83R7388 DDT-D
By: Gooden H.B. No. 2937
A BILL TO BE ENTITLED
AN ACT
relating to the grant or denial of a certificate of convenience and
necessity in certain counties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 13.241(e), Water Code, is amended to
read as follows:
(e) The commission by rule shall develop a standardized
method for determining under Section 13.246(f) or 13.2581(f), as
applicable, which of two or more retail public utilities or water
supply or sewer service corporations that apply for a certificate
of public convenience and necessity to provide water or sewer
utility service to an uncertificated area located in an
economically distressed area is more capable financially,
managerially, and technically of providing continuous and adequate
service. In this subsection, "economically distressed area" has
the meaning assigned by Section 15.001.
SECTION 2. Section 13.2451, Water Code, is amended by
adding Subsection (b-4) to read as follows:
(b-4) This section does not apply in a county:
(1) with a population of more than 100,000 and less
than 150,000; and
(2) that borders Cedar Creek Reservoir.
SECTION 3. Section 13.246, Water Code, is amended by adding
Subsection (a-2) to read as follows:
(a-2) This section does not apply in a county:
(1) with a population of more than 100,000 and less
than 150,000; and
(2) that borders Cedar Creek Reservoir.
SECTION 4. Section 13.251, Water Code, is amended to read as
follows:
Sec. 13.251. SALE, ASSIGNMENT, OR LEASE OF CERTIFICATE.
Except as provided by Section 13.255 of this code, a utility or a
water supply or sewer service corporation may not sell, assign, or
lease a certificate of public convenience and necessity or any
right obtained under a certificate unless the commission has
determined that the purchaser, assignee, or lessee is capable of
rendering adequate and continuous service to every consumer within
the certified area, after considering the factors under Section
13.246(c) or 13.2581(c), as applicable [of this code]. The sale,
assignment, or lease shall be on the conditions prescribed by the
commission.
SECTION 5. Section 13.254, Water Code, is amended by adding
Subsection (a-12) to read as follows:
(a-12) This section does not apply in a county:
(1) with a population of more than 100,000 and less
than 150,000; and
(2) that borders Cedar Creek Reservoir.
SECTION 6. Section 13.2551(a), Water Code, is amended to
read as follows:
(a) As a condition to decertification or single
certification under Section 13.254, [or] 13.255, or 13.2582, and on
request by an affected retail public utility, the commission may
order:
(1) the retail public utility seeking to provide
service to a decertified area to serve the entire service area of
the retail public utility that is being decertified; and
(2) the transfer of the entire certificate of public
convenience and necessity of a partially decertified retail public
utility to the retail public utility seeking to provide service to
the decertified area.
SECTION 7. Subchapter G, Chapter 13, Water Code, is amended
by adding Section 13.258 to read as follows:
Sec. 13.258. EXTENSION BEYOND EXTRATERRITORIAL
JURISDICTION. (a) This section applies only to an extension of
extraterritorial jurisdiction in a county:
(1) with a population of more than 100,000 and less
than 150,000; and
(2) that borders Cedar Creek Reservoir.
(a-1) 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) 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.
(c) The commission, after notice to the municipality and an
opportunity for a hearing, may decertify an area outside a
municipality's extraterritorial jurisdiction if the municipality
does not provide service to the area on or before the fifth
anniversary of the date the certificate of public convenience and
necessity was granted for the area. This subsection does not apply
to a certificate of public convenience and necessity for an area:
(1) that was transferred to a municipality on approval
of the commission; and
(2) in relation to which the municipality has spent
public funds.
SECTION 8. Subchapter G, Chapter 13, Water Code, is amended
by adding Section 13.2581 to read as follows:
Sec. 13.2581. NOTICE AND HEARING; ISSUANCE OR REFUSAL;
FACTORS CONSIDERED. (a) This section applies only in a county:
(1) with a population of more than 100,000 and less
than 150,000; and
(2) that borders Cedar Creek Reservoir.
(a-1) If an application for a certificate of public
convenience and necessity or for an amendment to a certificate is
filed, the commission shall cause notice of the application to be
given to affected parties and to each county and groundwater
conservation district that is wholly or partly included in the area
proposed to be certified. If requested, the commission shall fix a
time and place for a hearing and give notice of the hearing. Any
person affected by the application may intervene at the hearing.
(a-2) Except as otherwise provided by this subsection, in
addition to the notice required by Subsection (a-1), the commission
shall require notice to be mailed to each owner of a tract of land
that is at least 25 acres and is wholly or partly included in the
area proposed to be certified. Notice required under this
subsection must be mailed by first class mail to the owner of the
tract according to the most current tax appraisal rolls of the
applicable central appraisal district at the time the commission
received the application for the certificate or amendment. Good
faith efforts to comply with the requirements of this subsection
shall be considered adequate notice to landowners. Notice under
this subsection is not required for a matter filed with the
commission under:
(1) Section 13.248 or 13.255; or
(2) Chapter 65.
(b) The commission may grant applications and issue
certificates and amendments to certificates only if the commission
finds that a certificate or amendment is necessary for the service,
accommodation, convenience, or safety of the public. The commission
may issue a certificate or amendment as requested, or refuse to
issue it, or issue it for the construction of only a portion of the
contemplated system or facility or extension, or for the partial
exercise only of the right or privilege and may impose special
conditions necessary to ensure that continuous and adequate service
is provided.
(c) Certificates of public convenience and necessity and
amendments to certificates shall be granted on a nondiscriminatory
basis after consideration by the commission of:
(1) the adequacy of service currently provided to the
requested area;
(2) the need for additional service in the requested
area, including whether any landowners, prospective landowners,
tenants, or residents have requested service;
(3) the effect of the granting of a certificate or of
an amendment on the recipient of the certificate or amendment, on
the landowners in the area, and on any retail public utility of the
same kind already serving the proximate area;
(4) the ability of the applicant to provide adequate
service, including meeting the standards of the commission, taking
into consideration the current and projected density and land use
of the area;
(5) the feasibility of obtaining service from an
adjacent retail public utility;
(6) the financial ability of the applicant to pay for
the facilities necessary to provide continuous and adequate service
and the financial stability of the applicant, including, if
applicable, the adequacy of the applicant's debt-equity ratio;
(7) environmental integrity;
(8) the probable improvement of service or lowering of
cost to consumers in that area resulting from the granting of the
certificate or amendment; and
(9) the effect on the land to be included in the
certificated area.
(d) The commission may require an applicant for a
certificate or for an amendment to provide a bond or other financial
assurance in a form and amount specified by the commission to ensure
that continuous and adequate utility service is provided.
(e) Where applicable, in addition to the other factors in
this section the commission shall consider the efforts of the
applicant:
(1) to extend service to any economically distressed
areas located within the service areas certificated to the
applicant; and
(2) to enforce the rules adopted under Section 16.343.
(f) If two or more retail public utilities or water supply
or sewer service corporations apply for a certificate of public
convenience and necessity to provide water or sewer utility service
to an uncertificated area located in an economically distressed
area and otherwise meet the requirements for obtaining a new
certificate, the commission shall grant the certificate to the
retail public utility or water supply or sewer service corporation
that is more capable financially, managerially, and technically of
providing continuous and adequate service.
(g) In this section, "economically distressed area" has the
meaning assigned by Section 15.001.
(h) A landowner who owns a tract of land that is at least 25
acres and that is wholly or partly 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.
SECTION 9. Subchapter G, Chapter 13, Water Code, is amended
by adding Section 13.2582 to read as follows:
Sec. 13.2582. REVOCATION OR AMENDMENT OF CERTIFICATE. (a)
This section applies only in a county:
(1) with a population of more than 100,000 and less
than 150,000; and
(2) that borders Cedar Creek Reservoir.
(a-1) The commission at any time after notice and hearing
may, on its own motion or on receipt of a petition described by
Subsection (a-2), 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 under 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-2) As an alternative to decertification under Subsection
(a-1), 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 petitioner shall 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 time frame 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; and
(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 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 time frame, at the level,
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 is capable of providing
continuous and adequate service within the time frame, at the
level, and in the manner reasonably needed or requested by current
and projected service demands in the area.
(a-3) A landowner is not entitled to make the election
described in Subsection (a-2) but is entitled to contest the
involuntary certification of the landowner's property in a hearing
held by the commission if the landowner's property is located in a
platted subdivision actually receiving water or sewer service.
(a-4) Within 90 days from the date the commission determines
the petition filed under Subsection (a-2) 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-2) 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) Chapter 2001, Government Code, does not apply to any
petition filed under Subsection (a-2). The decision of the
commission on the petition is final after any reconsideration
authorized by the commission's rules and may not be appealed.
(b) On written request from the certificate holder, the
executive director may cancel the certificate of a utility or water
supply corporation authorized by rule to operate without a
certificate of public convenience and necessity under Section
13.242(c).
(c) If the certificate of any retail public utility is
revoked or amended, the commission may require one or more retail
public utilities with their consent to provide service in the area
in question. The order of the commission shall not be effective to
transfer property.
(d) A retail public utility may not in any way render retail
water or sewer service directly or indirectly to the public in an
area that has been decertified under this section without providing
compensation for any property that the commission determines is
rendered useless or valueless to the decertified retail public
utility as a result of the decertification.
(e) The determination of the monetary amount of
compensation, if any, shall be determined at the time another
retail public utility seeks to provide service in the previously
decertified area and before service is actually provided. The
commission shall ensure that the monetary amount of compensation is
determined not later than 90 days after the date on which a retail
public utility notifies the commission of its intent to provide
service to the decertified area.
(f) The monetary amount shall be determined by a qualified
individual or firm serving as independent appraiser agreed upon by
the decertified retail public utility and the retail public utility
seeking to serve the area. The determination of compensation by the
independent appraiser shall be binding on the commission. The costs
of the independent appraiser shall be borne by the retail public
utility seeking to serve the area.
(g) For the purpose of implementing this section, the value
of real property owned and used 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,
and 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
include: the amount of the retail public utility's debt allocable
for service to the area in question; 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 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 decertification;
the impact on future revenues lost from existing customers;
necessary and reasonable legal expenses and professional fees; and
other relevant factors. The commission shall adopt rules governing
the evaluation of these factors.
(g-1) If the retail public utilities cannot agree on an
independent appraiser within 10 days after the date on which the
retail public utility notifies the commission of its intent to
provide service to the decertified area, each retail public utility
shall engage its own appraiser at its own expense, and each
appraisal shall be submitted to the commission within 60 days.
After receiving the appraisals, the commission shall appoint a
third appraiser who shall make a determination of the compensation
within 30 days. The determination may not be less than the lower
appraisal or more than the higher appraisal. Each retail public
utility shall pay half the cost of the third appraisal.
SECTION 10. Section 13.301(e), Water Code, is amended to
read as follows:
(e) Before the expiration of the 120-day notification
period, the executive director shall notify all known parties to
the transaction of the executive director's decision whether to
request that the commission hold a public hearing to determine if
the transaction will serve the public interest. The executive
director may request a hearing if:
(1) the application filed with the commission or the
public notice was improper;
(2) the person purchasing or acquiring the water or
sewer system has not demonstrated adequate financial, managerial,
and technical capability for providing continuous and adequate
service to the service area being acquired and to any areas
currently certificated to the person;
(3) the person or an affiliated interest of the person
purchasing or acquiring the water or sewer system has a history of:
(A) noncompliance with the requirements of the
commission or the Texas Department of Health; or
(B) continuing mismanagement or misuse of
revenues as a utility service provider;
(4) the person purchasing or acquiring the water or
sewer system cannot demonstrate the financial ability to provide
the necessary capital investment to ensure the provision of
continuous and adequate service to the customers of the water or
sewer system; or
(5) there are concerns that the transaction may not
serve the public interest, after the application of the
considerations provided by Section 13.246(c) or 13.2581(c), as
applicable, for determining whether to grant a certificate of
convenience and necessity.
SECTION 11. The changes in law made by this Act by amending
Sections 13.241, 13.2451, 13.246, 13.251, 13.254, 13.2551, and
13.301, Water Code, and by adding Sections 13.258, 13.2581, and
13.2582, 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 that is made 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 12. This Act takes effect September 1, 2013.