BILL NUMBER: AB 1077	INTRODUCED
	BILL TEXT


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 introduced, 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 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 to
be able to attend the meeting by technology that allows the eligible
person to hear the meeting and verbally interact with the board, and
would further require the board to provide to an eligible person
attending a meeting by technology 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.  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)  Any eligible person, upon   (1) 
   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  , may   of his or her
intent to personally  attend  meetings of the board
  the meeting. An eligible person denied attendance at a
meeting of the board for failure to provide this notice shall be
able to attend the meeting by technology that allows the eligible
person to hear the meeting and verbally interact with the board 
 , including, but not limited to, a telephone or computer. The
board shall provide to an eligible person attending a meeting by
technology, before the meeting begins, a c   opy of all
documents to be discussed at the 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.
    (2)     A board  of directors of a
mutual water  company, except when the board adjourns to, or
meets solely in,   company shall only meet in executive
session during a meeting. A board may prohibit an eligible person
from attending an  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 in Section 14303.  The 
    (3)     The  board of directors of
 the   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.  As
specified in paragraph (3) of subdivision (o), an 
    (4)     An  eligible person shall be
 entitled   allowed  to attend a
teleconference meeting  , as specified in paragraph (3) of
subdivision (o),  or the portion of  a  
the  teleconference meeting that is open to eligible 
persons, and that   persons, 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 persons  
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 immediately following  meeting
that is open to eligible persons.   meeting. 
   (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  or a meeting that will be held solely in executive
session   ,  , at least four days prior to the
meeting.  Except for an emergency meeting, eligible persons
shall 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.  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 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  meetings of
the board held in   an  executive  session.
  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  may
  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 a brief 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.  Except for a meeting that will be held solely in
executive session, the   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.
   (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.