BILL ANALYSIS

H.B. 3650

By: Lucio III

Natural Resources

Committee Report (Unamended)

BACKGROUND AND PURPOSE

In 2013, the powers, duties, functions, and programs relating to the economic regulation of water and sewer service in Texas were transferred from the Texas Commission on Environmental Quality (TCEQ) to the Public Utility Commission of Texas (PUC). Much like the electrical and telecommunications sector, water and sewer services is a very complex field that requires specific expertise. However, after the recent winter storm, the PUC and its former commissioner made statements indicating that the PUC did not have the requisite expertise to properly manage or regulate water and sewer services in Texas. H.B. 3650 seeks to remedy this situation by transferring the economic regulation of water and sewer services from the PUC back to TCEQ.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly granted to the Public Utility Commission of Texas and the Texas Commission on Environmental Quality in SECTION 1 of this bill.

ANALYSIS

H.B. 3650 transfers the following from the Public Utility Commission of Texas (PUC) to the Texas Commission on Environmental Quality (TCEQ) on September 1, 2022:

·       the powers, duties, functions, programs, and activities of the PUC relating to the economic regulation of water and sewer service, including the issuance and transfer of certificates of convenience and necessity, the determination of rates, and the administration of hearings and proceedings involving those matters;

·       any obligations and contracts of the PUC that are directly related to implementing a transferred power, duty, function, program, or activity; and

·       all property and records in the custody of the PUC that are related to a transferred power, duty, function, program, or activity and all funds appropriated by the legislature for that power, duty, function, program, or activity.

H.B. 3650 requires TCEQ and the PUC to enter into a memorandum of understanding that does the following:

·       identifies in detail the applicable powers and duties that are transferred by the bill;

·       establishes a plan for the identification and transfer of the records, personnel, property, and unspent appropriations of the PUC that are used for purposes of powers and duties of the PUC directly related to the economic regulation of water and sewer service; and

·       establishes a plan for the transfer of all pending applications, hearings, rulemaking proceedings, and orders relating to the economic regulation of water and sewer service from the PUC to TCEQ.

With regard to the memorandum of understanding, H.B. 3650 provides the following:

·       the memorandum of understanding is not required to be adopted by TCEQ rule;

·       the executive directors of TCEQ and the PUC may agree in the memorandum of understanding to transfer certain personnel;

·       TCEQ and the PUC must periodically update the Office of Public Utility Counsel on the anticipated contents of the memorandum of understanding during the development of the memorandum; and

·       the memorandum of understanding must be completed by August 1, 2022.

The bill provides for a transition team appointed by TCEQ and the PUC to accomplish the purposes of the bill's provisions and for the continuation under the purview of TCEQ of a rule, form, policy, procedure, or decision of the PUC related to a power, duty, function, program, or activity transferred under the bill. The bill requires the PUC and TCEQ to adopt rules to implement the transfer of these powers, duties, functions, programs, and activities not later than September 1, 2023.

EFFECTIVE DATE

September 1, 2021.