TITLE 31. NATURAL RESOURCES AND CONSERVATION

PART 10. TEXAS WATER DEVELOPMENT BOARD

CHAPTER 356. GROUNDWATER MANAGEMENT

The Texas Water Development Board (TWDB) adopts 31 Texas Administrative Code (TAC) §§356.32, 356.42, 356.52, and 356.54. The proposal is adopted without changes as published in the April 17, 2026, issue of the Texas Register (51 TexReg 2496). The rules will not be republished.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED AMENDMENT.

The TWDB proposes amendments to Subchapters C. D, and E, 31 TAC Chapter 356, containing the agency's rules related to Groundwater Management. The TWDB proposes to amend the rules to implement relevant provisions of House Bill 2078, 89th Regular Session (HB 2078) and Senate Bill 1583, 89th Regular Session (SB 1583). TWDB is proposing this rulemaking primarily to modernize, update, and clarify rule language to facilitate groundwater management in the state and to clarify requirements for groundwater conservation districts.

HB 2078 amended Chapter 36 of the Water Code by requiring groundwater conservation district representatives within a groundwater management area to review each district's management plan at least once during each five-year planning period. In reviewing management plans, districts in the groundwater management area must consider the degree to which each district is achieving desired future conditions through the implementation of its management plan and rules. Additionally, the districts and district representatives within a groundwater management area are required to adopt and identify interim values for the desired future conditions for each 50-year planning period. This proposed rulemaking implements HB 2078's additional responsibilities of the groundwater conservation district representatives.

HB 2078 amended Chapter 36 of the Water Code by adding additional information that groundwater conservation districts must include in a groundwater management plan. The groundwater management plan must include an explanation in plain language of how the district monitors and tracks desired future conditions and how the district has performed in achieving the desired future conditions of the preceding five-year joint planning period. SB 1583 amended Chapter 36 of the Water Code by requiring groundwater conservation districts to include the most recently approved desired future conditions in the groundwater management plan. This proposed rulemaking implements HB 2078's and SB 1583's additional groundwater management plan requirements.

SB 1583 amended Chapter 36 of the Water Code by clarifying which desired future condition and modeled available groundwater amounts a groundwater conservation district must include in its management plan in the event a petition is filed challenging the reasonableness of a groundwater conservation district's adopted desired future condition. The groundwater conservation district management plan is considered administratively complete by the TWDB Executive Administrator if the plan includes, in addition to the information required by Section 36.1071(a) and (e), the most recently approved desired future conditions, the amount of modeled available groundwater corresponding to those desired future conditions, and a statement on the status of the petition. This applies until a final order is issued or the desired future condition is found to be unreasonable and a new desired future condition is adopted. This proposed rulemaking implements SB 1583's clarification for which desired future condition and modeled available groundwater amounts should be included for an administratively complete groundwater conservation district management plan in the event there is a contested desired future condition.

SB 1583 amended Chapter 36 of the Water Code by requiring a groundwater conservation district to amend the management plan prior to the second anniversary of adopting new desired future conditions. This proposed rulemaking implements SB 1583's required approval for a groundwater conservation district management plan.

SECTION BY SECTION DISCUSSION OF ADOPTED AMENDMENTS.

Section 356.32. Desired Future Conditions Package.

The amendment proposes to add §356.32(b) to implement HB 2078's additional responsibilities of the groundwater conservation district representatives in adopting desired future conditions. An amendment is also proposed to rename §356.32 to §356.32(a) for clarification.

Section 356.42. Petition: Mediation of Issues.

The amendment proposes adding §356.42(e) to implement SB 1583's clarification of management plan requirements for administrative completeness in the event that a desired future condition is challenged for reasonableness.

The amendment proposes adding 356.42(f) to implement SB 1583, which establishes application of the management review process when a desired future condition is challenged.

Section 356.52. Required Content of Management Plan.

The amendment proposes to add §356.52(a)(8) to implement SB 1583's most recently approved desired future conditions requirement for a groundwater conservation district's groundwater management plan. The amendment proposes to add §356.52(a)(9) to implement HB 2078's additional groundwater management plan requirements. Amendments are also proposed for §356.52(a)(6)(A) to account for the addition of proposed criterion and for §356.52(c) to correct an error.

Section 356.54. Approval.

The amendment proposes §356.54(a) to implement SB 1583's requirements for an administratively complete groundwater conservation district management plan, including management plans with petitions challenging the reasonableness of a desired future condition.

The amendment proposes to add §356.54(d) to implement SB 1583's required amended management plan prior to the second anniversary of the adoption of desired future conditions.

REGULATORY IMPACT ANALYSIS DETERMINATION (Texas Government Code §2001.0225)

The TWDB reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code §2001.0225 and determined that the rulemaking is not subject to Texas Government Code §2001.0225, because it does not meet the definition of a "major environmental rule" as defined in the Administrative Procedure Act. A "major environmental rule" is defined as a rule with the specific intent to protect the environment or reduce risks to human health from environmental exposure, a rule that may adversely affect in a material way the economy or a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The intent of the adopted rulemaking is to implement legislation.

Even if the adopted rulemakings were a major environmental rule, Texas Government Code §2001.0225 still would not apply to this rulemaking because Texas Government Code §2001.0225 only applies to a major environmental rule, the result of which is to: (1) exceed a standard set by federal law, unless the rule is specifically required by state law; (2) exceed an express requirement of state law, unless the rule is specifically required by federal law; (3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or (4) adopt a rule solely under the general powers of the agency instead of under a specific state law. This rulemaking does not meet any of these four applicability criteria because it: (1) does not exceed any federal law; (2) does not exceed an express requirement of state law; (3) does not exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; and (4) is not proposed solely under the general powers of the agency, but rather Texas Water Code §§15.001, 16.012, 36.101, 36.1071, 36.1072, 36.1073, 36.108, 36.1083 and 36.1085. Therefore, this rulemaking does not fall under any of the applicability criteria in Texas Government Code §2001.0225.

TAKINGS IMPACT ASSESSMENT (Texas Government Code §2007.043)

The TWDB evaluated this rulemaking and performed an analysis of whether it constitutes a taking under Texas Government Code, Chapter 2007. The specific purpose of this rulemaking is to update and clarify existing rules that are necessary for groundwater management in the state and certain requirements for groundwater conservation districts. The adopted rulemaking would substantially advance this stated purpose by aligning definitions with agency and industry practice and providing greater detail for desired future conditions packages and required elements of groundwater management plans.

The TWDB's analysis indicates that Texas Government Code, Chapter 2007 does not apply to this adopted rulemaking because this is an action that is reasonably taken to fulfill an obligation mandated by state law, which is exempt under Texas Government Code §2007.003(b)(4). The TWDB is the agency that reviewed groundwater conservation management plans for the applicable financial assistance programs.

Nevertheless, the TWDB further evaluated this rulemaking and performed an assessment of whether it constitutes a taking under Texas Government Code Chapter 2007. Promulgation and enforcement of this rulemaking would be neither a statutory nor a constitutional taking of private real property. Specifically, the subject proposed regulation does not affect a landowner's rights in private real property because this rulemaking does not burden, restrict, or limit the owner's right to property and reduce its value by 25% or more beyond that which would otherwise exist in the absence of the regulation. In other words, this rule updates the state's existing rules that facilitate groundwater management without burdening or restricting or limiting the owner's right to property and reducing its value by 25% or more. Therefore, the adopted rulemaking does not constitute a taking under Texas Government Code, Chapter 2007.

PUBLIC COMMENTS (Texas Government Code §2001.033(a)(1))

The TWDB received two public comments, which resulted in no modifications to the proposed language. Belding Farms submitted a comment recommending the groundwater conservation districts be required to disclose efforts to enforce or implement water use and/or permit-required curtailments specifically designed to ensure desired future conditions compliance and protection and preservation of groundwater in the plain language explanation of monitoring and tracking desired future conditions. The TWDB can provide this type of guidance through technical assistance provided to groundwater conservation districts as they draft updates to their management plans. The Greater Edwards Aquifer Alliance submitted a comment supporting TWDB's proposed amendments.

SUBCHAPTER C. SUBMISSION OF DESIRED FUTURE CONDITIONS

STATUTORY AUTHORITY (Texas Government Code §2001.024(a)(3))

The amendment is adopted under the authority of Texas Water Code §6.101, which provides the TWDB with the authority to adopt rules necessary to carry out the powers and duties in the Water Code and other laws of the State, and also under the authority of Texas Water Code Sections 15.001, 16.012, 36.101, 36.1071, 36.1072, 36.1073, 36.108, 36.1083 and 36.1085.

Additionally, this rulemaking is adopted under the authority of Texas Water Code Chapters 15 and 16.

This rulemaking affects Water Code, Chapters 15, 16, and 36.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 24, 2026.

TRD-202603136

Ashley Harden

General Counsel

Texas Water Development Board

Effective date: August 13, 2026

Proposal publication date: April 17, 2026

For further information, please call: (512) 475-1673

SUBCHAPTER D. APPEALING ADOPTION OF DESIRED FUTURE CONDITIONS

STATUTORY AUTHORITY (Texas Government Code §2001.024(a)(3))

The amendment is adopted under the authority of Texas Water Code §6.101, which provides the TWDB with the authority to adopt rules necessary to carry out the powers and duties in the Water Code and other laws of the State, and also under the authority of Texas Water Code Sections 15.001, 16.012, 36.101, 36.1071, 36.1072, 36.1073, 36.108, 36.1083 and 36.1085.

Additionally, this rulemaking is adopted under the authority of Texas Water Code Chapters 15 and 16.

This rulemaking affects Water Code, Chapters 15, 16, and 36.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 24, 2026.

TRD-202603137

Ashley Harden

General Counsel

Texas Water Development Board

Effective date: August 13, 2026

Proposal publication date: April 17, 2026

For further information, please call: (512) 475-1673

SUBCHAPTER E. GROUNDWATER MANAGEMENT PLAN APPROVAL

STATUTORY AUTHORITY (Texas Government Code §2001.024(a)(3))

The amendment is adopted under the authority of Texas Water Code §6.101, which provides the TWDB with the authority to adopt rules necessary to carry out the powers and duties in the Water Code and other laws of the State, and also under the authority of Texas Water Code Sections 15.001, 16.012, 36.101, 36.1071, 36.1072, 36.1073, 36.108, 36.1083 and 36.1085.

Additionally, this rulemaking is adopted under the authority of Texas Water Code Chapters 15 and 16.

This rulemaking affects Water Code, Chapters 15, 16, and 36.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 24, 2026.

TRD-202603138

Ashley Harden

General Counsel

Texas Water Development Board

Effective date: August 13, 2026

Proposal publication date: April 17, 2026

For further information, please call: (512) 475-1673

CHAPTER 358. STATE WATER PLANNING GUIDELINES

SUBCHAPTER B. DATA COLLECTION

The Texas Water Development Board (TWDB) adopts the repeal of 31 Texas Administrative Code §358.6 as part of a reorganization. The proposal is adopted without changes as published in the April 17, 2026, issue of the Texas Register (51 TexReg 2501). The rule will not be republished.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED AMENDMENT.

This rulemaking implements House Bill (HB) 29 from the 89th Texas Legislative Session, codified as Texas Water Code §16.0122. HB 29 created certain new responsibilities for municipally owned utilities that provide potable water through more than 150,000 service connections. This rulemaking covers the portions of Texas Water Code §16.0122 that deal with the Texas Water Development Board's responsibilities.

In a separate filing with the Texas Register, the TWDB adopts new sections within 31 TAC Chapter 358, within a new Subchapter C (relating to Water Loss Audits). With that rulemaking, the TWDB will reorganize the subchapter. The existing text of §358.6, with some amendments, will remain in those new sections.

SECTION BY SECTION DISCUSSION OF ADOPTED AMENDMENTS.

Section 358.6. Water Loss Audits.

TWDB adopts the repeal of this section to renumber the section with adopted changes to the text filed separately in this issue of the Texas Register.

REGULATORY IMPACT ANALYSIS DETERMINATION (Texas Government Code §2001.0225)

The TWDB reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code §2001.0225 and determined that the rulemaking is not subject to Texas Government Code §2001.0225, because it does not meet the definition of a "major environmental rule" as defined in the Administrative Procedure Act. A "major environmental rule" is defined as a rule with the specific intent to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy or a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The intent of the rulemaking is to clarify requirements for TWDB borrowers and other stakeholders by better organizing these rules.

Even if the rule were a major environmental rule, Texas Government Code §2001.0225 still would not apply to this rulemaking because Texas Government Code §2001.0225 only applies to a major environmental rule, the result of which is to: (1) exceed a standard set by federal law, unless the rule is specifically required by state law; (2) exceed an express requirement of state law, unless the rule is specifically required by federal law; (3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or (4) adopt a rule solely under the general powers of the agency instead of under a specific state law. This rulemaking does not meet any of these four applicability criteria because it: (1) does not exceed any federal law; (2) does not exceed an express requirement of state law; (3) does not exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; and (4) is not adopted solely under the general powers of the agency, but rather Texas Water Code §16.0121. Therefore, this rule does not fall under any of the applicability criteria in Texas Government Code §2001.0225.

TAKINGS IMPACT ASSESSMENT (Texas Government Code §2007.043)

The TWDB evaluated this rule and performed an analysis of whether it constitutes a taking under Texas Government Code, Chapter 2007. The specific purpose of this rule is to clarify requirements for TWDB borrowers and other stakeholders. The rule would substantially advance this stated purpose by reorganizing the rules in an easier to read manner.

The TWDB's analysis indicates that Texas Government Code, Chapter 2007 does not apply to this rule because this is an action that is reasonably taken to fulfill an obligation mandated by state law, which is exempt under Texas Government Code §2007.003(b)(4). The TWDB is the agency that implements certain provisions related to water loss audits and validations included in HB 29.

Nevertheless, the TWDB further evaluated this rule and performed an assessment of whether it constitutes a taking under Texas Government Code Chapter 2007. Promulgation and enforcement of this rule would be neither a statutory nor a constitutional taking of private real property. Specifically, the subject rule does not affect a landowner's rights in private real property because this rulemaking does not burden, restrict, or limit the owner's right to property and reduce its value by 25% or more beyond that which would otherwise exist in the absence of the rule. In other words, this rule repeals certain sections for renumbering. Therefore, the rule does not constitute a taking under Texas Government Code, Chapter 2007.

PUBLIC COMMENTS (Texas Government Code §2001.033(a)(1))

The comment period ended on May 18, 2026. No comments were received on this repeal. Comments were received on the associated proposed amendments and will be addressed in that rulemaking filed elsewhere in this issue of the Texas Register.

STATUTORY AUTHORITY (Texas Government Code §2001.033(a)(2))

The repeal is adopted under the authority of Texas Water Code §6.101, which provides the TWDB with the authority to adopt rules necessary to carry out the powers and duties in the Water Code and other laws of the State, and also under the authority of Texas Water Code §16.0121.

This rulemaking affects Water Code, Chapter 16.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 23, 2026.

TRD-202603129

Ashley Harden

General Counsel

Texas Water Development Board

Effective date: August 12, 2026

Proposal publication date: April 17, 2026

For further information, please call: (512) 475-1673

SUBCHAPTER C. WATER LOSS AUDITS

The Texas Water Development Board (TWDB) adopts 31 Texas Administrative Code §§358.10 - 358.15. Sections 358.10 - 358.12 and 358.15 are adopted with changes to the proposed text as published in the April 17, 2026, issue of the Texas Register (51 TexReg 2502) and will be republished. Sections 385.13 and 358.14 are adopted without changes to the proposed text and will not be republished.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED AMENDMENT.

This rulemaking implements House Bill (HB) 29 from the 89th Texas Legislative Session, codified as Texas Water Code §16.0122. HB 29 created certain new responsibilities for municipally owned utilities that provide potable water through more than 150,000 service connections. This rulemaking covers the portions of Texas Water Code §16.0122 that deal with the TWDB's responsibilities.

In a separate filing with the Texas Register, the TWDB adopts a repeal within 31 TAC Chapter 358. With this rulemaking, the TWDB will reorganize that chapter and add a new subchapter. The existing text of §358.6, with some amendments, will remain in the new sections adopted in this rulemaking.

SECTION BY SECTION DISCUSSION OF ADOPTED AMENDMENTS.

Subchapter C. Water Loss Audits.

This adoption adds a new subchapter within chapter 358 to better organize the chapter.

Section 358.10 Definitions.

The TWDB adopts the definitions for the subchapter for ease of reading. All but one of these definitions were previously included in old §358.6. The definitions are reordered alphabetically. This adoption adds one new defined term in subsection (6) for "Large Municipally Owned Utilities." As some requirements from HB 29 only apply to certain utilities, the TWDB adopts a defined term for "large municipally owned utilities" to cover the applicability of those statutory requirements. This term will be defined as "A municipally owned utility, as defined by Texas Water Code §13.002, that provides potable water through more than 150,000 service connections," which directly implements the language of HB 29.

Pursuant to public comment, the TWDB also amends the definition of "Executive Administrator" to include "or a designated representative," which is consistent with TWDB's other rules. Pursuant to public comment, the TWDB amends the definition of "validation" with non-substantive changes for clarity purposes.

Section 358.11. Water Loss Audits.

This adoption moves previously numbered §358.6 to new §358.11. This adoption moves the defined terms to a new definitions section. The TWDB moves the provisions related to water loss audit validations, water loss thresholds, and technical assistance to separate sections within the same chapter.

This adoption updates the language within new §358.11 to correct cross references for the provisions that the TWDB moved. Pursuant to public comment, the rulemaking removes a duplicate reference to "water loss audits" for clarity purposes. This rulemaking does not include any other changes to the text of previously numbered §358.6.

Section 358.12. Water Loss Audit Validations.

This adoption moves previously numbered §358.6(b)(5) to its own new section. The TWDB will extend the deadline for water loss audit validations from 3 months to 180 days to better align with HB 29. This adoption adds the requirements from HB 29 to this rule text. This adoption also updates internal cross references and adds clarifying language. New subsection (b) within this new section reflects the new requirements from HB 29. Pursuant to public comment, the TWDB changes "will be required" to "must" throughout this section for clarity purposes. The rulemaking also makes other non-substantive changes for clarity purposes, pursuant to public comment. The TWDB received a public comment requesting a change to the reference to annual water loss audits. To avoid confusion, the adoption uses the statutory language from HB 29 to reference annual water loss audit requirements.

Section 358.13. Water Loss Thresholds.

This adoption moves previously numbered §358.6(e) and (f) to their own new section related to water loss thresholds. The only language changes are to change the reference to "total water loss" to reference "real or apparent water loss," which matches agency practice and to update internal cross-references based on renumbering.

Section 358.14. Water Loss Audit Technical Assistance.

This adoption moves previously numbered §358.6(g) and (h) to their own new section related to water loss technical assistance. This adoption does not include any changes to the language.

Section 358.15. Water Loss Mitigation Plan.

This adoption adds new §358.15 to include a new requirement for water loss mitigation plans from HB 29. The TWDB received a public comment requesting a change to the reference to annual water loss audits. To avoid confusion, the adoption uses the statutory language from HB 29 to reference annual water loss audit requirements.

REGULATORY IMPACT ANALYSIS DETERMINATION (Texas Government Code §2001.0225)

The TWDB reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code §2001.0225 and determined that the rulemaking is not subject to Texas Government Code §2001.0225, because it does not meet the definition of a "major environmental rule" as defined in the Administrative Procedure Act. A "major environmental rule" is defined as a rule with the specific intent to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy or a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The intent of the rulemaking is to clarify requirements for certain municipally owned utilities and encourage better data and analysis related to water loss.

Even if the rule were a major environmental rule, Texas Government Code §2001.0225 still would not apply to this rulemaking because Texas Government Code §2001.0225 only applies to a major environmental rule, the result of which is to: (1) exceed a standard set by federal law, unless the rule is specifically required by state law; (2) exceed an express requirement of state law, unless the rule is specifically required by federal law; (3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or (4) adopt a rule solely under the general powers of the agency instead of under a specific state law. This rulemaking does not meet any of these four applicability criteria because it: (1) does not exceed any federal law; (2) does not exceed an express requirement of state law; (3) does not exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; and (4) is not adopted solely under the general powers of the agency, but rather Texas Water Code §16.0121. Therefore, this rule does not fall under any of the applicability criteria in Texas Government Code §2001.0225.

TAKINGS IMPACT ASSESSMENT (Texas Government Code §2007.043)

The TWDB evaluated this rule and performed an analysis of whether it constitutes a taking under Texas Government Code, Chapter 2007. The specific purpose of this rule is to clarify requirements for certain municipally owned utilities and encourage better data and analysis related to water loss. The rule would substantially advance this stated purpose by reorganizing the subchapter in a clearer way and delineating responsibilities and duties for different utilities.

The TWDB's analysis indicates that Texas Government Code, Chapter 2007 does not apply to this rule because this is an action that is reasonably taken to fulfill an obligation mandated by state law, which is exempt under Texas Government Code §2007.003(b)(4). The TWDB is the agency that receives water loss audits, receives and conducts certain water loss audit validations, establishes water loss thresholds, and receives and reviews water conservation plans.

Nevertheless, the TWDB further evaluated this rule and performed an assessment of whether it constitutes a taking under Texas Government Code Chapter 2007. Promulgation and enforcement of this rule would be neither a statutory nor a constitutional taking of private real property. Specifically, the subject rule does not affect a landowner's rights in private real property because this rulemaking does not burden, restrict, or limit the owner's right to property and reduce its value by 25% or more beyond that which would otherwise exist in the absence of the rule. In other words, this rule implements legislation that requires certain municipally owned water utilities to conduct water loss audit validations and develop water loss mitigation plans. Therefore, the rule does not constitute a taking under Texas Government Code, Chapter 2007.

PUBLIC COMMENTS (Texas Government Code §2001.033(a)(1))

The TWDB received three public comments, which resulted in some modifications to the proposed language. The remaining suggested changes were not made to avoid repeating statue in administrative rules, stay in bounds with statute, and keep terms broad. The public comment period for this rulemaking ended on May 18, 2026.

The Greater Edwards Aquifer Alliance is supportive of the rulemaking and suggested no changes. The Sierra Club Lone Star Chapter is also supportive of the rules and appreciates the transparency of the TWDB by publishing the water loss data in the water loss dashboard. The Sierra Club would like the five requirements for mitigation plans to be specifically listed in rules, and for future mitigation plans to clearly differentiate between real and apparent water loss efforts. The National Wildlife Federation provided several specific text changes to the rules for clarity.

The following is a compilation of the comments received including a response to each.

Section 358.10

Comment:

The National Wildlife Federation commented to include "executive administrator's staff" in the definition of Executive Administrator.

Response:

The TWDB added "designated representative" to the definition and aligned the language with that used in other TWDB's administrative rules.

Comment:

The National Wildlife Federation commented to add "among other potential actions" to the mitigation definition to clarify that their other type of mitigation activities from the three listed.

Response:

The TWDB acknowledges the comment. No changes were made to the rules in response because "may include" suggests the list is not exhaustive.

Comment:

The National Wildlife Federation commented to modify the definition of validation to indicate "applying appropriate methodology."

Response:

The TWDB made the modification to the rules.

Section 358.11

Comment:

The National Wildlife Federation commented to reference "paragraph (1) or (2)" to determine the schedule of when to undertake and file an audit and delete the use of "water loss audit" twice.

Response:

The TWDB acknowledges the comment and will delete the duplication of water loss audit but will specify who needs to file an audit instead of referencing it.

Comment:

The National Wildlife Federation commented on specifying a timeframe for renewing their water loss audit training to ensure familiarity with audit methodologies.

Response:

The TWDB acknowledges the comment. No changes were made to the rules in response because the agency does not have the authority to impose more than statue.

Comment:

The National Wildlife Federation commented on indicating the missing or incomplete audit to avoid a utility skipping multiple cycles of audits without any impact on eligibility for financial assistance.

Response:

The TWDB acknowledges the comment. No changes were made to the rules in response because the current rules allow the ability to require the delinquent and/or future audit depending on where we are in the reporting cycle.

Section 358.12

Comment:

The National Wildlife Federation commented on changing certain words or phrases in the water loss audit validation requirements to make the language more straightforward.

Response:

The TWDB made those changes to the rules.

Comment:

The National Wildlife Federation commented on deleting a qualifying statement in the large municipally owned utilities requirements to make the language more straightforward.

Response:

The TWDB made those changes to the rules.

Section 358.15

Comment:

The Sierra Club Lone Star Chapter commented that §358.15. Water Loss Mitigation Plans, "could be expanded to list the requirements of the Water Loss Mitigation Plan found in HB 29 itself, which would avoid any confusion."

Response:

The TWDB acknowledges the comment. No changes were made to the rules in response, to avoid repeating plan requirements in administrative rules that already exist in statue.

STATUTORY AUTHORITY (Texas Government Code §2001.033(a)(2))

The amendment is adopted under the authority of Texas Water Code §6.101, which provides the TWDB with the authority to adopt rules necessary to carry out the powers and duties in the Water Code and other laws of the State, and also under the authority of Water Code §16.0121 and §16.0122.

This rulemaking affects Texas Water Code, Chapter 16.

§358.10. Definitions.

Unless otherwise indicated, in this subchapter the following terms shall have the meanings assigned.

(1) Allowed apparent loss--A unique number for allowable apparent loss calculated for each utility.

(2) Annual real loss--A unique number calculated for each utility based on the utility's real loss on an annualized basis.

(3) Apparent loss--Unauthorized consumption, meter inaccuracy, billing adjustments, and waivers.

(4) Average system operating pressure--System operating pressure in pounds per square inch calculated using a weighted average approach as identified in the American Water Works Association M36 Manual.

(5) Executive Administrator--The executive administrator of the board or a designated representative.

(6) Large Municipally Owned Utility--A municipally owned utility, as defined by Texas Water Code §13.002, that provides potable water through more than 150,000 service connections.

(7) Mitigation--An action or actions taken by a retail public utility to reduce the amount of total water loss in a system. Mitigation may include a detailed water loss assessment, pipe or meter replacement, or addition or improvement of monitoring devices to detect water loss.

(8) Real loss--Loss from main breaks and leaks, storage tank overflows, customer service line breaks, and line leaks.

(9) Retail public utility or utility--A retail public utility as defined by Texas Water Code §13.002.

(10) Service connection density--The number of a retail public utility's connections on a per mile basis.

(11) Total water loss--The sum of a utility's real loss and apparent loss.

(12) Validation--The process of examining water loss audit inputs to identify and correct inaccuracies in water loss audit data and of applying appropriate methodology to evaluate and communicate the uncertainty inherent in water loss audit data.

§358.11. Water Loss Audits.

(a) A retail public utility that provides potable water shall perform and file with the executive administrator a water loss audit computing the utility's system water loss during the preceding calendar year, unless a different 12-month period is allowed by the executive administrator. The water loss audit may be submitted electronically.

(1) Audit required annually. The utility must file the water loss audit with the executive administrator annually by May 1st if the utility:

(A) has more than 3,300 connections; or

(B) is receiving financial assistance from the board, regardless of the number of connections. A retail public utility is receiving financial assistance from the board if it has an outstanding loan, loan forgiveness agreement, or grant agreement from the board.

(2) Audit required every five years. The utility must file the water loss audit with the executive administrator by May 1, 2016, and every five years thereafter by May 1st if the utility has 3,300 or fewer connections and is not receiving financial assistance from the board.

(3) The water loss audit must be performed in accordance with methodologies developed by the executive administrator based on the population served by the utility and taking into consideration the financial feasibility of performing the water loss audit, population density in the service area, the retail public utility's source of water supply, the mean income of the service population, and any other factors determined by the executive administrator. The executive administrator will provide the necessary forms and methodologies to the retail public utility.

(4) A water loss audit must be performed by a person who has completed water loss audit training developed by the executive administrator. The executive administrator will make such training available without charge on the agency website and may also provide such training in person or by video.

(b) The executive administrator shall determine if the water loss audit is administratively complete. A water loss audit is administratively complete if all required responses are provided, the audit is completed by a person who has been trained to conduct water loss auditing as described in subsection (a)(4) of this section, and the audit has been validated as described in §358.12 of this subchapter (relating to Water Loss Audit Validations). In the event the executive administrator determines that a retail public utility's water loss audit is incomplete, the executive administrator shall notify the utility.

(c) A retail public utility that provides potable water that fails to submit a water loss audit or that fails to correct a water loss audit that is not administratively complete within the timeframe provided by the executive administrator is ineligible for financial assistance for water supply projects under Texas Water Code, Chapter 15, Subchapters C, D, E, F, G, H, J, O, Q, and R; Chapter 16, Subchapters E and F; and Chapter 17, Subchapters D, I, K, and L. The retail public utility will remain ineligible for financial assistance until a complete water loss audit has been filed with and accepted by the executive administrator.

(d) The executive administrator shall publicly post on the board's official website a summary of:

(1) the information included in the water audits required by Texas Water Code §16.0121(b) and §16.0121(b-1) according to category of retail public utility and according to regional water planning area;

(2) the measures taken by retail public utilities to reduce water loss; and

(3) a list of those retail public utilities receiving technical assistance as established under §358.14 of this subchapter (relating to Water Loss Technical Assistance), including details related to use of the board's financial assistance to mitigate a retail public utility's total water loss.

§358.12. Water Loss Audit Validations.

(a) A retail public utility that provides potable water required to submit a water loss audit annually as described in §358.11(a)(1)(B) of this subchapter (relating to Water Loss Audits) or that is applying for financial assistance must have its most current water loss audit validated within 180 days of submittal or prior to consideration of a request for financial assistance from the board, whichever is earlier, in accordance with TWDB's validation guidance. The executive administrator will validate the submitted water loss audit in consultation with the retail public utility. Alternatively, the utility may elect to have the water loss audit validated by a person other than the executive administrator. Should a water loss audit be validated by a person other than the executive administrator, validation must follow TWDB's validation guidelines and be performed by a person other than the person submitting the water loss audit, who has completed water loss audit validation training and is certified to conduct such validation.

(b) A large municipally owned utility that has filed an annual water audit under Texas Water Code §16.0121 must have its most current water loss audit for the current reporting year validated within 180 days of submittal. The validation must be conducted by someone other than the executive administrator. Validation must follow TWDB's validation guidelines and be performed by a person other than the person submitting the water loss audit, who has completed water loss audit validation training and is certified to conduct such validation. A validation conducted under this subsection can be used to satisfy the requirements of subsection (a) of this section if done according to the deadlines in subsection (a) of this section.

§358.15. Water Loss Mitigation Plans.

A large municipally owned utility that has filed an annual water audit under Texas Water Code §16.0121 must develop and submit to the board a water loss mitigation plan, that meets the requirements of Texas Water Code §16.0122, not later than the first anniversary of the date the audit was filed.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 24, 2026.

TRD-202603134

Ashley Harden

General Counsel

Texas Water Development Board

Effective date: August 13, 2026

Proposal publication date: April 17, 2026

For further information, please call: (512) 475-1673

CHAPTER 363. FINANCIAL ASSISTANCE PROGRAMS

SUBCHAPTER A. GENERAL PROVISIONS