Texas 2009 81st Regular

Texas Senate Bill SB921 House Committee Report / Bill

Filed 02/01/2025

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                    By: Fraser S.B. No. 921
 Substitute the following for S.B. No. 921:
 By: Solomons C.S.S.B. No. 921


 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. Subchapter A, Chapter 161, Utilities Code, is
 amended by adding Section 161.006 to read as follows:
 Sec. 161.006.  NONAPPLICABILITY. The following sections of
 this chapter do not apply to an electric cooperative of which one or
 more members is another electric cooperative:
 (1) Sections 161.072(d) through (m);
 (2) Sections 161.075(a), (d), (e), and (f);
 (3) Section 161.0751;
 (4) Section 161.077(d);
 (5) Section 161.080;
 (6) Section 161.081;
 (7) Section 161.082;
 (8) Section 161.126; and
 (9) Section 161.127.
 SECTION 3. Subsection (b), Section 161.064, 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 4. 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
 170,000 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 170,000 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 170,000 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 170,000 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
 170,000 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 5. 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 time specified in
 [on] the notice required by Section 161.0751 and [prescribed by]
 the bylaws.
 (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)  Except as provided by this section, each member of the
 electric cooperative is entitled to attend a regular or special
 board meeting. A person who is not a member of the cooperative may
 not attend a regular or special board meeting.
 (e)  At the board's discretion, the board may convene an
 executive session to which the members do not have access to
 deliberate and take action on sensitive matters, such as matters
 involving confidential personnel information, contracts, lawsuits,
 real estate transactions, competitively sensitive information,
 information related to the security of the electrical system or the
 cooperative, or other privileged, confidential, or proprietary
 information.
 (f)  The board shall reconvene the open session of the
 regular or special board meeting to announce the final action taken
 on a matter discussed in executive session, except matters
 involving confidential personnel information, real estate
 transactions, competitively sensitive information, or security
 information.
 (g)  The board secretary or person designated by the
 secretary shall make and keep written minutes of each regular or
 special board meeting.
 (h)  The board shall adopt and comply with procedures for
 providing a member with access to the entirety of a regular or
 special board meeting, other than an executive session.
 (i)  The board secretary or person designated by the
 secretary shall make and keep a written or audio record of each
 executive session. The secretary shall preserve the record for at
 least two years after 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.
 (j)  Subsections (e), (f), (g), (h), and (i) apply to an
 electric cooperative with more than 170,000 members.
 (k)  Each electric cooperative with not more than 170,000
 members shall hold an election every five years on the question of
 whether to make Subsections (e), (f), (g), (h), and (i) applicable
 to the electric cooperative.
 SECTION 6. Subchapter B, Chapter 161, Utilities Code, is
 amended by adding Section 161.0751 to read as follows:
 Sec. 161.0751.  NOTICE OF BOARD MEETINGS. (a) The board
 shall give members notice of the date, hour, place, and planned
 agenda of a regular or special board meeting. Notice of a board
 meeting must be given at least three days 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 main office and
 at each district office;
 (2)  posting a notice on the cooperative's Internet
 website, if the cooperative maintains a website; and
 (3)  providing a copy of the notice to a member on a
 request by the member.
 (b)  In the event of an emergency or urgent matter, notice
 may be given in the manner prescribed by Subsection (a) at any time
 before a regular or special board meeting is convened. An action
 taken by the board at a meeting for which notice is given under this
 subsection must be ratified by the board at the next meeting for
 which notice is given under Subsection (a)
 SECTION 7. 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 8. Subchapter B, Chapter 161, Utilities Code, is
 amended by adding Sections 161.080, 161.081, and 161.082 to read as
 follows:
 Sec. 161.080.  MEMBER'S RIGHT OF ACCESS TO RECORDS. (a) (a)
 Except as provided by Subsection (c), a member of an electric
 cooperative may, at any reasonable time and on written request that
 states a proper purpose for the request, inspect and copy the books
 and records of the cooperative relevant to that purpose.
 (b)  An electric cooperative may charge a member for the cost
 of providing information under Subsection (a).
 (c)  An electric cooperative may limit or deny a member's
 request to inspect its books and records if the member:
 (1) does not meet the requirements of Subsection (a);
 (2)  seeks information the release of which would
 unduly infringe on or invade the privacy of a person;
 (3) seeks information related to a trade secret;
 (4)  seeks personnel information the disclosure of
 which would violate the law or constitute a clearly unwarranted
 invasion of personal privacy;
 (5) seeks information related to:
 (A)  pending or reasonably anticipated
 litigation;
 (B)  a real estate transaction for a project that
 has not been formally announced or for which contracts have not been
 formally awarded;
 (C)  the cooperative's competitive activity,
 including commercial information and utility-related matters that
 would, if disclosed, give an advantage to a competitor or
 prospective competitor; or
 (D)  the security of the cooperative's electrical
 system; or
 (6)  seeks information that is confidential,
 privileged, or proprietary.
 Sec. 161.081.  POLICIES AND AUDIT. (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)  An electric 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.
 Sec. 161.082.  COMPLAINTS BY MEMBERS. (a) A member may file
 a written complaint with the general manager of the electric
 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 Sections 161.072,
 161.075, 161.0751, 161.080, 161.081, and 161.126.
 (b)  Not later than the 20th day after the date the general
 manager receives a complaint under Subsection (a), 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 Sections 161.072, 161.075,
 161.0751, 161.080, 161.081, and 161.126.
 (c)  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 attorney general's
 consumer protection division. A complaint filed with the attorney
 general 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 (a); and
 (C)  any relevant response from the cooperative
 regarding a request or complaint.
 (d)  In reviewing a member's complaint under this section,
 the attorney general may request that the cooperative provide to
 the attorney general any information relevant to the complaint.
 The attorney general must give a cooperative a reasonable
 opportunity to inspect and copy the requested information before
 providing the information to the attorney general. The attorney
 general shall designate an employee of the office of the attorney
 general to be the person responsible for receiving, inspecting, or
 copying information received under this subsection.
 (e)  An electric cooperative shall cooperate with a request
 for information under Subsection (d) and promptly provide the
 requested information to the attorney general's designated
 employee. The attorney general may not disclose to any person
 information provided by a cooperative in response to the request
 unless:
 (1)  the attorney general is required by a court to
 provide the information to the person;
 (2)  the person is an authorized employee of the office
 of the attorney general; or
 (3)  the cooperative that provided the information
 consents to the disclosure.
 (f)  The attorney general shall return to a cooperative any
 information provided under this section that is confidential or
 sensitive to the cooperative.
 SECTION 9. 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 170,000 members that provides retail electric
 service may not acquire equipment capable of generating electricity
 for sale other than equipment that uses an alternative energy
 resource 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 an electric cooperative or an affiliate of the
 cooperative creating or acquiring 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 10. (a) The changes in law made by 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 Section 161.0751, 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 and 161.082,
 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 the date the transaction is completed, and
 that law is continued in effect for that purpose.
 SECTION 11. Not later than December 31, 2010, each electric
 cooperative with not more than 170,000 members shall hold an
 election as required by Section 161.075(k), as added by this Act.
 SECTION 12. This Act takes effect September 1, 2009.