The discussion below traces the evolution of various Texas laws addressing remediation and prevention of colonias conditions along the Texas-Mexico border. Every regular session of the Texas Legislature since 1987 has made changes to the laws governing development of land along the border. The emphasis here is on the statutes restricting subdividing, selling, and providing utilities to residential lots. The effects of the statutory changes on enforcement efforts by the Office of the Attorney General (OAG) are briefly summarized. These are highlights only. The individual acts should be reviewed for their numerous details.
The Legislature adopted (through SB 896, Ch. 149, regular session, 70th Leg.) the Local Government Code ("LGC"), consolidating most of the laws regarding subdivision platting into Chapter 212 (municipal regulation) and Chapter 232 (county regulation). City extraterritorial jurisdictions (ETJ's) were defined in Chapter 42 to range from one-half mile for cities with fewer than 5,000 inhabitants up to 5 miles for cities of 100,000 or more. Chapter 242 contained the basic requirements to record a plat: city approval (only) if the land is inside the city limits, both city and county approval for land outside the city but inside its ETJ, and county approval (only) for land outside city ETJ's. If within the ETJ city and county regulations conflict, the more stringent provisions prevail.
Separate legislation (SB 408, Ch. 1102, regular session, 70th Leg.) expanded municipal extraterritorial jurisdictions for plat review and approval purposes only for cities with populations of 5,000 or more in border counties. Instead of the sliding scale ETJ, for plat review and approval such cities were given five-mile ETJ's. (See now LGC § 212.001.) This act also expanded the longstanding statewide prohibition against service to an unplatted lot by a utility owned, distributed, or controlled by the city. The act instituted a system whereby the city issues a certificate if land has been platted or is not required to be platted. Under the expanded prohibition, no water, sewer, electricity, gas, or other utility service could, without the certificate, be provided to a lot by a city, city official, city-owned or -operated utility, or a "public utility." (See now LGC §§ 212.0115 and 212.012.) The act also provided that a city may define and classify divisions of land exempt from obtaining city plat approval. (See now LGC § 212.0045.)
Prior to 1989 the OAG had no direct authority to enforce laws related to development of subdivisions or the sale of lots without utilities or a guarantee of utility service. The OAG did have the indirect authority through the consumer protection laws to sue developers who made misrepresentations in the sale of lots. One older lawsuit involved subdividers who had promised paved roads and sewer service but did not deliver.
In 1989 the Legislature passed SB 2 (Chapter 624, regular session, 71st Leg.), the first major Texas legislation addressing colonias. SB 2 set up the Texas Water Development Board's EDAP funding program, told state agencies to come up with model rules to assure water and sewer service to residential developments, and toughened platting requirements. The bill broadened (statewide) the list of utilities prohibited from providing services to lots in a subdivision not approved by a city. For a county along the border or receiving EDAP funds, the bill added a similar prohibition against providing utility service to lots in a subdivision not approved by a county. Many of the new provisions applied generally only to residential developments with lots of one acre or smaller in counties lying along the border or having low per-capita income and high unemployment. Incidentally, a basic policy underlying the legislation was that the state would spend millions of dollars to address water and sewer infrastructure needs in existing colonias, but there would be strict laws and rules to prevent new colonias (and costly remediation) from happening.
As a result of SB 2, the OAG gained enforcement authority in the following areas:
a) Under Water Code §§ 16.353 and 16.354 the OAG could take criminal and civil (including injunctive and civil penalty) actions for violations of the model rules. The civil penalties ranged from $50 to $1,000 per day per violation, capped at $5,000 per day. Intentional or knowing violation of a model rule became a class B misdemeanor.
b) Under Local Govt. Code §§ 212.0175 and 232.0049, the OAG was granted authority (a) to enforce some new platting requirements (described below) and (b) to ensure that water and sewer facilities are constructed or installed in a subdivision in compliance with the model rules. SB 2 added requirements related to water and sewer service for city or county approval of new subdivisions of residential lots of one acre or less. These new requirements applied only in counties on the border or receiving funding under Subchapter K of Chapter 17 of the Water Code (part of the EDAP program). The provisions required water and sewer for new subdivisions whenever the model rules required them, and allowed the city or the county to require a bond or other financial guarantee for their construction and installation. (See LGC §§ 212.0105 and 212.0106 for cities, and former LGC §§ 232.0035 and 232.0036 for counties.) When water and sewer were being provided, the subdivider was also to describe the facilities on the plat and to specify a date for the operability of the facilities. The act provided for civil penalties ($500 to $1,000) and criminal punishment (class B misdemeanor) for failing to timely provide the described water and sewer facilities. Incidentally, the term "sewer" refers generally in this paper and in the statutes both to on-site sewage facilities (or "OSSF") like septic systems and to centralized wastewater collection and treatment systems.
A number of provisions of SB 2 were effective contingent upon voter approval of a constitutional amendment to provide funding for the EDAP program. Following such approval in November 1989, state agencies developed the model rules. Formally titled "Economically Distressed Areas Program Model Subdivision Rules," they became effective 5/30/90. Within a few months a number of counties and several cities had adopted the model rules (either verbatim or through basically equivalent provisions in their subdivision rules) in order to obtain EDAP funding for water and sewer projects.
To implement the statutory purpose of assuring water and sewer for residential areas, the Model Subdivision Rules impose several requirements on the platting of new subdivisions. Plats must be accompanied by final engineering reports discussing how water and sewer services will be provided, and their costs. All utility systems must meet specified state standards. If water is to be supplied from an existing utility, there must be a contractual guarantee of sufficient water for 30 years. If groundwater is to be used for a subdivision, there must be an adequate supply for 30 years, and it must meet certain water quality standards. Similarly, if sewage will be sent to an existing treatment system, then there must be a contractual commitment to accommodate the total flow for 30 years. If on-site sewage facilities (like septic systems) are to be used, the final engineering report must contain information showing the suitability of the soils. SB 2 gave cities and counties the option to require bonds or other financial guarantees for unbuilt water and sewer infrastructure. The model rules go further: if water and sewer infrastructure is not built when final plat approval is sought, the subdivider must post a bond or other financial guarantee to cover such cost. A shorthand expression of this requirement is "Build it or bond it."
In the early 1990's, the OAG filed several suits containing allegations of violations of the model rules and violations of the statutory requirements related to describing the water and sewer facilities and certifying that they comply with the model rules. Meanwhile, for subdivisions pre-dating these requirements, the OAG began taking actions under the Water Code against subdividers whose water or sewer systems were inadequate. For example, a Webb County developer and one of his real-estate businesses were sued because he was re-building a collapsed makeshift sewage treatment plant not approved by the state. (This lawsuit later precipitated the filing for bankruptcy by Webb County colonias developer Cecil McDonald and D & A Realty, Inc.) A rural water supply company was sued because it was failing to provide adequate drinking water. By joining with counties as plaintiffs, the state was also able to sue subdividers of older never-platted subdivisions and seek remedies available to either the county or the state.
SB 1189 (Chapter 422, regular session, 72nd Leg.) expanded the coverage and closed some loopholes in laws related to preventing colonias. For example, the model rules became applicable to residential developments with lots of five acres or less, rather than to ones with lots of one acre or less. The new "five acres or less" threshold replaced the old "one acre or less" threshold in LGC §§ 212.0105 and 232.0035. SB 1189 added a stipulation that a city or county could grant an exemption from the model rules only if the city or county provided the subdivision with adequate water and sewer. By adding LGC § 232.001(f) [repealed in 1995 with the enactment of HB 1001], another loophole was closed in "affected counties" by requiring county plat approval for any division of land into two or more lots of five acres or less.
SB 1189 did not amend the basic authority of the OAG to enforce colonias-prevention laws. However, SB 1189 brought more subdivisions within the scope of the laws.
HB 2079 (Chapter 648, regular session, 73rd Leg.) increased the potential involvement of the OAG in various enforcement actions. Upon request by the local prosecutor, the OAG could take action to enforce provisions in Health & Safety Code Chapters 341 (including nuisance violations) and 366 (on-site sewage facilities). Through an amendment to LGC § 232.0049 [repealed in 1995 by HB 1001], the attorney general gained power to sue to recover from a subdivider damages adequate to undertake construction or other activity necessary to comply with a county requirement adopted under Chapter 232. HB 2079 also provided that the model rules must provide criteria applicable to tracts that were divided into two or more parts but not properly platted before September 1, 1989. (Such special criteria are included in the TWDB's revised model rules effective February 10, 2000. See 31 TAC § 364.57.)
As a result of HB 2079, the OAG has included damages for non-compliance in the relief prayed for in suits covering violations in the pertinent time frame. The OAG continued filing suits against subdividers who had evaded the law. The office also sued Maverick County for its lax enforcement of the statutes and the model rules. While this suit was pending, the TWDB cut off funding for EDAP projects in the county, because Water Code §§ 16.343(g) and 16.350(a) say a local government must adopt and enforce the model rules to be eligible to participate in the funding program. This suit was eventually settled, and EDAP funding was restored, after the county adopted new subdivision rules (drafted by attorneys for the county and the state) and improved enforcement procedures, including hiring a county engineer to review plats.
HB 1001 (Chapter 979, regular session, 74th Leg.) revamped county regulation of platting in many counties in the border region. Its key feature was the enactment of a new Subchapter B of LGC Chapter 232. Subchapter B contains enhanced platting requirements (including requiring building or bonding to assure water and sewer services), utility connection limitations, advertising and disclosure provisions, and restrictions on the sale of lots (even platted lots) lacking water and sewer. Subchapter B initially applied in counties within 50 miles of the border having high unemployment and low per capita income. For 1995-1998, seventeen counties were covered; for 1998-1999, 19 counties were covered. (Under a 1999 amendment, all 28 counties within 50 miles of the border are covered.) Within the affected counties, the special requirements of Subchapter B applied to subdivisions of four or more lots intended primarily for residential use outside city limits and outside the Chapter 42 ETJ of any municipality. For a subdivision that did not fall under Subchapter B, the more lax provisions of Subchapter A of Chapter 232 governed the county's review and approval of the subdivision plat.
Other legislation, SB 336 (Chapter 994, regular session, 74th Leg.) amended and added Property Code provisions regarding the use of contracts for deeds or other executory contracts for property used or to be used as the purchaser's residence. Enhanced notification requirements were imposed (statewide) before a seller may enforce the remedies of recission or of forfeiture and acceleration. A new subchapter E of Chapter 5 of the Property Code applies in high unemployment and low income counties within 200 miles of the border. It requires enhanced disclosures to purchasers (including in Spanish), annual accounting statements, limits on late fees, and protection of the purchaser's equity. As required by the law, TDHCA has developed a consumer education program on contracts for deeds.
HB 1001 gave the attorney general (as well as district and county attorneys) broad power to enjoin violations or threatened violations of Subchapter B of Chapter 232 (and rules adopted thereunder) and the model rules. (See LGC § 232.037.) Remedies also include requiring that land be platted or replatted, and obtaining substantial civil and criminal penalties against errant subdividers. Under LGC § 232.037(b), the OAG may conduct a criminal prosecution at the request of the district or county attorney. On the other hand, the OAG has no direct authority to enforce Subchapter A of Chapter 232. By amending Water Code § 16.352 and adding Water Code § 16.356, HB 1001 increased the civil penalties for model rule violations and allowed Travis County venue for suits seeking related injunctive relief or civil penalties.
As a result of HB 1001, the OAG focused investigative efforts on detecting (a) attempts to subdivide land without obtaining plat approval, (b) sales of lots without water and sewer, and (c) advertisements lacking the required disclosure information. Because Subchapter B applied only in limited geographic areas, a key element of the OAG investigations has been to determine the location of the land in relation to city limit lines and ETJ's. Lot purchasers have typically been interviewed to ascertain the circumstances of the sale. (For example, by monitoring deed records OAG investigators detected a number of sales of lots lacking water and sewer services. However, purchaser interviews revealed that in many situations HB 1001's prohibition was not applicable because the deed was executed pursuant to a contract for sale entered into before HB 1001 became law.) When an apparent violation has been uncovered, the OAG has sometimes issued a demand letter to a subdivider. Depending upon the response and the nature of the violation, appropriate court action has been taken.
Because of the number of significant changes made by HB 1001, the OAG's enforcement efforts included numerous meetings and workshops in border counties to explain the law to elected officials, citizens, subdividers, real estate agents, city and county planners, and other officials. The office compiled pertinent laws, written explanatory materials, and assisted counties in drafting rules and forms to carry out the laws.
Several bills made mostly minor changes to laws related to subdividing and colonias. Of particular interest to colonias residents, SB 1512 relaxed the prohibitions against providing utilities to lots not platted or lacking water and sewer service. The new hardship exception generally allowed a utility already serving one lot in a subdivision to serve other lots sold before July 1, 1995, on which home construction was begun by May 1, 1997. [The July 1, 1995, cutoff date was changed to Sept. 1, 1995, by an amendment to LGC § 232.029(c)(1) in 1999.] SB 569 closed a potential loophole in HB 1001 so that for gifts of lots to be exempt from the platting requirements in Subchapter B, the gifts must be to close relatives. SB 570 added a new Subchapter C to Chapter 232 of the Local Government Code, applicable to counties eligible for EDAP funding but not subject to Subchapter B. (In 1997 this group included five counties along the border, six counties near the border, and three counties in East Texas. In 1999, this group included 23 counties scattered around the state.) Subchapter C contains enhanced platting requirements for residential subdivisions with lots of five acres or less -- primarily that water and sewer services must be built or financially guaranteed for new plats. As part of a consolidation of TCEQ enforcement authority, SB 1876 repealed the comprehensive model rule enforcement provisions in Water Code §§ 16.352, 16.353, 16.354, and 16.356. In their place were left the more limited enforcement under new Chapter 7 of the Water Code and the piecemeal enforcement under LGC §§ 212.0175, 212.018, 232.035-.037, and 232.080.
The OAG continued to place major emphasis on detecting any new subdivisions that did not comply with plat requirements, any sales of lots lacking water and sewer, and illegal advertising. Monitoring was extended into Subchapter C counties. When violations were detected, efforts were made to assess the basic causes of the problems. The agency discovered that, contrary to the model rules and LGC § 232.027, Hidalgo County was not requiring subdividers to post financial guarantees for unbuilt water and sewer services. As a result a number of recently approved subdivisions had lots where residents had outhouses or had to haul in water or connect to a neighbor's hose. The OAG worked with county officials to revise the county's subdivision rules and procedures. The OAG also sued the developers of three problem subdivisions. Under subsequent settlements, the subdividers agreed to include water connections and septic systems in all future lot sales, and they offered to persons who had already bought lots financing for water meters and septic systems.
The OAG also continued to advise city and county officials in their efforts to implement the complex web of laws designed to prevent the spread of colonias. Whenever requested, the OAG has provided advice to other state agencies, particularly TWDB and TDHCA, on the statutes related to their work with colonias.
SB 1421 made several important changes. It expanded the applicability of the special county platting laws and other requirements in Subchapter B of Chapter 232 of the Local Government Code. Beginning Sept. 1, 1999, Subchapter B applies to any subdivision of two or more lots intended primarily for residential use located anywhere outside city limits in any of the 28 counties having some part within 50 miles of the border. In these counties and in EDAP-eligible counties, commissioners courts may by local option appoint county planning commissions to assist them in carrying out their duties under chapter 232 and other land use, health and safety, or planning laws. These counties may now charge subdividers fees for the costs of inspections to ensure compliance with county subdivision rules adopted under Subchapter B or C, under Water Code § 16.343 (i.e., the model rules), or under other law. To facilitate platting of older unplatted subdivisions, SB 1421 allowed limited variances from some requirements (but not requirements for water and sewer services). The bill created a "hardship" exception to the general prohibition of utility connections to lots not platted or lacking water and sewer; local governments may issue utility certificates based upon availability of water service. The bill also shifted to the TWDB ultimate responsibility for preparing and adopting the model rules. It strengthened enforcement of the model rules by enacting Water Code §§ 16.352 through 16.3545, enhancing provisions repealed in 1997. The bill provided for a state "Colonia Initiatives Coordinator" to help coordinate colonias-related efforts of state and local governments. SB 710 changed the platting trigger for a subdivision to be subject county regulation under Subchapter A of LGC Chapter 232. (This change was in response to the Elgin Bank case.) In border-area and EDAP counties, Subchapter A applies in general only to non-residential subdivisions. In the rest of Texas, Subchapter A applies to most kinds of subdivisions. The new platting trigger for Subchapter A and the exceptions to it are in LGC §§ 232.001 and 232.0015. SB 710 also allows counties (statewide) to adopt requirements for proper handling of drainage within and from new subdivisions.
The OAG continued to focus on the three elements of its colonias-prevention program: education and outreach, compliance investigation, and enforcement litigation.
The OAG presented a series of half-day Border Subdivision Workshops to explain the laws governing platting and selling residential land in border-area counties. Seven workshops, free and open to the public, were held in counties along the border in August 1999. Attorneys and investigators with the OAG also fielded scores of inquiries from persons needing help in applying the laws to particular and peculiar fact situations. OAG investigators continued reviewing and evaluating local compliance. The work included investigating complaints, examining official records, and making site visits to detect problems. Violations of particular concern generally have resulted from one of four situations: (1) subdivisions in which the owner sells lots without obtaining plat approval by the local county and/or city, (2) subdivisions that were approved by a local county or city, even though the plats did not meet statutory or Model Subdivision Rule requirements, (3) sales of lots that do not have both water and sewer (or an on-site sewage facility like a septic system), and (4) advertising that does not disclose the availability of utilities. Investigators have also monitored the practices of local governments and utilities in allowing new utility services to residential lots, and deviations have been called to the attention of local officials. OAG attorneys continued filing lawsuits to enforce the colonias-prevention laws.
Following a process that included considerable public input, the Texas Water Development Board formally adopted revised Model Subdivision Rules, effective February 10, 2000. Although the format was revised and a few updates and changes were made here and there, the basic thrust of the rules was not changed. The revised rules are Chapter 364 of Part 10 of Title 31 of the Texas Administrative Code. They are available at www.sos.state.tx.us/tac by clicking on "TAC Viewer."
During 2000 the OAG held four more workshops to explain the special border-area laws - in El Paso, Del Rio, Rio Grande City, and Uvalde. Compliance investigations resulted in several enforcement lawsuits. Some were against persons who sold lots lacking water and sewer facilities. Other suits involved subdividers who sold lots without obtaining plat approval. In a case from Starr County, the commissioners court failed to require the subdivider to pay for water meters or provide financial guarantees for septic systems when the court approved the plat in 1999. Ultimately the subdivider agreed to pay the state $47,000 in civil penalties and $17,500 in attorney's fees, in addition to providing the required utilities. Another case involved a plat improperly approved in 1997 by Hidalgo County. Among other deficiencies, stormwater drainage was not properly provided for in the subdivision, and the subdividers failed to build or bond for the septic systems. Under an agreed settlement, the subdividers paid $75,000 in civil penalties and $55,000 in attorney's fees. They also must file a revised plat, provide the proper utilities, and fix the drainage problems.
The Texas Legislature made several changes of note. SB 198 strengthened a number of contract for deed safeguards and made them applicable statewide. These requirements apply when the contract for deed involves property that is the residence of the buyer or a close relative of the buyer. The provisions are found in Subchapter D of Chapter 5 of the Property Code. For border counties with 150,000 or more population (El Paso, Webb, Hidalgo, and Cameron), and various urban counties elsewhere, SB 873 granted broad powers to commissioners courts to regulate subdivisions and to require wider rights-of-way, minimum lot frontages, set-backs, etc., outside city limits. These new county powers, codified in Subchapter E of Chapter 232, Local Govt. Code (§§ 232.100-232.107), are similar to the controls that cities can exercise over subdivisions within their extraterritorial jurisdictions (ETJ's). Counties subject to the colonias-prevention laws in Subchapters B and C of LGC Chapter 232 were exempted from HB 1445's requirement that cities and counties work out a one-stop shopping process for subdivision plat review and approval within ETJ areas. HB 3406 provided an opportunity for persons living inside a city's chapter 42 ETJ's on August 31, 1999, to apply for "hardship" utility certificates. On September 1, 1999, the coverage of Subchapter B expanded to include land within city ETJ's as determined under LGC § 42.021. With this expansion, some lots that had been eligible for utilities became ineligible under LGC § 232.029. The 2001 amendments provide an opportunity for these lot owners to obtain utility services if either (1) water service is feasible or (2) a residence is begun by May 1, 2003. Commissioners courts have discretion to grant or deny such requests. Because these lots are within city ETJ's, they must also meet city restrictions on utility connections, which are unchanged. As a practical matter, the 2001 amendments will mainly affect platted lots without electrical service. SB 365 adopted uniform building codes applicable inside city limits (see LGC §§ 214.211-.214.). Except for work begun or agreed to before January 1, 2002, residential construction, alteration, repair, etc., will have to meet the International Residential Code. Electrical work must meet the National Electrical Code. Cities must take action to implement the law before January 1, 2002. SB 5 added Chapter 388 to the Health & Safety Code, under which most new residential construction in Texas, including in rural areas, must comply with the energy efficiency chapter of the International Residential Code. Other construction must comply with the International Energy Conservation Code. SB 936 and SB 1308 strengthened local floodplain management under Water Code §§ 16.311-16.324. Under these changes, political subdivisions (including cities and counties) may adopt comprehensive floodplain management rules that go beyond the requirements of the federal National Flood Insurance Program. Civil and criminal enforcement is strengthened. Reasonable fees may now be charged to cover the local program's cost. HB 2912 and HB 3111 refined state statutes in Chapter 366 of the Health & Safety Code regarding on-site sewage facilities (OSSF) like septic systems. These assorted changes maintain the basic framework under which the TCEQ or its authorized agents (local governments) regulate on-site sewage facilities within the confines of Chapter 366 and the TCEQ's implementing rules. As before, to apply for EDAP funding from the TWDB, a local government must become and remain an authorized agent. Also, the TCEQ adopted a number of changes to its OSSF rules, effective June 13, 2001. The rules are in Chapter 285 of Part 1 of Title 30 of the Texas Administrative Code, available at www.sos.state.tx.us, the website of the Texas Secretary of State, by clicking on "TAC Viewer." Under one change [to 30 TAC § 285.4(b)(2)], the owners of a single-family lot that is too small for an OSSF may instead pipe the sewage to an OSSF on a nearby lot they own. Thereafter, the lots may not be sold separately. A number of colonias-related programs under various state agencies were expanded by SB 312, SB 322, and SB 649. These included (1) an extension of the Owner-Builder Loan Program (Govt. Code §§ 2306.751-.759), (2) a new Colonia Initiatives Advisory Committee (Govt. Code § 2306.590), (3) a new Colonia Model Subdivision Program (Govt. Code §§ 2306.781-786), (4) new outreach to non-border colonias (Govt. Code § 775.002(5)), (5) a new Colonia Self-Help Program (Water Code §§ 15.951-15.959), and (6) newly required training for applicants and recipients of EDAP assistance (Water Code §§ 17.991-.994). These programs are administered mainly by the Texas Department of Housing and Community Affairs or the Texas Water Development Board. The Secretary of State's Office retained its role as the state's colonia initiatives coordinator, with an expanded responsibility for colonias in counties more than 150 miles from the border ("nonborder" colonias). SJR 37 proposed a constitutional amendment (approved by Texas voters on Nov. 6, 2001) to provide $175 million to counties for access roads to connect border colonias with public roads. The funding will be administered by the Texas Transportation Commission under Chapter 1403 of the Government Code, as added by SB 1296. Information on all these bills, including their texts, may be found at www.legis.state.tx.us.
In response to numerous changes in the laws by the Texas Legislature during the 2001 session, the OAG significantly revised its education and outreach materials. The office continued its efforts to inform local governmental officials and the affected public about the special requirements in the border area. As in prior years, the OAG presented workshops (free and open to the public) to explain the laws and distribute outreach materials. In the fall two workshops were held in the Lower Rio Grande Valley, the location of considerable new development and a number of investigations and enforcement cases.
Compliance investigations resulted in more enforcement lawsuits. In a case from Cameron County, a plat had been approved even though the subdivider had not installed on-site sewage facilities (septic systems) or posted a financial guarantee for them. Water was supposed to be provided by individual wells, but the groundwater was of poor quality, even after treatment. Under an agreed judgment, the subdivider paid $22,500 in civil penalties and $23,562 in attorney's fees. The subdivider must also revise the plat and provide the required facilities.