ELIGIBLE COUNTIES AND MUNICIPALITIES TO ADOPT RULES.

(a) A county or municipality that applies for or receives funds or financial assistance under Section 15.407 of this code or Subchapter K, Chapter 17, of this code must adopt and enforce the model rules developed under Section 16.343 of this code to be eligible to participate in this program. The county or municipality by order or ordinance shall adopt and enter the model rules in the minutes of a meeting of its governing body and shall publish notice of that action in a newspaper with general circulation in the county or municipality. A municipality is eligible to participate in this program only if the county in which the project is located adopts and enforces the model rules.

(b) Rules adopted by the commissioners court under this section must apply to all the unincorporated area of the county.

(c) A municipality may adopt rules relating to water supply and sewer services within its corporate boundaries and extraterritorial jurisdiction that are more strict than those prepared under Section 16.343 of this code.

(d) A county or municipality that receives funds or financial assistance under Section 15.407 of this code or Subchapter K, Chapter 17, of this code may grant an exemption for a subdivision from the requirements of the model rules only if:

(1) the county or municipality supplies the subdivision with water supply and sewer services that meet the standards of the model rules; or

(2) the subdivision:

(A) is located within a county subject to Subchapter G, Chapter 232, Local Government Code; and

(B) involves four or fewer lots that:

(i) front an existing street that meets the standards adopted by the county or municipality and does not require the creation of any new street; and

(ii) may connect to an existing water supply and sewer service located within 50 feet of each lot in the subdivision that meets the standards of the model rules and does not require the extension of water or sewer facilities.