Takeaways from the 89th Lege: Regional solutions for water
Key Takeaways:
- Despite the Legislature’s preference for regionalization, Texas has over 10,000 drinking water and wastewater utilities, according to TCEQ data.
- Fragmentation within the water sector contributes to inefficiencies.
- The Legislature approved several bills this session that remove regulatory hurdles to regionalization and create new pathways to regional solutions.
The Texas Legislature has expressed a strong preference for the regionalization of water and wastewater service. Any reader of the Texas Water Code will find that the Legislature frequently prioritizes regional solutions for different aspects of state water policy. This applies to project funding, permitting, and even water supply planning.
The Legislature’s wisdom here reflects that regional solutions contribute to greater water sector efficiency. Regional solutions provide opportunities for efficient water supply use, cost-effective rate structures, smarter workforce utilization, and technological innovation.
Despite the Legislature’s policy preference within the Water Code, Texas still has over 10,000 drinking water and wastewater utilities, according to Texas Commission on Environmental Quality data. This fragmentation contributes to inefficiencies in water management.
Still, the Legislature passed several bills this session that build on the state’s policy preference for regional solutions. These bills create new opportunities for regional solutions and remove regulatory barriers to regionalization. Here’s a breakdown of what happened.
A New Framework for Regional Solutions
Collaboration is a feature of regionalization. Senate Bill 1169 by state Sen. Adam Hinojosa, R-Corpus Christi, creates a new framework for drinking water and wastewater utilities to work together under a public utility agency. Under this new law, different utilities can work together to form a public utility agency to finance, develop, and operate regional water projects.
These changes in Texas law are modeled on Florida statutes creating a better legal framework for regional solutions within the water sector. This model has worked toward providing regional solutions for different communities — including small and rural systems — in central Florida.
Eliminating Regulatory Disincentives
In 2023, the Legislature approved a measure removing a regulatory disincentive to the regionalization of water and wastewater service. Before 2023, water utilities were reluctant to incorporate their distressed neighbors into a regional system because the noncompliance record of the distressed utility would transfer to the absorbing utility.
The 2023 measure fixed this problem, in part, by providing “safe harbor” protection to certain utilities that absorb distressed neighbors provided there is a compliance agreement in place to fix the distressed system’s problems.
This year, the Legislature approved SB 565 by state Sen. Charles Perry, R-Lubbock, to expand the classes of entities eligible to receive “safe harbor” protection if they incorporate a distressed neighbor into a regional system. This change broadens the opportunity for more regional solutions in Texas.
Faster Consolidation of Failing Systems
Another bill passed this session will work to expedite the transfer of failing utilities into healthier systems. SB 740 by Perry requires that the Public Utility Commission adopt a process to expedite an application for the acquisition of a water or wastewater utility under receivership, supervision, or temporary management by a qualified utility, including cities, counties, water supply or sewer corporations, or a water district or authority.
This change allows for the consolidation of distressed water utilities into healthier, regional systems, enabling the potentially quicker resolution of problems.