HB1689

Regular Session

Relating to the use of certain groundwater export fees collected by a groundwater conservation district.

ModeratePlan for compliance

Low Cost

Effective:2025-05-28

Enforcing Agencies

Groundwater Conservation Districts (GCDs)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: May 28, 2025 (Immediate effect due to supermajority vote).
Compliance Deadline: Immediate. The statute applies retroactively to revenue collected from export fee increases on or after January 1, 2024.
Agency Rulemaking: While no state-level rulemaking is mandated, individual GCDs must amend their Management Plans and Rules to authorize these specific out-of-district expenditures. Expect a "regulatory gray zone" of 3-6 months while GCD boards update their bylaws.

Immediate Action Plan

1. Audit Fee Payments: Calculate the total amount paid in "export fee increases" since January 1, 2024. Confirm with your GCD that this specific sum is segregated and available for mitigation use.
2. Map Vulnerabilities: Identify any third-party wells near your extraction sites that cross district boundaries.
3. Force the Contract: Send a formal letter to your GCD Board of Directors requesting the immediate execution of Interlocal Contracts with all adjacent districts to operationalize HB1689.
4. Monitor Rulemaking: Attend upcoming GCD board meetings to influence the definition of "significantly affected" to ensure it aligns with hydrogeological reality rather than political pressure.

Operational Changes Required

Contracts

Interlocal Agreements (Chapter 791): This is the critical operational hurdle. A GCD cannot expend funds on an out-of-district well without a signed Interlocal Contract with the neighboring district.
Action: If your operations are near a district boundary, you must formally request that your permitting GCD executes a standing Interlocal Contract with the adjacent district to ensure your fees can be used to mitigate potential claims against you.

Hiring/Training

Accounting & Finance: Staff must segregate revenue streams. Funds derived from export fee increases (post-Jan 1, 2024) must be tracked separately from general operating funds to ensure they are available for the specific mitigation purposes authorized by Section 36.122.

Reporting & Record-Keeping

Causation Documentation: To trigger the release of these funds for mitigation, there must be a technical link between the groundwater development and the affected well.
Audit Trail: Exporters should require annual reports from the GCD detailing that the "increase" portion of their export fees is being held in reserve for mitigation, alternative water supply development, or aquifer science, rather than being absorbed into general administrative overhead.

Fees & Costs

Fee Utilization: This bill does not mandate a fee increase, but it strictly regulates the *spending* of revenue from increases implemented after Jan 1, 2024.
Cost Mitigation: Effectively utilized, this law reduces the "soft costs" of doing business (litigation defense, settlement payouts) by shifting the financial burden of well mitigation to the GCD, funded by the fees you are already paying.

Strategic Ambiguities & Considerations

"Significantly Affected": The statute authorizes spending on wells "significantly affected" by groundwater development but fails to define the technical threshold for "significant." GCDs will define this via local rulemaking. Watch for definitions that set the bar too low (triggering unnecessary payouts) or too high (rendering the protection useless).
"Maintain Operability": It is unclear if funds can be used to *upgrade* an affected well to a higher standard or merely restore it to its previous state. This distinction will impact how quickly the mitigation fund is depleted.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsFees & Other Nontax Revenue Fees & Other Nontax Revenue--local Special Districts & Authorities Special Districts & Authorities--groundwater Conserve Dist.Special Districts & Authorities--water & Utility

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

H.B. 1689

By: Gerdes

Natural Resources

Committee Report (Unamended)

BACKGROUND AND PURPOSE

Last session, the legislature enacted H.B. 3059, which authorized groundwater conservation districts (GCDs) to use funds obtained from certain fees to maintain the operability of wells significantly affected by groundwater development. The bill author has informed the committee that, while the updated fee structure and usage has allowed GCDs more flexibility in mitigation within their own jurisdictions, the impacts of large-scale groundwater production and export projects can extend beyond the permitting district's boundaries. Further, current law does not clarify whether GCDs have the ability to use shared funds to manage impacts of wells located on shared district borders. H.B. 1689 seeks to address this issue by authorizing a GCD to use funds obtained from certain authorized export fees for the purpose of maintaining the operability of wells located outside of the district if the GCD enters into an interlocal contract with the other district for that purpose.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

H.B. 1689 amends the Water Code to specify that the wells significantly affected by groundwater development for which a groundwater conservation district may use funds obtained from certain authorized export fee increases to maintain their operability include such wells located outside the district. The bill conditions a groundwater conservation district's use of such funds to maintain the operability of wells significantly affected by groundwater development that are located in another groundwater conservation district on the district entering into an interlocal contract under the Interlocal Cooperation Act with the other district authorizing the funds to be used for that purpose.

EFFECTIVE DATE

September 1, 2025.

House Authors

Rep. Stan GerdesRepublican · Primary Author

Senate Sponsor

Sen. Lois KolkhorstRepublican · Primary Sponsor

Bill Text(with markup)

H.B. No. 1689

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the use of certain groundwater export fees collected by
	a groundwater conservation district.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 36.207, Water Code, is amended by
	amending Subsection (b) and adding Subsection (c) to read as
	follows:
	(b) A district may use funds obtained from the amount that
	an export fee is increased under Section 36.122(e-1) on or after
	January 1, 2024, only for costs related to assessing and addressing
	impacts associated with groundwater development, including:
	(1) maintaining operability of wells significantly
	affected by groundwater development, including wells located
	outside the district;
	(2) developing or distributing alternative water
	supplies; and
	(3) conducting aquifer monitoring, data collection,
	and aquifer science.
	(c) A district may use funds described by Subsection (b) to
	maintain the operability of wells described by Subsection (b)(1)
	that are located in another district only if the district enters
	into an interlocal contract under Chapter 791, Government Code,
	with the other district authorizing the funds to be used for that
	purpose.
	SECTION 2. This Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 25, 2025

TO:	Honorable Cody Harris, Chair, House Committee on Natural Resources

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB1689 by Gerdes (Relating to the use of certain groundwater export fees collected by a groundwater conservation district.), As Introduced

No fiscal implication to the State is anticipated.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.

Source Agencies:

LBB Staff:

JMc, TUf, BC, CWi

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Frequently Asked Questions

Common questions about HB1689

What does Texas HB1689 do?

HB1689 immediately expands the permissible use of revenue generated from groundwater export fee increases to include the mitigation of wells located outside a Groundwater Conservation District's (GCD) boundaries. This legislation allows exporters to leverage their fee payments to offset cross-jurisdictional liability for aquifer drawdown, provided the exporting GCD executes an interlocal contract with the neighboring district. Implementation Timeline Effective Date: May 28, 2025 (Immediate effect due to supermajority vote).

Who authored HB1689?

HB1689 was authored by Texas Representative Stan Gerdes during the Regular Session.

When was HB1689 signed into law?

HB1689 was signed into law by Governor Greg Abbott on May 28, 2025.

Which agencies enforce HB1689?

HB1689 is enforced by Groundwater Conservation Districts (GCDs).

How urgent is compliance with HB1689?

The compliance urgency for HB1689 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB1689?

The cost impact of HB1689 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does HB1689 address?

HB1689 addresses topics including fees & other nontax revenue, fees & other nontax revenue--local, special districts & authorities, special districts & authorities--groundwater conserve dist. and special districts & authorities--water & utility.

Legislative data provided by LegiScanLast updated: November 25, 2025

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