An outhouse, commonly referred to as a privy in the Texas Statutes, is a type of toilet without plumbing in a small building separated from a main structure. Instead of being connected to a sewer or septic system, an outhouse sits over a pit.
In an outhouse however, bacteria that thrive in oxygen break down the waste, with help from other natural processes. Eventually the pit fills, is covered with dirt and the outhouse is relocated.
Under Texas law, an outhouse may not be built within 75 feet of a drinking water well or a human habitation other than the residence to which the privy belongs, without approval from local health authorities. An outhouse also may not be built over an abandoned well or a stream. For more regulations on outhouses, consult the Texas Statutes. Pertinent information can be found here