WHEREAS, we believe in full disclosure of American Water’s (“AWK”) direct and indirect lobbying activities and expenditures to assess whether AWK’s lobbying is consistent with its expressed goals and in shareholders’ best interests.

RESOLVED, the shareholders of AWK request the preparation of a report, updated annually, disclosing:

1. Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.

2. Payments by AWK used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.

3. AWK’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.

4. escription of the decision-making process and oversight by management and the Board for making payments described in sections 2 and 3 above.

For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which AWK is a member.

Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels. Neither “lobbying” nor “grassroots lobbying communications” include efforts to participate or intervene in any political campaign or to influence the general public or any segment thereof with respect to an election or referendum.

The report shall be presented to the Audit Committee or other relevant oversight committees and posted on AWK’s website. 

Supporting Statement  Since 2011, AWK has spent at least $1.7 million on federal lobbying. And AWK also lobbies extensively at the state level, where disclosure is uneven or absent.  For example, AWK spent $1,343,186 lobbying in New Jersey for 2010 – 2018 and $1,765,786 lobbying in California in 2017 - 2018.

AWK serves on the board of the National Association of Water Companies (NAWC), which spent $4,306,500 on lobbying from 2010 – 2018. AWK does not disclose its trade association memberships, nor payments and amounts used for lobbying. AWK only discloses trade association payments used for political contributions.  This leaves a serious disclosure gap, as trade associations generally spend far more on lobbying than on political contributions. And AWK does not disclose its payments to tax-exempt organizations that write and endorse model legislation, such as its support for the American Legislative Exchange Council (ALEC).

We are concerned that AWK’s lack of lobbying disclosure presents reputational risks. AWK’s ALEC involvement has drawn scrutiny,[1] and over 110 companies have publicly left ALEC. AWK uses the Global Reporting Initiative (GRI) for sustainability reporting, yet fails to report “any differences between its lobbying positions and any stated policies, goals, or other public positions” under GRI Standard 415.

This proposal received nearly 40 percent support in 2019 out of votes cast for and against.

[1] https://thinkprogress.org/private-water-industry-defends-alec-membership-e640861248da/