A Regular Session Like No Other – Recap of the Regular Session of the 87th Texas Legislature

by Ty Embrey

The Regular Session of the Texas Legislature ended on May 31st when the Legislature adjourned Sine Die. The Regular Session of the 87th Texas Legislature was one of the most unusual Regular Sessions the citizens of Texas have ever seen. The Legislature operated the entire session under the conditions created by the Covid-19 pandemic and many normal legislative activities were impacted by the pandemic in some way. The state experienced a major winter storm event, Winter Storm Uri, in February that caused a substantial number of deaths and significantly impacted the electric grid in Texas. The Legislature invested a large amount of time and effort during the Regular Session to try and address the issues that Winter Storm Uri brought to light.

The Regular Session did kick off on January 12th with the election of a new Speaker of the Texas House, Dade Phelan. Speaker Phelan is a Republican from Beaumont who has served as a state representative for over 8 years. A total of 7148 bills and joint resolutions were filed during the Regular Session, 21 bills were vetoed by Governor Abbott, and 1083 bills and joint resolutions became effective as Texas law.

This article summarizes the major legislation that addressed reliability and weatherization issues for utilities, groundwater, water utilities, solid waste and open government issues.

I. Utilities – Response to Winter Storm Uri, Weatherization and Reliability

The Legislature passed a significant package of bills in response to Winter Storm Uri and in an effort to address reliability and weatherization issues to prevent many of the issues faced by Texas citizens in February. The bills below are the major pieces of legislation that accomplished that objective:

SB 3 (Schwertner) – Relating to preparing for, preventing, and responding to weather emergencies, power outages, and other disasters. SB 3 is the Texas Legislature’s effort to improve the reliability and weatherization efforts for water, gas, and electric utilities in Texas in response to Winter Storm Uri. There were numerous new requirements placed on electric and gas utilities. SB 3 created a new Texas Energy Reliability Council that is tasked with preparing a report on an annual basis on the reliability and stability of the electricity supply chain in this state. SB 3 also created the State Energy Plan Advisory Committee to study the Texas energy market and prepare a report that is due to the Texas Legislature by September 1, 2022. In regards to water and wastewater utilities, SB 3 requires affected utilities, which SB 3 defines as retail public utilities, exempt utilities, or providers or conveyors of potable or raw water service, to ensure the emergency operation of their water system during an extended power outage at a minimum water pressure of 20 pounds per square inch, or at a water pressure level approved by the Texas Commission on Environmental Quality (“TCEQ”), as soon as safe and practicable following the occurrence of a natural disaster; and adopt and submit to TCEQ for its approval: (A) an emergency preparedness plan that demonstrates the utility’s ability to provide the emergency operations described by Subdivision (1); and (B) a timeline for implementing the emergency preparedness plan. SB 3 provides specific information regarding TCEQ review of each utility’s emergency preparedness plan and what information should be included in such a plan. SB 3 establishes that a retail public utility that is required to possess a certificate of public convenience and necessity (“CCN”) or a district or affected county that furnishes retail water or sewer utility service shall not impose late fees or disconnect service for nonpayment of bills that are due during an extreme weather emergency until after the emergency is over and shall work with customers that request to establish a payment schedule for unpaid bills that are due during the extreme weather emergency. SB 3 defines an extreme weather emergency as a period when the previous day’s highest temperature did not exceed 28 degrees Fahrenheit and the temperature is predicted to remain at or below that level for the next 24 hours according to the nearest National Weather Service reports. The bill also establishes monetary penalties if a utility violates the billing deferment and service cut-off provisions of SB 3.

HB 1520 (Paddie) – Relating to certain extraordinary costs incurred by certain gas utilities relating to Winter Storm Uri and a study of measures to mitigate similar future costs; providing authority to issue bonds and impose fees and assessments. HB 1520 amends Chapter 1232.002, Government Code, to provide a method of financing for “customer rate relief bonds authorized by the Railroad Commission of Texas.” The bill would enable a securitization process to occur by amending Chapter 1232 Government Code, to allow for the issuance of bonds, approved by the Railroad Commission. HB 1520 makes no reference to disaster or exceptional circumstances.

SB 2154 (Schwertner) – Relating to the membership of the Public Utility Commission of Texas. SB 2154 increases the number of PUC Commissioners from the current number of 3 Commissioners to 5 Commissioners. SB 2154 also requires the PUC Commissioners to be residents of Texas and adds professional engineers to the list of professions that the Governor can draw from when making Commissioner appointments. SB 2154 reduces the time period of ineligibility to serve as a Commissioner if the person has worked for a public utility or worked as an executive officer of a state agency or was a member of the Texas Legislature from two years to one year. The bill also establishes that only 2 of the 5 Commissioners must be well informed and qualified in the field of public utilities and utility regulation in comparison to current law that requires all 3 Commissioners to have such qualifications.

SB 2 (Bettencourt) – Relating to the governance of the Public Utility Commission of Texas, the Office of Public Utility Counsel, and an independent organization certified to manage a power region. SB 2 amends Section 39.151 of the Utilities Code and establishes that rules adopted by ERCOT under delegated authority by the PUC may not take effect before receiving PUC approval. This legislation also requires that all ERCOT members reside within Texas. It specifies that the board member set for independent generators must be “elected by a majority vote of the members of this market segment who each own and control five percent or more of the installed generation capacity located in the power region.” Also, the presiding officer of ERCOT is to be selected by the Governor, with consent of the Senate. All protocols must receive commission approval.
II. Groundwater

SB 601 (Perry) – Relating to the creation and activities of the Texas Produced Water Consortium. This bill creates the Texas Produced Water Consortium with the purpose of aggregating information resources to study the economics and technology related to beneficial uses of produced water. The Consortium shall produce a report by September 1, 2022 that includes (1) suggested legislative changes to better enable beneficial use of produced water, (2) an economically feasible pilot project for state participation in a produced water facility, and (3) an economic model for using produced water in an economic and efficient way. The Consortium shall be governed by a board with representatives from the Railroad Commission, the State Energy Conservation Office, TCEQ, the Texas Economic Development and Tourism Office, and the Texas Water Development Board. This bill provides that Texas Tech University will host the Consortium and will be tasked with soliciting participation from the oil and gas industry and companies that own or manage the infrastructure to store and transport produced water. Lastly, the bill provides the Consortium shall solicit sponsorships from private entities for funding, and in exchange private entities may receive access to data produced by the Consortium.

Bills that failed to pass:

SB 152 (Perry) – Relating to the regulation of groundwater conservation districts. SB 152 was the omnibus groundwater legislation for the Regular Session. This bill would create additional procedural rights for certain landowners and groundwater rights holders in dealing with groundwater conservation districts (“GCDs”). First, the bill amends section 36.066 of the Water Code (relating to suits against GCDs) to change the language for awarding attorney’s fees and other costs from “shall” to “may,” thus eliminating any guarantee of fee and cost reimbursement for a GCD that successfully brings or defends a lawsuit. Second, the bill would add a section titled “Petition to Change Rules” that authorizes a person with groundwater ownership and rights to petition their local GCD to adopt or modify a rule. This section contains several requirements for such a petition, including an explanation of why a change to the GCD’s rules is consistent with certain provisions of the Water Code and a requirement that the petitioner provide written notice to each person with groundwater rights in the area that would be affected by the change. This section also sets deadlines for a GCD to consider such a petition and requires the GCD to provide explanation for any action it takes on the petition. Finally, the bill adds a section that requires a person who submits a groundwater permit or a permit amendment to provide notice by certified mail to “each person with a real property interest in the groundwater beneath the land within the space prescribed by the district’s spacing rules for the proposed or existing well.” If a person receives notice under this section, they also have a “justiciable interest” that would allow them to participate in any hearings before the GCD.

HB 2095 (Wilson) – Relating to water research conducted by The University of Texas Bureau of Economic Geology. HB 2095 requires the University of Texas Bureau of Economic Geology to collect monitoring data related to surface water and groundwater and their integration. The bill provides that the bureau may also collect data related to soil or atmospheric moisture, if appropriate. The bureau will use the data collected to create a system of comprehensive surface water and groundwater models, including models of the integration of surface water and groundwater. Additionally, the bureau shall make the results available to state agencies and state institutions of higher education. The bureau may cooperate with Texas A&M University, Texas Tech University, a state agency, or a private entity to carry out these duties.

HB 2851 (Lucio III) – Relating to the consideration of modeled sustained groundwater pumping in the adoption of desired future conditions in groundwater conservation districts. HB 2851 would add an additional consideration by the GCDs in each Groundwater Management Area (“GMA”) of the modeled sustained groundwater pumping amount when the GCDs are making decisions on the desired future conditions (“DFCs”) for each aquifer in the GMA. HB 2851 would define “modeled sustained groundwater pumping” as the maximum amount of groundwater that the executive administrator, using the best available science, determines may be produced annually in perpetuity from an aquifer. HB 2851 does prohibit the executive administrator of TWDB from calculating the modeled sustained groundwater pumping for an aquifer or an aquifer that wholly or partly underlies an aquifer with a recharge rate such that an owner of land that overlies the aquifer qualifies or has previously qualified under federal tax law for a cost depletion deduction for the groundwater withdrawn from the aquifer for irrigation purposes.

III. Water and Water Utilities

HB 837 (Lucio III) – Relating to the procedure for amending or revoking certificates of public convenience and necessity issued to certain retail public utilities. This bill amends sections 13.254, 13.2541, and 13.255 of the Texas Water Code, which authorizes certain landowners to remove their property from a certificated service area by way of expedited release (13.254) or streamlined expedited release (13.2541), and authorizes municipalities and franchise utilities to acquire single certification, potentially rendering the property of a neighboring retail public utility useless or valueless (13.255). Each of these sections requires compensation be paid to the decertified or adversely affected retail public utility whose CCN may have been impacted by such proceedings. HB 837 adds language to each of these sections requiring the petitioning party (landowner, municipality, or franchise utility) to submit a report to the PUC verifying that such compensation has actually been paid.

HB 872 (Bernal, Howard, Lopez, Minjarez, Hernandez) – Relating to the disclosure of certain utility customer information. HB 872 amends the Texas Public Information Act to make certain government-operated utility customer information confidential and excepted from disclosure. Specifically, information maintained by a government-operated utility would be excepted from disclosure if it: (1) discloses whether utility services have been disconnected or are eligible for disconnection, or (2) is collected as part of an advanced metering system for usage, services, and billing, including amounts billed, unless that information is being requested by the customer or their designated representative.

HB 3476 (Schofield) – Relating to certificates of public convenience and necessity issued to water utilities inside the boundaries or extraterritorial jurisdiction of certain municipalities. When a municipality consents to a CCN for a service area within its extraterritorial jurisdiction, the municipality will not be able to require the water and sewer facilities to be built according to its own standards. Instead, when the PUC issues a CCN to such facilities, it must require the facility to be built according to the PUC’s own standards.

SB 997 (Nichols) – Relating to procedural requirements for the review of a contractual rate charged for the furnishing of raw or treated water or water or sewer service. This bill amends Texas Water Code Section 12.013 and adds new Section 13.0431 to (1) codify existing common law requirement that the PUC must first determine that a contract rate adversely affects the public interest before holding a hearing to prescribe reasonable rates, (2) provide that a PUC determination that a contract rate adversely affects the public interest is a final decision subject to judicial appeal, and (3) in cases where the courts uphold the PUC’s decision, require the PUC to allow the parties 60 days to attempt to negotiate a new contract prior to proceeding to a PUC rate hearing. The law will take effect on September 1, 2021.

Bills that Failed to Pass:

HB 1926 (Wilson) – Relating to the extension of water or sewer service by certain retail public utilities at the request of a developer. HB 1926 would have required a water supply or sewer service corporation or a special utility district provide a written statement to a developer’s request for an extension of retail water or sewer utility service for either (1) subdivided land or (2) more than two service connections within the certified area of the corporation. The written statement must include information on whether the corporation or district can provide the requested service and the infrastructure that the developer is required to supply to accommodate the service. The bill allows a developer to petition PUC if the corporation or district refused to extend service based on a conclusion that the developer failed to comply with the service extension policy or did not provide a written statement with the required information within 90 days of the request being submitted. A corporation or district may also petition PUC if the developer refuses to comply with the service extension policy. The bill provides that PUC shall evaluate whether the service extension policy is reasonable as applied to the developer and may hold an informal hearing.

IV. Solid Waste

Bills that failed to pass:

HB 753 (Cain, Gates) – Relating to municipal solid waste management services contracts; limiting the amount of a fee. This bill would have added to the Health & Safety Code Section 363.120, which would have limited the fee a municipality can charge for a solid waste franchise to 2% of the gross receipts of the franchisee in the municipality. The restriction would have only applied to contracts entered into on or after September 1, 2021. The bill would have also added a provision to the Health & Safety Code Section 364.034(f). Currently, (f) prohibits a municipality from granting an exclusive franchise for collection and removal of domestic septage, grease trap waste, grit trap waste, lint trap waste, and sand trap waste. The bill would have also prohibited a municipality from entering into an exclusive franchise for commercial, industrial, or multi-family residential waste.

HB 631 (Darby) – Relating to local government and other political subdivision regulation of certain solid waste facilities. Currently, Health & Safety Code Section 361.095 exempts hazardous waste facilities from requirements to obtain permits from local governments and other political subdivisions. This bill would have added a more limited exemption for municipal solid waste (“MSW”) facilities. The MSW exemption would have prevented TCEQ from requiring a local permit as a prerequisite to a permit being issued by TCEQ, but did not exempt the MSW facility from the requirement for the local permit. The bill would have also prohibited local governments and other political subdivisions from adopting rules or ordinances that conflict with or are inconsistent with the MSW rules and permits. Under the bill, an ordinance that is more restrictive than a TCEQ rule would likely be considered inconsistent with TCEQ rules. The bill would not restrict a city or county from enacting a siting ordinance.

SB 1482 (Zaffirini) – Relating to the issuance of a permit for a MSW landfill facility located in a special flood hazard area. This bill would have added Health and Safety Code Section 361.1232, which would have limited MSW landfills in special flood hazard areas. This bill defined the terms “facility” and “special flood hazard area,” and prohibited TCEQ from issuing a permit for a new MSW landfill facility, or a lateral expansion of an existing facility, that is contingent on the removal of a part of the facility from a special flood hazard area. This bill prohibited TCEQ from issuing a permit for a new MSW landfill facility, or a lateral expansion of an existing facility, if part of the facility is or will be located in a special flood hazard area, unless the applicant has obtained from FEMA a letter of map change demonstrating that the entire facility has been removed from the special flood hazard area. This bill required TCEQ to coordinate with all applicable regional and local governments to verify that all required map changes to the Flood Insurance Rate Map have been acquired from FEMA and all necessary permits have been issued for the facility by the governmental entities or agencies with jurisdiction over the facility.

V. Open Government

HB 1082 (King, Phil, Hernandez, Harless, Deshotel, Shaheen) – Relating to the availability of personal information of an elected public officer. This bill reenacts and amends Section 25.025 of the Tax Code and Sections 552.117 and 552.1175 of the Government Code (all relating to personal contact information exceptions for public information requests) to add any “elected public officer” to the list of protected officials. These changes will apply only to public information requests received after September 1, 2021.

HB 1118 (Capriglione) – Relating to state agency and local government compliance with cybersecurity training requirements. HB 1118 establishes stricter cybersecurity requirements for state and local entities. First, to receive a grant under Chapter 772 of the Government Code, a local government must submit written verification of their compliance with cybersecurity training requirements. If a grantee fails to comply with cybersecurity requirements, this bill requires them to repay their grant and prevents them from applying for a new Chapter 772 grant for two years. The bill also adds a requirement that local governments train appointed and elected officials in cybersecurity. Finally, the bill requires state agencies to include a certification of their compliance with cybersecurity training requirements in their strategic plans.

HB 1154 (Jetton, Metcalf, Bell, Cecil) – Relating to the requirements for meetings held and Internet websites developed by certain special purpose districts. HB 1154 adds a section to the Government Code that requires certain special purpose districts—political subdivisions with geographic boundaries defining their jurisdictions—to post certain information on publicly accessible websites. These posting requirements apply to a special purpose district that meets four requirements:
(1) it is authorized to impose ad valorem taxes, (2) it imposed an ad valorem tax in the previous year, (3) it has outstanding bonds, or it had gross receipts from operations, loans, taxes, or contributions in excess of $250,000 or cash and temporary investments in excess of $250,000 in the previous year, and (4) it encompasses a population of 500 or more people. The bill provides that a special purpose district that meets these requirements must post a variety of information online, including names of the members of its governing body, ad valorem tax rates, sales and use tax rates (if applicable), notices for meetings, and meeting minutes. These requirements do not apply to municipalities, counties, junior college districts, independent school districts, or any political subdivision with a statewide jurisdiction. The bill also amends Section 49.0631 of the Water Code to require utilities that fall under these requirements to list their informational websites on customer water bills. This law will take effect on September 1, 2021.

HB 1322 (Zaffirini) – Relating to a summary of a rule proposed by a state agency. HB 1322 requires state agencies to publish a brief explanation of a proposed rule on the agency’s website or another accessible website. The explanation must include a plain-language summary.

HB 2723 (Meyer, Shine, Button) – Relating to public notice of the availability on the Internet of property tax-related information. HB 2723 requires the comptroller to develop and maintain an easily accessible Internet website that lists each property tax database and includes a method to assist a property owner in identifying the appropriate property tax database for the owner’s property. The bill requires the website to be addressed as PropertyTaxes.Texas.gov and to include a separate link to the Internet location of each property tax database. Additionally, the bill requires certain governmental entities to include language in certain notices informing individuals that they can find a link to their local property tax database at VisitPropertyTaxes.Texas.gov. The language must provide that the information on the website is easily accessible and includes information about proposed tax rates that will determine how much individuals pay in property taxes and information regarding public hearings of each entity that taxes their property.

This bill may apply to notices of proposed tax rates for taxing units with low tax levies. The bill also applies to notices of a public hearing for which the proposed tax rate exceeds either one or both of the no-new-revenue tax rate and the voter-approval tax rate of the taxing unit; notices of a meeting to vote on a proposed tax rate that does not exceed the lower of no-new-revenue or voter-approval tax rate; and notices of a meeting where the board of a district will consider adopting an ad valorem tax rate for certain purposes.

Bills that failed to pass:

SB 861 (Paxton) – Relating to remote meetings under the open meetings law. SB 861 would have allowed all governmental bodies to hold open or closed meetings from one or more remote locations by telephone calls and videoconference meetings. The bill provided that a telephone conference call or videoconference meeting is subject to the same notice requirements as a face-to-face meeting in addition to the specific requirements for notice provided in the bill. The bill required that notice of a meeting (1) include the statement, “telephone conference call” or “videoconference” call in lieu of the place of the meeting, (2) list each physical location where members of the public may listen to or participate in the meeting, (3) include access information for the meeting, and (4) include instructions for members of the public to provide testimony, if applicable. A notice must also state the location where meetings of the governing body are usually held, and the location designated in the notice of the meeting must provide two-way communication during the entire meeting. SB 861 required that any method of access provided to the public be widely available at no cost to the public. In addition, the bill provided that each part of the meeting required to be open to the public must be visible to the public and audio and visual communication be clear while a participant is speaking. The bill required that any materials that would have been distributed to the public in a face-to-face meeting must be available electronically. The bill stated that a governmental body may have quorum as long as a sufficient number of members remain audible and visible, if applicable, to each other and to the public during the open portion of the meeting. Lastly, the bill updated the education, health and safety code, and transportation code to allow visual and audio meetings and provide requirements for notice.

HB 2103 (Bowers) – Relating to the authority of certain water planning entities to hold an open or closed meeting by telephone conference call or videoconference call. HB 2103 would have allowed the Interregional Planning Council, a regional water planning group, or a flood planning group and any of their committees or subcommittees to hold an open or closed meeting by telephone conference call or video conference call.

Conclusion

The Texas Legislature had to make it over many significant hurdles to get to the end of the Regular Session on May 31. Governor Abbott and others believe additional work is needed on several issues, including election reform issues, so the Governor called the Texas Legislature into a Special Session that began on July 8th. Each Special Session called by the Texas Governor can last up to 30 days under the Texas Constitution. Legislators will also be called into another Special Session before the end of 2021 to address redistricting issues.

There are several other legislative efforts that will begin later in 2021 that will impact the 2023 Regular Session. Ten legislators and two members of the public serve on the Sunset Advisory Commission (“SAC”) and SAC will perform reviews of TCEQ, PUC, TWDB, and ERCOT among multiple other state agencies to ultimately provide recommendations to the entire Texas Legislature. In addition, the state legislators will start working on preparing the list of issues and subject matters the legislators would like to study and hold public hearings on during the legislative interim time period. The legislators will use the information they gain during their interim committee work to prepare legislation for the next Regular Session of the Texas Legislature, which will begin in January 2023.

Ty Embrey is the Chair of the Firm’s Governmental Relations Practice Group and a member of the Firm’s Water, Districts, and Air and Waste Practice Groups. If you have any questions concerning legislative issues or would like additional information concerning the Firm’s legislative tracking and monitoring services or legislative consulting services, please contact Ty at 512.322.5829 or tembrey@lglawfirm.com.

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