VOLUME 22, NO. 3 JULY 2017 THE LONE STAR CURRENT

A Publication of Lloyd Gosselink Rochelle & Townsend, P.C., for the Benefit of Its Clients & Friends

PHASES AND STAGES: MARTIN ROCHELLE

and federal agencies, and individually with the Texas Water Conservation with all aspects of their water-related Association. issues. No doubt Texans all across our state have benefited, and will continue Please join us in wishing him well in to benefit, from Martin’s perspective the next steps of his journey. Martin, and counsel on water-related issues. we thank you.

In addition to his accomplishments for his clients, Martin has also led the Firm’s Water Practice Group since IN THIS ISSUE its inception. In this role, Martin has Firm News p. 2 been “leaning forward,” accomplishing Municipal Corner p. 3 his goal of creating a group of water Recap of Regular Session of 85th lawyers in the state that are experts in Texas Legislature every aspect of water law. This success Ty Embrey and Troupe Brewer p. 4 is in large part the result of his efforts Time to Get Ready for September 1 to initiate and continuously champion and S.B. 1004 his edition of our Newsletter the Firm’s efforts on attorney Georgia N. Crump p. 7 comes with the bittersweet T mentoring and career growth. Legislation from the 85th announcement of the retirement Legislative Session Affecting Water of Martin Rochelle, the Chair of the Martin has contributed nearly all of his Districts and Open Government Firm’s Water Practice Group, effective professional career to this Firm, and Statutes October 1, 2017. Martin has been with his achievements will not be forgotten. Stefanie Albright p. 9 Lloyd Gosselink since 1984, joining the Electric and Gas Utility Legislative Firm just months after it was founded. As he begins the next phase of his Wrap-Up: Cities Win Some, Lose In the years that have followed, Martin career, Martin plans to do some Some has been providing unparalleled traveling with Marianne, volunteer Thomas Brocato and Hannah service to the Firm’s clients, as well with a couple of charitable endeavors Wilchar p.11 as helping develop and grow our Firm that are close to his heart, and enjoy Conservation Efforts: Meeting from a group of five attorneys into its some of his favorite hobbies, such Regulators' and Customers' Needs While Extending Supplies* current state. as playing golf at Roy Kizer or Barton Nathan E. Vassar p.12 Creek and mentoring young lawyers. Over the past 33 years, Martin has Our guess is that he will also continue Ask Sheila been a leader in the state on water to pursue his true passion, sound water Sheila B. Gladstone p.13 law and policy, and he has assisted our policy for our state, at the Capitol and In the Courts p.14 clients at the Legislature, before state through his continued participation Agency Highlights p.16

lglawfirm.com FIRM NEWS

Lauren Kalisek received the Advancement of Women's Interest Award from the Travis County Women Lawyers' Association and the Travis THE LONE STAR CURRENT County Women Lawyers' Foundation. Lauren received this award at the Published by Annual Grants and Awards Luncheon Lloyd Gosselink on May 12th in recognition of her Rochelle & Townsend, P.C. efforts in updating and expanding 816 Congress Avenue, Suite 1900 the Firm's women and family-friendly Austin, Texas 78701 workplace policies, including the Firm's 512.322.5800 p reduced hours schedule for associates 512.472.0532 f and new parent leave policies. We are lglawfirm.com thankful for Lauren's leadership and dedication in continuing our Firm's culture of being a great place to work. David J. Klein Managing Editor [email protected] Ty Embrey, Ashleigh Acevedo, Michael Gershon, and Lauren Kalisek had the privilege of sharing their knowledge about water law with the Youth Water Leadership Academy, a Texas 4-Water Ambassadors Jeanne A. Rials program, this past month. This Project Editor program gives students an All written materials in this newsletter opportunity to learn about applied Copyrighted ©2017 by Lloyd Gosselink research and technology, water law, Rochelle & Townsend, P.C. policy, planning, and management strategies to help conserve our Lloyd Gosselink Rochelle & Townsend, valued resources. Our Firm is a proud P.C., provides legal services and specialized sponsor of this inspiring program assistance in the areas of municipal, that prepares and builds the future environmental, regulatory, administrative leaders of the Texas Water World. and utility law, litigation and transactions, and labor and employment law, as well as legislative and other state government relations services.

Based in Austin, the Firm’s attorneys represent clients before major utility and Claire Labit has joined the Firm's Energy Texas Environmental Superconference on environmental agencies, in arbitration and Utility Practice Group as a paralegal. August 3 in Austin. proceedings, in all levels of state and federal Claire earned her paralegal certificate courts, and before the Legislature. The and Master of Arts in Legal Studies from Ty Embrey will be providing a "Legislative Firm’s clients include private businesses, Texas State University and her Bachelor Debrief" at the Texas Alliance of individuals, associations, municipalities, of Science in biology from Louisiana State Groundwater Districts Groundwater and other political subdivisions. University - Shreveport. Summit on August 30 in San Marcos.

The Lone Star Current reviews items of Sheila Gladstone will be giving an Troupe Brewer will be presenting a interest in the areas of environmental, "Employment Law Update" at the Texas "Case Law Update" at the Texas Alliance utility, municipal, construction, and State Bar Advanced Government Law of Groundwater Districts Groundwater employment law. It should not be construed as legal advice or opinion and is not a Seminar on July 28 in Austin. Summit on August 31 in San Marcos. substitute for the advice of counsel. Sara Thornton will be presenting Troupe Brewer will be giving a "Legislative To receive an electronic version of The Lone "'Dammed' If You Do and Damned If You Update" at the American Water Works Star Current via e-mail, please contact Jeanne Rials at 512.322.5833 or jrials@ Don't: Complying with Section 404 of the Association North Texas Chapter Drinking lglawfirm.com. You can also access The Clean Water Act in the Development of Water Seminar on October 20 in Fort Lone Star Current on the Firm’s website at Critical Water Supplies" at the 29th Annual Worth. www.lglawfirm.com.

2 | THE LONE STAR CURRENT | Volume 22, No. 3 MUNICIPAL CORNER

A Texas court would likely conclude that extra compensation would prohibit a new the Public Information Act expressly a county's longevity pay policy for county county officer from receiving longevity makes that same information public. Tex. officials may include the prior service pay under a policy that did not specifically Att’y Gen. Op. KP-0151 (2017). of the individual as a county employee, authorize it, the opinion acknowledged a so long as the longevity payments are county commissioners court could adopt The AG was asked whether Section provided prospectively from the date the a new longevity pay policy that did include 552.1175 of the Public Information Act policy is adopted. Tex. Att’y Gen. Op. KP- county officers on a prospective basis. applies to except personal information 0135 (2017). contained in certain reports filed with The AG explains that a policy operates the Texas Ethics Commission (“TEC”) The Houston County Attorney asked the prospectively (and constitutionally) when from disclosure to the public, or whether Texas Attorney General ("AG") whether a a benefit becomes a term of employment, those documents must be made available county may provide longevity pay to an and employees receive that benefit only t o t h e p u b l i c t h r o u g h o t h e r s t a t u t e s , i . e . , elected county official for time worked for work performed after the benefit is § 254.0401. TEC administers and enforces as an employee for the county. In 2008, established as a term of employment. laws requiring certain persons to file the Houston County Commissioners Noting that Chapter 152 of the Texas Local campaign finance reports, lobby reports, Court amended its employee handbook Government Code authorizes longevity and financial statements. Those reports to adopt a longevity policy that applies pay as a form of compensation, the AG contain certain personal information, to “employees, those appointed by states that a constitutional longevity and the Chairman of the TEC asks to what Commissioners Court, and elected policy does not authorize payment for extent § 552.1175 is in conflict with the officials." In 2016, the handbook was an employee's past service, but rather TEC’s statutory requirements to make amended again for the purpose of "codify authorizes longevity payment for current information in reports filed with the TEC the ongoing practice of paying longevity services provided while recognizing a available to the public, including on the pay to elected officials." However, the person's enhanced value to his or her Internet. County was uncertain if the policy was employer because of the person's many valid after the issuance of AG Opinion KP- years of experience and knowledge. See The AG notes that § 552.1175 specifically 0060. Article III, Section 53 of the Texas United States v. Alger, 151 U.S. 362, 363 exempts from public disclosure certain Constitution forbids paying "any extra (1894). information that relates to the home compensation, fee or allowance to a public address, home telephone number, officer, agent, servant or contractor, after The AG concludes that Art. III, Sec. 53 does emergency contact information, date service has been rendered, or a contract not preclude a longevity pay formula from of birth, or social security number of an has been entered into, and performed including service rendered prior to the individual to whom the section applies, in whole or in part," and the AG has adoption of the longevity pay policy itself. or that reveals whether the individual has consistently recognized that Art. III, Sec. Therefore, the AG states that a court would family members. However, the Chairman 53 prohibits the retroactive awarding of likely conclude that a county's longevity of the TEC notes that this information compensation. See Tex. Att'y Gen. Op. pay policy for county officials may include is required to be made public through Nos. KP-0060 (2016) and JC-0376 (2001). an individual's prior service as a county numerous other statutes that require employee, provided the longevity pay is publication of campaign finance reports, The Court was specifically concerned with earned after the adoption of the longevity lobby reports, and financial statements whether or not longevity pay for elected policy. which include such information. officials who were formerly county employees constituted unconstitutional A Texas Court would likely conclude that The AG begins his analysis noting that “retroactive pay." The AG discusses the Texas Government Code § 552.1175 does Texas courts will attempt to construe opinion issued in KP-0060, stating that not require the Texas Ethics Commission apparently inconsistent statutes in a while the opinion recognized that the to redact or otherwise withhold manner that gives full effect to both. Tex. Texas constitution's prohibition against information when a statute outside of Gov’t Code § 311.026(a). When statutes at

Lloyd Gosselink Rochelle & Townsend, P.C. | July 2017 | 3 issue “irreconcilably conflict” (as do Section 552.1175 and others while § 254.0401 and the other statutes referenced are the cited in the request) if one of the conflicting statutes is general more specific statutes. Lastly, the AG notes previous decisions and the other specific, the specific provision usually prevails as an that concluded that "exceptions to required public disclosure exception to the general statute. The specific provision does not provided in the [Public Information Act] are inapplicable to negate the general one entirely, but will prevail “in its application information that statutes other than the [Public Information Act] to the situation that the specific provision covers." Antonin Scalia expressly make public." Thus, § 552.1175 does not require the & Bryan A. Garner, Reading Law: The Interpretation of Legal TEC to redact or otherwise withhold covered information when Texts, 185 (2012). a statute outside of the Public Information Act expressly makes that information public. While § 552.1175 applies to any state or local governmental body in Texas, § 254.0401 of the Election Code and similar statutes Municipal Corner is prepared by Troupe Brewer. Troupe is an pertain only to the duties of the TEC to make specified reports Associate in the Firm's Water, Litigation, and Districts Practice and statements filed with the Commission available to the public. Groups. If you would like additional information or have any Therefore, the AG states, a Texas court would likely conclude that questions related to these or other matters, please contact Troupe § 552.1175 of the Government Code is a general statute at 512.322.5858 or [email protected]. RECAP OF REGULAR SESSION OF 85TH TEXAS LEGISLATURE by Ty Embrey and Troupe Brewer he Texas Legislature wrapped up its Regular Session when its Groundwater Stakeholder Committee this interim, and Tit adjourned sine die on May 29th after many long days of that group developed and supported eleven bills related to legislative debate and action. For many observers of the Texas groundwater regulation and development in Texas. Ultimately, Legislature, the 2017 Regular Session will be remembered as one five of those bills were passed by the Legislature and one bill of the most contentious and acrimonious sessions in many years. was vetoed by Governor Abbott. Those bills and a few other bills The difficult nature of the Regular Session was reflected in the bill related to groundwater are discussed below. passage rate, which was one of the lowest percentages in some time. While 6,631 bills were filed during the Regular Session and Legislation successfully passed by the Legislature and signed into only 1,211 bills ultimately passed. Then Governor Abbott ended law by Gov. Abbott: up vetoing 50 of the 1,211 bills that were passed by the Texas Legislature. • House Bill ("HB") 2215 (Price) – “DFC Adoption” – This is a TWCA consensus bill. HB 2215 amends the Texas Water Code The Texas Legislature did pass some major legislation during the ("TWC") as it pertains to the process and the timeline for Regular Session, including legislation to address immigration adopting desired future conditions (“DFC”) by groundwater enforcement (sanctuary cities), windstorm insurance, foster care conservation districts ("GCDs") within groundwater system reform, and statewide ban on texting while driving. The management areas (“GMAs”). Specifically, HB 2215 makes Legislature also approved the one bill the Legislature is required amendments to TWC Chapters 16 and 36, primarily to amend by the Texas Constitution to approve, when the Legislature the deadline for the upcoming round of DFC adoption. approved a $217 billion budget to address the expenses of the The bill removes the previous DFC adoption deadline of State of Texas for the next two years. September 1, 2010, and inserts a new deadline of January 5, 2022 for the next round of DFC planning. The bill also Several bills that were important to Governor Abbott, Lieutenant includes language requiring that GMAs propose and adopt Governor Patrick, and Speaker Straus did not pass during the subsequent DFCs “before the end of each successive five- Regular Session. As a result, Governor Abbott announced that he year period after that date.” Effective Date – Immediately. would call a Special Session to start on July 18th for the Legislature to work on 20 issues that Governor Abbott believes need to be • Senate Bill ("SB") 864 (Perry) – “Notice to GCD of Alternative addressed. Under the Texas Constitution, the Special Session Supply” – This was a TWCA consensus bill. This bill requires could extend up to 30 days but the Legislature could adjourn the notice of a water rights application under TWC § 11.132 before the end of the 30-day time period. to identify any proposed alternative source of water, other than state water, that the applicant has identified in the This article summarizes the significant legislation that impacted application. SB 864 adds notice requirements if the applicant groundwater, surface water, water utility, and environmental proposes to use groundwater from a well within a GCD as issues. an alternative source of water. In such an application, notice must be provided to each GCD with jurisdiction over the I. Groundwater proposed groundwater production not less than 30 days before the date the Texas Commission on Environmental The Texas Water Conservation Association (“TWCA”) reassembled Quality (“TCEQ”) takes action on the application. This bill also

4 | THE LONE STAR CURRENT | Volume 22, No. 3 amends TWC § 11.135(b) to require a water right permit to effectively exclude “the public, potentially in perpetuity, include information about any alternative source of water from the decisions of a groundwater conservation district” that is not state water. If a public hearing is held on the and would “reduce transparency and inhibit the district’s application and the notice identifies groundwater from a well ability to respond to changed circumstances over time.” located in a GCD as a proposed alternative source, that notice must also be sent to the GCD in which the well is located and • HB 3025 (King) – “Plugging or Repairing of Abandoned and published at least 20 days before the hearing date stated Deteriorated Wells” – HB 3025 amended Chapter 36 of the in the notice in a newspaper of general circulation in each Water Code to provide that GCDs may require landowners to county in which the GCD is located. Effective Date – 9/1/2017. plug abandoned wells, and shall require landowners to plug or repair deteriorated wells in a manner sufficient to prevent • SB 865 (Perry) – “Authorization for Electronic Banking” – groundwater contamination. The bill also provided a specific This is a TWCA consensus bill. SB 865 amends TWC § 36.151 timeline for such action, and allowed GCD personnel to enter to allow payroll disbursements to be made by electronic onto property to plug or repair wells if the landowner failed deposit, to except such electronic deposits from the to act. However, Governor Abbott vetoed HB 3025, stating requirement that disbursements of district funds be signed that the bill gave GCDs “greater discretion to infringe on by two directors, and to allow a district, by resolution, private property rights and impose costs on landowners” and to transfer funds by federal reserve wire or electronic that the “legitimate need to repair deteriorated wells should means to any account. Effective Date – Immediately. be addressed in a way that provides more protections for landowners.” • SB 1009 (Perry) – “Administratively Complete Permit Applications” – This is a TWCA consensus bill. SB 1009 inserts Legislation that failed to pass the Legislature: the word "only" into TWC § 36.113(c) to make the list of information that may be required for an administratively • HB 31 (Larson) – Omnibus groundwater bill complete application an exhaustive list. SB 1009 also adds a • HB 180 (Lucio III) – Remove state auditor review of GCD provision to that list to allow a GCD to require in a permit Management Plans application any other information “required by district rule,” • HB 3028 (Burns) – Groundwater ownership/rights as long as that rule was in place at the time the application • HB 3043 (Workman)/SB 1528 (Creighton) – DFC joint planning was submitted, and as long as that rule is “reasonably process and advisory committees related” to an issue that a district is authorized to consider • HB 3166 (Lucio III) – Creates definition for “modeled under TWC Chapter 36. Lastly, SB 1009 amends TWC § 36.114 sustainable groundwater pumping” to state that an application is administratively complete • HB 3417 (King, T.) – Consideration of registered wells in if it contains all the information set forth in §§ 36.113 and permitting new production 36.1131, and that a district shall not require that additional • HB 4050 (Larson) – Export permit overhaul information be included in an application for a determination • HB 4122 (Kacal) – Transfer of property into single GCD of administrative completeness. Effective Date – 9/1/2017. • SB 862 (Perry) – “Loser pays” • SB 1053 (Perry) – Appeal of DFCs Legislation finally passed but vetoed by Governor Abbott: • SB 1392 (Perry) – Omnibus Chapter 36 bill

• HB 2377 (Larson) – “Brackish Groundwater Permitting” – As II. Surface Water/Water Utility a follow-up to Chairman Larson’s HB 30 from last session that required TWDB to study and report on “brackish In the context of surface water and water utility legislation, groundwater production zones,” HB 2377 sought to guide those bills were more successful than legislation pertaining GCDs in the permitting requirements for production to groundwater. TWCA formed a Surface Water Legislative permits from those zones designated by TWDB. However, Committee, and that group developed two pieces of consensus HB 2377 was vetoed by Governor Abbott, who stated that legislation that successfully passed. Those bills and others “[w]hile the development of brackish water resources as a pertaining to water and water utilities are discussed in more potential means of meeting our state’s future water needs detail below. is important, House Bill 2377 went about it the wrong way.”

• HB 2378 (Larson) – “Export Permits” - This was a TWCA Legislation successfully passed: consensus bill. HB 2378 provided that a term for a groundwater transport permit issued by a GCD shall be • HB 544 (Anderson) – “Use of Rural Water Assistance Fund automatically extended on or before its expiration to a term for Planning” – HB 544 amends TWC Chapter 15 to authorize not shorter than the term of the associated operating permit Texas Water Development Board ("TWDB") to use the Rural for the production of groundwater that was in effect at the Water Assistance Fund for planning (in addition to existing time of the extension. The transport permit term also would uses of outreach, financial, and technical assistance) to assist have been extended for each additional term for which the rural entities to obtain and use financing. The bill also expands associated operating permit was renewed. However, HB 2378 language to authorize financing from any source for a purpose was vetoed by Governor Abbott, who stated that the bill would described by Chapter 15. Effective Date – Immediately.

Lloyd Gosselink Rochelle & Townsend, P.C. | July 2017 | 5 • HB 965 (Springer) – “Water Utility Restrictions on the commission denied the appeal or the date the appeal Correctional Facilities” – HB 965 amends TWC Chapter is overruled by operation of law. Effective Date – 9/1/2017. 13 to allow retail public utilities to require correctional facilities to comply with water conservation measures. These • HB 3735 (Frank) – “Chapter 11 Clean-Up” – HB 3735 is a changes apply only to a correctional facility operated by the TWCA consensus bill that amends TWC Chapter 11 and Texas Department of Criminal Justice (“TDCJ”) or operated serves as a water rights application “clean-up” bill. HB 3735 under contract with the TDCJ. The provisions of HB 965 amends the map and plat requirements for an application for apply to such facilities unless TDCJ submits a statement appropriation of state water by authorizing TCEQ to prescribe that conservation would unreasonably increase costs or the form and necessary information for the submission of a endanger health and safety. Effective Date – Immediately. map or plat. HB 3735 amends TWC § 11.128 to eliminate any reference to an exemption from the fee associated with a • HB 1573 (Price) – “Water Loss Audits & TWDB Training” – HB permit application to use state water. The bill also amends 1573 amends TWC Chapter 16 to require persons performing TWC § 11.134 to provide that, in determining whether an annual water loss audits for retail public utilities providing appropriation is detrimental to the public welfare, TCEQ potable water to receive specialized must consider only the factors training on performing such audits. The that are within the jurisdiction and bill requires TWDB to make training expertise of TCEQ as established available for free on its website, and by Chapter 11. Lastly, HB 3735 TWDB may provide training in person includes provisions from HB 2894/ or by video or a “functionally similar SB 1430 that failed to pass, which and widely available medium.” Training add language to § 11.122 to grant provided under this bill must include the holder of a water right that comprehensive knowledge of water begins using desalinated seawater utility systems and terminology and after acquiring the water right a any tools available for analyzing audit right to expedited consideration results. Effective Date – 9/1/2017. of an application to make certain amendments to the water • HB 1648 (Price) – “Water Conservation right. Effective Date – 9/1/2017. Coordinator” – HB 1648 amends TWC Chapter 13, requiring retail public • SB 347 (Watson) – “Open utilities providing potable water to Government Laws & RWPGs” – SB more than 3,300 connections to 347 requires that Regional Water designate a “water conservation Planning Groups (“RWPG”), and coordinator” to assist in developing any committee or subcommittee and implementing the utility’s water of a RWPG, be subject to the conservation plan. Such utilities must Open Meetings Act and the inform TWDB in writing as to who is Public Information Act as they are their designated water conservation embodied in the Texas Government coordinator. Effective Date – 9/1/2017. Code. Effective Date – 9/1/2017.

• HB 3177 (Lucio III) – “Uncontested • SB 1511 (Perry) – Matters and ED Appeals” – HB 3177 is a “Water Planning & Chapter 16 TWCA consensus bill that amends TWC Amendments” – SB 1511 amends Chapter 5 to provide that a surface TWC Chapter 16 to require the water permit application or request State Water Plan (“SWP”) to may be delegated to the TCEQ Executive include information on projects Director ("ED") for action if each person who requested a deemed high priority by TWDB to receive financial assistance contested case hearing ("CCH") has withdrawn the request in the previous SWP, including discussing the extent to which for a CCH without condition; withdrawn the request for a projects were implemented in the decade in which they CCH conditioned only on the withdrawal of all other hearing were needed and identifying impediments to implementing requests; or agreed in writing to the action to be taken by the ED. projects not implemented in the decade in which they were needed. SB 1511 also adds representatives from The bill also adds a procedure to file a petition for review the State Soil and Water Conservation Board as ex officio of a decision to delegate an application or request to members of each Regional Water Planning Group ("RWPG"). the ED. An affected person may submit a petition to review, set aside, modify, or suspend such a ruling, order, The bill requires RWPGs to amend approved their regional or decision no later than either: (1) 30 days after the plans to exclude water management strategies or projects effective date of the decision; or (2) if the decision was that become “infeasible,” and consider substitution of appealed to the full commission, the earlier of the date another strategy/project that will meet the need. The bill

6 | THE LONE STAR CURRENT | Volume 22, No. 3 provides that a project is “infeasible” if its sponsor has Additionally, the bill required a transporter of used or scrap not formally approved expenditures to construct related tires and certain tire processors to register annually with infrastructure or filed applications for permits required on a TCEQ, maintain and submit transportation records to TCEQ, schedule consistent with the implementation of a strategy/ and provide evidence of financial assurance to TCEQ, unless project by the time it is needed as identified in a Regional they met one of several exceptions. Water Plan. Lastly, SB 1511 authorizes “simplified” planning of every other 5-year planning cycle if no significant changes Legislation that failed to pass: to water availability, supply, and demand have occurred. Effective Date – 9/1/2017. • HB 2958 (Thompson) – As filed, this bill would have created a two-year moratorium on all permitting activity for municipal Legislation that failed to pass: solid waste facilities in Texas. This bill was later revised and required the TCEQ to conduct a study on the permitting and • HB 3742 (Phelan) – Surface Water Right Contested Case regulatory process for municipal solid waste facilities in Texas. Hearing Clean-up • SB 696 (Perry) –Water Availability Modeling Update Conclusion

III. Air & Waste The Texas Legislature will begin its interim work once the Legislature has completed its work in one or more Special Sessions. Many bills pertaining to air and waste regulation, including the Legislators will begin to hold committee hearings this fall to work regulation of landfills and tire scraps, were filed but failed to pass on the interim charges assigned to the various House and Senate or were vetoed by Governor Abbott. Language continuing the life committees by the Speaker and Lieutenant Governor. Legislators of the Texas Emissions Reduction Plan (“TERP”) was finally passed, will also invest significant amounts of time in the election process after several attempts, through the passage of SB 1731 (Birdwell). with party primary elections fast approaching in the spring of 2018 and the general elections occurring in November 2018. We Legislation finally passed but vetoed by Governor Abbott: will keep you informed of the legislative developments that occur in Austin until the legislators convene in January 2019 for the next • SB 570 (Rodriguez) – Omnibus Scrap Tire Bill. SB 570 required Regular Session. a used or scrap tire generator, which included a tire dealer, junkyard, or fleet operator, to store used or scrap tires in a Ty Embrey is a Principal in the Firm’s Water and Districts Practice secure manner that locks the tires during nonbusiness hours. Groups and Troupe Brewer is an Associate in the Firm’s Water, A seller could have contracted for the transportation of used Litigation, and Districts Practice Groups. If you have any questions or scrap tires only with a transporter or tire processor who concerning legislative issues or would like additional information was registered with TCEQ and had filed evidence of financial concerning the Firm’s legislative tracking and monitoring services assurance. A civil penalty for a violation of not less than $500 or legislative consulting services, please contact Ty at 512.322.5829 a day could have been imposed for each violation and a or [email protected], or Troupe at 512.322.5858 or separate penalty imposed for each day a violation occurred. [email protected].

TIME TO GET READY FOR SEPTEMBER 1 AND S.B. 1004 by Georgia N. Crump

enate Bill ("SB") 1004, enacting a ordinances and processes in place or else systems,” the Network Node includes Snew Chapter 284 in the Texas Local find themselves unable to influence the the equipment, the antenna, the radio Government Code, was signed by the location and appearance of these facilities transceiver, and the fiber or coax Governor on June 9, 2017. With an effective in the public right-of-way (“ROW”). cable at the location—everything date of September 1, 2017, this new law that is mounted on a pole, light imposes strict limitations and prohibitions What kinds of wireless facilities are standard, or other structure in the on cities’ regulation of what are commonly covered? ROW. The Network Node does not referred to as “small cell antennas” include a generator, a pole, or a or “distributed antenna systems” The new law covers Network Nodes, Node macro tower (pole higher than 55 feet (defined in the bill as “Network Nodes,” Support Poles, Micro Network Nodes, and with antennas). And there are size “Node Support Poles,” and “Transport Transport Facilities: limitations for the nodes, antennas, Facilities”). The maximum amount of • A Network Node includes equipment “other” equipment, and ground- and compensation cities can demand from at a fixed location that enables pole-mounted enclosures. the providers of wireless services using wireless communications between • A Node Support Pole is just that—a these facilities is also prescribed by the user equipment and a communications pole installed by a network provider new law. The effective date is crucial network. Commonly known as “small to support the Network Node. Height to cities—by this date cities must have cell antennas” or “distributed antenna limitations on poles are allowed under

Lloyd Gosselink Rochelle & Townsend, P.C. | July 2017 | 7 the new law. The pole height cannot design specifications; or violate the federal reasonable costs it determines are incurred exceed the lesser of 10 feet above Americans with Disabilities Act of 1990. in granting or processing an application the tallest existing utility pole located (cannot include costs of third-party legal within 500 linear feet of the new pole The design manual can include installation or engineering review); or (ii) $500/ in the same ROW or 55 feet above and construction details that do not application (for up to 5 network nodes), ground level. conflict with Chapter 284 and can protect $250 for each additional network node • Micro Network Nodes are small historic areas and areas with special design per application, and $1,000/application for boxes that are usually hung on wires characteristics. In these areas (that are so each pole. between poles and can be no larger zoned or are identified by ordinance), the than 24 inches x 15 inches x 12 inches. design manual can require camouflage Can a city receive compensation for the • Transport Facilities are the physical measures for the nodes, poles, and use of the ROW by the providers? lines (usually fiber) between Network ground equipment. Cities can also require Nodes connecting the Network Nodes compliance with nondiscriminatory Yes, although the amount of the to the network. undergrounding requirements and can compensation is very limited. With regard prohibit the installation of the wireless to activities related to Transport Facilities Chapter 284 contains other important facilities in parks and certain residential for Network Nodes, activities of a network definitions that distinguish between areas. The best option is for a city to provider locating Network Nodes in the Service Poles (such as city-owned poles also have in place a comprehensive ROW public ROW or installing, constructing, supporting traffic control devices, signs, management ordinance that applies to operating, modifying, replacing, and and street lights) and Utility Poles (poles all entities using or occupying the public maintaining Node Support Poles in a public supporting electric distribution lines or ROW, as the wireless providers are subject ROW, a city may charge an annual public phone lines). to all applicable codes and ordinances. ROW fee. The fee may not exceed $250 for each Network Node in the public ROW. A Are any preexisting ordinances or Can a city require a permit and an city may, at its discretion, charge a lower agreements grandfathered? application process? fee if it is non-discriminatory, is related to the use of the ROW, and is not a prohibited Yes, but only to a limited extent. If a city Yes. A city can require a network provider gift of public property. The annual fee may has previously adopted an ordinance to get a permit to install a Network Node, be adjusted by the city no more often than regulating the size, location, and a Node Support Pole, and a Transport once a year by an amount equal to ½ of appearance of Network Nodes and Node Facility in the ROW, but a provider may file the annual change in the consumer price Support Poles, or if it has entered into a consolidated permit for up to 30 Network index. license or ROW agreements with the Nodes at a time. However, the new law providers of these facilities, the ordinance also imposes a “shot clock” on the city’s The maximum fee a city can charge for use or agreement can remain in effect only if processing of applications. Deficiencies in of the public ROW for Transport Facilities the facilities covered by the ordinance or the applications must be timely brought is $28 per node serviced by the Transport agreement have both been installed and to the attention of the provider, and the Facilities, per month, not to exceed the are operational before September 1, 2017. city must grant or deny a permit within aggregate amount received by the city on Otherwise, that ordinance or agreement specific time frames or the application will a per-node basis. has to be revised to conform to Chapter be deemed granted. Importantly, the time 284 no later than March 1, 2018, regardless requirements cannot be tolled or extended Does a municipally-owned electric utility of the effective date of the ordinance or pending adoption or modification of a have to allow the Network Nodes on its the agreement. design manual. poles?

Can a city adopt and enforce installation In addition to the application and permit Yes. The municipally-owned utility (“MOU”) and construction standards? requirement, if a provider wants to install must allow access to its poles by network Network Nodes on city-owned Service providers. But the terms and conditions Yes! A city can, and should, adopt design Poles, the city can require a separate pole of such access are to be governed by a manuals applicable to the installation use agreement and can impose a rental fee negotiated pole attachment agreement, and construction of Network Nodes and of not more than $20 per year, per Service including any permitting requirements new Node Support Poles. And this design Pole. of the MOU. The annual pole attachment manual should be in place by September rate is to be based on the pole attachment 1, 2017. Construction standards can ensure Can a city charge an application fee? rate charged to other attachers, consistent that the providers do not: obstruct, with § 54.204, Texas Utilities Code. impede, or hinder the usual travel or Yes. A city can charge an application fee if it public safety on a public ROW; obstruct also requires an application fee for “similar What must a city do before September 1, the legal use of the ROW by other utility types of commercial development” inside 2017? providers; violate nondiscriminatory the city unless such fees are not allowed by applicable codes; violate or conflict with law. The application fee cannot exceed the 1. If the city intends to exercise the city’s publicly-disclosed public ROW lesser of: (i) the city’s actual, direct, and design/appearance/aesthetic

8 | THE LONE STAR CURRENT | Volume 22, No. 3 controls over the Network Nodes, those non-discriminatory standards nodes), $250 for each additional it must have a design manual in in place prior to September 1, 2017. network node per application, and place before September 1, 2017. $1,000 for each pole. 4. The city should develop and adopt 2. If the city has areas that are of permit processing procedures Without a doubt, SB 1004 presents some historic importance, or if it wants to to ensure that the shot clock challenges. Cities should take advantage of control the appearance of facilities requirements can be met. Procedures the lead time available this summer to get in certain areas, it should consider must be in place by September 1, 2017, ready for this new chapter in the continuing adopting, by ordinance, standards for as no delays or moratoria are allowed. saga of public right-of-way management a historic district or a design district, and communications providers. and have those standards in place 5. The city should determine before September 1, 2017. Design and the city’s actual, direct, and Georgia Crump is the Chair of the Firm’s Energy aesthetic standards on decorative reasonable costs likely to be incurred and Utility Practice Group. Georgia assists poles within a design district in granting or processing a permit cities with developing and implementing should also be in place by that date. application. These costs should be right-of-way management practices relating reasonably related in time to the time to telecommunications, gas, and electricity. 3. If the city wants to adopt standards they are incurred. Once the costs are If you have any questions related to these for when new Node Support Poles determined, the city may impose a fee areas or would like additional information, might be allowed in public parks or that is the lesser of its actual costs or please contact Georgia at 512.322.5832 or in residential areas, it should have $500/application (for up to 5 network [email protected]. LEGISLATION FROM THE 85TH LEGISLATIVE SESSION AFFECTING WATER DISTRICTS AND OPEN GOVERNMENT STATUTES by Stefanie Albright Legislation Affecting Water Districts the district.

Districts governed by the Texas Water Code ("TWC"), including, • SB 622 (Burton). This legislation amends the Texas Local but not limited to, municipal utility districts and water control Government Code to require political subdivisions to and improvement districts, may be affected by legislation passed include in a proposed budget a line item indicating planned during the 85th Legislative Session. Below is a brief overview expenditures for notices required by law to be published in of some of the legislation passed this session that may have an a newspaper. This line item must allow a clear comparison impact on water districts. between a proposed budget and actual expenditures in the prior budget year. • House Bill ("HB") 999 (Israel). HB 999 amends TWC Chapter 49 to allow a district to hold a director’s election on a • SB 625 (Kolkhorst). SB 625 creates the “Special Purpose general election date authorized by other statute. This law District Public Information Database” to make available allows certain water districts to utilize changes to the Texas certain information on special purpose districts and to be Elections Code in 2011 that would allow for director elections created and maintained by the Comptroller. The database to be held in November. will include various information on each district, including: (1) the names of board members; (2) contact information; • HB 1701 (Parker). HB 1701 addresses the requirement that (3) information relating to bonds authorized and issued; and a written copy of the investment policy of a governmental (4) tax information. Noncompliant districts may be subject to entity be provided to any “business organization” offering up to two $1,000 fines that may be enforced by the Attorney to engage in an investment transaction by excepting General. transactions of the entity that are not made through accounts or other contractual arrangements over which the • SB 1987 (Lucio). SB 1987 amends the Texas Government business organization has accepted discretionary investment Code and several sections of the TWC pertaining to the authority. notice and procedural requirements for the creation of or annexation of land to certain special purpose districts with • Senate Bill ("SB") 554 (Kolkhorst). SB 554 requires that all provisions mostly applicable to municipal management TWC Chapter 49 water districts that do not have a meeting districts. However, provisions in TWC Chapters 49 and 54 place within the district’s boundaries to, on the first meeting (Chapter 49 being applicable to all districts and Chapter agenda of each year, include a notice statement of the 54 specifically to municipal utility districts) are amended Chapter 49 petition process to establish a meeting place in to remove the requirement that a proposal for creation or

Lloyd Gosselink Rochelle & Townsend, P.C. | July 2017 | 9 annexation of certain territory into a special purpose district Information Act (“TPIA”). must be signed by 50 holders of title to land in the territory at issue. • HB 3047 (Dale). HB 3047 amends the TOMA to require a member of a governmental body who participates in a • SB 2014 (Creighton). SB 2014 addresses provisions relating meeting by videoconference to be considered absent from to the administration of water districts, including TCEQ any portion of the meeting during which audio or video oversight over bond issuances by water districts in certain communications with the member is lost or disconnected. circumstances and over construction contracts. In such situations, the governmental body may continue the meeting only if a quorum of the body remains present at the This new law requires that if the TCEQ determines that an meeting location or if the presiding member is physically application for the approval of bonds complies with the present at a location open to the public during the meeting requirements for financial feasibility, and the district submitting and a quorum is available via video conference. the application is not required to comply with rules regarding project completion, the TCEQ may not disapprove the issuance • HB 3107 (Ashby). HB 3107 amends the TPIA to establish that a of bonds or require that the funding be escrowed solely on the public information request is considered withdrawn if: (1) the basis that the construction of the project is not complete at the requestor fails to inspect or duplicate the information in the time of the TCEQ’s determination. The legislation also exempts offices of the governmental body on or before the 60th day from TCEQ rules expenses regarding continuous construction after the information is made available; or (2) the requestor periods or the length of time for the payment of expenses during fails to pay charges before the 60th day after the date the construction periods. requestor is informed of charges. This new law also allows a governmental body to treat as one request (for cost estimate Additionally, this bill requires TCEQ to approve an application to purposes) all requests for public information received in one issue bonds to finance the following costs: day from an individual, and provides a process to establish monthly and yearly limits on time spent responding to TPIA 1. payment of creation and organization expenses. The bill requests for a particular requestor. HB 3107 also provides establishes that expenses are creation and organization that until any unpaid invoices for previous requests are paid expenses if the expenses were incurred through the date of by a requestor, the governmental entity is not required to the canvassing of the confirmation election; produce the responsive documents. 2. for levee improvement districts, spreading and compacting fill to remove property from the 100-year floodplain if the • SB 532 (Nelson). SB 532 makes confidential under the application otherwise meets all applicable requirements for TPIA “information directly arising from a governmental bond applications; and body’s routine efforts to prevent, detect, investigate, or 3. for municipal utility districts and districts with the powers mitigate a computer security incident, including information of a municipal utility district, spreading and compacting fill contained in or derived from an information security log.” to provide drainage if the costs are less than the cost of This legislation also creates the “Information Technology constructing or improving drainage facilities. Infrastructure Report” and requires reporting regarding information technology infrastructure and security from If a district is approved for the issuance of bonds by TCEQ to state agencies. use a certain return flow of wastewater, the approval applies to subsequent bond authorizations unless the district seeks • SB 564 (Campbell). SB 564 amends the TOMA to allow approval to use a different return flow of wastewater. governmental bodies to meet in closed session to deliberate: (1) security assessments or deployments relating to SB 2014 allows a governmental body to approve change orders information resources technology; (2) network security for applicable contracts to include certain changes the governing information; or (3) the deployment, or specific occasions for body determines are “beneficial to the district” and certain implementation, of security personnel, critical infrastructure, changes in the scope of work. Finally, this legislation amends TWC or security devices. § 49.273 to allow change orders increasing the original contract price by more than 25 percent in certain circumstances and • SB 1440 (Campbell). SB 1440 amends the TOMA to state exempts change orders from certain advertising and competitive that attendance by a quorum of a governmental body at bid soliciting requirements. a candidate forum, appearance, or debate to inform the electorate is excepted from the definition of a “meeting.” Legislation Relating to Open Government This exception is applicable only if no formal action is taken and discussion of public business is incidental to the event. In the 85th Legislative Session, several bills relating to open government were approved that will have an impact on Stefanie Albright is a Principal in the Firm's Districts and Water governmental entities and public officials. Below is a brief Practice Groups. If you would like additional information on overview of legislation passed this session relating to the this legislation or other matters, please contact Stefanie at T e x a s O p e n M e e ti n g s A c t ( “ T O M A ” ) a n d t h e T e x a s P u b l i c 512.322.5814 or [email protected].

10 | THE LONE STAR CURRENT | Volume 22, No. 3 ELECTRIC AND GAS UTILITY LEGISLATIVE WRAP-UP: CITIES WIN SOME, LOSE SOME by Thomas Brocato and Hannah Wilchar

n May 29, 2017, the Texas Legislature adjourned sine die schedule for mandatory electric utility rate cases. It also includes Oending the 85th Legislative Session. More than 100 bills other changes to rate-setting procedures that, taken collectively, relating to gas and electric utility consumers were filed, with would be something of a mixed bag for consumers. This bill was many affecting municipalities. Although cities faced challenges on signed by the Governor on May 27th. numerous issues, the Session was an overall success with respect to utility issues. This legislative wrap-up provides status reports Other bills of interest that passed include SB 1976, by Senator on bills Lloyd Gosselink was actively engaged on or monitored John Whitmire, and Senator Hancock's SB 736. SB 1976 ensures on behalf of the Steering Committee of Cities Served by Oncor, the continuation of a process under which the Public Utility Steering Committee of Cities Commission identifies low-income Served by Atmos, and the customers and which is important Texas Coalition for Affordable for maintaining various customer Power (collectively, "Cities"). protections. SB 1976 was signed into law on May 19th. SB 736 prohibits One of Cities’ biggest successes the General Land Office ("GLO") from this Session was the passage selling electricity. It was adopted by the of Representative Rick Miller’s Senate on April 12th with an amendment House Bill (“HB”) 931, which allowing the GLO's electric sales program helps cities build hike and to continue through 2022. bike trails within electric transmission line corridors. Electric bills that ultimately did not pass This bill has been on Cities’ include Representative Tan Parker's HB legislative agenda for several 787 and Senator Bob Hall’s SB 83, both years and is important to many relating to electric grid security. HB 787 municipalities with limited would have authorized the investigation green space available for parks of threats to the electric grid from within their city limits. After cyber-attacks, while SB 83 would have multiple floor amendments, a established a number of potentially 30-minute debate, and a last- expensive measures to strengthen the minute motion to reconsider, grid against cyber and electro-magnetic HB 931 was the final bill passed attacks. Although the bills made by the 85th Legislature on clear that a future legislature would May 30th and signed by the determine whether grid enhancements Governor on June 15th. would actually be implemented and how they would be paid for, the bills A couple of high-profile stalled in committees. Likewise, HB 1427, utility bills were also passed sponsored by Representative Pat Fallon, this Session. The Railroad was strongly supported by Cities but did Commission Sunset Bill, HB not pass. This bill would have clarified the 1818, by Representative Larry proposition that a city's zoning authority Gonzales, was signed in the extends over electric cooperatives. HB House on May 10th and by the 1427 was adopted on May 2nd by the Governor on May 22nd. This bill authorizes the continuation of House Urban Affairs Committee but stalled in House Calendars. the agency for several more years, and also spells out various adjustments to the agency's operations. However, HB 1818 does Overall, Cities experienced a successful 85th Legislature with not include several of Cities' recommended reforms, such as the favorable outcomes for important electric and gas utility bills use of independent administrative law judges for the adjudication impacting municipalities. of gas utility cases, which were included in versions of this bill during previous legislative sessions. It also does not change the Thomas Brocato is a Principal in the Firm’s Energy and Utility name of the Railroad Commission, an issue that has long been Practice Group and Hannah Wilchar is an Associate in the Firm’s contested and considered at the Legislature. Senator Kelly Energy and Utility Practice Group. If you have any questions Hancock's Senate Bill (“SB”) 735 was also passed minus many concerning these legislative issues or other matters, please contact of its more impactful provisions. Originally an omnibus electric Thomas at 512.322.5857 or [email protected], or Hannah utility reform bill, SB 735 was trimmed down to establishing a at 512.322.5811 or [email protected].

Lloyd Gosselink Rochelle & Townsend, P.C. | July 2017 | 11 CONSERVATION EFFORTS: MEETING REGULATORS' AND CUSTOMERS' NEEDS WHILE EXTENDING SUPPLIES* by Nathan E. Vassar Effective water conservation is among as well as contracting mandates that challenges in their implementation of the most important water development require wholesale customers to adopt and water conservation plans, whether practices for water suppliers and their implement their own water conservation technical, legal, or on the public relations customers. While its value for water plan in their wholesale water purchase front. As recommended throughout the suppliers includes environmental agreements. series, the right team can help identify stewardship and being respectful of best practices that have been employed a limited natural resource, it is also a TCEQ’s conservation plan requirements are across Texas and those that have secured critical planning tool that can be used also relevant in the context of water rights regulatory approval. Given the climate to extend the useful life of existing applications, where an applicant must diversity in Texas, a one-size fits all supplies. In fact, the Texas Commission include its water conservation plan (along approach is neither wise nor mandated on Environmental Quality’s (“TCEQ”) with drought contingency plans, which by law when it comes to determining definition of “conservation” focuses are developed for a completely different appropriate conservation tools, their on the use and effective management purpose—addressing water management implementation, and the resulting impact of water supplies for the purpose of during times of water shortages), in on a community’s water use and GPCD. future or alternative uses. Further, for order to meet requirements of Chapters Indeed, water conservation initiatives and water rights holders and for permitting 295 and 297 of the Texas Administrative GPCD expectations in rural Texas have purposes, TCEQ requires the adoption and Code (Title 30). Such requirements differed significantly from those in urban implementation of conservation plans. include compliance with the base Chapter areas, and such variations will continue. To date, the water supply planning series 288 mandates, and where applicable, The courts have recognized and endorsed has mostly focused on regulatory tools plans that describe technologies and such differences. In the specific context of and water right application strategies that techniques to “reduce the consumption interbasin transfer applications, the Texas can be useful in managing and stretching of water, prevent or reduce the loss or First Court of Appeals recently determined water supplies. Conservation, however, waste of water, maintain or improve the that the statutory requirement that an should be a part of every water supply efficiency in the use of water, increase the applicant’s water conservation plan strategy discussion, regardless of the recycling and reuse of water, or prevent result in the “highest practicable levels particular effort(s) being pursued, and in the pollution of water.” In order to of water conservation and efficiency” light of both regulatory expectations and appropriate new or additional state water, does not mean satisfying a fixed standard, conservation’s far-reaching impacts on an applicant must demonstrate that it has but whether an applicant is “capable of water supply management. evaluated “any other feasible alternative putting into practice and carrying out to new water development.” Further, it is [such water conservation measures] in its TCEQ requires Water Conservation Plans the applicant’s burden to show that there jurisdiction.”1 As such, meeting the needs to be submitted every five years for most is no feasible alternative to the proposed of a particular region/customer base, surface water right holders and for retail appropriation. and doing so in a manner that accounts public water suppliers with at least 3,300 or for the area’s or the customer’s unique more connections. Specific requirements As TCEQ examines water rights circumstances, is important in developing are found in Chapter 288 of the Texas applications, it reviews water conservation and implementing sound and effective Administrative Code (Title 30), but they plans to determine if the requested water conservation plans. include a set of minimum expectations for appropriation is necessary in light of record/data management, specific targets practicable alternatives, whether the Effective implementation also requires for water savings (including reductions requested quantities are reasonable and more than just meeting regulators’ needs, in gallons per capita per day (“GPCD”)), necessary, and if reasonable diligence will particularly as water usage and rates are public education programs, enforcement be employed to avoid water waste. Further, impacted. Public perception challenges practices, and rate structures that on certain federal water permitting efforts are driven by many factors, often encourage reasonable water use, (including Clean Water Act Section 404 including, the public’s lack of appreciation among others. As part of their Chapter permitting for water supply projects), the of the true value of water, the realities 288 obligations, utilities must provide U.S. Army Corps of Engineers and U.S. of weather pattern change, and the rate TCEQ with implementation reports Environmental Protection Agency conduct hikes that are sometimes necessary to demonstrating conservation measures similar analyses of conservation practices cover a utility’s financial obligations when implemented, along with supporting data. before they can approve applications. conservation may have resulted in water For some entities, plans must include usage declines (resulting in reduced leak detection/water loss accounting, Water suppliers face a number of revenues from sales of water), among

12 | THE LONE STAR CURRENT | Volume 22, No. 3 others. Accordingly, well-executed public that supports cooperative, collaborative team, or the use of water supply planning relations and education efforts are also partnership approaches, while meeting tools, please contact Nathan at (512) 322- critical in order to explain the importance applicable regulatory requirements. 5867 or [email protected]. of water conservation and the water supplier’s own costs for infrastructure Nathan Vassar is an Attorney in the used to serve its customers. Firm's Water Practice Group. Nathan’s 1 Upper Trinity Reg'l Water Dist. v. Nat'l Wildlife practice focuses on representing clients in Fed'n, 514 S.W.3d 855, 863 (Tex. App.—Houston As this series continues, our focus will next regulatory compliance, water resources [1st Dist.] 2017), reh'g denied (Mar. 30, 2017). pivot to water supply contract strategies development, and water quality matters. * This article is the seventh in an ongoing series Nathan regularly appears before state and approaches that can be useful as water of water supply planning and implementation suppliers manage their portfolios. The next and federal administrative agencies with articles to be published in The Lone Star article will highlight ways suppliers and respect to such matters. For questions Current that address simple, smart ideas for their customers can structure contracts to related to water conservation, the consideration and use by water suppliers in their meet both sides’ needs and in a manner development of a strong water supply comprehensive water supply planning efforts.

ASK SHEILA

Dear Sheila, a job opening, interviewing candidates, and evaluating job performance. How important are updated job descriptions? I am a county HR manager, and I’m looking at a stack of projects, trying to figure One tip for updating job descriptions is to get the employees out where to prioritize this project to update job descriptions. It who actually do the job on a day-to-day basis to make the first seems daunting, as our job descriptions haven’t been updated in pass at revision. Create a questionnaire for employees to assess years. Any advice on whether to do this sooner or later, and tips whether the current job description accurately reflects what they on making the process easier? do every day, what they need to know how to do, and what skills and background it takes to do the job right. We have found that Harried in HR many employees take this responsibility seriously, and want the document to fully reflect to management their full duties. You Dear Harried, can then collect these, compare them with others in the same job and with the supervisors’ assessments, and then simply edit Hate to tell you, but updated job descriptions are crucial, not only them to get a more up-to-date job description. in providing employees accurate guidance on job expectations, but also to defend claims of disability discrimination. Remember to list essential functions of the job separately from ancillary functions. Essential functions include not only what A case in point: recently, a federal appeals court found that the employee does frequently, but also important tasks that the an updated job description was key evidence in determining employee must be able to do, even if it is not required very often. whether an employer could be liable for firing an employee. For example, a maintenance worker hopefully does not have to In that case, the plaintiff was a pharmacist who was fired for deal with chemical spills very often, but the ability to handle the refusing to administer immunization injections to customers. The situation and accompanying safety protocol is still an essential pharmacist sued the pharmacy for failing to accommodate his function. A worker may not need to wear a respirator often, disability, trypanophobia (fear of needles), when it required him but if it is possible in the job, it may be an essential function to to administer the injections. The jury awarded him about $2M, be without facial hair for a proper respirator fit. Without this but was reversed on appeal because performing immunization requirement in a job description, an employee may be able to injections was an essential job duty, and plaintiff’s inability to do argue failure to reasonably accommodate religious requirements them, with or without reasonable accommodation, made him to wear a beard. unqualified for the job. Give us a call if you want help in reviewing your job descriptions How did the pharmacy prove the essential function? It had so that they are most beneficial to your employees and to the updated the pharmacist job description as soon as it began to organization. require pharmacists to perform immunizations. Stevens v. Rite Aid Corporation, 851 F.3d 224 (2d Cir. Mar. 21, 2017). "Ask Sheila" is prepared by Sheila Gladstone, the Chair of So, yes, updated job descriptions are important. Evidence of the Employment Practice Group. If you would like additional essential functions is much more convincing when it existed information or have questions related to this article or other before the employee’s claim of discrimination. Also, accurate matters, please contact Sheila at 512.322.5863 or sgladstone@ job descriptions are crucial roadmaps to use when posting lglawfirm.com.

Lloyd Gosselink Rochelle & Townsend, P.C. | July 2017 | 13 IN THE COURTS

Water Cases The Texas Court of Appeals in Houston affirmed the Texas Commission on Environmental Quality's ("TCEQ") order granting Complaint, Tex. Gen. Land Office v. Fish & Wildlife Serv., No. the Lake Ralph Hall reservoir permit to the Upper Trinity Regional 1:17-CV-538 (W.D. Tex. June 5, 2017). Water District on January 26, 2017. Lake Ralph Hall is the first major reservoir authorized by the TCEQ in decades. This reservoir On March 1, 2017, the Texas General Land Office (“GLO”) provided permit will allow the District to divert up to 45,000 acre-feet of a 60-day notice of intent to file a lawsuit to the U.S. Fish and water per year from the North Sulphur River in the Sulphur River Wildlife Service to delist the golden-cheeked warbler from the Basin and to transfer its diversions through an interbasin transfer Endangered Species List. On June 5, 2017, the GLO filed their formal authorization. The permit was challenged by the National Wildlife complaint claiming violations under the National Environmental Federation, but the appellate court found in favor of the District. Policy Act and that the warbler should have been delisted due A request for rehearing was denied on March 30, 2017, and the to recent scientific data that suggests that the warbler’s habitat deadline for appeal to the Texas Supreme Court has now expired, range and population numbers are significantly larger than once meaning that the court of appeals judgment will remain final. For thought. Because of the presence of golden-cheeked warblers more information on this case, see the April 2017 Edition of The on GLO land, the GLO has allegedly suffered harm due to the Lone Star Current. warbler’s presence and its impact on market value for several GLO properties. Borcik v. Crosby Tugs, L.L.C, 858 F.3d 936 (5th Cir. 2017).

S. Cal. All. of Pub. Owned Treatment Works v. Envtl. Prot. In this case, an employee brought a whistleblower suit, alleging Agency, No. 2:16-CV-2960 (E.D. Cal. 2017). that he had been fired in retaliation for reporting environmental violations. Under the law, any reports must have been submitted An amended complaint was filed on May 30, 2017 in ongoing in good faith. Expounding on the meaning of “good faith,” the U.S. litigation challenging the Environmental Protection Agency’s Court of Appeals held that the term merely means that, when the (“EPA”) efforts to impose certain testing requirements for whole report was submitted, the employee was acting with an honest effluent toxicity (“WET”) on dischargers without first establishing belief that a violation of an environmental law, rule, or regulation rules pursuant to the Administrative Procedure Act (“APA”). occurred. The motive of the employee in reporting the violation The litigation, filed last December, arose after EPA pressured is irrelevant, even if the motive may be viewed as improper (e.g., state agencies to adopt the Test of Significant Toxicity (“TST”), seeking to take unfair advantage of—or cause harm to—the even though the applicable regulations do not identify TST employer or another employee). as an acceptable methodology. Moreover, stakeholders have raised significant technical questions about the validity of TST. Defenders of Wildlife v Zinke, No. 15-55806 (9th Cir. 2017). The plaintiffs' concern is that once the TST is used in California domestic wastewater discharge permits for publicly-owned This case arose from the planned construction of an industrial treatment works (“POTW”), it will be more broadly applied in solar project on federal lands in Nevada. The project was planned other states. Therefore, the litigation directly challenges the in a way that would reduce connectivity between two different TST, which plaintiffs allege may increase the risk of false failures habitat locations used by the endangered desert tortoise. and result in higher incidences of alleged noncompliance and Although none of the construction was planned within a critical resulting enforcement. Furthermore, the litigation underscores habitat zone, it would have narrowed the connection between that rulemaking without notice and comment violates the APA, two different critical habitat areas. The Defenders of Wildlife stifles public participation, and harms POTWs as well as the public (“DOW”) brought suit, alleging that narrowing the corridor in general. between the habitats constituted an adverse modification of the critical habitat, and therefore, ran afoul of the Endangered Upper Trinity Reg’l Water Dist. & Tex. Comm’n on Envtl. Quality Species Act (“ESA”) because of the effect it would have on the v. Nat’l Wildlife Fed., (Tex. App.—Houston [1st Dist.] Jan. 26, critical habitats’ recovery value. However, the district court 2017). disagreed, and the Ninth Circuit affirmed. The Court of Appeals

14 | THE LONE STAR CURRENT | Volume 22, No. 3 held that, because none of the construction would have caused Supreme Court observed, “retroactivity must be limited by the an actual alteration of the critical habitat, the construction was need for finality,” and as a result “this long-final judgment cannot permissible under the ESA. be upended via collateral attack.”

Air and Waste Case Litigants in pre-Tooke cases are therefore assured that their cases will not be reopened to new litigation applying Tooke. Final Waterkeeper All. v. Envtl. Prot. Agency, No. 09-1017 (D.C. Cir. judgments are, after all, final. 2017). Pidgeon v. Turner, No. 15-0688, 2017 WL 2829350 (Tex. June 30, The Court of Appeals for the D.C. Circuit ruled that concentrated 2017). animal feeding operations (“CAFOs”) cannot be exempted from requirements in the Comprehensive Environmental Response, Before the United States Supreme Court legalized gay marriage in Compensation, and Liability Act (“CERCLA”) and the Emergency Hodges v. Obergefell, two Houston taxpayers filed suit against the Planning and Community Right-to-Know Act (“EPCRA”) to report City of Houston alleging that it violated the Texas Constitution and air releases from animal waste. A 2008 Environmental Protection the Texas Family Code by providing marriage benefits to same- Agency (“EPA”) rule exempted CAFOs from the CERCLA and EPCRA sex couples who were legally married in other states. The district reporting requirements, reasoning that “reports are unnecessary court agreed and granted an injunction barring the City from because, in most cases, a federal response is impractical and providing spousal benefits to same-sex couples. unlikely.” The Court stated that “[i]t's not at all clear why it would be impractical for the EPA to investigate or issue abatement After the Obergefell decision, Texas’s 14th Court of Appeals orders” and that the record in the case “suggests the potentiality reversed the injunction and sent the case back down to the trial of some real benefits.” court to be decided “consistent with” Obergefell and DeLeon v. Abbott, a 5th Circuit case striking down Texas’ Defense of Litigation Cases Marriage Act as unconstitutional. The Texas Supreme Court, in a unanimous decision, disagreed and held that Obergefell, while Engelman Irrigation Dist. v. Shields Bros., Inc., No. 15-0188 (Tex. requiring states to license and recognize same-sex unions, does Mar. 17, 2017). not address and resolve the “specific issue” of state spousal benefits. Therefore, the 14th Court of Appeals erred in ordering Over the past decade, the Texas Supreme Court’s jurisprudence on the trial court to resolve the case consistent with Obergefell. waiver of governmental immunity has changed radically. Before Now the district court will be required to decide on its own what 2006, it was generally assumed that statutory authorization to benefits Obergefell requires the State of Texas to provide (or not, a governmental entity to “sue and be sued” waived that entity’s as the case may be) to same-sex couples. governmental immunity. But the Supreme Court squelched that assumption inTooke v. Mexia, 197 S.W.3d 325 (Tex. 2006), holding As a side issue, the Texas Supreme Court addressed the fact that that the statutory authorization to the City to “sue and be sued” the City and the Mayor both filed pleas to the jurisdiction before did not waive its immunity. the Obergefell decision was handed down. None of the immunity arguments were addressed in either the district court or the Court In Engelman, the Supreme Court addressed the issue of what of Appeals’ decision. The Texas Supreme Court was careful to happens when a pre-Tooke case comes back to life in the post- point out that Obergefell represented a “shift in the law” and that Tooke world. Engelman derives from a 25-year old suit involving the parties should have an opportunity to brief and argue their the same parties. In 1992, Shields Brothers sued the Engelman immunity claims in light of Obergefell at the district court level. Irrigation District for breach of a water-delivery contract. Relying on pre-Tooke precedent, the district court overruled Engelman’s The likely effect of all this is that, whatever the district court plea to the jurisdiction and, after trial, rendered judgment for decides, this case will return to the Texas Supreme Court, with Shields in the amount of $271,000 (plus attorneys’ fees and a very-possible appeal to the United States Supreme Court, interest). That judgment, however, went unpaid for more than some years from now. In the immediate term, Pidgeon does not 20 years. provide political subdivisions with any guidance as to what same- sex marriage benefits are mandated, permitted, or barred by Having refused to pay the judgment, Engelman brought suit in state law. So, Pidgeon does not compel any action on the part of 2010 for declaratory judgment that the original judgment was political subdivisions at this time. void in light of the Supreme Court’s decision in Tooke. Engelman observed that a judicial decision generally applies retroactively, In the Courts is prepared by Jeff Reed in the Firm’s Air and Waste and Tooke is no exception. Hence, Engelman argued, the original Practice Group, James Parker in the Firm’s Litigation Practice judgment was always void because the district court never had Group, and Ashleigh Acevedo in the Firm’s Water Practice Group. If jurisdiction to adjudicate Sheilds Brothers’ claim against it. you would like additional information or have questions related to these cases or other matters, please contact Jeff at 512-322-5835 The Supreme Court, however, disagreed. While Tooke has or [email protected], or James at 512.322.5878 or jparker@ retroactive application to cases pending at the time of that lglawfirm.com, or Ashleigh at 512.322.5891 or aacevedo@ decision, it cannot be used to reopen ancient judgments. As the lglawfirm.com.

Lloyd Gosselink Rochelle & Townsend, P.C. | July 2017 | 15 AGENCY HIGHLIGHTS

United States Environmental Protection Appropriations Subcommittee's fiscal 2018 have reached agreement on an omnibus Agency (“EPA”) spending bill contains a policy rider that spending bill to keep the Federal would authorize the EPA to "withdraw the Government funded through the end WOTUS Rule Re-Write Update. The Waters of the United States rule without of September. Funding levels for many EPA has taken the first step in a two- regard to any provision of statute or important clean water projects have step process to revise the contentious regulation that establishes a requirement been maintained, and in some cases even 2015 Clean Water Rule—known as the for such withdrawal", apparently increased, relative to levels enacted in “Waters of the U.S.” (“WOTUS”) Rule. EPA exempting the WOTUS repeal from the Fiscal Year 2016 (FY16). Specifically, the proposed a rule to withdraw the current legal requirements of the Administrative Omnibus would provide $1.394 billion rule and adopt the definition of “waters of Procedure Act (e.g., public comment for the Clean Water State Revolving the U.S.” that existed prior to the WOTUS period) and expediting the withdrawal Fund (equal to FY16), $171 million for Rule’s passage. Definition of “Waters of process. For more information on the nonpoint source control grants (increase the United States”—Recodification of WOTUS re-write, see the April 2017 Edition of $6 million compared to FY16), and $231 Pre-Existing Rules, 82 Fed. Reg. 34899 of The Lone Star Current. million for state clean water grants (equal (July 27, 2017). Comments are due on to FY16). The Gulf of Mexico geographic August 28, 2017. Once withdrawn, EPA EPA Office of Water Receives New program also received almost $8 million will publish its revised version of the Appointment. A former National (increase of $4 million compared to FY rule, which is expected to incorporate Aeronautics and Space Administration 16). These spending increases may be Justice Scalia’s test from the Rapanos official, Dennis Lee Forsgren, has recently a sign of good news for the upcoming plurality opinion. Under Scalia’s test, been appointed to serve as the new Deputy congressional budgeting process as Clean Water Act jurisdiction would only Assistant Administrator for the EPA’s Office Congress decides whether to honor the extend to “relatively permanent, standing of Water. Forsgren is an experienced water Trump Administration’s proposed EPA or flowing bodies of water.” Wetlands and natural resources attorney, and in budget cuts. For more information on the areas would only be regulated if they recent years, he has focused his practice proposed EPA budget cuts, see the April have a “continuous surface connection to around oil pollution, the Clean Water Act, 2017 edition of The Lone Star Current. traditionally navigable waters.” A number and the Endangered Species Act. of definitions have been suggested for Proposed EPA Budget Cuts. On June 15, the phrases “relatively permanent” and Guidance Document Suggests Using 2017, EPA Administrator Scott Pruitt went “continuous surface connection”. Current Nature to Harness Stormwater Runoff. In in front of the House Appropriations practice considers waters directly abutting a new guidance document released June Interior and Environment Subcommittee wetlands as well as wetlands that have a 8, 2017, the EPA recommends using native to defend the Trump Administration’s defined, continuous surface connection plants and grasses and porous pavements new proposed EPA budget cuts. The to jurisdictional waters to be “waters of to harness polluted stormwater runoff. President’s preliminary plans included a the U.S.” regardless of distance. It has The EPA, which has been promoting green 31% decrease in EPA funding, which would also been suggested that the term extend infrastructure use within municipalities cost the agency over 3,800 employees. only to wetlands that directly touch since 2011, asserts that the approach will According to a recent proposed memo, as jurisdictional waters or to waters that have work in parks because it is “attractive, many as 1,228 EPA employees will still be some degree of connectivity as quantified effective, and beneficial” and requires eligible for buyout offers that would need by metrics such as distance or flow. The minimal maintenance. The guidance to take place before September 2, 2017. EPA is soliciting and aggregating comments discusses how stormwater agencies can However, Congress has suggested that it for these definitions. use their own funds or state funds to will still give the EPA more than the Trump install green infrastructure at parks. It also Administration has asked for. It is likely The Supreme Court is continuing its review provides links to other EPA documents that that a number of EPA programs will still be of the jurisdictional questions raised by on other green infrastructure resources. cut, but the cuts may not be as drastic as the WOTUS Rule (see Nat’l Assoc. of Mfr. originally thought. For more information v. Dep’t of Defense, Docket No. 16-299). Omnibus Spending Bill Passes Congress. on the proposed EPA budget, see the April Additionally, the House Energy-Water Congress and the Trump Administration 2017 edition of The Lone Star Current.

16 | THE LONE STAR CURRENT | Volume 22, No. 3 Landfill Emissions Guidelines Put On Finance Innovation Act (“WIFIA”) program, Texas Commission on Environmental Hold. As part of President Obama’s first authorized by Congress in 2014, will Quality (“TCEQ”) Climate Action Plan, the EPA promulgated begin awarding funding to cities. Unlike a new final rule that established emissions other federal grant or loan programs, the TCEQ Issues State Plan Concept and guidelines and new source performance WIFIA program is designed to provide Initiation Memo on Landfill NSPS and EG standards for both new and existing only a portion of the cost of a given Rules. On April 6, 2017, the TCEQ issued municipal solid waste landfills. The new infrastructure project. Water systems notice that it would initiate a rulemaking rule was meant to identify and reduce can then use this funding as seed money to bring TCEQ rules related to landfill air methane gas emissions from landfill sites to secure additional private financing at emissions into conformity with recently throughout the United States. However, more affordable borrowing rates. EPA issued EPA New Source Performance as of May 22, 2017, the new rule has been is authorized to distribute $17 million in Standards (“NSPS”) Emission Guidelines subjected to a 90-day implementation WIFIA funding in its initial year. WIFIA (“EG”) rules. However, after TCEQ issued freeze pending further reconsideration by works in tandem with the existing federal the notice, EPA stayed implementation the EPA. low-interest state revolving fund programs of its NSPS and EG rules. TCEQ has not that are designed to tackle wastewater announced a timeline for issuing rules New Policy Prohibits Third-Party and drinking water projects that typically since EPA announced the stay. Payments in Federal Settlement cost under $100 million, and this financing Agreements. Attorney General Jeff can also be combined with tax-exempt Texas Parks and Wildlife Department Sessions has issued a new policy, municipal bonds. (“TPWD”) effective immediately, which prohibits Justice Department attorneys from Flushable Wipes Rules Face Opposition. Zebra Mussels Confirmed in Lake Travis entering into settlement agreements that The District of Columbia has proposed and Canyon Lake. TPWD biologists and include payments to non-governmental new legislation that it hopes will address game wardens have recently confirmed organizations or third-party organizations the problems caused by flushable and non- the presence of zebra mussels in Canyon that were not parties to the dispute. flushable wipes. The proposed legislation Lake and Lake Travis. These invasive Following in the wake of the recent would require the issuance of new rules species are known to cause serious harm Volkswagen emissions scandal—whose that establish “flushability” standards to the environment and recreational settlement included several billion dollars for flushable wipes and new labeling water users, clogging public water intakes, for state supplemental environmental requirements for non-flushable wipes. If damaging underwater infrastructure, projects (“SEPs”)—Session’s new policy passed, the bill would be the first of its kind and littering shorelines with sharp-edged appears to be aimed at ending the use in the United States to establish standards shells. Because they have been located in of SEPs in future federal settlement for flushable wipes. Canyon Lake, the TPWD has also issued a agreements. However, a few exemptions warning for other downstream users on to the moratorium are specifically EPA Stays Implementation of Landfill the Guadalupe River since zebra mussel permitted. These exceptions include NSPS and EG Rules. On May 23, 2017, larvae typically disperse downstream. payments to provide restitution to EPA announced a 90-day stay of the New Other potentially affected lakes include victims or to directly remedy the harm Source Performance Standards (“NSPS”) Lake Dunlap, Lake McQueeney, Lake the case sought to redress (including Emission Guidelines (“EG”) rules related to Placid, Meadow Lake, Lake Gonzales, and harm to the environment); payment for air emissions from landfills that it approved Lake Wood. legal or professional services rendered in in August 2016. EPA is reconsidering certain connection with the case; or where such aspects of its NSPS and EG rules, including Public Utility Commission (“PUC”) payments are explicitly authorized by requirements related to surface emissions statute. Through these exceptions, some monitoring. EPA announced that it expects Utility Distribution Cost Recovery Filings. in the environmental sector are arguing to prepare new proposed rules, which will AEP Texas (“AEP”) and CenterPoint that Session’s memo applies to payments allow for new public comment. See related Houston Electric, LLC (“CenterPoint”) made to third parties but doesn't explicitly item, TCEQ Issues State Plan Concept and filed applications for a Distribution Cost address supplemental environmental Initiation Memo on Landfill NSPS and EG Recovery Factor (“DCRF”) with the Public projects. Therefore, the fact that SEPs Rules, below. Utility Commission of Texas (“PUC”) in are designed to benefit the environment early April 2017. Public Utility Regulatory impacted by the alleged violation makes EPA Sends Proposal to Reconsider Act (“PURA”) and PUC rules permit an these projects consistent with the Clean Power Plan to OMB. On June 8, electric utility to file an annual, limited- Department of Justice memo. However, it 2017, EPA sent a proposal to the Office issue rate proceeding to adjust its rates to is still unclear whether this ambiguity will of Management and Budget (“OMB”) to reflect increased distribution investment permit federal agencies to continue to use reconsider the Obama Administration’s since its last full base-rate case. The SEPs in future settlement agreements. Clean Power Plan. The Clean Power Plan resulting charge is called a DCRF. would limit carbon dioxide emissions This is the third DCRF filing for CenterPoint New EPA Water Financing Assistance from power plants, and EPA’s proposal to and the second for AEP. In these for Cities. This fiscal year will be the first OMB is the first step in either revising or applications, CenterPoint sought to in which the Water Infrastructure and rescinding the rule. increase its DCRF by $44.6 million, and

Lloyd Gosselink Rochelle & Townsend, P.C. | July 2017 | 17 AEP asked for a $21.4 million increase and necessity (“CCN”) resulting from an without abiding by PUC rules, which have for the Central division and a $6.6 million application filed under TWC § 13.254. previously only applied to CCN holders. increase for the North division. City groups After the tract was removed from Aqua’s intervened in both utility proceedings, on CCN areas, the City of Celina filed its intent Docket No. 46957, Application of Oncor an expedited schedule. to provide water and sewer service to Electric Delivery Company LLC for the tract, and Aqua intervened claiming Authority to Change Rates. The Steering Cities were able to reach a final settlement that it was owed compensation resulting Committee of Cities Served by Oncor agreement with the parties to the AEP from the earlier decertification. The PUC (“OCSC”) acted to require Oncor to initiate Texas DCRF whereby AEP would reduce determined that no compensation was due a rate case on March 17, 2017. OCSC its requested DCRF by $3.5 million in the to Aqua because no property had been originally passed show-cause resolutions Central Division and $1 million in the North rendered useless or valueless as a result for Oncor in anticipation of its acquisition Division, and would pay the participating of decertification. In addressing Aqua’s by the investor group led by Ray L. Hunt Cities their reasonable rate case expenses claims to the contrary, the PUC pointed and transformation to a REIT. After that within 30 days of the PUC approving the out that TWC § 13.254(g) does not identify deal fell through, OCSC suspended their settlement. The parties are also working actual property interests themselves, but show-cause action. However, because on a settlement in the CenterPoint DCRF, rather, identifies the factors that should be NextEra’s application to purchase Oncor but a final agreement has not yet been considered in determining the adequate proposed no benefits to ratepayers, OCSC reached. compensation owed to the decertificated lifted its suspension. NextEra’s application entity for property that is rendered useless declared that Oncor would file a rate case Utility Energy Efficiency Cost Recovery and valueless by decertification. The PUC, on or before July 1, 2017. However, OCSC Filings. Pursuant to the PUC’s energy in explaining its decision, noted that when initiated the earlier rate case to benefit efficiency rules, electric utilities made their Aqua Texas, Inc. made expenditures for ratepayers by forcing Oncor’s regulatory annual Energy Efficiency Cost Recovery designing, planning, legal, professional, assets, which now total close to $900 Factor (“EECRF”) filings at the end of May and other services for the decertified million and grow each month, to be dealt to adjust their rates during the following property, they no longer had a property with sooner, and to seek commitments year to reflect changes in program costs interest in the money that was spent. For from NextEra, including how these and performance bonuses. The filings also similar reasons, the PUC noted that lost regulatory assets will be treated. true-up any prior energy efficiency costs economic opportunities are not property over- or under-collected pursuant to PURA as Aqua had claimed. As a result, the PUC Oncor filed its Statement of Intent to § 39.905 and 16 Tex. Admin. Code § 25.181. held that Aqua was not entitled to any Increase Rates on March 17th, requesting compensation, and the City was allowed to to increase rates by $317 million, or AEP is seeking to adjust its EECRF to collect provide retail water and sewer service to 7.5%. OCSC intervened in this proceeding $11,618,997 ($9,488,449 for the Central the tract. Aqua filed a motion for rehearing along with the Texas Industrial Energy Division and $2,130,548 for the North in this matter, which the PUC considered Consumers, the Texas Solar Power Division) in 2018. CenterPoint is seeking on June 29, 2017. However, the PUC in Association, the Environmental Defense to collect $46,397,825, Texas-New Mexico the hearing on that motion only clarified Fund, and various other interested Power Company is seeking to collect its prior order and did not change the stakeholders. The intervenors conducted $5,950,438, and Oncor is seeking to collect ultimate outcome. extensive discovery on Oncor and a 2018 EECRF of $56,462,432. have engaged in numerous settlement Docket 47306, Proposed Amendments discussions. The parties continue to work As in past years, City groups have to 16 TAC § 24.114. On June 16, 2017, on a settlement as a final agreement has intervened in these EECRF proceedings to the PUC Staff initiated the process to not yet been reached. review the utilities’ demand and energy amend its substantive rule relating to the goals, program incentive costs, evaluation, requirement of water and sewer service Docket No. 45259, Appeal of Centerpoint management, and verification expenses, providers to provide continuous and Energy Houston Electric, LLC from an and performance bonuses. Like the DCRFs, adequate service, 16 Texas Administrative Ordinance of the City of League City, Texas these cases are also limited in review and Code § 24.114. The stated purpose of the and Application for Declaratory Relief. will proceed on an expedited schedule rule amendment is to conform the rule The dispute over the City of League City’s with hearings slated throughout August. with TWC § 13.250(d), which prohibits undergrounding ordinance continues to retail public utilities that have not been be litigated at the PUC. League City has Docket 45848, City of Celina’s Notice granted a CCN from discontinuing, been fighting CenterPoint Energy Houston of Intent to Provide Water and Sewer reducing, or impairing retail water or sewer Electric, LLC (“CenterPoint”) since October Service to Area Decertified From Aqua service to a ratepayer except under certain 2015, when CenterPoint appealed the City’s Texas, Inc. in Denton County. On April conditions. The rulemaking may indicate land use ordinance requiring developers to 13, 2017, the PUC issued an order related a desire by the PUC to take jurisdiction request underground distribution service to the decertification of a 128-acre tract over governmental entities that are not and non-wooden electric poles be installed from Aqua Texas, Inc.’s (“Aqua”) water required to hold CCNs and to prevent in new subdivisions. CenterPoint claims and sewer certificates of convenience those entities from disconnecting service the ordinance conflicts with CenterPoint’s tariff because the ordinance removes the

18 | THE LONE STAR CURRENT | Volume 22, No. 3 customer’s “right” to request standard violates PURA because it regulates the filed exceptions to the PFD on July 11th service. CenterPoint also claimed the services of Brazos and CoServ. The and replies to exceptions on July 20th. ordinance is illegal under PURA because it Commission issued an order adopting the All parties who filed exceptions argued mandates the utility’s operations. PFD on May 4, 2017. that the PFD erred in its ROE finding— intervenors arguing the Commission After extensive briefing from the parties, In a memorandum agreeing with the PFD, should have set the ROE significantly the ALJ issued a Proposal for Decision PUC Commissioner Anderson stated that lower because APT is less risky than the (“PFD”) recommending the City’s the Colony’s ordinance violates PURA interstate pipeline companies to which ordinance be overturned. The Commission “because it regulates the cooperatives’ it compared itself, and APT arguing that took up the PFD at its March 9th Open services by dictating where it may the Commission abandoned precedent by Meeting but did not issue a final decision. construct a transmission substation,” changing its method for calculating ROE. Instead, the PUC remanded the case to and that “the City undermined PURA’s The Railroad Commission will consider the SOAH for a final fact-determination on pervasive regulatory scheme when it PFD at its August 1, 2017 Open Meeting. whether the ordinance applies only to prohibited the construction of substation customer-specific distribution lines and facilities because the location of the GUD No. 10567, Statement of Intent of does not apply to transmission lines. substation becomes intertwined with the CenterPoint Energy Resources Corp. provision of the service.” Commissioner D/B/A CenterPoint Energy Entex and The parties submitted supplemental Anderson clarified that the Commission’s CenterPoint Energy Texas Gas to Increase stipulated facts and additional briefs on decision invalidating the ordinance Rates in the Houston Division and Texas May 26th, with League City arguing, again, pertains only to its application against Coast Division. The Gulf Coast Coalition that its Ordinance is a proper exercise of the electric cooperatives and that it is not of Cities (“GCCC”) was able to reach a municipal authority over land use that does voiding the ordinance outright. successful settlement agreement in the not alter CenterPoint’s tariff. However, CenterPoint Gas case. CenterPoint Gas filed the ALJ issued a supplemental PFD on On May 30, 2017, the Colony filed a motion a statement of intent to increase its gas July 5th reaffirming his recommendation for rehearing that was denied in part utility rates within the Houston and Texas that the Commission overturn the City’s and granted in part, but ultimately the Coast Divisions in November. CenterPoint ordinance because it conflicts with PURA, Commission’s Order on Rehearing did not requested a $31 million, or 10.7%, rate Commission rules, and CenterPoint’s tariff. alter the outcome of the case. The City increase and proposed to consolidate the The parties filed exceptions to the PFD on then filed another Motion for Rehearing Houston and Texas Coast divisions into a July 20th, and the PUC will take up this on the Commission’s Order on Rehearing single Texas Gulf Division. matter again on August 17, 2017 to issue a on July 19, 2017. final decision. In addition to GCCC, the City of Houston and Railroad Commission of Texas (“RRC”) Texas Coast Utilities Coalition intervened Docket No. 45175, Appeal of Brazos in this docket. Along with the proposed Electric Power Coopeartive, Inc. and GUD No. 10580, Statement of Intent to rate increase, CenterPoint’s proposal to Denton County Electric Cooperative Inc. Change the Rates of City Gate Service consolidate the two service areas proved D/B/A Coserv Electric from an Ordinance (CGS) and Rate Pipeline Transportation to be a contentious issue. However, the of the Colony, Texas, and, in the (PT) Rates of Atmos Pipeline – Texas (APT). parties eventually reached a settlement Alternative, Application for a Declaratory On January 6, 2017, Atmos Pipeline— agreement in early April. Overall, the Order. The Colony is once again asking Texas (“APT”), a division of Atmos Energy settlement reflects a 47% reduction to the Commission to reconsider its decision Corporation, filed a Statement of Intent to the company’s requested overall revenue in the City’s land use dispute with Brazos change its rates at the Railroad Commission. increase, and the customer charge has Electric Cooperative (“Brazos”) and Denton APT seeks to increase its annual revenues been reduced for all residential customers. County Electric Cooperative’s (“CoServ”). by $72.9 million. APT claims that the rate The parties also agreed to the service increase is necessary due to increases in area consolidation, but CenterPoint Gas This case began in September 2015, when operating expenses since APT’s last general will continue to make separate interim Brazos and CoServ appealed the Colony’s rate case, which was seven years ago. The rate adjustment filings in the Houston and zoning ordinance after the City refused to proposed rate increase will affect eight Texas Coast divisions. grant the electric cooperatives a special use firm transportation customers and 70 fully permit to build a substation on a certain interruptible transportation customers. Agency Highlights is prepared by Jeff Reed piece of land. The City’s zoning ordinance The Atmos Cities Steering Committee in the Firm’s Air and Waste Practice Group, prohibits certain land use activities in the (“ACSC”) intervened and played an active Ashleigh Acevedo in the Firm’s Water property’s zone, including substation use. role during the litigation of this case. Practice Group, and Hannah Wilchar in the Firm’s Energy and Utility Practice Group. If A hearing on the merits was held in The ALJ issued a PFD on June 16, 2017, you would like any additional information, September 2016, and the administrative recommending granting APT an increase please contact Jeff at 512.322.5835 or jreed@ law judge issued a PFD in December 2016 in annual revenues of $30.6 million and lglawfirm.com, Ashleigh at 512.322.5891 recommending that the Colony’s ordinance an 11.5% return on equity (“ROE”). Parties or [email protected], or Hannah at 512.322.5811 or [email protected].

Lloyd Gosselink Rochelle & Townsend, P.C. | July 2017 | 19 816 Congress Avenue Suite 1900 Austin, Texas 78701

20 | THE LONE STAR CURRENT | Volume 22, No. 3