S.B. No. 573
 
 
 
 
AN ACT
  relating to certificates of public convenience and necessity for
  water or sewer services.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 13.245, Water Code, is amended by
  amending Subsection (b) and adding Subsections (c-1) through (c-5)
  to read as follows:
         (b)  Except as provided by Subsections [Subsection] (c),
  (c-1), and (c-2), the commission may not grant to a retail public
  utility a certificate of public convenience and necessity for a
  service area within the boundaries or extraterritorial
  jurisdiction of a municipality without the consent of the
  municipality.  The municipality may not unreasonably withhold the
  consent.  As a condition of the consent, a municipality may require
  that all water and sewer facilities be designed and constructed in
  accordance with the municipality's standards for facilities.
         (c-1)  If a municipality has not consented under Subsection
  (b) before the 180th day after the date a landowner or a retail
  public utility submits to the municipality a formal request for
  service according to the municipality's application requirements
  and standards for facilities on the same or substantially similar
  terms as provided by the retail public utility's application to the
  commission, including a capital improvements plan required by
  Section 13.244(d)(3) or a subdivision plat, the commission may
  grant the certificate of public convenience and necessity without
  the consent of the municipality if:
               (1)  the commission makes the findings required by
  Subsection (c);
               (2)  the municipality has not entered into a binding
  commitment to serve the area that is the subject of the retail
  public utility's application to the commission before the 180th day
  after the date the formal request was made; and
               (3)  the landowner or retail public utility that
  submitted the formal request has not unreasonably refused to:
                     (A)  comply with the municipality's service
  extension and development process; or
                     (B)  enter into a contract for water or sewer
  services with the municipality.
         (c-2)  If a municipality refuses to provide service in the
  proposed service area, as evidenced by a formal vote of the
  municipality's governing body or an official notification from the
  municipality, the commission is not required to make the findings
  otherwise required by this section and may grant the certificate of
  public convenience and necessity to the retail public utility at
  any time after the date of the formal vote or receipt of the
  official notification.
         (c-3)  The commission must include as a condition of a
  certificate of public convenience and necessity granted under
  Subsection (c-1) or (c-2) that all water and sewer facilities be
  designed and constructed in accordance with the municipality's
  standards for water and sewer facilities.
         (c-4)  Subsections (c-1), (c-2), and (c-3) do not apply to:
               (1)  a county that borders the United Mexican States
  and the Gulf of Mexico or a county adjacent to such a county;
               (2)  a county with a population of more than 30,000 and
  less than 35,000 that borders the Red River; or
               (3)  a county with a population of more than 100,000 and
  less than 200,000 that borders a county described by Subdivision
  (2).
         (c-5)  Subsections (c-1), (c-2), and (c-3) do not apply to:
               (1)  a county with a population of 130,000 or more that
  is adjacent to a county with a population of 1.5 million or more
  that is within 200 miles of an international border; or
               (2)  a county with a population of more than 40,000 and
  less than 50,000 that contains a portion of the San Antonio River.
         SECTION 2.  Section 13.2451, Water Code, is amended by
  amending Subsections (a) and (b) and adding Subsections (b-1),
  (b-2), and (b-3) to read as follows:
         (a)  Except as provided by Subsection (b), if [If] a
  municipality extends its extraterritorial jurisdiction to include
  an area certificated to a retail public utility, the retail public
  utility may continue and extend service in its area of public
  convenience and necessity under the rights granted by its
  certificate and this chapter.
         (b)  The commission may not extend a municipality's
  certificate of public convenience and necessity beyond its
  extraterritorial jurisdiction if an owner of land that is located
  wholly or partly outside the extraterritorial jurisdiction elects
  to exclude some or all of the landowner's property within a proposed
  service area in accordance with Section 13.246(h).  This subsection
  does not apply to a transfer of a certificate as approved by the
  commission.  [A municipality that seeks to extend a certificate of
  public convenience and necessity beyond the municipality's
  extraterritorial jurisdiction must ensure that the municipality
  complies with Section 13.241 in relation to the area covered by the
  portion of the certificate that extends beyond the municipality's
  extraterritorial jurisdiction.]
         (b-1)  Subsection (b) does not apply to an extension of
  extraterritorial jurisdiction in a county that borders the United
  Mexican States and the Gulf of Mexico or a county adjacent to such a
  county.
         (b-2)  Subsection (b) does not apply to an extension of
  extraterritorial jurisdiction in a county:
               (1)  with a population of more than 30,000 and less than
  35,000 that borders the Red River; or
               (2)  with a population of more than 100,000 and less
  than 200,000 that borders a county described by Subdivision (1).
         (b-3)  Subsection (b) does not apply to an extension of
  extraterritorial jurisdiction in a county:
               (1)  with a population of 130,000 or more that is
  adjacent to a county with a population of 1.5 million or more that
  is within 200 miles of an international border; or
               (2)  with a population of more than 40,000 and less than
  50,000 that contains a portion of the San Antonio River.
         SECTION 3.  Subsection (h), Section 13.246, Water Code, is
  amended to read as follows:
         (h)  Except as provided by Subsection (i), a landowner who
  owns a tract of land that is at least 25 acres and that is wholly or
  partially located within the proposed service area may elect to
  exclude some or all of the landowner's property from the proposed
  service area by providing written notice to the commission before
  the 30th day after the date the landowner receives notice of a new
  application for a certificate of public convenience and necessity
  or for an amendment to an existing certificate of public
  convenience and necessity.  The landowner's election is effective
  without a further hearing or other process by the commission.  If a
  landowner makes an election under this subsection, the application
  shall be modified so that the electing landowner's property is not
  included in the proposed service area. An applicant for a
  certificate of public convenience and necessity that has land
  removed from its proposed certificated service area because of a
  landowner's election under this subsection may not be required to
  provide service to the removed land for any reason, including the
  violation of law or commission rules by the water or sewer system of
  another person.
         SECTION 4.  Section 13.254, Water Code, is amended by
  amending Subsections (a), (a-1), (a-2), and (a-3) and adding
  Subsections (a-5) through (a-11) and (h) to read as follows:
         (a)  The commission at any time after notice and hearing
  may[, on its own motion or on receipt of a petition described by
  Subsection (a-1),] revoke or amend any certificate of public
  convenience and necessity with the written consent of the
  certificate holder or if it finds that:
               (1)  the certificate holder has never provided, is no
  longer providing, is incapable of providing, or has failed to
  provide continuous and adequate service in the area, or part of the
  area, covered by the certificate;
               (2)  in an affected county as defined in Section
  16.341, the cost of providing service by the certificate holder is
  so prohibitively expensive as to constitute denial of service,
  provided that, for commercial developments or for residential
  developments started after September 1, 1997, in an affected county
  as defined in Section 16.341, the fact that the cost of obtaining
  service from the currently certificated retail public utility makes
  the development economically unfeasible does not render such cost
  prohibitively expensive in the absence of other relevant factors;
               (3)  the certificate holder has agreed in writing to
  allow another retail public utility to provide service within its
  service area, except for an interim period, without amending its
  certificate; or
               (4)  the certificate holder has failed to file a cease
  and desist action pursuant to Section 13.252 within 180 days of the
  date that it became aware that another retail public utility was
  providing service within its service area, unless the certificate
  holder demonstrates good cause for its failure to file such action
  within the 180 days.
         (a-1)  As an alternative to decertification under Subsection
  (a), the owner of a tract of land that is at least 50 acres and that
  is not in a platted subdivision actually receiving water or sewer
  service may petition the commission under this subsection for
  expedited release of the area from a certificate of public
  convenience and necessity so that the area may receive service from
  another retail public utility. The fact that a certificate holder
  is a borrower under a federal loan program is not a bar to a request
  under this subsection for the release of the petitioner's land and
  the receipt of services from an alternative provider.  On the day
  the petitioner submits the petition to the commission, the [The]
  petitioner shall send [deliver], via certified mail, a copy of the
  petition to the certificate holder, who may submit information to
  the commission to controvert information submitted by the
  petitioner.  The petitioner must demonstrate that:
               (1)  a written request for service, other than a
  request for standard residential or commercial service, has been
  submitted to the certificate holder, identifying:
                     (A)  the area for which service is sought;
                     (B)  the timeframe within which service is needed
  for current and projected service demands in the area;
                     (C)  the level and manner of service needed for
  current and projected service demands in the area;
                     (D)  the approximate cost for the alternative
  provider to provide the service at the same level and manner that is
  requested from the certificate holder;
                     (E)  the flow and pressure requirements and
  specific infrastructure needs, including line size and system
  capacity for the required level of fire protection requested; and
                     (F) [(D)]  any additional information requested
  by the certificate holder that is reasonably related to
  determination of the capacity or cost for providing the service;
               (2)  the certificate holder has been allowed at least
  90 calendar days to review and respond to the written request and
  the information it contains;
               (3)  the certificate holder:
                     (A)  has refused to provide the service;
                     (B)  is not capable of providing the service on a
  continuous and adequate basis within the timeframe, at the level,
  at the approximate cost that the alternative provider is capable of
  providing for a comparable level of service, or in the manner
  reasonably needed or requested by current and projected service
  demands in the area; or
                     (C)  conditions the provision of service on the
  payment of costs not properly allocable directly to the
  petitioner's service request, as determined by the commission; and
               (4)  the alternate retail public utility from which the
  petitioner will be requesting service possesses the financial,
  managerial, and technical capability to provide [is capable of
  providing] continuous and adequate service within the timeframe, at
  the level, at the cost, and in the manner reasonably needed or
  requested by current and projected service demands in the area.
         (a-2)  A landowner is not entitled to make the election
  described in Subsection (a-1) or (a-5) but is entitled to contest
  under Subsection (a) the involuntary certification of its property
  in a hearing held by the commission if the landowner's property is
  located:
               (1)  within the boundaries of any municipality or the
  extraterritorial jurisdiction of a municipality with a population
  of more than 500,000 and the municipality or retail public utility
  owned by the municipality is the holder of the certificate; or
               (2)  in a platted subdivision actually receiving water
  or sewer service.
         (a-3)  Within 60 [90] calendar days from the date the
  commission determines the petition filed pursuant to Subsection
  (a-1) to be administratively complete, the commission shall grant
  the petition unless the commission makes an express finding that
  the petitioner failed to satisfy the elements required in
  Subsection (a-1) and supports its finding with separate findings
  and conclusions for each element based solely on the information
  provided by the petitioner and the certificate holder. The
  commission may grant or deny a petition subject to terms and
  conditions specifically related to the service request of the
  petitioner and all relevant information submitted by the petitioner
  and the certificate holder.  In addition, the commission may
  require an award of compensation as otherwise provided by this
  section.
         (a-5)  As an alternative to decertification under Subsection
  (a) and expedited release under Subsection (a-1), the owner of a
  tract of land that is at least 25 acres and that is not receiving
  water or sewer service may petition for expedited release of the
  area from a certificate of public convenience and necessity and is
  entitled to that release if the landowner's property is located in a
  county with a population of at least one million, a county adjacent
  to a county with a population of at least one million, or a county
  with a population of more than 200,000 and less than 220,000 that
  does not contain a public or private university that had a total
  enrollment in the most recent fall semester of 40,000 or more, and
  not in a county that has a population of more than 45,500 and less
  than 47,500.
         (a-6)  The commission shall grant a petition received under
  Subsection (a-5) not later than the 60th day after the date the
  landowner files the petition.  The commission may not deny a
  petition received under Subsection (a-5) based on the fact that a
  certificate holder is a borrower under a federal loan program.  The
  commission may require an award of compensation by the petitioner
  to a decertified retail public utility that is the subject of a
  petition filed under Subsection (a-5) as otherwise provided by this
  section.
         (a-7)  The utility shall include with the statement of intent
  provided to each landowner or ratepayer a notice of:
               (1)  a proceeding under this section related to
  certification or decertification;
               (2)  the reason or reasons for the proposed rate
  change; and
               (3)  any bill payment assistance program available to
  low-income ratepayers.
         (a-8)  If a certificate holder has never made service
  available through planning, design, construction of facilities, or
  contractual obligations to serve the area a petitioner seeks to
  have released under Subsection (a-1), the commission is not
  required to find that the proposed alternative provider is capable
  of providing better service than the certificate holder, but only
  that the proposed alternative provider is capable of providing the
  requested service.
         (a-9)  Subsection (a-8) does not apply to a county that
  borders the United Mexican States and the Gulf of Mexico or a county
  adjacent to a county that borders the United Mexican States and the
  Gulf of Mexico.
         (a-10)  Subsection (a-8) does not apply to a county:
               (1)  with a population of more than 30,000 and less than
  35,000 that borders the Red River; or
               (2)  with a population of more than 100,000 and less
  than 200,000 that borders a county described by Subdivision (1).
         (a-11)  Subsection (a-8) does not apply to a county:
               (1)  with a population of 130,000 or more that is
  adjacent to a county with a population of 1.5 million or more that
  is within 200 miles of an international border; or
               (2)  with a population of more than 40,000 and less than
  50,000 that contains a portion of the San Antonio River.
         (h)  A certificate holder that has land removed from its
  certificated service area in accordance with this section may not
  be required, after the land is removed, to provide service to the
  removed land for any reason, including the violation of law or
  commission rules by a water or sewer system of another person.
         SECTION 5.  The changes made by this Act to Sections 13.245,
  13.2451, 13.246, and 13.254, Water Code, apply only to:
               (1)  a retail public utility's application for a
  certificate of public convenience and necessity for a service area
  in the extraterritorial jurisdiction of a municipality that is made
  on or after the effective date of this Act;
               (2)  an extension of a municipality's certificate of
  public convenience and necessity for a service area in the
  extraterritorial jurisdiction of the municipality on or after the
  effective date of this Act; and
               (3)  a petition to release an area from a certificate of
  public convenience and necessity that is made on or after the
  effective date of this Act.
         SECTION 6.  This Act takes effect September 1, 2011.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 573 passed the Senate on
  April 26, 2011, by the following vote: Yeas 26, Nays 5; and that
  the Senate concurred in House amendments on May 26, 2011, by the
  following vote: Yeas 25, Nays 6.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 573 passed the House, with
  amendments, on May 25, 2011, by the following vote: Yeas 126,
  Nays 22, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor