The Texas Water Development Board (the board) adopts new 31 TAC §§364.1, 364.2, 364.11-364.18, 364.31-364.37, 364.51-364.57, 364.71, 364.72, 364.80, 364.81, and 364.90, 364.91, concerning Model Subdivision Rules. Sections 364.1, 364.11, 364.12, 364.18, 364.32, 364.33, 364.34, 364.52, 364.57 and 364.91 are adopted with changes to the proposed text as published in the December 3, 1999 issue of the Texas Register (24 TexReg 10808). Sections 364.2, 364.13- 364.17, 364.31, 364.35-364.37, 364.51, 364.53-364.56, 364.71, 364.72, 364.80, 364.81, and 364.90 are adopted without changes and will not be republished. The new sections will comprise new 31 TAC Chapter 364, Model Subdivision Rules.

The new sections are intended to assure that minimum standards for safe and sanitary water supply and sewer services are met in residential areas of applicable political subdivisions. The Model Subdivision Rules must be adopted and enforced before a county or municipality can receive financial assistance from the board's Economically Distressed Areas Program (EDAP). Although not heretofore formally adopted as administrative rules of any state agency, the Model Subdivision Rules have existed in an approved form which political subdivisions participating in EDAP have been required to adopt and enforce since 1990. In the February 1995 update of the colonia needs assessment prepared by the board, entitled "Water and Wastewater Needs of Texas Colonias: 1995 Update", it was concluded that, based on site visits and contacts with local officials in each of the 23 counties surveyed, the establishment of new, illegally developed colonias was not a widespread problem and that the Model Subdivision Rules appeared to be working in the counties that have adopted and are enforcing the rules.

Subchapter A (§364.1 and §364.2) contains General Provisions related to the scope of the new chapter and procedures for adoption of the Model Subdivision Rules. Section 364.1 is adopted to identify the statutory requirement for the board to adopt these provisions. Further, this section states that these rules are to be adopted by counties in which there are political subdivisions which are eligible EDAP assistance and that in order to be eligible for EDAP assistance the applicants must adopt and enforce these rules, if so authorized, and be in a county that adopts and enforce these rules. Section 364.1 is adopted with change to include a section symbol before the numbers which identify the applicable section of the Water Code. Section 364.2 is adopted to identify the statutory purpose of the rules which is to establish a minimum state wide standard in the development of residential subdivisions within counties that are eligible for EDAP assistance or are otherwise required to adopt the Model Subdivision Rules. In this manner the board is meeting the intent of the legislation that created EDAP by reducing or eliminating the potential for the existence of residential areas that lack adequate water and wastewater.

Subchapter B contains the subdivision rules that are to be adopted by the counties. This subchapter consists of four divisions: Division 1 (§§364.11-364.18) containing general provisions, jurisdictional statements and definitions; Division 2 (§§364.31-364.37) setting out the minimum state standards for water supply and sewer services to certain subdivisions; Division 3 (§§364.51-364.57) providing requirements for processing and approval of subdivision plats; and Division 4 (§364.71 and §364.72) regarding enforcement responsibilities and authority.

Division 1 contains general provisions which identify the scope of the subdivision rules that are adopted by the county. As adopted by an eligible county, §364.11 specifies that the rules will apply when there is a subdivision of real property in the unincorporated areas of the county which creates two or more lots of five acres or less which are to be used for residential purposes. While the statutory provisions which authorize these rules could be construed as applying to any subdivision of property that results in at least one lot of five acres or less, the board determined that it is appropriate to harmonize these rules with statutory provisions relating to subdivisions in the Local Government Code so that implementation by the county of these Model Subdivision Rules may be consistent with the other statutory provisions. Since these Model Subdivision Rules are to be adopted by eligible counties, the verbiage of §364.11 should have a blank space provided before "county" in the first sentence of this section so that the adopting county may be specified by filling in the blank at the time of the adoption by the county. The proposed verbiage of this section as published did not include this blank and this section is adopted with change to include such a blank.

Section 364.12 identifies the purpose that the rules will fulfill for the adopting county. Based on comments received and in order to insure that this provision is not construed as providing a basis for a county to develop its own water and wastewater standards, the last phrase of this section is adopted with change to read "and to apply the minimum state standards for water and wastewater facilities to these subdivisions." Sections 364.13 and 364.14 specify the date upon which the rules will become effective in the county and allow the adopting county to repeal any existing but conflicting subdivision rules of the adopting county, respectively. Section 364.15 specifically identifies the circumstances which are regulated by the county pursuant to these rules and prohibits the sale of any property that is subdivided in contravention of the rules. Sections 364.16 and 364.17 provide that the rules adopted by the county supersede any contrary rules of the county and provide that if any section of the rules is deemed invalid by a court with jurisdiction that the validity of the remaining provisions of the rules will not be impaired.

Section 364.18 provides definitions for certain terms to be used in the rules in order that the terms used throughout the rules and necessary for implementation have a definitive and consistent meaning. The definition of "Commissioners court" is intended to identify the commissioners court of the county adopting these rules. As submitted to the Texas Register, the definition had a blank space provided before "County, Texas" so that the adopting county would be specified by filling in the blank at the time of the adoption by the county. The section as published did not include this blank and this section is adopted with change to include such blank. Further, based on a comment received, the sole reference in these rules to a sanitarian in §364.33(b)(1) has been deleted and therefore the definition of "Sanitarian" at §364.18(13) is no longer necessary and will be deleted from the rule as adopted. Further the definitions of Sewerage facilities, Subdivider, Subdivision, TAC, TNRCC, and Water facilities are renumbered §364.18(13), §364.18(14), §364.18(15), §364.18(16), §364.18(17), and §364.18(18), respectively.

Division 2 (§§364.31-364.37) specifies the minimum standards for water supply and sewer services for the subdivisions governed by the rules. Section 364.31 identifies the subdivisions to which the standards apply. Section 364.32 sets out the standards for water supply service. The standards for water supply are set forth as standards for public water systems, in §364.32(a), standards for non-public water systems, in §364.32(b), and a prohibition on the use of trucks or other mobile devices for the delivery of potable water. Pursuant to §364.32(a)(1), if a subdivision is to receive a water supply using an existing water service provider, the subdivider is required to have a written agreement with a retail public utility with provisions as set forth in the rule. A written agreement was deemed necessary since it would provide a legally binding method to assure the provision of water to the residential area. Any agreement must provide a definitive time for performance and the board concluded that 30 years is appropriate because it is consistent with the planning horizon specified for regional planning groups. See, e.g., 31 TAC §358.4(4)(E). Further, the 30 year period also covers the term of a typical residential home mortgage. The statute requires that the rule assure a water supply for residential areas. Initial occupation of residential areas will coincide, at a minimum, with the term of residential home mortgages and the water supply should be assured for the period of time.

Additionally, the agreement must show that the subdivider has paid all fees or other costs charged by the retail utility provider and includes all costs, including necessary connection equipment, membership fees, or water rights acquisition costs. The rule is intended to be as inclusive as possible to cover the cost for the initial connection to water service because Water Code §16.343 is understood to require that water service must be available to any resident moving onto the lot. All these costs should be paid because purchasers have been known to move on to property that they purchased but could not connect to water lines in the street because there was no meter to which the home could be connected and because expenses associated with obtaining the meter, such as membership fees, water rights acquisition fees, or other connection equipment or fees, had not been paid. The board has determined that as recently as 1998 there have been platted subdivisions in which there were homes receiving water through the garden hoses of neighbors. This situation was caused in part due to the fact that the cost of the down payment on the lot and the first month's payment was less than the cost of the water meter, membership fee, and water rights acquisition fee which was necessary for the home to receive a safe and sanitary water supply in this residential area. The Office of the Attorney General (OAG) filed lawsuits against the subdividers of these subdivisions and stated in the Original Petitions filed in state district court that Local Government Code §232.027, as well as the then existing Model Subdivision Rules and county regulations, require that water meters either be constructed or that financial guarantees be in place to insure the installation of the water meters. The agreed final judgments in these cases specifically required that the subdivider insure payment to the utility provider of "the water meter and associated membership and connection fees." Further, in assisting Hidalgo County in updating its subdivision regulations in 1998, the OAG included provisions requiring the subdivider to pay the "costs of water meters and all membership or other fees associated with connecting the individual lots in the subdivision to the utility's water supply system." Consultations with the staff of the OAG establish that the statutory interpretation that requires installation of water meters is the interpretation used by that office regardless of the terms of these rules. Additionally, testimony of residents from these areas establish that lot purchasers too often are not aware of the fees charged to obtain the water supply and purchase a lot but then cannot afford to connect to the water system. The cost of the meter and other necessary connection equipment as well as membership fees and water rights acquisition fees charged by the water supplier are as necessary to receive the water from the retail utility provider as the cost of any transmission line to the subdivision. By requiring the subdivider to pay these expenses in order to get the final plat approved, the rule will assure that a safe and sanitary water supply is available to the residential area and that the rule is consistent with the statutory interpretation of the chief legal officer of the state.

Having concluded that §364.32(a)(1) will require that all fees and costs, including necessary connection equipment, membership fees, or water rights acquisition costs charged by the retail utility provider must be paid, the board has also concluded that these fees will be paid as part of the water supply agreement with the retail public utility. This method insures that the costs are paid but only installed or otherwise used when each lot in the subdivision is occupied. Public meetings and hearings conducted in advance of proposing these rules elicited concern that the actual installation of water meters could result in theft or vandalism of the meters. Actual installation would occur even in the event that the subdivider posted a financial guarantee for the meters because the plat must include an actual date for construction of the proposed facility. In a public hearing conducted by the board, representatives of the Valley Association of Quality Development indicated that if the fees and costs are required, then making that payment as part of the water supply agreement is more desirable than being able to post a financial guarantee for these costs. In doing so, the subdivider can also negotiate as part of the agreement terms which identify the fees that are assessed and the conditions pursuant to which the fees may be refunded or forfeited in the event of default by purchasers. Based on comment received, §364.32(a)(1) is adopted with change to reflect that required provisions of the agreement will provide that the water service will be available upon completion of the construction of the water facilities identified in the plat, rather than "immediately" as proposed, so that a subdivider using financial guarantees in lieu of actual construction of the facilities may execute an water supply agreement that is consistent with the information contained on the plat.

Pursuant to §364.32(a)(2), if a subdivision is to receive its water supply from a public water system where there is no currently existing provider, the subdivider must establish a retail public utility and the water system, water quality and system design and construction must all be accomplished in compliance with the regulations established by the Texas Natural Resource Conservation Commission (TNRCC) since these are already the minimum state standards for retail public utility water systems statewide. Section §364.32(a)(2) further provides that if groundwater will be the source for the water supply, then a groundwater availability study must be performed that includes an analysis of water availability for 30 years. The justification for this requirement is that the statute is interpreted as requiring a sufficient supply of water for residential purposes and that 30 years is consistent with both the term of the contract with an existing retail public utility as well as the term of a typical residential home mortgage. Section §364.32(a)(2) also provides that if surface water is the source of supply, then water rights must be obtained to provide a sufficient supply of water to the subdivision for 30 years, for the same reasons.

Section 364.32(b) specifies the standards for non-public water systems by requiring that a representative test well or wells be drilled in the proposed subdivision and that a sample of the water from the well(s) be submitted to a private laboratory for a complete chemical and bacteriological analysis as well as for water availability. The chemical and bacteriological analysis must show that the water meets standards for community water systems since the TNRCC standard is an existing state minimum standard. The testing requirement is included to fulfill the statutory requirement that the water supply be safe and sanitary and it is concluded that an effective method to assure the safety of the water is to obtain chemical and bacteriological analysis that satisfy TNRCC regulations which set the minimum state standards for safe and sanitary water supplies. The justification for the water availability requirement is that Water Code §16.343 is interpreted as requiring a sufficient supply of water for residential purposes and that 30 years is consistent with both the term of the contract with an existing retail public utility as well as the term of a typical residential home mortgage. Section 364.32(c) prohibits truck or other mobile device transportation of potable water service because there does not exist a sufficient regulatory scheme to insure that water supplied in this manner will be safe for domestic use.

Section 364.33 sets out the standards for wastewater disposal. The standards for wastewater disposal are set forth as standards for organized sewerage facilities in §364.33(a) and standards for on-site sewerage facilities in §364.33(b). Pursuant to §364.33(a)(1), a subdivider seeking to establish an organized wastewater collection and treatment system where none currently exists must obtain the appropriate permits and approvals from the TNRCC, since these are already the minimum state standards for organized wastewater systems statewide. Pursuant to §364.33(a)(2), a subdivider seeking to dispose of wastewater by connecting to an existing and permitted wastewater treatment facility must have a written agreement with the retail public utility with provisions as set forth in the rule. A written agreement was deemed necessary since it would provide a legally binding method to assure the treatment of wastewater from the residential area. Any agreement must provide a definitive time for performance. The wastewater service should be available for a term that is consistent with the typical residential home mortgages, which extends for 30 years, and is consistent with the term for which a water supply will be made available. Additionally, the agreement must show that the subdivider has paid all of fees or other costs charged by the retail utility provider. The rule is intended to be as inclusive as possible to cover the cost for the initial connection to wastewater service because the intent of Water Code §16.343 has been interpreted to require that service must be available to any resident moving onto the lot. Based on comment received, §364.33 is adopted with change in subsection (a)(2) to reflect that the required provisions of the agreement will provide that the wastewater service will be available upon completion of the construction of the wastewater facilities identified in the plat, rather than "immediately" as proposed, so that a subdivider using financial guarantees in lieu of actual construction of the facilities may execute an wastewater treatment agreement that is consistent with the information contained on the plat. Section §364.33(a)(2) also requires that engineering plans for proposed wastewater collection lines must comply with existing TNRCC regulations to insure that the existing minimum state standard is met.

As proposed §364.33(b)(1) specifies the standards for on-site sewerage systems as requiring that all on-site sewer systems treating wastewater flows of less than 5,000 gallons a day be designed by a registered professional engineer or a registered professional sanitarian and in all respects comply with the regulations of the TNRCC since these regulations set the minimum standards statewide. Based on comment received and to insure that this rule does not exceed an established minimum state standard, this section will be adopted with change to delete the requirement that such a system be designed by either a register professional engineer or a registered professional sanitarian and only require that on-site systems comply with the TNRCC regulations since these regulations establish the minimum state standard. Similarly, §364.33(b)(2) adopts TNRCC regulations as the minimum standards for sewerage facilities handling sewage of 5,000 gallons a day or greater. Based on comment received, the adopted language for this subsection will not reference the term on-site since the location of the facilities is irrelevant to the application of the TNRCC regulations.

Section 364.34 identifies the standards for greywater systems for reuse of treated wastewater to be the requirements of the TNRCC since these standards already establish a statewide minimum standard. Based on comments received, §364.34 is adopted with change to delete the reference in §364.34(a) to Chapter 285, Subchapter H as inapplicable. Similarly, based on comments received, the reference in §364.34(b) to the Construction Standards for On-Site Sewerage Facilities promulgated by the TNRCC will be deleted from the adopted rule as inapplicable. Section 364.35 identifies the standards for sludge disposal to the requirements set by the TNRCC since these standards already establish a statewide minimum standard.

Section 364.36 establishes minimum distances for dwellings to be setback from roads and property lines. Water Code §16.343(e) requires that these rules include a minimum standard and the standard adopted reasonably accomplishes the purpose of the statute. Section 364.37 prohibits more than one single family detached dwelling being located on each lot in the subdivision as required by Water Code §16.343(d). Section 364.37 also requires that a notation of this restriction be placed on the final plat and on all deeds and contracts for deed for lots sold from the subdivision. Lot purchasers are the individuals most affected by this rule and notification is the key to enforcement. Notice on both the plat and in conveyancing documents are methods to accomplish this goal while minimizing the impact on the subdividers.

Division 3 (§§364.51-364.57) provides the requirements for processing and approval of subdivision plats. Section 364.51 requires (a) that the owner of the land subject to the rules file a written request with the county for approval of proposed plat, and (b) that the plat comply with the provisions of Divisions 2 and 3. In order to provide evidence that the proposed subdivision will comply with Division 2, §364.52 requires that an engineering report that complies with the requirements of the section be attached to the plat. As proposed, §364.52(1)(A) references the requirement that a subdivider shall provide a written agreement with a retail public utility in substantially the form attached in Appendix 1A. The rule should include a reference to §364.32(a)(1) which identifies the figure that was published and contains the form of the required agreement. Section 364.52 is adopted with change to include this reference and, since §364.32(a)(1) specifies the terms of the agreement, the remaining portion of the sentence in §364.52(1)(A) which re-states the terms required in the agreement will be deleted as surplusage. Similarly, as proposed, §364.52(3)(A) references the requirement that a subdivider shall provide a written agreement with a retail public utility in substantially the form attached in Appendix 1B. The rule should include a reference to §364.33(a)(2) which identifies the figure that was published and contains the form of the required agreement. Section 364.52 is adopted with change to include this reference and, since §364.33(a)(2) specifies the terms of the agreement, the remaining portion of the sentence in §364.52(3)(A) which re- states the terms required in the agreement will be deleted as surplusage.

Section 364.53 provides a section in which the adopting county may, in its discretion, require additional information necessary to determine the adequacy of proposed water and wastewater improvements as part of the plat approval process. There is information that the county may deem important, such as the impact of flood plains on the location of water or wastewater facilities. This section allows the county to require the information that it necessary in its county for adequate water and wastewater facilities.

Section 364.54(a) provides, in the event the facilities necessary to provide water or wastewater service to the proposed subdivision have not been constructed at the time the plat is submitted to the commissioners court for approval, that the commissioners court shall require the subdivider to execute an agreement with the county in substantially the form set out in these rules to construct the facilities identified in the final engineering report within the subdivision and provide a sufficient financial guarantee in the form of a bond, irrevocable letter of credit, or adequate alternative financial guarantee to pay for such construction. This requirement is in compliance with the statutory provisions of the Local Government Code which authorize the affected counties to require financial guarantees for unconstructed water and sewerage facilities. The alternative of allowing a subdivider to provide financial guarantees fulfills the intent of Water Code §16.343 by having the construction of the water and sewerage facilities to all residential lots paid for while providing an alternative to actual construction of the facilities. Section 364.54(b) sets forth the requirements of a bond submitted in compliance with §364.54(a). These requirements include that the bond is executed by sureties acceptable to the commissioners court and identify the criteria by which the commissioners court will determine acceptability. Section 364.54(c) sets forth the requirements of a letter of credit submitted in compliance with §364.54(a). Subsection (c) identifies differing criteria for letters of credit based on the type of financial institution issuing the letter and the amount of credit involved. When the issuing institution is either a bank or savings and loan association, the issuing institution must be federally insured, have minimum total assets, and have minimum Sheshunoff ratings. These criteria are used because cumulatively they establish reliability for the letter of credit in the event that it needs to be redeemed and also because it is relatively easy to ascertain if the letter meets the criteria. When the financial institution is other than a bank or savings and loan association, the letter of credit must be 110% collateralized and the county must receive safekeeping receipts for all collateral because these institutions are not subject to the oversight of the regulations necessary to be federally insured and therefore letters of credit from these institutions are inherently riskier financial guarantees.

Section 364.54(d) provides that the county will require a financial guarantee in an amount to insure construction of adequate water and sewerage facilities. Section 364.54(e) authorizes a county to approve a final plat without receiving the necessary financial guarantee instrument in the instance that the subdivision is within the concurrent jurisdiction of a municipality that is requiring financial guarantee and the county and the municipality have executed an interlocal agreement that authorizes the reciprocal arrangement. This subsection allows the county to rely on the municipality to enforce the financial guarantees without requiring the subdivider to provide a financial guarantee to the county in addition to the financial guarantee provided to the municipality.

Section 364.55 identifies the criteria necessary for the commissioners court to approve an application for approval of a final plat and the circumstances under which a submitted plat may not be approved. Section 364.56 allows the commissioners court to provide a time extension for the installation of water or sewer services and identifies the limited circumstances pursuant to which the time extension may be granted.

Section 364.57 provides criteria required by Water Code §16.343(b)(2) and (c)(2) to assure minimum standards for subdivisions that actually occurred prior to September 1, 1989 and were not platted or recorded prior to September 1, 1989. Based on comment received, §364.57 is adopted with change in subsection (a) to add a statement that the section is in addition to the authority of the county to grant delays or variances pursuant to Local Government Code §232.043. This change is made to assure that the authority provided in Local Government Code §232.043 is in addition to the authority provided in these rules.

Division 4 (§364.71 and §364.72) contains provisions regarding enforcement responsibilities and authority and relies on the referenced statutory provisions.

Subchapter C contains the provisions relative to adoption of the requirements of the Model Subdivision Rules as applicable to municipalities participating in the Economically Distressed Area Program, consisting of two divisions: Division 1 (§364.80 and §364.81) pertaining to municipalities that have not adopted any subdivision ordinances; and Division 2 (§364.90 and §364.91) pertaining to municipalities that have existing subdivision ordinances in effect.

Border WaterWorks, joined by the El Paso County Attorney, commented that the purpose of the variance provisions now codified in Local Government Code §232.043 was to facilitate new water/sewer facilities in existing but unplatted subdivisions but that §364.57 interprets Local Government Code §232.043 in a way that restricts public access to water/sewer utilities. The board adopts a change to §364.57(a) to clarify that the variance provided in this section is not exclusive but is in conjunction with other authority the county may have to grant delays or variances pursuant to Local Government Code §232.043.

Border WaterWorks commented that proposed §364.57 requires that only a resident lot owner can request a variance under this provision and that such a limitation prevents in-fill of the unoccupied lots, does not allow platting by original subdivider or lot purchaser not residing on the lot and that a person that owns but doesn't occupy "may need" variances from sale restriction, as well as road and drainage. Further, Border WaterWorks noted that since platting is usually done on a subdivision wide basis, the rule as written imposes the requirement that all lots in the subdivision be occupied and therefore would prevent the platting of entire subdivisions and that a developer should be able to plat when she hasn't violated any laws stating that "The reason that variances are necessary is because there would be plan to bring in water/sewer to the subdivision. A developer who has not violated any laws should be allowed to bring water/sewer into a colonia." The board adopts no change to the rule based on this comment. Water Code §16.343 requires that Model Subdivision Rules include basically four requirements on a subdivided plat: adequate water, adequate wastewater, one dwelling per lot, and minimum set backs. Water Code §16.343 and §16.350 establish a legislative intent that adequate water and wastewater may not be waived and therefore there are only two requirements set forth Water Code §16.343 from which variances may be allowed under the Model Subdivision Rules, that of one dwelling per lot and minimum set backs. If a lot is unoccupied, it would not need a waiver from either one dwelling per lot or minimum set back restrictions.

Border WaterWorks commented that proposed §364.57 requires that the variance only applies to subdivisions created prior to 1989 and that it therefore limits access to water/sewer utilities to post 1989 developments, even though developer doesn't own it and even though its "contrary to SB1421". The effect is to punish purchasers of lots and deny them access to infrastructure. The board adopts no change to the rule based on this comment. The statute specifically states that these criteria are to be applied to a subdivision that was not platted or recorded prior to September 1, 1989.

Border WaterWorks commented that proposed §364.57 requires that the commissioners court has to make a written finding that a plat was required prior to 1989 but that it is possible that a subdivision did not have to be platted when developed but under changing law now has to be platted and therefore such a finding is unnecessarily cumbersome because it is so fact intensive and does not promote public health. Further, the failure of the county to make the finding does not mean a plat was or was not required. The board adopts no change to the rule as the result of this comment. There are not any circumstances pursuant to which a subdivision that did not have to be platted when developed now is required by statute to be platted. The only time that these criteria need to be used is when a plat was required at the time the subdivision was created. The board concludes that a finding by the commissioners court to this effect is appropriate.

Border WaterWorks commented that proposed §364.57 requires that water and wastewater service must be available before a variance is granted and that no utility would extend service into a subdivision unless and until it knew that the plat would be approved and it could legally make hook-ups. Border WaterWorks recommended that this section should be amended to allow individuals requesting a variance under this section to either construct the necessary facilities or provide financial guarantees to insure that water and sewer service can be constructed after the plat is approved. The board adopts no change to the rule as the result of this comment. The possibility that such a circumstance would arise is deemed to be so remote as to not warrant amendments to the existing provision. Further, additional statutory provisions provide adequate remedies to assist lot owners should the circumstances arise.

Valley Association for Quality Development (VAQD) commented that proposed §364.12, relating to the purpose of the Model Subdivision Rules, states that the purpose of the proposed rules "is to establish minimum standards for water and wastewater facilities." VAQD stated that it may be inferred from this section that the Model Subdivision Rules "can establish minimum standards for water and wastewater facilities that may exceed minimum State of Texas standards for water and wastewater facilities." According to VAQD, this interpretation would exceed the scope of Water Code §16.343 which only requires that the water and wastewater facilities must meet minimum state standards. The board adopts a change to §364.12 to further clarify this section. These rules, as applied to affected counties, are divided into three subchapters. Subchapter A contains two provisions (§364.1 and §364.2) that state the scope of the chapter and purpose of the rules that are being proposed by the board. Subchapter B contains the rules that are to be adopted by the affected counties. Section 364.12 referenced by VAQD is the provision which states the purpose for which the county is adopting the subdivision regulations. Section 364.12 will be adopted to make abundantly clear that the county is only imposing the already established statewide standards for water and wastewater facilities within the county so that the last phrase will be to state that the purpose is to apply the minimum state standards for water and wastewater facilities to the subdivisions in the county.

VAQD commented that §364.32(a)(1), which requires that a subdivider relying on a existing retail public utility for water supply provide an executed water supply agreement for a 30 year period, presents practical issue as to whether a water supplier will agree to warrant that service will be available for thirty years. VAQD noted that an existing Certificate of Public Convenience and Necessity (CCN) issued by TNRCC obligates water suppliers to provide continuous and adequate service to all customers, but requiring a utility to warrant that water service will be available could have a chilling effect on water suppliers who would then not sign the contract. VAQD further commented that most utilities have their own service agreement which contain different requirements and other matters. The board adopts no change to the rule as the result of this comment. Senate Bill 1 Regional Planning Groups guidelines specify that water planning efforts should identify the water sources for its anticipated 30 year demand. See, e.g., 31 TAC §358.4(4)(E). Thus, the policy direction of the Board , as well as the on-going issues related to water rights acquisition along the border and indeed throughout the state, support the inclusion of this requirement.

VAQD commented that proposed rule §364.32(a)(1), which requires that the subdivider pay the cost of water meters and other necessary equipment, membership fees, etc, exceeds the State of Texas minimum standards because there is no state minimum standard to force subdividers to pay such costs. VAQD stated that there is no reasoned justification as to why the Board would place this requirement on subdividers because there has been no showing that there has been a proliferation of subdivisions without adequate water and wastewater facilities since 1990. The board adopts no change to the rule as the result of this comment. The preamble adopting this rule appropriately contains the reasoned justification for this section.

VAQD asked two questions in relation to the requirement to pay the costs of the meter, membership fees, water rights acquisition fees, or other connection equipment or fees. First, who would be entitled to the fees in the event of default by the purchaser? Second, what will occur in the event that a purchaser does not immediately move onto the property and connect to the water supply but instead does not move onto the property for many years? The board adopts no change to the rule as the result of this comment. The answer to these questions will greatly vary depending on the facts relating to the nature of the fee being assessed, the terms of conveyance between the subdivider and the lot purchaser, and the terms of the agreement reached between the subdivider and the retail public utility. The subdivider should be able to address these questions with substantive terms in either or both of these agreements.

VAQD commented that a 30 year wastewater treatment agreements required by §364.33(a) when the subdivision will be connected to an existing wastewater treatment facility is not appropriate or necessary since TNRCC only issues wastewater permits to a retail public utility for a term of 5 years. The board adopts no change to the rule as the result of this comment. The time period of the permit does not prevent a wastewater provider from making a commitment to provide, and actually providing, service for a longer period of time. The commitment to provide service for a longer term than the permit ensures that the service provider is obligating itself to meet subsequent permit requirements.

VAQD commented that the requirement in §364.33(a)(2) that TNRCC review of wastewater collection plans and specifications will unnecessarily slow down the plat approval process and increases costs without any obvious benefit and that if TNRCC does not require review of wastewater collection plans and specifications then the rule should not impose this requirement. The board adopts no change to the rule as the result of this comment. The rule requires no more than compliance with existing TNRCC regulation which would apply regardless of these rules.

VAQD commented that §364.33(b)(1), which requires that a professional register engineer or a professional registered sanitarian must design each on-site sewerage facility, exceeds the State of Texas minimum standards because the current On Site Sewer Facility (OSSF) regulations of TNRCC do not make such a requirement. The board adopts a change to §364.33(b)(1) based on this comment so that an on-site system referenced in this section does not have to be designed by either a registered professional engineer or a registered professional sanitarian but must comply with the on-site sewer facility requirements of TNRCC. The adoption of the rule without the reference to a sanitarian also eliminates the necessity of a definition of sanitarian in §364.18(13) and thereby requiring the renumbering of the remaining definitions.

VAQD commented that §364.37, which requires notation on the plat and any conveyance instruments that no more than one single family detached dwelling be located on each lot, poses a trap for developers because it is primarily an enforcement problem for the county and will not provide any benefit. VAQD commented that the notation on the plat is sufficient. The board adopts no change to the rule as the result of this comment. Notification of this restriction at the time of the sale of the property is an effective method to insure that lot purchasers are aware of this statutory restriction while the cost of compliance is extremely low.

VAQD asked if a change in the construction cost and schedule estimates after submission of final engineering report required pursuant §364.52 subject a subdivider to an enforcement action. The board adopts no change to the rule as the result of this comment. If the proposed water and sewer facilities are not constructed in the time period set forth in the final engineering report, then the subdivider forfeits the financial guarantee submitted with the final plat and is subject to the enforcement provisions of set forth in statute and referenced in these rules. There are provisions that allow a county to approve amendments to a submitted final engineering report so that unforeseen difficulties can be addressed. If the cost of construction changes but the subdivider constructs the facilities as set forth in the engineering report, then there is no enforcement action necessary since the purpose of the construction estimate is to assist the county in determining the amount of financial guarantees necessary to insure construction completion. If the water and sewer facilities have not been constructed in the time period identified in the final engineering report and the construction cost estimate is deficient to achieve construction, then the subdivider is subject to enforcement penalties as well as the actual costs to complete construction.

VAQD commented that the requirement of §364.54 to construct septic tanks prior to approval of the final plat is costly to lot owner and state audit proved the problem is much less than anticipated. Additional cost to lot owners in tax and interest in Cameron and Hidalgo Counties alone exceeds $5 million. Additionally, VAQD urged the Board to review and possibly update the Colonia Plumbing Loan Program to provide low-interest loans to lot purchasers in affected counties. The board adopts no change to the rule as the result of this comment. Current law only authorizes approval of the final plat without construction of sewer facilities if adequate financial guarantees are in place to insure that construction will occur as set forth in the plat. Through several legislative sessions since the initial promulgation of the Model Subdivision Rules, the laws requiring construction, or financial guarantee to insure construction, of water and sewer facilities has not been amended by the legislature even though state attorney general's office position has been to interpret the statutes in this manner.

VAQD commented that §364.55(c)(1), which requires that sites identified in the final plat as the location of components of the water or sewer facilities necessary for maintenance and operation of the system be dedicated to the retail public utility, is not sufficiently clear as to whether the subdivider is required to give land that will benefit the surrounding area. VAQD commented that this requirement could overburden the subdivider for facilities without compensation. The board adopts no change to the rule as the result of this comment. The rule specifies that the sites required to be dedicated are those sites identified in the final plat which is prepared and submitted by the subdivider for which the subdivider is requesting approval from the county. This section requires only that the subdivider effectuate the plan for assuring water and sewer service to the residential lots within the subdivision as identified in the plat and the final engineering report.

VAQD commented that the criteria set forth in §364.57 for approval of a subdivision that occurred prior to 1989 in lieu of filing a plat is impossible to comply with because most subdividers of property prior to 1989 are out of the business and the burden of complying with section is too tremendous for an individual. VAQD commented that if no law was in effect that required a plat at the time of purchase, it is unfair to require platting now and will cost as much as the original purchase price and that there is no supporting legislation for this requirement. The board adopts no change to the rule as the result of this comment. This rule does not impose a requirement to file a plat if there was no requirement to file a plat at the time the subdivision occurred. This rule addresses the circumstance that a plat was required at the time the subdivision occurred and that circumstances now compel the lot owner to file a plat. In these instances, compliance with all the Model Subdivision Rules is required but as a practical matter may be difficult or impossible. This section allows for a legal approval of the subdivision without compliance with the set back or dwelling limitation requirements in order to assist such lot owners to the maximum extent allowed under existing statutes.

VAQD commented on the fiscal note submitted by Ms. Patricia Todd, Director of Accounting and Finance. First VAQD states that it "does not agree that all of the updated rules are consistent with the existing statutes." Second, VAQD stated that fiscal impacts stated by Ms. Todd were incorrect, that the cost of obtaining water service ranges from $400 to $700 per lot rather than the range reported by Ms. Todd of $218 to $580 per lot, and that the cost of obtaining sewer service ranges from $1,000 to $4,500 rather than $390 to $1,135 per lot as reported by Ms. Todd. The board adopts no change to the rule or fiscal note as the result of this comment. First, the board has determined that the updated rules are consistent with existing statutes. Second, the fiscal impact determinations by Ms. Todd are based on rates provided from ten different water and wastewater service providers. VAQD has not provided any specific cost information from service providers to contradict the findings of Ms. Todd.

VAQD, joined by Sigler, Winston, Greenwood & Associates (SWG&A), commented that the requirement in the Model Subdivision Rules to locate the subdivision with respect to the absolute original survey corner of a land grant or "porcion" is impossible to comply with, that the original corners and survey marks of the land grants are no longer there since they often referred to such things as a certain mesquite stake in the road or a mesquite tree, etc. that are no longer there. VAQD commented that this requirement will also put in question all boundaries of the properties in this part of the state, and that it does not conform to the standard practice that is endorsed by the State Board of Professional Surveyors. SWG&A commented that the accepted practice is to use a known corner of a lot or block from the subdivision of the original survey or grant. The board adopts no change to the rule as the result of this comment. There is no such requirement in the Model Subdivision Rules.

VAQD, joined by SWG&A as well as Martin, Brown & Perez (MB&P), commented that the requirement in the Model Subdivision Rules to provide topographic information of the surrounding 500 feet joining a proposed subdivision would require the permission of the neighboring land owners, otherwise, it would be trespassing and would require the surveyor to break the law to comply with this requirement. VAQD commented that property rights should not need the permission of the neighbor. MB&P commented that the normal practice is to examine existing maps, studies, or other available information. The board adopts no change to the rule as the result of this comment. There is no such requirement in the Model Subdivision Rules.

VAQD, joined by SWG&A and MB&P, commented that the requirement in the Model Subdivision Rules to certify the FEMA Map flood zone designation of the property cannot be met because an engineer can only certify to his own work and work that he has knowledge of its accuracy, therefore the engineer can certify it is the correct FEMA designation but not to its accuracy. The board adopts no change to the rule as the result of this comment. There is no such requirement in the Model Subdivision Rules.

VAQD, joined by SWG&A and MB&P, commented that the requirement in the Model Subdivision Rules to certify to the utility's ability to provide service is another requirement that the engineer cannot perform because the engineer would have no knowledge of the utility's conditions nor the right to demand this information, perform inspections of the facilities or of the financial condition of the utility. The board adopts no change to the rule as the result of this comment. There is no such requirement in the Model Subdivision Rules.

VAQD, joined by SWG&A and MB&P, commented that there are few individuals, even on the border area, that have the proficiency to comply with the requirement in the Model Subdivision Rules to translate items on the plat into Spanish and to sign and seal with their engineering seal that these items are correct. VAQD commented that this problem with compliance was exemplified by the plat that was furnished to "us" to be used as an example and a local Brownsville engineer advised "me" that the translation in the example was not entirely accurate. VAQD commented that if the TWDB's and the OAG's interpretation is not correct, "how can someone who is not versed in both languages be expected to certify to the accuracy of a language they do not speak." The board adopts no change to the rule as the result of this comment. There is no such requirement in the Model Subdivision Rules.

The Office of the Attorney General (OAG) commented that the utility service agreements set forth in §364.32(a)(1) and §364.33(a)(2) require that service be immediately available to each lot within the subdivision. The OAG notes that in the event that the subdivider has elected to provide financial guarantees to insure construction of the water or sewerage facilities, in lieu of actually constructing these facilities, the utility provider would not be in a position to provide service immediately to each lot within the subdivision. The board adopts §364.32(a)(1) and §364.33(a)(2) so that the agreements referenced therein require that service will be available upon completion of the construction of the water and wastewater facilities, respectively, as set forth in the final plat.

TNRCC commented that references in §364.33(b)(2) to "on-site" are irrelevant to the manner in which the TNRCC regulations function. The board adopts §364.33(b)(2) without the references to "on-site."

TNRCC commented that §364.34(a) contains a reference to a TNRCC regulation that is not relevant to this section and that §364.34(b) contains a references to a TNRCC regulation that does not exist. The board adopts §364.34(a) so that the reference to Chapter 285, Subchapter H is deleted and adopts §364.34(b) so that the phrase "contained within the 'Construction Standards for On-Site Sewerage Facilities'" is deleted.

TNRCC commented that §364.91(4) would require a municipality to apply all of 30 TAC Chapter 290 to a subdivision that will be relying on groundwater while §364.32(b) provides that counties would only apply specified sections of 30 TAC Chapter 290. The board will adopt §364.91(4) to change the general reference of 30 TAC Chapter 290 to be include only those specific provisions of 30 TAC Chapter 290 that are referenced in §364.32(b).

Subchapter A. GENERAL PROVISIONS

Subchapter C. APPLICATIONS TO THE BOARD

The Texas Water Development Board (the board) adopts amendments to 31 TAC §§375.2, 375.12, 375.16, 375.36, 375.39, 375.52, 375.71, 375.72, 375.82, 375.85, 375.221, and 375.222, concerning the Clean Water State Revolving Fund (CWSRF). Section 375.71 is adopted with change to the proposed text as published in the December 3, 1999, issue of the Texas Register (24 TexReg 10818) to correct a typographical error. The new word "identified" should have been inserted after the word "all" instead of before the word "all" in subsection (a)(1). Sections 375.2, 375.12, 375.16, 375.36, 375.39, 375.52, 375.72, 375.82, 375.85, 375.221, and 375.222 are adopted without change and will not be republished.

In §375.2, Definitions of Terms, the term "Alternative technology" is amended because the terms previously addressed only wastewater treatment technologies and omitted reference to wastewater management techniques which are also eligible for funding and which include treatment technologies. The term "Closing" adds the phrase "release of funds" because the rule previously was not clear to borrowers that they will actually take control of funds at closing. "Commitment" is revised to give notice to applicants that they do not have a commitment from the agency unless the board has taken formal action, resulting in a board resolution. The term "Delivery" is deleted because it duplicates the process already described in "Closing" and "Release". A definition for the term "Pre-design commitment" is added to clarify that §375.39 of this title relating to Pre-Design Funding Option creates both a process of receiving a loan commitment as well as a process for loan closing and release of funds. A definition for "Rural hardship community" has been added to conform to the eligibility criteria established by Federal regulations for the Rural Hardship Community Program. The definitions are renumbered as a result of the deletions and additions.

Section 375.12, relating to Types of Assistance, is amended to add a heading to subsection (a) which became necessary when subsection (b) was added. The more restrictive term "bonds" was replaced with a broader term, "debt obligations" to include a wider range of debt such as notes and certificates of obligation to reflect statutory authority by the board and to allow greatest flexibility for applicants. Subsection (b) is added to require bond insurance for refinancings so that a public benefit, improvement of the credit quality of the Board's portfolio of bonds, will result from the debt restructuring.

Section 375.16, relating to Rating Process, is amended to change "wastewater treatment" to the broader category of "wastewater management" in order to encourage the use of innovative and cost effective wastewater management techniques that would not be considered a treatment process. The section also provides consistency with the existing rules by replacing the numbers in the section with words. To implement state policies to encourage regional or consolidated facilities, the section additionally provides new incentives to projects that implement existing plans for regional facilities, consolidation, or commission recommendations by awarding three priority rating points. The section is also amended to provide incentives to encourage the use of innovative or alternative waste management techniques which may be more cost effective than conventional treatment techniques. Additionally, the section is amended to state the board policy to first use public funds for projects for new construction to increase the population that is served with adequate wastewater systems and thereby increase the public health benefits through the use of state funds. Finally, the subdivisions are renumbered to accommodate the changes.

Section 375.36, relating to Engineering Feasibility Data, is amended to conform to the new definition of alternative management techniques and to encourage the use of techniques which may be more cost effective.

Section 375.39, relating to Pre-design Funding Option, is amended to eliminate past confusion that the pre-design funding option referred only to a process for closing the loan. The intent of the section is to inform applicants that pre-design commitment and pre-design closing are separate actions that can function independently of each other.

Section 375.52, relating to Lending Rates, is amended to allow flexibility in the setting of variable interest rates to specify a formula rather than basis points so that there is no need for frequent rule changes to accommodate changing market conditions.

Section 375.71, relating to Loan Closing, is amended to clarify that applicants must secure authorizations, not from all agencies but only from those agencies that have been identified by the board. The section also deletes a phrase that is confusing and unnecessary because the release of building funds does not necessarily coincide with loan closing.

Section 375.72, relating to Release of Funds, is amended to include in two different paragraphs the existing but previously unstated criteria that all requirements of identified agencies having jurisdiction have been met. The change is made to assure that the necessary coordination has been completed. The section also reduces the number of copies of construction contracts that must be submitted since one copy has been determined to be sufficient.

Section 375.82, relating to Inspection During Construction, is amended to allow for qualified inspection that meets the standards and practices of the engineering and construction industry yet permits a cost effective means of meeting the standards.

Section 375.85, relating to Building Phase Submittals, is changed to provide assurances to the board that the as-built plans, which are essential to the borrower's ability to maintain the facility, have been provided to the borrower.

Section 375.221, relating to Pre-design Funding Option, is amended to eliminate past confusion that the pre-design funding option referred only to a process for closing the loan. The intent of the section is to inform applicants that pre-design commitment and pre-design closing are separate actions that can function independently of each other.

Section 375.222, relating to Lending Rates, is amended to continue the board's policy regarding setting variable lending rates without the need for frequent rule changes to accommodate changing market conditions.

One response was received from the U.S. Environmental Protection Agency (EPA), acknowledging an understanding of the proposed amendments but offering no comments.

Subchapter A. GENERAL PROVISIONS