BILL ANALYSIS Ó
AB 1077
Page 1
ASSEMBLY THIRD READING
AB
1077 (Holden)
As Amended May 18, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+--------------------+---------------------|
|Local |9-0 |Maienschein, | |
|Government | |Gonzalez, Alejo, | |
| | |Chiu, Cooley, | |
| | |Gordon, Holden, | |
| | |Linder, Waldron | |
| | | | |
| | | | |
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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
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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;
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;
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) 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;
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g) Requires a Board to only meet in executive session during
a meeting, and makes conforming changes;
h) 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;
i) Specifies that an eligible person shall be entitled to
attend a teleconferenced meeting with or without fulfilling
the notice requirements specified in a), above; and,
j) 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.
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.
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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 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;
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;
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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,
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;
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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 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) 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
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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;
c) 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);
d) 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; and,
e) Specifies that an eligible person shall be allowed to
attend a teleconference meeting with or without fulfilling
the 24-hour notice requirements of 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
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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
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 of 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.
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
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limited than the requirements of the Brown Act.
5)Related Legislation. AB 656 (Cristina Garcia) of the current
legislative session, allows a mutual 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 the Assembly Local Government Committee on a 9-0 vote
on April 29 and is pending in the Assembly Appropriations
Committee.
AB 617 (Perea) of the current legislative session, modifies
portions of last year's Sustainable Groundwater Management Act,
including, among other things, provisions that allow mutual
water companies to join Groundwater Sustainability Agencies
formed by one or more public agencies pursuant to a JPA, and to
exercise all of the Groundwater Sustainability Agencies powers
provided by Sustainable Groundwater Management Act. AB 617 is
pending in the Assembly Appropriations Committee.
6)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."
7)Arguments in Opposition. None on file.
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Analysis Prepared by:
Angela Mapp / L. GOV. / (916) 319-3958 FN:
0000444