Office of House Bill AnalysisH.B. 1362
By: Clark
Land & Resource Management


Prior to the 76th Legislature, Section 13.255, Water Code, provided a
mechanism for municipalities in Texas to be granted a single certification
to provide water and sewer service for areas within their corporate limits
when the certificate of convenience and necessity for those areas was
previously held by another retail public utility.  That situation generally
arose when a previously rural area was incorporated or annexed into a
municipality due to urban growth.  The municipality compensated the retail
public utility for the transferred service area and infrastructure.  This
compensation was determined by an appraiser selected solely by the retail
public utility with the cost of the appraiser to be paid by the
municipality. The appraiser's decision was binding on the Texas Natural
Resource Conservation Commission (TNRCC).  The law may have created an
appearance of unfairness and, if a dispute arose, the municipality's only
recourse was to take legal action. 

H.B. 1362 provides a statutory protocol whereby disputes over an appraisal
may be equitably resolved by the retail public utility and the
municipality.  Specifically, the bill authorizes the retail public utility
and the municipality to each select an appraiser if they cannot agree on a
single appraiser and authorizes a retail public utility or a municipality
to petition TNRCC to appoint a third appraiser if the two appraisers cannot
agree on a compensation amount. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


SECTION 1.  Amends Section 13.255, Water Code, by amending Subsection (l),
as follows: 

(l) Requires the costs of an independent appraiser who is selected by the
affected retail public utility (utility) to be paid by the municipality.
Requires the compensation provided under Subsection (g) to be determined by
a qualified individual or firm to which a municipality and a utility agree
to serve as an independent appraiser for an area annexed by the
municipality. Requires the utility and municipality to each appoint an
independent appraiser if the entities are unable to agree on an appraiser
before the 11th day after the utility or municipality notifies the other
party of the impasse.  Requires the independent appraisers to meet to reach
an agreed determination of the compensation amount on or before the 10th
business day after their appointment.  Authorizes the utility or
municipality to petition the Texas Natural Resource Conservation Commission
(TNRCC) or a person TNRCC designates for the purpose to appoint a third
qualified independent appraiser to reconcile the appraisals of the two
originally appointed appraisers.  Prohibits the determination of the third
appraiser from being less than the lesser or more than the greater of the
two original appraisals.  Requires the costs of the independent appraisers
for an annexed area to be shared equally by the utility and municipality.
Makes conforming and  nonsubstantive changes.   

Subsection (g) requires the value of real property to be determined
according to certain standards and requires the factors ensuring that the
compensation to a retail public utility for the taking, damaging, and/or
loss of personal property, including the retail public utility's business,
is just and adequate, to include certain factors, including expenses of the
retail  public utility. 

SECTION 2.  Makes changes in law made by this Act propesctive to an
application filed with TNRCC to grant single certification to a
municipality under Section 13.255(b) (Single Certification in Incorporated
or Annexed Areas), Water Code, filed on or after September 1, 1999.   

SECTION 3.  Effective date:  September 1, 1999.

SECTION 4.Emergency clause.