BILL ANALYSIS



C.S.H.B. 2387
By: Johnson
3-20-95
Committee Report (Substituted)


BACKGROUND
Chapter 13, Texas Water Code, provides for a comprehensive
regulatory scheme governing water and sewer utility service in the
State of Texas.  This regulatory scheme is administered by the
Texas Natural Resource Conservation Commission (TNRCC).  This bill
enacts amendments to various sections of Chapter 13, Texas Water
Code.

PURPOSE
The purpose of this bill is to enact certain amendments to Chapter
13, Texas Water Code, to clarify statutory provisions to reflect
the consolidation of certain regulatory functions previously
administered by other State agencies and to update administration
of certain regulatory requirements for water and sewer utilities
based on the TNRCC's regulatory experience.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.

SECTION BY SECTION ANALYSIS
SECTION 1.  Amends the definition of "member" under Section
13.002(11), Texas Water Code, in non-profit water supply and sewer
service corporations organized under Article 1434a, Tex. Civ. Stat.
Ann. to expand the category of persons who may qualify as members
of these corporations.  As amended, a "member" could be either a
person receiving water or sewer utility service or the record owner
of fee simple title to the property receiving the service. 
Previously, the definition of "member" restricted membership to
those persons owning the fee simple title to property being served.

Also amends the definition of "water supply or sewer service
corporation" to exclude corporations that provide retail water or
sewer service to  a person who is not a member; also provides
exceptions.

SECTION 2.  Amends Section 13.043(g), Texas Water Code, to ensure
that the TNRCC's appellate review of certain charges and fees
assessed by water supply or sewer service corporations will be
reasonable in deference to the fact that such fees and charges are
assessed by boards of directors elected by the actual water utility
or sewer utility service customers and, further, to prevent
repetitive appeals challenging the same fees and charges, which
unduly burdens the State's administrative supervision of such
appeals and the costs imposed on non-profit water supply and sewer
service corporations.

SECTION 3.  Amends Section 13.139(d), Texas Water Code, to delete
the reference to the Texas Department of Health since minimum
capacity requirements are now determined by the TNRCC pursuant to
the Legislature's consolidation of public water supply supervisory
functions.

SECTION 4.  Amends Section 13.187(d), Texas Water Code, to minimize
unnecessary regulatory supervision over pass-through rates, which
are required by either the TNRCC or, in cases involving franchised
municipal utilities, city councils, when these rates involve the
recovery of charges required by law and are not optional to the
utility.

SECTION 5.  Amends Section 13.250(b), Texas Water Code, to clarify
that agreements between water utility service providers and sewer
utility service providers, when these services are provided by
separate retail utilities, may allow for the disconnection of water
utility service as a more efficient means of ensuring payment of
sewer utility services, and that this means of enforcement may be
allowed under an arrangement between the service providers which is
approved by TNRCC order.

SECTION 6.  Adds new Section 13.2502 to clearly state TNRCC
regulatory policy which allows a water supply or sewer service
corporation or a special utility district created under Chapter 65,
Texas Water Code, to deny service when a developer of a subdivision
fails to pay the full costs involved in organized water or sewer
utility service to the subdivision.  Subsection (a) sets forth the
appropriate regulatory limitations on the ability of a non-profit
water supply or sewer service corporation or a special utility
publication or other demonstration of effective notice to affected
persons.  Subsection (d) expressly provides that the service
policies set forth under this provision do not affect the TNRCC's
jurisdiction for review of the charges and fees assessed for such
service pursuant to Section 13.043(g), Texas Water Code. 
Subsection (e) defines "developer" for purposes of this new
section.

SECTION 7.  Amends Section 13.301, Texas Water Code, to add a new
subparagraph (c)(5), expressly authorizing the TNRCC to review
those factors generally relevant to the issuance of certificates of
convenience and necessity in determining whether to authorize the
transfer, sale, or merger of one utility system to another utility.

SECTION 8.  Amends Section 13.304, Texas Water Code, by adding new
subsections (b) and (c) to provide flexibility for financial
institutions foreclosing on utility systems.  The TNRCC's
experience has been that certain financial institutions, in
foreclosing on utility systems, do not provide the 120-day prior
notice, and that this is largely unnecessary.  However, new
subsection (b) still requires financial institutions to provide the
TNRCC with a minimum of 30 days written notice prior to completion
of the foreclosure, and new subsection (c) provides that such
financial institutions must continue to operate the utility
services subject to the same rules and restrictions, and
protections to the utility service customers, as are binding on the
TNRCC's regulation of the utility itself.

SECTION 9.  Provides for an effective date of September 1, 1995.

SECTION 10.  Emergency clause.



COMPARISON OF ORIGINAL TO SUBSTITUTE
(1)  At Section 1, the definition of "member" will differ as
follows:
ORIGINAL:  ""Member" means a person who holds a membership in a
water supply or sewer service corporation , who receives water or
sewer utility service from the corporation, and who is a record
owner...."
SUBSTITUTE:    ""Member" means a person who holds a membership in
a water supply or sewer service corporation and who either receives
water or sewer utility service from the corporation or is a record
owner...."

(2)  At Section 6, page 5, lines 7-9:
ORIGINAL:  "....comply with the subdivision extension policy of the
corporation or special district as set forth in the tariff of the
corporation or the policies of the special district;..."
SUBSTITUTE:    "....comply with the subdivision service extension
policy of the corporation or special utility district as set forth
in the tariff of the corporation or the policies of the special
utility district;..."

(3)  At Section 6, page 5, (lines 11-14 of Original; lines 12-15 of
Substitute):
ORIGINAL:  "....the corporation or special district gave notice as
provided by this section of the rules of the corporation or special
district applicable to service to subdivisions from the system of
the corporation or special district."
SUBSTITUTE:    "....the corporation or special utility district
gave notice as provided by this section of the rules of the
corporation or special utility district applicable to service to
subdivisions from the corporation or special utility district."

(4)  At Section 6, page 5, lines 21-22 of Substitute:
The words "on a biennial basis" were inserted in the Substitute,
and were not found in the Original.

(5)  The words "service extension policy" and "extension policy" in
the Original were changed in the Substitute to "subdivision service
extension policy" in a number of places.

(6)  The words "special district" in the Original were changed in
the Substitute to "special utility district" in a number of places.

(7)  At Section 6, page 6, lines 17-18 of Substitute:
There was no definition for "service applicant" in the Original.

(8)  At Section 8, page 7, (lines 26-27 of Substitute, lines 21-22
of Original):
ORIGINAL:   "A financial institution that forecloses on all of the
facilities of a utility that are used...."
SUBSTITUTE: "A financial institution that forecloses on a utility
or on any part of the utility's facilities or property that are
used...."


SUMMARY OF COMMITTEE ACTION
H.B.2387 was considered by the committee in a public hearing on
March 20, 1995.
The committee considered a complete substitute for the bill.  The
substitute was adopted without objection.

The following persons testified in favor of the bill: 
     Mr. Kent B. Watson, representing himself and Texas Rural Water
Trade Association;
     Mr. John Burke, representing Aqua Water Supply Corporation;
The following persons testified against the bill: None (0).
The following person testified on the bill:
     Mr. Dean Robbins, representing the Texas Natural Resource
Conservation Commission.

The bill was reported favorably as substituted, with the
recommendation that it do pass and be printed and be sent to the
Committee on Local and Consent Calendars, by a record vote of 7
ayes, 0 nays, 0 pnv, 2 absent.