BILL NUMBER: AB 1077	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 18, 2015
	AMENDED IN ASSEMBLY  APRIL 28, 2015
	AMENDED IN ASSEMBLY  APRIL 7, 2015

INTRODUCED BY   Assembly Member Holden

                        FEBRUARY 27, 2015

   An act to amend Section 14305 of the Corporations Code, relating
to mutual water companies.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1077, as amended, Holden. Mutual water companies: open
meetings.
   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.
   A mutual water company may be organized under the General
Corporation Law or the Nonprofit Mutual Benefit Corporation Law. The
Mutual Water Company Open Meeting Act authorizes an eligible person,
upon 24 hours advance written notice, to attend meetings of the board
of directors of a mutual water company that operates a public water
system, except when the board adjourns to, or meets solely in,
executive session.
   This bill would prohibit a mutual water company from meeting
solely in an executive session without holding a meeting. The bill
would require notice of a meeting to be given to an eligible person
at least 4 days prior to the meetings. The bill would require a board
of directors 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. The bill would require the
board to allow an eligible person who was denied attendance at a
meeting for failure to provide this notice, or because the number of
eligible persons having already provided notice of attendance exceeds
the room capacity of the place of the meeting, to attend the meeting
by teleconference, and would further require the board to provide to
an eligible person attending a meeting by teleconference a copy of
the documents to be discussed at the meeting, as specified.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) Mutual water companies are nonprofit entities that seek to
provide quality water service to their residential, commercial,
 municipal   municipal,  and agricultural
shareholders or members, many through small water systems and in
disadvantaged communities throughout the state.
   (b) Since 2013, mutual water companies have made great
improvements to water quality and service reliability across
California, as well as to the transparency of their operations and
finances.
   (c) Mutual water companies have been leaders in promoting water
conservation and efficiency since the drought emergency in California
began.
   (d) Mutual water companies serve as the sole water provider in
their service territories and act in many ways like public agencies,
and they therefore should take reasonable steps to ensure their
shareholders and customers have a voice in the operations of the
company.
   (e) Many mutual water companies have small or no meeting
facilities, some of which meet in board members' residences, that can
safely hold only a limited number of people, and are located in
remote parts of California that are difficult to access by some
shareholders and customers of the mutual water company.
   (f) Many small mutual water companies have limited financial means
and it is important that their financial resources be put to
efficient use in fulfilling their duty to provide safe and affordable
water to their shareholders and members.
   (g) Mutual water companies are unique, and unlike large public
agencies or for-profit utilities, these nonprofit organizations are
solely responsible to their shareholders and customers and not the
broader public outside of their service area.
   (h) Given the distinctive operational constraints faced by mutual
water companies, the Legislature believes that mutual water companies
should, where economically and technologically feasible, have means
to provide the greatest shareholder and customer access to meetings
within these constraints.
  SEC. 2.  Section 14305 of the Corporations Code is amended to read:

   14305.  (a) (1) This section shall be known and may be cited as
the Mutual Water Company Open Meeting Act.
   (2) This section shall only apply to a mutual water company that
operates a public water system.
   (b) (1) (A) A board of directors of a mutual water company shall
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.
Notwithstanding any other law, the board of directors may use
teleconferencing for the benefit of any eligible person denied
attendance at a meeting of the board for failure to provide this
notice, 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 issued pursuant to subdivision
(f). The teleconferenced meeting or proceeding shall comply with
this section and all other applicable provisions of law relating to a
specific type of meeting or proceeding conducted by a mutual water
company. If the board uses teleconferencing, the board shall 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 of directors to provide photocopied or
electronically scanned copies before the meeting begins. 
 meeting   .  A board of directors of a mutual
water company shall not prohibit an eligible person from attending a
meeting of the board either in person or by technology in compliance
with this paragraph. 
   (B) Any eligible person who attends a meeting by teleconference as
provided in this subdivision shall 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. Any eligible
person attending a meeting by teleconference shall ensure that no one
who is not an eligible person is able to hear or participate in that
meeting, and shall comply with any time limits for speaking
established pursuant to subdivision (h). If it is subsequently
discovered that someone who is not an eligible person listened to the
board meeting with the knowledge of the eligible person, that
eligible person shall forfeit his or her right to participate in
future board meetings by teleconference upon the board finding a
violation following a disciplinary hearing.  
   (C) 
    (B)  For purposes of this subdivision, the term
"teleconference" means, 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.
   (2) A board of directors of a mutual water company shall only meet
in executive session during a meeting. A board may prohibit an
eligible person from attending an executive session to consider
pending or potential litigation, matters relating to the formation of
contracts with third parties, including matters relating to the
potential acquisition of real property or water rights, 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 in
Section 14303.
    (3) The board of directors of a mutual water company shall meet
in executive session, if requested by a member or shareholder who may
be subject to a fine, penalty, or other form of discipline, and the
member shall be entitled to attend the executive session.
   (4) An eligible person shall be  allowed  
entitled  to attend a teleconference meeting, as specified in
paragraph (3) of subdivision (o), or the portion of the
teleconference meeting that is open to eligible persons,  and
shall be entitled to attend with or  without fulfilling the
notice requirement in paragraph (1). The teleconference meeting or
portion of the meeting that is open to eligible persons shall be
audible to the eligible person in a location specified in the notice
of the meeting.
   (c) Any matter discussed in executive session shall be generally
noted in the minutes of the meeting at which the executive session
occurred.
   (d) The minutes, minutes proposed for adoption that are marked to
indicate draft status, or a summary of the minutes, of any meeting of
the board of directors of a mutual water company, conducted on or
after January 1, 2014, other than an executive session, shall be
available to eligible persons within 30 days of the meeting. The
minutes, proposed minutes, or summary minutes shall be provided to
any eligible person upon request and upon reimbursement of the mutual
water company's costs for providing the minutes.
   (e) The pro forma budget required in Section 14306 shall be
available to eligible persons within 30 days of the meeting at which
the budget was adopted. The budget shall be provided to any eligible
person upon request and upon reimbursement of the mutual water
company's costs.
   (f) Unless the bylaws provide for a longer period of notice,
eligible persons shall be given notice of the time and place of a
meeting as defined in subdivision (o), except for an emergency
 meeting   meeting,  at least four days
prior to the meeting. Notice shall be given by posting the notice in
a prominent, publicly accessible place or places within the territory
served by the mutual water company and by mail to any eligible
person who had requested notification of board meetings by mail, at
the address requested by the eligible person. Eligible persons
requesting notice by mail shall pay the costs of reproduction and
mailing of the notice in advance. Notice may also be given by mail,
by delivery of the notice to each unit served by the mutual water
 company   company,  or, with the consent
of the eligible person, by electronic means. The notice shall contain
the agenda for the meeting.
   (g) An emergency meeting of the board may be called by the chief
executive officer of the mutual water company, or by any two members
of the board of directors other than the chief executive officer, if
there are circumstances that could not have been reasonably foreseen
which require immediate attention and possible action by the board,
and which of necessity make it impracticable to provide notice as
required by this section.
   (h) The board of directors of a mutual water company shall permit
any eligible person to speak at any meeting of the mutual water
company or the board of directors, except for any portion of a
meeting that is held in executive session outside the presence of
eligible persons. A reasonable time limit for all eligible persons to
speak to the board of directors or before a meeting of the mutual
water company shall be established by the board of directors.
   (i) (1) Except as described in paragraphs (2) to (4), inclusive,
the board of directors of the mutual water company 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 that was posted and
distributed pursuant to subdivision (f). This subdivision does not
prohibit an eligible person who is not a member of the board from
speaking on issues not on the agenda.
   (2) Notwithstanding paragraph (1), a member of the board of
directors, mutual water company officers, or a member of the staff of
the mutual water company, may do any of the following:
   (A) Briefly respond to statements made or questions posed by a
person speaking at a meeting as described in subdivision (h).
   (B) Ask a question for clarification, make an announcement, or
make a brief report on his or her own activities, whether in response
to questions posed by an eligible person or based upon his or her
own initiative.
   (3) Notwithstanding paragraph (1), the board of directors or a
member of the board of directors, subject to rules or procedures of
the board of directors, may do any of the following:
   (A) Provide a reference to, or provide other resources for factual
information to, the mutual water company's officers or staff.
   (B) Request the mutual water company's officers or staff to report
back to the board of directors at a subsequent meeting concerning
any matter, or take action to direct the mutual water company's
officers or staff to place a matter of business on a future agenda.
   (C) Direct the mutual water company's officers or staff to perform
administrative tasks that are necessary to carry out this
subdivision.
   (4) (A) Notwithstanding paragraph (1), the board of directors may
take action on any item of business not appearing on the agenda
posted and distributed pursuant to subdivision (f) under any of the
following conditions:
   (i) Upon a determination made by a majority of the board of
directors present at the meeting that an emergency situation exists.
An emergency situation exists if there are circumstances that could
not have been reasonably foreseen by the board, that require
immediate attention and possible action by the board, and that, of
necessity, make it impracticable to provide notice.
   (ii) Upon a determination made by the board by a vote of
two-thirds of the members present at the meeting, or, if less than
two-thirds of total membership of the board is present at the
meeting, by a unanimous vote of the members present, that there is a
need to take immediate action and that the need for action came to
the attention of the board after the agenda was posted and
distributed pursuant to subdivision (f).
   (iii) The item appeared on an agenda that was posted and
distributed pursuant to subdivision (f) for a prior meeting of the
board of directors that occurred not more than 30 calendar days
before the date that action is taken on the item and, at the prior
meeting, action on the item was continued to the meeting at which the
action is taken.
   (B) Before discussing any item pursuant to this paragraph, the
board of directors shall openly identify the item to the members in
attendance at the meeting.
   (j) (1) Notwithstanding any other law, the board of directors
shall not take action on any item of business outside of a meeting.
   (2) (A) Notwithstanding any other provision of law, the board of
directors shall not conduct a meeting via a series of electronic
transmissions, including, but not limited to, electronic mail, except
as specified in subparagraph (B).
   (B) Electronic transmissions may be used as a method of conducting
an emergency meeting if all members of the board, individually or
collectively, consent in writing to that action, and if the written
consent or consents are filed with the minutes of the meeting of the
board. These written consents may be transmitted electronically.
   (k) (1) An eligible person may bring a civil action for
declaratory or equitable relief for a violation of this section by a
mutual water company for which he or she is defined as an eligible
person for a judicial determination that an action taken by the board
is null and void under this section.
   (2) Prior to the commencement of an action pursuant to paragraph
(1), the eligible person shall make a demand on the board to cure or
correct the action alleged to be taken in violation of this section.
The demand shall be in writing, and submitted within 90 days from the
date the action was taken. The demand shall state the challenged
action of the board and the nature of the alleged violation.
   (3) Within 30 days of receipt of the demand, the board shall cure
or correct the challenged action and inform the demanding party in
writing of its actions to cure or correct, or inform the demanding
party in writing of its decision not to cure or correct the
challenged action.
   (4) Within 15 days of receipt of the written notice of the board's
decision to cure or correct or not to cure or correct, or within 15
days of the expiration of the 30-day period to cure or correct,
whichever is earlier, the demanding party shall commence the action
pursuant to paragraph (1). If the demanding party fails to commence
the action pursuant to paragraph (1), that party shall be barred from
commencing the action thereafter.
   (l) A board action that is alleged to have been taken in violation
of this section shall not be determined to be void if the action
taken was in substantial compliance with this section.
   (m) The fact that the board of directors of a mutual water company
takes subsequent action to cure or correct an action taken pursuant
to this section shall not be construed as, or admissible as evidence
of, a violation of this section.
   (n) An eligible person who prevails in a civil action to enforce
his or her rights pursuant to this section shall be entitled to
reasonable attorney's fees and court costs. A prevailing mutual water
company shall not recover any costs, unless the court finds the
action to be frivolous, unreasonable, or without foundation.
   (o) As used in this section:
   (1) "Eligible person" means a person who is any of the following:
   (A) A shareholder or member of the mutual water company.
   (B) 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.
   (C) 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.
   (D) Any other person eligible to participate in the mutual water
company's meetings under provisions of the company's articles or
bylaws.
   (2) "Item of business" means any action within the authority of
the board, except those actions that the board has validly delegated
to any other person or persons, officer of the mutual water company,
or committee of the board comprising less than a majority of the
directors.
   (3) "Meeting" means either of the following:
   (A) A congregation of a majority of the members of the board at
the same time and place to hear, discuss, or deliberate upon any item
of business that is within the authority of the board.
   (B) 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. A teleconference meeting shall be
conducted in a manner that protects the rights of members of the
mutual water company and otherwise complies with the requirements of
this title. The notice of the teleconference meeting shall identify
at least one physical location so that members of the mutual water
company may attend and at least one member of the board of directors
or a person designated by the board shall be present at that
location. 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.
 Nothing in this subparagraph requires the notice of a
meeting to disclose the use of teleconferencing if the use of
teleconferencing is approved by the board pursuant to paragraph (1)
of subdivision (b). 
   (4) "Mutual water company" means a mutual water company, as
defined in Section 14300, that operates a public water system, as
defined in Section 14300.5.