88R19380 CXP-F
	By: Thompson of Harris	H.B. No. 4763
	Substitute the following for H.B. No. 4763:
	By:  King of Uvalde	C.S.H.B. No. 4763

	A BILL TO BE ENTITLED
	AN ACT
	relating to requirements for the purchase or acquisition of certain
	water and sewer systems.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 13.301, Water Code, is amended by
	amending Subsection (h) and adding Subsections (l), (m), and (n) to
	read as follows:
	(h)  A sale, acquisition, lease, or rental of any water or
	sewer system owned by an entity required by law to possess a
	certificate of public convenience and necessity, or a sale or
	acquisition of or merger or consolidation with such an entity, that
	is not completed in accordance with the provisions of this section
	is void. The utility commission shall approve a transaction to
	which this section applies without an owner's signature required by
	other law if the owner has abandoned operation of the facilities
	that are the subject of the transaction and cannot be located or
	does not respond to an application filed under Subsection (l).
	(l)  Notwithstanding any other provision of this section,
	the utility commission by rule shall adopt an expedited process
	that allows a person appointed by the utility commission or
	commission under Section 13.4132 as a temporary manager of a
	utility, utility in receivership, or utility in supervision, who is
	also an operator of a Class A or Class B utility to apply for utility
	commission approval of the person's acquisition of the stock,
	ownership interest, or assets of the temporarily managed and
	operated utility, utility in receivership, or utility in
	supervision, its facilities, and, if applicable, its certificated
	service area. The expedited process must:
	(1)  waive public notice requirements regardless of
	whether the person elects to charge initial rates in accordance
	with Section 13.3011 or use a voluntary valuation determined under
	Section 13.305;
	(2)  require approval of the acquisition transaction if
	the transaction is considered to be in the public interest; and
	(3)  provide that:
	(A)  the person's appointment is considered
	sufficient to demonstrate adequate financial, managerial, and
	technical capability for providing continuous and adequate service
	to the service area to be acquired and any areas currently
	certificated to the person; and
	(B)  all used and useful invested capital and just
	and reasonable operations and maintenance costs incurred by the
	person during the person's appointment as temporary manager and
	operator of the utility, utility in receivership, or utility in
	supervision to be acquired are considered to be a regulatory asset
	for the person and are recoverable in the person's next
	comprehensive rate proceeding or system improvement charge
	application.
	(m)  If a temporary rate under Section 13.046 is adopted
	during the period described by Subsection (l)(3)(B), all used and
	useful invested capital and just and reasonable operations and
	maintenance costs incurred by the person in excess of costs covered
	by the temporary rate are considered to be a regulatory asset for
	the person and are recoverable in the person's next comprehensive
	rate proceeding or system improvement charge application.
	(n)  The utility commission and commission shall provide a
	reasonable period for a person acquiring a utility under Subsection
	(l) to bring the acquired utility into compliance with utility
	commission and commission rules before imposing a penalty for any
	violation committed by the acquired utility for which no
	enforcement action has been completed at the time of acquisition.
	SECTION 2.  This Act takes effect September 1, 2023.

Statutes affected:
Introduced: Water Code 13.301 (Water Code 13)
House Committee Report: Water Code 13.301 (Water Code 13)