HBA-MPM, NLM, PDH H.B. 1362 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 1362 By: Clark Land & Resource Management 9/16/1999 Enrolled BACKGROUND AND PURPOSE Prior to the 76th Legislature, Section 13.255, Water Code, provided a mechanism for municipalities in Texas to be granted a single certification to provide water and sewer service for areas within their corporate limits when the certificate of convenience and necessity for those areas was previously held by another retail public utility. That situation generally arose when a previously rural area was incorporated or annexed into a municipality due to urban growth. The municipality compensated the retail public utility for the transferred service area and infrastructure. This compensation was determined by an appraiser selected solely by the retail public utility with the cost of the appraiser to be paid by the municipality. The appraiser's decision was binding on the Texas Natural Resource Conservation Commission (TNRCC). The law may have created an appearance of unfairness and, if a dispute arose, the municipality's only recourse was to take legal action. H.B. 1362 provides a statutory protocol whereby disputes over an appraisal may be equitably resolved by the retail public utility and the municipality. Specifically, the bill authorizes the retail public utility and the municipality to each select an appraiser if they cannot agree on a single appraiser and authorizes a retail public utility or a municipality to petition TNRCC to appoint a third appraiser if the two appraisers cannot agree on a compensation amount. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 13.255, Water Code, by amending Subsection (l), as follows: (l) Requires the costs of an independent appraiser who is selected by the affected retail public utility (utility) to be paid by the municipality. Requires the compensation provided under Subsection (g) to be determined by a qualified individual or firm to which a municipality and a utility agree to serve as an independent appraiser for an area annexed by the municipality. Requires the utility and municipality to each appoint an independent appraiser if the entities are unable to agree on an appraiser before the 11th day after the utility or municipality notifies the other party of the impasse. Requires the independent appraisers to meet to reach an agreed determination of the compensation amount on or before the 10th business day after their appointment. Authorizes the utility or municipality to petition the Texas Natural Resource Conservation Commission (TNRCC) or a person TNRCC designates for the purpose to appoint a third qualified independent appraiser to reconcile the appraisals of the two originally appointed appraisers. Prohibits the determination of the third appraiser from being less than the lesser or more than the greater of the two original appraisals. Requires the costs of the independent appraisers for an annexed area to be shared equally by the utility and municipality. Makes conforming and nonsubstantive changes. Subsection (g) requires the value of real property to be determined according to certain standards and requires the factors ensuring that the compensation to a retail public utility for the taking, damaging, and/or loss of personal property, including the retail public utility's business, is just and adequate, to include certain factors, including expenses of the retail public utility. SECTION 2. Makes changes in law made by this Act propesctive to an application filed with TNRCC to grant single certification to a municipality under Section 13.255(b) (Single Certification in Incorporated or Annexed Areas), Water Code, filed on or after September 1, 1999. SECTION 3. Effective date: September 1, 1999. SECTION 4.Emergency clause.