Reflections and Considerations Regarding the Streamlined Expedited Decertification Process

by David J. Klein

As we look to the last half of 2022, prior to the commencement of the 2023 Legislative Session, the quickest and most certain process for some Texas landowners to be removed from the service area boundaries of a water and/or sewer certificate of convenience and necessity (“CCN”) is through a petition process in Texas Water Code (“TWC”) § 13.2541 known as the “streamlined expedited decertification process.” In general, a CCN is a permit, currently regulated through the Public Utility Commission of Texas (“PUC”), which provides its holder with the exclusive right and obligation to provide continuous and adequate retail water/sewer service over a specific geographic area. CCNs can be approved for new authorizations; and existing CCNs can be amended and transferred. It seems, however, that a majority of the CCN-related applications are petitions for decertification. Many years ago, CCN decertifications were a near-impossible endeavor- an option available under TWC § 13.254(a), limited to other retail service providers and the Commission (and its predecessor agencies) itself. It was common that a contested CCN decertification petition under that process would likely take 18-24 months.

In 2005, House Bill 2876 amended Chapter 13 of the Texas Water Code, establishing several landowner-friendly laws that in part enabled landowners – for the first time – to somewhat control the extent to which their land is included within a CCN. Specifically, landowners across the state that could meet certain prerequisites could file a petition for expedited CCN release (decertification) under TWC § 13.254(a-1). That being said, a landowner-petitioner would need to demonstrate under TWC § 13.254(a-1) that the existing CCN holder either refused to provide service or the existing CCN holder is not capable of providing the service on a continuous and adequate basis within the timeframe, at the level, or at the approximate cost that the alternative provider is capable of providing for a comparable level of service, or in the manner reasonably needed or requested by current and projected service demands in the area. No guarantee existed that a landowner petition filed under that new law would be approved. But again, the landowner now had the opportunity to try to get removed from an existing CCN, under a timeframe – approximately 180 days – that was far quicker than the traditional TWC § 13.254(a) process.

Then, in 2011, the Legislature passed Senate Bill 573, establishing TWC § 13.254(a-5), which created a second avenue for certain landowners to file streamlined expedited decertification process petitions at the PUC. The scope of TWC § 13.254(a-5) was narrower than TWC § 13.254(a-1), as it was only available to landowners of 25 acres or more that are located either within a county of 1 million people or in a county adjacent to a county of 1 million people, and not receiving water or sewer service from the CCN holder. However, there was much more certainty under TWC § 13.254(a-5) that a landowner who meets those prerequisites will be decertified from the CCN that includes their land. Plus, the Legislature required that the PUC approve such petitions no later than the 60th day after they are filed at the PUC, which has been interpreted by the PUC as 60 days after the day the PUC deems the petition administratively complete.

Most recently, in 2019, the Legislature transitioned the streamlined expedited decertification process from TWC § 13.254(a-5) to § 13.2541 and tweaked the compensation process. But the core purpose of the streamlined CCN decertification remains in place today: if you can meet the statutory prerequisites, then the PUC should remove your land from the CCN in approximately 60 days.

Dozens, if not hundreds, of landowners have availed themselves of this streamlined expedited decertification process over the past 10+ years by filing and pursuing petitions at the PUC. However, history has shown that the Legislature is prone to modify this CCN decertification law. Depending on your perspective, the changes over the past years have been for the good, at times, and for the bad, at other times. Thus, as we start the third calendar quarter of 2022 and simultaneously look to 2023 and the upcoming Legislative Session, landowners and CCN holders alike should be considering their next moves as to whether they should be filing streamlined expedited decertification petitions now, or wait.

David Klein is a Principal in the Firm’s Districts and Water Practice Groups. If you have any questions regarding CCNs or other water or wastewater system issues, please contact David at 512.322.5818 or dklein@lglawfirm.com.