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2012 Utility Update TCEQ Water Utilities Program. Todd Galiga Environmental Law Division Office of Legal Services. Updates From Last Year. SB 573 CCN Release Process – One Glorious Year Later SER – Streamlined Expedited Release 29 petitions filed since 9/1/11. Updates From Last Year.

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2012 utility update tceq water utilities program

2012 Utility UpdateTCEQ Water Utilities Program

Todd Galiga

Environmental Law Division

Office of Legal Services

updates from last year
Updates From Last Year

SB 573 CCN Release Process – One Glorious Year Later

SER – Streamlined Expedited Release

29 petitions filed since 9/1/11

updates from last year1
Updates From Last Year

SER Petitions:

18 were granted

8 were withdrawn or returned

3 pending

updates from last year2
Updates From Last Year

SER Petitions:

23 petitions filed in first four months after effective date of statute

6 filed since 1/1/12

updates from last year3
Updates From Last Year

SER Petitions:

Main issue – whether petitioner is receiving water or sewer service from the CCN holder.

updates from last year4
Updates From Last Year

SER Petitions:

Texas Water Code § 13.002(21) - "Service" means any act performed, anything furnished or supplied, and any facilities or lines committed or used by a retail public utility in the performance of its duties under this chapter to its patrons, employees, other retail public utilities, and the public, as well as the interchange of facilities between two or more retail public utilities.

updates from last year5
Updates From Last Year

SER Petitions:

4 lawsuits over the new process

Aqua WSC – Federal Court

Aqua WSC – State Court

Tri –Community WSC – State Court

Crystal WSC – State Court

updates from last year6
Updates From Last Year

SER Petitions:

Aqua WSC Federal Court Lawsuit

ACC filed petition to release 98 acre tract located in city limits of Elgin from CCN of Aqua WSC

Aqua filed suit in federal court while the petition was pending at TCEQ

updates from last year7
Updates From Last Year

SER Petitions:

Aqua WSC federal lawsuit alleges that:

Texas Water Code § 13.254(a-6) unconstitutionally attempts to preempt 7 U.S.C. § 1926 in violation of the Supremacy Clause of the Constitution

The actions of TCEQ constitute an attempt to deprive Aqua WSC of its federal rights under 7 U.S.C. § 1926(b)

updates from last year8
Updates From Last Year

SER Petitions:

Aqua WSC Federal Court lawsuit

7 U.S.C. § 1926(b) – The service provided or made available through any such association shall not be curtailed or limited by inclusion of the area served by such association within the boundaries of any municipal corporation or other public body ….

updates from last year9
Updates From Last Year

SER Petitions:

Aqua WSC federal lawsuit

Aqua, ACC, and Elgin reached settlement over who will serve the 98 acres

Lawsuit continues over the 1926(b) issue

updates from last year10
Updates From Last Year

SER Petitions:

Aqua WSC state court lawsuit

No injunction requested in federal court case, so TCEQ grated petition within 60 day deadline

updates from last year11
Updates From Last Year

SER Petitions:

Aqua WSC state court lawsuit

Similar claims of preemption and unconstitutionality as in federal case

updates from last year12
Updates From Last Year

SER Petitions:

Tri-Community WSC state court lawsuit

Landowner applied for release of property

CCN holder did not file a response

TCEQ approved petition on 11/9/11

updates from last year13
Updates From Last Year

SER Petitions:

Tri-Community WSC state court lawsuit

After approval, CCN holder claimed that landowner was receiving service on part of released property

updates from last year14
Updates From Last Year

SER Petitions:

Tri-Community WSC state court lawsuit

All parties agreed that CCN was providing service, and the judge issued Agreed Order reversing the ED’s approval and remanding the matter back to TCEQ

Landowners filed new petition with revised map

updates from last year15
Updates From Last Year

SER Petitions:

Crystal WSC state court lawsuit

WSC alleges that TCEQ erred in approving petition because it was providing service to the property as defined by TWC §13.002(21)

updates from last year16
Updates From Last Year

Repeal of Fees for rate, CCN, and STM applications by TCEQ Sunset Bill.

No fees for these applications

updates from last year17
Updates From Last Year

Changes to requirements for obtaining a CCN within a city’s corporate limits or ETJ:

No applications filed that invoked new requirements

updates from last year18
Updates From Last Year

Rulemaking Updates:

6 rule projects required for utility related legislative implementation:

SB 313 and SB 660 - New requirements for creating GCDs and for appeals of DFCs. Adopted by Commission on 7/25/12

updates from last year19
Updates From Last Year

Rulemaking updates:

SB 2694, SB 1361, and HB 3002 – deletes the application fees for Rate, CCN, and STM applications, raises the audit exemption amount for districts from 100,000 to 250,000, gives cities and districts an extra 30 days to provide notice of a rate increase, allows for e-mailing of notices in certain situations. Proposed on 2/08/12. Adoption set for 8/08/12.

updates from last year20
Updates From Last Year

Rulemaking updates:

HB 805 – added Fort Bend County to the counties in which “affected utilities” are required to file Emergency Preparedness Plans. Proposed at the 5/30/12 agenda. Set for adoption on 10/17/12.

updates from last year21
Updates From Last Year

Rulemaking updates:

SB 181 and SB 660 – requires TCEQ and TWDB to develop a uniform methodology for calculating water use for developing water conservation plans and preparing reports. Also requires the development of a data collection and reporting system for cities and water systems with over 3300 connections. Proposed on 6/27/12. Adoption set for 11/14/12.

updates from last year22
Updates From Last Year

Rulemaking updates:

HB 3372, HB 3391, and SB 1073 – requires TCEQ and DSHS to develop rules regarding rainwater harvesting systems connected to public drinking water systems. Proposal set for 8/22/12 agenda. Adoption set for January 2013.

updates from last year23
Updates From Last Year

Rulemaking updates:

SB’s 18, 512, 573, 914, 1234, SJR 28, HB’s 679, and 1901 - Limits on eminent domain authority, qualifications for board of a FWSD.

SB 573 – SERs, obtaining a CCN within a city’s corporate limits or ETJ, opting out of a city’s CCN at the time of application, revoking a CCN, changes to the old expedited release process under 13.254(a-1). Proposal set for 10/17/12. Adoption set for March of 2013.

utility cases overview
Utility Cases Overview

36 Current Utility Cases at SOAH:

14 rate cases

22 CCN cases

utility cases overview1
Utility Cases Overview

Total number of Rate and CCN preliminary hearings at SOAH:

FY ‘12 - 38 (through 7/31/12)

FY ‘11 - 41

FY ‘10 - 50

FY ‘09 - 81

current cases
Current Cases

Karnes City Petition:

Karnes City filed application in 1993 under TWC § 13.255 to decertify 60 acres within the CCN of the El Oso WSC

Parties reached a settlement and the city askedthat the application be dismissed with prejudice in 1994

2008 – City again files application under 13.255 to decertify the same 60 acre tract

current cases1
Current Cases

Karnes City case continued:

El Oso challenged jurisdiction based on 1994 dismissal with prejudice

After briefing and oral argument, ALJ issues PFD sustaining the WSC’s challenge to jurisdiction

current cases2
Current Cases

Karnes City case continued:

Commissioners found that TCEQ had jurisdiction based on “materially changed circumstances” and remanded the case back to SOAH for hearing

current cases3
Current Cases

Karnes City case continued:

WSC obtained federal loan and filed motion to dismiss SOAH case based on federal debt protection under 7 U.S.C. § 1926(b)

current cases4
Current Cases

Karnes City case continued:

WSC also filed suit in federal court seeking injunctive and declaratory relief, liquidated damages based on breach of 1994 settlement agreement, and attorney’s fees

current cases5
Current Cases

Karnes City case continued:

Parties agreed to abate the SOAH proceeding while the federal case progressed

City and WSC filed Motions for Summary Judgment

current cases6
Current Cases

Karnes City case continued:

Federal Magistrate granted the WSC’s Motion for Partial Summary Judgment, finding that:

  • El Osoqualified for debt protection
  • City had encroached on WSC’s CCN
  • Timing of federal debt didn’t matter
current cases7
Current Cases

Karnes City case continued:

Federal Magistrate found

  • City’s argument that it would assume a pro-rata share of the federal debt was unpersuasive
  • “skimming the cream” –would adversely affect remaining customers
current cases8
Current Cases

Karnes City case continued:

City is enjoined from encroaching on WSC’s service area as long as federal debt protection is in place

WSC also awarded $50K for liquidated damages and attorney’s fees

current cases9
Current Cases

Karnes City case continued:

City withdrew application without prejudice

ALJ dismissed the case

current cases10
Current Cases

Canyon Lake Water Supply case

Rate increase filed by Canyon Lake Water Supply Company in 2010

Former Water Supply Corporation purchased by an IOU

current cases11
Current Cases

Evidentiary Hearing held March 2012

Main issues:

  • Original cost of assets purchased by the IOU
  • How to handle contributed capital
  • Rate of return
current cases12
Current Cases

Canyon Lake case

Main issues continued:

  • Trending vs. booked costs
  • Negative acquisition adjustment
  • Rate case expenses
other hot issues
Other Hot Issues

83rd Legislative Session

  • Transfer of rate and CCN programs back to PUC
  • Changes to rate making process
slide42

Questions?

Todd.Galiga@tceq.texas.gov

(512) 239-3578