By: Watson, Nichols S.B. No. 1162
A BILL TO BE ENTITLED
AN ACT
relating to requirements for the purchase or acquisition of a water
or sewer system.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 13.301, Water Code, is amended by
amending Subsections (a), (d), (e), (f), and (g) and adding
Subsections (a-1), (a-2), (a-3), (a-4), (a-5), and (e-1) to read as
follows:
(a) A utility or a water supply or sewer service
corporation, on or before the 120th day before the effective date of
a sale, acquisition, lease, or rental of a water or sewer system
that is required by law to possess a certificate of public
convenience and necessity or the effective date of a merger or
consolidation with such a utility or water supply or sewer service
corporation, shall:
(1) file a written application with the commission
electronically; and
(2) [unless public notice is waived by the executive
director for good cause shown,] give public notice of the action.
(a-1) The commission shall post the application on the
commission's Internet website not later than the 30th day after the
date the application is accepted for filing.
(a-2) Except as provided by Subsection (a-4) or (a-5), for a
proposed sale, acquisition, lease, rental, merger, or
consolidation transaction subject to Subsection (a) that involves
more than one utility or water supply or sewer service corporation,
or that involves a single utility or water supply or sewer service
corporation and a political subdivision's water or sewer system, at
the time notice is given under Subsection (a)(2), the parties to the
proposed transaction jointly shall mail written notice to each
affected customer in accordance with commission rules. The written
notice must include:
(1) a comparison of the rates and quality-of-service
records of the parties;
(2) the purchase price or lease rate of the sale,
acquisition, lease, or rental;
(3) the anticipated transaction costs, including
legal fees, regulatory fees, and interest;
(4) a disclosure of:
(A) any investments or expenses any party to the
transaction anticipates it will make during the next 24 months for
infrastructure improvement to a water or sewer system involved in
the transaction; and
(B) the estimated effect the investments or
expenses will have on rates;
(5) the expected closing date of the transaction;
(6) the estimated date by which customers to be
affected by the transaction will be required to pay service fees in
an amount different than service fees payable by those customers on
the date of the application;
(7) any plans to implement a rate change during the
pendency of the proposed transaction; and
(8) notice to the customer that the customer can make a
written request for a public hearing to the commission.
(a-3) Notwithstanding any other provision of this section,
the executive director may waive the notice requirement if the
sale, acquisition, lease, rental, merger, or consolidation
transaction involves two or more parties, and all but one are in
receivership, are under temporary management, or have been referred
for the appointment of a temporary management or receivership.
(a-4) If the notice required by Subsection (a-2) would be
more than two pages long, the notice may be provided by mailing an
abbreviated notice that contains:
(1) a brief description of the contents and purpose of
the notice; and
(2) the exact Internet address, by uniform resource
locator, of the commission's Internet website where the person can
access the information required under Subsection (a-2).
(a-5) A party to the proposed transaction who is required to
provide written notice to customers under Subsection (a-2) may
provide electronic notice by electronic mail instead of written
notice to a customer who has agreed to receive other information
related to that customer's account by electronic mail.
(d) After the parties to the proposed transaction have made
the application as required by this section and provided notice as
required by this section, the [The] commission shall, with or
without a public hearing, investigate the sale, acquisition, lease,
[or] rental, merger, or consolidation to determine whether the
proposed transaction will serve the public interest. In making the
determination, the commission shall consider:
(1) the factors listed under Section 13.246(c);
(2) the anticipated benefits of the transaction;
(3) the anticipated costs of the transaction;
(4) whether the price to be paid for the assets is
excessive; and
(5) if the applicant intends to consolidate water or
sewer systems under a single tariff, whether the systems being
consolidated have substantially similar facilities, quality of
service, and cost of service.
(e) On [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 shall request a public hearing if, before the expiration
of the 120-day notification period, at least 10 percent of the
customers of a utility or a water supply or sewer service
corporation subject to Subsection (a-2) make a written request for
a public hearing. 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 Subsection (d) [Section 13.246(c) for
determining whether to grant a certificate of convenience and
necessity].
(e-1) The commission shall hold a public hearing at the
request of the executive director.
(f) Unless the executive director requests that a public
hearing be held, the sale, acquisition, lease, [or] rental, merger,
or consolidation may be completed as proposed:
(1) at the end of the 120-day period; or
(2) at any time after the executive director notifies
the utility or water supply or sewer service corporation that a
hearing will not be requested.
(g) If a public hearing is requested by the executive
director [or if the utility or water supply or sewer service
corporation fails to make the application as required or to provide
public notice], the sale, acquisition, lease, [or] rental, merger,
or consolidation may not be completed unless the commission
determines after a public hearing that the proposed transaction
serves the public interest.
SECTION 2. Section 13.301, Water Code, as amended by this
Act, applies only to a sale, acquisition, lease, rental, merger, or
consolidation for which an application is filed with the Texas
Commission on Environmental Quality on or after January 1, 2014. A
sale, acquisition, lease, rental, merger, or consolidation for
which an application is filed before January 1, 2014, is governed by
the law in effect immediately before the effective date of this Act,
and that law is continued in effect for that purpose.
SECTION 3. The changes in law made by this Act do not affect
a transfer of state agency functions as provided by another Act of
the 83rd Legislature, Regular Session, 2013, that becomes law. To
the extent functions of the Texas Commission on Environmental
Quality affected by the changes in law are transferred to another
agency, references to the commission in Section 13.301, Water Code,
as amended by this Act, shall be construed as references to the
other agency.
SECTION 4. This Act takes effect September 1, 2013.