The Texas Commission on Environmental Quality (TCEQ or commission) adopts the amendments to §§304.1 - 304.3, 304.11 - 304.13, 304.15, 304.16, 304.21, 304.31 - 304.34, 304.42, 304.44, 304.62, and 304.63. Sections 304.1 - 304.3 and §304.16 are adopted with changes to the proposed text as published in the November 11, 2005, issue of the Texas Register (30 TexReg 7364). Sections 304.11 - 304.13, 304.15, 304.21, 304.31 - 304.34, 304.42, 304.44, 304.62, and 304.63 are adopted without changes to the proposed text and will not be republished.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULES

The adopted rulemaking clarifies that Chapter 304 applies to all watermaster programs, other than the Rio Grande Water Division, created under Texas Water Code (TWC), Chapter 11, and all watermasters appointed by the executive director under TWC, Chapter 11. The adopted rulemaking deletes requirements regarding the repealed Wagstaff Act (TWC, §11.028), makes changes for corrective and administrative purposes and to provide clarity, and changes the watermaster's reporting requirements to the water right holders from quarterly to annually.

SECTION BY SECTION DISCUSSION

Throughout the adopted rulemaking, the transport of water and the use of watercourses are added to the activities regulated by the rules to be consistent with 30 TAC Chapter 297 and TWC, Chapter 11.

Also throughout the rulemaking, minor changes are made to provide consistency in the language used in the rules and to conform to the standards set out in the Texas Legislative Council Drafting Manual , November 2004.

The adopted amendment to §304.1, Applicability, clarifies that Chapter 304 applies to any watermaster program, other than the Rio Grande Water Division, created under TWC, Chapter 11. Also, the amendment clarifies that Chapter 304 applies to any matters related to water rights within each water division, or segment of a water division. The rule is changed from the proposed version to add that Chapter 304 applies to all water rights, permits, authorizations, orders, and any other matters related to water rights within each water division, segment of a water division, "or watermaster program" other than the Rio Grande. This change is made after staff review indicated that while the beginning of the applicability statements in §304.1 include "or watermaster program created by or under the Texas Water Code, Chapter 11," the statement relating to water rights had omitted "or watermaster program." It is clear from the beginning of the section that watermaster programs are covered; this additional change is made to make that intent consistent throughout the section. "Watermaster program" must be included because watermaster programs may be created under the TWC, Chapter 11, Subchapter I, and by the legislature, and these rules need to be flexible to cover for those programs.

The adopted amendment to §304.2, Appointment of Watermaster, clarifies that under TWC, Chapter 11, the executive director can appoint a watermaster for each water division or segment of a water division. The rule is changed from the proposed version to add that a watermaster may be appointed for a "watermaster program" as well as a water division or segment of a water division. This change is made after staff review indicated that while the beginning of the applicability statements in §304.1 include "or watermaster program created by or under the Texas Water Code, Chapter 11," §304.2 did not include "or watermaster program" as a program for which the executive director may appoint a watermaster. It is clear from the beginning of §304.1 that watermaster programs are covered by these rules; this additional change is made to make that intent consistent throughout the chapter. "Watermaster program" must be included because watermaster programs may be created under TWC, Chapter 11, Subchapter I, and by the legislature, and these rules need to be flexible to account for those programs.

The adopted amendment to §304.3, Definitions, changes the definition of "Agent" to clarify that an agent is one who is designated by a water right holder to act on the holder's behalf. This change was necessary to provide an adequate definition of "Agent."

The adopted amendment to §304.3 also changes the definition of return flow to be consistent with the definition of return flow found in §297.1, Definitions, and defines a water division to include the entire water division and any segments thereof. The definition for the term "Transport" is added in the adopted rules in response to comments received, and is defined as "the discharge, conveyance, and subsequent diversion of water under Texas Water Code, §11.042." The definition of this term is necessary because "transport" is not meant to include any transport of water (e.g., in a pipeline) not regulated by the commission under TWC, Chapter 11. The adopted amendment also clarifies that the definition of watermaster relates to the person appointed by the executive director under TWC, Chapter 11 and that the definitions in §297.1 are applicable to this chapter. Additionally, the amendment to this section changes the reference from the Texas Water Commission to the Texas Commission on Environmental Quality.

The adopted amendment to §304.11, Difference in Operations, conforms to the Texas Register requirements and the standards set out in the Texas Legislative Council Drafting Manual , November 2004.

The adopted amendment to §304.12, Identification of Diversion Facilities, Outlet Works, and Points of Return, adds the term ". . . or watercourses" to clarify that the transport of water in a watercourse is an activity regulated by the watermaster in his administration of bed and banks authorizations and the execution of his duties.

The adopted amendment to §304.13, Requirement for Measuring Devices, conforms to the Texas Register requirements and the standards set out in the Texas Legislative Council Drafting Manual , November 2004.

The adopted amendment to §304.15, Declarations of Intent To Divert or Release Water, changes the section title to "Declarations of Intent to Divert, Transport, or Release Water." In addition, the adopted amendment clarifies in subsections (a), (b), and (e) that the transport of water in a watercourse is an activity regulated by the watermaster in his administration of bed and banks authorizations and the execution of his duties.

The adopted amendment to §304.16, Records of Diversions, Releases, and Impoundments, changes the section title to "Records of Diversions, Transport, Releases, and Impoundments." The adopted amendment clarifies in subsection (a) that the transport of water is an activity regulated by the watermaster in his administration of bed and banks authorizations and the execution of his duties.

The adopted amendment to §304.16(a) is also changed from the proposed rule in response to comments received and clarifies that diversion reports must be filed within seven calendar days from the termination of the declaration of intent or other report period. The adopted rule language is changed because the proposed rule did not state whether the requirement is for calendar or work week days.

The adopted amendment to §304.21, Allocation of Available Waters, deletes requirements relative to TWC, §11.028 (Wagstaff Act), which has been repealed, and reletters the subsequent subsections. The adopted amendment also corrects the references to other commission rules by adding a reference to §297.57, Emergency Suspension of Permit Conditions, and deleting the reference to §297.61, Amendments by Executive Director. In addition, the adopted amendment deletes the provision that a failure to comply with a watermaster order is a violation of the TWC. This provision is moved to Subchapter D, §304.32, Violations, because the provision relates to violations and is more properly part of that section.

The adopted amendment to §304.31, General, clarifies that a failure to comply with the commission's rules or the watermaster's or commission orders could result in enforcement proceedings.

The adopted amendment to §304.32, Violations, clarifies that a failure to comply with the commission's rules or a watermaster or commission order could result in enforcement proceedings.

The adopted amendment to §304.33, Enforcement Actions, adds "transport" to paragraph (2) to clarify that the watermaster may take action for a violation of the bed and bank statutes and to incorporate minor editorial changes to ensure the language conforms to the Texas Register requirements.

The adopted amendment to §304.34, Field Citation by Watermaster, incorporates minor editorial changes to ensure the language conforms to the Texas Register requirements. In addition, the adopted amendment to the figure in subsection (d) adds the terms "use" and "transport" to clarify that a violation of the bed and bank statute is a violation subject to a field citation issued by the watermaster.

The adopted amendment to §304.42, Reports, changes the watermaster reporting requirements to the water right holders, from quarterly to annually. This less frequent reporting requirement is sufficient, because the watermaster provides a summary with each authorization when a declaration of intent is made. This summary provides information needed by the water right holders.

The adopted amendment to §304.44, Appointment of an Agent, adds the words "transport" and "water" to the activities regulated by the rule to be consistent with Chapter 297 and TWC, Chapter 11.

The adopted amendment to §304.62, Determination of Assessment Rates, provides specificity regarding the fees that are currently assessed for various uses authorized by statute. The adopted amendment also provides consistency with existing permits use types. Explanatory statements regarding the specified uses are added to provide clarity.

The adopted amendment to §304.63, Assessment of Cost, incorporates minor editorial changes to ensure the language conforms to Texas Register requirements.

FINAL REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the adopted rulemaking in light of the regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that the adopted rules are not subject to §2001.0225, because they do not meet the definition of a "major environmental rule" as defined in the Texas Government Code. A "major environmental rule" is a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state.

The primary purposes of this adopted rulemaking action are: 1) to clarify that Chapter 304 is applicable to all TCEQ Watermaster Programs, including the Concho River Watermaster Program; 2) to clarify the existing fee structure to establish specific rates for currently permitted general uses that were enacted by the legislature; 3) to delete references to the repealed Wagstaff Act; 4) to change the watermaster's reporting frequency to the water right holders from quarterly to annually; 5) to clarify that the watermaster regulates the use of watercourses to transport water; 6) to provide consistency between the commission's rules regulating water rights by changing the definition of return flows in Chapter 304 to that currently found in Chapter 297; 7) to clarify the definition of agent; 8) to clarify that the definition of water division includes any segments of a water division; and 9) to provide consistency in the language used in the commission's other water rights rules and to conform to the standards set out in the Texas Legislative Council Drafting Manual .

Regarding the Concho River, the 79th Legislature enacted House Bill (HB) 2815 creating the Concho River Watermaster Program by adding TWC, Chapter 11, Subchapter K. TWC, §11.561 provides that "{a} provision of {the Water Code} or a rule adopted by the commission that relates to watermasters and does not conflict with the provisions of {subchapter K} applies to the program established under this subchapter." Therefore, since Chapter 304 contains rules adopted by the commission that relate to a watermaster, it is already applicable to the Concho River Watermaster Program to the extent that it does not conflict with HB 2815. Section 304.1 provided that it is "applicable to each water division created by the commission pursuant to the Texas Water Code, §11.325, outside of the Rio Grande Water Division, and to all water rights and matters related to water rights within each such water division . . .." Changing the reference from TWC, §11.325 to TWC, Chapter 11, clarifies that Chapter 304 is applicable to any water division, or watermaster program, other than the Rio Grande Water Division, created under TWC, Chapter 11.

In addition, this rulemaking clarifies existing general assessment fees for agricultural and other specific uses that were added by the legislature as separate water rights and are issued in existing water rights. This adopted rulemaking also deletes references to the Wagstaff Act, originally codified in TWC, §11.028, which was repealed by the legislature in 1997. Therefore, this adopted rulemaking seeks to streamline, clarify, and update existing rules in response to legislative action.

Furthermore, this adopted rulemaking addresses administrative issues concerning the watermaster program and does not address environmental risks or exposures. For example, the adopted rulemaking adds references to "transport" and "watercourses" to clarify that the watermaster regulates the use of watercourses in his division. These authorizations are issued by the commission under §297.16. Once they are issued, the watermaster administers these authorizations within his area. The adopted rulemaking also changes the definition of water division to clarify that the definition also includes any segments of a water division. In addition, the adopted rulemaking provides consistency between the commission's rules on water rights by changing the definition of return flows in Chapter 304 to the definition currently used in Chapter 297. Changes are also adopted to add and correct references to other commission rules and statutes regulating water rights. The adopted rulemaking also makes stylistic changes in conformance with the Texas Legislative Council Drafting Manual and reduces the watermaster's reporting requirements to the water right holders from quarterly to annually. Therefore, this adopted rulemaking does not constitute a major environmental rule, and is not subject to a formal regulatory analysis.

TAKINGS IMPACT ASSESSMENT

The commission evaluated these adopted rules and performed a preliminary assessment of whether Texas Government Code, Chapter 2007 is applicable. The commission's preliminary assessment indicates that the adopted government action has no impact on private real property.

The purpose of this adopted rulemaking is to streamline and clarify the watermaster program and to update existing rules in response to legislative action. In order to achieve this purpose, the commission adopts the following actions: 1) amends the applicability section so that it is clear that Chapter 304 applies to any water division or watermaster program, other than the Rio Grande Water Division created under TWC, Chapter 11; 2) amends the existing fee structure to establish specific rates for currently permitted general uses that were enacted by the legislature; 3) deletes references to the repealed Wagstaff Act; 4) changes the frequency of the watermaster's reporting to the water right holders from quarterly to annually; 5) adds references to "transport" and "watercourse" to clarify that the watermaster administers bed and bank authorizations once issued by the commission; 6) changes the definition of return flows in Chapter 304 to that currently stated in other commission rules to provide consistency in regulating water rights; 7) to clarifies the definition of agent; 8) amends the definition of water division to include segments of a water division; 9) adds references to other commission rules and statutes regulating water rights; and 10) makes other revisions to provide consistency in the language used in the commission's other water rights rules and to conform to the standards set out in the Texas Legislative Council Drafting Manual . These actions do not impact private real property rights.

As defined by Texas Government Code, §2007.002(1), the commission is a "governmental entity" covered by the Texas Private Real Property Rights Preservation Act (the Act) codified in Chapter 2007. This adopted rulemaking is a governmental action to which the Act applies since Texas Government Code, §2007.003(a)(1), makes the Act applicable to "the adoption . . . of a rule . ..." Texas Government Code, §2007.002(4), provides that "{p}rivate real property' means an interest in real property recognized by common law, including a . . . groundwater or surface water right of any kind . . .." However, this adopted rulemaking, if adopted, does not result in a burden or impact on private real property rights, nor restrict or limit any owner's right to such property that exists in the absence of this rulemaking.

Regarding the Concho River Watermaster Program, this adopted rulemaking clarifies that the commission's existing Chapter 304 rules already apply to the program as required by statute. The 79th Legislature enacted HB 2815 and established the Concho River Watermaster Program effective September 1, 2005. Newly enacted TWC, §11.561, states that "{a} provision of {the Water Code} or a rule adopted by the commission that relates to watermasters and does not conflict with the provisions of (Water Code, Chapter 11, subchapter K) applies to the (Concho River Watermaster Program)." This adopted rulemaking clarifies that the existing rules found in this chapter are already applicable to the Concho River Watermaster Program as dictated by HB 2815, as well as any other water division created under TWC, Chapter 11, other than the Rio Grande Water Division. Therefore, these adopted amendments do not affect an owner's private real property in a manner that restricts or limits the owner's right to the property that would otherwise exist in the absence of the rules. The adoption of the amendments to Chapter 304 have no impact on private real property since, by statute, Chapter 304 already applies to the Concho River Watermaster Program if it does not conflict with TWC, Chapter 11, Subchapter K. Also, the changes are administrative in nature and do not affect the actual water right or interbasin use.

Regarding the other adopted changes, the establishment of a fee structure, the deletion of provisions relating to the repealed Wagstaff Act, the addition of references to applicable rules and statutes, the changes in the definitions of water division and return flows, the change in the watermaster reporting to the water right holders from quarterly to annually, and stylistic changes are administrative changes to existing rules and these changes have no impact on private real property since they are administrative in nature. The addition of the terms "transport" and "watercourses" do not affect private real property since bed and banks authorizations are existing authorizations to use watercourses for delivering water down beds and banks as specified in TWC, §11.042. The other adopted changes streamline, clarify, and update the commission's rules as well as provide consistency with the commission's other regulations.

Therefore, since the adopted rulemaking is administrative in nature, it will neither impose a burden nor have an impact on private real property.

Furthermore, promulgation and enforcement of these adopted rules will not result in a statutory or a constitutional taking of private real property. The rulemaking, if adopted, would not restrict or limit the owner's rights to property nor reduce its value by 25% or more beyond that which will otherwise exist in the absence of the regulations. A water right is a private real property right, however, water right holder's rights are regulated under existing statutory law, which this adopted rulemaking does not change.

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM

The commission reviewed the adopted rulemaking and found that the rules are neither identified in the Coastal Coordination Council Act Implementation Rules, 31 TAC §505.11, nor will they affect any action/authorization as identified in §505.11. Therefore, the adopted rulemaking is not subject to the Texas Coastal Management Program.

PUBLIC COMMENT

During the public comment period, which closed on December 12, 2005, the commission received several written comments from Texas Genco, LLC (Texas Genco).

RESPONSE TO COMMENTS

Texas Genco commented that in §304.1 and §304.2, the terms "segment" and "segment of a water division" are not defined, and that criteria for determining a segment should be included in the rule. Texas Genco argued that segments should be defined as all priority water rights in order to protect them and also to protect contract deliveries.

RESPONSE

The commission has made no change to the rules to define "segment of a water division." The purpose of this rule change is to ensure that all possible watermaster programs, other than the Rio Grande, that may be created and administered by the commission are covered by Chapter 304, including those that may be created by the legislature. A watermaster program may not be limited to an entire water division, and may include river basins and segments in or not in a water division.

Texas Genco commented that the term "transport" is used throughout the rule but is not defined.

RESPONSE

The commission agrees with the comment and adds the definition of "Transport" to the definitions in §304.3. Transport is defined as "the discharge, conveyance, and subsequent diversion of water in a watercourse under Texas Water Code, §11.042."

Texas Genco commented that §304.16(a) does not specify that diverters' reports are required within seven business or calendar days, and recommended that the term be calendar days to be consistent throughout the rule.

RESPONSE

The commission agrees with the comment and amends the proposed rule to state that reports must be filed within seven calendar days from the termination of the declaration of intent or other report period.

Texas Genco commented that in §304.16(b), concerning water charged under a declaration, the rule should clarify the phrase "to the extent water is available for appropriation" to distinguish whether the phrase means any amount of flow, whether or not the amount is so low or so high that water cannot physically be pumped with a diverter's facilities.

RESPONSE

The commission has made no change the rule to define "to the extent water is available for appropriation." Determining whether water is available for appropriation is the watermaster's decision made by considering the amount of flow, whether the water is appropriated to someone else, whether the water can actually be used, and possibly other relevant factors. The factors the watermaster can consider should not be limited in this rule.

Texas Genco commented that in §304.16(b)(1), the phrase "within 10%" should be clarified either as the total amount diverted over the whole declaration of intent or as on a daily basis during the declaration of intent.

RESPONSE

The commission disagrees with the comment and has made no change to the rule. The duration of a request for diversion will be in the declaration of intent provided by the water user. Some requests are for total amounts of water diverted over longer periods of time. The total amount diverted for calculation of the penalty is for the period requested.

Texas Genco commented that in §304.16(b)(2), the "penalty rate calculation" is insufficient to dissuade diverters from diverting more than their approved declaration of intent during times of water shortage and recommended that diversions in excess of 110% should be considered a violation of §304.32 and §304.33.

RESPONSE

The commission has made no change to the rule, because it is unnecessary. It is currently a violation to divert water without proper authorization under §304.32(a)(1), which could include taking more water than is authorized by the watermaster.

Texas Genco commented that in §304.16(b)(3), a diverter should not be penalized if their actual diversion is less than 90% of the state amount of the declaration, and recommended exemption from the fees.

RESPONSE

The commission has made no change to the rule to exempt diverters from fees if the actual diversion is less than 90% of the amount stated in the declaration of intent. The watermaster needs to be able to penalize water right holders that don't take all their requested water because when diverters are not taking what they request, the amount available to other diverters is difficult to determine. Additionally, as part of the watermaster's administrative processes, all diverters have the opportunity to adjust their diversion amounts with the watermaster without penalty.

Texas Genco commented that in §304.21, the rule should be modified to say that the watermaster "will" cancel or modify declarations of intent when available flow is not sufficient to meed demands, rather than "may" cancel these declarations.

RESPONSE

The commission disagrees with the comment and has made no change to the rule. Some discretion on the part of the watermaster to consider the facts of each situation is necessary.

Texas Genco asked the commission to clarify if assessments rates apply to all issued water rights including those that have not been used.

RESPONSE

The commission responds that assessments are based on the amount of water authorized to be used in the water right, regardless of whether the water rights have been used. The commission has made no change to the rules because this is clear in the rules.

Texas Genco also commented that in §304.62, the assessment rate factor for "indirect reuse" should be the same as the rate factor for a new municipal or consumptive water right rate (from 0.50 to 1.00).

RESPONSE

The commission disagrees with the comments and responds that not all reuse is for municipal or consumptive use. Additionally, the assessment rate for reuse is in addition to the assessment rate for the underlying use of the water. A high assessment rate for "reuse" is necessary, therefore, the commission has made no change to the rule.

Texas Genco commented that the definition of reuse in proposed §304.62 is not consistent with Chapter 297.

RESPONSE

The commission has made no change to the definition of reuse in §304.62, because it is the correct definition. The commission intends to change the definition of "reuse" in Chapter 297 at a future date to clarify that reuse, as used in the rules, means returning water to a watercourse under TWC, §11.042.

Texas Genco commented that under §304.63, Assessment of Costs, the commission should only charge a reuse fee once for a specified volume of water if the water is transported several times and provided an example where water is assessed for a bed and banks transport, and then assessed later when the water is reused at the reuse rate.

RESPONSE

The commission disagrees with the comment and responds that both assessments are reasonable, because the watercourse is being used for two distinct purposes, transport only and transport for reuse. The example provided by Texas Genco is one which would be assessed for a bed and banks transport, and assessed later when the water is reused at the reuse rate. The commission also notes that the "bed and banks" assessment rate is only 0.05.

Subchapter A. INTRODUCTORY PROVISIONS

Subchapter B. CONCENTRATED ANIMAL FEEDING OPERATIONS