California Legislature—2013–14 Regular Session

Assembly BillNo. 240


Introduced by Assembly Member Rendon

February 5, 2013


An act to add Section 14304 to the Corporations Code, to amend Section 116755 of the Health and Safety Code, and to add Section 10531.5 to the Water Code, relating to mutual water companies.

LEGISLATIVE COUNSEL’S DIGEST

AB 240, as introduced, Rendon. Mutual water companies.

Under existing law, a mutual water company is defined as a corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for irrigation or domestic purposes that provides in its articles or bylaws that the water shall be sold, distributed, supplied, or delivered only to owners of its shares, as specified.

(1) Existing law requires each board member of a mutual water company that operates a public water system to complete a training course regarding the duties of board members of mutual water companies, as specified.

This bill would require a board member to repeat this training course every 6 years.

(2) Existing law permits a mutual water company that is not a public utility to levy assessments upon its shares, unless otherwise provided in its articles or bylaws.

This bill would also permit the board of directors of a mutual water company, if authorized by its articles or bylaws, to record a notice of lien against a shareholder’s property if the shareholder has not timely paid any rate, charge, or assessment arising from, or related to, water services provided by the mutual water company to the shareholder’s property and if the shareholder was given at least 20 days’ notice of the lien.

(3) Existing law declares that water is a valuable natural resource in California and should be managed to ensure the availability of sufficient supplies to meet the state’s agricultural, domestic, industrial, and environmental needs. Existing law declares that local agencies can realize efficiencies by coordinating and integrating their assets and seeking mutual solutions to water management issues.

This bill would declare the intent of the Legislature to encourage collaboration among mutual water companies that operate public water systems in the City of Maywood to create a public agency that can consolidate drinking water services for the people and business of that city.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 14304 is added to the Corporations Code,
2to read:

3

14304.  

If a shareholder of a mutual water company has not
4timely paid any rate, charge, or assessment arising from, or related
5to, water service provided by the mutual water company to the
6shareholder’s property, and if authorized by its articles or bylaws,
7then after providing at least 20 days’ written notice to the
8shareholder, the board of directors of the mutual water company
9may authorize the recording of a notice of lien against that
10shareholder’s property to secure the collection of the rates, charges,
11and assessments owed to the mutual water company by the
12shareholder.

13

SEC. 2.  

Section 116755 of the Health and Safety Code is
14amended to read:

15

116755.  

(a) Each board member of a mutual water company
16that operates a public water system, as defined in Section 116275,
17shall, within six months of taking office, or by December 31, 2012,
18if that member was serving on the board on December 31, 2011,
19complete a two-hour course offered by a qualified trainer regarding
20the duties of board members of mutual water companies, including,
21but not limited to, the duty of a corporate director to avoid
P3    1contractual conflicts of interest and fiduciary duties, the duties of
2public water systems to provide clean drinking water that complies
3with the federal Safe Drinking Water Act (42 U.S.C. Sec. 300f et
4seq.) and this chapter, and long-term management of a public water
5systembegin insert. A board member of a mutual water company shall repeat end insert
6begin insertthis training every six yearsend insert. For the purposes of this subdivision,
7a trainer may be qualified in any of the following ways:

8(1) Membership in the California State Bar.

9(2) Accreditation by the International Association of Continuing
10Education and Training (IACET) ANSI/IACET 1-2007.

11(3) Sponsorship by either the Rural Community Assistance
12Corporation or the California Rural Water Association.

13(b) A mutual water company formed pursuant to Part 7
14(commencing with Section 14300) of Division 3 of Title 1 of the
15Corporations Code shall be liable for the payment of any fines,
16penalties, costs, expenses, and other amounts that may be imposed
17upon the mutual water company pursuant to this chapter. The
18mutual water company may levy an assessment, pursuant to Section
1914303 of the Corporations Code, to pay these fines, penalties,
20costs, expenses, and other amounts so imposed. If the amount of
21outstanding fines, penalties, costs, expenses and other amounts
22imposed pursuant to this chapter exceed 5 percent of the annual
23budget of the mutual water company, then the mutual water
24company shall levy an assessment, pursuant to Section 14303 of
25the Corporations Code, to pay those fines, penalties, costs,
26expenses, and other amounts so imposed.

27

SEC. 3.  

Section 10531.5 is added to the Water Code, to read:

28

10531.5.  

It is the intent of the Legislature to encourage
29collaboration among mutual water companies that operate public
30water systems in the City of Maywood to create a public agency
31that can consolidate drinking water services for the people and
32businesses of that city.



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