Relating to penalties in certain suits involving a groundwater conservation district; increasing a penalty, the official text

H.B. No. 5560

AN ACT

relating to penalties in certain suits involving a groundwater

conservation district; increasing a penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 36.102, Water Code, is amended by

amending Subsection (b) and adding Subsections (b-1) and (f) to

read as follows:

(b) Except as provided by Subsection (f), the [The] board by

rule may set reasonable civil penalties, including a range of

reasonable civil penalties, that the district may recover from

[against] any person for breach of any rule of the district in an

amount not to exceed $25,000 [$10,000] per day per violation, and

each day of a continuing violation constitutes a separate

violation.

(b-1) In determining the amount of a civil penalty under

this section, the court shall consider:

(1) the nature, circumstances, extent, duration, and

gravity of the violation, with special emphasis on the effect of the

violation on:

(A) groundwater resources;

(B) another person's right to produce

groundwater;

(C) public health and safety; or

(D) other water resources or the environment;

(2) with respect to the alleged violator:

(A) the history and extent of previous

violations;

(B) the degree of culpability, including whether

the violation was attributable to mechanical or electrical failures

and whether the violation could have been reasonably anticipated

and avoided;

(C) the demonstrated good faith, including

actions taken by the alleged violator to rectify the cause of the

violation and to compensate the affected person;

(D) whether there was an economic benefit gained

as a result of the violation and, if so, the amount of the economic

benefit;

(E) the amount necessary to deter future

violations; and

(F) if the alleged violator is a person required

to adopt a drought contingency plan under Section 11.1272 and

overproduction of groundwater is the basis of the alleged

violation, whether the person acted in good faith and exercised

reasonable diligence in implementing and enforcing the terms of the

plan; and

(3) any other matters that justice may require.

(f) In an enforcement action brought by a district against a

person, the court may assess a penalty greater than the maximum

penalty authorized under Subsection (b) if the court determines

that the person gained an economic benefit as a result of the

violation that was greater than the maximum penalty under

Subsection (b). A penalty assessed under this subsection must be in

an amount determined by the court to be necessary and appropriate to

outweigh the economic benefit gained by the person as a result of

the violation and discourage future violations.

SECTION 2. Subchapter D, Chapter 36, Water Code, is amended

by adding Sections 36.1021 and 36.1022 to read as follows:

Sec. 36.1021. DEFERRAL OF PENALTY. (a) A court by order may

allow a person to defer the payment of not more than 50 percent of

the total amount of the civil penalties awarded by the court to a

district for a violation under Section 36.102 on the condition that

the person complies with all provisions for corrective action to

address the violation.

(b) A court order under Subsection (a) must require the

person to spend an amount of money equal to the amount of the civil

penalty deferred by the court to mitigate the consequences of a

violation of a rule of the district or prevent future violations of

a rule of the district.

(c) In determining whether deferral of a civil penalty under

this section is appropriate and the amount, if any, to be deferred,

the court must consider:

(1) the factors used in determining the amount of the

civil penalty under Section 36.102(b-1);

(2) whether the amount of the civil penalty that is not

deferred, when combined with the amount of any attorney's fees

awarded by the court to the district, will at a minimum cover the

costs and expenditures of the district in enforcing its rules

against the person so that the district will be made financially

whole;

(3) the financial position of the person and the

person's ability to reasonably pay the costs associated with the

corrective action under the terms of the court order;

(4) any risks to groundwater resources, another

person's right to produce groundwater, public health and safety, or

other water resources or the environment that would result from a

delay in implementing the corrective action because of the person's

limited financial resources;

(5) any alternatives reasonably available to the

person for the purpose of paying the penalty and any costs

associated with taking the corrective action; and

(6) whether requiring the person to pay the civil

penalty will affect other essential public health and safety

services for which the person is responsible.

(d) If the person seeking deferral of a civil penalty under

this section is a wholesale or retail public water system, the

corrective action for purposes of Subsection (a) may include

capital improvements that benefit the water system in which the

violation occurred, including securing additional sources of water

supply, addressing system water loss, or otherwise addressing water

conservation issues.

(e) The court may require the person to pay the full amount

of the civil penalty under Section 36.102 if the court finds that

the person is not in compliance with a provision of the court order

issued under Subsection (a) of this section.

Sec. 36.1022. RECOVERY OF CIVIL PENALTY BY WATER AND SEWER

UTILITY. (a) A court that has assessed a civil penalty against a

water and sewer utility, as defined by Section 13.002, under

Section 36.102 for violation of a district rule limiting

groundwater production may authorize the utility to recover, in any

manner that is equitable and just, all or part of the civil penalty

from any customers or class of customers responsible for causing

the utility to violate the rule.

(b) The court may allow the recovery of the civil penalty

only if the court finds that:

(1) the utility acted in good faith and exercised

reasonable diligence in implementing and enforcing the terms of the

utility's drought contingency plan required by Section 11.1272; and

(2) the customers from whom the civil penalty will be

recovered continued to violate the provisions of the drought

contingency plan despite the utility's enforcement measures.

(c) The utility may retain a civil penalty recovered under

this section unless the court directs the utility to use the money

for a specific purpose in the interests of justice.

(d) A civil penalty recovered under this section is not a

rate as defined by Section 13.002 and may not be considered revenue

of the utility in a rate proceeding under Chapter 13.

SECTION 3. Section 36.102, Water Code, as amended by this

Act, and Sections 36.1021 and 36.1022, Water Code, as added by this

Act, apply only to a suit involving a groundwater conservation

district that is filed on or after the effective date of this Act. A

suit filed before the effective date of this Act is subject to the

law in effect on the date the suit is filed, and that law is

continued in effect for that purpose.

SECTION 4. This Act takes effect September 1, 2025.

______________________________
______________________________

President of the Senate
Speaker of the House

I certify that H.B. No. 5560 was passed by the House on May 8,

2025, by the following vote: Yeas 144, Nays 3, 2 present, not

voting; and that the House concurred in Senate amendments to H.B.

No. 5560 on May 29, 2025, by the following vote: Yeas 125, Nays 4,

3 present, not voting.

______________________________

Chief Clerk of the House

I certify that H.B. No. 5560 was passed by the Senate, with

amendments, on May 19, 2025, by the following vote: Yeas 28, Nays

3.

______________________________

Secretary of the Senate

APPROVED: __________________

Date

__________________

Governor