Relating to a certificate of public convenience and necessity to provide water or sewer service in an area incorporated or annexed by a municipality.

Contracts

• Franchise Agreements & MSAs: If you are a private utility operating under a municipal franchise, you must amend your Master Service Agreements immediately. The law requires franchised utilities designated to provide service in an annexed area to pay the compensation to the incumbent.
• Indemnification Clauses: Insert strong indemnification language protecting your entity from litigation costs and compensation awards if a municipality mandates you take over a service area.

Hiring/Training

• Legal Counsel Re-alignment: Retain counsel with specific experience in Travis County District Court civil litigation. Reliance solely on administrative law specialists is no longer sufficient, as appeals now trigger a full civil trial (trial de novo).
• Valuation Experts: Train appraisers to value "damages to the remainder" of the system, not just the infrastructure being taken. The standard has shifted from "useless or valueless" to "adversely affected."

Reporting & Record-Keeping

• Asset Segregation: You must maintain distinct asset records separating infrastructure located *within* potential annexation zones from infrastructure *outside* that supports those zones.
• Impact Modeling: Develop financial models showing how the loss of a specific service area impacts the rates and viability of your remaining system to substantiate "adverse effect" claims.

Fees & Costs

• Litigation Budget: Increase legal reserves. The "trial de novo" provision effectively guarantees that contentious valuations will be litigated twice—once at the PUC and once in District Court.
• Bonding Requirements: Municipalities or acquiring utilities must secure surety bonds or cash deposits to cover potential damages if they seek possession of the system pending an appeal.