1. (a) A utility may not purchase voting stock, and a person may not acquire a controlling interest, in a utility doing business in this state unless the utility or person files a written application with the commission no later than the 61st day before the date on which the transaction is to occur. A controlling interest is defined as:

   1. (1) a person or a combination of a person and the person's family members that possess at least 50% of a utility's voting stock; or
   2. (2) a person that controls at least 30% of a utility's voting stock and is the largest stockholder.
2. (b) A person acquiring a controlling interest in a utility is required to demonstrate adequate financial, managerial, and technical capability for providing continuous and adequate service to the requested area and to the person's certificated service area, if any.
3. (c) If the person acquiring a controlling interest cannot demonstrate adequate financial capability, the commission may require the person to provide financial assurance to ensure continuous and adequate utility service is provided to the service area. The commission will set the amount of financial assurance. The form of the financial assurance must be as specified in §24.11 of this title relating to Financial Assurance. The obligation to obtain financial assurance under this chapter does not relieve an applicant from any requirements to obtain financial assurance in satisfaction of another state agency's rules.
4. (d) The commission may require a public hearing on the transaction if a criterion prescribed by §24.239 of this title relating to Sale, Transfer, Merger, Consolidation, Acquisition, Lease, or Rental applies.

5. (e) Unless the commission requires that a public hearing be held, the purchase or acquisition may be completed as proposed:

   1. (1) at the end of the 60-day period; or
   2. (2) at any time after the commission notifies the person or utility that a hearing will not be required.
6. (f) If a hearing is required or if the person or utility fails to make the application to the commission as required, the purchase of voting stock or acquisition of a controlling interest may not be completed unless the commission determines that the proposed transaction serves the public interest. A purchase or acquisition that is not completed in accordance with the provisions of this section is void.
7. (g) The utility or person must notify the commission within 30 days after the date that the transaction is completed.
8. (h) Within 30 days of the commission order that allows a utility's purchase of voting stock or a person's acquisition of a controlling interest to proceed as proposed, the utility purchasing voting stock or the person acquiring a controlling interest must file a written update on the status of the transaction. A written update must also be filed every 30 days thereafter, until the transaction has been completed.
9. (i) Except as otherwise provided by this section, the commission order granting approval for the transaction to proceed expires 180 days after the date the order is issued. If the transaction has not been completed within the 180-day period, the commission's approval to proceed with the transaction will expire by operation of law unless, prior to the expiration of the 180-day period, the commission in writing extends the period.

10. (j) Expedited acquisition of voting stock or controlling interest. An eligible applicant may apply for the expedited acquisition of the voting stock or controlling interest and, if applicable, the certificated service area of a utility in accordance with this subsection.

    1. (1) Eligibility. To be eligible for expedited acquisition under this subsection, an applicant must meet the criteria in subparagraphs (A) and (B) of this paragraph.

       1. (A) Prior to filing an application for expedited acquisition, an applicant must, for the utility being acquired, be either:

          1. (i) a person appointed by the commission or TCEQ as a temporary manager or supervisor; or
          2. (ii) appointed as a receiver at the request of the commission or TCEQ.

       2. (B) In addition to meeting one of the criteria under subparagraph (A) of this paragraph, an applicant must also be either:

          1. (i) a Class A utility;
          2. (ii) a Class B utility;
          3. (iii) a municipally owned utility;
          4. (iv) a county;
          5. (v) a water supply or sewer service corporation;
          6. (vi) a public utility agency; or
          7. (vii) a district or river authority.

    2. (2) Application.

       1. (A) An application filed by an eligible applicant under paragraph (1) of this subsection must comply with the requirements of this section, except that the following are waived:

          1. (i) any public notice requirements required by this chapter, regardless of whether the person elects to charge initial rates in accordance with §24.240 of this title (relating to Water and Sewer Utility Rates After Acquisition) or use a voluntary valuation determined under §24.238 of this title (relating to Fair Market Valuation); and
          2. (ii) as applicable, any requirements of this chapter that do not apply to an entity over which the commission does not have original rate jurisdiction.

       2. (B) An applicant's appointment as a temporary manager, supervisor, or receiver of the utility subject to the application is sufficient to demonstrate adequate financial, managerial, and technical capability for providing continuous and adequate service to:

          1. (i) the service area to be acquired; and
          2. (ii) any areas currently certificated to the applicant or, as applicable to municipally owned utilities or districts, any areas being served by the applicant.

    3. (3) Commission approval and effects of approval.

       1. (A) The commission will approve an application under this subsection if the commission considers the transaction to be in the public interest in accordance with the processes specified under Texas Water Code §13.246 and §13.301. In determining whether the transaction is in the public interest, the commission may also consider whether the applicant is currently in compliance with commission rules, orders, and other applicable law.
       2. (B) The commission will approve an application under this subsection without the signature of the owner of the utility being acquired that is required by other law if the utility owner has abandoned operation of the facilities that are the subject of the transaction and cannot be located, or does not respond to an application filed under this subsection.
       3. (C) Unless otherwise specified by §24.363 of this title (relating to Temporary Rates for Services Provided for a Nonfunctioning System), the applicant acquiring the utility may seek recovery of all used and useful invested capital and just and reasonable operations and maintenance costs incurred during the applicant's appointment term as a regulatory asset in the applicant's next comprehensive rate proceeding under §24.41 of this title (relating to Cost of Service) or system improvement charge application under §24.76 of this title (relating to System Improvement Charge).

Source Note:The provisions of this §24.243 adopted to be effective October 17, 2018, 43 TexReg 6826; amended to be effective August 20, 2020, 45 TexReg 5627; amended to be effective January 1, 2026, 50 TexReg 8561.