S.B. No. 573
AN ACT
relating to certificates of public convenience and necessity for
water or sewer services.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 13.245, Water Code, is amended by
amending Subsection (b) and adding Subsections (c-1) through (c-5)
to read as follows:
(b) Except as provided by Subsections [Subsection] (c),
(c-1), and (c-2), the commission may not grant to a retail public
utility a certificate of public convenience and necessity for a
service area within the boundaries or extraterritorial
jurisdiction of a municipality without the consent of the
municipality. The municipality may not unreasonably withhold the
consent. As a condition of the consent, a municipality may require
that all water and sewer facilities be designed and constructed in
accordance with the municipality's standards for facilities.
(c-1) If a municipality has not consented under Subsection
(b) before the 180th day after the date a landowner or a retail
public utility submits to the municipality a formal request for
service according to the municipality's application requirements
and standards for facilities on the same or substantially similar
terms as provided by the retail public utility's application to the
commission, including a capital improvements plan required by
Section 13.244(d)(3) or a subdivision plat, the commission may
grant the certificate of public convenience and necessity without
the consent of the municipality if:
(1) the commission makes the findings required by
Subsection (c);
(2) the municipality has not entered into a binding
commitment to serve the area that is the subject of the retail
public utility's application to the commission before the 180th day
after the date the formal request was made; and
(3) the landowner or retail public utility that
submitted the formal request has not unreasonably refused to:
(A) comply with the municipality's service
extension and development process; or
(B) enter into a contract for water or sewer
services with the municipality.
(c-2) If a municipality refuses to provide service in the
proposed service area, as evidenced by a formal vote of the
municipality's governing body or an official notification from the
municipality, the commission is not required to make the findings
otherwise required by this section and may grant the certificate of
public convenience and necessity to the retail public utility at
any time after the date of the formal vote or receipt of the
official notification.
(c-3) The commission must include as a condition of a
certificate of public convenience and necessity granted under
Subsection (c-1) or (c-2) that all water and sewer facilities be
designed and constructed in accordance with the municipality's
standards for water and sewer facilities.
(c-4) Subsections (c-1), (c-2), and (c-3) do not apply to:
(1) a county that borders the United Mexican States
and the Gulf of Mexico or a county adjacent to such a county;
(2) a county with a population of more than 30,000 and
less than 35,000 that borders the Red River; or
(3) a county with a population of more than 100,000 and
less than 200,000 that borders a county described by Subdivision
(2).
(c-5) Subsections (c-1), (c-2), and (c-3) do not apply to:
(1) a county with a population of 130,000 or more that
is adjacent to a county with a population of 1.5 million or more
that is within 200 miles of an international border; or
(2) a county with a population of more than 40,000 and
less than 50,000 that contains a portion of the San Antonio River.
SECTION 2. Section 13.2451, Water Code, is amended by
amending Subsections (a) and (b) and adding Subsections (b-1),
(b-2), and (b-3) to read as follows:
(a) Except as provided by Subsection (b), if [If] a
municipality extends its extraterritorial jurisdiction to include
an area certificated to a retail public utility, the retail public
utility may continue and extend service in its area of public
convenience and necessity under the rights granted by its
certificate and this chapter.
(b) The commission may not extend a municipality's
certificate of public convenience and necessity beyond its
extraterritorial jurisdiction if an owner of land that is located
wholly or partly outside the extraterritorial jurisdiction elects
to exclude some or all of the landowner's property within a proposed
service area in accordance with Section 13.246(h). This subsection
does not apply to a transfer of a certificate as approved by the
commission. [A municipality that seeks to extend a certificate of
public convenience and necessity beyond the municipality's
extraterritorial jurisdiction must ensure that the municipality
complies with Section 13.241 in relation to the area covered by the
portion of the certificate that extends beyond the municipality's
extraterritorial jurisdiction.]
(b-1) Subsection (b) does not apply to an extension of
extraterritorial jurisdiction in a county that borders the United
Mexican States and the Gulf of Mexico or a county adjacent to such a
county.
(b-2) Subsection (b) does not apply to an extension of
extraterritorial jurisdiction in a county:
(1) with a population of more than 30,000 and less than
35,000 that borders the Red River; or
(2) with a population of more than 100,000 and less
than 200,000 that borders a county described by Subdivision (1).
(b-3) Subsection (b) does not apply to an extension of
extraterritorial jurisdiction in a county:
(1) with a population of 130,000 or more that is
adjacent to a county with a population of 1.5 million or more that
is within 200 miles of an international border; or
(2) with a population of more than 40,000 and less than
50,000 that contains a portion of the San Antonio River.
SECTION 3. Subsection (h), Section 13.246, Water Code, is
amended to read as follows:
(h) Except as provided by Subsection (i), a landowner who
owns a tract of land that is at least 25 acres and that is wholly or
partially located within the proposed service area may elect to
exclude some or all of the landowner's property from the proposed
service area by providing written notice to the commission before
the 30th day after the date the landowner receives notice of a new
application for a certificate of public convenience and necessity
or for an amendment to an existing certificate of public
convenience and necessity. The landowner's election is effective
without a further hearing or other process by the commission. If a
landowner makes an election under this subsection, the application
shall be modified so that the electing landowner's property is not
included in the proposed service area. An applicant for a
certificate of public convenience and necessity that has land
removed from its proposed certificated service area because of a
landowner's election under this subsection may not be required to
provide service to the removed land for any reason, including the
violation of law or commission rules by the water or sewer system of
another person.
SECTION 4. Section 13.254, Water Code, is amended by
amending Subsections (a), (a-1), (a-2), and (a-3) and adding
Subsections (a-5) through (a-11) and (h) to read as follows:
(a) The commission at any time after notice and hearing
may[, on its own motion or on receipt of a petition described by
Subsection (a-1),] revoke or amend any certificate of public
convenience and necessity with the written consent of the
certificate holder or if it finds that:
(1) the certificate holder has never provided, is no
longer providing, is incapable of providing, or has failed to
provide continuous and adequate service in the area, or part of the
area, covered by the certificate;
(2) in an affected county as defined in Section
16.341, the cost of providing service by the certificate holder is
so prohibitively expensive as to constitute denial of service,
provided that, for commercial developments or for residential
developments started after September 1, 1997, in an affected county
as defined in Section 16.341, the fact that the cost of obtaining
service from the currently certificated retail public utility makes
the development economically unfeasible does not render such cost
prohibitively expensive in the absence of other relevant factors;
(3) the certificate holder has agreed in writing to
allow another retail public utility to provide service within its
service area, except for an interim period, without amending its
certificate; or
(4) the certificate holder has failed to file a cease
and desist action pursuant to Section 13.252 within 180 days of the
date that it became aware that another retail public utility was
providing service within its service area, unless the certificate
holder demonstrates good cause for its failure to file such action
within the 180 days.
(a-1) As an alternative to decertification under Subsection
(a), the owner of a tract of land that is at least 50 acres and that
is not in a platted subdivision actually receiving water or sewer
service may petition the commission under this subsection for
expedited release of the area from a certificate of public
convenience and necessity so that the area may receive service from
another retail public utility. The fact that a certificate holder
is a borrower under a federal loan program is not a bar to a request
under this subsection for the release of the petitioner's land and
the receipt of services from an alternative provider. On the day
the petitioner submits the petition to the commission, the [The]
petitioner shall send [deliver], via certified mail, a copy of the
petition to the certificate holder, who may submit information to
the commission to controvert information submitted by the
petitioner. The petitioner must demonstrate that:
(1) a written request for service, other than a
request for standard residential or commercial service, has been
submitted to the certificate holder, identifying:
(A) the area for which service is sought;
(B) the timeframe within which service is needed
for current and projected service demands in the area;
(C) the level and manner of service needed for
current and projected service demands in the area;
(D) the approximate cost for the alternative
provider to provide the service at the same level and manner that is
requested from the certificate holder;
(E) the flow and pressure requirements and
specific infrastructure needs, including line size and system
capacity for the required level of fire protection requested; and
(F) [(D)] any additional information requested
by the certificate holder that is reasonably related to
determination of the capacity or cost for providing the service;
(2) the certificate holder has been allowed at least
90 calendar days to review and respond to the written request and
the information it contains;
(3) the certificate holder:
(A) has refused to provide the service;
(B) is not capable of providing the service on a
continuous and adequate basis within the timeframe, at the level,
at the approximate cost that the alternative provider is capable of
providing for a comparable level of service, or in the manner
reasonably needed or requested by current and projected service
demands in the area; or
(C) conditions the provision of service on the
payment of costs not properly allocable directly to the
petitioner's service request, as determined by the commission; and
(4) the alternate retail public utility from which the
petitioner will be requesting service possesses the financial,
managerial, and technical capability to provide [is capable of
providing] continuous and adequate service within the timeframe, at
the level, at the cost, and in the manner reasonably needed or
requested by current and projected service demands in the area.
(a-2) A landowner is not entitled to make the election
described in Subsection (a-1) or (a-5) but is entitled to contest
under Subsection (a) the involuntary certification of its property
in a hearing held by the commission if the landowner's property is
located:
(1) within the boundaries of any municipality or the
extraterritorial jurisdiction of a municipality with a population
of more than 500,000 and the municipality or retail public utility
owned by the municipality is the holder of the certificate; or
(2) in a platted subdivision actually receiving water
or sewer service.
(a-3) Within 60 [90] calendar days from the date the
commission determines the petition filed pursuant to Subsection
(a-1) to be administratively complete, the commission shall grant
the petition unless the commission makes an express finding that
the petitioner failed to satisfy the elements required in
Subsection (a-1) and supports its finding with separate findings
and conclusions for each element based solely on the information
provided by the petitioner and the certificate holder. The
commission may grant or deny a petition subject to terms and
conditions specifically related to the service request of the
petitioner and all relevant information submitted by the petitioner
and the certificate holder. In addition, the commission may
require an award of compensation as otherwise provided by this
section.
(a-5) As an alternative to decertification under Subsection
(a) and expedited release under Subsection (a-1), the owner of a
tract of land that is at least 25 acres and that is not receiving
water or sewer service may petition for expedited release of the
area from a certificate of public convenience and necessity and is
entitled to that release if the landowner's property is located in a
county with a population of at least one million, a county adjacent
to a county with a population of at least one million, or a county
with a population of more than 200,000 and less than 220,000 that
does not contain a public or private university that had a total
enrollment in the most recent fall semester of 40,000 or more, and
not in a county that has a population of more than 45,500 and less
than 47,500.
(a-6) The commission shall grant a petition received under
Subsection (a-5) not later than the 60th day after the date the
landowner files the petition. The commission may not deny a
petition received under Subsection (a-5) based on the fact that a
certificate holder is a borrower under a federal loan program. The
commission may require an award of compensation by the petitioner
to a decertified retail public utility that is the subject of a
petition filed under Subsection (a-5) as otherwise provided by this
section.
(a-7) The utility shall include with the statement of intent
provided to each landowner or ratepayer a notice of:
(1) a proceeding under this section related to
certification or decertification;
(2) the reason or reasons for the proposed rate
change; and
(3) any bill payment assistance program available to
low-income ratepayers.
(a-8) If a certificate holder has never made service
available through planning, design, construction of facilities, or
contractual obligations to serve the area a petitioner seeks to
have released under Subsection (a-1), the commission is not
required to find that the proposed alternative provider is capable
of providing better service than the certificate holder, but only
that the proposed alternative provider is capable of providing the
requested service.
(a-9) Subsection (a-8) does not apply to a county that
borders the United Mexican States and the Gulf of Mexico or a county
adjacent to a county that borders the United Mexican States and the
Gulf of Mexico.
(a-10) Subsection (a-8) does not apply to a county:
(1) with a population of more than 30,000 and less than
35,000 that borders the Red River; or
(2) with a population of more than 100,000 and less
than 200,000 that borders a county described by Subdivision (1).
(a-11) Subsection (a-8) does not apply to a county:
(1) with a population of 130,000 or more that is
adjacent to a county with a population of 1.5 million or more that
is within 200 miles of an international border; or
(2) with a population of more than 40,000 and less than
50,000 that contains a portion of the San Antonio River.
(h) A certificate holder that has land removed from its
certificated service area in accordance with this section may not
be required, after the land is removed, to provide service to the
removed land for any reason, including the violation of law or
commission rules by a water or sewer system of another person.
SECTION 5. The changes made by this Act to Sections 13.245,
13.2451, 13.246, and 13.254, Water Code, apply only to:
(1) a retail public utility's application for a
certificate of public convenience and necessity for a service area
in the extraterritorial jurisdiction of a municipality that is made
on or after the effective date of this Act;
(2) an extension of a municipality's certificate of
public convenience and necessity for a service area in the
extraterritorial jurisdiction of the municipality on or after the
effective date of this Act; and
(3) a petition to release an area from a certificate of
public convenience and necessity that is made on or after the
effective date of this Act.
SECTION 6. This Act takes effect September 1, 2011.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 573 passed the Senate on
April 26, 2011, by the following vote: Yeas 26, Nays 5; and that
the Senate concurred in House amendments on May 26, 2011, by the
following vote: Yeas 25, Nays 6.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 573 passed the House, with
amendments, on May 25, 2011, by the following vote: Yeas 126,
Nays 22, two present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor