Relating to the provision of financial assistance by the Texas Water Development Board for certain projects.
LowStandard timeline
Low Cost
Effective:2025-09-01
Enforcing Agencies
Texas Water Development Board (TWDB)
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: September 1, 2025
Compliance Deadline:Immediate for Planning Cycles. While the law is effective in 2025, Capital Improvement Plans (CIPs) and feasibility studies for the FY2026 funding cycle must be adjusted now to incorporate "capture and reuse" components to qualify for these funds.
Agency Rulemaking: TWDB must update its Intended Use Plans (IUPs) and financial assistance application guidance. Expect draft guidance in Q2/Q3 2025 defining the technical thresholds for what constitutes a valid "water supply component" in a flood project.
Immediate Action Plan
1.Audit Capital Improvement Plans (CIPs): Immediately review all planned drainage projects for FY2026-2028. Identify any project where a retention/treatment component can be added to qualify for this new funding bucket.
2.Secure Off-Take Agreements: If you are a Drainage District, approach local municipalities now to draft contingent agreements to purchase any water captured by future projects. This "guaranteed buyer" will be critical for loan approval.
3.Update Feasibility Models: Direct engineering teams to remove "historical water use" constraints from feasibility models for these specific projects, as the bill explicitly prohibits TWDB from requiring this data for non-retail applicants.
4.Monitor TWDB Agenda: Assign a compliance officer to track TWDB work sessions in early 2025 regarding the implementation of SB1967 to catch the definition of "eligible water supply component."
Operational Changes Required
Contracts
Wholesale Water Supply Agreements: Drainage districts generally lack retail customers. To monetize the captured water, Districts must execute contingent Wholesale Agreements or Memoranda of Understanding (MOUs) with municipal utilities or industrial users *before* applying for funding.
Joint Venture (JV) Agreements: Construction and engineering contracts must be restructured. Firms specializing in flood control (civil/structural) must partner with firms specializing in water quality (process/treatment) to bid effectively on these dual-purpose projects.
Performance Guarantees: Contracts must now include dual-performance metrics: volumetric retention (flood control) and output quality/quantity (supply).
Hiring/Training
Engineering Pivot: Design teams must be retrained to shift focus from "divert and discharge" to "capture, treat, and store."
Grant Writing Strategy: Grant writers must be trained to utilize the new statutory exemptions. Narratives must explicitly state the project utilizes Section 3 eligible sources (floodwater, stormwater, agricultural runoff) to bypass historical usage data requirements.
Reporting & Record-Keeping
Source Classification: Applicants must document and classify the water source under the new Section 3 definitions. Misclassification (e.g., labeling "agricultural runoff" as "surface water" without proper distinction) may delay funding or trigger TCEQ treatment scrutiny.
Water Audits: Retail public utilities partnering with drainage districts must ensure their Section 16.0121 Water Audits are current with TWDB. The bill amends prioritization criteria (Section 2), making audit compliance a gatekeeper for this specific funding stream.
Fees & Costs
Feasibility Study Costs: Expect a 10-15% increase in upfront engineering costs for feasibility studies, as they must now model treatment viability and yield projections for stormwater, rather than simple hydraulic flow.
Strategic Ambiguities & Considerations
The "Supply Component" Threshold: The statute does not define the minimum ratio of "water supply" required to qualify a flood project. It is unclear if a project that captures 1% of floodwater qualifies for the same funding as one that captures 50%. Watch TWDB rulemaking closely for a "minimum yield" requirement.
TCEQ vs. TWDB Standards: While TWDB provides the money, TCEQ regulates the water quality. The bill allows for "agricultural runoff" reuse. The regulatory standards for treating ag-runoff to potable or non-potable standards are complex. There is a risk of funding approval (TWDB) followed by permitting gridlock (TCEQ) if quality standards are not aligned early.
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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.
In 2019, the 86th Texas Legislature established the Texas Flood Infrastructure Fund (FIF), which provides financial support to communities for the planning, design, construction of drainage, flood mitigation, and flood control projects. Administered by the Texas Water Development Board (TWDB), FIF provides financial assistance to political subdivisions (cities, counties, or state-established districts or authorities) in the form of grants and zero-interest loans.
Hidalgo County Drainage District No. 1 (HCDD1) is actively developing the Delta Reclamation Project (Delta Project), a transformative initiative to reclaim water from its extensive network of man-made drainage systems. This effort stems from the unique challenges faced by the region, including recurrent flooding, non-absorbent soils, flat topography, and significant distances from natural outfalls. Once complete, the Delta Project would be a multi-purpose project that will repurpose water from daily drainage runoff and turning it into a new water source for potable drinking water and provide flood mitigation from sister detention ponds that are being proposed. Currently, most existing TWDB programs are not well-suited for the Delta Project. TWDB feedback indicated that the Delta Project either did not meet eligibility criteria or would not rank competitively for funding under these programs.
S.B. 1967 amends Section 15.531 of the Water Code to make projects like the Delta Project eligible for funding under FIF. The bill expands the definition of "flood project" to include multi-purpose flood mitigation projects. These projects must control, divert, capture, or impound floodwater, stormwater, agricultural runoff water, or treated wastewater effluent and treat and distribute the water to create an additional water supply source.
As proposed, S.B. 1967 amends current law relating to the projects eligible for financial assistance from the flood infrastructure fund.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 15.531(2), Water Code, as follows:
(2) Provides that "flood project" means a drainage, flood mitigation, or flood control project, including construction of multi-purpose flood mitigation and drainage infrastructure projects that control, divert, capture, or impound floodwater, stormwater, agricultural runoff water, or treated wastewater effluent and treat and distribute the water for the purpose of creating an additional source of water supply. Makes nonsubstantive changes.
SB1967 fundamentally alters Texas water infrastructure financing by authorizing the Texas Water Development Board (TWDB) to fund water supply projects for drainage districts without requiring a Certificate of Convenience and Necessity (CCN) or historical retail data. This legislation creates a new asset class of "Dual-Purpose Infrastructure" (Flood Mitigation + Water Supply), effectively monetizing stormwater and agricultural runoff for special districts and the engineering firms that support them. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: Immediate for Planning Cycles.
Q
Who authored SB1967?
SB1967 was authored by Texas Senator Juan Hinojosa during the Regular Session.
Q
When was SB1967 signed into law?
SB1967 was signed into law by Governor Greg Abbott on May 20, 2025.
Q
Which agencies enforce SB1967?
SB1967 is enforced by Texas Water Development Board (TWDB).
Q
How urgent is compliance with SB1967?
The compliance urgency for SB1967 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of SB1967?
The cost impact of SB1967 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does SB1967 address?
SB1967 addresses topics including disaster preparedness & relief, water, water--development, water--general and floods.
Legislative data provided by LegiScanLast updated: November 25, 2025
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