81R33584 SMH-F

By: Hegar S.B. No. 1846

Substitute the following for S.B. No. 1846:

By: Corte C.S.S.B. No. 1846

A BILL TO BE ENTITLED

AN ACT

relating to the powers and duties of the Texas Commission on Environmental Quality and related entities.

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

SECTION 1. Subchapter C, Chapter 341, Health and Safety Code, is amended by adding Section 341.0365 to read as follows:

Sec. 341.0365. ADDITIONAL REQUIREMENTS FOR OWNERS AND OPERATORS OF CERTAIN WATER WELLS. (a) In addition to any applicable requirements under this chapter or other law, a person who owns or operates a water well that, for compensation, provides water to not fewer than 3 and not more than 14 residences for any purpose shall ensure that the well water is treated with chlorine or a chlorine compound.

(b) The chlorination system for the well water must be designed by a professional water engineer. The owner or operator of the well must submit the plans to the commission for approval before use of the chlorination system. The owner or operator of the well shall maintain the chlorination system and keep the system in functional operating condition.

(c) In coordination with the local health department, the owner or operator of the well must perform testing for foreign organisms in the water, including fecal coliform bacteria and E. coli bacteria, every six months. The owner or operator of the well must provide the commission and the recipients of water from the well with the results of the testing.

SECTION 2. Section 5.1175, Water Code, is amended to read as follows:

Sec. 5.1175. PAYMENT OF PENALTY BY INSTALLMENT. (a) The commission by rule may [shall] allow a person who [small business that] owes a monetary civil or administrative penalty imposed for a violation of law within the commission's jurisdiction or for a violation of a license, permit, or order issued or rule adopted by the commission to pay the penalty in periodic installments. The rule must provide a procedure for a person [qualified small business] to apply for permission to pay the penalty over time.

(b) [The rule must classify small businesses by their net annual receipts and number of employees. A business that is a wholly owned subsidiary of a corporation may not qualify as a small business under this section.

[(c)] The rule may vary the period over which the penalty may be paid or the amount of the periodic installments according to the amount of the penalty owed and the size of the business that owes the penalty. The period over which the penalty may be paid may not exceed 36 [12] months.

SECTION 3. Section 7.002, Water Code, is amended to read as follows:

Sec. 7.002. ENFORCEMENT AUTHORITY. The commission may initiate an action under this chapter to enforce provisions of this code and the Health and Safety Code within the commission's jurisdiction as provided by Section 5.013 of this code and rules adopted under those provisions. The commission or the executive director may institute legal proceedings to compel compliance with the relevant provisions of this code and the Health and Safety Code and rules, orders, permits, or other decisions of the commission. The commission may delegate to the executive director the authority to issue an administrative order including the authority to assess penalties or order corrective measures to ensure compliance with the provisions of this code and the Health and Safety Code within the commission's jurisdiction as provided by Section 5.013 of this code and rules adopted under those provisions.

SECTION 4. Section 13.043, Water Code, is amended by amending Subsection (h) and adding Subsection (h-1) to read as follows:

(h) The commission or the executive director may[, on a motion by the executive director or by the appellant under Subsection (a), (b), or (f) of this section,] establish interim rates to be in effect until a final decision is made.

(h-1) If the commission sets a final rate that is lower than the interim rate established under Subsection (h), the retail public utility shall refund or credit the difference between the interim rate and the final rate plus interest as determined by the commission, unless otherwise agreed to by the parties to the proceeding. If the commission sets a final rate that is higher than the interim rate, the retail public utility may collect the difference between the interim rate and the final rate unless otherwise agreed to by the parties to the proceeding.

SECTION 5. Subsection (c), Section 13.131, Water Code, is amended to read as follows:

(c) The commission shall fix proper and adequate rates and methods of depreciation, amortization, or depletion of the several classes of property of each utility and shall require every utility to carry a proper and adequate depreciation account in accordance with those rates and methods and with any other rules the commission prescribes. Rules adopted under this subsection must require the book cost less net salvage of depreciable utility plant retired to be charged in its entirety to the accumulated depreciation account in a manner consistent with accounting treatment of regulated electric and gas utilities in this state. Those rates, methods, and accounts shall be utilized uniformly and consistently throughout the rate-setting and appeal proceedings.

SECTION 6. Subsection (a), Section 13.145, Water Code, is amended to read as follows:

(a) A utility may consolidate more than one system under a single tariff on a regional or statewide basis [only] if[:

[(1) the systems under the tariff are substantially similar in terms of facilities, quality of service, and cost of service; and

[(2)] the tariff provides for rates that promote water conservation for single-family residences and landscape irrigation.

SECTION 7. Section 13.187, Water Code, is amended by amending Subsections (f), (i), (j), (k), (l), (n), and (o) and adding Subsection (l-1) to read as follows:

(f) The regulatory authority may set the matter for hearing on its own motion at any time within 120 days after the effective date of the rate change. [If more than half of the ratepayers of the utility receive service in a county with a population of more than 2.5 million, the hearing must be held at a location in that county.]

(i) The regulatory authority or the executive director, pending final action in a rate proceeding, may order the utility to deposit all or part of the rate increase received or to be received into an escrow account with a financial institution approved by the regulatory authority. Unless otherwise agreed to by the parties to the rate proceeding, the utility shall refund or credit against future bills all sums collected during the pendency of the rate proceeding in excess of the rate finally ordered plus interest as determined by the regulatory authority.

(j) For good cause shown, the regulatory authority or the executive director may authorize the release of funds to the utility from the escrow account during the pendency of the proceeding.

(k) If the regulatory authority receives at least the number of complaints from ratepayers required for the regulatory authority to set a hearing under Subsection (e), the regulatory authority or the executive director may, pending the hearing and a decision, suspend the date the rate change would otherwise be effective. Except as provided by Subsection (d-1), the proposed rate may not be suspended for longer than:

(1) 90 days by a local regulatory authority; or

(2) 250 [150] days by the commission or executive director.

(l) During [At any time during] the pendency of the rate proceeding the regulatory authority or the executive director may fix interim rates to remain in effect until a final determination is made on the proposed rate. The regulatory authority may fix interim rates at any time during the pendency of the rate proceeding. The executive director may fix interim rates not later than the 120th day after the proposed effective date of the proposed rate change. The interim rates established by the executive director may not be lower than the rates on the utility's approved tariff or higher than those in the application of the utility. In establishing an interim rate, the executive director shall consider only representative operating data for the test year proposed in the application of the utility. The executive director may request additional data or information for the test year. In establishing an interim rate, the executive director shall consider:

(1) whether the interim rate will preserve the financial integrity of the utility during the period that the interim rate is in effect;

(2) whether the interim rate will provide sufficient money for the capital improvements necessary to provide facilities capable of providing adequate and continuous utility service during the period that the interim rate is in effect;

(3) whether the interim rate equitably distributes costs across and is consistent in application to each class of affected customers; and

(4) any other factor that the executive director considers adequately balances the public interest and that of the utility.

(l-1) If the executive director establishes an interim rate under Subsection (l), the executive director shall issue an order establishing the interim rate that states the basis on which the executive director established the interim rate, after taking into consideration the factors provided by this section.

(n) For good cause shown, the regulatory authority or the executive director may at any time during the proceeding require the utility to refund money collected under a proposed rate before the rate was suspended or an interim rate was established to the extent the proposed rate exceeds the existing rate or the interim rate.

(o) If a regulatory authority other than the commission or the executive director establishes interim rates or an escrow account, the regulatory authority must make a final determination on the rates not later than the first anniversary of the effective date of the interim rates or escrowed rates or the rates are automatically approved as requested by the utility.

SECTION 8. Subchapter F, Chapter 13, Water Code, is amended by adding Section 13.193 to read as follows:

Sec. 13.193. UTILITY FACILITIES CONSTRUCTION AND IMPROVEMENT CHARGE. (a) Notwithstanding any other provision of this chapter, a utility may assess a utility facilities construction and improvement charge to recover the depreciation and return on investment of a utility facilities construction and improvement project that:

(1) is completed and placed into service between two consecutive statements of intent to change the utility's rates or tariff filed under Section 13.187; and

(2) serves the utility's certificated service area, including a facility used for:

(A) the production, transmission, storage, distribution, or provision of potable or recycled water to the public; or

(B) the collection, transportation, treatment, or disposal of sewage.

(b) The commission by rule shall require a utility that proposes to assess a utility facilities construction and improvement charge under this section:

(1) to file a tariff establishing a just and reasonable manner for calculating the charge; and

(2) to receive the executive director's approval of the tariff.

(c) In adopting rules under Subsection (b), the commission shall ensure that:

(1) not later than the 60th day before a utility's proposed inclusion of a charge or a proposed increase of a charge in a tariff under this section, the utility submits to the executive director for review of a project's eligibility a written notice that contains:

(A) the amount of the proposed charge or increase of a charge;

(B) the proposed implementation date for the charge or increase of a charge;

(C) a list of completed, eligible capital projects, and related depreciation and return on investment for which the utility seeks reimbursement through the charge or increase of a charge; and

(D) a calculation of the projected total annual increase in revenue due to the charge or increase of a charge;

(2) the total amount the utility is authorized to recover annually through a charge assessed under this section and the amount the utility actually recovers are subject to annual audit by the executive director;

(3) the amount of the charge the utility requests authorization to assess is based on the amount necessary to ensure that the charge yields a rate of return on invested capital that is equal to:

(A) the rate of return approved for the utility in the utility's most recent approved base rate or tariff change application filed under Section 13.187; or

(B) the rate of return proposed by the utility, if the rates in the utility's most recent base rate or tariff change application were approved by settlement;

(4) the cumulative annual amount the utility proposes to recover from the charge does not exceed an amount equal to 10 percent of the utility's annual revenue;

(5) the utility does not implement an increase under this section more often than twice every calendar year;

(6) the charge is applied to each customer included in the tariff;

(7) the utility provides to each customer written notice of the charge on the initial tariff filing that proposes to implement the charge; and

(8) the charge is subject to a true-up or reconciliation at the utility's next rate case filed under Section 13.187.

(d) Notwithstanding any other provision of this code, the implementation of a utility facilities construction and improvement charge or an increase in a utility facilities construction and improvement charge is not subject to a contested case hearing under Chapter 2001, Government Code.

(e) This section does not apply to a utility that has in place a negotiated stay-out agreement on September 1, 2009.

SECTION 9. Subsection (c), Section 13.242, Water Code, is amended to read as follows:

(c) The commission may by rule allow a municipality or utility or water supply corporation to render retail water or sewer service without a certificate of public convenience and necessity if the municipality has given notice under Section 13.255 [of this code] that it intends to provide retail water or sewer service to an area or if the utility or water supply corporation has less than 15 potential connections and is not within the certificated area of another retail public utility.

SECTION 10. Section 13.248, Water Code, is amended to read as follows:

Sec. 13.248. CONTRACTS VALID AND ENFORCEABLE. Contracts between retail public utilities designating areas to be served and customers to be served by those retail public utilities, when approved by the commission or the executive director after public notice [and hearing], are valid and enforceable and are incorporated into the appropriate areas of public convenience and necessity.

SECTION 11. Subsection (h), Section 26.0135, Water Code, is amended to read as follows:

(h) The commission shall apportion, assess, and recover the reasonable costs of administering the water quality management programs under this section [from users of water and wastewater permit holders in the watershed according to the records of the commission generally in proportion to their right, through permit or contract, to use water from and discharge wastewater in the watershed]. Irrigation water rights, non-priority hydroelectric rights of a water right holder that owns or operates privately owned facilities that collectively have a capacity of less than two megawatts, and water rights held in the Texas Water Trust for terms of at least 20 years will not be subject to this assessment. The cost to river authorities and others to conduct water quality monitoring and assessment shall be subject to prior review and approval by the commission as to methods of allocation and total amount to be recovered. The commission shall adopt rules to supervise and implement the water quality monitoring, assessment, and associated costs. The rules shall ensure that water users and wastewater dischargers do not pay excessive amounts, [that program funds are equitably apportioned among basins,] that a river authority may recover no more than the actual costs of administering the water quality management programs called for in this section, and that no municipality shall be assessed cost for any efforts that duplicate water quality management activities described in Section 26.177. [The rules concerning the apportionment and assessment of reasonable costs shall provide for a recovery of not more than $5,000,000 annually. Costs recovered by the commission are to be deposited to the credit of the water resource management account and may be used only to accomplish the purposes of this section. The commission may apply not more than 10 percent of the costs recovered annually toward the commission's overhead costs for the administration of this section and the implementation of regional water quality assessments. The commission, with the assistance and input of each river authority, shall file a written report accounting for the costs recovered under this section with the governor, the lieutenant governor, and the speaker of the house of representatives on or before December 1 of each even-numbered year.]

SECTION 12. Section 49.321, Water Code, is amended to read as follows:

Sec. 49.321. DISSOLUTION AUTHORITY. After notice [and hearing], the commission or executive director may dissolve any district that is inactive for a period of five consecutive years and has no outstanding bonded indebtedness.

SECTION 13. Section 49.324, Water Code, is amended to read as follows:

Sec. 49.324. ORDER OF DISSOLUTION. The commission or the executive director may enter an order dissolving the district [at the conclusion of the hearing] if the commission or executive director [it] finds that the district has performed none of the functions for which it was created for a period of five consecutive years [before the day of the proceeding] and that the district has no outstanding bonded indebtedness.

SECTION 14. Subsection (a), Section 49.326, Water Code, is amended to read as follows:

(a) Appeals from an [a commission] order dissolving a district shall be filed and heard in the district court of any of the counties in which the land is located.

SECTION 15. Subsection (b), Section 54.030, Water Code, is amended to read as follows:

(b) The governing body of a district which desires to convert into a district operating under this chapter shall adopt and enter in the minutes of the governing body a resolution declaring that in its judgment, conversion into a municipal utility district operating under this chapter and under Article XVI, Section 59, of the Texas Constitution, would serve the best interest of the district and would be a benefit to the land and property included in the district. The resolution shall also request that the commission approve [to hold a hearing on the question of] the conversion of the district.

SECTION 16. Section 54.032, Water Code, is amended to read as follows:

Sec. 54.032. CONVERSION OF DISTRICT: NOTICE. (a) Notice of the conversion [hearing] shall be given by publishing notice in a newspaper with general circulation in the county or counties in which the district is located.

(b) The notice shall be published once a week for two consecutive weeks [with the first publication to be made not less than 14 full days before the time set for the hearing].

(c) The notice shall:

(1) [state the time and place of the hearing;

[(2)] set out the resolution adopted by the district in full; and

(2) [(3)] notify all interested persons how they may offer comments [to appear and offer testimony] for or against the proposal contained in the resolution.

SECTION 17. Section 54.033, Water Code, is amended to read as follows:

Sec. 54.033. CONVERSION OF DISTRICT; FINDINGS. (a) If [After a hearing, if] the commission or the executive director finds that conversion of the district into one operating under this chapter would serve the best interest of the district and would be a benefit to the land and property included in the district, the commission or executive director [it] shall enter an order making this finding and the district shall become a district operating under this chapter and no confirmation election shall be required.

(b) If the commission or the executive director finds that the conversion of the district would not serve the best interest of the district and would not be a benefit to the land and property included in the district, the commission or executive director [it] shall enter an order against conversion of the district into one operating under this chapter.

(c) The findings of the commission or the executive director entered under this section shall be subject to appeal or review within 30 days after entry of the order [of the commission] granting or denying the conversion.

(d) A copy of the [commission] order converting a district shall be filed in the deed records of the county or counties in which the district is located.

SECTION 18. Sections 49.322 and 54.031, Water Code, are repealed.

SECTION 19. Section 13.145(a), Water Code, as amended by this Act, applies only to an application for approval of a tariff filed on or after the effective date of this Act. An application filed before the effective date of this Act is governed by the law in effect on the date the application is filed, and that law is continued in effect for that purpose.

SECTION 20. The changes in law made by Section 13.187, Water Code, as amended by this Act, apply only to a rate application or appeal filed with the Texas Commission on Environmental Quality on or after the effective date of this Act. A rate application or appeal filed with the commission before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 21. The changes in law made by Section 13.193, Water Code, as added by this Act, apply only to a project that is completed and placed into service on or after the effective date of this Act. A project that is completed and placed into service before the effective date of this Act is subject to the law in effect at that time, and that law is continued in effect for that purpose.

SECTION 22. (a) Except as provided by Subsection (b) of this section, this Act takes effect September 1, 2009.

(b) Section 341.0365, Health and Safety Code, as added by this Act, takes effect September 1, 2010.