BILL ANALYSIS Ó
AB 1077
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CONCURRENCE IN SENATE AMENDMENTS
AB
1077 (Holden)
As Amended August 31, 2015
Majority vote
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|ASSEMBLY: | 75-0 |(May 22, 2015) |SENATE: | 40-0 |(September 2, |
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Original Committee Reference: L. GOV.
SUMMARY: Makes a number of changes to the Mutual Water Company
Open Meeting Act.
The Senate amendments are technical and clarifying.
AS PASSED BY THE ASSEMBLY, this bill:
1)Revised and recast the Mutual Water Company Open Meeting Act
(Act) as follows:
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a) Required 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) Allowed 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) Required 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) Required, 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) Prohibited 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) Defined "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) Required a Board to only meet in executive session
during a meeting, and makes conforming changes;
h) Specified 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) Specified 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) Specified 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)Made additional clarifying and technical changes.
3)Made a number of findings and declarations regarding mutual
water companies.
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 to provide any eligible person access to a
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Board meeting who otherwise would be denied attendance in
person 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 a 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
access a Board meeting via teleconference 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
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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
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. AB 240 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)Related Legislation. AB 656 (Cristina Garcia) of the current
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legislative session, allows a mutual water company and a
public agency to form a joint powers authority (JPA) for the
purpose of risk-pooling, as specified.
AB 617 (Perea) of the current legislative session, pending in
the Senate, 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 the
Sustainable Groundwater Management Act.
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. Rubio Canon Mutual Water Company, in
opposition, states, "(AB 1077) imposes on privately-held
companies requirements that no other private corporations in
California must face (to with: potentially allowing
non-shareholders and non-eligible persons to remotely attend
private Board meetings)... and will burden small water
companies with more regulation, expense and legal exposure for
no apparent reason."
Analysis Prepared by:
Angela Mapp / L. GOV. / (916) 319-3958 FN:
0001906
AB 1077
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