of the adopted amendments and new sections is to establish criteria and minimum requirements for drought contingency plans for wholesale and retail public water suppliers and irrigation districts necessary to implement the Texas Water Code, §11.1272, as enacted by Senate Bill 1, 75th Legislature (1997). The new sections include both procedural and substantive requirements that must be addressed by drought contingency plans. The new rules also establish deadlines for irrigation districts, and wholesale and retail public water suppliers to submit drought contingency plans. A staggered deadline is provided for public water supply systems to allow smaller systems with more limited resources additional time to prepare their plans and allow for their participation in a technical assistance program jointly sponsored by the commission and the Texas Water Development Board. Staggering this requirement also allows the commission to review a manageable number of plans based upon the agency's available resources. Specifically, retail public water suppliers with less than 3,300 connections must develop their plans by September 1, 2000, and must make the plans available to the TNRCC upon request. Larger retail public water suppliers, wholesale public water suppliers, and irrigation districts must submit drought contingency plans to the TNRCC by September 1, 1999.

The adopted new rules also establish deadlines for existing water right holders of 10,000 acre- feet a year or more for irrigation uses, and 1,000 acre-feet a year or more for other uses, to submit water conservation plans to the executive director as required by Texas Water Code, §11.1271, as amended by Senate Bill 1. Under the new rule, all applicable water rights holders must submit water conservation plans by September 1, 1999.

The adopted new rules amend the title of Chapter 288 to include drought contingency plans and establishes three subchapters relating to water conservation plans, drought contingency plans, and submission requirements, respectively. Additionally, the new §288.20(a)(1) provides minimum criteria for drought contingency plans for Public Water Suppliers. Section 288.20(a)(1)(F) provides that the drought contingency plan include an assessment of water management strategies to be used when flows are at 75 percent of normal and when flows are at 50 percent of normal. The rules do not require some corresponding drought management action to occur when flows reach these levels. Rather, they simply provide for an assessment of available water supplies and the need to undertake such actions. These percentages correspond to those provided in Senate Bill 1 and for which the commission must provide water right holders information on the amount of water available to them when flows are at these levels. They also correspond to those provided in Texas Water Development Board rules for the purposes of regional water planning. The commission intends that the terms "flows are at 75 percent of normal," and "flows are at 50 percent of normal," have the same definitions and usage as those terms have in the Texas Water Development Board's regional planning rules, 31 TAC §357 et. seq. in order to have consistency between the two sets of rules.

FINAL REGULATORY IMPACT ANALYSIS

The commission has reviewed the adopted rulemaking in light of the regulatory analysis requirements of Texas Government Code §2001.0225 and has determined that the rulemaking is not subject to §2001.0225 because it does not meet any of the four applicability requirements listed in §2001.0225(a). Specifically, it does not exceed a standard set by federal law since there are no corresponding federal requirements; it does not exceed any express requirements of state law but, rather, the rule is specifically required by Texas Water Code, §11.1271, and §11.1272; does not involve any delegation agreements or contracts; and the rule is being proposed for adoption under specific authority provided in §§11.1271 and §11.1272 as well as the general powers of the commission provided under Chapter 5 of the Texas Water Code. The requirements for plans that are added to the rules are necessary to implement Senate Bill 1, 75th Legislature (1997).

TAKINGS IMPACT ASSESSMENT

The commission has prepared a Takings Impact Assessment for these rules pursuant to Texas Government Code, §2007.043. The following is a summary of that Assessment. The specific purpose of the rule is to adopt criteria and deadlines for submission of water conservation and drought contingency plans necessary to implement existing statutory requirements for certain water right holders and wholesale and retail public water suppliers and irrigation districts to develop such plans. The rules will substantially advance this specific purpose by specifying the minimum requirements that must be addressed in water conservation and drought contingency plans, and specifying a date for submission of plans. Promulgation and enforcement of these rules will not burden private real property. Rather, they implement statutory requirements providing for the reasonable conservation and management of a state natural resource to which persons have been granted a usufructuary interest and over which the state retains supervisory oversight in trust for the public to ensure the protection of the public health, safety, and welfare.

COASTAL MANAGEMENT PROGRAM (CMP)

The commission has reviewed the adopted rulemaking and found that the rule is neither identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11, relating to Actions and Rules Subject to the Coastal Management Program, nor will it affect any action or authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11. Therefore, the adopted rule is not subject to the CMP.

HEARINGS AND COMMENTERS

A public hearing was held in Austin on October 29, 1998. The comment period closed November 9, 1998.

Written comments suggesting changes to the rules were provided by the Association of Electric Companies of Texas, Inc. (AECT), the company Azurix, the Brazos River Authority, the City of Dallas, the City of Fort Worth, Henry, Lowerre, Johnson, Hess & Frederick, Attorneys at Law, the Law Offices of Louis T. Rosenberg, P.C. for Bexar Metropolitan Water District (Bexar Met), the City of North Richland Hills, the Public Interest Counsel of the Texas Natural Resource Conservation Commission, the San Antonio Water System, Tarrant Regional Water District (Tarrant Regional), the Texas and Southwestern Cattle Raisers' Association (Cattle Raisers), the Texas Water Conservation Association (TWCA), the Texas Water Development Board, the City of Tyler, and the Wharton County Water Council. The following paragraphs summarize the written and oral comments received.

The City of Tyler objected that the Fiscal Note in the proposed rules did not consider the cost to the citizens of the State for retrofitting water conserving plumbing. The city asserted that the cost of a retrofit plumbing program would greatly exceed $140,000.

The commission notes that the subsection concerning retrofitting of water conserving plumbing fixtures, §288.2(a)(3)(C), was not proposed for amendment. That provision of the current rules is not part of the minimum requirements for a water conservation plan. A retro-fit program is an additional water conservation strategy that may be considered, in addition to the minimum requirements, if additional strategies are necessary to achieve water conservation goals. Under the rules adopted today, holders of existing water rights permits that meet or exceed the statutory amounts, are required to submit a water conservation plan to the executive director where it will under go a staff review to ensure that each element of the minimum requirements of §288.2(a)(1) are met. Under §288.2(a)(3)(C) only the commission may require a retrofit strategy, and then only if the commission determines that the retrofit strategy is necessary to achieve the goals of the water conservation plan. The commission would only review a water conservation plan as part of an application for a new or amended water right under §§288.30(6) and 295.9, not as part of a submission to the executive director under §288.30(1).

AECT suggested that the title to Chapter 288 be revised to add a reference to Drought Contingency Plans.

The commission agrees, and accordingly, the title has been revised.

The San Antonio Water System proposed that the definition of municipal use in §288.1(9) should be modified to ensure that reuse of treated effluent is included in the definition. They suggest that the definition in §297.1 incorporates the concept. The City of North Richland Hills also supported the concept of the unrestricted right of reuse of wastewater effluent.

The commission disagrees with the comment, in part, because the suggested change to §297.1 could greatly expand existing water rights for municipal use by authorizing reuse that may not be currently authorized in such water rights. The commission intends that the term municipal use, as used in Chapter 288, includes the reuse of treated effluent for all municipal purposes including supplying that treated effluent as part of its regular water system operations to commercial or industrial customers. The commission notes that the word reuse is expressly defined in the current rules, and that recycling and reuse of water is expressly part of the definitions of conservation and water conservation plan. The commission also notes that no amendment to the municipal use definition in Chapter 288 was proposed.

An individual commented that the proposed definition of public water supplier exceeded statutory authority, including noncommunity water systems that were neither wholesale or retail providers, because they were not in the business of providing water. The City of Dallas requested that the rules include a definition of wholesale water supplier.

The commission agrees. The legislature used the terms wholesale and retail public water suppliers, (emphasis added) which implies compensation for the service of supplying water. The adopted rules, in §288.30 regarding who must supply water conservation and drought contingency plans, have dropped the use of terms not used in the statute. The adopted rules now are crafted in terms of wholesale and retail public water suppliers. Both those terms are defined in §288.1, Definitions. The definitions of both wholesale and retail public water suppliers now include the concept of compensation for the water supplier. The commission intends to exclude from both terms noncommunity water systems where water may be supplied to the public, but there is no charge or compensation for the water or the water service.

AECT suggested that §288.2(a)(1)(F) be revised to delete reference to public education regarding the drought contingency plan. AECT supported public education programs about drought contingency plans. However, they felt that since subchapter A deals with water conservation plans, only water conservation plans should be mentioned in this subchapter. AECT felt that elimination of the public education component for drought contingency plans would not reduce the amount of public outreach since §288.20(a)(1) requires informing and educating the public. The City of Dallas suggested that §288.20(a)(1) add language requiring a program of continuing public education and information regarding the public water supplier's water conservation and drought contingency plans.

The commission has deleted the requirement for public education of the drought contingency plan from subchapter A. As was pointed out by AECT, this subchapter deals with water conservation plans. The commission has clarified §288.20(a) to separate the requirements for public involvement in the preparation of the drought contingency plan from the requirement to inform and educate the public about the drought contingency plan on an on-going basis.

The Texas Water Development Board objected to the use of the term "Regional Planning Groups" in §288.2(a)(1)(J) instead of the term "Regional Water Planning Groups."

The commission agrees with this comment. Accordingly, use of the term "regional planning groups" has been replaced by "regional water planning groups" throughout the adopted rules.

The Cattle Raisers objected to §288.4(a)(1)(C) requirements of a metering device to measure water diverted from the surface water supply. The commenter stated that although conservation plans are only required to be submitted to the TNRCC for holders of water rights of 10,000 acre feet or more for irrigation purposes, the rule would apparently require every irrigation user to install a metering device. Because of the expense of installing and maintaining a metering device, the Cattle Raisers suggested deleting the requirement for a metering device.

The commission disagrees with the comment because the rules do not necessarily require a meter, but some reliable method of measuring water diversion and use for purposes of ensuring water conservation and the prevention of waste which may or may not include a meter. Accordingly, the rule has been revised to make this clear. In addition, §288.4 is intended to state what must be in a water conservation plans for irrigation uses. That section does not state who has to submit an irrigation use water conservation plan. Individuals or entities that must submit a water conservation plan for irrigation use are set out in §288.30, required plans. Only the holders of existing permits, certified filings, or certificates of adjudication for the appropriation of surface water in the amount of 10,000 acre-feet a year or more for irrigation use, or applicants for a new water right under §295.9, must comply with §288.4. Existing surface water right holders for irrigation uses of under 10,000 acre-feet a year are not required to file a water conservation plan, or otherwise comply with §288.4. In order to provide flexibility as to the measurement of the amount of water diverted, the commission will continue to allow measurement methods in lieu of water meters. However, as provided in the prior rules, the measuring device or method must have an accuracy of plus or minus 5 percent. The water conservation plan for irrigation use must contain a description of the measuring device or method.

The Wharton County Water Council objected to §288.4 requirements that metering devices and documentation of coordination with the Regional Planning Groups be required for all underground irrigation wells.

The commission does not intend that the water conservation rule would apply to underground, or groundwater, wells. Only surface water right holders are potentially subject to §288.4, water conservation plans for irrigation use. The commission has not made any changes in response to this comment.

Henry, Lowerre, Johnson, Hess and Frederick objected to the introductory language of §§288.5, 288.20, 288.21, and 288.22. The commenters thought that the language "shall provide information in response to each of the following" could be construed as requiring only a discussion of these elements rather than substantive requirements that must be implemented. The commenter suggested replacing that language with "shall include the following elements."

The commission agrees in part, and has made some modifications to the rule. The commission notes that §288.5(1) includes mandatory language that all water conservation plans for wholesale water suppliers, "shall include the following elements:" That mandatory language is restricted to paragraph (1) because the commission intends that paragraph (1) contain required elements for all wholesale water supplier water conservation plans. Paragraph (2) is intended to contain additional strategies that a wholesaler might want to consider, but will not always be required. Nevertheless, paragraph (2) expressly states that the commission may require any of these additional strategies, if the commission determines that the strategies are necessary to obtain the goals of the water conservation plan. The commission, rather than the executive director, can only make this determination as part of a plan submitted with a water right application for new or additional state water under §295.9, relating to water conservation and drought contingency plans.

The commenter's suggested language of "shall include the following elements," was not used in the introductory paragraph to §§288.20, and 288.21, because those sections have subparagraphs that will not apply to all drought contingency plans. For example in §288.20, drought contingency plans for Municipal Uses by Public Water Suppliers, paragraph (2) [proposed paragraph (4)] only applies to privately-owned water utilities. The commission chose not to use language such as "shall include the following elements, where applicable," in order to avoid water suppliers not including a required element on grounds that it did not apply. The commission wants to make very clear which elements must be provided by all public water suppliers. The commission did intend, however, in all cases, that drought contingency plans be developed with public involvement and must be coordinated with Regional Water Planning Groups. Because of the language that the commenter pointed out, this intent might not be clear to every reader. Therefore, the commission has modified these sections to place the requirements for public involvement and coordination with the Regional Water Planning Groups in paragraph (1) after the "shall include the following elements" language. In §288.22, all subparagraphs were intended to apply to all drought contingency plans for irrigation use, therefore the commenter's suggested change was made.

The commission had proposed the deletion of the current §288.5(1)(F), relating to water conservation plans for wholesale water suppliers. That subsection had provided that new or renewed wholesale water supply contracts must have a requirement that the customer implement a water conservation plan. Tarrant Regional supported repeal of the current §288.5(1)(F). The City of Dallas and Henry, Lowerre, Johnson, Hess and Frederick opposed the deletion of §288.5(1)(F). The City of Dallas further suggested that wholesale water customers should coordinate the development of their water conservation and drought contingency plans with their water supplier and that the wholesaler's and customer's drought contingency plans should be consistent.

The commission has elected to retain the current §288.5(1)(F) in the rules adopted today. In many cases there will be few water conservation strategies that a wholesaler can effectively implement without a direct relationship with the ultimate water customer. For example, a city can adopt water conservation ordinances. Other types of water suppliers can use customer service agreements, that require a customer to use water conservation practices as a condition of receiving water service. The ultimate customer is a necessary ingredient to an effective water conservation strategy because they are the ones with discretionary water usage that is the target of the water conservation strategy. Providing that those who purchase water from a wholesaler implement a water conservation plan, ensures that some supplier in the chain finally has a direct relationship with the ultimate water customer. The commission notes that in many cases wholesalers and customers will coordinate the plan development to ensure their plans are consistent. That way the process will be both effective and efficient for both wholesalers and customers. However, the commission does not want to forestall a customer from developing their own effective water conservation plans that are consistent with Chapter 288. Therefore, to allow for additional flexibility for the customer to tailor water conservation plans to their own circumstances, the commission declines to go beyond the current rule.

Tarrant Regional objected to renumbered §288.5(1)(F), current rule §288.5(1)(H), in that a coordinated system reservoir operations plan to optimize available water supplies may conflict with a plan that also incorporates other goals such as cost of water production and desirable water quality. The operations plan should look at best management of the resources, not just optimization of the supply.

The commission understands that in developing an operations plan for multiple reservoirs, trade-offs between several goals such as maximization of supply, cost of production and water quality must be considered. The commission's intent on this provision is that in a plan for coordinated operation of reservoirs, optimization of water supplies be considered as a significant goal to optimize.

Tarrant Regional objected to the perceived requirement in §288.5(1)(H) that documentation of coordination with the Regional Water Planning Group be included in the conservation plan. Tarrant Regional had a similar objection to §288.22(a)(2) related to drought contingency plans. Tarrant Regional felt that it would be more reasonable to allow separate documentation of coordination.

The commission agrees with the comment, but finds that changes to the rule in response to the comment are unnecessary. The executive director will accept a water conservation or drought contingency plan where the formal elements of the plan are in one document, and the description or documentation of public involvement and coordination with the relevant Regional Water Planning Group are in separate documents.

Several commenters questioned how water right holders or public water suppliers and irrigation districts would coordinate their water conservation or drought plans with the Regional Water Planning Groups. The City of Tyler commented that amendments to Chapter 288 should not be adopted until the Regional Water Planning Groups have had an opportunity to develop and implement their individual guidelines. The City of Fort Worth commented that the Regional Water Planning Groups may not be in a position to review conservation and drought contingency plans before May 31, 1999.

The commission has not made any changes to the rules in response to these comments. The commission notes that the Texas Water Code §16.054 specifically allows the submission of local water conservation plans and drought plans to the regional water planning groups and requires the regional water planning group to consider any submitted plans when they prepare the regional water plan. The Texas Water Code §§11.1271 and 11.1272 also required local water conservation and drought contingency plans to be consistent with the appropriate approved regional water plan. Therefore there is a dilemma as to which should be prepared first. The commission is of the opinion that the water conservation and drought plans will effect projections and planning assumptions about the anticipated levels of water usage. Therefore it will be essential to the regional planning groups that they have the benefit of the local water conservation and drought contingency plans prior to the preparation of the regional plans. Once the first round of regional plans are approved, any future revisions to water conservation or drought contingency plans should be prepared in coordination with the regional planning groups, since each effects the other.

AECT commented that the water conservation rules of subchapter A apply only to surface water. AECT suggested language be inserted into the rule to clarify the applicability of this subchapter.

The commission has not made any changes to the rule in response to this comment. The commission agrees that subchapter A as currently written only applies to water conservation plans for water that originated as surface water. However, the commission disagrees that clarifying language is needed. Section 288.30 clearly states those individuals or entities required to file water conservation plans. Only surface water right holders are required to file water conservation plans that comply with subchapter A.

The Public Interest Counsel for the Texas Natural Resource Conservation Commission commented that the public involvement provisions of the proposed drought contingency rules, §288.20(a)(1), §288.21(a)(1), §288.22(a)(1), do not contain any specific notice requirements despite the statutory requirements of §11.1272 requiring public input into the development of these plans. The Public Interest Counsel recommended that a baseline form and procedure be established for notice requirements for public participation in the development of drought contingency plans.

The commission agrees that a minimum acceptable procedure for notice and public participation should be established. The commission notes that a campaign of news releases and public service announcements can result in more actual public notice and involvement than a set of uniform minimum notice requirements. The commission also notes the difficulty with providing a uniform procedure for the different types of wholesale, retail public water suppliers, and irrigation districts. For example, for a city that is a retail public water supplier, having the plan adopted at a city council meeting, with opportunity for public comment, and notice as provided by the Open Meetings Act would be an acceptable minimum level of public involvement. An investor owned utility, not subject to the Open Meetings Act, would not be able to utilize the same sort of public process. An investor owned utility might want to provide notice of the proposed plan in monthly water bills, along with an announcement about a time and place for a meeting for the customers to come and provide comment on the proposed plan to the utility management. In order to provide guidance as to a possible baseline form and procedures for notice and public participation while maintaining flexibility for local officials to use a public involvement process that will best provide for actual public input, the commission may establish suggested baseline procedure in a regulatory guidance document. Accordingly, no changes have been made in the proposed rules.

The City of Fort Worth commented that the proposed rules did not address how existing state agency- approved water conservation and drought contingency plans are to be handled.

The commission has not made any changes in response to this comment. The commission notes that many existing water conservation plans developed for prior Texas Water Development Board requirements or for previous commission water rights applications will meet nearly all of the requirements for water conservation and drought management plans. However, some additional materials must be developed or documented as required by Senate Bill 1. For example, the public participation requirements, the requirements to coordinate development with the Regional Water Planning Groups, and an assessment of water management strategies for when flows are 50 and 75 percent of normal are additional requirements for drought contingency plans for municipal uses. These additional tasks will have to be performed and submitted to the commission.

TWCA objected to §288.20(a)(3)(C) dealing with water management strategies in drought contingency plans for when flows are at 75 percent of normal and 50 percent of normal, and recommended that this requirement be deleted. TWCA felt that public water suppliers should be provided with flexibility to develop their own triggering criteria based on the unique characteristics of their system.

The commission has not made any changes in response to this comment. The commission does not intend the flows of 75 percent of normal and 50 percent of normal to be "trigger levels" that separate different drought management strategies. Rather, the commission intends that the drought contingency plan have water management strategies that will be in place for those flow levels. The commission intends that local public water suppliers, in coordination with the appropriate Regional Water Planning Groups, are free to tailor the trigger levels for drought stages to meet local conditions, for purposes of Chapter 288 drought contingency plans. The commission notes that Texas Water Code §16.053 requires the Regional Water Planning Groups to develop regional water plans that have specific provision for water management strategies to be used when flows are 50 and 75 percent of normal. The legislature considers water management strategies at the 50 and 75 percent level to be important. Therefore, the commission, by this rule, is requiring local plans to include consideration of strategies for those scenarios.

The City of Fort Worth and Tarrant Regional objected to §288.20(a)(3)C) relating to water management strategies for when flows are 75 and 50 percent of normal. The methodology for calculation of theses level is unclear especially as applied to a reservoir system or for a customer of a wholesale supplier.

The commission has made no changes to the rule in response to this comment. The commission acknowledges the difficulties in making these calculation for a reservoir system or for a customer of a wholesale supplier. However, the legislature charged the Regional Water Planning Groups, many presumably relying on reservoir systems for water supply, with developing regional water plans with water management strategies at those flow levels. See Texas Water Code §16.053. The legislature also required the commission to inform water right holders, including those with rights based on a reservoir, with information on the amount of water available at those flows. As was stated in the preamble to the proposed rules, and is restated in this preamble, the commission intends that the methodology for calculating these levels be consistent with the Texas Water Development Board's rules and the regional planning process. To that end, the commission, in consultation with the Texas Water Development Board, will develop a regulatory guidance document to provide clarification as to the methodology for calculation of these levels including methods for the calculation for reservoir systems and for customers of wholesale suppliers.

Tarrant Regional objected to provisions of §288.20(a)(3)(F)(ii) and §288.22(a)(3)(E)(ii) that require the prior approval of the executive director for using alternative water sources. Tarrant Regional felt the method of executive director approval was unspecified and may be problematical given the new, more complicated requirements for emergency permits.

The commission has made no changes in response to this comment. The method of approval will depend on what alternative water source is proposed by the local public water supplier. If the supplier is seeking an emergency permit for surface water, then the new §295.91, application for emergency water use, will apply. If the alternative water source is any of the examples listed in the rule, e.g., interconnection with another water system, temporary use of a non-municipal water supply, use of reclaimed water for non-potable purposes, then the approval procedures are governed by the Chapter 290 regulations. Those Chapter 290 regulation approval procedures are detailed in TNRCC Regulatory Guidance RG-226.

The Cattle Raisers suggested that §288.21 be clarified to provide that the irrigation district or other water supplier is the person responsible for developing and submitting the drought continency plan.

The commission has not made any changes in response to this comment. Subchapter B is designed to set out the requirements for drought contingency plans, regardless of who must prepare the plan or what is the jurisdiction for requiring the plan. Subchapter C contains the requirements for who and under what circumstances a plan must be submitted. The commission's intention, in keeping with Texas Water Code §11.1272, is that irrigation districts or wholesale and retail public water suppliers are responsible for developing and implementing drought contingency plans. These requirements are clear in Subchapter C, therefore no changes to the rule were made.

The TWCA objected to provisions of §288.22(a)(3)(F) dealing with wholesale water contracts, and they suggested modifying the provision to read: "Provisions in a wholesale water contract for curtailment of water during a drought should be in accordance with Texas Water Code §11.039." Tarrant Regional objected to §288.22(a)(3) as being more restrictive than required by statute or case law. The San Antonio Water System stated that it understood §288.21(a)(3) would not preclude an irrigation manager from recognizing an irrigator's effort to conserve water by exempting from pro rata reductions those who have made a prior effort to reduce water use.

The commission has modified the rule to clarify its intent. The commission intends that drought continency plans for wholesale water suppliers under §288.22(a)(3) must include contracts that provide in times of drought for allocation of water among customers in accordance with Texas Water Code §11.039.

Eight commenters objected to the proposed deadlines for preparation of the water conservation or drought contingency plans. The proposed rules required all required water conservation plans to be submitted to the executive director not later than May 31, 1999. Under the proposed rules, community water systems providing water service to 3,300 or more connections, wholesale public water suppliers and irrigation districts must also submit drought contingency plans to the executive director by May 31, 1999. Smaller community water systems, those serving under 3,300 connections, would have until May 31, 2000 to prepare a drought contingency plan and have it available for inspection.

TWCA and the Brazos River Authority objected to the May 31, 1999 deadlines and suggested that they be increased to September 1, 1999. The City of North Richland Hills suggested a deadline of September 30, 1999 would be appropriate. AECT proposed a deadline of December 31, 1999 for water conservation plans. The City of Fort Worth suggested a deadline of twelve months from the date of adoption of the rules. The Cities of Tyler and Dallas proposed a deadline of May 31, 2000 for large systems. Tarrant Regional objected to the deadlines as proposed but did not suggest an alternate deadline.

Commenters gave several reasons for the proposed delay of the deadlines. Inadequate time to possibly hire a consultant, develop the plan, solicit necessary public input, and coordinate with regional water planning groups was the most frequent reason given for a later due date. Larger systems felt that they have more complicated systems, and therefore they will require more time to complete a plan than small systems. One commenter felt that the Regional Water Planning Groups may not be ready to review plans. AECT commented that the early deadline might be appropriate for drought contingency plans, however water conservation plans address long term efficient water use during normal water supply conditions, not during water shortages and droughts.

The commission has changed the due dates in response to these comments. The adopted rules provide that all water conservation plans and drought contingency plans for large systems must be submitted to the executive director by September 1, 1999. Retail public water suppliers with fewer than 3,300 connections will have to September 1, 2000 with which to develop a drought contingency plan. The commission is extending the deadlines to provide greater time to solicit public input and coordinate with Regional Water Planning Groups. The commission is reminded of 1996, 1997, and 1998 when significant portions of the state were experiencing drought conditions at least part of the year. Further delay of the requirements for water conservation and drought contingency plans does not seem to the commission to be prudent in the face of even a slight risk of future water shortages. The commission notes that affected cities, industries and individuals have been on notice since the passage of Senate Bill 1 in May of 1997 that some form of water conservation and drought plans would be required. The commission notes that the requirements for the plans are similar to existing rules for water conservation and drought contingency plans that have been in commission rules since 1992. Larger systems, while possibly being more complicated, also have greater staff and budget resources with which to develop water conservation and drought contingency plans. While water conservation plans are directed at long term efficient water use during normal water supply conditions, a plan that reduces the long term water demand will also provide some relief to a water system experiencing a temporary reduction in its available water supply.

The Cattle Raisers suggested that §288.30(2) be modified so that the provider, not necessarily the end user, of the water is the person responsible for developing and submitting the water conservation plan. The Cattle Raisers also suggested clarifying that the threshold for filing is an individual water right of 10,000 acre feet a year or more. An accumulation of smaller water rights that totaled over 10,000 acre feet a year or more would not be subject to the requirement.

The commission has made no changes to the rule in response to this comment. Texas Water Code §11.1271 requires the commission to require holders of an existing permit, certified filing, or certificate of adjudication to develop and implement a water conservation plan. Section 288.30(2) implements this statutory duty. The commission agrees that this requirement applies to individual water rights of 10,000 acre feet a year or more, not to an accumulation of smaller rights held by an individual, the sum of which exceeds 10,000 acre feet a year or more. The rule is clear enough on this point, so no changes have been made.

Five commenters objected to the level of review and agency oversight of either water conservation plans, drought contingency plans, or both. The TWCA, the City of North Richland Hills, and Tarrant Regional objected to community water systems of 3,300 or more connections, wholesale public water suppliers, and irrigation districts having to submit drought contingency plans to the executive director for review. Tarrant Regional suggested that plans be available for inspection. The TWCA also suggested that these plans be made available for inspection, or submitted to the executive director upon request. Azurix recommended that water conservation plans be filed with the agency for information purposes only. In a similar comment, the AECT objected to the language of §288.30(6). The AECT suggested alternative language for that subsection that stated the water conservation plan would be subject to review by the commission but not subject to commission approval.

The commission has made no changes in response to these comments. Water conservation plans and drought contingency plans that are required by §288.30 to be submitted to the executive director will undergo a staff review to ensure that the submitted plans in fact do address all of the minimum requirements of Chapter 288. The commission in §288.30(6) reserves the right to perform a more extensive review by staff and commission for water conservation and drought plans submitted in accordance with §295.9, with an application for a new or amendment water right, or during times of drought for purposes of technical assistance for public water systems identified as "at risk."

TWCA objected to new community water systems with 3,300 or more connections having 90 days from adoption of any new or revised plans to submit the plan to the executive director. The TWCA suggests giving new community water systems 180 days from commencement of operations to prepare and adopt a plan.

The rule has been modified to increase the time for new public water suppliers to prepare plans from 90 days to 180 days from commencement of operation, with the submittal date being 90 days after adoption. Revised plans for systems that already have submitted a prior plan to the agency must be submitted within 90 days of adoption by the local public water supplier.

AECT noted that there are situations where wholesale water suppliers not only deliver water to which they hold a water right, but they may also provide the service of transporting and delivering water to other water right holders.

The commission has not made any changes in response to this comment. The commission agrees with the commenter. Neither the water conservation requirements of Subchapter A or the drought contingency plan requirements of Subchapter B are intended to reach or apply to situations where an individual or entity is transporting or delivering water under a contracted delivery service agreement where the transporter does not own the underlying water right.

AECT suggested that language be added to the proposed rule to clarify that non-attainment of the goals contained in water conservation plans will not result in enforcement action or will not be the basis for either the partial or full cancellation of the water right.

The commission has included the suggested language in the rule. The commission does not intend to be the ultimate enforcer of locally prepared water conservation and drought contingency plans. That responsibility rests with the local water supplier, or irrigation district.

Tarrant Regional commented that the rules are unclear how a multiple-purpose use will be reflected in conservation planning. Tarrant Regional suggested that where both municipal and irrigation purpose are authorized, conservation planning for the highest priority use should be sufficient.

The commission has made no change to the rule in response to this comment. The commission notes that the opportunities for water conservation differ with differing types of use. If a water right is granted for agricultural and municipal purposes, to require only water conservation for one type of use would necessarily miss water conservation opportunities when the water was used for the other purpose. The water right holder will have to develop and implement plans for all permitted uses.

Bexar Met commented that only one water conservation plan should be required of an entity for all permits pending or approved and should be centrally filed in one location only.

The commission has made no changes to the rule in response to this comment. The commission intends that the agency have only a single set of requirements for water conservation and drought contingency plans for all permits or other requirements for these plans. These plans will be filed in one location within the agency. However, because of agency resource limitations, the agency will subject water conservation and drought plans submitted to it under Texas Water Code §§11.1271 and 11.1272 to a lesser review than a review of plans submitted with applications for new or amended water rights.

Azurix commented that no rules should be adopted for drought contingency plans, rather the agency should only provide guidance for suggested drought contingency plans.

The commission has made no changes in response to this comment. The Texas Water Code §11.1272 expressly requires the commission by rule to require wholesale and retail public water suppliers and irrigation districts to develop drought contingency plans.

Subchapter A. Water Conservation Plans

The Texas Natural Resource Conservation Commission (TNRCC or commission) adopts new §293.16 and §293.21; the repeal of §§293.21-293.25, Subchapter C; new §293.36, §293.37, Subchapter D; amendments to §§293.131, 293.132, and 293.134; and new §293.137, relating to Procedure for Creation and Dissolution of a Groundwater Conservation District and the Appointment of its Temporary Directors. New §293.21 and §293.36 are adopted with changes to the proposed text as published in the October 9, 1998, issue of the Texas Register (23 TexReg 10284). Sections §293.16, 293.37, 293.131, 293.132, 293.134, 293.137, and the repeal of §§293.21-293.25 are adopted without changes and will not be republished.

EXPLANATION OF ADOPTED RULE The purpose of the adopted repeals of §§293.21-293.25 is to repropose these sections in Chapter 294, which is the section which is currently titled "Underground Water Management Areas," and covers two designated Management Areas and four Critical Areas. The commission believes that these sections are more appropriate in Chapter 294.

The purpose of the adopted new sections is to implement the requirements in Senate Bill 1 (1997), amending Texas Water Code Chapter 36, relating to the creation of groundwater conservation districts in areas which have been designated as Priority Groundwater Management Areas (PGMA). These rules provide procedures for district creation, for appointment of temporary directors, and for commission action if a groundwater conservation district does not submit or implement a management plan. Also, these rules provide procedures for a groundwater conservation district to expand its management authority within its territory. Primarily, the rules track the statutory requirements.

New §293.16(a) provides that if a district created by the commission wants to expand its authority to manage water-bearing formations which are within its territorial boundaries, it may file a motion to amend the commission order which meets the criteria of §293.16(b). Pursuant to adopted §293.16(c), no further confirmation election need be held. Districts have expressed the need to regulate all aquifers within their territorial limits.

New §293.21 relates to commission creation of groundwater conservation districts in priority groundwater management areas. The commission has changed the title of this subsection to take out the words "on its own motion," pursuant to staff comment. The purpose of this change is to better reflect the language of the statute concerning commission creation of groundwater conservation districts. Section 293.21(a) would provide that the executive director prepare a report meeting specified requirements and file it with the chief clerk, and the chief clerk shall set the petition for hearing. Pursuant to adopted §293.21(b), the hearing procedures are those set out in Texas Water Code, §36.014. Adopted new §293.21(c) provides that the order is mailed to each city having extraterritorial jurisdiction and/or each county in the district, and adopted new §293.21(d) provides that the governing board provide certain information to the executive director.

New §293.36 provides procedures for appointment of temporary directors for these districts. Under adopted new §293.36(a), the commission shall order the commissioners' court of the counties in the area to appoint temporary directors and hold an election within 90 days. If this is not done, the commission shall appoint the directors. Under adopted new §293.36(b), the commission also appoints temporary directors if it grants a petition to create a district under Texas Water Code §36.015 or if it dissolves the board of the district. Under §293.36(c), if the temporary directors fail to qualify, or a vacancy occurs, the commission or the county commissioners' court shall appoint someone to fill the vacancy. Section 293.36(d) provides that temporary directors serve until the initial directors are elected or voters fail to approve creation of the district. Section 293.36(e) provides that appointment of temporary directors also be pursuant to §§293.31-293.35 of this chapter. Section 293.36(f) provides that if a commission-created district contains more than one county, the commission shall apportion the number of temporary directors to each county based on each county's proportionate amount of total estimated groundwater use within the proposed district.

Adopted new §293.37 provides that the Texas Water Development Board will provide the commission an estimate of total groundwater use in each county comprising the area studied as a proposed PGMA.

Section 293.131 is amended to provide that subsection (a) applies only to Texas Water Code, Chapter 36 districts. That section provides that a groundwater conservation district can be dissolved if it is found not to be operational under Texas Water Code §36.302 and has no outstanding indebtedness. If the procedures set out in §293.137 are followed, Texas Water Code §36.302 allows dissolution for failure to file or implement a management plan. All assets will be sold and the proceeds given to the county or counties in proportion to the surface land area in each county served by the district. Section 293.131(b), setting out procedures for dissolution, is adopted to amend the section to state that the section applies only to Chapter 49 districts. The rest of §293.131(b) and §§293.132-293.136 are not changed.

New §293.137 sets out procedures for commission action for failure of a groundwater conservation district to submit or implement a management plan. Section 293.137(a) provides that the commission may require certain actions of the district or order the district to refrain from taking certain actions, dissolve the board, remove the district's taxing authority, dissolve the district, or recommend action to the legislature to address operational problems. Section 293.137(b) provides that the executive director will investigate any violations and write a report to the commission including actions the executive director would recommend taking. Adopted subsection (c) provides that the executive director will attempt to resolve noncompliances with the board of the district, and if unsuccessful, shall follow Chapter 70, Subchapter C of this title. New adopted §293.137(d) would set out notice requirements for any hearing on the violations, and adopted §293.137(e) provides that the commission will appoint temporary directors if it dissolves the board. Adopted subsection (f) provides that the commission shall file a certified copy of the order with the county, and if the district was legislatively created, with the secretary of state. Adopted subsection (f) provides that appeals for any commission order shall be in the district court in any of the counties in which the district is located.

The commission also adopts the repeal of §§293.21-293.25 in order to adopt these sections in Chapter 294, which is the section which is currently titled Underground Water Management Areas, and covers two designated Management Areas and four Critical Areas. The commission believes that these sections are more appropriate in Chapter 294.

FINAL REGULATORY IMPACT ANALYSIS The commission has reviewed the adopted rulemaking in light of the regulatory analysis requirements of Texas Government Code, §2001.0225 and has determined that the rulemaking is not subject to §2001.0225 because it does not meet any of the four applicability requirements listed in §2001.0225(a) in that the rules are specifically required by state law, Chapter 36 of the Texas Water Code, do not exceed any express requirements of state law, and do not involve any delegation agreements between the state and the federal government, and there are no applicable federal law or contracts. While some of these rules interpret statutory procedural requirements, these procedural requirements are not outside the scope of the statute. The additional procedural requirements under these rules are necessary to implement SB 1 requirements for PGMA designation and district creation. The rules relating to adding aquifers to groundwater districts do not exceed state law requirements, but implement a method for amending commission orders delineating districts, following existing statutory procedures for these orders.

TAKINGS IMPACT ASSESSMENT The commission has prepared a Takings Impact Assessment for these rules pursuant to Texas Government Code, §2007.043. The following is a summary of that Assessment. The specific purpose of the rule is to adopt new requirements, pursuant to state law, for creating groundwater conservation districts in Priority Groundwater Management Areas ("PGMAs") and for taking certain actions if the district does not prepare or implement a management plan. Also, the new rules contain a process for adding aquifer areas to the district's authority within the district's territory. The PGMA process and groundwater conservation district creation is for the purpose of protecting groundwater which is threatened.

These new rules will not burden private real property because these rules only add procedural requirements to a process which was already in existence in the statutes. Additionally, these rules do not create districts on their own. The locality will decide whether a district should be created. The PGMA process and district creation do not create a burden on real property because the process is for the protection of real property, groundwater. Additionally, even if the rules could be construed as creating a burden on private real property, the rules are being proposed in response to a real and substantial threat to public health and safety, the rules significantly advance the health and safety purpose, and impose no greater burden than is necessary to achieve that purpose. These rules help preserve and protect groundwater supplies, which are necessary to public health and safety. The district creation process is an efficient method of ensuring that there supplies remain and are uncontaminated.

COASTAL MANAGEMENT PROGRAM (CMP) The commission has reviewed this adopted rulemaking and found that the rule is neither identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11, relating to Action as and Rules Subject to the Coastal Management Program, nor will it affect any action or authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11. Therefore, the adopted rule is not subject to the CMP.

HEARINGS AND COMMENTERS A public comment hearing on this proposal and rules review was held in Austin on October 29, 1998. The public comment period closed November 9, 1998. There were no oral comments relating to this rulemaking.

Written comments to the rules were provided by Azurix and the Association of Electric Companies of Texas (AECT). The following paragraphs summarize the written comments received.

Azurix expressed concern about §293.16, which outlines a process for adding aquifers to an existing district's authority. Azurix contends that adding aquifers to an existing authority is the same as creating a new district because new landowners will be added. Therefore, Azurix argues that the same procedures should be followed as for a new district.

The commission disagrees and responds that §293.16 would only allow a process for adding aquifers which are in the same territorial limits as contained in the existing district. Adding aquifers to an existing district is not the same as creating another district. The district has been created and confirmed by an election of the district's residents. As such, all residents within the existing area are responsible for the payment of ad valorem taxes to finance district operations. If the scope of a district's authority is limited to consider only one aquifer within the district's jurisdiction, the district cannot manage other aquifers outside of this scope. Although these other aquifers are within the district's boundaries, the district has no ability to manage these aquifers for the residents who are currently supporting the district. The TNRCC notes that the process proposed under §294.44 pertains to adding territory within a PGMA to an existing district. Under §294.44, the added territory is not within an existing district.

Azurix comments on §293.21, which relates to Commission Creation of Groundwater Conservation District in Priority Groundwater Management Areas (PGMAs). Azurix urges the commission to be deliberate and judicious in its decision to create new districts, and to include public input and legal due process before creating a district.

The commission appreciates this comment and will follow the process in the statute for creating districts which includes, adequate public input and due process.

The Association of Electric Companies of Texas, Inc. (AECT) comments on §293.21(a)(5), concerning Contents of the Executive Director's Report on District Creation, that the commission should define "physical culture."

The commission responds that the term "physical culture," as used in §293.21(a)(5) in reference to the Executive Director's groundwater district creation report in a priority groundwater management area, means that the referenced map will show surface water courses and water bodies and available topographical features.

AECT comments on §293.36(a)(2), concerning the Appointment of Temporary Directors by the Commission, that the section should read that the commission will appoint additional directors "if an inadequate number of" temporary directors than required under paragraph three have been appointed at the expiration of 90 days. The section now reads that the commission shall appoint additional directors if "fewer" temporary directors have been appointed than required under paragraph three.

The commission is not changing this section because it believes that "fewer" than required is clearer than "an inadequate number" than required.

The title to §293.21 was changed to take out "on its own Motion" pursuant to staff comment. The deletion of this phrase better tracks the language of the statute and reflects the fact that the commission can create these districts as part of the PGMA process.

Subchapter B. Creation of Water Districts

The Texas Natural Resource Conservation Commission (TNRCC or commission) adopts the repeal of §§294.20-294.22, 294.24, and 294.25, new §§294.21-294.25 , 294.30-294.32, 294.34, 294.35, 294.40-294.44, relating to procedures for designation of underground management areas by rulemaking. Section 294.40 and §294.42 will be adopted with changes to the proposed text as published in the proposed text as published in the October 19, 1999, issue of the Texas Register (23 TexReg 10290). The repeal of §§294.20-294.22, 294.24, 294.25, new 294.21-294.25, 294.30-294.32, 294.34, 294.35, 294.41, 294.43, and 294.44 are being adopted without changes and will not be republished.

The new rules in Subchapter D, §294.30, 294.31, 294.34, and 294.35, were in Chapter 293 Subchapter C. The adopted rules simply change the Subchapter to Subchapter D, and change "critical area" to "priority groundwater management area" in the title of the Subchapter and in the text of the rules and renumber existing related rules. The repeal and adoption of these rules reflects the redesignation of these areas by the legislature as priority groundwater management areas pursuant to Senate Bill 1 (1997) . The commission additionally adopts new Chapter 294 Subchapter E, related to designation of priority groundwater management areas ("PGMAs").

EXPLANATION OF PROPOSED RULE The rules related to underground management areas are being added to Chapter 294 and moved from Chapter 293 because Chapter 294 relates to underground management areas and similar designations. The adopted rules related to changing "critical area" to "priority groundwater management area" make this change because recent legislation, Senate Bill 1, 75th Legislature (1997), changed critical areas to PGMAs. The adopted new rules related to procedures for designation of PGMAs implement changes made to Texas Water Code Chapter 35 in Senate Bill 1. Concurrently, the commission proposes the review of 30 TAC Chapter 294, in accordance with the General Appropriations Act, Article IX, §167, 75th Legislature, 1997, and is publishing the proposed notice of review in the Rules Review Section of the Texas Register.

In general, these rules track the statute. Adopted new Subchapter C relates to the designation of groundwater management areas. These rules are presently in §§293.21-293.25 of this title. Adopted §294.21 provides the procedure for designating these areas through rulemaking.

Adopted §294.22 sets out requirements for adoption of rules designating these areas by a petition. Section 294.23 provides that the commission consider this petition within 60 days and initiate a rulemaking or deny the petition. Adopted §294.24 provides for notice of commission consideration of designation, and adopted §294.25 would provide procedures for alteration of groundwater management areas by the commission or on petition for a rulemaking proceeding.

Amended Subchapter C changes the Subchapter designation to Subchapter D of Chapter 294. Subchapter D designates four areas as a Priority Groundwater Management Area. These sections simply change "critical area" to "priority groundwater management area." The commission is making this change because recent legislation, Senate Bill 1, 75th Legislature, (1997), changed the name of these areas.

New Subchapter E relates to procedures for designation of PGMAs and implements changes made to Texas Water Code Chapter 35 in Senate Bill 1. Proposed §294.40 defines executive administrator and Priority Groundwater Management Area (PGMA). Another definition, "affected person," is being added to clarify who may ask for a hearing in a PGMA designation. This definition incorporates the final two sentences of the Chapter 55 definition of "affected person."

Adopted §294.41 relates to the executive director's report concerning proposed PGMAs. Section 294.41(a) provides that the executive director and executive administrator shall meet at least once a year to identify areas experiencing groundwater problems, and §294.41(b) provides that a report shall be prepared if the executive director concludes that an area should be considered for PGMA designation. Adopted §294.41(c) provides that the executive director will begin the PGMA study by requesting a study from the Texas Water Development Board which addresses certain criteria. Adopted §294.41(d) provides that notice must be given to several different groups of the proposed PGMA designation and that those persons may provide information to the executive director which will be considered. Adopted subsection (e) states that the executive director will also request a study from the Texas Department of Parks and Wildlife which addresses certain criteria. Under adopted §294.41(f), the executive director must complete the report on or before the 240th day following the date of the request for the study. The executive director will also provide notice by filing the report with the commission, making the report available for public inspection in each county in which the proposed PGMA is located, publishing notice in the Texas Register , and mailing notice to the persons who received notice of the initiation of the study. Adopted §294.41(h) provides the executive director may hold public meetings and solicit information for the study, and adopted §294.41(i) provides that if the executive director recommends that no PGMA be designated, no further action by the commission or executive director is necessary. However, any person who received mailed notice can file a motion for reconsideration under §50.39 of this title.

Adopted §294.42 relates to commission action concerning a PGMA designation recommendation. Adopted §294.42(a) provides that the commission shall consider the recommendation using the procedures set out in the subchapter. Adopted §294.42(b) provides that the commission shall call an evidentiary hearing to consider the proposed designation, whether a district should be created over all or part of the PGMA, or whether the land in the PGMA should be added to an existing district. The commission changed this subsection from the proposed version to clarify that the commission is not required to recommend that a district be created. Under adopted §294.42(c), the hearing must be held in one of the counties in which the PGMA is proposed, or the nearest convenient location. Under adopted §294.42(d), hearing procedures are set out. Adopted §294.42(e) provides that the commission ruling on designation may not be appealed. Section 294.42(f) provides that notice must be given by newspaper 30 days prior to the hearing, and the requirements of that notice are set out in proposed §294.42(g). Under adopted §294.42(h), the commission shall also give written notice to the persons who received notice of the PGMA study 30 days prior to the hearing. Adopted §294.42(i) sets out what should be in any commission order, and requires that the commission address whether a district would be beneficial, there is a public need for a district, and whether a district would further the public welfare. New §294.42(j) provides that the Administrative Procedures Act, Texas Government Code Annotated, §2001 et seq., does not apply to these hearings.

Adopted §294.43 relates to landowner actions regarding district creation in a designated PGMA. Under adopted §294.43(a), if the commission finds that a district or districts should be created, landowners may create districts under Texas Water Code, Chapter 36, have the area annexed to an adjoining district, or create districts through the legislative process. Under adopted §294.43(b), the executive director must identify those areas which the commission has decided need a district but which have not formed a district and report this to the commission with recommendations for action. Notice provisions for this report are set out.

Adopted §294.44 relates to adding a PGMA to an existing district. Under adopted §294.44(a), the commission will submit to the affected district a copy of an order recommending that a PGMA be added to an existing district, and the affected district's board to conduct a vote and advise the commission. Adopted §294.44(b) provides that if the board votes to accept the PGMA into their district, the board may request state agencies to administer an education program concerning water resources, management and annexation, and shall call an election on the issue. Adopted §294.44(c) provides that the board shall give notice of the election and proposition. Adopted §294.44(d) sets out how the ballot shall read for the election. Adopted §294.44(e) provides what occurs after the election, including a requirement that the board file a copy of the election results with the commission. Adopted §294.44(f) provides that if the voters approve adding the PGMA to the district, the board shall provide reasonable representation on the board. Under adopted §294.44(g), if the proposition is defeated, another election may not be called within one year. Adopted §294.44(h) provides for payment of costs of the election, and §294.44(i) provides that if the election is defeated, the commission may make recommendations to the legislature in its biennial report concerning possible legislative action.

FINAL REGULATORY IMPACT ANALYSIS The commission has reviewed the adopted rulemaking in light of the regulatory analysis requirements of Texas Government Code §2001.0225 and has determined that the rulemaking is not subject to §2001.0225 because it does not meet any of the four applicability requirements listed in §2001.0225(a) in that the rules are specifically required by state law, there is no applicable federal law, do not exceed any express requirements of state law, and do not involve any delegation agreements or contracts. Additionally, some of these rules already exist and are simply being moved to a new chapter, or are being amended to change the term "critical area" to "priority groundwater management area." While some of the rules interpret the statute's procedural requirements, they are not outside the scope of the statute. Additional procedural rules are necessary to implement SB 1 PGMA creation requirements.

TAKINGS IMPACT ASSESSMENT The commission has prepared a Takings Impact Assessment for these rules pursuant to Texas Government Code §2007.043. The following is a summary of that Assessment. The specific purpose of part of this rulemaking is to move rules which provide procedures for designation of underground management areas by rulemaking, These regulations were in Chapter 293 and are being moved verbatim to Chapter 294, which is a more appropriate Chapter for these rules. These new rules will not burden private real property because these rules already exist and are simply being moved to place these rules in a more appropriate Chapter.

The amendments to rules which simply change the words "critical area" to "priority groundwater management area" are to implement the change in term in amendments to Chapter 35 of the Texas Water Code and do not burden private real property because they have no affect on real property.

The new rules concerning procedures for designating PGMAs, which are to implement recent amendments to Chapter 35 of the Texas Water Code, do not burden private real property because a similar procedure was already in place in the critical area process, and, the designation of a PGMA is for the protection and preservation of groundwater. Additionally, PGMAs have no regulatory authority which could constitute a burden.

COASTAL MANAGEMENT PROGRAM (CMP) The commission has reviewed this adopted rulemaking and found that the rule is neither identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11, relating to Action as and Rules Subject to the Coastal Management Program, nor will it affect any action or authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11. Therefore, the adopted rule is not subject to the CMP.

HEARINGS AND COMMENTERS A public hearing was held in Austin on October 29, 1998. The comment period closed November 9, 1998.

There were no oral comments on this rulemaking. Written comments were submitted by Azurix and the Association of Electric companies of Texas, Inc. (AECT). The following paragraphs summarize the written comments received.

Azurix comments on §294.42(b), concerning an evidentiary hearing on a proposed PGMA designation. This section states that the commission is to consider whether a district should be created, and whether all or part of a PGMA should be added to an existing district. Azurix asks that another subpart be added to clarify that the commission should also consider whether a district should be created at all.

The commission agrees with this recommendation and believes that §294.42(b) could be clearer that a district does not have to be created. Therefore, we have changed §294.42(b)(2) to state that the commission must consider at an evidentiary hearing "whether a district should be created, and if so, whether it should include all or part of the PGMA." This is clearly what is intended in the statute.

Azurix also believes that §294.42 is vague on what the term "affected persons" means in the context of being named a party at a PGMA hearing. It suggests that the term be defined as it is in 30 TAC § 55.3.

The commission generally agrees with this comment, but does not believe that the entire definition of "affected person" in Chapter 55 is appropriate because these hearings are not contested cases under the Administrative Procedures Act. However, the first two sentences of the definition would be appropriate and would add some clarity to the definition of "affected person" in a PGMA hearing. Therefore, the commission is changing §294.40 to add a definition of "affected person" to include the first two sentences of §55.3. The third sentence require an analysis of the factors set out in Chapter 5 of the Water Code for who is an "affected person" in a contested case. Since a PGMA hearing would involve limited issues these requirements should not be necessary.

The Association of Electric Companies of Texas, Inc. (AECT) comments on sections 294.31(b), and 294.32(b), that the boundary description of these PGMAs should be changed to reflect district creation in those areas.

The commission disagrees with this comment. The commission is aware that a portion of the Briscoe, Swisher, and Hale County PGMA within Hale County was added to the High Plains UWCD No. 1 in August, 1993, and that portions of Dallam County within the Dallam County PGMA were added to the North Plains GWCD No. 2 in May, 1993. The Briscoe, Swisher, and Hale County PGMA, and the Dallam County PGMA, were designated by commission rule in 1990, and the references to the boundaries of the High Plains UWCD No. 1 and the North Plains GWCD No. 2 are to the boundaries of the districts as they existed at that date. The current boundaries of the two districts do not affect the designated boundaries of the two PGMAs.

Subchapter C. Critical Areas

The Texas Natural Resource Conservation Commission (commission) adopts amendments to §§295.5, 295.9, 295.13, 295.21, 295.22, 295.91, 295.111, 295.133, 295.134, 295.155 and 295.156 and adopts new §§295.16, 295.112, 295.113, and 295.161 relating to Water Rights, Procedural. Sections §§295.5, 295.9, 295.13, 295.91, 295.111, 295.112, 295.113, 295.155 and 295.161 are adopted with changes. Sections 295.16, 295.21, 295.22, 295.133, 295.134, and 295.156 are adopted without changes to the proposed as published in the October 9, 1998, Texas Register (23 TexReg 10298) and will not be republished.

The amendments to §§295.5, 295.9, 295.13, 295.21, 295.22, 295.91, and 295.111 and new §§295.16, 295.112, 295.113, are contained in Subchapter A, Requirements for Water Right Applications. The purpose of the rules is to implement changes made to the Texas Water Code by Senate Bill 1 (Acts 1997, Texas Legislature, Regular Session, Chapter 1010), and to put into rule, where necessary, agency regulatory guidance contained in "A Regulatory Guidance Document for Application to Divert, Store or Use State Water" (RG-141 June 1995).

The amendments to §295.133 and §295.134 are contained in Subchapter B, Water Use Permit Fees. The purpose of the rules is to implement changes made to the Texas Water Code by Senate Bill 1 (Acts 1997, Texas Legislature, Regular Session, Chapter 1010).

Additionally, the amendments of §295.155 and §295.156 and the adoption of new §295.161 are contained in Subchapter C, Notice Requirements for Water Use Permit Applications. The purpose of the rules is to implement changes made to the Texas Water Code by Senate Bill 1 (Acts 1997, Texas Legislature, Regular Session, Chapter 1010).

EXPLANATION OF ADOPTED RULE

The title of Subchapter A is changed to clarify that the subchapter includes all classes of water rights administered by the commission, including certificates of adjudication, claims, and certified filings as well as permits. This section simply tracks the statute.

Amendments to §295.5, Amount and Purpose of Diversion and Use, implement changes made to Texas Water Code §11.134 by Senate Bill 1 (1997) authorizing multiple purposes of use for the same appropriative amount by requiring this information to be provided in the application, if appropriate.

Amendments to §295.9, Conservation Plan, do not institute new substantive requirements for water right applications. Rather, they reflect proposed changes to related rules contained in Chapter 288 of this title. Specifically, the drought contingency components previously required in water conservation plans under Chapter 288 to be submitted with a water right application have been separated into a new subchapter specific to drought contingency plans in order to implement new Texas Water Code §11.1272 enacted by Senate Bill 1 (1997). This separation and reorganization of Chapter 288 requires adding "drought contingency plans" to the title and relevant portions of §295.9 to continue the requirement that drought contingency measures also be submitted with the application.

Amendments to §295.13, Interbasin Transfers, implement changes made to Texas Water Code §11.085 by Senate Bill 1 by adding corresponding additional application content requirements for an application for an interbasin transfer, unless exempted by Texas Water Code §11.085(v). These changes are necessary because §11.085 contains new requirements for interbasin transfers.

New §295.16, Consistency With State and Regional Water Plans, implements changes made to Texas Water Code, §11.134 and §11.1501 by Senate Bill 1, and tracks the language of the statute by providing that the application shall contain information describing how the application addresses a water supply need consistent with the state water plan and the applicable approved regional water plan or, in the alternative, whether present conditions exist that warrant a waiver of this requirement.

Amendments to §295.21, Aquifer Storage and Retrieval Projects, implement changes made to Texas Water Code §11.153 by Senate Bill 1 by deleting the list of specific aquifers where such projects may be authorized and providing that such projects may be authorized for aquifers where completed pilot projects or historically demonstrated projects have been shown to be feasible. This change tracks statutory language.

Amendments to §295.22, Additional Requirements for the Underground Storage of Surface Water for Subsequent Retrieval and Beneficial Use, implement changes made to Texas Water Code §§11.154 and 11.155 by Senate Bill 1 by changing the terms "critical area" and "underground water" to "priority groundwater management area" and "groundwater," respectively.

Amendments to §295.91, Application for Emergency Water Use Authorization, implement changes made to Texas Water Code §11.139 by Senate Bill 1 by providing additional, statutory application content requirements for the emergency appropriation or transfer of water.

Amendments to §295.111, Application, change the title as well as the section to clarify that this provision relates to a bed and banks authorization under Texas Water Code §11.042(a) providing for the release of water from a storage reservoir and its conveyance downstream to meet a water supply contract. The rule also adds that a person seeking such bed and banks authorization must also submit information on how the conveyance of the water will be measured. The changes are necessary in order to assure that no more water will be diverted at the delivery point than water being released, less carriage losses.

New §295.112, Application to Convey Groundwater-Based Effluent in Bed and Banks, implements changes made to Texas Water Code §11.042(b) and (d) by Senate Bill 1 by providing the application content requirements for the use of bed and banks for the discharge of groundwater-based effluent into a stream and its subsequent diversion and use. This information is needed to determine what special conditions, if any, may be necessary to protect affected water rights and environmental flow needs as provided by Texas Water Code, §11.042(b). Nothing in this rule shall be construed to affect an existing project for which water rights and reuse authorizations have been granted by the commission prior to September 1, 1997.

New §295.113, Application to Convey Water in Bed and Banks, implements changes made to Texas Water Code §11.042(c) and (d) by providing the application content requirements for a bed and banks authorization for the conveyance of water in a state watercourse other than provided by Texas Water Code §11.042(a) and (b). This information is needed to determine what special conditions, if any, may be necessary to protect affected water rights and environmental flow needs as provided by Texas Water Code, §11.042(c). Nothing in this proposed rule shall be construed to affect an existing project for which water rights and reuse authorizations have been granted by the commission prior to September 1, 1997.

Amendments to §295.133, One-Time Use Fees, and §295.134, Maximum Fees, implement changes made to Texas Water Code §5.235 by Senate Bill 1 providing the statutory language that the one-time use fee to be submitted with an application to use saline tidal water for industrial processes shall be one dollar per acre-foot, not to exceed a total fee of five thousand dollars ($5,000). Additionally, the rule provides that for an application requesting multiple purposes for the same amount of water, the fee is based on the use with the highest fee.

The title of Subchapter C has been changed to clarify that the subchapter includes all classes of water rights administered by the commission, including certificates of adjudication, claims, and certified filings as well as permits.

Amendments to §295.155, Notice for Interbasin Transfers, implement changes to Texas Water Code §11.085 made by Senate Bill 1 (1997) by providing additional statutory notice requirements for an application for an interbasin transfer.

Amendments to §295.156, Notice for Emergency Water Use, implement changes to Texas Water Code §11.139 made by Senate Bill 1 (1997) by providing additional statutory notice requirements for an application for the emergency use of water.

New §295.161, Notice of Applications to Convey Water in Bed and Banks, implements changes made to Texas Water Code §11.042(b) and (c) by Senate Bill 1 (1997) by providing notice requirements for applications to convey water, including groundwater, discharged into a stream or watercourse for subsequent diversion and use. Specifically, notice is provided to existing water right holders downstream of the discharge point as well as the Public Interest Counsel and the Texas Parks and Wildlife Department for the diversion of historically discharged groundwater and water under Texas Water Code, §§11.042(b) and 11.042(c), respectively. Such notice to downstream water right holders needs to be provided since §11.042(b) and (c) provide that existing water rights that were based upon the availability or use of historical return flows may potentially be affected by the diversion of these return flows under a bed and banks authorization. However, in the case of a new or increase of discharge of groundwater, notice is provided to water right holders of record between the points of discharge and diversion to provide consistency with the notice under §295.160 provided for the diversion of stored or conserved water as well as to "affected persons" as may be required under the Texas Administrative Procedures Act. Notice is also provided to the Texas Parks and Wildlife Department pursuant to Texas Water Code, §11.147(f). The Public Interest Counsel also receives notice in accordance with Texas Water Code, §5.273.

FINAL REGULATORY IMPACT ANALYSIS

The commission has reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code §2001.0225 and has determined that the rulemaking is not subject to this provision because it does not meet any of the four applicability requirements listed in the provision because the rule is specifically required by changes made to the Water Code by Senate Bill 1 (1997), there is no applicable federal law, it does not otherwise exceed any express requirements of state law, and does not involve any delegation agreements or contracts. This rulemaking only implements state law, and all requirements not specifically stated in the law, are necessary to carry out the express provisions of the law, as stated above.

TAKINGS IMPACT ASSESSMENT

The commission has prepared a Takings Impact Statement for these rules pursuant to Texas Government Code §2007.043. The following is a summary of that Assessment. The specific purpose of the rule is to adopt criteria and guidelines for the submission of certain water right applications. Promulgation and enforcement of these rules will not burden private real property. Rather, they implement statutory requirements providing procedural requirements for the beneficial use of state water to which persons have been granted a usufructuary interest and over which the state retains supervisory oversight in trust for the public for the protection of the public health, safety, and welfare. None of these requirements would adversely impact private real property.

COASTAL MANAGEMENT PROGRAM

The commission has determined the rulemaking is subject to the Texas Coastal Management Program and has reviewed the rules for consistency in accordance with the Coastal Coordination Act Implementation Rules, 31 TAC §505, relating to Council Procedures for State Consistency with Coastal Management Program Goals and Policies, and in particular, 31 TAC §505.11, relating to Actions and Rules Subject to the Coastal Management Program, and has identified the rule as potentially affecting an action or authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11(a)(6). Applicable goals contained in 31 TAC §501.12 include: 1.) To protect, preserve, restore, and enhance the diversity, quality, quantity, functions, and values of coastal natural resource areas (CNRAs); 2.) To ensure sound management of all coastal resources by allowing for compatible economic development and multiple human uses of the coastal zone; and 5.) To balance the benefits from economic development and multiple human uses of the coastal zone, the benefits from protecting, preserving, restoring, and enhancing CNRAs, the benefits from minimizing loss of human life and property, and the benefits from public access to and enjoyment of the coastal zone. Of the eighteen policies contained in 31 TAC §501.14, relating to Policies for Specific Activities and Coastal Natural Resource Areas, only one: (r) Appropriations of Water, has the potential for being affected by the rule.

The commission has reviewed these rules for consistency with the aforementioned goals and policies of the Texas Coastal Management Program and has determined the rules are consistent with the intent of the applicable goals and policies and will not result in any significant adverse effects to CNRAs. The rules implement, in part, provisions under Chapter 11 of the Texas Water Code requiring the assessment of environmental impacts from applications for new and amended water rights to existing instream uses, aquatic and wildlife habitat, water quality, and freshwater inflows to bays and estuaries. In determining what conditions may be placed on the water right, if granted, the commission is to weigh such impacts with the proposed use of the water to balance such benefits with any potential impacts. The commission may also require that if such impacts cannot be avoided, that they be minimized and mitigated.

PUBLIC HEARING

A public comment hearing on the proposed rules was held in Austin on October 29, 1998. One commenter submitted comments.

GENERAL COMMENTS

Written comments suggesting changes to the proposed rules were provided by: the American Land Foundation (ALF); the Association of Electric Companies of Texas, Inc. (AECT); Bracewell & Patterson, L.L.P., on behalf of the company of Azurix, a subsidiary of the Enron Corporation; Booth, Ahrens & Werkenthin, L.L.P., on behalf of the City of Victoria (Victoria) and Tarrant Regional Water Authority (Tarrant Regional); Bracewell & Patterson, L.L.P., on behalf of Associated General Contractors (AGC); Brown McCarroll & Oaks Hartline, L.L.P. (Brown McCarroll); Brown & Potts, L.L.P. (Brown & Potts); the Brazos River Authority (BRA); the City of Dallas; the Law Offices of Glenn Jarvis on behalf of the Texas Irrigation Council (TIC); Henry, Lowerre, Johnson, Hess & Frederick, Attorneys at Law (Henry, Lowerre); the Lake Medina Conservation Society (LAMCOS); the Law Offices of Louis T. Rosenberg, P.C., on behalf of Bexar Metropolitan Water District (Bexar Met); the City of North Richland Hills (North Richland Hills); the Public Interest Council of the Texas Natural Resource Conservation Commission (PIC); the San Antonio Water System (SAWS); Small, Craig & Werkenthin, P.C., on behalf of the Texas and Southwestern Cattle Raisers' Association (Cattle Raisers); the Texas Water Conservation Association (TWCA); the Texas Water Development Board (TWDB); and Texas Utilities Services (TU).

Henry, Lowerre, Johnson, Hess & Frederick stated that proposed revisions to Chapter 295 were subject to the Texas Coastal Management Program (CMP) and by failing to acknowledge this, the TNRCC failed to comply with the requirements of 31 TAC §505.22.

The commission disagrees with the comment. The commission has conducted a consistency review of the adopted rules in accordance with 31 TAC §505.22 and has found the rules to be consistent with the applicable goals and policies of the CMP (see Coastal Management Program section).

SAWs comments that the definition for "municipal use" contained in §297.1(29) also be provided in Chapter 295 and that revisions to the definition substitute the language "reuse of such water" for "use of sewage" and "municipal, industrial and commercial" uses be substituted for "urban uses".

The commission disagrees with the comment because §297.1 expressly provides that those definitions are also applicable to Chapter 295 and that the inclusion of the term "reuse" and uses other than municipal would greatly expand current authorizations for municipal water rights. Changes in purpose of use, diversion point, and location of use that may be associated with reuse and industrial and commercial use require the approval of an amendment to the water right in accordance with Texas Water Code §§11.122, 11.042 and 11.046.

Henry, Lowerre commented that §295.5, Amount and Purpose of Diversion and Use, should be clarified that even when an applicant seeks authorization for multiple uses, the applicant should be required to specify the amount for each separate use so that there is a reasonable basis for assessing the need for the requested amount of water and consistency with the state or applicable regional water management plans.

The commission agrees with the comment and has revised the rule accordingly.

AECT commented that proposed §295.9 should be clarified to indicate that water conservation and drought contingency plans must be submitted with an application for a new water right as well as with an application for an amended water right as provided by paragraph (4) of this section.

The commission disagrees with the need for this clarification because the other subsections of the rule expressly provide that water conservation and drought contingency plans must be submitted with an application for a water right.

The AECT also commented that §295.9(4) should be clarified by expressly referencing the requirements of Chapter 288 of this title (relating to Water Conservation Plans, Drought Contingency Plans, Guidelines and Requirements).

The commission disagrees with the need for this clarification because subsection (4) requires that plans submitted with an application for an amendment must meet the requirements of the section, which already provides that water conservation and drought contingency plans meeting the requirements of Chapter 288 must be submitted with an application for an amendment to a water right.

An individual commented that proposed §295.13 be revised to require the applicant to develop watershed management plans that address all environmental water needs identified in Chapter 11 of the Water Code. The individual further commented that this requirement apply to all sub-basins or watersheds subject to interbasin transfers in which the cumulative daily diversion rate or monthly diversion amount is greater than the fifth percentile daily discharge or fifth percentile monthly volume, respectively.

The commission disagrees with the need for this modification since the rule clearly provides for the assessment of impacts resulting from an application to transfer water from one basin to another relative to existing water rights, instream uses, water quality, aquatic and riparian habitat, and bays and estuaries. Pending results of the individual assessments, the commission may impose specific conditions on any transfer to protect and preserve environmental resources.

Brown & Potts, L.L.P, commented that proposed §295.13(b) should be clarified to recognize that if there is no approved regional plan existing at the time of the application for an interbasin transfer is submitted, this information is not required to be submitted with the application.

The commission agrees with the comment and has revised the rule accordingly.

Azurix commented that proposed §295.13(b)(9) be revised to provide that the application contain "information required to be submitted by the applicant", rather than "any other related information the executive director or commission may require to make recommendation or determination, as applicable, whether (the application) meets all applicable requirements." The commenter states that the latter language is broader in scope than that authorized by statute.

The commission disagrees that the rule is broader in scope than the statute and simply provides that the executive director or commission may require the applicant to submit clarifying or supporting information that goes toward meeting application requirements.

Bexar Met commented that subsection (c)(4) of proposed §295.13, Interbasin Transfers, should be revised to provide that a proposed transfer from a basin to a municipal water district that is partially within the basin for use in that part of the district not within the basin should also be exempt from application content requirements provided in subsection (b) of that section.

The commission disagrees with the comment because such exemption for transfers under Texas Water Code §11.085(v) are only provided to municipalities and counties that straddle a basin line, and not to districts.

Bexar Met commented that proposed §295.21, Aquifer Storage and Retrieval Projects, should allow a phased progression from pilot status to Phase II long-term basis without separate proceedings.

The commission disagrees with this comment because Texas Water Code §11.153 specifically provides for separate proceedings for a Phase I pilot project and Phase II long-term project to allow the commission and Texas Water Development Board to evaluate the feasibility of the pilot project and provide notice and opportunity for hearing on such analysis as well as whether the project should be granted on a long-term basis.

The TWCA, TU and AECT commented that proposed §295.91, Application for Emergency Water Use, should be revised to provide that an application for an emergency transfer or appropriation of water include information on the steps made by the applicant to develop and implement a water conservation and drought contingency plan in order for the commission to be able to assess whether practical alternatives exist to the proposed emergency transfer or appropriation as required by Texas Water Code §11.139 and §297. 17 of this title (relating to Emergency Authorization (Texas Water Code §11.139)).

The commission agrees with the comment and has revised the rule accordingly.

Tarrant Regional comments that proposed §295.111, Authorization to Convey Stored Water in Bed and Banks, improperly narrows the definition of "stored" water in Texas Water Code §11.042(a) to mean water stored in a reservoir and requests that the statutory language "stored" water only be used in the rule.

The commission disagrees with the comment, in part, because the term "stored" means water that has been stored in a reservoir and is being proposed for release and conveyance in the bed and banks for downstream use. Such definition is consistent with previous commission authorizations under this section and the purpose of the proposed change was not to substantively change the interpretation or use of this rule or Texas Water Code §11.042. Without such clarification, the meaning of "stored" water could be subject to different interpretations that would have unintended consequences and inconsistencies with other subsections of the rule relating to what reuse projects may be authorized under a bed and banks permit. In response to the comment, however, the inclusion of "conserved water" has been made to clarify that this rule seeks to implement Texas Water Code §11.042(a) relating to both stored and conserved water. A definition for "conserved water" is contained in §297.1 of the rules (relating to Definitions) and is consistent with Texas Water Code §11.002(9).

Henry, Lowerre commented that §§295.111, 295.112, and 295.113 relating to bed and banks authorizations, should be clarified to provide that nothing in these sections shall be construed to affect an existing project for which all required water rights and reuse authorizations have been granted by the commission prior to September 1, 1997, as provided under Texas Water Code §11.042(d).

The commission agrees with the comment and has revised the rules accordingly.

Henry, Lowerre commented that, in accordance with Texas Water Code §11.042(b) and (c), §§295.111, 295.112, and 295.113 should be clarified to require that the applicant submit an assessment of the adequacy of the quantity and quality of flows remaining after the proposed diversion to meet instream flow and bay and estuary freshwater inflow needs. The commenter also requests that the rules provide the executive director with express authorization to require the applicant to submit additional information addressing the criteria for review and approval of the application.

The commission agrees with the comment and has revised the rule accordingly. The statement of adequacy of the flows is necessary to implement the statutory provisions that the commission may include special conditions to maintain instream flows and freshwater inflows to bays and estuaries provided under Texas Water Code, §§11.147, 11.150, and 11.152.

LAMCOS comments that proposed §§295.111, 295.112, and 295.113 should be revised to provide that the calculation of carriage losses include the loss of water through seepage and evaporation of the water before it is released and conveyed downstream, that all water right holders of record be provided notice of an application for a bed and banks permit, and that the rules specifically require that executive director approval is required of the method of measuring carriage losses.

The commission disagrees with the comment . Losses resulting from storage in the reservoir are taken into consideration when calculating the safe yield of the reservoir, therefore carriage losses occurring between the discharge point and diversion point may include such factors as evaporation, seepage, evapotranspiration, and losses to the adjacent alluvial banks and flood plains. Charging reservoir evaporation and seepage to the carriage losses constitutes double accounting. With regard to the comment on notice for an application under §295.111 relating to the conveyance of stored water, §295.160, Notice of Applications to Convey Stored Water, is not the subject of this proposed rulemaking. However, concurrent with this rulemaking, the commission has provided notice and request for comment on the regulatory review of all of Chapter 295 and shall consider this comment in any subsequent, related rulemaking.

Tarrant Regional comments that it is in support of proposed §295.133(d) providing that for multiple use permits, only one use fee should apply and requests the commission to clarify that this approach is reflective of current policy and practice rather than a change of policy and practice.

The commission agrees with the comment and acknowledges that the rule is reflective of current policy and practice.

AECT commented that proposed §295.155, Notice for Interbasin Transfers, be revised to provide notice to regional water planning groups in both the basin of origin and in the receiving basin to assist the commission in assessing the impacts to both basins and determining consistency with applicable regional water management plans as required by Texas Water Code §§11.085, 11.134 and 11.1501, respectively.

The commission agrees with the comment and has revised the rule accordingly for the reasons provided and pursuant to Texas Water Code §11.132 which provides the commission with the authority to require notice of an application to those persons who, in the judgement of the commission, may be affected by the granting of the application.

The City of Victoria comments that proposed §295.155 (a) should be amended to provide that a change in place or purpose of use for an existing interbasin transfer constitutes a new interbasin transfer for which additional requirements should apply.

The commission disagrees with this comment because the additional requirements for a new transfer seek to address the impacts of the loss of water from the basin of origin, not on a transfer of water that has already been authorized. In the case of a change in purpose or location of use for an already authorized transfer, impacts from the transfer itself have already been assessed and addressed when the original transfer was granted. Changes in purpose of use or place of use for water that has already left the basin of origin would not have any greater impact on the basin of origin than the original transfer. Whether there is a justified need for the change in purpose or place of use are already addressed under Texas Water Code §11.085(j) making applicable Texas Water Code §§11.122, 11.1271, 11,134 and other Code provisions generally applicable to an application for an amended water right. However, in response to the comment, the commission has clarified that where a change in place of use is for use in a basin other than authorized, such transfer shall constitute a new interbasin transfer so that impacts on the previously authorized receiving basin may be assessed, unless the transfer is otherwise exempt under §11.085(v).

SAWS comments that proposed §295.155(d)(4) relating to the exemption for additional requirements for those interbasin transfers to a city or county that straddle basin lines should be clarified to extend such exemption to the use of water in a city and its service area as these areas expand in the future without having to obtain additional authorization from the commission. SAWS also comments that the descriptions of this exemption in §295.155(d)(4) and §297.18(k)(4) should be consistent.

The commission agrees with the comments and further responds that the intent of the rule is, in part, to prevent the sidestepping of the interbasin transfer requirements by using the exemption to leapfrog into another basin. This could be attempted by transferring the water first to a county or a city that straddles the basin line and then relaying the water further into the receiving basin for use in a city or county that does not straddle the basin line. The commission has revised the rules to allow use of the water in a city or county as the service area expands without further authorization but to clarify its intent to prevent transfers that attempt to leapfrog the additional requirements applicable to an interbasin transfer. Additionally, both §295.155(d)(4) and §297.18(k)(4) have been revised so that they contain the same exact language.

Brown & Potts comments that proposed §295.156, Notice for Emergency Water Use, should be revised to provide that notice of the initial emergency authorization shall be provided to all water right holders of record.

The commission disagrees with the comment because Texas Water Code §11.139 allows limited or no notice of the initial authorization. This is because insufficient time exists to provide such notice and meet an emergency need for water. Providing such notice for the initial authorization would also defeat the utility of acting quickly to address an emergency and, therefore, defeat the purposes of Texas Water Code, §11.139. Additionally, notice is provided to water right holders of the hearing to affirm, amend or set aside the emergency authorization not later than twenty days from the date of the initial authorization. At the hearing, affected water right holders may assert how they have been impacted, pursuant to Texas Water Code, §11.139.

SAWS comments that proposed §295.161, Notice of an Application to Convey Water in Bed and Banks, should be revised to provide that notice of an application to convey groundwater that has not historically been discharged into stream not be provided to downstream water right holders since they could not be affected by the diversion of water that is new to the stream and that was not used as a basis for granting their water rights.

The commission disagrees, in part, with the comment because downstream water right holders should be made aware that a new diversion is being proposed upstream and the purpose of such diversion. Additionally, the diversion of such new water to a stream may potentially affect existing water rights or instream uses if more water is diverted than actually discharged, less carriage losses. This could occur if the method and calculation of carriage losses as well as the diversion amount, timing and rate to ensure that no more water is being taken out of the stream than is being discharged is done inaccurately. There is a similar potential impact that may occur in the diversion of stored or conserved water under Texas Water Code, §11.042(a). However, notice of a related application provided under §295.160 is given only to water right holders of record between the points of release and diversion. This rule was not the subject of this rulemaking, but the commission received a comment in response to its concurrent notice of the regulatory review of Chapter 295 to revise this rule to provide notice to water rights holders downstream of the diversion point. In order to reconcile the notice requirements for these two authorizations and allow time to further study this issue, the commission has revised §295.161 to provide a similar notice of a bed and banks permit application to convey new groundwater until such time that the regulatory review process is completed. A reference to required notice under the Texas Administrative Procedures Act is also made to ensure that notice shall not be denied to an affected person.

Subchapter A. Requirements of Water Right Applications General Provisions