HB5560

HB5560 raises the ordinary ceiling for civil penalties recoverable by a groundwater conservation district for violating its rules from $10,000 to $25,000 per day per violation. Each day of a continuing violation remains separate. The district board may set reasonable penalties or a reasonable range by rule; the maximum is not an automatic charge. In a district enforcement action, a court may go above the ordinary ceiling if the violator’s economic benefit exceeded it, setting an amount necessary and appropriate to outweigh that benefit and discourage future violations. These are civil penalties, not new criminal sentences. Final law, Section 1.

Courts must consider the violation’s nature, extent, duration and seriousness, especially effects on groundwater, others’ pumping rights, public health and safety, other waters and the environment. They must also consider previous violations, blameworthiness—including avoidable mechanical or electrical failures—good-faith correction and compensation, economic benefit, deterrence and other matters justice requires. For overproduction by a person required to have a drought contingency plan, the court must consider good faith and reasonable diligence in implementing and enforcing it. Final law, new 36.102(b-1).

A court may conditionally defer payment of up to 50% of the civil penalties awarded to the district. The person must comply with corrective-action requirements and spend an amount equal to the deferred penalty on mitigating the violation or preventing future violations. The court must consider the penalty factors, whether the nondeferred amount plus awarded attorney’s fees would cover the district’s enforcement costs, the person’s finances, risks from delaying corrective action, other payment options and effects on essential public health/safety services. For wholesale or retail public water systems, corrective action may include new water sources, reducing system losses or conservation improvements. Noncompliance can lead the court to require the full penalty. This is not an unconditional 50% discount. Final law, new 36.1021.

For a water and sewer utility as defined in Water Code 13.002, a court may authorize equitable recovery of some or all of an overproduction penalty from customers or customer classes responsible for the violation. The court must find both that the utility diligently and in good faith implemented/enforced its drought plan and that those customers kept violating it despite enforcement. The utility may retain recovered money unless the court directs a particular use. The recovery is not a utility rate and cannot be treated as utility revenue in a Chapter 13 rate proceeding. Final law, new 36.1022.

That customer-recovery power is not a blanket authority for every public water supplier to pass fines to every customer. Section 13.002(23)’s definition generally excludes municipal corporations, public utility agencies, water-supply/sewer-service corporations and political subdivisions other than an affected county. The broader corrective-action provision for public water systems is distinct from this narrower recovery provision. Referenced utility definition; final law.

The new provisions apply only to suits involving a groundwater conservation district filed on or after September 1, 2025. Earlier-filed suits remain under prior law. The trigger is filing date, not simply when a judgment occurs. The governor signed the act June 20, 2025. Final law, Sections 3–4; official history.