C.S.H.B. 2184 78(R)    BILL ANALYSIS


C.S.H.B. 2184
By: Geren
Natural Resources
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Currently, the Texas Commission on Environmental Quality (TCEQ) is
authorized to change prices in certain contracts for water.  However, some
concern exists that the commission's authority places a state agency in a
difficult position of reforming a contract entered into by willing
parties. 

Historically, where a written contract existed, the state routinely set a
rate using established methodology.  However, the approach to those cases
changed as a result of a lawsuit filed by the City of Fort Worth in the
early 1990s concerning a wholesale sewer rate dispute with the City of
Arlington.  Based on the constitutional provision prohibiting impairment
of contracts, the court found in Texas Water Comm'n v. City of Fort Worth
that the commission must first find that the contract rate adversely
affects the public interest.  As a result of that case, the commission
adopted the rules in Chapter 291, Subchapter I, which establish the
criteria for determining whether a rate charged under a written contract
adversely affects the public interest.  If this test is met, the rules
provide that the commission could determine a reasonable rate. 

Some stakeholders may harbor reservations, arguing that while reforming a
contract between willing parties may seem questionable, the state should
maintain a proper role in contract disputes over a resource which the
state owns and upon which the state authorizes permits.  However, TCEQ
generally processes fewer than five wholesale cases per year, and most are
settled before they reach the commission level.  

C.S.H.B. 2184 amends current law to prohibit TCEQ from amending,
interpreting, impairing, or modifying a written contract for wholesale
water between a willing buyer and a willing seller. 


RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

The bill amends Chapter 11, Water Code, Chapter 12, Water Code, and
Chapter 13, Water Code, to prohibit the Texas Commission on Environmental
Quality from amending, interpreting, impairing, or modifying a wholesale
water contract.  The bill also places additional requirements on a
petitioner under Chapter 11, Water Code, which require a written petition
to include information that the petitioner has not entered into a contract
with the party owning or controlling the water supply.  

The bill also provides that the changes made by the Act apply only to a
contract executed on or after the effective date of the Act.  A contract
executed before the effective date of the Act is governed by the law in
effect on the date the contract was executed and the former law is
continued in effect for that purpose. 

EFFECTIVE DATE

Upon passage, or, if the Act does not receive the necessary vote, the Act
takes effect September 1, 2003. 

 

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2184 stipulates that the Act applies only to contracts executed
for the wholesale provision of water and not for only the provision of
water.  

C.S.H.B. 2184 also adds a grandfather provision which states that the
changes made by the Act apply only to a contract executed on or after the
effective date of the Act.  A contract executed before the effective date
of the Act is governed by the law in effect on the date the contract was
executed and the former law is continued in effect for that purpose.