The Texas Legislature created its first special districts in the 1890s to facilitate navigation and irrigation. During the 1920s and 1930s, Texas created river authorities to facilitate water supply projects and electricity generation projects. Other special districts deal with flood control, water quality, subsidence, groundwater regulation, and emergency services. The laws concerning these districts are generally found in the Texas Water Code, Title 4.
MUDs and most other water districts start off as privately funded development and cannot be created without receiving many approvals. To start, water districts are created by an act of the Texas Legislature or a petition to the Texas Commission of Environmental Quality (TCEQ). Water districts then need approval from the city with control over the ETJ, the TCEQ (again), and the Office of the Texas Attorney General (OTAG). Texas Water Code, Chapter 54 covers MUDs, which have proved the most dynamic water district.