H.B. 3574 78(R)    BILL ANALYSIS


H.B. 3574
By: Wohlgemuth
Natural Resources
Committee Report (Amended)



BACKGROUND AND PURPOSE 

Chapter 65 of the Water Code allows traditional water supply and sewer
service corporations to obtain the tax and financing advantages of a
district through the creation of a Special Utility District (SUD). Chapter
65 provides a procedural framework for the creation of a SUD through the
Texas Commission on Environmental Quality (TCEQ).   

Currently, the Johnson County Rural Water Supply Corporation (JCRWSC)
provides water service within Johnson, Tarrant, Ellis, and Hill Counties.
HB 3574 would allow for the creation of a SUD vested with certain powers
granted under Chapter 65 and embodies the terms of a mediated settlement
agreement among the parties.   
 

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. 

ANALYSIS

The bill creates the Johnson County SUD, contingent upon the temporary
board calling and holding an election to confirm establishment of the
district and to elect its initial directors; establishes the boundaries of
the district within certain areas of the present boundaries of JCRWSC's
certificate of convenience and necessity (CCN); and recognizes that the
land within the district will be benefitted by the works and projects of
the district.   

The bill confers the rights and powers provided by general law to a SUD,
with the following express limitations 

(1)  For six years from the effective date of the bill, the district
agrees to limit the exercise of its powers with respect to the provision
of public water utility service to territory located within the boundaries
of the district or as authorized by its Certificate of Convenience and
Necessity; and  


(2)  For six years from the effective date of the bill, the district shall
not have the power to provide wastewater service, solid waste service,
fire-fighting service, stormwater, flood control, and drainage services,
and shall be prohibited from conversion to or otherwise becoming a
municipal utility district, absent the express written consent of any city
with extraterritorial jurisdiction (ETJ) that overlaps the district's
boundaries.   


After six years, the District may apply to TCEQ to expand its powers and
notice of such application must be sent to each city whose corporate
limits or ETJ overlap the district's boundaries.  TCEQ must grant a timely
request for a contested case hearing filed by such a city.   



 

The bill provides that if a municipality asserts regulatory authority,
including water quality standards, over any geographic area lying within
the jurisdiction of the district, the regulation of the municipality shall
control over that of the district in the event of a regulatory conflict,
except with respect to potable water quality standards or to disputes
relating to retail water utility service areas. 

The bill recognizes the district's right to obtain tax exempt bond
financing and a state sales tax exemption, and does not impair any other
right or benefit under Chapter 65 or other applicable law consistent with
the powers granted by the bill not in conflict with the bill's express
prohibitions.   

The bill establishes that the district is governed by an initial board of
nine directors, and utilizes  the statutory framework for elections in
Chapter 65, including provision for a temporary and initial board of
directors.  

EFFECTIVE DATE

Upon passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2003. 


EXPLANATION OF AMENDMENTS

Committee Amendment No. 1 eliminates a provision in SECTION 11 of the Act
stating that in adopting rules under the Act, the district is subject to
Subchapter B, Chapter 2001, Government Code, as if the district were a
state agency.