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Signed Into Law
Signed May 28, 2025Effective 2025-05-28
HB1689

Regular Session

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

Government Affairs & Regulatory Compliance Analysis

HB1689: Government Affairs Overview

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.

Rep. Stan Gerdes·House Bill·Regular Session

Moderate
Low Cost
Effective:2025-05-28
Business Impact

Who HB1689 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: moderate

Notable regulatory updates (effective 2025-05-28). Consider how these changes may affect your operations.

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Water

Affected business types:

  • Water utilities
  • Wastewater treatment facilities
  • Municipal water districts
  • Agricultural water users
View all water legislation

Key Operational Considerations

  • 1Interlocal 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.
  • 2Causation Documentation: To trigger the release of these funds for mitigation, there must be a technical link between the groundwater development and the affected well.

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

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HB1689
Relating to the use of certain groundwater export fees collected by a groundwater conservation district.
Moderate Urgency
Unanimous Passage
House Vote144 - 0
YEA
100% in favor144 voting
Senate Vote31 - 0
YEA
100% in favor31 voting
Cost Impact
Low
Effective
2025-05-28
Enforcing Agencies
Groundwater Conservation Districts
Primary Author: Rep. Stan Gerdes
89th Texas Legislature
jdkey.com
01

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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JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Dec 20, 2024
Passed House
Apr 24, 2025
Passed Senate
May 14, 2025
Signed
May 28, 2025
Effective
May 28, 2025
TopicsFees & Other Nontax RevenueFees & Other Nontax Revenue--localSpecial Districts & AuthoritiesSpecial Districts & Authorities--groundwater Conserve Dist.Special Districts & Authorities--water & Utility
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House Authors

Rep. Stan GerdesRepublican · Primary Author

Senate Sponsor

Sen. Lois KolkhorstRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Rep. Stan Gerdes

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Related by Topic

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Quick Reference

Frequently Asked Questions

Common questions about HB1689

Q

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.

Q

Who authored HB1689?

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

Q

When was HB1689 signed into law?

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

Q

Which agencies enforce HB1689?

HB1689 is enforced by Groundwater Conservation Districts (GCDs).

Q

How significant are the changes in HB1689?

The regulatory priority for HB1689 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

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.

Q

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.

Q

What are the key dates for HB1689?

Key dates for HB1689: Effective date is 2025-05-28. Consult with legal counsel regarding applicability.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026