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