S T A T E   O F   N E W   Y O R K
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                                  6244--A
     Cal. No. 333
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                               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:
 
   Section  1.    Section  17  of  the  rural electric cooperative law is
 amended by adding a new subdivision (f) to read as follows:
   (F) EVERY COOPERATIVE SHALL KEEP, AT THE OFFICE  OF  THE  COOPERATIVE,
 CORRECT  AND  COMPLETE  BOOKS  AND RECORDS OF ACCOUNT AND MINUTES OF THE
 PROCEEDINGS OF ITS MEMBERS, BOARD AND EXECUTIVE COMMITTEES, IF ANY,  AND
 SHALL  KEEP  AT  SUCH  OFFICE  A LIST OR RECORD CONTAINING THE NAMES AND
 ADDRESSES OF ALL MEMBERS, THE CLASS OR CLASSES OF MEMBERSHIP AND  AMOUNT
 OF  PATRONAGE CAPITAL ALLOCATED AND UNRETIRED TO EACH MEMBER, AS WELL AS
 THE AMOUNT OF ANY PATRONAGE CAPITAL ALLOCATED  TO  NONMEMBERS,  AND  THE
 DATES  WHEN THEY RESPECTIVELY WERE ALLOCATED SUCH PATRONAGE CAPITAL. ANY
 OF THE FOREGOING BOOKS, MINUTES AND RECORDS MAY BE IN WRITTEN FORM OR IN
 ANY OTHER FORM CAPABLE OF BEING CONVERTED INTO  WRITTEN  FORM  WITHIN  A
 REASONABLE TIME.
   §  2.  The rural electric cooperative law is amended by adding two new
 sections 19-a and 19-b to read as follows:
   § 19-A. CONFLICT OF INTEREST POLICY. (A) EXCEPT AS PROVIDED IN  SUBDI-
 VISION  (D)  OF  THIS SECTION, THE BOARD OF EVERY RURAL ELECTRIC COOPER-
 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.
                                                            LBD10932-11-8

 S. 6244--A                          2
 
 WITH,  A CONFLICT OF INTEREST POLICY TO ENSURE THAT ITS DIRECTORS, OFFI-
 CERS AND EMPLOYEES ACT IN THE COOPERATIVE'S  BEST  INTEREST  AND  COMPLY
 WITH APPLICABLE LEGAL REQUIREMENTS.
   (B)  THE  CONFLICT OF INTEREST POLICY SHALL INCLUDE, AT A MINIMUM, THE
 FOLLOWING PROVISIONS:
   (1) A DEFINITION OF THE CIRCUMSTANCES THAT CONSTITUTE  A  CONFLICT  OF
 INTEREST;
   (2)  PROCEDURES  FOR  DISCLOSING  A  CONFLICT  OF INTEREST OR POSSIBLE
 CONFLICT OF INTEREST TO THE BOARD OR TO A COMMITTEE OF  THE  BOARD,  AND
 PROCEDURE  FOR  THE  BOARD  OR COMMITTEE TO DETERMINE WHETHER A CONFLICT
 EXISTS;
   (3) A REQUIREMENT THAT THE PERSON WITH THE CONFLICT OF INTEREST NOT BE
 PRESENT AT OR PARTICIPATE IN THE BOARD OR COMMITTEE DELIBERATION OR VOTE
 ON A MATTER GIVING RISE TO SUCH CONFLICT, PROVIDED THAT NOTHING IN  THIS
 SECTION SHALL PROHIBIT THE BOARD OR A COMMITTEE FROM REQUESTING THAT THE
 PERSON  WITH  THE CONFLICT OF INTEREST PRESENT INFORMATION AS BACKGROUND
 OR ANSWER QUESTIONS AT  A  COMMITTEE  OR  BOARD  MEETING  PRIOR  TO  THE
 COMMENCEMENT OF DELIBERATION OR VOTING RELATING THERETO;
   (4)  A PROHIBITION AGAINST ANY ATTEMPT BY THE PERSON WITH THE CONFLICT
 TO INFLUENCE IMPROPERLY THE DELIBERATION OR VOTING ON THE MATTER  GIVING
 RISE TO SUCH CONFLICT; AND
   (5) A REQUIREMENT THAT THE EXISTENCE AND RESOLUTION OF THE CONFLICT BE
 DOCUMENTED IN THE COOPERATIVE'S RECORDS, INCLUDING IN THE MINUTES OF ANY
 MEETING AT WHICH THE CONFLICT WAS DISCUSSED OR VOTED UPON.
   (C)  THE  CONFLICT  OF INTEREST POLICY SHALL REQUIRE THAT PRIOR TO THE
 INITIAL ELECTION OF ANY DIRECTOR, AND ANNUALLY THEREAFTER, SUCH DIRECTOR
 SHALL COMPLETE, SIGN AND SUBMIT TO THE SECRETARY OF THE COOPERATIVE OR A
 DESIGNATED COMPLIANCE OFFICER A WRITTEN STATEMENT  IDENTIFYING,  TO  THE
 BEST  OF  THE DIRECTOR'S KNOWLEDGE, ANY ENTITY OF WHICH SUCH DIRECTOR IS
 AN OFFICER, DIRECTOR, TRUSTEE, MEMBER, OWNER (EITHER AS A SOLE  PROPRIE-
 TOR  OR  A  PARTNER),  OR  EMPLOYEE AND WITH WHICH THE COOPERATIVE HAS A
 RELATIONSHIP, AND ANY TRANSACTION IN WHICH THE COOPERATIVE IS A  PARTIC-
 IPANT  AND IN WHICH THE DIRECTOR MIGHT HAVE A CONFLICTING INTEREST.  THE
 POLICY SHALL REQUIRE THAT EACH DIRECTOR ANNUALLY RESUBMIT  SUCH  WRITTEN
 STATEMENT. THE SECRETARY OF THE COOPERATIVE OR THE DESIGNATED COMPLIANCE
 OFFICER  SHALL  PROVIDE  A  COPY  OF ALL THE COMPLETED STATEMENTS TO THE
 PRESIDENT OF THE BOARD.
   (D) A RURAL ELECTRIC COOPERATIVE THAT  HAS  ADOPTED  AND  POSSESSES  A
 CONFLICT  OF  INTEREST  POLICY  PURSUANT TO FEDERAL, STATE OR LOCAL LAWS
 THAT IS SUBSTANTIALLY CONSISTENT WITH THE PROVISIONS OF SUBDIVISION  (B)
 OF  THIS  SECTION  SHALL BE DEEMED IN COMPLIANCE WITH PROVISIONS OF THIS
 SECTION.
   (E) NOTHING IN THIS SECTION SHALL BE INTERPRETED TO  REQUIRE  A  RURAL
 ELECTRIC  COOPERATIVE  TO ADOPT ANY SPECIFIC CONFLICT OF INTEREST POLICY
 NOT OTHERWISE REQUIRED BY THIS SECTION OR ANY OTHER LAW OR RULE,  OR  TO
 SUPERSEDE OR LIMIT ANY REQUIREMENT OR DUTY GOVERNING CONFLICTS OF INTER-
 EST REQUIRED BY ANY OTHER LAW OR RULE.
   §  19-B.  WHISTLEBLOWER  POLICY. (A) EXCEPT AS PROVIDED IN SUBDIVISION
 (C) OF THIS SECTION, THE BOARD OF EVERY RURAL ELECTRIC COOPERATIVE SHALL
 ADOPT, AND OVERSEE THE IMPLEMENTATION OF, AND COMPLIANCE WITH, A  WHIST-
 LEBLOWER POLICY TO PROTECT FROM RETALIATION PERSONS WHO REPORT SUSPECTED
 IMPROPER CONDUCT. SUCH POLICY SHALL PROVIDE THAT NO DIRECTOR, OFFICER OR
 EMPLOYEE  OF  A RURAL ELECTRIC COOPERATIVE WHO IN GOOD FAITH REPORTS ANY
 ACTION OR SUSPECTED ACTION TAKEN BY OR WITHIN THE  COOPERATIVE  THAT  IS
 ILLEGAL,  FRAUDULENT  OR  IN VIOLATION OF ANY ADOPTED POLICY OR BYLAW OF
 THE COOPERATIVE SHALL SUFFER INTIMIDATION, HARASSMENT, DISCRIMINATION OR

 S. 6244--A                          3
 
 OTHER RETALIATION OR, IN  THE  CASE  OF  EMPLOYEES,  ADVERSE  EMPLOYMENT
 CONSEQUENCE.
   (B) THE WHISTLEBLOWER POLICY SHALL INCLUDE THE FOLLOWING PROVISIONS:
   (1) PROCEDURES FOR THE REPORTING OF VIOLATIONS OR SUSPECTED VIOLATIONS
 OF  LAWS  OR  COOPERATIVE  POLICIES  OR BYLAWS, INCLUDING PROCEDURES FOR
 PRESERVING THE CONFIDENTIALITY OF REPORTED INFORMATION;
   (2) A REQUIREMENT THAT AN EMPLOYEE, OFFICER OR DIRECTOR OF THE COOPER-
 ATIVE BE DESIGNATED TO ADMINISTER THE WHISTLEBLOWER POLICY AND TO REPORT
 TO THE BOARD OR AN AUTHORIZED COMMITTEE THEREOF;
   (3) A REQUIREMENT THAT THE PERSON WHO IS THE SUBJECT OF A WHISTLEBLOW-
 ER COMPLAINT NOT BE PRESENT AT OR PARTICIPATE IN BOARD DELIBERATIONS  OR
 VOTE  ON THE MATTER RELATING TO SUCH COMPLAINT, PROVIDED THAT NOTHING IN
 THIS PARAGRAPH SHALL PROHIBIT THE BOARD FROM REQUESTING THAT THE  PERSON
 WHO  IS  SUBJECT  TO  THE COMPLAINT PRESENT INFORMATION AS BACKGROUND OR
 ANSWER QUESTIONS AT A BOARD MEETING PRIOR TO THE COMMENCEMENT OF  DELIB-
 ERATIONS OR VOTING RELATING THERETO; AND
   (4)  A  REQUIREMENT  THAT  A  COPY OF THE POLICY BE DISTRIBUTED TO ALL
 DIRECTORS, OFFICERS AND EMPLOYEES. FOR  PURPOSES  OF  THIS  SUBDIVISION,
 POSTING  THE POLICY ON THE COOPERATIVE'S WEBSITE OR AT THE COOPERATIVE'S
 OFFICES IN A CONSPICUOUS LOCATION ACCESSIBLE TO EMPLOYEES ARE AMONG  THE
 METHODS A COOPERATIVE MAY USE TO SATISFY THE DISTRIBUTION REQUIREMENT.
   (C)  A  RURAL  ELECTRIC  COOPERATIVE  THAT HAS ADOPTED AND POSSESSES A
 WHISTLEBLOWER POLICY PURSUANT TO FEDERAL, STATE OR LOCAL  LAWS  THAT  IS
 SUBSTANTIALLY  CONSISTENT WITH THE PROVISIONS OF SUBDIVISION (B) OF THIS
 SECTION SHALL BE DEEMED IN COMPLIANCE WITH PROVISIONS OF THIS SECTION.
   (D) NOTHING IN THIS SECTION SHALL BE INTERPRETED TO RELIEVE ANY  RURAL
 ELECTRIC  COOPERATIVE  FROM  ANY  ADDITIONAL REQUIREMENTS IN RELATION TO
 INTERNAL COMPLIANCE, RETALIATION, OR DOCUMENT RETENTION REQUIRED BY  ANY
 OTHER LAW OR RULE.
   §  3.  Section  60 of the rural electric cooperative law is amended to
 read as follows:
   § 60. [Refunds to members. Revenues of a cooperative  for  any  fiscal
 year in excess of the amount thereof necessary:
   (a)  To  defray  the  expenses of the operation and maintenance of the
 facilities of the cooperative during such fiscal year;
   (b) To pay interest  and  principal  obligations  of  the  cooperative
 coming due in such fiscal year;
   (c)  To  finance,  or  to  provide a reserve for the financing of, the
 construction or acquisition by the cooperative of additional  facilities
 to the extent determined by the board of directors;
   (d)  To provide a reasonable reserve for working capital as determined
 by the board of directors;
   (e) To provide a reserve for the payment of indebtedness of the  coop-
 erative in an amount not less than the total of the interest and princi-
 pal  payment  in  respect  thereof  required  to be made during the next
 following fiscal year; and
   (f) To provide a fund for education in cooperation and for the dissem-
 ination of information concerning the effective use of  electric  energy
 and  other  services  made  available  by the cooperative, shall, unless
 otherwise determined by a vote of the members,  be  distributed  by  the
 cooperative  to its members and to other persons to whom the cooperative
 supplies  electric  energy  or  other  services,  as  patronage  refunds
 prorated  in  accordance  with  the  patronage of the cooperative by the
 respective members and such other persons, paid for during  such  fiscal
 year; provided, however, that such distribution shall not be made to any
 such  other  person  until he has become a member of the cooperative. If

 S. 6244--A                          4

 such other person does not become a member of the cooperative within one
 year after the amount of his distributive share or accumulated distribu-
 tive shares equals the membership fee required by  the  by-laws  of  the
 cooperative,  or,  if  no  membership  fee is required, within two years
 after the declaration of any such patronage refund, he shall cease to be
 entitled to such share or shares, which shall, in  such  case,  be  paid
 into  the  fund provided for in this subdivision.  The cooperative shall
 make such additional provision, in the by-laws or otherwise, relative to
 the disposition of the revenues of the cooperative, as may be  necessary
 and  appropriate  to  establish and maintain the non-profit character of
 the cooperative. Nothing herein contained shall be construed to prohibit
 the payment by a cooperative of all or  any  part  of  its  indebtedness
 prior  to  the  date  when the same shall become due.] PATRONAGE CAPITAL
 CONTRIBUTIONS, ALLOCATIONS, AND RETIREMENTS.    (A)  EACH  COOPERATIVE'S
 BY-LAWS  SHALL, UNLESS OTHERWISE DETERMINED BY AGREEMENT OF THE MEMBERS,
 PROVIDE FOR PATRONAGE CAPITAL ALLOCATIONS AND RETIREMENTS IN THE  MANNER
 PROVIDED  BY THIS SECTION. AGREEMENT BY THE MEMBERS FOR PURPOSES OF THIS
 SECTION SHALL MEAN MEMBER APPROVAL OF BY-LAW PROVISIONS OR BY A MAJORITY
 VOTE OF THE MEMBERS VOTING AT A DULY  CALLED  MEETING.  ANY  MATTER  SET
 FORTH  IN THIS SECTION WHICH IS SUBJECT TO DETERMINATION OF THE BOARD OF
 DIRECTORS SHALL BE DETERMINED IN THE EXERCISE OF SUCH  BOARD  OF  DIREC-
 TOR'S BUSINESS JUDGMENT.
   (B) PATRONAGE CAPITAL SHALL BE DETERMINED BY A COOPERATIVE ON AN ANNU-
 AL BASIS AND SHALL BE THE EXCESS, IF ANY, OF AMOUNTS RECEIVED OR RECEIV-
 ABLE  BY  SUCH COOPERATIVE FROM FURNISHING ELECTRICITY OVER SUCH COOPER-
 ATIVE'S  OPERATING  COSTS  AND  EXPENSES  PROPERLY  CHARGEABLE   AGAINST
 FURNISHING  ELECTRICITY,  AS  DETERMINED USING SUCH ACCOUNTING METHOD OR
 METHODS AS AGREED UPON BY THE MEMBERS.   COSTS AND  EXPENSES  CHARGEABLE
 AGAINST FURNISHING ELECTRICITY SHALL INCLUDE:
   (1) EXPENSES OF THE OPERATION AND MAINTENANCE OF ITS FACILITIES DURING
 SUCH FISCAL YEAR;
   (2)  INTEREST OBLIGATIONS OF THE COOPERATIVE COMING DUE IN SUCH FISCAL
 YEAR;
   (3) DEPRECIATION AND OTHER EXPENSES TO FINANCE OR TO PROVIDE A RESERVE
 FOR THE FINANCING OF THE CONSTRUCTION OR ACQUISITION BY THE  COOPERATIVE
 OF ADDITIONAL FACILITIES TO THE EXTENT DETERMINED BY THE BOARD OF DIREC-
 TORS;
   (4)  EXPENSES  TO  PROVIDE A REASONABLE RESERVE FOR WORKING CAPITAL AS
 DETERMINED BY THE BOARD OF DIRECTORS;
   (5) EXPENSES TO PROVIDE A RESERVE FOR THE PAYMENT OF  INDEBTEDNESS  OF
 THE COOPERATIVE MATURING MORE THAN ONE YEAR AFTER THE DATE OF THE INCUR-
 RENCE  OF  SUCH INDEBTEDNESS IN AN AMOUNT NOT LESS THAN THE TOTAL OF THE
 INTEREST AND PRINCIPAL PAYMENTS IN RESPECT THEREOF REQUIRED TO  BE  MADE
 DURING THE NEXT FOLLOWING FISCAL YEAR;
   (6)  EXPENSES  TO  PROVIDE A FUND FOR EDUCATION IN COOPERATION AND FOR
 THE DISSEMINATION OF INFORMATION CONCERNING THE EFFECTIVE USE  OF  ELEC-
 TRIC ENERGY AND OTHER SERVICES MADE AVAILABLE BY THE COOPERATIVE; AND
   (7)  ALL  OTHER  COSTS  AND  EXPENSES FROM AND DIRECTLY RELATED TO THE
 FURNISHING OF ELECTRIC ENERGY TO THE PATRONS.
   (C) "PATRON", AS REFERRED TO IN SUBDIVISIONS (B) THROUGH (H)  OF  THIS
 SECTION,  SHALL  BE  DEFINED AS (1) A MEMBER AND (2) A NONMEMBER TO WHOM
 THE COOPERATIVE FURNISHES ELECTRIC ENERGY OR OTHER SERVICES ON A  PATRO-
 NAGE BASIS PURSUANT TO BYLAWS OR AS AGREED UPON BY THE MEMBERS.
   (D) ON AN ANNUAL BASIS, PATRONAGE CAPITAL DETERMINED UNDER SUBDIVISION
 (B)  OF  THIS SECTION SHALL BE ALLOCATED ON THE BOOKS OF THE COOPERATIVE

 S. 6244--A                          5
 
 TO EACH PATRON HAVING FURNISHED SUCH CAPITAL AND SHALL BE BASED UPON AND
 IN PROPORTION TO:
   (1)  THE  REVENUE  FROM EACH PATRON OR GROUP OF SIMILAR PATRONS TO THE
 COOPERATIVE'S TOTAL REVENUE;
   (2) THE CONTRIBUTION OF EACH PATRON OR GROUP OF SIMILAR PATRONS TO THE
 COOPERATIVE'S OVERALL PATRONAGE CAPITAL;
   (3) THE KILOWATT-HOUR USAGE OF EACH PATRON OR GROUP OF SIMILAR PATRONS
 TO THE TOTAL KILOWATT-HOUR USAGE OF ALL PATRONS;
   (4) ANY OTHER METHOD WHICH IS AGREED UPON BY THE MEMBERS; OR
   (5) ANY COMBINATION OF PARAGRAPHS  ONE, TWO, THREE AND/OR FOUR OF THIS
 SUBDIVISION AS AGREED UPON BY THE MEMBERS.
   (E) "RETIREMENT" IN REFERENCE TO  PATRONAGE  CAPITAL  SHALL  MEAN  THE
 REDEMPTION  AND PAYMENT IN CASH OR OTHER PROPERTY, AS PROVIDED BY SUBDI-
 VISION (F) OF THIS SECTION, OF  PATRONAGE  CAPITAL  TO  THE  COOPERATIVE
 PATRONS OR FORMER PATRONS TO WHOM IT HAS PREVIOUSLY BEEN ALLOCATED.  THE
 ALLOCATION  OF PATRONAGE CAPITAL TO A PATRON'S PATRONAGE CAPITAL ACCOUNT
 SHALL IN NO EVENT CREATE A VESTED RIGHT TO THE RETIREMENT OF THE  AMOUNT
 SO  ALLOCATED.    THE  BOARD  OF  DIRECTORS OF A COOPERATIVE MAY, IN ITS
 DISCRETION, RETIRE PATRONAGE CAPITAL ALLOCATED ON THE BOOKS OF THE COOP-
 ERATIVE WHEN IT DETERMINES SUCH  RETIREMENT  IS  CONSISTENT  WITH  SOUND
 BUSINESS  AND MANAGEMENT PRACTICES AND THE LONG-TERM FINANCIAL STABILITY
 OF THE COOPERATIVE.  PATRONAGE CAPITAL SHALL BE RETIRED ACCORDING TO THE
 METHOD CHOSEN BY THE MEMBERS AND AT THE  TIME  THE  BOARD  OF  DIRECTORS
 SHALL  DETERMINE AS A MATTER OF ITS DISCRETION. HOWEVER, PATRONAGE CAPI-
 TAL MAY BE RETIRED IN ADVANCE OF THE DATE WHEN  IT  WOULD  OTHERWISE  BE
 RETIRED  UNDER THE PREVIOUS SENTENCE IN SUCH CIRCUMSTANCES AND UPON SUCH
 CONDITIONS AS ARE AGREED UPON BY THE MEMBERS, INCLUDING, BUT NOT LIMITED
 TO, UPON A PATRON'S OR FORMER  PATRON'S  DEATH,  THE  TERMINATION  OF  A
 PATRON  OR  FORMER  PATRON'S  ELECTRIC  SERVICE,  OR  A PATRON OR FORMER
 PATRON'S FILING FOR BANKRUPTCY. IN THE EVENT OF SUCH EARLY RETIREMENT OF
 PATRONAGE CAPITAL, THE AMOUNT OF  PATRONAGE  CAPITAL  ALLOCATED  TO  THE
 PATRON OR FORMER PATRON ON THE COOPERATIVE'S BOOKS MAY BE DISCOUNTED FOR
 PURPOSES  OF  ITS RETIREMENT IN ACCORDANCE WITH SUCH METHOD AS IS AGREED
 UPON BY THE MEMBERS.  THE DIFFERENCE BETWEEN THE DISCOUNTED  AMOUNT  AND
 THE PATRON'S OR FORMER PATRON'S PATRONAGE CAPITAL MAY BE RETAINED BY THE
 COOPERATIVE  AS  PART  OF  ITS NET SAVINGS IN A MANNER DETERMINED BY THE
 BOARD OF DIRECTORS.
   (F) WHEN THE BOARD OF DIRECTORS OF  THE  COOPERATIVE  HAS  DETERMINED,
 PURSUANT  TO  SUBDIVISION  (E)  OF  THIS SECTION, THAT PATRONAGE CAPITAL
 SHALL BE RETIRED, THE RETIREMENT MAY BE ACCOMPLISHED BY A  BILL  CREDIT,
 BY THE MAILING OF PAYMENT OR NOTICE OF PAYMENT TO THE PATRON'S OR FORMER
 PATRON'S  LAST  KNOWN ADDRESS OF RECORD ON FILE WITH THE COOPERATIVE, OR
 BY SUCH OTHER METHOD AS THE BOARD OF DIRECTORS  SHALL  DETERMINE  TO  BE
 APPROPRIATE.  NO INTEREST SHALL BE PAID OR PAYABLE BY THE COOPERATIVE ON
 ANY PATRONAGE CAPITAL. THE AMOUNT OF PATRONAGE CAPITAL BEING RETIRED MAY
 BE REDUCED BY ANY AMOUNT OWED TO THE COOPERATIVE BY THE PATRON OR FORMER
 PATRON.
   (G) A COOPERATIVE MAY ADOPT SUCH PROCEDURES  FOR  THE  ASSIGNMENT  AND
 CONTRIBUTION  OF  UNCLAIMED  PATRONAGE CAPITAL TO THE COOPERATIVE AS ARE
 AGREED UPON BY ITS MEMBERS.  SUCH PROCEDURES MAY INCLUDE PROVIDING  THAT
 PATRONAGE  CAPITAL  WHICH  HAS  NOT  BEEN  CLAIMED BY A PATRON OR FORMER
 PATRON, AFTER REASONABLE EFFORTS TO LOCATE SAID PATRON OR FORMER PATRON,
 SHALL BE ADDED TO THE NET SAVINGS OF THE COOPERATIVE. MAILING OF A CHECK
 OR NOTICE OF THE AVAILABILITY OF A CHECK TO THE LAST KNOWN ADDRESS OF  A
 PATRON  OR FORMER PATRON BY FIRST CLASS MAIL AND PUBLICATION OF THE LIST
 OF PATRONS OR FORMER PATRONS HAVING UNCLAIMED PATRONAGE CAPITAL  ON  THE

 S. 6244--A                          6
 
 WEBSITE AND/OR NEWSLETTER OF THE COOPERATIVE FOR A PERIOD OF THREE YEARS
 SHALL  BE  DEEMED  REASONABLE  EFFORT  TO  LOCATE  SAID PATRON OR FORMER
 PATRON.
   (H) IN THE EVENT THAT THE COOPERATIVE SHOULD ENGAGE IN THE BUSINESS OF
 FURNISHING  GOODS  AND  SERVICES OTHER THAN ELECTRIC ENERGY, ALL AMOUNTS
 RECEIVED AND RECEIVABLE THEREFROM WHICH  ARE  IN  EXCESS  OF  COSTS  AND
 EXPENSES  PROPERLY  CHARGEABLE  AGAINST  THE FURNISHING OF SUCH GOODS OR
 SERVICES SHALL, INSOFAR AS PERMITTED BY LAW, BYLAWS, OR BY  APPROVAL  OF
 THE  MEMBERS, BE PRORATED ANNUALLY ON A PATRONAGE BASIS AND ALLOCATED TO
 EACH MEMBER AND SHALL BE RETIRED TO SAID MEMBER ACCORDING TO THE  METHOD
 CHOSEN  BY THE MEMBERS AND AT THE TIME THAT THE BOARD OF DIRECTORS SHALL
 DETERMINE AS A MATTER OF ITS  DISCRETION.    NOTHING  IN  THIS  SECTION,
 HOWEVER, PREVENTS A COOPERATIVE FROM FURNISHING GOODS AND SERVICES OTHER
 THAN  ELECTRIC  ENERGY  ON A NON-PATRONAGE BASIS TO NON-MEMBERS; THE NET
 EARNINGS OF WHICH MAY BE RETAINED AS PART OF ITS NET SAVINGS.
   (I) WITH RESPECT TO ANY COOPERATIVE FORMED UNDER THIS CHAPTER THAT  IS
 EXEMPT FROM FEDERAL INCOME TAXATION UNDER PARAGRAPH TWELVE OF SUBSECTION
 (C) OF SECTION FIVE HUNDRED ONE OF THE INTERNAL REVENUE CODE OF NINETEEN
 EIGHTY-SIX, AS AMENDED, OR ANY CORRESPONDING PROVISION OF FUTURE FEDERAL
 TAX  LAW,  OR  ANY  COOPERATIVE  WHICH  WOULD OTHERWISE QUALIFY FOR SAID
 EXEMPTION BUT FOR HAVING LESS  THAN  EIGHTY-FIVE  PERCENT  (OR  WHATEVER
 THRESHOLD  MAY BE SPECIFIED IN THE FUTURE FOR SAID PURPOSE BY THE INTER-
 NAL REVENUE CODE) OF INCOME FROM MEMBERS,  THIS  SECTION  SHALL  IN  ALL
 EVENTS BE LIMITED TO AND INTERPRETED IN A MANNER WHICH IS COMPLIANT WITH
 THE  REQUIREMENTS OF EXEMPTION UNDER SUCH INTERNAL REVENUE CODE SECTION,
 AND ANY AGREEMENT BY THE MEMBERS OR DETERMINATION BY THE BOARD OF DIREC-
 TORS UNDER THIS SECTION WITH RESPECT TO THE SUBJECT MATTER HEREOF  SHALL
 ALSO  BE  LIMITED TO AND INTERPRETED IN A MANNER WHICH IS COMPLIANT WITH
 SUCH INTERNAL REVENUE CODE SECTION.
   § 4. This act shall take effect on the first of January next  succeed-
 ing the date on which it shall have become a law.