(C) Virginia Mercury This story was originally published by Virginia Mercury and is unaltered. . . . . . . . . . . Court says Rappahannock Electric Cooperative members can propose bylaw changes • Virginia Mercury [1] ['Charlie Paullin', 'Clay Wirestone', 'Samantha Willis', 'Ivy Main', 'More From Author', '- April'] Date: 2024-04-08 A Virginia Court of Appeals ruled in favor of Rappahannock Electric Cooperative members last month who initially attempted to increase transparency among the electricity provider’s board through three proposals. Judge Mary Bennett Malveaux wrote the opinion of the three-member panel that affirmed a lower court’s ruling that the Board of Directors is allowed to receive a proposal to amend its bylaws to print board members’ salaries in its magazine. “Under our harmonized interpretation of that statute’s subsections, members are permitted to propose bylaw changes that have some effect on utility cooperative board procedures,” wrote Malveaux on one of the proposals Rappahannock Electric Cooperative member Seth Heald brought the proposals before the board almost 12 years ago. In addition to the salary disclosure, he proposed requiring notice for open board meetings, and changing the way proxy votes were handled. The proposals reflected concerns over governance issues and came during a time when members of electric cooperatives were seeking to reorganize the organizations amid the transition to clean energy. “This is a significant win for rural Virginians, and for the principle of democratic governance of electric co-ops,” Heald said in a statement. “It’s unfortunate that REC’s board fought this basic reform for more than a decade.” Electric co-ops are the sources of electricity in the state for predominantly rural, and increasingly suburban, areas outside of the territories of Virginia’s two largest electric utilities, Dominion Energy and Appalachian Power Company, and some municipal services. They’re organized primarily under the state’s Virginia Utility Consumer Services Cooperatives Act, but are allowed to make changes under the Virginia Nonstock Corporation Act and Virginia Stock Corporation Act. The co-ops give their members, who are also their customers, ownership control of the operations, hence the name, but an elected board of directors of at least five people conducts the business of the co-op. Heald’s first attempt at having the board adopt the proposals was shot down by the co-op on April 3, 2012, he said in a phone interview. In 2018, he attempted to bring forward the proposals again, but was rejected again. That’s when Heald, now joined by two other of the co-op’s members, sought help from the State Corporation Commission, which regulates the state’s utilities Lower court cases Legal proceedings ultimately led to Spotsylvania Circuit Court Judge Joseph Ellis dismissing the complaint since Ellis had to consider the legality of all three proposals altogether. Ellis ruled that the request to require notice for an open meeting proposal would hinder the board’s operations by limiting its ability to call a special meeting during a storm. He also ruled that a requirement to have bylaws changed by a two-third vote, instead of a simple majority, of members present at a meeting was allowed. But as a result of dismissing the open meeting proposal, Ellis made no determination on the other two proposals. The petitioners then asked the judge to again take up the proxy voting change, which would’ve had board members reveal who they were voting for by proxy instead of through secret balloting, and sought the OK on the requirement to disclose the board members salaries once a year in the co-op’s magazine, instead of simply listing salaries on its website. Ellis sided again with REC on rejecting the proxy voting proposal by saying those were an internal process for the board to decide, but sided with the memberson the salary disclosure proposal, stating that it “does not fundamentally prevent the Board from fulfilling its statutory role in any way,” according to court filings. The board “would continue doing exactly what it was doing before” and “would simply have to share . . . information,” Ellis ruled. Appeals court ruling Both sides sought appeals to the decisions, which lead to Malveaux and the two other judges ruling that Ellis erred in rejecting the reduction of the supermajority vote requirement. While the Virginia Utility Consumer Services Cooperatives Act may have been “silent” on the proportion of votes needed to change bylaws, the Virginia Nonstock Corporation Act’s simple majority requirement filled in that gap, the appellate court found. But the appeals judges upheld Ellis’ decision on the proxy vote proposal and board member salary disclosure, while disagreeing with the rationale made by the circuit court. The appeals courts said on a more foundational level than what Ellis ruled that the proxy vote change would have been a new bylaw from a proposal of members, who are allowed to only “alter or repeal,” and the salary disclosure would not have resulted in a new bylaw. The appeals court also noted while considering the proxy vote proposal that REC’s lawyers had argued a subsection of state law had said the board has the power to make its own rules and regulations for its procedure, but the judges said that ideology would “yield an absurd result,” by invalidating a member’s right to alter and repeal bylaws. The totality of the law, Malveaux wrote, “makes clear that a board’s power to adopt and amend bylaws is subject to members’ right to alter and repeal bylaws.” What’s next In a statement, REC spokeswoman Casey Hollins stated the co-op has already made some changes, including adding the simple majority requirement and publicizing any changes in board member salary. “REC’s Board promptly amended the subject bylaw to now require a majority vote of the members to alter or repeal the bylaws,” Hollins said by email. “While the court of appeals did not grant REC all of the relief it requested, REC is pleased by the ruling on the proxy voting bylaw proposal, as well as the trial court’s previous decision in favor of REC on the petitioners’ open meetings bylaw proposal.” Heald said he was considering what to do next with his salary disclosure proposal, since a new bylaw adopted by the REC Board of Directors requires members get 2.5% of the members’ signatures, or about 3,500 people, in order to submit one. The change was part of various “clean-up” changes that are consistent with other minimum membership requirements, Hollins said. But to Heald, the change is just another obstacle. And “as if that isn’t enough,” he said, the signatures have to also be from each of the nine regions the board members represent. [END] --- [1] Url: https://virginiamercury.com/2024/04/08/court-says-rappahannock-electric-cooperative-members-can-propose-bylaw-changes/ Published and (C) by Virginia Mercury Content appears here under this condition or license: Creative Commons BY-NC-ND 4.0. via Magical.Fish Gopher News Feeds: gopher://magical.fish/1/feeds/news/virginiamercury/