Texas legislature limits pipeline fees for developers in Rio Grande Valley

The Senate Committee on Water, Agriculture, and Rural Affairs convened on May 5, 2025, to discuss critical legislation aimed at regulating pipeline construction fees imposed by water districts in Texas. The primary focus of the meeting was a bill designed to prevent excessive charges that have been a burden for developers in Hidalgo, Cameron, and Willoughby Counties.

The bill, introduced as a response to Senate Bill 21 from 2021, seeks to extend protections to real estate developers who are often responsible for extending water and sewer pipelines for new housing and commercial developments. Previously, these developers were not included in the fee limitations established for retail public utilities, leading to arbitrary and inflated fees that significantly increased the cost of housing and infrastructure in rapidly growing areas.

Key provisions of the bill include defining a developer as anyone who subdivides land or requests more than two water or sewer service connections on a single contiguous tract. It prohibits water districts from charging pipeline construction fees that exceed the actual, reasonable, and documented costs incurred for necessary legal, engineering, and administrative tasks, as well as construction oversight and infrastructure repairs.

During the discussions, it was noted that while the original bill allowed developers to challenge what they deemed unduly burdensome construction requirements, this mechanism was removed in the committee substitute. This change was made in response to concerns from the Texas Irrigation Council, aiming to preserve the discretion of irrigation districts regarding technical construction standards while still preventing profit-driven fees.

The committee emphasized the importance of addressing these issues, particularly in the context of the River Valley, which is experiencing rapid growth and development. The meeting concluded with a commitment to advancing the bill, which aims to create a more equitable environment for developers and ultimately support the housing needs of the region.