Connecticut Seal

General Assembly

File No. 593

    January Session, 2017

Substitute House Bill No. 7220

House of Representatives, April 13, 2017

The Committee on Public Health reported through REP. STEINBERG of the 136th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT CONCERNING THE DEPARTMENT OF PUBLIC HEALTH'S RECOMMENDATIONS REGARDING SAFE DRINKING WATER.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective October 1, 2017) (a) As used in this section:

(1) "Small community water system" means a water company that regularly serves at least twenty-five, but not more than one thousand, year-round residents;

(2) "Useful life" means a manufacturer's recommended or estimated lifespan of a water company's capital asset, taking into consideration the service history and current condition of such capital asset; and

(3) "Water company" has the same meaning as provided in section 25-32a of the general statutes.

(b) Each water company shall prepare a fiscal and asset management plan for all of the capital assets that comprise each of the water company's small community water systems. The fiscal and asset management plan shall include, but need not be limited to, (1) a list of all capital assets of the small community water system, (2) the useful life of such capital assets, which shall be based on the current condition of such capital assets, (3) the maintenance and service history of such capital assets, (4) the manufacturer's recommendation regarding such capital assets, and (5) the water company's plan for the reconditioning, refurbishment or replacement of such capital assets. Each water company shall commence the creation of the fiscal and asset management plan with the assessment of its hydropneumatic pressure tanks as its initial priority. Each water company shall complete the fiscal and asset management plan for all of the capital assets of each of its small community water systems not later than January 1, 2020, except that each water company shall complete on a form prepared by the Department of Public Health the asset and fiscal management plan assessment review of the hydropneumatic pressure tanks at each of its small community water systems not later than May 1, 2018. Following the completion of the initial fiscal and asset management plan, a water company shall update such fiscal and asset management plan annually and shall make such fiscal and asset management plan available to the department upon request.

(c) This section shall not apply to a water company that is (1) a water company, as defined in section 16-1 of the general statutes, (2) subject to the requirements in section 25-32d of the general statutes, or (3) a state agency.

(d) The provisions of this section shall be deemed to relate to the purity and adequacy of water supplies for the purposes of the imposition of a penalty under section 25-32e of the general statutes, as amended by this act.

(e) The Commissioner of Public Health may adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to carry out the provisions of this section.

Sec. 2. Subsections (a) to (e), inclusive, of section 25-32e of the general statutes are repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

(a) If, upon review, investigation or inspection, the Commissioner of Public Health determines that a water company has violated any provision of section 25-32, section 25-32d or any regulation adopted under section 25-32d, or any [regulation in the Public Health Code] provision of the general statutes or regulations of Connecticut state agencies relating to the purity and adequacy of water supplies or to the testing of water supplies or any report of such testing, the commissioner may impose a civil penalty not to exceed five thousand dollars per violation per day upon such water company. Governmental immunity shall not be a defense against the imposition of any civil penalty imposed pursuant to this section. The commissioner shall [adopt regulations, in accordance with the provisions of chapter 54, establishing a schedule or schedules of the amounts, or the ranges of amounts, of civil penalties which may be imposed under this section. In adopting such regulations, the commissioner shall consider the size of or the number of persons served by the water company, the level of assessment necessary to insure immediate and continued compliance with such provision, and the character and degree of injury or impairment to or interference with or threat thereof to: (1) The purity of drinking water supplies; (2) the adequacy of drinking water supplies; and (3) the public health, safety or welfare. No such civil penalty may be imposed until the regulations required by this subsection have been adopted] publish annually, or as the commissioner deems necessary in response to any guidelines or ruling promulgated by the United States Environmental Protection Agency, a schedule of the amounts, or ranges of amounts, of civil penalties that may be imposed under this section on the Department of Public Health's Internet web site if the civil penalty for a violation under this section has not been established by statute. Notwithstanding the provisions of chapter 54, the commissioner shall not be required to adopt or revise any regulations regarding the imposition of civil penalties. Not less than six months prior to publishing such schedule, the commissioner shall publish notice in the Connecticut Law Journal of his or her intention to publish such schedule on the department's Internet web site. Such notice shall include such schedule and the date on which the commissioner intends to hold a public hearing on such schedule. The commissioner shall hold the public hearing on such schedule not later than thirty days after the date of publishing such notice.

(b) In setting a civil penalty in a particular case, the commissioner shall consider all factors which the commissioner deems relevant, including, but not limited to, the following: (1) The amount of assessment necessary to insure immediate and continued compliance with such provision; (2) the character and degree of impact of the violation on the purity and adequacy of drinking water supplies; (3) whether the water company incurring the civil penalty is taking all feasible steps or procedures necessary or appropriate to comply with such provisions or to correct the violation; (4) any prior violations by such water company of statutes, regulations, orders or permits administered, adopted or issued by the commissioner; (5) the character and degree of injury to, or interference with, public health, safety or welfare which has been or may be caused by such violation; and (6) [after the adoption of the federal Safe Drinking Water Act Public Notification Rule pursuant to section 5 of public act 01-185,] whether the consumers of the water company have been notified of such violation pursuant to [such rule] section 19-13-B102 of the regulations of Connecticut state agencies.

(c) If the commissioner has reason to believe that a violation has occurred, the commissioner may impose a penalty if compliance is not achieved by a specified date and send to the violator, by certified mail, return receipt requested, or personal service at the address filed with the department by the water company as required under subsection (a) of section 25-33 or, if the water company did not file an address as required under subsection (a) of said section, to the last known address of the water company on file at the department, a notice which shall include: (1) A reference to the sections of the statute or regulation involved; (2) a short and plain statement of the [matters asserted or charged] violation; (3) a statement of the amount of the civil penalty or penalties [to be] imposed; (4) the initial date of the imposition of the penalty when the penalty is imposed for a continuing violation, or the dates for which the penalty is imposed when the penalty is imposed for an isolated violation; and (5) a statement of the [party's] water company's right to a hearing. The commissioner shall send a copy of such notice to the local director of health in the municipality or municipalities in which such violation occurred or that utilize such water.

(d) The civil penalty shall be payable for noncompliance on the date specified in subsection (c) of this section and for each day thereafter until the water company against which the penalty was issued [notifies] demonstrates to the commissioner that the violation has been corrected or has otherwise ceased to occur. [Upon receipt of such notification, the commissioner shall determine whether or not the violation has been corrected and shall notify the water company, in writing, of such determination. The water company may, within twenty days after such notice is sent by the commissioner, request a hearing to contest an adverse determination. If, after such hearing, the commissioner finds that the violation still exists, or if the water company fails to request a hearing, the penalty shall continue in force from the original date of imposition.]

(e) The water company to which the notice is addressed shall have twenty days from the date of mailing of the notice to make written application to the commissioner for a hearing to contest the imposition of the penalty. The application shall include a detailed statement of all of the grounds for contesting the imposition of the penalty. The water company shall send a copy of such application to the local director of health in the municipality or municipalities in which such violation occurred or that utilize such water. All hearings under this section shall be conducted pursuant to sections 4-176e to 4-184, inclusive, except that the presiding officer shall automatically grant each local director of health in the municipality or municipalities in which such violation occurred or that utilize such water the right to be heard in the proceeding. Any civil penalty may be mitigated by the commissioner upon such terms and conditions as the commissioner, in the commissioner's discretion, deems proper or necessary upon consideration of the factors set forth in subsection (b) of this section.

Sec. 3. (NEW) (Effective October 1, 2017) As used in this section and sections 4 to 15, inclusive, of this act:

(1) "Abandoned operations" includes, but is not limited to, the failure of a small water company to:

(A) Provide water to consumers of the small water company for at least five days during the preceding three months or two or more repeated service interruptions during the preceding three months;

(B) Meet the standards adopted under section 25-32 of the general statutes for the quantity and quality of public drinking water and such failure constitutes an immediate threat to the quality or adequacy of any source of water supply;

(C) Have the financial, managerial and technical resources needed to operate the small water company in a reliable and efficient manner and to provide continuous, adequate service to the persons served by the small water company;

(D) Adequately maintain the small water company's facilities, resulting in a potential threat to the quality or adequacy of the small water company's public water supply; and

(E) Provide consumers adequate notice of a public health threat or potential public health threat;

(2) "Consumer" has the same meaning as provided in section 25-32a of the general statutes;

(3) "Small water company" means a water company, other than a state agency, that is not required to submit a water supply plan pursuant to section 25-32d of the general statutes; and

(4) "Water company" has the same meaning as provided in section 25-32a of the general statutes.

Sec. 4. (NEW) (Effective October 1, 2017) (a) A motion to appoint a receiver for a small water company may be filed in the Superior Court by the Commissioner of Public Health. The court shall hold a hearing not later than ten days after the date the motion is filed. Notice of such hearing shall be given to the owner of such small water company, or such owner's agent for service of process, not less than five days prior to such hearing and shall be posted by the Department of Public Health in conspicuous locations throughout the distribution system of the small water company for not less than three days prior to such hearing. The notice and hearing requirements in this subsection may be waived by the owner of the small water company.

(b) Notwithstanding the provisions of subsection (a) of this section, the court may appoint a receiver upon an ex parte motion filed by the department when affidavits, testimony or any other evidence presented indicate that there is a reasonable likelihood a condition exists at such small water company that must be remedied immediately to ensure the health, safety and welfare of the consumers of such small water company. Notice of the ex parte motion and order shall be served on the owner or the owner's agent for service of process and shall be posted in a conspicuous place at such small water company not later than twenty-four hours after issuance of such order. A hearing on the motion shall be held not later than five days after the issuance of such order unless the owner consents to a later hearing date. The notice and hearing requirements in this subsection may be waived by the owner of the small water company.

Sec. 5. (NEW) (Effective October 1, 2017) The court shall grant a motion for the appointment of a receiver made under section 4 of this act for a small water company upon a finding of any of the following: (1) Such small water company has abandoned operations; or (2) such small water company failed to comply with an order issued in response to a violation under sections 19a-36 to 19a-39, inclusive, or 25-32 to 23-53, inclusive, of the general statutes or any regulation or permit adopted or issued thereunder, and such violation constitutes an immediate threat to the quality or adequacy of any source of water supply.

Sec. 6. (NEW) (Effective October 1, 2017) It shall be a sufficient defense to a motion for the appointment of a receiver under section 4 of this act that (1) the owner of a small water company did not have a reasonable time in which to correct a violation described in section 5 of this act, or (2) such violation listed in the motion does not, in fact, exist.

Sec. 7. (NEW) (Effective October 1, 2017) (a) Except as provided in subsection (c) of this section, a receiver appointed pursuant to the provisions of this section and sections 4 to 6, inclusive, and 8 to 13, inclusive, of this act shall (1) have the same powers in operating a small water company as a receiver of a corporation under section 52-507 of the general statutes, (2) exercise such powers to remedy the conditions that constituted grounds for the imposition of receivership, (3) ensure the availability and potability of water and the provision of water at an adequate volume and pressure to the consumers of the small water company, and (4) preserve the assets and property of the owner. If such small water company is placed in receivership, it shall be the duty of the receiver to notify each consumer of such receivership. Such receiver may correct or eliminate any condition or violation that is prejudicial to public health while the receiver remains at such small water company, provided the total cost of correction or elimination does not exceed three thousand dollars. The court may order expenditures for such correction or elimination in excess of three thousand dollars upon a motion made by such receiver.

(b) Not later than ninety days after the date of appointment as a receiver, the receiver shall take all necessary steps to stabilize the operation of the small water company in order to ensure the availability and potability of water and the provision of water at adequate volume and pressure to the consumers of such small water company.

(c) The court may limit the powers of a receiver appointed pursuant to the provisions of this section and sections 4 to 6, inclusive, and 8 to 13, inclusive, of this act to those necessary to solve a specific problem.

(d) Any action filed against a small water company that is in receivership pursuant to this section shall be transferred to the court supervising the receiver of such small water company. Except as otherwise ordered by the court, the appointment of a receiver pursuant to this section shall act as a stay of such actions until such time as the court terminates the stay.

Sec. 8. (NEW) (Effective October 1, 2017) (a) A receiver may not be required to honor any lease, mortgage, secured transaction or other contract entered into by the owner of a small water company if, upon a motion made to the Superior Court, said court determines that (1) the person seeking payment under the lease, mortgage, secured transaction or other contract was an owner or controlling stockholder of such small water company or was an affiliate of such owner or controlling stockholder at the time the lease, mortgage, secured transaction or other contract was effectuated, or (2) the rental, price or rate of interest required to be paid under the lease, mortgage, secured transaction or other contract was substantially in excess of a reasonable rental, price or rate of interest at the time the lease, mortgage, secured transaction or other contract was entered into.

(b) If the receiver is in possession of real estate or goods subject to a lease, mortgage or security interest that the receiver is permitted to avoid under subsection (a) of this section and if the real estate or goods are necessary for the continued operation of the small water company under this section, the receiver may apply to the court to set a reasonable rental, price or rate of interest to be paid by the receiver for the duration of the receivership. The court shall hold a hearing not later than fifteen days after a motion is made. Any known owners of the property involved shall receive notice of such motion made by the receiver not later than ten days prior to the hearing. Payment by the receiver of the amount determined by the court to be reasonable is a defense to any action against the receiver for payment or for possession of the goods or security interest or real estate subject to the lease or mortgage involved by any person who received such notice, but the payment does not relieve the owner of the small water company of any liability for the difference between the amount paid by the receiver and the amount due under such lease, mortgage, secured transaction or other contract involved.

(c) The provisions of this section shall not apply to a lease, mortgage, secured transaction or other contract entered into with any financial institution regulated by a state or federal agency.

Sec. 9. (NEW) (Effective October 1, 2017) (a) The Department of Public Health shall maintain and publish on the department's Internet web site a list of interested and qualified individuals, corporations, associations and partnerships, with experience in the provision of water service and a history of satisfactory operation of a water company. The Superior Court may appoint any responsible individual, corporation, association or partnership whose name is proposed by the Commissioner of Public Health to act as receiver. If no such individual, corporation, association or partnership consents to assume operation of the small water company, the Superior Court shall appoint a receiver. No state employee, owner of the small water company or other person with a financial interest in the small water company may serve as a receiver for such small water company. No person appointed to act as a receiver shall be permitted to have a current financial interest in the small water company or to acquire a financial interest in the small water company for a period of five years from the date his or her receivership terminates.

(b) The court, in its discretion, may require a bond of such receiver in accordance with the provisions of section 52-506 of the general statutes.

Sec. 10. (NEW) (Effective October 1, 2017) The court may remove a receiver appointed pursuant to sections 4 to 9, inclusive, and 11 to 13, inclusive, of this act, in accordance with section 52-513 of the general statutes. A small water company receiver appointed pursuant to sections 4 to 9, inclusive, and 11 to 13, inclusive, of this act shall be entitled to a reasonable receiver's fee as determined by the court. The receiver shall be liable only in the receiver's official capacity for injury to person and property by reason of the conditions of the small water company. The receiver shall not be personally liable, except for acts or omissions constituting gross, wilful or wanton negligence.

Sec. 11. (NEW) (Effective October 1, 2017) (a) The receiver may, subject to the approval of the Superior Court and the Commissioner of Public Health, use the rates collected from the consumers of the small water company, or sell or otherwise dispose of all or part of the real and personal property of the small water company, or both, to pay the costs incurred in the operation of the receivership. The costs shall include, but not be limited to: (1) Payment of fees to the receiver for the receiver's services; (2) payment of fees of attorneys, accountants, certified operators, engineers or any other person or entity that provides goods or services necessary to the operation of the receivership; and (3) any other fee deemed necessary by the Superior Court and the commissioner.

(b) Subject to the approval of the Superior Court and the commissioner, the receiver may increase the rates collected from the consumers of the small water company to pay the costs incurred in the operation of the receivership.

Sec. 12. (NEW) (Effective October 1, 2017) Each receiver shall, during the first week in January, April, July and October in each year, sign, swear to and file with the clerk of the Superior Court in which the receiver was appointed a full and detailed account of his or her doings as the receiver for the three months next preceding, together with a statement of all court orders passed during such three-month period and the present condition and prospects of the small water company in the receiver's charge, and cause a motion for a hearing and approval of the same to be placed on the short calendar.

Sec. 13. (NEW) (Effective October 1, 2017) The Superior Court, upon a motion by the receiver appointed under sections 4 to 12, inclusive, of this act or the owner of the small water company, may terminate the receivership if it finds that such small water company has been rehabilitated so that the violations or other conditions complained of no longer exist. Upon such finding, the court may terminate the receivership and return such small water company to its owner. In its termination order, the court may include such terms as it deems necessary to prevent the violations or other conditions complained of from recurring.

Sec. 14. (NEW) (Effective October 1, 2017) (a) (1) If a small water company has abandoned operations of the small water company, or (2) the Commissioner of Public Health has filed or is filing a motion in a Superior Court for the appointment of a receiver under section 4 of this act, the commissioner, after providing notice and an opportunity for a hearing to the owner of the small water company, may authorize a person to temporarily manage and operate a small water company.

(b) The commissioner may appoint a person under this section by emergency order. Notice of such appointment shall be deemed adequate if the notice is mailed or hand-delivered to the last known address of the small water company.

(c) A temporary manager appointed under this section has the powers and duties necessary to ensure the continued operation of the small water company, the availability and potability of water and the provision of water at adequate volume and pressure to the consumers of the small water company, including the powers and duties to (1) read meters, (2) bill consumers for water services, (3) collect revenues, (4) disburse funds, (5) increase rates charged to consumers if such rate increase is necessary and approved by the commissioner, (6) access all small water company components, (7) conduct sampling of water, (8) make necessary repairs, as determined by the temporary manager in consultation with the commissioner, and (9) perform other acts necessary to assure continuous and adequate water service as authorized by the commissioner.

(d) The commissioner may require a bond of such temporary manager in accordance with section 52-506 of the general statutes.

(e) A temporary manager shall serve a term of one year, unless (1) specified otherwise by the commissioner, (2) an extension is requested by the Department of Public Health or the temporary manager and the commissioner grants such extension, (3) the temporary manager is discharged from such temporary manager's responsibilities by the commissioner, or (4) a receiver is appointed pursuant to the provisions of sections 4 to 13, inclusive, of this act.

(f) Not later than sixty days after appointment, the temporary manager shall provide to the commissioner an accounting of the assets and property the small water company received.

(g) The source of compensation for the temporary manager shall be the rates collected from the consumers of the small water company. The commissioner shall set the compensation at the time of appointment.

(h) The temporary manager shall report to the commissioner on a monthly basis. Such report shall include, but need not be limited to (1) an income statement for the relevant reporting period, (2) a summary of small water company activities, including, but not limited to, all repairs made to the water company, and (3) any other information deemed necessary by the commissioner.

(i) This section shall not affect the authority of the department to pursue enforcement against a small water company.

Sec. 15. (NEW) (Effective October 1, 2017) The Commissioner of Public Health, or an agent authorized by the commissioner to conduct any inquiry, investigation or hearing under the provisions of this section and sections 4 to 14, inclusive, of this act, shall have the power to inspect the premises of a water company, issue subpoenas, order the production of books, records or documents, administer oaths and take testimony under oath relative to the matter of such inquiry, investigation or hearing. At any hearing ordered by the Department of Public Health, the commissioner or such agent may subpoena witnesses and require the production of records, papers and documents pertinent to such inquiry. If any person disobeys such subpoena or, having appeared in obedience thereto, refuses to answer any pertinent question put to such person by the commissioner or such agent or to produce any records and papers pursuant to the subpoena, the commissioner or such agent may apply to the superior court for the judicial district of Hartford or for the judicial district wherein the person resides or wherein the business has been conducted, setting forth such disobedience or refusal, and the court shall cite such person to appear before the court to answer such question or to produce such records and papers.

This act shall take effect as follows and shall amend the following sections:

Section 1

October 1, 2017

New section

Sec. 2

October 1, 2017

25-32e(a) to (e)

Sec. 3

October 1, 2017

New section

Sec. 4

October 1, 2017

New section

Sec. 5

October 1, 2017

New section

Sec. 6

October 1, 2017

New section

Sec. 7

October 1, 2017

New section

Sec. 8

October 1, 2017

New section

Sec. 9

October 1, 2017

New section

Sec. 10

October 1, 2017

New section

Sec. 11

October 1, 2017

New section

Sec. 12

October 1, 2017

New section

Sec. 13

October 1, 2017

New section

Sec. 14

October 1, 2017

New section

Sec. 15

October 1, 2017

New section

Statement of Legislative Commissioners:

In Section 7(c), "sections 3 to 6, inclusive" was changed to "sections 4 to 6, inclusive"; in Section 10, "sections 3 to 9, inclusive" was changed to "sections 4 to 9, inclusive"; and in Section 15, "sections 3 to 14, inclusive" was changed to "sections 4 to 14, inclusive" for accuracy.

PH

Joint Favorable Subst.

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact: None

Municipal Impact: None

Explanation

This bill makes various changes affecting public water systems and the oversight of small water companies that are not anticipated to result in a fiscal impact to the Departments of Public Health and Energy and Environmental Protection or municipalities.

The Out Years

State Impact: None

Municipal Impact: None

OLR Bill Analysis

sHB-7220

AN ACT CONCERNING THE DEPARTMENT OF PUBLIC HEALTH'S RECOMMENDATIONS REGARDING SAFE DRINKING WATER.

SUMMARY

This bill makes various changes affecting public water systems and the oversight of small water companies. Among other things, the bill:

The bill defines a “small water company” as a water company, other than a state agency, that (1) supplies water to less than 1,000 people or 250 consumers or (2) is not required to submit a water supply plan to DPH (e.g., contingency procedures for public drinking water supply emergencies).

The bill also makes minor and technical changes.

EFFECTIVE DATE: October 1, 2017

1 — FISCAL AND ASSET MANAGEMENT PLANS

Plan Contents

The bill requires each water company to prepare a fiscal and asset management plan for all capital assets of each of the company's small community water systems (i.e., those regularly serving between 25 and 1,000 year-round residents).

The fiscal and asset management plan must include:

The bill requires the water company to begin creating the plan by assessing its hydropneumatic pressure tanks as its initial priority.

Under the bill, as under existing law, “water company” means any individual, municipality, or entity that owns, maintains, operates, manages, controls, or employs any pond, lake, reservoir, well, stream, or distributing plan or system that supplies water to two or more consumers or to 25 or more people on a regular basis.

Deadline

The bill requires water companies to complete the fiscal and asset management plan by January 1, 2020. But they must first complete an assessment review of the hydropneumatic pressure tanks at each of their small community water systems by May 1, 2018 on a form DPH prepares.

The bill also requires water companies to update the fiscal and asset management plan annually and make it available to DPH upon request.

Exceptions

The plan requirement does not apply to a water company that is (1) regulated by the Public Utilities Regulatory Authority, (2) required to submit a water supply plan to DPH, or (3) a state agency.

The bill deems the report requirement to relate to the purity and adequacy of water supplies for the purpose of imposing a penalty for violating statutory or regulatory requirements regarding public water supply purity, adequacy, or testing.

Regulations

The bill authorizes the DPH Commissioner to adopt regulations to implement the fiscal and asset management plan requirement.

2 — CIVIL PENALTIES

Publishing Civil Penalty Schedule ( 2)

Current law requires the DPH commissioner to adopt regulations establishing a schedule of civil penalties that may be imposed against water companies for violation of state laws and regulations regarding the purity, adequacy, and testing of public water supplies.

The bill instead requires the commissioner to publish the civil penalty schedule on the department's website if the penalty for a violation has not been established by statute. The commissioner must do this annually, or when he deems it necessary in response to any guidelines or rules issued by the federal Environmental Protection Agency.

Notwithstanding the Uniform Administrative Procedure Act, the bill does not require the commissioner to adopt or revise any regulations for imposing these civil penalties.

Within six months before publishing the civil penalty schedule on the DPH website, the commissioner must publish a notice in the Connecticut Law Journal of his intention to do so. The notice must include the civil penalty schedule and the date the commissioner intends to hold a public hearing on the matter. He must hold the hearing within 30 days after publishing the notice.

Notice of Violations ( 2)

By law, the DPH commissioner must notify a water company before imposing a civil penalty for failing to correct a violation within a specified date. He may do this by certified mail, return receipt requested, or personal service. The bill specifies that for the latter, the notification must be served to the address the water company filed with the department, or if the water company failed to do so, the company's last known address on file.

If the civil penalty is imposed for a continuing violation, the bill requires the notice to include the initial date the penalty is imposed. For an isolated violation, the notice must include the date for which it is imposed. By law, the notice must include additional information, such as a statement of the violation and the water company's right to a hearing.

Administrative Appeal ( 2)

By law, a water company can contest the penalty by applying to the DPH commissioner for an administrative hearing under the Uniform Administrative Procedure Act within 20 days after receiving notice of the penalty. The bill requires the application to include a detailed statement of all the grounds for contesting the penalty.

Existing law, unchanged by the bill, requires the water company to send a copy of the application to the health director of the municipalities in which the violation occurred or that use the water that was the subject of the violation. A water company aggrieved by a DPH order may appeal to Superior Court.

3-13 — SMALL WATER COMPANY RECEIVERSHIP

Notice and Hearing Requirements ( 4)

The bill authorizes the DPH commissioner to file a motion in Superior Court to appoint a receiver for a small water company.

The court must hold a hearing within 10 days after the date the motion is filed. The small water company owner or the owner's agent must be notified at least five days before the hearing date. DPH must also post the notice in conspicuous locations throughout the water company's distribution system for at least three days before the hearing date.

The bill also allows the court to appoint a receiver if DPH files an ex parte motion and the affidavits, testimony, or other evidence presented indicates that there is a reasonable likelihood a condition exists at the small water company that must be immediately remedied to ensure consumers' health, safety, and wellbeing.

Under the bill, the owner or the owner's agent must be served notice of the ex parte motion and order and the notice must be posted in a conspicuous place at the water company within 24 hours after the order is issued. (The bill does not specify who must notify the owner and post the notice.)

A hearing on the motion must be held within five days after the order is issued, unless the owner consents to a later hearing date.

The bill allows the owner to waive the above notice and hearing requirements.

Appointment of Receiver ( 5)

The bill requires the court to grant a motion to appoint a receiver if it finds the small water company (1) abandoned operations or (2) failed to comply with an order to correct a violation of the public health or environment laws or statutes that poses an immediate threat to the quality and adequacy of a water supply source.

Under the bill, a small water company has “abandoned operations” if it fails to:

Defense to a Receivership Motion ( 6)

Under the bill, it is a sufficient defense to a motion to appoint a receiver if the (1) small water company owner did not have reasonable time to correct a violation in an order described above or (2) the violation listed in the motion does not exist.

Receiver's Powers ( 7)

Under the bill, a receiver of a small water company must:

The bill specifies that the court may limit a receiver's powers to those necessary to solve a specific problem.

The bill authorizes the receiver to correct or eliminate any condition or violation that is prejudicial to the public health while remaining at the water company, provided the total cost of doing so does not exceed $3,000. If the receiver files a motion, the court may order expenditures exceeding this amount.

Under the bill, the receiver must, within 90 days after being appointed, take all necessary steps to stabilize the small water company's operation to ensure its consumers have available and potable water that is provided at an adequate volume and pressure.

Actions Filed Against a Small Water Company Under Receivership ( 7)

Under the bill, any action filed against a water company under receivership must be transferred to the court supervising the receiver. A receiver's appointment must act as a stay of such actions until the court terminates the stay, or orders otherwise.

Leases, Mortgages, and Other Contracts ( 8)

Under the bill, a receiver may not be required to honor a lease, mortgage, secured transaction, or other contract the small water company's owner entered into if, after a motion is made to the Superior Court, the court determines that the:

In the case of the latter, the receiver may apply to the court to set a reasonable rental, price, or interest rate to be paid for the duration of the receivership. The receiver may do this if he or she possesses real estate or goods necessary for the small water company's continued operation and they are related to the above listed transactions that the receiver is permitted to avoid.

The bill requires the court to hold a hearing within 15 days after the receiver makes such a motion. Any known owners of property involved in the motion must be notified at least 10 days before the hearing.

Under the bill, if the receiver pays an amount the court determines is reasonable, it constitutes a defense to any action against the receiver for (1) payment or (2) possession of the goods, security interest, or real estate subject to the lease or mortgage involved in the motion. But payment does not relieve the small water company owner from any liability for the difference between the amount the receiver paid and the amount due under the lease, mortgage, secured transaction, or contract.

The bill does not apply to a lease, mortgage, secured transaction, or contract entered into with a state- or federally-regulated financial institution.

List of Qualified Receivers ( 9)

The bill requires DPH to maintain and post on its website, a list of proposed interested and qualified receivers. The list must include individuals, corporations, associations, and partnerships with experience providing water service and a history of satisfactory water company operations.

The Superior Court may appoint anyone from the department's list to act as a receiver, but if the individual or entity declines, the court must appoint a receiver.

The bill prohibits a state employee, small water company owner, or person with a financial interest in the small water company to serve as its receiver. A person appointed as a receiver is prohibited from acquiring or having a current financial interest in the water company for up to five years after the date the receivership terminates.

The bill authorizes the court, at its discretion, to require the receiver to file a surety bond conditioned upon the receiver's faithful performance of his or her duties.

Removing a Receiver ( 10)

The bill authorizes the court to remove a small water company receiver at any time. If the receiver is removed, declines to act, or dies, the court that made the appointment may fill the vacancy.

Under the bill, a small water company receiver is entitled to a reasonable receiver's fee the court determines. The receiver is liable only in his or her official capacity for injury to a person or property by reason of the small water company's conditions. The receiver is not personally liable, except for acts or omissions that constitute gross, willful, or wanton negligence.

Receivership Costs ( 11)

The bill allows the receiver to pay the costs of operating the receivership by (1) using the rates collected from the small water company's consumers, and raising them if necessary; (2) selling or disposing of all or part of the company's real and personal property; or (3) both. The receiver may do this only if the Superior Court and DPH commissioner approve it.

The receivership costs include paying: (1) the receiver's service fees; (2) fees for attorneys, accountants, certified operators, engineers, or other provider of goods and services necessary to the receivership's operation; and (3) any other fees the court and DPH commissioner deem necessary.

Receiver's Filing Requirement ( 12)

The bill requires a small water company receiver to quarterly sign, swear, and file with the Superior Court clerk a (1) full and detailed account of his or her actions as the receiver for the preceding three months and (2) statement of all court orders passed during the preceding three months and the small water company's present condition and prospects. The receiver must then cause a motion for a hearing and approval to be placed on the short calendar.

The bill requires the receiver to do this the first week of each January, April, July, and October.

Termination of Receivership ( 13)

The bill authorizes the court to terminate a small water company's receivership and return the company to its owner if the receiver or owner files such a motion. The court must find that the small water company has been rehabilitated so that the violations or other conditions complained of no longer exist. In its termination order, the court must include terms it deems necessary to prevent these violations or conditions from recurring.

14 — TEMPORARY MANAGERS

Appointment

The bill allows the DPH commissioner to appoint a person by emergency order to temporarily manage and operate a small water company if:

The bill specifies that appointing a temporary manager does not affect DPH's authority to pursue enforcement actions against a small water company.

Powers and Duties

The bill grants a temporary manager the powers and duties necessary to ensure the (1) small water company's continued operation, (2) availability and potability of water, and (3) provision of water to consumers at adequate volume and pressure. Specifically, these powers and duties include:

The bill permits the DPH commissioner to require the temporary manager to file a surety bond conditioned upon the manager's faithful performance of his or her duties.

Term Limits and Compensation

Under the bill, the temporary manager must serve a one-year term unless:

Under the bill, the DPH commissioner must set the temporary manager's compensation at the time he or she is appointed. The temporary manager must be paid using the rates collected from the small water company's consumers.

Reporting Requirements

The bill requires the temporary manager, within 60 days after being appointed, to provide the DPH commissioner an accounting of the small water company's assets and property.

Additionally, the temporary manager must report monthly to the DPH commissioner (1) an income statement for the relevant reporting period, (2) a summary of the small water company's activities, including all repairs made; and (3) any other information the commissioner deems necessary.

15 — DPH INVESTIGATIONS, INQUIRIES, AND HEARINGS

The bill authorizes the DPH commissioner, or his agent authorized to conduct an inquiry, investigation, or hearing under the bill's provisions to inspect the premises of a small water company; issue subpoenas; order the production of books, records, or documents; and administer oaths and take testimony under oath.

If DPH orders a hearing, the commissioner or his agent may subpoena witnesses and require the production of records, papers, and documents pertaining to the inquiry. If a person disobeys the subpoena, refuses to answer pertinent questions, or fails to produce records and papers pursuant to the subpoena, the bill allows the commissioner or his agent to petition the Superior Court in Hartford to order the person to appear before the court and answer the questions or produce the documents.

COMMITTEE ACTION

Public Health Committee

Joint Favorable Substitute

Yea

23

Nay

3

(03/27/2017)

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