An Act To Establish the Locally Governed Water District Act
Maine Legislature, Session 121, LD 1359
Committee: Utilities and Energy
Sponsors: DAGGETT, HOTHAM, SUSLOVIC, BROMLEY, DAMON, MAYO, BLISS, BRUNO, MARLEY, MOODY, USHER

Legislative Document 
No. 1359 
S.P.447 
In Senate, March 13, 2003 
An Act To Establish the Locally Governed Water District Act 
Reference to the Committee on Utilities and Energy suggested and ordered printed. 
Presented by President DAGGETT of Kennebec. 
JOY J. O'BRIEN 
Secretary of the Senate 
Cosponsored by Representative HOTHAM of Dixfield, Representative SUSLOVIC of Portland 
and Senators: BROMLEY of Cumberland, DAMON of Hancock, MAYO of Sagadahoc, 
Representatives: BLISS of South Portland, BRUNO of Raymond, MARLEY of Portland, 
MOODY of Manchester, USHER of Westbrook. 
Printed on recycleJ paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. I. 35-A MRSA c. 62 is enacted to read: 
CHAPTER 62 
LOCALLY GOVERNED KATER DISTRICTS 
§6201. 
Short title 
This chapter may be known and cited as "the Locally Governed 
Water District Act. " 
§6202. 
Definitions 
As 
used 
in this 
chapter, 
unless 
the 
context 
otherwise 
indicates, the following terms have the following meanings. 
1. 
Charter. 
"Charter" has the same meaning as set forth in 
section 6402, subsection 1. 
2. 
Consumer owned water 
utility" has the same meaning 
subsection 1-A. 
utility. 
"Consumer owned 
water 
as set forth in 
secti",o""n,----",6-"",1",0...",1,-,-, 
3. 
Governing body. 
"Governing body" has the same meaning 
as set forth in section 6101, subsection I-B. 
4. 
Locally governed water 
water district" means 
a 
consumer 
been selected by the commission 
project described in section 6203. 
district. 
"Locally 
governed 
owned water utility that has 
to participate in the pilot 
5. 
Kater 
district; 
district. 
"Water 
district" 
or 
"district" has the same meaning as set forth in section 6101 , 
subsection 3. 
§6203. 
Local governance pilot project 
1. 
Local governance pilot project. 
The commission shall 
establish a local governance pilot project, referred to in this 
chapter as "the pilot project." to determine whether economic 
regulation 
of 
consumer-owned 
water 
districts 
should 
be 
transferred to the local level in a 
manner similar to other 
quasi municipal entities in the State. 
The 
commission shall 
oversee the pilot project in accordance with this section. 
2. 
Designation of participants. 
Within 6 months after the 
effective date of this section, the commission shall designate no 
more 
than 
percent of 
the 
consumer owned 
water utilities 
Page l-LR0927(1) 
operating in the State to participate in the pilot project. 
The 
participating utilities must include at last one representative 
from each of the following classes of districts: 
A. 
A large district serving an area with a population over 
100,000 people: 
B. 
A 
medium sized 
district 
serving 
an 
area 
with 
a 
population over 10,000 people but under 100,000 people: and 
c. 
A small district serving an area with a population under 
10,000 people. 
At least one of the participating districts must be a municipal 
water district. 
3. 
Election by participating water utility. 
To qualify for 
selection by the commission under subsection 1, the governing 
body of the consumer-owned water utility must affirmatively vote 
to participate in the pilot project. 
The 
election must 
be 
certified by the secretary or clerk of the utility. 
Prior to 
taking the vote, the utility shall hold a public hearing at which 
the Public Advocate and any customers of the utility may testify 
and may question the utility's officials regarding participation 
in the pilot project. Public notice of the time, date, location 
and purpose of the hearing must be made no less than 14 days in 
advance of the hearing in a newspaper of general circulation in 
the area encompassed by the utility. 
In addition, the utility 
shall provide one notice to each of its customers containing the 
same 
information in the public notice, 
which notice must 
be 
distributed by mail or other similar means no less than 14 days 
prior to the hearing. 
A copy of the notice must be provided 
concurrently to the commission and the Public Advocate. 
4. 
Municipal 
approval. 
If 
the 
governing 
body 
of 
the 
consumer-owned water utility votes to participate in the pilot 
project pursuant to subsection 3, then the municipal officers of 
a municipality within the consumer-owned water utility's service 
area shall vote on whether to approve the utility's election. 
For utilities serving more than one municipality, the approval of 
municipalities representing a majority of the population within 
the utility's service area is required. 
Prior to requesting a 
vote by any municipality under this subsection, the utility shall 
provide to the clerk of the municipality a copy of the utility's 
certified vote pursuant to subsection 2. 
5. 
Term 
of 
pilot 
project. 
Once 
designated 
by 
the 
commission as a local governed water district. a utility is a 
locally governed water district until June 1, 
2007. 
At the 
expiration 
of 
the 
pilot project, 
a 
locally 
governed 
water 
district resumes business as a consumer-owned water utility. 
The 
commission may discontinue the project prior to February 1, 2007 
for one or more of the utilities if it determines, 
following 
notice 
and 
publi~ 
hearing, 
that 
local 
governance 
by 
the 
participating utility is not in the public interest. 
Public 
notice of the time, date, location and purpose of the hear ing 
must be made no less than 14 days in advance of the hearing in a 
newspaper of general circulation in the area encompassed by the 
utility. 
§6204. 
Scope 
1. 
Chapter 
governs 
affairs. 
provision of this Title, 
except as 
sUbsection 
2, 
this 
chapter 
governs 
governed water districts. 
Notwithstanding 
any 
other 
specifically provided in 
the 
affairs 
of 
locally 
2. 
Regu1ation of districts. 
To the extent applicable to 
water utili ties, the following laws apply to locally governed 
water districts: 
A. 
Section 706, subsections 3, 4, 5 and 6; 
B. 
Section 761, subsection 3; 
C. 
Section 2102; 
D. 
Section 2110, but only to the extent the governing boQy 
of 
a 
locally 
governed 
water 
district 
consents 
to 
the 
extension of service under section 2110; 
E. 
Sections 2303, 2307, 2308 and 2309; 
F. 
Chapter 25; 
G. 
Section 6103: 
H. 
Section 6110; 
I. 
Section 6111; 
J. 
Chapter 64, as applicable pursuant to the express terms 
of that chapter or the express terms of the charter of the 
locally governed water district, except that: 
(1) 
Section 6401, subsection 3 and section 6414 do not 
apply; and 
(2) 
Notwithstan~d~i~n~g~~s.e~~c~t~i~o~n~~6~4~0~8L' __ ~s~u~b~s~e~c~t~~~'~o~n~~2 __ ~a~n=d 
..,s",e,""c~t~~,,-· o~n~.><6-"4-"0,-=9'--"L---,t""h",e",------<pl:'-"-r",o--"v-=i,""s<"i"-,o",n...",s __ ,,,o-,,,f~-,,,s-"e,-"c,-,t~~",-' o=n""s,------,,6-'.7--,O,--,1"'-L-' _6702 , 
6703 and 6704 do not apply: 
K. 
Section 6704-Aj 
L. 
Section 6705; and 
M. 
Section 6706. 
The application of these laws is not intended to permit the 
commission to issue any order or condition regulating locally 
governed water districts except as specifically permitted under 
this chapter. 
This section may not be interpreted to affect the scope or 
application of any provision of law outside this Title. 
Although 
this chapter provides for a reduced level of regulation by the 
commission of locally governed water districts, the districts 
remain water utilities for purposes of the applicable provisions 
of this Title listed in subsection 2 and for all laws outside of 
this Title. 
Any reference outside this Title to entities that 
include 
water 
utilities, 
including, 
but 
not 
limited 
to, 
references 
to 
public 
utilities, 
water 
districts 
and 
public 
service corporations, includes locally governed water districts. 
§6205. 
Establishment of rates 
1. 
Authority. 
The governing body of a locally governed 
water district shall establish rates, tolls, deposits, customer 
contributions and charges in accordance with this section. 
2. 
Provide 
revenue. 
The 
governing 
body 
of 
a 
locally 
governed water district may establish rates or charges to provide 
revenue to the district in order to carry out any lawful purpose 
~o~f,-----~t=h=e~-=l-"o~c,-"a~l~l~y~~g-",o--"v~e~r~n=e~d~_w~a~t~e~r~ district, 
including, 
but 
not 
limited to: 
A. 
Paying 
the 
current 
expenses 
for 
operating 
and 
maintaining the water 
system 
and to provide 
for 
normal 
renewals and replacements: 
B. 
Providing 
for 
the 
payment 
of 
the 
interest 
on 
the 
indebtedness created or assumed by the district:. 
C. 
Creating a sinking fund for the extinguishment of term 
indebtedness; 
D. 
Providing 
annual 
principal 
payments 
on 
serial 
indebtedness created or assumed by the district; 
E. 
Providing for a contingency reserve fund to pay losses 
of the district in the event of insufficient revenues; 
F. 
Providing for a water supply protection fund to acquire 
interests in land in order to protect the district's sources 
of supply; 
G. 
Providing for system developments related to an increase 
in demand for service; and 
H. 
Providing for capital improvements and expansions to the 
system. 
3. 
Process. 
Before the adoption of a 
new rate schedule 
under this section, the governing body of a 
locally governed 
water district shall hold a public hearing regarding the proposed 
rate schedule. 
The governing body shall publish the proposed 
rate schedule and notice of the hearing in a newspaper having a 
general circulation in the district not less than 7 days prior to 
the hearing. 
The district shall mail to each ratepayer a notice 
of the public hearing and the proposed new rate schedule not less 
than 14 days prior to the hearing. Once a proposed rate schedule 
becomes final, a copy of the rate schedule must remain on file at 
the main office of the district for public information. 
4. 
Just and reasonable rates. 
The governing body of 
a 
locally governed water district shall establish rates that are 
just 
and 
reasonable 
and 
that 
do 
not 
give 
any 
undue 
or 
unreasonable preference, advantage, prejudice or disadvantage to 
a particular person. 
This subsection is not intended to limit 
the ability of 
a 
locally governed water district to 
charge 
different 
rates 
or 
enter 
into 
special 
contracts 
upon 
a 
determination by the governing body that such a practice is in 
the best interest of the district. 
5. 
Fire protection charges; cost allocation. 
A locallj': 
governed water district shall allocate as a percentage of gross 
revenue its charges for water service for fire protection in 
accordance with the standards, terms and conditions established 
in 
any 
commission 
rules 
governing 
such 
allocation 
for 
consumer-owned water utilities, or, if no such rules exist, based 
on the results of a full allocation study of the district's water 
system. 
§6206. 
Eminent domain 
A 
locally 
governed 
water 
district 
has 
eminent 
domain 
authority as specified in its charter, except that any provision 
in the charter that refers to a section of this Title that by the 
terms of this chapter does not apply to the district does not 
cause that section to apply. 
§6207. 
Annual audit 
A locally governed water district shall conduct an annual 
audit of its books and records by an independent accountant. 
Within 3 months after the audit is completed, the district shall 
submit a copy of the audit to the commission. 
For good cause 
shown, the commission may extend the deadline for submitting a 
copy of the audit. 
§6208. 
Service standards; appeal 
1. 
Local option; appeal. 
The governing body of a locally 
governed water district may elect to create a process for appeals 
of its decisions to another person, board or entity, including an 
ombudsman or appeals board appointed by the governing body, that 
may lawfully review and decide such appeals. 
The governing body 
may provide for appeals of any action of the governing body, 
including, but not limited to, actions regarding matters relating 
to denial or termination of service; 
terms and conditions of 
service; and billing, metering and collection for service. 
The 
governing body shall establish procedures concerning the manner 
in which such appeals may be taken. 
2. 
Final action. 
If the governing body establishes an 
appeal process under subsection 1, a decision of the governing 
body that has been appealed does not become a final decision of 
the district for purposes of subsection 3 until a decision on 
that appeal has been made. 
In all other cases, a decision of 
the governing body is 
a 
final decision of the district for 
purposes of subsection 3. 
3. 
Right of appeal. 
Except as otherwise provided in the 
charter 
of 
a 
locally 
governed 
water 
district. 
any 
person 
aggrieved by a final decision of the district has a right to 
appeal to the Superior Court on g;uestions of law in the same 
manner as an appeal taken to the Law Court from a judgment of the 
Superior Court in a civil action. 
4. 
Other actions. 
A person may bring an action under the 
Maine Rules of Civil Procedure, Rule 80B to review any action or 
failure or refusal to act by a locally governed water district. 
Nothing in this section may be interpreted to limit any rights of 
action or appeal that may exist by operation of other law. 
§6209. 
Relation to private and special laws 
This chapter is not intended to limit or restrict the terms 
of a private and special law or a valid charter of a locally 
governed water district. except that a 
law or charter may not 
prohibit or interfere with the ability of a consumer-owned water 
utility to make an election under section 6203, subsection 2. 
§62l0. 
Rules 
The commission has authority to adopt rules to carry out 
this chapter. 
Rules adopted pursuant to this chapter are routine 
technical rules as defined in Title 5, chapter 375, subchapter 
2-A. 
Sec. 2. Interim report. 
No later than October 31, 
2006, the 
Public Utilities Commission shall submit an interim report that 
includes the commission's findings and recommendations concerning 
the local governance pilot project established in this Act for 
presentation to the joint standing committee of the Legislature 
having jurisdiction over public utilities matters. 
SUMMARY 
This bill permits consumer-owned water utilities to exercise 
local control by participating in a pilot project that allows 
them to opt out of regulation by the Public Utilities Commission 
with respect to their rates, 
terms 
of 
service 
and business 
affairs. 
The bill also requires the Public Utili ties Commission 
to submit a report by October 31, 
2006 to the joint standing 
committee 
of the Legislature having jurisdiction over 
public 
utilities matters.