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The House Committee for Natural Resources met on March 23 to discuss a number of items. This report covers HB 1435, HB 1874, HB 1904, HB 1905, HB 2083, and HB 2225. The video archive of the meeting can be found here.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

HB 1435 (Lucio III) – Relating to a certificate of public convenience and necessity to provide water or sewer service in an area incorporated or annexed by a municipality

  • Lucio – Certification of convenience and necessity which is a regulatory compliance certification awarded by the PUC; this certification may be revoked by PUC
  • CCN is the right to sell within a certain territory, sometimes an exclusive license to sell water within that geographic area
  • Decertification can come through a property owner/developer or through the city
  • As cities grow into rural water supplier’s jurisdiction, there is a war of who should service that area as cities annex and grow
  • Bill would amend 13.255 of water code which only addresses municipal certification
  • Specifically, this bill targets cases relating to an area incorporated or annexed by a municipality for which the municipality wishes to provide retail service, but a retail public utility already holds the certificate of convenience for that area
  • The municipality must then apply to the PUC in order to receive single certification and be the single provider in the area
  • This bill authorizes PUC to determine whether or not a retail public utility is capable of providing continuous and adequate services to an incorporated or annexed area
  • Authorizes PUC to grant single certification to the municipalities if the retail utility has proven unable
  • Authorizes retail utilities an appeal to PUC ruling directly to the commission in a separate hearing
  • Public utilities are concerned that they will lose service area and not be adequately compensated
  • At the same time, some public retailers do not have the infrastructure to maintain services
  • Bill allows the property owner the path of least resistance to developing their land and getting the most affordable, reliable service
  • Provide adequate compensation to retail public utilities when their service is gobbled by city
  • Allow the city to annex, have growth, and build infrastructure in that area that can service property owners that becomes much more affordable to come to city
  • Paul – Water providers outside city limits before annex, this only deals with private entities? What if it is a public entity that is providing that service? What does your bill say about that?
    • Will let public testimony answer your question, I do not believe this impacts those entities
  • Paul – Any comment from citizens that live in the area, letting landowner decide? Would the citizens decide which water they would like? If there is a private company and they want to keep it?
    • There is public comment portion at the PUC when there is a hearing, but most of those cases are handled with buyouts before PUC gets involved
    • This bill will change the standard by which the PUC will determine decertification; does not change the fundamental process
  • Ramos – How does municipality demonstrate that the private or retail public utility is not capable? How do they have access to that info to convince PUC?
    • Very capable lawyers, identical burden of proof
  • Ramos – Any way to put meat on this? My concern is that a private entity or retail public utility can drag their feet and not provide info; how do we make sure it is not costly for municipality?
    • Interested in talking to you about this, worried about the guilty until proven innocent mentality
    • I have not heard any issues with providing information

 

Trent Hightower, Texas Rural Water Association – for

  • When a city annexes territory within a utility service area, the city can obtain single certification regardless of the current provider’s ability to serve; transfer is automatic once it is requested by city and does not consider any investments the current provider has taken to serve that area
  • Bill makes is so the transfer service is not automatic unless the city can show that the current provide has not taken steps to serve the new growth
  • If the current provider can serve the area, city could still annex the territory but the provider of water service in the area would not change
  • There are going to be cases where the city is better suited to serve that growth, but PUC would investigate capability
  • Even though water code allows for compensation, retail utilities are not always adequately compensated in terms of the actual investment they have made
  • The current automatic single certification process creates bad policy in terms of duplication of resources
  • Ramos –  You do not foresee problem with municipality having to demonstrate its capability to the public?
    • These happen all the time and I have heard no problem, PUC would have answer

 

Marco Vega, McAllen Public Utility – neutral

  • We have never decertified a CCN, we have respected the boundaries of rural water supply next to us; always agreed to a buyout
  • Bill only allows for public utility to serve in areas that are incorporated city limits or annexed already; that would greatly limit our ability to serve in that area
  • Rural water supply corporation adjacent to us does not provide fire protection; our citizens and development process require protection
  • Could result in a higher cost to developers

 

Geoffrey Kirshbaum, Terrill & Waldrop – for

  • Fixes major problems with CCN and certification law that harms rural water facilities that have made major investments to provide utility service to rural customers, only to have that service area taken from them
  • Cities are allowed to rule utility service without any consideration of the existing utility
  • Bill provides quality and cost-effective alternative
  • Fixes lack of adequate compensation when a rural utility has its serves commandeered
  • Positive change and should promote compensation award
  • Current language in 13255C allows compensation to only be awarded for property valued useless or valueless, which has been interpreted by the PUC to mean compensation cannot be awarded for property unless it cannot be used anywhere besides the CCN where it is located
  • HB would require a serious comparison of the existing utility versus the city and would provide appropriate compensation if the utility loses part of its service area

 

Norberg, Sharyland Water Supply Corporation – for

  • Lucio said it was a tug of war, I see it like a delicate dance, trying to be friendly and cooperative while protecting the interest of the organization
  • Would love communication between parties that are at odds; cities are keeping their arms distance from
  • We have a finite CCN, finite area; in last 55 years, we have released hundreds of thousands of acres of land to the cities around us
  • As those cities began to grow, we were happy to work with cities because we could not serve all those thousands of acres
  • As cities grow, they come into our CCN trying to take water service away from us
  • Lucio, in closing – Will clarify language in committee substitute

HB 1435 left pending

 

HB 1874 (Larson) Relating to the provision of technical assistance by the Texas Water Development Board to an interregional planning council.

  • Follow up from HB 807 from last session, better collaboration on interregional water council
  • Problem with staffing, too many regions to organize developmental projects
  • Allows Water Development Board to provide technical assistance
  • Kathleen Jackson, Texas Water Development board member, tried to collaborate with regions

HB 1874 left pending

 

HB 1904 (Harris) – Relating to the use of the water infrastructure fund.

  • Water Infrastructure Fund provides affordable financing for water conservation and development projects through the implementation of recommended strategies in the state water plan
  • Water Development Board has issued more than $950 million in bonds to support projects through Water Infrastructure Fund, WIF
  • In 2013, WIF was retired by the Texas Water Development Board after the legislature created the state water implementation fund for Texas
  • Bill properly closes out WIF program by transferring fund balance to the development fund too as is recommended by the Texas Water Development Board

HB 1904 left pending

 

HB 1905 (Harris) – Relating to relieving regional water planning groups of certain duties.

  • Relieve applicants to regional planning groups in the Texas Water Development from redundant reporting requirements
  • Currently, water planning groups are required to prepare a report that details how local entities propose to pay for projects in the plan
  • Was a useful tool to assess financing needs prior to the development of the Swift Program, but the demand for the Swift program is a better indicator of the need for state assistance
  • Ledge priority this session for Texas Water Development Board

HB 1905 left pending

 

HB 2083 (Darby) – Relating to the general manager of the Upper Colorado River Authority.

  • UCRA was created in 1935 to protect the watershed of it’s fourteen county region; now it manages long term water contracts and water supply agreements, supports infrastructure, etc.
  • Governed by a nine-member board, appointed by Governor at the advice of the Senate
  • UCRA could benefit from hiring a general manager to run the regional office and be fully committed to authority business
  • Bill gives UCRA statutory authority to employ a general manager
  • Ramos – Any salary caps for this position?
    • General manager would have a salary set by the board
  • Ramos – Could be up to $800k?
    • Anything that detracts from the ability to preform their mission would not be approved by board members
    • Problem would be finding someone to do this work at a much smaller pay level

HB 2083 left pending

 

HB 2225 (King, Tracy O. | et al.) – Relating to the powers and duties of the Parks and Wildlife Department regarding the Texas Water Trust

  • Texas Water Trust has not completed its statutory purpose, having only purchased two or three water rights since its creation
  • Bill would give Parks and Wildlife the ability to encourage and facilitate voluntary transfer of water rights to the Texas Water Trust

 

Lon Burnam, Public Citizen – for

  • Bill will help develop more habitat; we appreciate the chairman carrying the bill

 

Ken Kramer, Lone Star Chapter of Sierra Club – for

  • Priority issue for chapter, to maintain instream flows in rivers and streams and to protect freshwater influence on estuaries
  • Goal of bill is to maintain the aquatic and marine habitats; these freshwater flows have many benefits to ecology and economics
  • The largest volume of surface water has already been spoken for; it is important that we look at voluntary mechanisms to support our flowing rivers
  • Water Trust has not achieved it is potential; does not have an agency champion and promote and receive water rights
  • Important to designate agency whose mission is to promote trust
  • It is not the Water Development Board’s mission to actively promote trust, Texas Wildlife Department would be a much better fit, as their duty is to promote recreation that rivers and streams provide
  • Directs Parks and Wildlife Department to promote and facilitate the placement of water rights into the trust for environmental purposes

 

Myron Hess, National Wildlife Federation – for

  • Working to improve water management in Texas with the Texas Living Waters Project, protecting environmental flows
  • Water rights granted over time, handout, that did not have environmental consideration when they were granted
  • Almost all water rights in the state are managed on priority basis; newer rights have environmental flow conditions, but does not affect the senior rights
  • Issuing new rights does not address the senior rights The concept of TX water trust
  • Charge an agency with facilitating these rights, a good fit for the parks
  • Maybe we’ll have money one day to buy those rights, that’s the hope for the future
  • Parks and Wildlife have the authority, TCQ manages to make sure it does not harm other water right holders

 

David Bradsby, Texas Parks and Wildlife – on

  • No questions for resource witness
  • King, in closing –  Collaborating with interested parties to make sure Parks and Wildlife does not go rogue, working on a substitute

HB 2225 left pending