81R7843 TRH-D
By: Rose H.B. No. 1390
A BILL TO BE ENTITLED
AN ACT
relating to access by the members of electric cooperatives to
meetings of the boards of directors and certain information of the
electric cooperatives.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 161.002, Utilities Code, is amended by
adding Subdivision (2-a) to read as follows:
(2-a) "Board meeting" means a deliberation between a
quorum of the voting board, or between a quorum of the voting board
and another person, during which electric cooperative business or
policy over which the board has responsibility is discussed or
considered, or during which the board takes formal action. The term
does not include the gathering of a quorum of the board at a social
function unrelated to the business of the cooperative, or the
attendance by a quorum of the board at a regional, state, or
national convention or workshop, ceremonial event, or press
conference, if formal action is not taken and any discussion of
cooperative business is incidental to the social function,
convention, workshop, ceremonial event, or press conference.
SECTION 2. Section 161.064(b), Utilities Code, is amended
to read as follows:
(b) The bylaws may contain any provision for the regulation
and management of the affairs of the electric cooperative that is
consistent with the articles of incorporation and this chapter.
SECTION 3. Section 161.072, Utilities Code, is amended by
adding Subsections (c) through (m) to read as follows:
(c) Director elections shall be conducted in a manner that
is fair and open to all members of the electric cooperative.
(d) A board committee of a cooperative with more than
210,000 members may not cast a member's proxy vote in a director
election.
(e) A director who is standing for reelection to the board
of a cooperative with not more than 210,000 members may not serve on
a committee established under the bylaws for the purpose of
casting, or being authorized to cast, the proxy vote of a member in
a director election.
(f) A member's proxy vote may be cast in a director election
only if:
(1) a proxy form is sent by regular mail to each member
of record not later than the 30th day before the date of the meeting
at which proxy votes are counted;
(2) the proxy form designates each candidate who is an
incumbent director;
(3) an exact copy of the proxy form is posted on the
cooperative's Internet website, if the cooperative maintains a
website;
(4) the proxy form includes information describing the
process by which proxy votes are authorized and cast, including:
(A) the name of each member of the committee, if
any, established under the bylaws for the purpose of casting proxy
votes in a director election;
(B) the process prescribed in the bylaws for
selecting members to serve on the committee; and
(C) the districts represented by each committee
member, if applicable; and
(5) the proxy form contains the following statements,
in bold type:
(A) "If you grant the committee your proxy, you
are giving the committee full authority to vote your proxy for the
candidates you selected, or, if you did not select any candidates,
to vote your proxy for candidates the committee selects";
(B) "You may rescind your proxy at any time
before votes are cast at the meeting to elect directors"; and
(C) "State law prohibits any person from using
incentives or other enticements to encourage you to provide your
proxy in any board election."
(g) Subsections (d) and (f) may not be construed as limiting
the right of an individual member to collect or cast the proxy votes
of another member in a director election, if allowed by the bylaws.
(h) This section may not be construed as limiting the use of
a proxy as provided by Section 161.069 to establish a quorum to
transact business other than the election of a director.
(i) A person may not use an incentive or other enticement to
encourage a member to authorize another person to cast the member's
proxy vote in a director election.
(j) A cooperative with more than 210,000 members may elect
directors only by district. A member may vote for a director to
represent a district only if the member resides in that district.
(k) A cooperative with more than 210,000 members may
nominate qualified members as candidates in a director election
only through a written petition by members. The bylaws must:
(1) specify the number of printed names and dated
signatures a petition nominating a candidate must contain;
(2) specify a period within which a petition
nominating a candidate must be submitted to the cooperative; and
(3) specify that only members residing in a district
may sign a petition for the nomination of a candidate to represent
that district.
(l) If the bylaws of a cooperative with not more than
210,000 members allow a committee of members to nominate qualified
members as candidates in a director election, the bylaws must also:
(1) allow nominations to be made through one or more
written petitions by members;
(2) specify the number of printed names and dated
signatures a petition nominating a candidate must contain; and
(3) specify a period within which a petition
nominating a candidate must be submitted to the cooperative.
(m) A petition submitted under Subsection (l) must provide
on the petition the name and address of the member seeking
nomination and, if the cooperative nominates or elects directors by
district, the district the member seeks to represent.
SECTION 4. Section 161.075, Utilities Code, is amended to
read as follows:
Sec. 161.075. BOARD MEETINGS. (a) The board shall hold a
regular or special board meeting at the place and on [the] notice as
provided by Section 161.0751 and [prescribed by] the bylaws.
Except as provided by Section 161.0752, each member of the electric
cooperative is entitled to attend a regular or special board
meeting.
(b) The attendance of a director at a board meeting
constitutes a waiver of notice to the director of the meeting unless
the director attends the meeting for the express purpose of
objecting to the transaction of business at the meeting because the
meeting is not lawfully called or convened.
(c) A notice or waiver of notice of a board meeting given to
a director is not required to specify the business to be transacted
at the meeting or the purpose of the meeting.
(d) The board shall keep a record of each regular or special
board meeting, in the form of written minutes or a taped recording
of the meeting. A record of a meeting must state the subject of each
deliberation and indicate each vote, order, decision, or other
action taken by the board. The board shall make meeting records
available to a member for inspection and copying on the member's
written request to the board secretary or to a person the secretary
designates.
(e) A member attending a regular or special board meeting
may record all or part of the meeting by any means of audio or visual
reproduction, including a tape recorder or video camera.
(f) The board may adopt reasonable rules to maintain order
at a regular or special board meeting, including rules relating to
the location of recording equipment and the manner in which
recording may be conducted. A rule adopted by the board under this
section may not prevent or unreasonably impair a member from
exercising a right granted by this section.
SECTION 5. Subchapter B, Chapter 161, Utilities Code, is
amended by adding Sections 161.0751 and 161.0752 to read as
follows:
Sec. 161.0751. NOTICE OF BOARD MEETINGS. (a) The board
shall give members and the media written notice of the date, hour,
place, and subject of a regular or special board meeting. Notice of
a board meeting must be given at least 72 hours before the scheduled
time of the meeting by:
(1) posting a notice on a bulletin board in a place
convenient to members, at the electric cooperative's headquarters
and at each district office;
(2) posting a notice on the cooperative's Internet
website, if the cooperative maintains a website; and
(3) sending a notice by electronic mail to members of
the media who, before the time notice is required by this section,
requested notification of meetings.
(b) If the board recesses a regular or special board meeting
to continue the following regular business day, the board is not
required to post notice of the continued meeting if the recess is
taken in good faith and not to circumvent this section and Section
161.075. If a regular or special board meeting is continued to the
following regular business day, and on that following day the board
continues the meeting to another day, the board shall give written
notice as required by this section of the meeting continued to that
other day.
(c) In the event of an emergency or urgent necessity that
requires immediate board action to meet a reasonably unforeseeable
situation, notice may be given in the manner prescribed by
Subsection (a) at least two hours before a regular or special board
meeting is convened, in order to:
(1) call an emergency board meeting; or
(2) add a subject to the agenda of a previously
scheduled board meeting.
(d) Notice under Subsection (c) shall clearly identify the
emergency or urgent necessity for which the notice is given. If the
board adds a subject to the agenda of a previously scheduled regular
or special board meeting, the board secretary or person the
secretary designates shall post a copy of the revised agenda on the
electric cooperative's Internet website, if the cooperative
maintains a website, and physically at the cooperative's
headquarters and each district office, not less than two hours
before the meeting convenes.
(e) If, at a regular or special board meeting, a member
makes an inquiry regarding a subject for which notice has not been
given as required by this section, the notice provisions of this
section do not apply to:
(1) a statement by the board of specific factual
information given in response to the inquiry; or
(2) a recitation of existing policy in response to the
inquiry.
(f) Any deliberation of or decision relating to the subject
of an inquiry made under Subsection (e) shall be limited to a
proposal to place the subject on the agenda for a subsequent board
meeting.
Sec. 161.0752. EXECUTIVE SESSIONS. (a) Before the board
calls an executive session, the board shall convene in a regular or
special board meeting for which notice has been given as provided by
Section 161.0751. During that board meeting, the presiding director
may call an executive session by announcing that an executive
session will be held to deliberate a matter described by Subsection
(d) and identifying the specific subdivision of Subsection (d)
under which the executive session will be held.
(b) Except as provided by Subsection (c), a final action,
decision, or vote on a matter deliberated in an executive session
may only be made in a regular or special board meeting for which
notice has been given as provided by Section 161.0751.
(c) The board may take action in an executive session for
matters described by Subsections (d)(2), (4), and (5).
(d) The board may hold an executive session to which the
members do not have access to deliberate:
(1) anticipated or pending litigation, settlement
offers, or interpretations of the law with the electric
cooperative's legal counsel and with any other person the board
considers necessary;
(2) the purchase, exchange, lease, or value of real
property, if the board determines in good faith that deliberation
in an open board meeting may have a detrimental effect on the
electric cooperative;
(3) business and financial issues relating to the
negotiation of a contract, if the board determines in good faith
that deliberation in an open board meeting may have a detrimental
effect on the position of the electric cooperative;
(4) personnel issues, and complaints or charges
against a director or electric cooperative employee or consultant,
unless the director or employee who is the subject of the
deliberation requests a public hearing;
(5) utility-related matters and commercial
information that the board determines in good faith are related to
the electric cooperative's competitive activity but only to the
extent the board specifically determines that disclosure of the
information could give an advantage to competitors or potential
competitors; or
(6) issues related to security of the electric
cooperative, including security personnel, security devices, and
security audits.
(e) The board secretary or a person the secretary designates
shall make and keep a written or audio record of each executive
session. The secretary shall preserve the record for at least two
years following the session. The record must include:
(1) a statement of the subject matter of each
deliberation;
(2) a record of any further action taken; and
(3) an announcement by the presiding director at the
beginning and end of the session indicating the date and time.
SECTION 6. Section 161.077, Utilities Code, is amended by
adding Subsection (d) to read as follows:
(d) The provisions of this chapter that apply to the board
also apply to the executive committee.
SECTION 7. Subchapter B, Chapter 161, Utilities Code, is
amended by adding Sections 161.080, 161.081, 161.082, and 161.083
to read as follows:
Sec. 161.080. MEMBER'S RIGHT OF ACCESS TO RECORDS. (a)
Except as provided by Subsection (c), a member of an electric
cooperative may, at any reasonable time and on written request that
states the purpose of the request:
(1) inspect books and records of the cooperative
relevant to that purpose; and
(2) at the member's own expense, copy records the
member is entitled to inspect under this section.
(b) An electric cooperative may charge a reasonable fee to
the member if fulfilling the member's request will require a large
amount of employee time.
(c) An electric cooperative may reject or limit a member's
request to inspect its books and records if:
(1) the member refuses to warrant and furnish to the
electric cooperative, on the electric cooperative's request, an
affidavit that:
(A) the inspection is desired for a purpose
reasonably related to the business of the cooperative; or
(B) the member does not intend to sell or offer to
sell any list of members of the cooperative or assist another person
in obtaining a list of members for that purpose;
(2) the release of the information sought by the
member, such as individual member information or personnel
information, would unduly infringe on or invade the privacy of a
person;
(3) the inspection is sought for a dishonest purpose;
or
(4) the records sought to be inspected pertain to
trade secrets or information that is privileged, confidential, or
proprietary.
Sec. 161.081. POLICIES AND AUDITS. (a) The board shall
adopt written policies relating to:
(1) travel expenditures for board members, officers,
and employees;
(2) reimbursement of expenses for board members,
officers, and employees;
(3) conflicts of interest for board members, officers,
and employees;
(4) whistleblower protections;
(5) criteria and procedures for the selection,
monitoring, review, and evaluation of outside vendors or contracted
professional services;
(6) budgets for use in planning and controlling costs;
and
(7) the creation of a committee that audits the
actions of the board.
(b) A cooperative shall provide for an independent
financial audit, to be performed annually by an unaffiliated entity
that is professionally qualified to perform such an audit.
(c) The state auditor may audit the financial transactions
and operations of a cooperative, at the cooperative's expense.
Sec. 161.082. COMPLAINTS BY MEMBERS. (a) In this section,
"commission" means the Public Utility Commission of Texas.
(b) A member may file a written complaint with the general
manager of the cooperative if the member is aggrieved by an action
of the board or by an employee of the board or of the cooperative
that the member alleges infringes on a right of the member under
this chapter.
(c) Not later than the 20th day after the date the general
manager receives a complaint under Subsection (b), the general
manager shall take corrective action regarding the complaint, if
the general manager determines that the action complained of
infringed on the member's rights under this chapter.
(d) If the general manager determines that the action
complained of did not infringe on the member's rights under this
chapter, or if the general manager otherwise fails to resolve the
member's complaint to the member's satisfaction before the 21st day
after the general manager receives the member's complaint, the
member may file a written complaint with the commission. A
complaint filed with the commission under this subsection must:
(1) identify the electric cooperative by name and
address;
(2) describe in detail the nature of the member's
complaint; and
(3) include copies of documents relevant to the
member's complaint, including:
(A) any relevant written request made by the
member to the cooperative;
(B) the written complaint made by the member to
the general manager under Subsection (b); and
(C) any relevant response from the cooperative
regarding a request or complaint.
(e) In reviewing a member's complaint under this section,
the commission may request that the cooperative provide to the
commission any information relevant to the complaint. The
commission must give a cooperative a reasonable opportunity to
inspect and copy the requested information before providing the
information to the commission. The commission shall designate an
employee of the commission to be the person responsible for
receiving, inspecting, or copying information received under this
subsection.
(f) An electric cooperative shall cooperate with a request
for information under Subsection (e) and promptly provide the
requested information to the commission's designated employee. The
commission may not disclose to any person information provided by a
cooperative in response to the request unless:
(1) the commission is required by a court to provide
the information to the person;
(2) the person is an authorized employee of the
commission; or
(3) the cooperative that provided the information
consents to the disclosure.
(g) The commission shall give a cooperative notice before
using information provided in response to a request under
Subsection (e) in a contested case hearing. On objection by the
cooperative that the information is confidential or sensitive, the
administrative judge presiding over the contested case hearing
shall determine whether the information is admissible in the
hearing.
(h) The commission shall return to a cooperative any
information provided under this section that is confidential or
sensitive to the cooperative.
Sec. 161.083. ALTERNATIVE DISPUTE RESOLUTION. The Public
Utility Commission of Texas may refer a complaint made under
Section 161.082(d) to the State Office of Administrative Hearings
as provided by Section 14.0025 for alternative dispute resolution
if the commission determines a referral is in the public interest.
SECTION 8. Subchapter C, Chapter 161, Utilities Code, is
amended by adding Sections 161.126 and 161.127 to read as follows:
Sec. 161.126. PROHIBITION ON ACQUISITION OF GENERATOR
CAPACITY BY CERTAIN ELECTRIC COOPERATIVES. An electric cooperative
with more than 210,000 members that provides retail electric
service may not acquire equipment capable of generating electricity
for sale unless the Public Utility Commission of Texas first
approves of the acquisition. The commission by rule shall
establish the standards and procedures by which it will approve an
electric cooperative's acquisition of electric generation
capacity.
Sec. 161.127. NOTIFICATION OF CERTAIN INVESTMENTS. Not
later than the 30th day following the completion of a transaction
that results in a cooperative or an affiliate of the cooperative
creating, acquiring, or receiving an interest in an entity that
does not generate, transmit, or distribute electricity, the
cooperative shall provide a notice to members that contains:
(1) the name of the entity;
(2) a description of the entity;
(3) the reasons for the decision to enter into the
transaction;
(4) a description of the costs associated with the
transaction, and the method of financing for those costs; and
(5) a description of the anticipated effect the
transaction will have on the cooperative's electric energy rates or
prices.
SECTION 9. (a) The changes in law made to Section 161.072,
Utilities Code, as amended by this Act, apply only to a director
election held on or after the effective date of this Act. A director
election held before the effective date of this Act is subject to
the law in effect on the date the election is held, and that law is
continued in effect for that purpose.
(b) The changes in law made by Section 161.075, Utilities
Code, as amended by this Act, and by Sections 161.0751 and 161.0752,
Utilities Code, as added by this Act, apply only to a meeting
convened on or after the effective date of this Act. A meeting
convened before the effective date of this Act is subject to the law
in effect on the date the meeting is held, and that law is continued
in effect for that purpose.
(c) The changes in law made by Sections 161.080, 161.082,
and 161.083, Utilities Code, as added by this Act, apply only to a
request to inspect records submitted on or after the effective date
of this Act. A request submitted before the effective date of this
Act is subject to the law in effect on the date of the request, and
that law is continued in effect for that purpose.
(d) The changes in law made by Section 161.127, Utilities
Code, as added by this Act, apply only to a transaction that is
completed on or after the effective date of this Act. A transaction
that is completed before the effective date of this Act is subject
to the law in effect on that date, and that law is continued in
effect for that purpose.
SECTION 10. This Act takes effect September 1, 2009.