Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

American Water maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective.

The Company’s management, including the Chief Executive Officer and the Chief Financial Officer, conducted an evaluation of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of June 30, 2024.

Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of June 30, 2024, the Company’s disclosure controls and procedures were effective at a reasonable level of assurance.

Changes in Internal Control over Financial Reporting

The Company concluded that there have been no changes in internal control over financial reporting that occurred during the three months ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The following information updates and amends the information provided in the Company’s Form 10-K in Item 3—Legal Proceedings, and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, in Part II, Item 1—Legal Proceedings. Capitalized terms used but not otherwise defined herein have the meanings set forth in the Company’s Form 10-K and Form 10-Q. In accordance with the SEC’s disclosure rules, the Company has elected to disclose environmental proceedings involving the Company and a governmental authority if the amount of potential monetary sanctions, exclusive of interest and costs, that the Company reasonably believes will result from such proceeding is $1 million or more.

Alternative Water Supply in Lieu of Carmel River Diversions

Monterey Peninsula Water Supply Project

Coastal Development Permit Application

On April 24, 2024, the court granted defendants’ motion for judgment on the pleadings and dismissed one of MCWD’s four causes of action in its petition challenging the issuance of a coastal development permit for the Water Supply Project. The three remaining claims challenge the Coastal Commission’s substantive compliance with certain provisions of the California Environmental Quality Act, the California Coastal Act, and due process requirements in considering Cal Am’s application. Trial has been set for November 13, 2024.

Water Supply Project Land Acquisition and Slant Well Site Use

The July 15, 2024, trial date previously set by the Monterey County Superior Court for the City’s May 2020 lawsuit has been vacated pending receipt of the SWRCB’s expert advisory opinion. The court scheduled a status and trial setting conference for September 24, 2024.

Cal Am’s Action for Damages Following Termination of Regional Desalination Project (“RDP”)

A hearing on MCWD’s motion for judgment on the pleadings is scheduled for August 16, 2024. The trial date of August 5, 2024, has been vacated, and will be rescheduled at a later date.

Proposed Acquisition of Monterey System Assets — MPWMD Condemnation Action

MPWMD Condemnation Action

On February 26, 2024, Cal Am filed a motion requesting the Monterey County Superior Court dismiss the MPWMD’s eminent domain lawsuit seeking to condemn Cal Am’s Monterey system assets. An initial hearing on the motion was held on May 3, 2024, and a subsequent hearing is scheduled for August 23, 2024.

Dunbar, West Virginia Water Main Break Class Action Litigation

By order dated June 28, 2024, the Circuit Court set a new date of December 3, 2024, for a class trial on issues relating to duty and breach of that duty. This trial will not find class-wide or punitive damages. Mediation is scheduled to take place in August 2024.

Chattanooga, Tennessee Class Action Litigation

On June 14, 2024, the court issued its written order denying the Tennessee Plaintiffs’ motion to certify an amended business customer-only class and incorporating the court’s original November 6, 2023, denial of certification of a residential class. On June 21, 2024, the Tennessee Plaintiffs appealed both of the court’s orders denying class certification.

Mountaineer Gas Company Main Break

On May 31, 2024, the West Virginia Supreme Court denied the motion seeking referral of the four class action complaints and the Mountaineer Gas complaint to the West Virginia Mass Litigation Panel. The Kanawha County Circuit Court has set a trial date of February 2, 2026, for the four class action complaints.

On June 14, 2024, the judge in the Ruffin case partially granted the Ruffin plaintiff’s motion to consolidate the class action lawsuits before a single judge in Kanawha County Circuit Court by transferring all of the four class action lawsuits to her court but deferring as premature consolidation of the cases.

WVAWC’s motion to dismiss in part the complaint captioned Mountaineer Gas Company v. West Virginia-American Water Company was rendered moot after Mountaineer Gas voluntarily dismissed its implied indemnity count against WVAWC. On May 31, 2024, WVAWC answered the complaint.

On December 6, 2023, WVAWC initiated a process whereby Mountaineer Gas customers could file claims with WVAWC and seek payment from WVAWC of up to $2,000 in damages per affected household for the inconvenience arising from a loss of use of their appliances and documented out-of-pocket expenses as a result of the natural gas outage. In light of the diminishing number of new claims being filed, the claims process was concluded on March 8, 2024. As of June 30, 2024, a total of 589 Mountaineer Gas customers completed this claims process, and each of those customers has been paid by WVAWC an average of approximately $1,500. In return, these customers were required to execute a partial release of liability in favor of WVAWC.

On March 1, 2024, the staff of the WVPSC issued an initial memorandum in each separate general investigation for Mountaineer Gas and WVAWC. On April 24, 2024, the staff issued a final joint memorandum in the Mountaineer Gas general investigation stating its view that Mountaineer Gas responded appropriately, reasonably and according to Mountaineer Gas’s written procedures. The staff is making no recommendations for improvements to Mountaineer Gas and is recommending that the Mountaineer Gas general investigation be closed. On July 24, 2024, the staff issued a final joint memorandum in the WVAWC general investigation finding no indication of systematic failure by WVAWC and concluding WVAWC’s maintenance and operating procedures were adequate to ensure safe and reliable service, subject to the implementation by WVAWC of three recommended operational improvements. Both general investigations remain pending.

PFAS Multi-District Litigation

The Company has timely submitted to the PFAS MDL its Phase One claims forms under the 3M and DuPont settlements prior to the due date, which was extended by the MDL court to July 26, 2024.

On April 26, 2024, a potential class action settlement involving defendant Tyco Fire Products LP was filed with the MDL court to resolve claims brought in the MDL against this defendant by public water systems. On June 13, 2024, the MDL court granted preliminary approval to this settlement. Final approval by the MDL court of the settlement is required, and a final fairness hearing has been scheduled for November 1, 2024.

On May 21, 2024, an agreement in principle for a potential class action settlement with BASF Corporation was announced, which if approved would resolve claims brought in the MDL against this defendant by public water systems. The MDL court granted preliminary approval of the settlement on July 3, 2024, and set the matter for a fairness hearing on November 1, 2024. Final approval of the settlement by the MDL court is required after the fairness hearing, among other conditions to the settlement.