PROVISION OR CONVERSION OF PROPORTIONATE WATER RIGHTS BY DISTRICT

(a) Not later than the second anniversary of the date the municipal water supplier files a petition under Section 49.503: (1) a district shall provide the municipal water supplier with the proportionate water rights described by Section 49.505 from the district's existing water rights; or (2) a district shall, if the district does not have sufficient existing water rights: (A) apply for appropriate amendments to the district's water rights under commission rules to convert the proportionate water rights from irrigation use to municipal use with municipal priority of allocation; and (B) provide to the municipal water supplier the converted rights described by Section 49.505. (b) The district may continue to use the irrigation use water for district purposes until: (1) the commission approves the amendment to the district's water rights; or (2) the water is otherwise provided to the municipal water supplier. (c) A district that applies for appropriate amendments under Subsection (a)(2) shall provide the municipal water supplier with an estimate of the district's reasonable costs for the administrative proceedings. The district is not required to begin the proceedings until the municipal water supplier deposits the amount of the estimate with the district. The municipal water supplier shall pay the district any reasonable costs that exceed the estimate. The district shall refund the balance of the deposit if the actual cost is less than the estimate.