The responsibility for the regulation of water and sewer service, including the oversight of certificates of public convenience and necessity (“CCNs”), was recently transferred from the Texas Commission on Environmental Quality (“TCEQ”) to the Public Utility Commission (“PUC”), effective September 1, 2014. Senate Bill 567 (“SB 567”) and House Bill 1600 (“HB 1600”) transferred “the powers, duties, functions, programs, and activities . . . relating to the economic regulation of water and sewer service, including the issuance and transfer of certificates of convenience and necessity, the determination of rates, and the administration of hearings and proceedings involving those matters, under Section 12.013 and Chapter 13, Water Code . . .” from the TCEQ to the PUC.2 Among those duties, the PUC is now responsible for the streamlined expedited release process by which certain landowners may petition to have their property removed from the existing retail service provider’s CCN. This paper discusses the transition to the PUC, the basics of decertification, expedited release, and some of the remaining issues in implementing the expedited release process.

II. TRANSITION FROM THE TCEQ TO THE PUC -

As of September 1, 2014, the PUC has assumed responsibility for oversight and enforcement of the statutory scheme applicable to CCNs. In transferring the duties of the TCEQ related to CCNs to the PUC, the Legislature specifically provided that “A rule, form, policy, procedure, or decision of the [TCEQ] related to a power, duty, function, program, or activity transferred under this Act continues in effect as a rule, form, policy, procedure, or decision of the [PUC] and remains in effect until amended or replaced by that agency.” The PUC adopted the substantive rules regulating water and sewer utilities from the TCEQ (30 Texas Administrative Code, Chapter 291) with the only changes being those necessary to implement the rules in accordance with PUC procedures and correct typographical errors. Since that time, the PUC has not made any formal amendments to any substantive rules regulating CCNs (as of November 1, 2014).

Originally presented at the TexasBarCLE 8th Annual Advanced Real Estate Strategies December 4-5. 2014 in Galveston, Texas.