2009S0122-3 01/22/09

By: Uresti S.B. No. 514

A BILL TO BE ENTITLED

AN ACT

relating to providing an oversight mechanism for the Bexar Metropolitan Water District, including enforcement authority.

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

SECTION 1. LEGISLATIVE FINDINGS. The legislature finds that:

(1) according to audits and evaluations of the Bexar Metropolitan Water District performed by state agencies under H.B. No. 1565, Acts of the 80th Legislature, Regular Session, 2007:

(A) certain officials of the district have engaged in a pattern of unethical conduct and unprofessional management practices;

(B) disagreements regarding jurisdiction within the district and between the district and other entities and distrust among key management personnel and members of the board have hampered efforts by the district to improve services for existing customers and to meet water supply needs of growing populations within its service areas;

(C) there has been a history of noncompliance on the part of the district; and

(D) the district has demonstrated weak management, engaged in financial improprieties, and provided unreliable service, which threatens to impair the quality of life of its customers and diminish the prospects for economic growth within the district;

(2) after 18 months of intense scrutiny by state agencies and the Bexar Metropolitan Water District Oversight Committee, which is composed of gubernatorial appointees, legislators, and a local representative of Bexar County, it is evident that further legislative action is necessary; and

(3) to ensure the reliability, sustainability, quality, and affordability of water supply services to the customers of the district, it is necessary to appoint a conservator, who shall manage the district until the district has achieved sufficient rehabilitation to serve its customers in a professional, ethical, and reliable manner.

SECTION 2. CREATION OF CONSERVATORSHIP. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Sections 33B, 33C, and 33D to read as follows:

Sec. 33B. CONSERVATOR. Not later than the 60th day after the effective date of this Section, the Texas Commission on Environmental Quality shall appoint as Conservator for the District an individual who has demonstrated a high level of expertise in water utility management.

Sec. 33C. POWERS AND DUTIES OF CONSERVATOR. (a) The Board shall be subject to the authority of a conservator appointed under this Act and shall work cooperatively with the Conservator in rehabilitating the Board in its ability to manage and operate the District in a professional manner. During the period of conservatorship, the Conservator has all of the general authority held by the Board immediately before the date conservatorship is established.

(b) The Conservator shall:

(1) take possession and control of the books, records, property, assets, and daily management of the District;

(2) take immediate action to ensure that the assets of the District are protected and that the quality of service provided to District customers is improved to the highest level reasonably practicable under the circumstances;

(3) develop a comprehensive rehabilitation plan for the District; and

(4) report monthly to the Texas Commission on Environmental Quality and to any committee with direct oversight authority over the District regarding:

(A) the financial, managerial, technical, and operational status of the District under the conservatorship;

(B) the actions the Conservator has taken to ensure that the District complies with the plan developed under Subdivision (3) of this Subsection; and

(C) the progress the Conservator has made towards completion of the plan developed under Subdivision (3) of this Subsection.

(c) The comprehensive rehabilitation plan must:

(1) identify strategies for restoring the District's financial integrity and for developing a system of sound financial management;

(2) describe a standard of ethics, professionalism, and openness expected of each member of the Board and employees of the District and a mechanism for enforcing compliance with District policies, including procurement policies;

(3) address ways to enhance the District's operational efficiency;

(4) as an integral part of rehabilitating the District, devise a program for:

(A) educating the Board of Directors and key management personnel on improving management practices, on complying with Board policy and applicable laws and regulations, and on implementing needed reforms for the District; and

(B) developing greater technical expertise on the part of District employees;

(5) identify District assets that, if sold, would likely improve the District's ability to serve its remaining customers;

(6) ensure that any assets identified in Subdivision (5) of this Subsection that are sold are sold at fair market value;

(7) ensure that any entity that acquires a District asset is responsible for all transaction costs related to the acquisition, including the cost of defending the State against legal challenges to the disposition of the asset; and

(8) inventory and evaluate the discrete water systems that the District comprises and determine:

(A) the District's basis in or the intrinsic value of the infrastructure associated with each water system;

(B) the District's bonded debt and commercial paper reasonably associated with or allocable to the infrastructure of each water system;

(C) the adequacy of the source of the water supply, such as wells, located in each water system's service area to supply the current and projected demands generated in that service area;

(D) the adequacy of the water storage facilities located in each water system's service area to supply the current and projected demands generated in that service area; and

(E) the adequacy of the distribution system located in each water system's service area to supply the current and projected demands generated in that service area.

(d) The term of the Conservator continues until:

(1) the Conservator reports that the District has been sufficiently rehabilitated to provide reliable, cost-effective, quality service to its customers; and

(2) the Texas Commission on Environmental Quality, after performing a confirmation review, concurs with the Conservator's report that the District has been sufficiently rehabilitated to ensure that it can serve its customers in a professional manner and that conservatorship is no longer necessary.

(e) When conservatorship is terminated under Subsection (d) of this Section, the assets and management of the District return to the control of the Board of Directors.

(f) Funding for the conservatorship shall be provided by the District and approved by the Commission.

Sec. 33D. ADDITIONAL ENFORCEMENT AUTHORITY. (a) Notwithstanding any other law, if the Texas Commission on Environmental Quality determines that, after a reasonable period, the District has not made satisfactory progress in rehabilitating its management and related operations, the Commission may use the auditing and enforcement authority provided to the Commission by Chapters 36 and 49, Water Code, including dissolution, to address deficiencies on the part of the District.

(b) If the Texas Commission on Environmental Quality determines that, after a reasonable period, the Conservator has not made satisfactory progress in implementing the comprehensive rehabilitation plan and the Commission has not determined that the District must be dissolved, the Commission shall appoint a new Conservator.

(c) The Texas Commission on Environmental Quality shall adopt rules providing for filling a vacancy in the position of Conservator.

SECTION 3. CREATION OF SUBSEQUENT CONSERVATORSHIP. Effective June 1, 2011, Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Section 33E to read as follows:

Sec. 33E. SUBSEQUENT CONSERVATOR. (a) The Texas Commission on Environmental Quality shall appoint a subsequent Conservator for the District if the Commission determines that after the termination of an earlier conservatorship under Section 33C of this Act, the District has:

(1) obstructed the Commission's authority to supervise the District;

(2) violated a final order of the Commission;

(3) caused a potential health hazard by failing to provide appropriate water or wastewater treatment to District customers;

(4) caused a potential health hazard, extended outages, or repeated service interruptions by failing to adequately maintain District facilities;

(5) displayed a pattern of hostility towards the Commission or repeatedly failed to respond to the Commission or to District customers;

(6) engaged in a pattern of:

(A) noncompliance with laws or regulations; or

(B) unethical conduct and unprofessional management practices;

(7) abandoned the operation of its facilities;

(8) had a majority of its Board of directors resign;

(9) demonstrated weak management;

(10) engaged in financial improprieties; or

(11) provided unreliable service that impairs the quality of life of its customers or diminishes the prospects for economic growth within the district.

(b) An individual appointed Conservator under this Section must have demonstrated a high level of expertise in water utility management and shall have all the powers and duties assigned to a Conservator under Section 33C of this Act.

(c) For a conservatorship created under this Section, the Texas Commission on Environmental Quality has the additional enforcement authority assigned to it under Section 33D of this Act.

SECTION 4. OVERSIGHT COMMITTEE: COMPOSITION; REPORT. Section 33A, Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by amending Subsection (c) and adding Subsection (g) to read as follows:

(c) The oversight committee is comprised of five [5] members appointed as follows [to represent the following members]:

(1) a [the] Senator who represents a Senate district that includes territory within the District, [sponsor of this Act, or, in the event this Senator cannot serve, a Senator] appointed by the Lieutenant Governor;

(2) a Representative who represents a [the] House district that includes territory within the District, [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 of the Senate Committee on Natural Resources [with special expertise in the operation of public water utilities] appointed by the Lieutenant Governor;

(4) one member of the House Committee on Natural Resources appointed by the Speaker of the Texas House of Representatives; and

(5) 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].

(g) On or before December 31, 2010, the oversight committee shall provide a report under Subsection (e) of this Section to the 82nd Legislature. The committee is abolished and this Section expires on January 1, 2011.

SECTION 5. NOTICE. (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 6. EFFECTIVE DATE. Except as otherwise provided by this Act, 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, 2009, except as otherwise provided by this Act.