Relating to penalties in certain suits involving a groundwater conservation district; increasing a penalty.

Contracts

• Water Utilities (IOUs/MUDs): You must amend Tariffs and Service Agreements to explicitly allow for the "pass-through" of GCD civil penalties to specific customers who violate Drought Contingency Plans (DCPs), as authorized by Section 36.1022.
• Industrial/Commercial: Update Master Service Agreements (MSAs) with third-party water operators. Indemnity clauses must be expanded to cover the new uncapped "economic benefit" liability if a vendor’s negligence causes a permit breach.

Hiring/Training

• Operations Management: Train facility managers that over-pumping to avoid a production shutdown is no longer a viable financial decision; the "economic benefit" penalty clause allows courts to confiscate profits derived from that production.
• Utility Staff: Staff must be trained to actively enforce Drought Contingency Plans (not just monitor them) to establish the "reasonable diligence" defense required to pass fines to customers.

Reporting & Record-Keeping

• "Cure" Documentation: Establish a protocol to log every dollar and hour spent rectifying a violation immediately upon discovery. This is now a statutory factor courts must consider to mitigate penalties.
• Maintenance Logs: Maintain granular records of meter and pump maintenance. To utilize the "mechanical failure" defense, you must prove the violation was beyond your control and not due to deferred maintenance.

Fees & Costs

• Civil Penalties: Statutory liability increases to a maximum of $25,000 per violation, per day.
• Disgorgement: Courts are now empowered to assess penalties exceeding the $25,000 cap if necessary to offset the economic benefit gained from the violation.
• Insurance: Legal departments must review policies immediately; civil penalties and profit disgorgement are typically uninsurable exclusions, placing this risk directly on the balance sheet.