Q
What does Texas SB971 do?
SB 971 resolves a statutory conflict by repealing the broader definition of "rural political subdivision" (Section 15. 001(14), added by S. B.
Signed Into Law
Signed June 20, 2025Effective 2025-09-01
SB971
Regular Session
Relating to the definition of a rural political subdivision for purposes of the Texas Water Assistance Program.
Government Affairs & Regulatory Compliance Analysis
SB971: Government Affairs Overview
SB 971 resolves a statutory conflict by repealing the broader definition of "rural political subdivision" (Section 15. 001(14), added by S. B.
Sen. Kevin Sparks·Senate Bill·Regular Session
LowStandard timeline
Low Cost
Effective:2025-09-01
Enforcing Agencies
Business Impact
Who SB971 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.
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Water
Affected business types:
- Water utilities
- Wastewater treatment facilities
- Municipal water districts
- Agricultural water users
Key Operational Considerations
- 1Demographic Substantiation: Applicants must curate specific data sets (Decennial Census or most recent American Community Survey) that prove the entity meets the surviving definition.
Estimated Cost Impact
lowMinimal cost impact anticipated.
Enforcing Agencies
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SB971
LowRelating to the definition of a rural political subdivision for purposes of the Texas Water Assistance Program.
Low Compliance Urgency
Requires routine attention
Cost Impact
Low
Effective
2025-09-01Enforcing Agencies
Texas Water Development Board
Primary Author: Sen. Kevin Sparks
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. Entities currently preparing applications for the upcoming fiscal cycle must utilize the surviving definition (H.B. 3582) to ensure eligibility does not lapse mid-process.
- Agency Rulemaking: The TWDB is expected to update program guidance documents and Intended Use Plans (IUPs) in Q3 2025 to reflect the statutory cleanup. Watch for "Program Information Memorandum" updates regarding eligibility calculations.
Immediate Action Plan
- 1. Audit Eligibility: Immediately compare your service area demographics against the H.B. 3582 definition of "rural political subdivision."
- 2. Review Pending Applications: Identify any active loan or grant applications that relied on the now-repealed Section 15.001(14) and assess the viability of these applications post-September 1.
- 3. Update Financial Models: If eligibility is at risk, run pro forma financial models using market-rate interest assumptions to determine project feasibility without state subsidies.
- 4. Contact TWDB: For multi-phase projects, request written confirmation from your TWDB project manager regarding how the change in definition applies to future funding tranches.
Operational Changes Required
Contracts
- Financing Contingencies: Review all development and infrastructure contracts that rely on state-subsidized financing. If a project loses "rural" status, it may no longer qualify for low-interest loans or principal forgiveness.
- Vendor Agreements: Amend scopes of work for grant writers and engineering firms to mandate eligibility verification under the surviving statute before billable hours are incurred on application drafting.
Hiring/Training
- Grant Teams: Staff responsible for TWDB applications must be retrained to stop using the S.B. 469 definition. They must now strictly apply the population caps and Metropolitan Statistical Area (MSA) exclusions found in the remaining statute.
Reporting & Record-Keeping
- Demographic Substantiation: Applicants must curate specific data sets (Decennial Census or most recent American Community Survey) that prove the entity meets the surviving definition.
- Legal Opinions: In-house counsel should generate an internal memo confirming the entity’s status under the single controlling definition to support future bond counsel opinions.
Fees & Costs
- Cost of Capital: While there are no new regulatory fees, entities that lose "rural" status will be forced into market-rate financing. This could result in a significant increase in debt service costs for planned infrastructure projects.
Strategic Ambiguities & Considerations
- Pipeline Applications: The law does not explicitly grandfather applications pending as of September 1, 2025. There is a regulatory risk that the TWDB may reject applications that were valid when submitted but invalid upon the effective date of the repeal.
- Data Source Discretion: The surviving definition relies on population thresholds. It remains within TWDB discretion to determine which specific data source (e.g., 2020 Census vs. 2024 Estimates) is dispositive for entities hovering near the population cap.
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Schedule a ConsultationInformation 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
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Senate Authors
Coauthors (2)
House Sponsor
Fiscal NoteView Original
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Related by Topic
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- HB2890Relating to an interstate compact for the liquefied natural gas industry.
- HB4630Relating to the regulation of artesian water wells by the Texas Commission on Environmental Quality.
- HJR7Proposing a constitutional amendment to dedicate a portion of the revenue derived from state sales and use taxes to the Texas water fund and to provide for the allocation and use of that revenue.
Quick Reference
Frequently Asked Questions
Common questions about SB971
Q
Who authored SB971?
SB971 was authored by Texas Senator Kevin Sparks during the Regular Session.
Q
When was SB971 signed into law?
SB971 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce SB971?
SB971 is enforced by Texas Water Development Board.
Q
How significant are the changes in SB971?
The regulatory priority for SB971 is rated as "low". Businesses and organizations should review the legislation to understand potential impacts.
Q
What is the cost impact of SB971?
The cost impact of SB971 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does SB971 address?
SB971 addresses topics including economic & industrial development, economic & industrial development--general, political subdivisions, water and water--development.
Q
What are the key dates for SB971?
Key dates for SB971: Effective date is 2025-09-01. Consult with legal counsel regarding applicability.
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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