BILL ANALYSIS Ó
AB 1077
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Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Brian Maienschein, Chair
AB 1077
(Holden) - As Amended April 28, 2015
SUBJECT: Mutual water companies: open meetings.
SUMMARY: Makes a number of changes to the Mutual Water Company
Open Meeting Act. Specifically, this bill:
1)Revises and recasts the Mutual Water Company Open Meeting Act
(Act) as follows:
a) Requires a Board of Directors (Board) of a mutual water
company to allow an eligible person to personally attend a
meeting of the Board, if the eligible person gave the Board
at least 24 hours advance written notice of his or her
intent to personally attend the meeting;
b) Allows the Board to use teleconferencing for the benefit
of any eligible person denied attendance at a meeting of
the Board for failure to provide the notice specified
above, or because the number of eligible persons having
already provided notice of attendance exceeds the room
capacity of the place of the meeting described in the
notice of the meeting;
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c) Requires a teleconferenced meeting or proceeding to
comply with the Act and all other applicable provisions of
law relating to a specific type of meeting or proceeding
conducted by a mutual water company;
d) Requires, if the Board uses teleconferencing, the Board
to provide to an eligible person attending a meeting by
teleconference, before the meeting begins, an electronic
copy or photocopy of all documents not related to an
executive session to be discussed at the meeting, or within
24 hours after the conclusion of the meeting if it is not
feasible for the Board to provide photocopied or
electronically scanned copies before the meeting begins;
e) Prohibits a mutual water company Board from prohibiting
an eligible person from attending a meeting of the Board
either in person or by technology, as specified;
f) Requires any eligible person who attends a meeting by
teleconference as specified above to identify themselves
and any other persons present with them who are able to
hear the Board meeting as soon as practicable after they
have joined the meeting;
g) Requires any eligible person attending a meeting by
teleconference to ensure that no one who is not an eligible
person is able to hear or participate in that meeting, and
to comply with any time limits for speaking established
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pursuant to the Act;
h) Requires an eligible person to forfeit his or her right
to participate in future Board meetings by teleconference
if it is discovered that someone who is not an eligible
person listened to the Board meeting with the knowledge of
the eligible person, upon the Board finding a violation
following a disciplinary hearing;
i) Defines "teleconference" to mean, to the extent it is
technologically feasible, any electronic means, that
includes either audio or video or both, that allows an
eligible person to hear a meeting and verbally interact
with the Board, including, but not limited to, a telephone,
cellular telephone with speaker phone technology, or
computer, or a device using internet-based video or audio
conference technology;
j) Requires a Board to only meet in executive session
during a meeting, and makes conforming changes;
aa) Specifies that a Board may prohibit an eligible person
from attending an executive session to consider pending or
potential litigation, or matters relating to the potential
acquisition of real property or water rights;
bb) Specifies that an eligible person shall be allowed to
attend a teleconferenced meeting without fulfilling the
notice requirements specified in a), above;
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cc) Specifies that a Board shall not discuss or take action
on any item at a nonemergency meeting unless the item was
placed on the agenda included in the notice of the meeting
that was posted and distributed pursuant to the Act; and,
dd) Provides that nothing in the Act pertaining to a
teleconference of a majority of the Board requires the
notice of a meeting to disclose the use of teleconferencing
if the use of teleconferencing is approved by the Board
pursuant to a) through i), above.
2)Makes additional clarifying and technical changes.
3)Makes a number of findings and declarations regarding mutual
water companies.
EXISTING LAW:
1)Specifies that any corporation organized for or engaged in the
business of selling, distributing, supplying, or delivering
water for irrigation purposes or for domestic use must be
known as a mutual water company.
2)Defines a "public water system" to mean a system for the
provision of water for human consumption through pipes or
other constructed conveyances that has 15 or more service
connections or regularly serves at least 25 individuals daily
at least 60 days out of the year. A public water system
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includes the following:
a) Any collection, treatment, storage, and distribution
facilities under control of the operator of the system that
are used primarily in connection with the system;
b) Any collection or pretreatment storage facilities not
under the control of the operator that are used primarily
in connection with the system; and,
c) Any water system that treats water on behalf of one or
more public water systems for the purpose of rendering it
safe for human consumption.
3)Establishes, pursuant to the Act, increased transparency
requirements for mutual water companies that operate a public
water system, including the following provisions:
a) Allows any eligible person, upon 24 hours advance
written notice, to attend meetings of the Board, except
when the Board adjourns to, or meets solely in, executive
session to consider litigation, matters relating to the
formation of contracts with third parties, member or
shareholder discipline, personnel matters, or to meet with
a member or shareholder, upon the member or shareholder's
request, regarding the member or shareholder's payment of
assessments, as specified;
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b) Requires an eligible person to be entitled to attend a
teleconference meeting or the portion of a teleconference
meeting that is open to eligible persons, and that meeting
or portion of the meeting shall be audible to the eligible
persons in a location specified in the notice of the
meeting;
c) Requires any matter discussed in executive session to be
generally noted in the minutes of the immediately following
meeting that is open to eligible persons;
d) Requires, unless the bylaws provide for a longer period
of notice, eligible persons to be given notice of the time
and place of a meeting, as specified, except for an
emergency meeting or a meeting that will be held solely in
executive session, at least four days prior to the meeting;
e) Requires, except for an emergency meeting, eligible
persons to be given notice of the time and place of a
meeting that will be held solely in executive session at
least two days prior to the meeting;
f) Requires the Board to permit any eligible person to
speak at any meeting of the mutual water company or the
Board, except for meetings of the Board held in executive
session. A reasonable time limit for all eligible persons
to speak to the Board or before a meeting of the mutual
water company shall be established by the Board;
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g) Provides, with limited exceptions, that a mutual water
company Board may not discuss or take action on any item at
a nonemergency meeting unless the item was placed on the
agenda included in the meeting notice that was posted and
distributed pursuant to the Act;
h) Includes in the definition of "meeting" a teleconference
in which a majority of the members of the Board, in
different locations, are connected by electronic means,
through audio or video or both;
i) Requires a teleconference meeting to be conducted in a
manner that protects the rights of members of the mutual
water company and otherwise complies with the requirements
of the Corporations Code;
j) Requires, except for a meeting that will be held solely
in executive session, the notice of a teleconference
meeting to identify at least one physical location so that
members of the mutual water company may attend and at least
one member of the Board or a person designated by the Board
shall be present at that location;
aa) Provides that participation by Board members in a
teleconference meeting constitutes presence at that meeting
as long as all Board members participating in the meeting
are able to hear one another and members of the mutual
water company speaking on matters before the Board; and,
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bb) Defines "eligible person" to mean any of the following:
i) A shareholder or member of the mutual water company;
ii) A person who is an occupant, pursuant to a lease or
a rental agreement, of commercial space or a dwelling
unit to which the mutual water company sells,
distributes, supplies, or delivers drinking water;
iii) An elected official of a city or county who
represents people who receive drinking water directly
from the mutual water company on a retail basis; or,
iv) Any other person eligible to participate in the
mutual water company's meetings under provisions of the
company's articles or bylaws.
4)Requires, pursuant to the Ralph M. Brown Act (Brown Act), that
all meetings of a legislative body, as defined, of a local
agency be open and public and all persons permitted to attend,
unless a closed session is authorized.
5)Defines, for purposes of the Brown Act, local agency to mean a
county, city, whether general law or chartered, city and
county, town, school district, municipal corporation,
district, political subdivision, or any board, commission or
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agency thereof, or other local public agency.
FISCAL EFFECT: None
COMMENTS:
1)Bill Summary. This bill makes numerous changes to the Act,
the major provisions of which are as follows:
a) Removes a requirement that eligible persons be entitled
to attend a teleconference meeting or portion of a
teleconference meeting open to eligible persons, and a
requirement that the teleconference meeting shall be
audible to eligible persons in a location specified in the
notice of the meeting. Instead, this bill allows a mutual
water company Board to use teleconferencing for the benefit
of any eligible person who has been denied attendance at a
Board meeting because the person failed to provide 24 hours
advance written notice, or because the number of eligible
persons who provided notice of attendance exceeds the room
capacity of the meeting;
b) Requires the Board to provide an eligible person
attending a meeting by teleconference an electronic copy or
photocopy of all documents to be discussed at the meeting
(excluding documents related to an executive session)
before the meeting begins, or within 24 hours after the
conclusion of the meeting if it is not feasible for the
Board to provide copies before the meeting begins;
c) Requires any eligible person who attends a meeting by
teleconference to identify themselves and any other persons
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present with them who are able to hear the Board meeting as
soon as practicable after they have joined the meeting;
d) Requires any eligible person attending a meeting by
teleconference to ensure that no one who is not an eligible
person is able to hear or participate in that meeting, and
to comply with any time limits for speaking established
pursuant to the Act;
e) Requires an eligible person to forfeit his or her right
to participate in future Board meetings by teleconference
if it is discovered that someone who is not an eligible
person listened to the Board meeting with the knowledge of
the eligible person and the Board finds a violation
following a disciplinary hearing;
f) Requires a Board to meet in executive session only
during a meeting (removes the ability of a Board to meet in
executive session only, separate from of a meeting that
eligible persons may attend);
g) Specifies that a Board may prohibit an eligible person
from attending an executive session where matters relating
to the potential acquisition of real property or water
rights will be discussed;
h) Specifies that an eligible person shall be allowed to
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attend a teleconference meeting without fulfilling the
24-hour notice requirements of the Act; and,
i) Provides that nothing in the Act pertaining to a
teleconference of a Board majority requires the notice of a
meeting to disclose the use of teleconferencing, if the use
of teleconferencing is approved by the Board pursuant to
the Act.
This bill is sponsored by the author.
2)Author's Statement. According to the author, "The existing
Mutual Water Company Open Meetings Act permits water company
shareholders and their tenants to attend meetings after
providing notice. However, in the two years since the passage
of AB 240 some water companies have struggled to comply with
the Act. Greater interest in attending these public meetings
has burdened mutual water companies small staffs, exceeded the
capacity of some meeting facilities, and, in some cases, the
water company's service territory is too large and remote for
all shareholders to conveniently attend meetings.
"Assembly Bill 1077 will provide mutual water companies the
ability to use teleconferencing tools, currently provided to
local agencies, to provide better access to meetings. Whether
a meeting is inaccessible to a shareholder because of distance
or capacity of the mutual water companies facilities,
teleconferencing will enable all shareholders to have their
voice heard and provide enhanced opportunities for consumer
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participation in these companies operations."
3)Background. Public water systems that deliver domestic water
generally fall into three categories:
a) Local agencies (cities and special districts). Local
Agency Formation Commissions (LAFCOs) control the cities
and special districts' boundaries and local officials are
responsible to their voters for their water rates;
b) Investor-owned public utilities. The California Public
Utilities Commission (PUC) controls the companies' service
areas and their water rates; or,
c) Mutual water companies. These private entities, formed
under statutes governing corporations, respond to their
shareholders, usually the landowners who receive water
service. Neither LAFCOs nor the PUC regulate mutual water
companies.
The State Department of Public Health and some county health
departments monitor the quality of drinking water delivered to
most households, regardless of the type of public water system
that delivers the water.
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Most mutual water companies are organized pursuant to the
General Corporation Law or the Nonprofit Mutual Benefit
Corporation Law. Shareholders in a mutual water company hold
a right to purchase water from the company. Stock in a
company is usually linked to the ownership of a parcel served
by the company and transfers with the land when the parcel is
sold to successive owners. This type of corporate structure
allows landowners to establish, essentially, a customer-owned
water provider to serve their properties.
Governance of a mutual water company is generally limited to
shareholders, or members,
of the company. While the details of any particular company's
governing structure are determined by its articles and bylaws,
most mutual water companies allow only shareholders and
members to vote on organizational matters and serve on the
company's governing board.
4)Recent Legislative History. In response to concerns that some
mutual water companies lacked capital to pay for needed water
quality improvements and the managerial capacity to operate
successful public water systems, the Legislature passed AB 54
(Solorio), Chapter 512, Statutes 2011. AB 54 established
training requirements for mutual water company's board members
regarding the duties of board members, made mutual water
companies liable for specified fines and penalties for
violating the California Safe Drinking Water Act, and expanded
LAFCOs' authority to review matters related to mutual water
companies.
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More recently, AB 240 (Rendon), Chapter 633, Statutes of 2013,
increased transparency requirements for mutual water companies
by establishing the Act. The bill also allowed mutual water
companies to impose liens to collect unpaid charges. While
the requirements of AB 240 opened the meetings of mutual water
companies to "eligible persons," these requirements are far
more limited than the requirements of the Brown Act.
5)Policy Considerations. The Committee may wish to consider the
following:
a) This bill removes a requirement that eligible persons be
entitled to attend a teleconference meeting or portion of a
teleconference meeting open to eligible persons. This bill
also contains a provision stating that nothing in the Act
pertaining to a teleconference of a Board majority requires
the notice of a meeting to disclose the use of
teleconferencing, if the use of teleconferencing is
approved by the Board pursuant to the Act. There is no
requirement in the Act for the Board to formally "approve"
the use of teleconferencing. Furthermore, allowing a Board
to use teleconferencing without including that information
in the notice of the meeting and without a duty to allow
eligible persons to participate seems counter to the Act's
goals of increasing transparency
in the meetings of mutual water companies. The Committee may
wish to consider restoring language that gives eligible
persons the right to attend teleconference meetings
(whether or not they provide proper notice) and striking
language that allows a Board to teleconference without
notice.
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b) This bill requires a mutual water company Board to
provide an eligible person who attends a meeting by
teleconference a copy of all documents to be discussed at
the meeting before the meeting begins, or within 24 hours
after the conclusion of the meeting if it is not feasible
for the Board to provide copies before the meeting begins.
Providing copies of documents that will be discussed at a
meeting a day later defeats the purpose of open, informed
participation. Leaving this decision up to the discretion
of the Board because it determined it wasn't "feasible" is
questionable. The Committee may wish to consider striking
this language from the bill.
c) This bill imposes a number of new requirements on
eligible persons who attend meetings via teleconference.
It requires eligible persons to identify themselves and any
other persons present with them who are able to hear the
Board meeting as soon as practicable after they have joined
the meeting; and, it requires any eligible person to ensure
that no one who is not an eligible person is able to hear
or participate in that meeting. If it is discovered that
someone who is not an eligible person listened to the Board
meeting with the knowledge of the eligible person and the
Board finds a violation following a disciplinary hearing,
the eligible person must forfeit his or her right to
participate in future Board meetings by teleconference.
Mutual water companies are private corporations, not
judicial bodies. These requirements for eligible persons
and the authority granted to mutual water companies to
conduct "disciplinary hearings" raise due process issues.
The Committee may wish to consider striking this language
from the bill.
6)Related Legislation. AB 656 (Cristina Garcia) allows a mutual
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water company and a public agency to form a joint powers
authority (JPA) to provide insurance, to be co-insured, and to
provide risk-pooling and technical support, continuing
education, safety engineering, and operational and managerial
advisory assistance to members of the JPA for the purpose of
reducing potential risk liabilities. AB 656 passed this
Committee on a 9-0 vote on April 29 and is pending in the
Assembly Appropriations Committee.
AB 617 (Perea) modifies portions of last year's Sustainable
Groundwater Management Act (SGMA), including, among other
things, provisions that allow mutual water companies to join
Groundwater Sustainability Agencies (GSA) formed by one or
more public agencies pursuant to a JPA, and to exercise all of
the GSA powers provided by SGMA. AB 617 is pending in the
Assembly Appropriations Committee.
7)Arguments in Support. Sierra Club California, in support,
states, "Despite the Open Meeting Act, mutual water companies
are continuing to find ways to prevent citizens from attending
meetings. To counter this, AB 1077 expands the open meeting
requirements for mutual water companies in simple ways, like
webcasts. This is a non-burdensome way to ensure that people
can see the discussions surrounding items such as the rates
they pay for water."
8)Arguments in Opposition. None on file.
REGISTERED SUPPORT / OPPOSITION:
AB 1077
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Support
Sierra Club California
Opposition
None on file
Analysis Prepared by:Angela Mapp / L. GOV. / (916) 319-3958