JD Key Consulting Logo
Signed Into Law
Signed May 20, 2025Effective 2025-09-01
SB1967

Regular Session

Relating to the provision of financial assistance by the Texas Water Development Board for certain projects.

Government Affairs & Regulatory Compliance Analysis

SB1967: Government Affairs Overview

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.

Sen. Juan Hinojosa·Senate Bill·Regular Session

Low
Low Cost
Effective:2025-09-01
Business Impact

Who SB1967 Affects

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

Regulatory Priority: low

Standard regulatory changes (effective 2025-09-01). Review during normal business planning.

💧

Water

Affected business types:

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

Key Operational Considerations

  • 1Performance Guarantees: Contracts must now include dual-performance metrics: volumetric retention (flood control) and output quality/quantity (supply).
  • 2Engineering Pivot: Design teams must be retrained to shift focus from "divert and discharge" to "capture, treat, and store."

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

Need Government Relations Support?

JD Key Consulting provides government affairs and regulatory strategy services. We help businesses navigate Texas agencies, understand legislative impacts, and advocate for their interests.

Need Help Navigating This Legislation?

JD Key Consulting provides strategic guidance on Texas regulatory compliance and legislative impact for your business.

SB1967
Low
Relating to the provision of financial assistance by the Texas Water Development Board for certain projects.
Low Compliance Urgency
Requires routine attention
Cost Impact
Low
Effective
2025-09-01
Enforcing Agencies
TWDB
Primary Author: Sen. Juan Hinojosa
89th Texas Legislature
jdkey.com
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.

Need Compliance Guidance on This Legislation?

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.

Schedule a Consultation

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.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 5, 2025
Passed Senate
Apr 10, 2025
Passed House
May 2, 2025
Signed
May 20, 2025
Effective
Sep 1, 2025
TopicsDisaster Preparedness & ReliefWaterWater--developmentWater--generalFloodsSpecial Districts & AuthoritiesSpecial Districts & Authorities--miscellaneousState FinancesState Finances--management & ControlUtilitiesUtilities--water & SewerWater Development Board, Texas
03

Senate Authors

Sen. Juan HinojosaDemocrat · Primary Author
Joint Authors
Coauthors (2)

House Sponsors

Rep. Armando MartinezDemocrat · Primary Sponsor
Joint Sponsors

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

Explore more bills from this author and on related topics

More from Sen. Juan Hinojosa

View all bills by Sen. Juan Hinojosa

Related by Topic

View more Disaster Preparedness & Relief legislation
Quick Reference

Frequently Asked Questions

Common questions about SB1967

Q

What does Texas SB1967 do?

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.

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 significant are the changes in SB1967?

The regulatory priority for SB1967 is rated as "low". Businesses and organizations should review the legislation to understand potential impacts.

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.

Q

What are the key dates for SB1967?

Key dates for SB1967: Effective date is 2025-09-01. Consult with legal counsel regarding applicability.

Q

Which Texas businesses are affected by SB1967?

SB1967 primarily affects utility companies and energy providers. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

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