H.B. No. 1565

AN ACT

relating to the powers and duties of the Bexar Metropolitan Water District.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1

SECTION 1.01. Section 3, Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended to read as follows:

Sec. 3. In addition to the powers vested by the Constitution and general laws in such public agency for the greatest practicable measure of the conservation, preservation, and beneficial utilization of its public waters, the power to control and utilize its public waters and to regulate the disposal and the disposal of sewage, waste, and refuse, the District shall have the following general powers:

(a) Through every practical and legal means to develop, transport, deliver, distribute, store, and treat water for use within the District, including the storm and flood waters within the District, including the power to cooperate with the United States Government or any agency thereof, or any municipality, public, quasi-public or private agency and to contract, negotiate, and enter into agreements with any one or more of such agencies in effecting such purposes;

(b) [to store, control, and conserve storm and flood waters of its rivers and streams and to prevent the escape of any such waters without first obtaining therefrom a maximum of public service; to prevent devastation of property from overflow and to protect life and property from uncontrolled flood and storm waters;

[(c)] to conserve and distribute waters essential for domestic and other uses by the inhabitants of the District, including necessary water supply for cities and towns situated within the District;

(c) [(d) to provide for the development of drainage systems to control, regulate, and dispose of all storm and flood waters of the District so as to protect effectively lives and property, and to utilize such waters for each and every purpose for which flood and storm waters when controlled, conserved, or regulated may be utilized as contemplated by the Constitution and the public policy therein declared;

[(e)] to provide by purchase, construction, lease, gift, or in any other manner and to operate any and all facilities deemed by the District essential for preserving the purity of all the surface and underground waters of the District for the protection of the health of its inhabitants, and to formulate plans to make and enforce rules and regulations for the effective disposal of any and all sewage wastes, refuse, or residuum, however accumulated; which otherwise would contaminate, pollute, or render unsafe and insanitary the surface and underground waters of the District and which might threaten or impair the health of its inhabitants or which might adversely affect the health of the inhabitants downstream below the District;

(d) [(f)] to acquire by purchase, construction, lease, gift, or in any other manner (otherwise than by condemnation) and to maintain, use, and operate any and all property of any kind, real, personal, or mixed, or any interest therein within or without the boundaries of the District deemed by its Board of Directors necessary or convenient to the exercise of the powers, rights, privileges, and functions conferred upon it by this Act;

(e) [(g)] to acquire by condemnation any and all property of any kind, real, personal, or mixed, or any interest therein, within or outside of the boundaries of the District, necessary to the exercise of the powers, rights, privileges, and functions conferred by this Act, in the manner provided by General Law relative to condemnation, or at the option of the District, in the manner provided by law with respect to condemnation by agencies organized pursuant to Section 59, Article 16 of the Constitution of the State of Texas; provided that the District shall not have the right or power to so condemn any such property that may be owned by any other political subdivision, city, or town located within the District;

(f) [(h)] to cooperate, contract, and enter into agreements with towns, cities, districts, or political subdivisions located in or outside of the District and with Bexar County, in the construction, purchase, lease, maintenance, improvement, use, and operation of any and all facilities, works, and plants necessary or convenient to the accomplishment of the purposes for which the District was created;

(g) [(i)] to make contracts with any person, private corporation, municipal corporation, political subdivision, or the Board of Trustees thereof, operating water distribution facilities for the benefit of a city or town within the District, under which the District may perform services for such parties or such parties may perform services for the District, or under which either may operate all or any part of the facilities of the other, having due regard for the duties and obligations of such parties in the instrument prescribing their or its duties;

(h) [(j)] to construct, extend, improve, maintain, and reconstruct, to cause to be constructed, extended, improved, maintained, or reconstructed and to use and operate any and all facilities of any kind necessary or convenient to the exercise of the powers, rights, privileges, and functions conferred by this Act;

(i) [(k)] to sue and be sued in its corporate name;

(j) [(l)] to make by-laws for the management and regulation of its affairs conformably to the powers and purposes herein conferred and consistent with the Constitution of this State;

(k) [(m)] to make rules and regulations and to prescribe penalties for the breach of any rule or regulation of the District, which penalties shall not exceed fines of more than Two Hundred Dollars ($200), or imprisonment for more than thirty (30) days, or may provide both such fine and such imprisonment. The penalties hereby authorized shall be in addition to any other penalties provided by the laws of Texas and may be enforced by complaints filed in the appropriate court of jurisdiction in the county in which the district's principal office is located; provided, however, that no rule or regulation which provides a penalty for the violation thereof shall be in effect, as to enforcement of the penalty, until five days next after the district may have caused a substantive statement of the particular rule or regulation and the penalty for the violation thereof to be published, once a week for two consecutive weeks, in one or more newspapers affording general circulation in the area in which the property of the district is situated; and, the substantive statement so to be published shall be as condensed as is possible to afford an intelligent direction of the mind to the object sought to be accomplished or the act forbidden by the rule or regulation; one notice may embrace any number of regulations; there must be embraced in the notice advice that breach of the particular regulation, or regulations, will subject the violator to the infliction of a penalty and there also shall be included in the notice advice that the full text of the regulation sought to be enforced is on file in the principal office of the District, where the same may be read by any interested person. Five (5) days after the second publication of the notice hereby required, the advertised regulation shall be in effect, and ignorance of any such regulation shall not constitute a defense to a prosecution for the enforcement of a penalty; and, the rules and regulations authorized hereby, after the required publication, shall judicially be known to the courts and shall be considered of a nature like unto that of valid penal ordinances of a city of the State;

(l) [(n)] to adopt, use, and alter a corporate seal;

(m) [(o)] to appoint agents and employees; prescribe their duties and fix their compensation;

(n) [(p)] to make contracts and execute instruments necessary or convenient to the exercise of the powers, rights, privileges, and functions therein conferred;

(o) [(q)] to borrow money for its authorized purposes, to accept grants or loans or allotments from the United States Government or any of its agencies, or others, and in connection with any such grants, loans, or allotments to enter into such agreements as may be required to make them effective, and for the purpose of obtaining funds to issue its negotiable tax bonds and its negotiable revenue bonds in the manner and to the extent hereinafter provided;

(p) [(r)] to operate and maintain with consent of the governing body of any city, town, or political subdivision located in the District any works, plants, or facilities deemed necessary or convenient to the accomplishment of the purposes for which the District is created;

(q) [(s)] to enter into planning agreements with the Texas Water Development Board under Subchapter C, Chapter 16, Water Code, for the purpose of conducting studies necessary to maintain retail water supply services to customers within the boundaries of the District; and

(r) [(t)] to cooperate with and support local fire departments and economic development activities sponsored by local entities within the District that use water and water resources provided, or to be provided, by the District.

SECTION 1.02. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Section 27D to read as follows:

Sec. 27D. (a) No later than 120 days after the text of this section becomes effective, the District shall:

(1) produce a report of an assessment of the operations and maintenance condition of the District;

(2) produce a status report of infrastructure improvements under construction;

(3) produce a report addressing the District's provision of water meeting Texas Commission on Environmental Quality (TCEQ) pressure and quality standards;

(4) provide a report on customer service response time;

(5) produce a report certifying any rate structure changes approved by the District and documenting a schedule for future changes to rate structure anticipated by the District; and

(6) deliver these reports to the Utilities and District's section of the TCEQ and the oversight committee.

(b) No later than 180 days after the text of this section becomes effective, the District shall produce an assessment of the District's financial condition and present it to the Utilities and District's section of the TCEQ and the oversight committee.

(c) No later than 240 days after the text of this section becomes effective, the District shall:

(1) produce a report of necessary improvements to the system and a schedule for the implementation of those improvements to ensure all service area improvements are included in the Capital Improvement Plan (CIP) and all service areas have defined Operating and Management (O&M) projects programmed to repair or replace existing aged infrastructure;

(2) produce a report on the sustainability and adequacy of the water resources of the District and a plan for obtaining additional water resources if deficiencies exist; and

(3) deliver these reports to the Utilities and District's section of the TCEQ and the oversight committee.

(d) No later than one year after the text of this section becomes effective, the District shall:

(1) produce a report on service delivery improvements that have been completed and that are in progress;

(2) produce a report identifying all service improvements necessary for the system and a schedule for the completion of those improvements; and

(3) deliver these reports to the Utilities and District's section of the TCEQ and the oversight committee.

(e) No later than eighteen months after the text of this section becomes effective, the District shall adopt a uniform rate structure with rates that are equal to or lower than the rates of other large retail water providers in the region, except that the District may adopt higher rates if necessary to meet debt service obligations or debt coverage requirements.

SECTION 1.03. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Section 32 to read as follows:

Sec. 32. (a) The District shall permit a customer to pay a bill at one or more retail locations in the District.

(b) The District may not close a customer service branch that is in operation on June 1, 2007, unless a comparable customer service branch is opened. This subsection expires September 1, 2012.

SECTION 1.04. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Section 27A to read as follows:

Sec. 27A. The District shall submit to the oversight committee the following:

(a) a schedule for achieving the objectives set out in Section 27D within six months of the date the text of this Section becomes effective;

(b) evidence that the District has completed its three-year plan of improvements as adopted by the board of directors of the District prior to the effective date of this Act within one and one half years from the date the text of this Section becomes effective;

(c) current year audited annual financial statements indicating the financial condition of the district within thirty (30) days of completion;

(d) a written projection of all rate and fee increases for three years following the effective date of this Act within six months of the date the text of this Section becomes effective;

(e) a report summarizing the District's efforts to facilitate transition of service areas outside of Bexar and Atascosa Counties to other qualified local water utility service providers;

(f) any documentation or materials used in conducting a standard managerial and financial audit; and

(g) any other information the oversight committee requests.

SECTION 1.05. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Section 27B to read as follows:

Sec. 27B. (a) The District shall maintain a file on each complaint received by the District that relates to retail water service provided by the District. The file must include:

(1) the name of the person who filed the complaint, unless the person requests anonymity;

(2) the date the District receives the complaint;

(3) the subject matter of the complaint;

(4) the name of each person contacted in relation to the complaint;

(5) a summary of the results of the review or investigation of the complaint; and

(6) an explanation of the reason the file was closed, if the District closed the file without taking action other than investigating the complaint.

(b) The District shall establish and implement procedures for receiving complaints submitted through the Internet and orally.

SECTION 1.06. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Section 27C to read as follows:

Sec. 27C. The District shall maintain a rate structure that promotes and encourages conservation of water and provides for lower rates for customers using lower quantities of water.

SECTION 1.07. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Section 27E to read as follows:

Sec. 27E. The District shall implement an appeal and grievance process for employees of the District.

SECTION 1.08. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Section 27F to read as follows:

Sec. 27F. The legislature finds that:

(1) the Texas Commission on Environmental Quality has continuing jurisdiction over districts created under Section 52(b), Article III, and Section 59, Article XVI, Texas Constitution;

(2) the management and operation of the District demonstrate the need for an evaluation of the District by an independent third party such as the commission; and

(3) the commission has the expertise and authority necessary to conduct a thorough evaluation of the District and initiate actions to improve the management and operations of the District.

SECTION 1.09. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Section 27G to read as follows:

Sec. 27G. (a) Not later than the 30th day after the effective date of the Act enacting this section, the Texas Commission on Environmental Quality shall begin an on-site evaluation of the District. The evaluation must include:

(1) a description and analysis of the District's management structure, policies, practices and procedures, and recommendations for improving them;

(2) a description and analysis of the decision-making policies and procedures of the board of directors of the District, and recommendations for improving the policies and procedures;

(3) a narrative summary of the District's record of compliance with applicable state laws and commission rules, and recommendations for improving the District's record of compliance;

(4) a narrative summary and analysis of the financial policies and practices of the District, including the District's bonded indebtedness and other forms of debt, and a comparison of the District's debt to other water purveyors in the area;

(5) a description and analysis of the water rate-setting policies and practices of the District, and recommendations for improving the policies and practices;

(6) a narrative summary of the District's infrastructure capital improvements budget and a comparison of the budget with the capital improvements budgets of other major water purveyors in the area, and recommendations for improving the District's long-range budget;

(7) a compilation and analysis of customer water service interruptions during the preceding three years that resulted from inadequate infrastructure or other causes, and recommendations for preventing future service interruptions;

(8) a compilation and analysis of incidents in which contaminated water was supplied to customers of the District during the preceding three years, a description of measures taken by the District to prevent contamination, and recommendations for preventing future contamination; and

(9) a calculation of the annual volume of the District's unaccounted-for water, and recommendations for preventing future system leaks and related problems.

(b) On commencement of the evaluation, the commission shall specify a time period for completion of the evaluation.

(c) The commission may contract with utility management consultants, accountants, and other persons as necessary to conduct the evaluation.

(d) The commission may require the District to reimburse the commission for the reasonable cost of conducting the evaluation.

(e) The commission shall file copies of the completed evaluation with the oversight committee.

(f) On completion of the evaluation, the commission may issue orders compelling any appropriate and necessary actions by the District under Chapter 49, Water Code, and the commission's rules regulating retail public utilities. If the commission finds that the District is incapable of operating the utility in a manner that provides adequate water service to current and future customers, the commission may include, in the final evaluation, a recommendation that the oversight committee consider the option of initiating the process of receivership appointment to operate the utility under Section 13.142, Water Code.

ARTICLE 2

SECTION 2.01. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Section 33A to read as follows:

Sec. 33A. OVERSIGHT COMMITTEE. (a) In recognition of the important goal of the state in providing safe and efficient water supply services to the customers of the District and the necessity for state oversight and regulation of the District to ensure the achievement of this goal there is created the Bexar Metropolitan Water District Oversight Committee.

(b) The oversight committee shall monitor the progress of the district in maintaining a rate structure that conserves water, provides adequate service to low-income customers, and assists in creating uniform rates among water utility providers in the region; the oversight committee also shall monitor the quality of service provided by the district; monitor the plans by the district to provide for sustainability of water resources and plan for infrastructure needs; identify regulatory and statutory barriers to achievement of the district's goals, and make recommendations to the Legislature, if necessary; and perform any other oversight function deemed appropriate by the oversight committee.

(c) The oversight committee is comprised of 5 members appointed to represent the following members:

(1) the Senator sponsor of this Act, or, in the event this Senator cannot serve, a Senator appointed by the Lieutenant Governor;

(2) the House author of this Act, or, in the event this Representative cannot serve, a Representative appointed by the Speaker of the Texas House of Representatives;

(3) one member with special expertise in the operation of public water utilities appointed by the Governor;

(4) one member appointed by the Governor to represent the public; and

(5) a member of the Bexar County Commissioners Court who represents a precinct in which customers of the District reside.

(d) A member of the oversight committee is not entitled to receive compensation for service on the oversight committee but is entitled to reimbursement of the travel expenses incurred by the member while conducting the business of the oversight committee, as provided by the General Appropriations Act.

(e) The oversight committee shall prepare a comprehensive report to the House and Senate Natural Resources Committee on its findings and recommendations concerning the District's ability to meet service and financial standards and any legislative changes needed in the District's authority or governance.

(f) The District shall provide staff support for the oversight committee.

SECTION 2.02. Subject to approval by the Legislative Audit Committee for inclusion in the annual audit plan, the state auditor shall conduct a financial audit of the District upon passage of this Act and submit the findings from the audit in a written report to the members of the oversight committee, the board of directors of the District, and the Texas Legislature. The District shall cooperate and provide assistance and access to all necessary records, confidential or unconfidential, to the state auditor in conducting the audit pursuant to this Section. The District shall reimburse the state auditor for the cost of performing the audit.

SECTION 2.03. (a) The legal notice of the intention to introduce this Act, setting forth the general substance of this Act, has been published as provided by law, and the notice and a copy of this Act have been furnished to all persons, agencies, officials, or entities to which they are required to be furnished under Section 59, Article XVI, Texas Constitution, and Chapter 313, Government Code.

(b) The governor, one of the required recipients, has submitted the notice and Act to the Texas Commission on Environmental Quality.

(c) The Texas Commission on Environmental Quality has filed its recommendations relating to this Act with the governor, the lieutenant governor, and the speaker of the house of representatives within the required time.

(d) All requirements of the constitution and laws of this state and the rules and procedures of the legislature with respect to the notice, introduction, and passage of this Act are fulfilled and accomplished.

SECTION 2.04. Notwithstanding any other provision of this Act, nothing herein shall impair any Canyon Regional Water Authority project contract, project financing obligation issued or to be issued wherein the Bexar Metropolitan Water District is a CRWA member entity project participant.

SECTION 2.05. Notwithstanding any other Act enacted during the 80th Texas Legislature and notwithstanding Sections 311.025 and 312.014, Government Code, this Act prevails over any other Act relating to or amending Chapter 306, Acts of the 49th Legislature, Regular Session, 1945.

SECTION 2.06. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2007.

______________________________ ______________________________

President of the Senate Speaker of the House

I certify that H.B. No. 1565 was passed by the House on April 4, 2007, by the following vote: Yeas 142, Nays 0, 4 present, not voting; that the House refused to concur in Senate amendments to H.B. No. 1565 on May 25, 2007, and requested the appointment of a conference committee to consider the differences between the two houses; and that the House adopted the conference committee report on H.B. No. 1565 on May 28, 2007, by the following vote: Yeas 141, Nays 0, 1 present, not voting.

______________________________ Chief Clerk of the House

I certify that H.B. No. 1565 was passed by the Senate, with amendments, on May 23, 2007, by the following vote: Yeas 30, Nays 0; at the request of the House, the Senate appointed a conference committee to consider the differences between the two houses; and that the Senate adopted the conference committee report on H.B. No. 1565 on May 28, 2007, by the following vote: Yeas 30, Nays 0.

______________________________ Secretary of the Senate APPROVED: __________________

Date

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Governor