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


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
  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.
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