Bill Text: NY S06244 | 2017-2018 | General Assembly | Amended
Bill Title: Relates to patronage capital contributions, allocations and retirements.
Spectrum: Moderate Partisan Bill (Republican 4-1)
Status: (Engrossed - Dead) 2018-06-13 - SUBSTITUTED BY A7953A [S06244 Detail]
Download: New_York-2017-S06244-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 6244--A Cal. No. 333 2017-2018 Regular Sessions IN SENATE May 11, 2017 ___________ Introduced by Sens. BONACIC, O'MARA, SEWARD, VALESKY, YOUNG -- read twice and ordered printed, and when printed to be committed to the Committee on Energy and Telecommunications -- recommitted to the Committee on Energy and Telecommunications in accordance with Senate Rule 6, sec. 8 -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, passed by Senate and delivered to the Assembly, recalled, vote reconsidered, restored to third reading, amended and ordered reprinted, retaining its place in the order of third reading AN ACT to amend the rural electric cooperative law, in relation to refunds of capital contributions, allocations and retirements The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 17 of the rural electric cooperative law is 2 amended by adding a new subdivision (f) to read as follows: 3 (f) Every cooperative shall keep, at the office of the cooperative, 4 correct and complete books and records of account and minutes of the 5 proceedings of its members, board and executive committees, if any, and 6 shall keep at such office a list or record containing the names and 7 addresses of all members, the class or classes of membership and amount 8 of patronage capital allocated and unretired to each member, as well as 9 the amount of any patronage capital allocated to nonmembers, and the 10 dates when they respectively were allocated such patronage capital. Any 11 of the foregoing books, minutes and records may be in written form or in 12 any other form capable of being converted into written form within a 13 reasonable time. 14 § 2. The rural electric cooperative law is amended by adding two new 15 sections 19-a and 19-b to read as follows: 16 § 19-a. Conflict of interest policy. (a) Except as provided in subdi- 17 vision (d) of this section, the board of every rural electric cooper- 18 ative shall adopt, and oversee the implementation of, and compliance EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD10932-11-8S. 6244--A 2 1 with, a conflict of interest policy to ensure that its directors, offi- 2 cers and employees act in the cooperative's best interest and comply 3 with applicable legal requirements. 4 (b) The conflict of interest policy shall include, at a minimum, the 5 following provisions: 6 (1) a definition of the circumstances that constitute a conflict of 7 interest; 8 (2) procedures for disclosing a conflict of interest or possible 9 conflict of interest to the board or to a committee of the board, and 10 procedure for the board or committee to determine whether a conflict 11 exists; 12 (3) a requirement that the person with the conflict of interest not be 13 present at or participate in the board or committee deliberation or vote 14 on a matter giving rise to such conflict, provided that nothing in this 15 section shall prohibit the board or a committee from requesting that the 16 person with the conflict of interest present information as background 17 or answer questions at a committee or board meeting prior to the 18 commencement of deliberation or voting relating thereto; 19 (4) a prohibition against any attempt by the person with the conflict 20 to influence improperly the deliberation or voting on the matter giving 21 rise to such conflict; and 22 (5) a requirement that the existence and resolution of the conflict be 23 documented in the cooperative's records, including in the minutes of any 24 meeting at which the conflict was discussed or voted upon. 25 (c) The conflict of interest policy shall require that prior to the 26 initial election of any director, and annually thereafter, such director 27 shall complete, sign and submit to the secretary of the cooperative or a 28 designated compliance officer a written statement identifying, to the 29 best of the director's knowledge, any entity of which such director is 30 an officer, director, trustee, member, owner (either as a sole proprie- 31 tor or a partner), or employee and with which the cooperative has a 32 relationship, and any transaction in which the cooperative is a partic- 33 ipant and in which the director might have a conflicting interest. The 34 policy shall require that each director annually resubmit such written 35 statement. The secretary of the cooperative or the designated compliance 36 officer shall provide a copy of all the completed statements to the 37 president of the board. 38 (d) A rural electric cooperative that has adopted and possesses a 39 conflict of interest policy pursuant to federal, state or local laws 40 that is substantially consistent with the provisions of subdivision (b) 41 of this section shall be deemed in compliance with provisions of this 42 section. 43 (e) Nothing in this section shall be interpreted to require a rural 44 electric cooperative to adopt any specific conflict of interest policy 45 not otherwise required by this section or any other law or rule, or to 46 supersede or limit any requirement or duty governing conflicts of inter- 47 est required by any other law or rule. 48 § 19-b. Whistleblower policy. (a) Except as provided in subdivision 49 (c) of this section, the board of every rural electric cooperative shall 50 adopt, and oversee the implementation of, and compliance with, a whist- 51 leblower policy to protect from retaliation persons who report suspected 52 improper conduct. Such policy shall provide that no director, officer or 53 employee of a rural electric cooperative who in good faith reports any 54 action or suspected action taken by or within the cooperative that is 55 illegal, fraudulent or in violation of any adopted policy or bylaw of 56 the cooperative shall suffer intimidation, harassment, discrimination orS. 6244--A 3 1 other retaliation or, in the case of employees, adverse employment 2 consequence. 3 (b) The whistleblower policy shall include the following provisions: 4 (1) procedures for the reporting of violations or suspected violations 5 of laws or cooperative policies or bylaws, including procedures for 6 preserving the confidentiality of reported information; 7 (2) a requirement that an employee, officer or director of the cooper- 8 ative be designated to administer the whistleblower policy and to report 9 to the board or an authorized committee thereof; 10 (3) a requirement that the person who is the subject of a whistleblow- 11 er complaint not be present at or participate in board deliberations or 12 vote on the matter relating to such complaint, provided that nothing in 13 this paragraph shall prohibit the board from requesting that the person 14 who is subject to the complaint present information as background or 15 answer questions at a board meeting prior to the commencement of delib- 16 erations or voting relating thereto; and 17 (4) a requirement that a copy of the policy be distributed to all 18 directors, officers and employees. For purposes of this subdivision, 19 posting the policy on the cooperative's website or at the cooperative's 20 offices in a conspicuous location accessible to employees are among the 21 methods a cooperative may use to satisfy the distribution requirement. 22 (c) A rural electric cooperative that has adopted and possesses a 23 whistleblower policy pursuant to federal, state or local laws that is 24 substantially consistent with the provisions of subdivision (b) of this 25 section shall be deemed in compliance with provisions of this section. 26 (d) Nothing in this section shall be interpreted to relieve any rural 27 electric cooperative from any additional requirements in relation to 28 internal compliance, retaliation, or document retention required by any 29 other law or rule. 30 § 3. Section 60 of the rural electric cooperative law is amended to 31 read as follows: 32 § 60. [Refunds to members. Revenues of a cooperative for any fiscal33year in excess of the amount thereof necessary:34(a) To defray the expenses of the operation and maintenance of the35facilities of the cooperative during such fiscal year;36(b) To pay interest and principal obligations of the cooperative37coming due in such fiscal year;38(c) To finance, or to provide a reserve for the financing of, the39construction or acquisition by the cooperative of additional facilities40to the extent determined by the board of directors;41(d) To provide a reasonable reserve for working capital as determined42by the board of directors;43(e) To provide a reserve for the payment of indebtedness of the coop-44erative in an amount not less than the total of the interest and princi-45pal payment in respect thereof required to be made during the next46following fiscal year; and47(f) To provide a fund for education in cooperation and for the dissem-48ination of information concerning the effective use of electric energy49and other services made available by the cooperative, shall, unless50otherwise determined by a vote of the members, be distributed by the51cooperative to its members and to other persons to whom the cooperative52supplies electric energy or other services, as patronage refunds53prorated in accordance with the patronage of the cooperative by the54respective members and such other persons, paid for during such fiscal55year; provided, however, that such distribution shall not be made to any56such other person until he has become a member of the cooperative. IfS. 6244--A 4 1such other person does not become a member of the cooperative within one2year after the amount of his distributive share or accumulated distribu-3tive shares equals the membership fee required by the by-laws of the4cooperative, or, if no membership fee is required, within two years5after the declaration of any such patronage refund, he shall cease to be6entitled to such share or shares, which shall, in such case, be paid7into the fund provided for in this subdivision. The cooperative shall8make such additional provision, in the by-laws or otherwise, relative to9the disposition of the revenues of the cooperative, as may be necessary10and appropriate to establish and maintain the non-profit character of11the cooperative. Nothing herein contained shall be construed to prohibit12the payment by a cooperative of all or any part of its indebtedness13prior to the date when the same shall become due.] Patronage capital 14 contributions, allocations, and retirements. (a) Each cooperative's 15 by-laws shall, unless otherwise determined by agreement of the members, 16 provide for patronage capital allocations and retirements in the manner 17 provided by this section. Agreement by the members for purposes of this 18 section shall mean member approval of by-law provisions or by a majority 19 vote of the members voting at a duly called meeting. Any matter set 20 forth in this section which is subject to determination of the board of 21 directors shall be determined in the exercise of such board of direc- 22 tor's business judgment. 23 (b) Patronage capital shall be determined by a cooperative on an annu- 24 al basis and shall be the excess, if any, of amounts received or receiv- 25 able by such cooperative from furnishing electricity over such cooper- 26 ative's operating costs and expenses properly chargeable against 27 furnishing electricity, as determined using such accounting method or 28 methods as agreed upon by the members. Costs and expenses chargeable 29 against furnishing electricity shall include: 30 (1) expenses of the operation and maintenance of its facilities during 31 such fiscal year; 32 (2) interest obligations of the cooperative coming due in such fiscal 33 year; 34 (3) depreciation and other expenses to finance or to provide a reserve 35 for the financing of the construction or acquisition by the cooperative 36 of additional facilities to the extent determined by the board of direc- 37 tors; 38 (4) expenses to provide a reasonable reserve for working capital as 39 determined by the board of directors; 40 (5) expenses to provide a reserve for the payment of indebtedness of 41 the cooperative maturing more than one year after the date of the incur- 42 rence of such indebtedness in an amount not less than the total of the 43 interest and principal payments in respect thereof required to be made 44 during the next following fiscal year; 45 (6) expenses to provide a fund for education in cooperation and for 46 the dissemination of information concerning the effective use of elec- 47 tric energy and other services made available by the cooperative; and 48 (7) all other costs and expenses from and directly related to the 49 furnishing of electric energy to the patrons. 50 (c) "Patron", as referred to in subdivisions (b) through (h) of this 51 section, shall be defined as (1) a member and (2) a nonmember to whom 52 the cooperative furnishes electric energy or other services on a patro- 53 nage basis pursuant to bylaws or as agreed upon by the members. 54 (d) On an annual basis, patronage capital determined under subdivision 55 (b) of this section shall be allocated on the books of the cooperativeS. 6244--A 5 1 to each patron having furnished such capital and shall be based upon and 2 in proportion to: 3 (1) the revenue from each patron or group of similar patrons to the 4 cooperative's total revenue; 5 (2) the contribution of each patron or group of similar patrons to the 6 cooperative's overall patronage capital; 7 (3) the kilowatt-hour usage of each patron or group of similar patrons 8 to the total kilowatt-hour usage of all patrons; 9 (4) any other method which is agreed upon by the members; or 10 (5) any combination of paragraphs one, two, three and/or four of this 11 subdivision as agreed upon by the members. 12 (e) "Retirement" in reference to patronage capital shall mean the 13 redemption and payment in cash or other property, as provided by subdi- 14 vision (f) of this section, of patronage capital to the cooperative 15 patrons or former patrons to whom it has previously been allocated. The 16 allocation of patronage capital to a patron's patronage capital account 17 shall in no event create a vested right to the retirement of the amount 18 so allocated. The board of directors of a cooperative may, in its 19 discretion, retire patronage capital allocated on the books of the coop- 20 erative when it determines such retirement is consistent with sound 21 business and management practices and the long-term financial stability 22 of the cooperative. Patronage capital shall be retired according to the 23 method chosen by the members and at the time the board of directors 24 shall determine as a matter of its discretion. However, patronage capi- 25 tal may be retired in advance of the date when it would otherwise be 26 retired under the previous sentence in such circumstances and upon such 27 conditions as are agreed upon by the members, including, but not limited 28 to, upon a patron's or former patron's death, the termination of a 29 patron or former patron's electric service, or a patron or former 30 patron's filing for bankruptcy. In the event of such early retirement of 31 patronage capital, the amount of patronage capital allocated to the 32 patron or former patron on the cooperative's books may be discounted for 33 purposes of its retirement in accordance with such method as is agreed 34 upon by the members. The difference between the discounted amount and 35 the patron's or former patron's patronage capital may be retained by the 36 cooperative as part of its net savings in a manner determined by the 37 board of directors. 38 (f) When the board of directors of the cooperative has determined, 39 pursuant to subdivision (e) of this section, that patronage capital 40 shall be retired, the retirement may be accomplished by a bill credit, 41 by the mailing of payment or notice of payment to the patron's or former 42 patron's last known address of record on file with the cooperative, or 43 by such other method as the board of directors shall determine to be 44 appropriate. No interest shall be paid or payable by the cooperative on 45 any patronage capital. The amount of patronage capital being retired may 46 be reduced by any amount owed to the cooperative by the patron or former 47 patron. 48 (g) A cooperative may adopt such procedures for the assignment and 49 contribution of unclaimed patronage capital to the cooperative as are 50 agreed upon by its members. Such procedures may include providing that 51 patronage capital which has not been claimed by a patron or former 52 patron, after reasonable efforts to locate said patron or former patron, 53 shall be added to the net savings of the cooperative. Mailing of a check 54 or notice of the availability of a check to the last known address of a 55 patron or former patron by first class mail and publication of the list 56 of patrons or former patrons having unclaimed patronage capital on theS. 6244--A 6 1 website and/or newsletter of the cooperative for a period of three years 2 shall be deemed reasonable effort to locate said patron or former 3 patron. 4 (h) In the event that the cooperative should engage in the business of 5 furnishing goods and services other than electric energy, all amounts 6 received and receivable therefrom which are in excess of costs and 7 expenses properly chargeable against the furnishing of such goods or 8 services shall, insofar as permitted by law, bylaws, or by approval of 9 the members, be prorated annually on a patronage basis and allocated to 10 each member and shall be retired to said member according to the method 11 chosen by the members and at the time that the board of directors shall 12 determine as a matter of its discretion. Nothing in this section, 13 however, prevents a cooperative from furnishing goods and services other 14 than electric energy on a non-patronage basis to non-members; the net 15 earnings of which may be retained as part of its net savings. 16 (i) With respect to any cooperative formed under this chapter that is 17 exempt from federal income taxation under paragraph twelve of subsection 18 (c) of section five hundred one of the internal revenue code of nineteen 19 eighty-six, as amended, or any corresponding provision of future federal 20 tax law, or any cooperative which would otherwise qualify for said 21 exemption but for having less than eighty-five percent (or whatever 22 threshold may be specified in the future for said purpose by the inter- 23 nal revenue code) of income from members, this section shall in all 24 events be limited to and interpreted in a manner which is compliant with 25 the requirements of exemption under such internal revenue code section, 26 and any agreement by the members or determination by the board of direc- 27 tors under this section with respect to the subject matter hereof shall 28 also be limited to and interpreted in a manner which is compliant with 29 such internal revenue code section. 30 § 4. This act shall take effect on the first of January next succeed- 31 ing the date on which it shall have become a law.
