83R7271 DDT-D
 
  By: Watson, Nichols S.B. No. 1162
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to requirements for the purchase or acquisition of a water
  or sewer system.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 13.301, Water Code, is amended by
  amending Subsections (a), (d), (e), (f), and (g) and adding
  Subsections (a-1), (a-2), (a-3), and (e-1) to read as follows:
         (a)  A utility or a water supply or sewer service
  corporation, on or before the 120th day before the effective date of
  a sale, acquisition, lease, or rental of a water or sewer system
  that is required by law to possess a certificate of public
  convenience and necessity or the effective date of a merger or
  consolidation with such a utility or water supply or sewer service
  corporation, shall:
               (1)  file a written application with the commission
  electronically; and
               (2)  [unless public notice is waived by the executive
  director for good cause shown,] give public notice of the action.
         (a-1)  The commission shall post the application on the
  commission's Internet website not later than the 30th day after the
  date the application is accepted for filing.
         (a-2)  For a proposed sale, acquisition, lease, rental,
  merger, or consolidation transaction subject to Subsection (a) that
  involves more than one utility or water supply or sewer service
  corporation, or that involves a single utility or water supply or
  sewer service corporation and a political subdivision's water or
  sewer system, at the time notice is given under Subsection (a)(2),
  the parties to the proposed transaction jointly shall mail written
  notice to each affected customer in accordance with commission
  rules. The written notice must include:
               (1)  a comparison of the rates and quality-of-service
  records of the parties;
               (2)  the purchase price or lease rate of the sale,
  acquisition, lease, or rental;
               (3)  the anticipated transaction costs, including
  legal fees, regulatory fees, and interest;
               (4)  a disclosure of:
                     (A)  any investments or expenses any party to the
  transaction anticipates it will make during the next 24 months for
  infrastructure improvement to a water or sewer system involved in
  the transaction; and
                     (B)  the estimated effect the investments or
  expenses will have on rates;
               (5)  the expected closing date of the transaction;
               (6)  the estimated date by which customers to be
  affected by the transaction will be required to pay service fees in
  an amount different than service fees payable by those customers on
  the date of the application;
               (7)  any plans to implement a rate change during the
  pendency of the proposed transaction; and
               (8)  notice to the customer that the customer can make a
  written request for a public hearing to the commission.
         (a-3)  Notwithstanding any other provision of this section,
  the executive director may waive the notice requirement if the
  sale, acquisition, lease, rental, merger, or consolidation
  transaction involves two or more parties, and all but one are in
  receivership, are under temporary management, or have been referred
  for the appointment of a temporary management or receivership.
         (d)  After the parties to the proposed transaction have made
  the application as required by this section and provided notice as
  required by this section, the [The] commission shall, with or
  without a public hearing, investigate the sale, acquisition, lease,
  [or] rental, merger, or consolidation to determine whether the
  proposed transaction will serve the public interest. In making the
  determination, the commission shall consider:
               (1)  the factors listed under Section 13.246(c);
               (2)  the anticipated benefits of the transaction;
               (3)  the anticipated costs of the transaction;
               (4)  whether the price to be paid for the assets is
  excessive; and
               (5)  if the applicant intends to consolidate water or
  sewer systems under a single tariff, whether the systems being
  consolidated have substantially similar facilities, quality of
  service, and cost of service.
         (e)  On [Before] the expiration of the 120-day notification
  period, the executive director shall notify all known parties to
  the transaction of the executive director's decision whether to
  request that the commission hold a public hearing to determine if
  the transaction will serve the public interest.  The executive
  director shall request a public hearing if, before the expiration
  of the 120-day notification period, at least 10 percent of the
  customers of a utility or a water supply or sewer service
  corporation subject to Subsection (a-2) make a written request for
  a public hearing.  The executive director may request a hearing if:
               (1)  the application filed with the commission or the
  public notice was improper;
               (2)  the person purchasing or acquiring the water or
  sewer system has not demonstrated adequate financial, managerial,
  and technical capability for providing continuous and adequate
  service to the service area being acquired and to any areas
  currently certificated to the person;
               (3)  the person or an affiliated interest of the person
  purchasing or acquiring the water or sewer system has a history of:
                     (A)  noncompliance with the requirements of the
  commission [or the Texas Department of Health]; or
                     (B)  continuing mismanagement or misuse of
  revenues as a utility service provider;
               (4)  the person purchasing or acquiring the water or
  sewer system cannot demonstrate the financial ability to provide
  the necessary capital investment to ensure the provision of
  continuous and adequate service to the customers of the water or
  sewer system; or
               (5)  there are concerns that the transaction may not
  serve the public interest, after the application of the
  considerations provided by Subsection (d) [Section 13.246(c) for
  determining whether to grant a certificate of convenience and
  necessity].
         (e-1)  The commission shall hold a public hearing at the
  request of the executive director.
         (f)  Unless the executive director requests that a public
  hearing be held, the sale, acquisition, lease, [or] rental, merger,
  or consolidation may be completed as proposed:
               (1)  at the end of the 120-day period; or
               (2)  at any time after the executive director notifies
  the utility or water supply or sewer service corporation that a
  hearing will not be requested.
         (g)  If a public hearing is requested by the executive
  director [or if the utility or water supply or sewer service
  corporation fails to make the application as required or to provide
  public notice], the sale, acquisition, lease, [or] rental, merger,
  or consolidation may not be completed unless the commission
  determines after a public hearing that the proposed transaction
  serves the public interest.
         SECTION 2.  Section 13.301, Water Code, as amended by this
  Act, applies only to a sale, acquisition, lease, rental, merger, or
  consolidation for which an application is filed with the Texas
  Commission on Environmental Quality on or after January 1, 2014. A
  sale, acquisition, lease, rental, merger, or consolidation for
  which an application is filed before January 1, 2014, is governed by
  the law in effect immediately before the effective date of this Act,
  and that law is continued in effect for that purpose.
         SECTION 3.  The changes in law made by this Act do not affect
  a transfer of state agency functions as provided by another Act of
  the 83rd Legislature, Regular Session, 2013, that becomes law. To
  the extent functions of the Texas Commission on Environmental
  Quality affected by the changes in law are transferred to another
  agency, references to the commission in Section 13.301, Water Code,
  as amended by this Act, shall be construed as references to the
  other agency.
         SECTION 4.  This Act takes effect September 1, 2013.