2009S0122-3 01/22/09
By: Uresti S.B. No. 514
A BILL TO BE ENTITLED
AN ACT
relating to providing an oversight mechanism for the Bexar
Metropolitan Water District, including enforcement authority.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. LEGISLATIVE FINDINGS. The legislature finds
that:
(1) according to audits and evaluations of the Bexar
Metropolitan Water District performed by state agencies under H.B.
No. 1565, Acts of the 80th Legislature, Regular Session, 2007:
(A) certain officials of the district have
engaged in a pattern of unethical conduct and unprofessional
management practices;
(B) disagreements regarding jurisdiction within
the district and between the district and other entities and
distrust among key management personnel and members of the board
have hampered efforts by the district to improve services for
existing customers and to meet water supply needs of growing
populations within its service areas;
(C) there has been a history of noncompliance on
the part of the district; and
(D) the district has demonstrated weak
management, engaged in financial improprieties, and provided
unreliable service, which threatens to impair the quality of life
of its customers and diminish the prospects for economic growth
within the district;
(2) after 18 months of intense scrutiny by state
agencies and the Bexar Metropolitan Water District Oversight
Committee, which is composed of gubernatorial appointees,
legislators, and a local representative of Bexar County, it is
evident that further legislative action is necessary; and
(3) to ensure the reliability, sustainability,
quality, and affordability of water supply services to the
customers of the district, it is necessary to appoint a
conservator, who shall manage the district until the district has
achieved sufficient rehabilitation to serve its customers in a
professional, ethical, and reliable manner.
SECTION 2. CREATION OF CONSERVATORSHIP. Chapter 306, Acts
of the 49th Legislature, Regular Session, 1945, is amended by
adding Sections 33B, 33C, and 33D to read as follows:
Sec. 33B. CONSERVATOR. Not later than the 60th day after
the effective date of this Section, the Texas Commission on
Environmental Quality shall appoint as Conservator for the District
an individual who has demonstrated a high level of expertise in
water utility management.
Sec. 33C. POWERS AND DUTIES OF CONSERVATOR. (a) The Board
shall be subject to the authority of a conservator appointed under
this Act and shall work cooperatively with the Conservator in
rehabilitating the Board in its ability to manage and operate the
District in a professional manner. During the period of
conservatorship, the Conservator has all of the general authority
held by the Board immediately before the date conservatorship is
established.
(b) The Conservator shall:
(1) take possession and control of the books, records,
property, assets, and daily management of the District;
(2) take immediate action to ensure that the assets of
the District are protected and that the quality of service provided
to District customers is improved to the highest level reasonably
practicable under the circumstances;
(3) develop a comprehensive rehabilitation plan for
the District; and
(4) report monthly to the Texas Commission on
Environmental Quality and to any committee with direct oversight
authority over the District regarding:
(A) the financial, managerial, technical, and
operational status of the District under the conservatorship;
(B) the actions the Conservator has taken to
ensure that the District complies with the plan developed under
Subdivision (3) of this Subsection; and
(C) the progress the Conservator has made towards
completion of the plan developed under Subdivision (3) of this
Subsection.
(c) The comprehensive rehabilitation plan must:
(1) identify strategies for restoring the District's
financial integrity and for developing a system of sound financial
management;
(2) describe a standard of ethics, professionalism,
and openness expected of each member of the Board and employees of
the District and a mechanism for enforcing compliance with District
policies, including procurement policies;
(3) address ways to enhance the District's operational
efficiency;
(4) as an integral part of rehabilitating the
District, devise a program for:
(A) educating the Board of Directors and key
management personnel on improving management practices, on
complying with Board policy and applicable laws and regulations,
and on implementing needed reforms for the District; and
(B) developing greater technical expertise on
the part of District employees;
(5) identify District assets that, if sold, would
likely improve the District's ability to serve its remaining
customers;
(6) ensure that any assets identified in Subdivision
(5) of this Subsection that are sold are sold at fair market value;
(7) ensure that any entity that acquires a District
asset is responsible for all transaction costs related to the
acquisition, including the cost of defending the State against
legal challenges to the disposition of the asset; and
(8) inventory and evaluate the discrete water systems
that the District comprises and determine:
(A) the District's basis in or the intrinsic
value of the infrastructure associated with each water system;
(B) the District's bonded debt and commercial
paper reasonably associated with or allocable to the infrastructure
of each water system;
(C) the adequacy of the source of the water
supply, such as wells, located in each water system's service area
to supply the current and projected demands generated in that
service area;
(D) the adequacy of the water storage facilities
located in each water system's service area to supply the current
and projected demands generated in that service area; and
(E) the adequacy of the distribution system
located in each water system's service area to supply the current
and projected demands generated in that service area.
(d) The term of the Conservator continues until:
(1) the Conservator reports that the District has been
sufficiently rehabilitated to provide reliable, cost-effective,
quality service to its customers; and
(2) the Texas Commission on Environmental Quality,
after performing a confirmation review, concurs with the
Conservator's report that the District has been sufficiently
rehabilitated to ensure that it can serve its customers in a
professional manner and that conservatorship is no longer
necessary.
(e) When conservatorship is terminated under Subsection (d)
of this Section, the assets and management of the District return to
the control of the Board of Directors.
(f) Funding for the conservatorship shall be provided by the
District and approved by the Commission.
Sec. 33D. ADDITIONAL ENFORCEMENT AUTHORITY. (a)
Notwithstanding any other law, if the Texas Commission on
Environmental Quality determines that, after a reasonable period,
the District has not made satisfactory progress in rehabilitating
its management and related operations, the Commission may use the
auditing and enforcement authority provided to the Commission by
Chapters 36 and 49, Water Code, including dissolution, to address
deficiencies on the part of the District.
(b) If the Texas Commission on Environmental Quality
determines that, after a reasonable period, the Conservator has not
made satisfactory progress in implementing the comprehensive
rehabilitation plan and the Commission has not determined that the
District must be dissolved, the Commission shall appoint a new
Conservator.
(c) The Texas Commission on Environmental Quality shall
adopt rules providing for filling a vacancy in the position of
Conservator.
SECTION 3. CREATION OF SUBSEQUENT CONSERVATORSHIP.
Effective June 1, 2011, Chapter 306, Acts of the 49th Legislature,
Regular Session, 1945, is amended by adding Section 33E to read as
follows:
Sec. 33E. SUBSEQUENT CONSERVATOR. (a) The Texas
Commission on Environmental Quality shall appoint a subsequent
Conservator for the District if the Commission determines that
after the termination of an earlier conservatorship under Section
33C of this Act, the District has:
(1) obstructed the Commission's authority to supervise
the District;
(2) violated a final order of the Commission;
(3) caused a potential health hazard by failing to
provide appropriate water or wastewater treatment to District
customers;
(4) caused a potential health hazard, extended
outages, or repeated service interruptions by failing to adequately
maintain District facilities;
(5) displayed a pattern of hostility towards the
Commission or repeatedly failed to respond to the Commission or to
District customers;
(6) engaged in a pattern of:
(A) noncompliance with laws or regulations; or
(B) unethical conduct and unprofessional
management practices;
(7) abandoned the operation of its facilities;
(8) had a majority of its Board of directors resign;
(9) demonstrated weak management;
(10) engaged in financial improprieties; or
(11) provided unreliable service that impairs the
quality of life of its customers or diminishes the prospects for
economic growth within the district.
(b) An individual appointed Conservator under this Section
must have demonstrated a high level of expertise in water utility
management and shall have all the powers and duties assigned to a
Conservator under Section 33C of this Act.
(c) For a conservatorship created under this Section, the
Texas Commission on Environmental Quality has the additional
enforcement authority assigned to it under Section 33D of this Act.
SECTION 4. OVERSIGHT COMMITTEE: COMPOSITION; REPORT.
Section 33A, Chapter 306, Acts of the 49th Legislature, Regular
Session, 1945, is amended by amending Subsection (c) and adding
Subsection (g) to read as follows:
(c) The oversight committee is comprised of five [5] members
appointed as follows [to represent the following members]:
(1) a [the] Senator who represents a Senate district
that includes territory within the District, [sponsor of this Act,
or, in the event this Senator cannot serve, a Senator] appointed by
the Lieutenant Governor;
(2) a Representative who represents a [the] House
district that includes territory within the District, [author of
this Act, or, in the event this Representative cannot serve, a
Representative] appointed by the Speaker of the Texas House of
Representatives;
(3) one member of the Senate Committee on Natural
Resources [with special expertise in the operation of public water
utilities] appointed by the Lieutenant Governor;
(4) one member of the House Committee on Natural
Resources appointed by the Speaker of the Texas House of
Representatives; and
(5) one member appointed by the Governor to represent
the public[; and
[(5) a member of the Bexar County Commissioners Court
who represents a precinct in which customers of the District
reside].
(g) On or before December 31, 2010, the oversight committee
shall provide a report under Subsection (e) of this Section to the
82nd Legislature. The committee is abolished and this Section
expires on January 1, 2011.
SECTION 5. NOTICE. (a) The legal notice of the intention
to introduce this Act, setting forth the general substance of this
Act, has been published as provided by law, and the notice and a
copy of this Act have been furnished to all persons, agencies,
officials, or entities to which they are required to be furnished
under Section 59, Article XVI, Texas Constitution, and Chapter 313,
Government Code.
(b) The governor, one of the required recipients, has
submitted the notice and Act to the Texas Commission on
Environmental Quality.
(c) The Texas Commission on Environmental Quality has filed
its recommendations relating to this Act with the governor, the
lieutenant governor, and the speaker of the house of
representatives within the required time.
(d) All requirements of the constitution and laws of this
state and the rules and procedures of the legislature with respect
to the notice, introduction, and passage of this Act are fulfilled
and accomplished.
SECTION 6. EFFECTIVE DATE. Except as otherwise provided by
this Act, this Act takes effect immediately if it receives a vote of
two-thirds of all the members elected to each house, as provided by
Section 39, Article III, Texas Constitution. If this Act does not
receive the vote necessary for immediate effect, this Act takes
effect September 1, 2009, except as otherwise provided by this Act.