Bill Text: TX SB1769 | 2021-2022 | 87th Legislature | Introduced

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Bill Title: Relating to the authorization of dual certification of convenience and necessity for water and sewer service in incorporated or annexed areas.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2021-03-26 - Referred to Local Government [SB1769 Detail]

Download: Texas-2021-SB1769-Introduced.html

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87R14221 TYPED
By: Hinojosa S.B. No. 1769

A BILL TO BE ENTITLED
AN ACT
relating to the authorization of dual certification of convenience
and necessity for water and sewer service in incorporated or
annexed areas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 13, Water Code, is amended by adding
Section 13.2552 to read as follows:
Sec. 13.2552. DUAL CERTIFICATION IN INCORPORATED OR ANNEXED
AREAS. (a) This section applies only to a municipality:
(1) that is located entirely in a county:
(A) with a population of more than 500,000 that
is served by a county elections administrator; and
(B) that does not contain a municipality with a
population of more than 150,000; and
(C) that is a municipality with a population
greater than 125,000 that is located in a county that borders the
United Mexican States.
(b) In the event that an area is incorporated or annexed by a
municipality, either before or after the effective date of this
section, the municipality shall provide written notice to any
retail public utility that provides water or sewer service to all or
part of the area pursuant to a certificate of convenience and
necessity that the area may be served by a municipally owned
utility, by a franchised utility, or by the retail public utility.
The notice shall indicate which area, are parts thereof, will be
served by a municipally owned utility. In this section, the phrase
"franchised utility" shall mean a retail public utility that has
been granted a franchise by a municipality to provide water or sewer
service inside municipal boundaries. The notice may provide for
single or dual certification of all or part of the area. The
municipality and retail public utility may enter into an agreement
for the purchase of facilities or property, and for such other or
additional terms that the parties may agree on. If a franchised
utility is to serve the area, the franchised utility shall also be a
party to the agreement. The notice and executed agreement, if any,
shall be filed with the utility commission, and the utility
commission, on receipt of the notice or agreement, shall
incorporate the terms of the notice or agreement into the
respective certificates of convenience and necessity of the parties
to the agreement.
(c) If the notice or agreement filed with the public utility
commission in accordance with subsection (b) above is a notice
filed to grant single certification to the municipally owned water
or sewer utility or to a franchised utility, the utility commission
shall fix a time and place for a hearing limited to the
determination of the monetary amount that is adequate and just to
compensate the retail public utility for property rendered useless
or valueless pursuant to section (d) and give notice of the hearing
to the municipality and franchised utility, if any, and notice of
the application and hearing to the retail public utility.
(d) The utility commission shall grant single or dual
certification to the municipality as described in the notice
required by subsection (b). The utility commission shall also
determine whether single certification as noticed by the
municipality would result in property of a retail public utility
being rendered useless or valueless to the retail public utility,
and shall determine in its order the monetary amount that is
adequate and just to compensate the retail public utility for such
property. If the municipality in its notice has requested the
transfer of specified property of the retail public utility to the
municipality or to a franchised utility, the utility commission
shall also determine in its order the adequate and just
compensation to be paid for such property pursuant to the
provisions of this section, including an award for damages to
property remaining in the ownership of the retail public utility
after single certification. The order of the utility commission
shall not be effective to transfer property. A transfer of property
may only be obtained under this section by a court judgment rendered
pursuant to Subsection (e) or (f). The grant of single
certification by the utility commission shall go into effect on the
date the municipality or franchised utility, as the case may be,
pays adequate and just compensation pursuant to court order, or
pays an amount into the registry of the court or to the retail
public utility under Subsection (g). If the court judgment provides
that the retail public utility is not entitled to any compensation,
the grant of single certification shall go into effect when the
court judgment becomes final. The municipality or franchised
utility must provide to each customer of the retail public utility
being acquired an individual written notice within 60 days after
the effective date for the transfer specified in the court
judgment. The notice must clearly advise the customer of the
identity of the new service provider, the reason for the transfer,
the rates to be charged by the new service provider, and the
effective date of those rates.
(e) In the event the final order of the utility commission
is not appealed within 30 days, the municipality may request the
district court of Travis County to enter a judgment consistent with
the order of the utility commission. In such event, the court shall
render a judgment that:
(1) transfers to the municipally owned utility or
franchised utility title to property to be transferred to the
municipally owned utility or franchised utility as delineated by
the utility commission's final order and property determined by the
utility commission to be rendered useless or valueless by the
granting of single certification; and
(2) orders payment to the retail public utility of
adequate and just compensation for the property as determined by
the utility commission in its final order.
(f) Any party that is aggrieved by a final order of the
utility commission under this section may file an appeal with the
district court of Travis County within 30 days after the order
becomes final. The hearing in such an appeal before the district
court shall be by trial de novo on all issues. After the hearing, if
the court determines that the municipally owned utility or
franchised utility is entitled to single certification under the
provisions of this section, the court shall enter a judgment that:
(1) transfers to the municipally owned utility or
franchised utility title to property requested by the municipality
to be transferred to the municipally owned utility or franchised
utility and located within the singly certificated area and
property determined by the court or jury to be rendered useless or
valueless by the granting of single certification; and
(2) orders payment in accordance with Subsection (h)
to the retail public utility of adequate and just compensation for
the property transferred and for the property damaged as determined
by the court or jury.
(g) Transfer of property shall be effective on the date the
judgment becomes final. However, after the judgment of the court is
entered, the municipality or franchised utility may take possession
of condemned property pending appeal if the municipality or
franchised utility pays the retail public utility or pays into the
registry of the court, subject to withdrawal by the retail public
utility, the amount, if any, established in the court's judgment as
just and adequate compensation. To provide security in the event an
appellate court, or the trial court in a new trial or on remand,
awards compensation in excess of the original award, the
municipality or franchised utility, as the case may be, shall
deposit in the registry of the court an additional sum in the amount
of the award, or a surety bond in the same amount issued by a surety
company qualified to do business in this state, conditioned to
secure the payment of an award of damages in excess of the original
award of the trial court. On application by the municipality or
franchised utility, the court shall order that funds deposited in
the registry of the court be deposited in an interest-bearing
account, and that interest accruing prior to withdrawal of the
award by the retail public utility be paid to the municipality or to
the franchised utility. In the event the municipally owned utility
or franchised utility takes possession of property or provides
utility service in the singly certificated area pending appeal, and
a court in a final judgment in an appeal under this section holds
that the grant of single certification was in error, the retail
public utility is entitled to seek compensation for any damages
sustained by it in accordance with Subsection (h) of this section.
(h) For the purpose of implementing this section, the value
of real property owned and utilized by the retail public utility for
its facilities shall be determined according to the standards set
forth in Chapter 21, Property Code, governing actions in eminent
domain; the value of personal property shall be determined
according to the factors in this subsection. The factors ensuring
that the compensation to a retail public utility is just and
adequate, shall, at a minimum, include: impact on the existing
indebtedness of the retail public utility and its ability to repay
that debt, the value of the service facilities of the retail public
utility located within the area in question, the amount of any
expenditures for planning, design, or construction of service
facilities outside the incorporated or annexed area that are
allocable to service to the area in question, the amount of the
retail public utility's contractual obligations allocable to the
area in question, any demonstrated impairment of service or
increase of cost to consumers of the retail public utility
remaining after the single certification, the impact on future
revenues lost from existing customers, necessary and reasonable
legal expenses and professional fees, factors relevant to
maintaining the current financial integrity of the retail public
utility, and other relevant factors.
(h-1) The utility commission shall adopt rules governing
the evaluation of the factors to be considered in determining the
monetary compensation under Subsection (h). The utility commission
by rule shall adopt procedures to ensure that the total
compensation to be paid to a retail public utility under Subsection
(h) is determined not later than the 90th calendar day after the
date on which the utility commission determines that the
municipality's application is administratively complete.
(i) A municipality or a franchised utility may rescind
notice for single or dual certification without prejudice at any
time before a judgment becomes final provided the municipality or
the franchised public utility has not taken physical possession of
property of the retail public utility or made payment for such right
pursuant to Subsection (g) of this section.
(j) In the event that a municipality files an application
for single certification on behalf of a franchised utility, the
municipality shall be joined in such application by such franchised
utility, and the franchised utility shall make all payments
required in the court's judgment to adequately and justly
compensate the retail public utility for any taking or damaging of
property and for the transfer of property to such franchised
utility.
(k) This section shall apply only in a case where:
(1) the retail public utility that is authorized to
serve in the certificated area that is annexed or incorporated by
the municipality is a nonprofit water supply or sewer service
corporation, a special utility district under Chapter 65, Water
Code, or a fresh water supply district under Chapter 53, Water Code;
or
(2) the retail public utility that is authorized to
serve in the certificated area that is annexed or incorporated by
the municipality is a retail public utility, other than a nonprofit
water supply or sewer service corporation, and whose service area
is located entirely within the boundaries of a municipality with a
population of 1.7 million or more according to the most recent
federal census.
(l) The following conditions apply when a municipality or
franchised utility makes an application to acquire the service area
or facilities of a retail public utility described in Subsection
(k)(2):
(1) the utility commission or court must determine
that the service provided by the retail public utility is
substandard or its rates are unreasonable in view of the reasonable
expenses of the utility;
(2) if the municipality abandons its application, the
court or the utility commission is authorized to award to the retail
public utility its reasonable expenses related to the proceeding
hereunder, including attorney fees; and
(3) unless otherwise agreed by the retail public
utility, the municipality must take the entire utility property of
the retail public utility in a proceeding hereunder.
(m) For an area incorporated by a municipality, the
compensation provided under Subsection (h) shall be determined by a
qualified individual or firm to serve as independent appraiser, who
shall be selected by the affected retail public utility, and the
costs of the appraiser shall be paid by the municipality. For an
area annexed by a municipality, the compensation provided under
Subsection (h) shall be determined by a qualified individual or
firm to which the municipality and the retail public utility agree
to serve as independent appraiser. If the retail public utility and
the municipality are unable to agree on a single individual or firm
to serve as the independent appraiser before the 11th day after the
date the retail public utility or municipality notifies the other
party of the impasse, the retail public utility and municipality
each shall appoint a qualified individual or firm to serve as
independent appraiser. On or before the 10th business day after the
date of their appointment, the independent appraisers shall meet to
reach an agreed determination of the amount of compensation. If the
appraisers are unable to agree on a determination before the 16th
business day after the date of their first meeting under this
subsection, the retail public utility or municipality may petition
the utility commission or a person the utility commission
designates for the purpose to appoint a third qualified independent
appraiser to reconcile the appraisals of the two originally
appointed appraisers. The determination of the third appraiser may
not be less than the lesser or more than the greater of the two
original appraisals. The costs of the independent appraisers for an
annexed area shall be shared equally by the retail public utility
and the municipality. The determination of compensation under this
subsection is binding on the utility commission.
(n) The utility commission shall reject a notice for single
or dual certification by a municipality that fails to demonstrate
compliance with the commission's minimum requirements for public
drinking water systems.
SECTION 2. This Act takes effect September 1, 2021.