FEDERAL LOANS TO RURAL WATER PROVIDERS – 1926(b) REVISITED: DOES THIS AFFECT YOUR CITY?

Earlier this month, Aqua Water Supply Corporation (Aqua) – a rural, non-profit water corporation – filed suit in the United States District Court for the Western District of Texas against the city of Elgin, the Austin Community College District (ACCD), and the Texas Commission on Environmental Quality (TCEQ).

Aqua alleges that ACCD’s petition to the TCEQ for expedited decertification from Aqua’s certificate of convenience and necessity (CCN), which ACCD asked for under new Texas Water Code Section 13.254(a-5) and (a-6) (enacted by S.B. 573 during the last legislative session), was improper because the law prohibits the TCEQ from taking federal loans held by the corporation into account when deciding whether to grant the CCN release.

Aqua argues that a federal law known as 1926(b) (Title 7, United States Code, Section 1926(b)) protects Aqua from having part of its CCN removed while it still holds federal debt, and therefore the section of state law prohibiting TCEQ from taking that federal debt into account is in violation of 1926(b).

While the sections discussed in the suit do not apply to most Texas cities, the language being contested appears in a much more broadly applicable section of the Water Code dealing with expedited decertification that could affect many cities. If your city has experienced similar problems and you would be interested in joining a coalition on the issue, please contact Lauren Crawford in the TML Legal Department at 512-231-7400 or lauren@tml.org.

TML member cities may use the material herein for any purpose.
No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the
Texas Municipal League.

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