1. (a) The governing body of a sponsor may petition the board to remove the entity from the alliance as a sponsor.
2. (b) A petition must be submitted in the manner and form required by board rule.

3. (c) After receiving a petition under Subsection (a), the board shall:

   1. (1) decide whether the petitioning sponsor should be removed from the alliance as a sponsor; and
   2. (2) by order approve, conditionally approve, or disapprove the petition.
4. (d) The board may not approve a petition submitted under this section if that action would impair or violate or conflict with the terms of any outstanding bonds, notes, or other obligations of the alliance.

5. (e) An order issued under Subsection (c) that approves or conditionally approves a sponsor's petition to be removed from the alliance as a sponsor must address:

   1. (1) all matters related to the removal as determined by the board, including the removal of the territory of the sponsor and, if applicable, territory located in the service area of the sponsor as provided by the sponsor's certificate of convenience and necessity; and

   2. (2) if applicable, any conditions imposed by the board that the petitioning sponsor must satisfy before the board approves the petition, which may include:

      1. (A) payment by the petitioning sponsor of all bonds, notes, or other obligations issued by the alliance on behalf of the sponsor;
      2. (B) payment by the petitioning sponsor of the sponsor's pro rata share of any bond, note, or other obligation issued by the alliance, other than the bonds, notes, or other obligations described by Paragraph (A), if the payment is allowed under the terms of the bond, note, or other obligation;
      3. (C) conditions related to the ownership or transfer of ownership of real property, facilities, equipment, personnel, and supplies; and
      4. (D) conditions the alliance considers necessary for the winding up of activities in connection with the removal of the petitioning sponsor as a sponsor from the alliance.
6. (f) If the board by order issued under Subsection (c) conditionally approves a sponsor's petition, the petitioning sponsor remains a sponsor and shall make all payments owed to the alliance when due and shall satisfy all conditions included in the order. The board shall approve the petition immediately after all required payments to the alliance are received and all conditions included in the order are satisfied as determined by the board.
7. (g) The removal of a sponsor from the alliance under this section does not prohibit the former sponsor from contracting with the alliance for the provision of water supply, wastewater treatment, or other services provided by the alliance.

Added by Acts 2025, 89th Leg., R.S., Ch. 29 (S.B. 1194), Sec. 1, eff. May 15, 2025.