Water & Sewer Utilities in Texas
What Is a Certificate of Convenience and Necessity?
In Texas, a Certificate of Convenience and Necessity (CCN) gives a retail public utility (i.e. water and sewer company) exclusive right to providing services to a certain area. Because they have a monopoly, the CCN holder is legally obligated to provide “continuous and adequate” utilities to the designated area, and other utility companies cannot infringe upon those boundaries. CCNs, therefore, are closely related to the water rights of both individuals and business owners.
Attorney Mark McPherson’s first water rights case, in fact, involved a CCN dispute. He spent three days in a contested case evidentiary hearing opposing a CCN holder’s application to cancel its CCN, which would have left his client with no water supply. The TCEQ’s Executive Director argued that the CCN should be canceled, but the administrative law judge accepted Mark’s argument and determined that the application to cancel the CCN should be denied.
This case played a significant role in Mark’s decision to focus his practice exclusively on environmental and water rights. He is now dedicated to serving both real estate developers and the owners of utility companies throughout the state of Texas.
How We Serve Real Estate Developers
Removing Properties from CCNs
In previous decades, people could obtain CCNs over vast geographic areas with little to no financial ability to provide the area with continuous and adequate service. Landowners, meanwhile, had very few rights to participate in the granting, amendment, or termination of the CCN.
Once land was included in a CCN Certificated Area, a landowner could not remove their land without going through a costly and time-consuming contested case proceeding at the TCEQ. As a result, the CCN holder could require hefty payments from landowners before consenting to remove their land from the Certificated Area, unless the landowner had the resources to go through the expensive contested case process—and this was rarely the case.
Now, however, landowners in a CCN Certificated Area have additional rights to participate in the CCN permitting process. In some instances, landowners can remove their land from the CCN area using expedited removal processes administered by TCEQ. Nevertheless, companies may still be motivated to prioritize profit over property owners’ needs.
If you are considering buying land in a CCN Certificated Area, you owe it to yourself to conduct appropriate due diligence on the ability of the CCN holder to provide continuous and adequate service to the tract of your desire. Under certain circumstances, state law may allow you to remove a property from the CCN Certified Area to obtain less costly service. But this process can be highly complex and costly without qualified support.
At McPherson Law Firm PLLC, our attorney can help you remove properties from CCN Certificated Areas. We will first review your deeds and determine whether you meet the basic qualifications for removal (e.g. owning enough acres, not currently receiving water or sewer services, located in a qualifying county). We can then help you draft the written request and mapping documents needed to apply.
Establishing New Water Utilities
In Texas, real estate developers are responsible for ensuring their development’s water source can meet all water demands. Often, developers fulfill this requirement by drilling new groundwater wells for every structure. But this method has become increasingly more difficult due to tightened regulations and state policies. Because Texas generally discourages the “everybody gets a well” mentality, the challenge of acquiring reliable water sources for new developments will only continue to grow.
When you establish a new water utility service, you can choose from:
- Investor Owned Utility (IOU)
- Water Supply Corporation (WSC)
- Special Utility District (SUD)
- Municipal Utility District (MUD)
At the McPherson Law Firm PLLC, we can help you determine which type of service will meet your needs. Additionally, we can guide you through the formation and permit acquisition process, as well as navigation of groundwater conservation districts, if applicable. Due to the challenges of acquiring new water utilities, you will have a much higher likelihood of success if we are here to support you every step of the way.
Representing Owners of Utilities
Are you looking to sell, transfer, or merge a utility? The Application for Sale, Transfer, or Merger (STM) of a Retail Public Utility requires you to demonstrate your ability to provide adequate service to all areas you plan to acquire and currently serve. The application will ask for information regarding your finances, managerial capacity, and technical resources.
Our attorney can help you complete and close STMs. We have years of experience handling these types of applications and transactions, and our comprehensive guidance can help you accomplish your goals and advance your best interests.
Contact Us Today to Begin
Mark McPherson has a history of successfully asserting the rights of landowners and developers against CCN holders, as well as moving property into or out of CCN Certificated Areas. Although protecting your rights is easier now than it once was, you will have a much better chance of success if you enlist our support.
If you own or plan to own utility companies, we can provide knowledgeable counsel and skilled representation for every transaction and application process. At McPherson Law Firm PLLC, we are deeply passionate about this area of law and even more committed to advocating for the rights of Texas property and utility owners.