1. (1) When a utility system is referred to the Board by operation of statute, the utility system will undergo a formal review by the Board and Board staff. A utility system may be placed under formal review for the following reasons:

   1. (a) The utility system’s financially distressed status;
   2. (b) Excessive water loss by the utility system;
   3. (c) Approval of a utility system’s ethics policy;
   4. (d) Approval of the incorporation of a new utility district under T.C.A. § 7-82-702(a)(7) system;
   5. (e) Approval of the purchase, development, acquisition, or construction of a new water or wastewater system by a city or county under T.C.A. § 68-221-1017;
   6. (f) A utility system’s failure to file an annual report;
   7. (g) The failure of a utility system’s governing body to meet training or continuing education requirements;
   8. (h) The failure of a utility system to implement or update a cyber-security plan; and,
   9. (i) Any other reason a utility system is referred to the Board for review, or must submit any documentation to the Board for review.
2. (2) In preparation for the Board’s formal review, Staff may request any records from the utility system and speak with its officials and employees. Staff shall gather sufficient information about the circumstances leading to the referral and shall summarize that information and any remedial steps taken by the utility system for the Board.
3. (3) The utility’s staff and governing body must promptly provide requested records and cooperate with Staff’s review. The Board may adopt negative inferences as to what missing records may show if the utility’s staff or governing body repeatedly refuses to provide records or cooperate with Board staff.
4. (4) At a public meeting, the Board shall review staff’s case summary and any recommendations, may request additional documentation for a full consideration of the issues before it, and may determine any other remedial actions the utility system must take to correct any remaining issues. Staff shall document the Board’s directive(s) in the form of an order, letter, or memorandum, depending on the nature of the directive(s). The Board’s directive(s) must be met before the Board releases the utility system from Board oversight.
5. (5) Upon satisfactory compliance with the directive(s) of the Board, the Board shall instruct Staff to close the review and inform the utility system that it has been released from the Board’s oversight.

Authority: T.C.A. §§ 4-5-201, et seq., 7-82-702, 7-82-703, 7-82-706, and 68-221-1017. Administrative History: New rules filed May 5, 2025; effective August 3, 2025.