1.1                          A bill for an act 
  1.2             relating to utilities; allowing members of electric 
  1.3             cooperative that has merged or been consolidated into 
  1.4             new cooperative to revoke the merger or consolidation 
  1.5             and reestablish former electric cooperative; amending 
  1.6             Minnesota Statutes 1998, section 308A.801, subdivision 
  1.7             5; proposing coding for new law in Minnesota Statutes, 
  1.8             chapter 308A. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1998, section 308A.801, 
  1.11  subdivision 5, is amended to read: 
  1.12     Subd. 5.  [EFFECT OF MERGER.] (a) After the effective date, 
  1.13  the cooperatives and associations that are parties to the plan 
  1.14  become a single association.  For a merger, the surviving 
  1.15  association is the association designated in the plan.  For a 
  1.16  consolidation, the new cooperative is the association provided 
  1.17  for in the plan.  Except for the surviving or new 
  1.18  association and except as provided in sections 308A.811 to 
  1.19  308A.813, the separate existence of all cooperatives and 
  1.20  associations that are parties to the plan cease on the effective 
  1.21  date of the merger or consolidation.  
  1.22     (b) The surviving or new association possesses all of the 
  1.23  rights and property of each of the merged or consolidated 
  1.24  cooperatives or associations, and is responsible for all their 
  1.25  obligations.  The title to property of the merged or 
  1.26  consolidated association is vested in the surviving or new 
  1.27  association without reversion or impairment of the title caused 
  2.1   by the merger or consolidation.  
  2.2      (c) The right of a creditor may not be impaired by the 
  2.3   merger or consolidation without the creditor's consent.  
  2.4      Sec. 2.  [308A.810] [DEFINITIONS.] 
  2.5      Subdivision 1.  [SCOPE.] The following terms used in 
  2.6   sections 308A.810 to 308A.814 have the meanings given them in 
  2.7   this section. 
  2.8      Subd. 2.  [COMMISSION.] "Commission" means the public 
  2.9   utilities commission. 
  2.10     Subd. 3.  [DEPARTMENT.] "Department" means the department 
  2.11  of commerce. 
  2.12     Subd. 4.  [FORMER ELECTRIC COOPERATIVE.] "Former electric 
  2.13  cooperative" means an electric cooperative that has merged or 
  2.14  been consolidated into another electric cooperative. 
  2.15     Subd. 5.  [EXISTING ELECTRIC COOPERATIVE.] "Existing 
  2.16  electric cooperative" means an electric cooperative created as a 
  2.17  result of a merger or consolidation of electric cooperatives. 
  2.18     Subd. 6.  [REESTABLISHED FORMER ELECTRIC COOPERATIVE.] 
  2.19  "Reestablished former electric cooperative" means a former 
  2.20  electric cooperative that has been reestablished under sections 
  2.21  308A.810 to 308A.814. 
  2.22     Sec. 3.  [308A.811] [MERGER AND CONSOLIDATION OF ELECTRIC 
  2.23  COOPERATIVES; PARTIAL REVOCATION.] 
  2.24     Subdivision 1.  [PARTIAL REVOCATION.] A merger or 
  2.25  consolidation involving three or more electric cooperatives 
  2.26  effective after December 29, 1996, and before January 1, 2001, 
  2.27  may be revoked within five years of its adoption with respect to 
  2.28  a particular former electric cooperative by a vote in accordance 
  2.29  with this section of the members or stockholders of the 
  2.30  particular existing electric cooperative who reside or are 
  2.31  located in the service territory of the former electric 
  2.32  cooperative that has been merged or consolidated into the 
  2.33  existing electric cooperative. 
  2.34     Subd. 2.  [PETITION.] The revocation vote must be initiated 
  2.35  by a petition signed by one percent of members or stockholders 
  2.36  of an existing electric cooperative who reside or are located in 
  3.1   the service territory of a particular former electric 
  3.2   cooperative that has merged or been consolidated into the 
  3.3   existing electric cooperative.  The petition form must be 
  3.4   prescribed by the department within one month of the effective 
  3.5   date of this section and sample forms must be available from the 
  3.6   department.  Petitions must include a uniform statement that 
  3.7   petition signers are requesting a vote of cooperative members or 
  3.8   stockholders residing or located in the service territory area 
  3.9   of a particular former electric cooperative on the question of 
  3.10  revocation of the merger or consolidation and reestablishment of 
  3.11  the former electric cooperative.  On receipt of the petition, 
  3.12  the department shall verify that persons signing the petition 
  3.13  reside or are located in the service territory of the former 
  3.14  electric cooperative and that the petition is signed by at least 
  3.15  one percent of the members or stockholders of the existing 
  3.16  electric cooperative who reside or are located in the service 
  3.17  territory of the particular former electric cooperative. 
  3.18     Subd. 3.  [BALLOT.] Upon verification of a petition meeting 
  3.19  the requirements of this section, the department shall prepare 
  3.20  and mail ballots to all members or stockholders of the existing 
  3.21  electric cooperative who reside or are located in the service 
  3.22  territory of the former electric cooperative on the question of 
  3.23  whether the merger or consolidation of the former electric 
  3.24  cooperative into the existing electric cooperative should be 
  3.25  revoked with regard to the former electric cooperative and the 
  3.26  former electric cooperative reestablished.  The department shall 
  3.27  mail the ballots no later than 30 days after verifying that the 
  3.28  petition meets the requirements of this section.  Upon request 
  3.29  of the department, the existing electric cooperative shall 
  3.30  promptly provide the department with a list of the names and 
  3.31  addresses of current members or stockholders who reside or are 
  3.32  located in the service territory of the former electric 
  3.33  cooperative.  The department shall indicate on the ballot that 
  3.34  the ballot must be returned to the department within 17 days of 
  3.35  the date it was mailed by the department to be counted toward 
  3.36  the final vote. 
  4.1      Subd. 4.  [VOTING FOR MEMBERS.] If a vote or petition of 
  4.2   members or stockholders of a cooperative is submitted under this 
  4.3   section, the spouse of the member or stockholder may sign the 
  4.4   petition and vote on behalf of the member or stockholder unless 
  4.5   the member or stockholder has notified the department in writing 
  4.6   otherwise. 
  4.7      Subd. 5.  [NOTICE OF RESULTS.] The department shall provide 
  4.8   notice of the results of a vote held under this section to the 
  4.9   public utilities commission and the existing electric 
  4.10  cooperative within seven days after the vote has been counted by 
  4.11  the department.  The existing electric cooperative shall provide 
  4.12  notice of the results to its members or stockholders within 
  4.13  seven days of receiving notice from the department.  Notice by 
  4.14  first class mail is considered given pursuant to this 
  4.15  subdivision when mailed. 
  4.16     Sec. 4.  [308A.812] [REESTABLISHING FORMER ELECTRIC 
  4.17  COOPERATIVE; DISTRIBUTING ASSETS AND LIABILITIES; TRANSITION.] 
  4.18     Subdivision 1.  [COMMISSION ORDER TO REESTABLISH 
  4.19  COOPERATIVE.] Within 15 days of receiving notice from the 
  4.20  department of an affirmative vote to reestablish a former 
  4.21  electric cooperative, the commission shall issue an order 
  4.22  reestablishing the former electric cooperative.  Upon issuance 
  4.23  of the order, the former electric cooperative is reestablished 
  4.24  for organizational and transitional purposes but not for 
  4.25  actually providing electric service.  The reestablished former 
  4.26  electric cooperative is reestablished for purposes of actually 
  4.27  providing electric service and any other purposes effective as 
  4.28  of the date the reestablished former electric cooperative begins 
  4.29  to provide service to its members or stockholders.  The merger 
  4.30  or consolidation is revoked with respect to the former electric 
  4.31  cooperative as of the same date. 
  4.32     Subd. 2.  [MEMBERS.] The members or stockholders of the 
  4.33  existing electric cooperative who reside or are located in the 
  4.34  service territory of the former electric cooperative are members 
  4.35  or stockholders of the reestablished cooperative upon issuance 
  4.36  of the commission order under subdivision 1.  The members or 
  5.1   stockholders of the reestablished cooperative also remain 
  5.2   members or stockholders of the existing electric cooperative 
  5.3   until the date the reestablished former electric cooperative 
  5.4   begins to provide electric service to its members or 
  5.5   stockholders. 
  5.6      Subd. 3.  [INITIAL MEETING; BOARD OF DIRECTORS.] As part of 
  5.7   the order required by subdivision 1, the commission shall set 
  5.8   the date, time, and place of the first meeting of the 
  5.9   reestablished former electric cooperative.  The meeting must be 
  5.10  held, if possible, at a location in the service territory of the 
  5.11  reestablished former electric cooperative and must be held 
  5.12  within 30 days of issuance of the order.  The commission shall 
  5.13  designate one of the petitioners to call the meeting to order.  
  5.14  At the meeting, the members shall elect a board of directors.  
  5.15  The terms of the board of directors must be staggered if 
  5.16  necessary to be consistent with the articles and bylaws of the 
  5.17  reestablished former electric cooperative.  The commission shall 
  5.18  send notice of the meeting to persons who received ballots 
  5.19  pursuant to section 308A.811. 
  5.20     Subd. 4.  [ARTICLES OF ASSOCIATION.] The articles of 
  5.21  association of the former electric cooperative in effect just 
  5.22  prior to the merger or consolidation are the articles of the 
  5.23  reestablished former electric cooperative upon issuance of an 
  5.24  order by the commission reestablishing the former electric 
  5.25  cooperative until new or amended articles are adopted by the 
  5.26  reestablished former electric cooperative. 
  5.27     Subd. 5.  [BYLAWS.] The bylaws of the former electric 
  5.28  cooperative in effect just prior to the date of the merger or 
  5.29  consolidation are the bylaws of the reestablished former 
  5.30  electric cooperative upon issuance of an order by the commission 
  5.31  reestablishing the former electric cooperative until new or 
  5.32  amended bylaws are adopted by the reestablished former electric 
  5.33  cooperative. 
  5.34     Subd. 6.  [CRITERIA FOR DISTRIBUTING ASSETS AND 
  5.35  LIABILITIES; ORDER; DEADLINE.] (a) Within 30 days after the 
  5.36  initial meeting of the reestablished former electric 
  6.1   cooperative, the commission shall commence a proceeding to 
  6.2   determine how to allocate the assets and liabilities of the 
  6.3   existing electric cooperative between that electric cooperative 
  6.4   and the reestablished former electric cooperative.  The 
  6.5   commission shall issue an order allocating the assets and 
  6.6   liabilities within 120 days after commencing the proceeding.  
  6.7      (b) To the extent reasonably possible taking into 
  6.8   consideration the legal rights of secured lenders, the 
  6.9   commission shall allocate assets and liabilities according to 
  6.10  the criteria set forth in this subdivision. 
  6.11     (c) The reestablished former electric cooperative shall 
  6.12  receive all assets that the former electric cooperative 
  6.13  contributed to the existing electric cooperative as part of the 
  6.14  merger or consolidation that have not been sold including, but 
  6.15  not limited to, any buildings, electric system infrastructure, 
  6.16  equipment, and membership or stock in a generation and 
  6.17  transmission cooperative. 
  6.18     (d) The reestablished former electric cooperative shall 
  6.19  receive monetary compensation for the sale price of all assets 
  6.20  that the former electric cooperative contributed to the existing 
  6.21  electric cooperative as part of the merger or consolidation that 
  6.22  have been sold since the merger or consolidation, plus interest 
  6.23  on the sale price at an annual rate equal to the current 
  6.24  interest rate on one-year U.S. Treasury bonds for the period 
  6.25  from the time the asset was sold until the allocation of assets 
  6.26  and liabilities under this section. 
  6.27     (e) The reestablished former cooperative shall receive any 
  6.28  assets acquired or infrastructure improvements made since the 
  6.29  existing electric cooperative was established that are at a 
  6.30  fixed location in the service territory of the former electric 
  6.31  cooperative. 
  6.32     (f) The reestablished former electric cooperative shall 
  6.33  receive monetary compensation for a fair share of any other 
  6.34  assets acquired or any other infrastructure improvements made 
  6.35  since the existing electric cooperative was established taking 
  6.36  into consideration the value of the assets and any monetary 
  7.1   compensation it will receive under paragraphs (d) and (e). 
  7.2      (g) The existing electric cooperative shall keep its 
  7.3   remaining assets. 
  7.4      (h) The liabilities of the existing electric cooperative 
  7.5   must be fairly apportioned between the existing electric 
  7.6   cooperative and the reestablished former electric cooperative, 
  7.7   taking into consideration the liabilities of the former electric 
  7.8   cooperative at the time of the merger or consolidation and the 
  7.9   liabilities that the existing electric cooperative has incurred 
  7.10  since the consolidation or merger.  The commission may require 
  7.11  the sale of assets as part of an order under this subdivision.  
  7.12  The commission may contract with an asset valuation expert to 
  7.13  provide assistance to the commission in its performance of 
  7.14  duties under this section. 
  7.15     Subd. 7.  [ALLOCATING ASSETS AND LIABILITIES; ORDER; 
  7.16  DEADLINE.] The existing electric cooperative shall distribute 
  7.17  the assets, liabilities, and any monetary compensation to the 
  7.18  reestablished former electric cooperative in accordance with the 
  7.19  order adopted by the commission under subdivision 6 within 60 
  7.20  days of the issuance of the order.  As part of the allocation 
  7.21  process, the existing electric cooperative shall transfer the 
  7.22  title of property allocated to the reestablished former electric 
  7.23  cooperative to that reestablished cooperative.  If the existing 
  7.24  electric cooperative fails to comply with the requirements of 
  7.25  the order within the time allowed in this subdivision, the 
  7.26  commission may order the existing electric cooperative to take 
  7.27  steps, including the sale of assets, that the commission 
  7.28  determines are necessary to ensure compliance with the order. 
  7.29     Subd. 8.  [TRANSITION PLAN.] The existing electric 
  7.30  cooperative and the reestablished former electric cooperative 
  7.31  shall submit a transition plan to the commission within 30 days 
  7.32  after issuance of the order under subdivision 6 relating to 
  7.33  allocation of assets.  The plan must address the transition in 
  7.34  electric service from the existing electric cooperative to the 
  7.35  reestablished former electric cooperative for members or 
  7.36  stockholders of the reestablished electric cooperative in a 
  8.1   manner that ensures that the members or stockholders do not 
  8.2   incur an interruption in service.  The commission shall approve 
  8.3   or modify the plan to meet the requirements of this 
  8.4   subdivision.  If the existing electric cooperative and 
  8.5   reestablished former electric cooperative are unable to reach an 
  8.6   agreement on a transition plan by the date required under this 
  8.7   section, the commission shall issue an order providing for an 
  8.8   orderly transition in electric service. 
  8.9      Subd. 9.  [ELECTRIC SERVICE FOR MEMBERS.] The existing 
  8.10  electric cooperative shall continue to provide electric service 
  8.11  to members or stockholders who reside in the service territory 
  8.12  of the former electric cooperative, on the same terms and 
  8.13  conditions upon which it provides service to other members or 
  8.14  stockholders, until the date that the reestablished electric 
  8.15  cooperative begins to provide electric service to its members or 
  8.16  stockholders. 
  8.17     Subd. 10.  [SERVICE TERRITORIES.] Effective the date that 
  8.18  the reestablished former electric cooperative begins to provide 
  8.19  electric service, the service territory of the reestablished 
  8.20  former electric cooperative is the service territory of the 
  8.21  former electric cooperative.  Effective the same date, the 
  8.22  service territory of the existing electric cooperative is its 
  8.23  existing service territory prior to the revocation less the 
  8.24  service territory of the reestablished former electric 
  8.25  cooperative. 
  8.26     Subd. 11.  [EMPLOYEES.] (a) To the extent reasonably 
  8.27  possible and permitted by law, the reestablished former electric 
  8.28  cooperative shall hire employees of the existing electric 
  8.29  cooperative who work in the service area of the former electric 
  8.30  cooperative and who wish to work for the reestablished former 
  8.31  electric cooperative. 
  8.32     (b) With respect to employees who leave the existing 
  8.33  electric cooperative to work for the reestablished former 
  8.34  electric cooperative, the reestablished former electric 
  8.35  cooperative shall abide by the terms of any contract between 
  8.36  union employees and the existing electric cooperative that 
  9.1   exists at the time of the revocation of the merger or 
  9.2   consolidation.  This requirement applies for the remainder of 
  9.3   the contract period. 
  9.4      (c) To the extent permitted by law, the existing electric 
  9.5   cooperative shall transfer the pension funds of employees of the 
  9.6   existing electric cooperative who leave to work for the 
  9.7   reestablished former electric cooperative to the reestablished 
  9.8   former electric cooperative.  For purposes of this section, the 
  9.9   pension funds of an employee includes the amount of pension 
  9.10  funds the employee accrued as of the date of the merger or 
  9.11  consolidation plus the amount of benefits the employee would 
  9.12  have accrued prior to the time the employee leaves to work for 
  9.13  the reestablished former electric cooperative had the pension 
  9.14  plan of the existing electric cooperative remained invested as 
  9.15  it had been invested by the former electric cooperative.  The 
  9.16  pension funds shall be managed by the reestablished former 
  9.17  electric cooperative for the benefit of the employees to whom 
  9.18  they belong. 
  9.19     Sec. 5.  [308A.813] [MERGER AND CONSOLIDATION OF ELECTRIC 
  9.20  COOPERATIVES; COMPLETE REVOCATION.] 
  9.21     Subdivision 1.  [REESTABLISHING FORMER ELECTRIC 
  9.22  COOPERATIVES; ORGANIZATION.] A merger or consolidation involving 
  9.23  three or more electric cooperatives effective after December 29, 
  9.24  1996, and before January 1, 2001, may be completely revoked 
  9.25  within five years of its adoption in accordance with this 
  9.26  section.  If members or stockholders who reside or are located 
  9.27  in each of the former electric cooperatives that merged or were 
  9.28  consolidated into the existing electric cooperative vote under 
  9.29  section 308A.811 within 45 days of each other to revoke the 
  9.30  merger or consolidation, each of the former electric 
  9.31  cooperatives that comprise the existing electric cooperative 
  9.32  must be reestablished in accordance with section 308A.812.  The 
  9.33  membership, articles, and bylaws of each of the reestablished 
  9.34  cooperatives are established pursuant to section 308A.812, 
  9.35  subdivisions 2, 4, and 5.  The commission shall set and provide 
  9.36  notice of the initial meeting of each of the reestablished 
 10.1   former electric cooperatives under section 308A.812, subdivision 
 10.2   3. 
 10.3      Subd. 2.  [ALLOCATING ASSETS AND LIABILITIES; ORDER; 
 10.4   DEADLINE.] (a) Within 30 days of the latest initial meeting of 
 10.5   the reestablished former electric cooperatives, the commission 
 10.6   shall commence a proceeding to determine how to allocate the 
 10.7   assets and liabilities of the existing electric cooperative 
 10.8   between the reestablished former electric cooperatives.  The 
 10.9   commission shall issue an order allocating the assets and 
 10.10  liabilities of the existing electric cooperative between the 
 10.11  reestablished former electric cooperatives within 120 days after 
 10.12  commencing the proceeding.  
 10.13     (b) To the extent possible, taking into consideration the 
 10.14  legal rights of secured lenders, the commission shall allocate 
 10.15  the assets and liabilities of the existing electric cooperative 
 10.16  among the reestablished former electric cooperatives in a manner 
 10.17  that places the parties as close as reasonably possible to the 
 10.18  position they would have been in had there been no merger or 
 10.19  consolidation of those parties while fairly allocating assets 
 10.20  and liabilities acquired and incurred since the merger or 
 10.21  consolidation.  The commission may require the sale of assets as 
 10.22  part of the order.  
 10.23     (c) The existing electric cooperative shall distribute the 
 10.24  assets and liabilities to the reestablished former electric 
 10.25  cooperatives in accordance with the order within 60 days of the 
 10.26  issuance of the order.  As part of the allocation process, the 
 10.27  existing electric cooperative shall transfer the title of the 
 10.28  property allocated to each of the reestablished former electric 
 10.29  cooperatives to the respective cooperative.  If the existing 
 10.30  electric cooperative fails to comply with the requirements of 
 10.31  the order within the allowed time, the commission may order the 
 10.32  existing electric cooperative to take steps, including the sale 
 10.33  of assets, that the commission determines are necessary to 
 10.34  ensure compliance with the order. 
 10.35     Subd. 3.  [TRANSITION.] The existing electric cooperative 
 10.36  and the reestablished former electric cooperative shall submit a 
 11.1   transition plan to the commission within 30 days after issuance 
 11.2   of the order under this section relating to allocation of 
 11.3   assets.  The plan must address the transition in electric 
 11.4   service from the existing electric cooperative to the 
 11.5   reestablished former electric cooperatives for members or 
 11.6   stockholders in a manner that ensures that the members or 
 11.7   stockholders do not incur an interruption in service.  The 
 11.8   commission shall approve or modify the plan to meet the 
 11.9   requirements of this subdivision.  If the existing electric 
 11.10  cooperative and reestablished former electric cooperatives are 
 11.11  unable to reach an agreement by the date required under this 
 11.12  section, the commission shall issue an order providing for an 
 11.13  orderly transition in electric service.  The existing electric 
 11.14  cooperative shall continue to provide electric service to 
 11.15  members or stockholders until the date that the reestablished 
 11.16  electric cooperatives begin to provide electric service to their 
 11.17  members or stockholders. 
 11.18     Subd. 4.  [SERVICE TERRITORIES.] Effective the date the 
 11.19  reestablished former electric cooperatives begin to provide 
 11.20  electric service, the service territories of the reestablished 
 11.21  former electric cooperatives are the respective service 
 11.22  territories of the former electric cooperatives.  Effective the 
 11.23  same date, the merger or consolidation is revoked and the 
 11.24  existing electric cooperative ceases to exist. 
 11.25     Subd. 5.  [EMPLOYEES.] (a) To the extent reasonably 
 11.26  possible and permitted by law, the reestablished former electric 
 11.27  cooperatives shall hire employees of the existing electric 
 11.28  cooperative who work in the respective service areas of the 
 11.29  former electric cooperatives and who wish to work for the 
 11.30  respective reestablished former electric cooperatives. 
 11.31     (b) With respect to employees who leave the existing 
 11.32  electric cooperative to work for a reestablished former electric 
 11.33  cooperative, the reestablished former electric cooperative must 
 11.34  abide by the terms of any contract between union employees and 
 11.35  the existing electric cooperative that exists at the time of the 
 11.36  revocation of the merger or consolidation.  This requirement 
 12.1   applies for the remainder of the contract period. 
 12.2      (c) To the extent permitted by law, the existing electric 
 12.3   cooperative shall transfer the pension funds of employees of the 
 12.4   existing electric cooperative who leave to work for a 
 12.5   reestablished former electric cooperative to that reestablished 
 12.6   former electric cooperative.  For purposes of this section, the 
 12.7   pension funds of an employee includes the amount of pension 
 12.8   funds the employee accrued as of the date of the merger or 
 12.9   consolidation plus the amount of benefits the employee would 
 12.10  have accrued prior to the time the employee leaves to work for 
 12.11  that reestablished former electric cooperative had the pension 
 12.12  plan of the existing electric cooperative remained invested as 
 12.13  it had been invested by the respective former electric 
 12.14  cooperative.  The pension funds shall be managed by the 
 12.15  reestablished former electric cooperative for the benefit of the 
 12.16  employees to whom they belong. 
 12.17     Sec. 6.  [308A.814] [CREDITORS.] 
 12.18     The rights of a creditor may not be impaired by the 
 12.19  revocation of a merger or consolidation of electric cooperatives 
 12.20  under sections 308A.810 to 308A.813 without the creditor's 
 12.21  consent. 
 12.22     Sec. 7.  [MEMBER DUE PROCESS.] 
 12.23     Minnesota Statutes, section 216B.027, granting rights to 
 12.24  stockholders, applies to the exercise of stockholders' rights 
 12.25  under Minnesota Statutes, sections 308A.810 to 308A.814, 
 12.26  regardless of whether a referendum has been held as required by 
 12.27  Minnesota Statutes, section 216B.027, subdivision 7.  
 12.28  Notwithstanding Minnesota Statutes, section 216B.027, 
 12.29  subdivision 6, the cooperative shall pay the costs of including 
 12.30  stockholders' positions on issues as provided under Minnesota 
 12.31  Statutes, section 216B.027, subdivision 6. 
 12.32     Sec. 8.  [EFFECTIVE DATE.] 
 12.33     Sections 1 to 7 are effective the day following final 
 12.34  enactment and apply to mergers and consolidations adopted after 
 12.35  December 29, 1996, and before January 1, 2001.