S T A T E O F N E W Y O R K
________________________________________________________________________
1223
2015-2016 Regular Sessions
I N A S S E M B L Y
January 8, 2015
___________
Introduced by M. of A. BRENNAN, PRETLOW, KAVANAGH, GUNTHER, LUPARDO,
COLTON, ENGLEBRIGHT, LIFTON, CAHILL, ROBINSON, MAGNARELLI, ABINANTI,
BENEDETTO, GOLDFEDER, JAFFEE, PAULIN -- Multi-Sponsored by -- M. of A.
CRESPO, CYMBROWITZ, DenDEKKER, GALEF, GLICK, GOTTFRIED, HOOPER,
MARKEY, McDONOUGH, PEOPLES-STOKES, PERRY, RAIA, RAMOS, SCHIMEL,
THIELE, TITONE -- read once and referred to the Committee on Corpo-
rations, Authorities and Commissions
AN ACT to amend the public service law, in relation to directing the
public service commission to conduct an in-depth public interest anal-
ysis of proposed mergers by telephone corporations and other telecom-
munications services providers over which said commission has juris-
diction
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Legislative findings and purpose. The legislature finds
2 the public interest to require closer scrutiny of proposed telecommuni-
3 cations industry transfers of control, and declares that, except where
4 the public interest requires a contrary result, a portion of the bene-
5 fits of such mergers should be returned to the state's ratepayers.
6 S 2. Subdivision 2 of section 99 of the public service law, as amended
7 by chapter 383 of the laws of 1996, is amended to read as follows:
8 2. (A) No franchise nor any right to or under any franchise to own or
9 operate a telegraph line or telephone line shall be assigned, trans-
10 ferred, or leased, nor shall any contract or agreement hereafter made
11 with reference to or affecting any such franchise or right be valid or
12 of any force or effect whatsoever[,] unless the assignment, transfer,
13 lease, contract, or agreement shall have been approved by the commis-
14 sion.
15 (B) No telephone corporation shall transfer or lease its works or
16 system or any part of such works or system to any other person or corpo-
17 ration or contract for the operation of its works or system[,] without
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02448-01-5
A. 1223 2
1 the written consent of the commission. [Notwithstanding the foregoing,
2 any such transfer or lease between affiliated corporations with an
3 original cost of (a) less than one hundred thousand dollars proposed by
4 a telephone corporation having annual gross revenues in excess of two
5 hundred million dollars, (b) less than twenty-five thousand dollars
6 proposed by a telephone corporation having annual gross revenues of less
7 than two hundred million but more than ten million dollars or (c) less
8 than ten thousand dollars proposed by a telephone corporation having
9 annual gross revenues of less than ten million dollars and any other
10 transfer or lease between non-affiliates regardless of cost shall be
11 effective without the commission's written consent within ninety days
12 after such corporation notifies the commission that it plans to complete
13 such transfer or lease and submits a description of the transfer or
14 lease, unless the commission, or its designee, determines within such
15 ninety days that the public interest requires the commission's review
16 and written consent.]
17 (C) (1) NO CONSENT SHALL BE GIVEN BY THE COMMISSION TO THE ASSIGNMENT,
18 TRANSFER, OR LEASE OF ANY RIGHT OR FRANCHISE TO OPERATE A TELEGRAPH LINE
19 OR TELEPHONE LINE UNLESS IT SHALL HAVE BEEN SHOWN THAT SUCH ASSIGNMENT,
20 TRANSFER, OR LEASE IS IN THE PUBLIC INTEREST.
21 (2) NO CONSENT SHALL BE GIVEN BY THE COMMISSION TO THE ASSIGNMENT,
22 TRANSFER, OR LEASE OF ANY RIGHT OR FRANCHISE TO OPERATE ANY PART OF A
23 TELEPHONE CORPORATION'S WORKS OR SYSTEM, OR TO A CONTRACT FOR THE OPERA-
24 TION OF SUCH ENTITY'S WORKS OR SYSTEM, UNLESS IT SHALL HAVE BEEN SHOWN
25 THAT SUCH ASSIGNMENT, TRANSFER, OR LEASE OR CONTRACT IS IN THE PUBLIC
26 INTEREST.
27 (D) BEFORE AUTHORIZING THE MERGER, ACQUISITION, ASSIGNMENT, LEASE, OR
28 TRANSFER OF CONTROL OF ANY TELEPHONE CORPORATION ORGANIZED AND DOING
29 BUSINESS IN THIS STATE, AND ONLY WHERE ANY OF THE ENTITIES THAT ARE
30 PARTIES TO THE PROPOSED TRANSACTION HAS GROSS ANNUAL NEW YORK REVENUES
31 EXCEEDING TWO HUNDRED MILLION DOLLARS THE COMMISSION SHALL FIND THAT THE
32 PROPOSAL DOES ALL OF THE FOLLOWING:
33 (1) PROVIDES SHORT-TERM AND LONG-TERM ECONOMIC BENEFITS TO RATEPAYERS.
34 (2) EQUITABLY ALLOCATES, WHERE THE COMMISSION HAS RATEMAKING AUTHORI-
35 TY, THE TOTAL SHORT-TERM AND LONG-TERM FORECASTED ECONOMIC BENEFITS, AS
36 DETERMINED BY THE COMMISSION, OF THE PROPOSED MERGER, ACQUISITION, OR
37 CONTROL BETWEEN SHAREHOLDERS AND RATEPAYERS. RATEPAYERS SHALL RECEIVE
38 NOT LESS THAN FORTY PERCENT OF SUCH BENEFITS; PROVIDED, HOWEVER THAT
39 REINVESTMENT OF SUCH BENEFITS IN A TELEPHONE CORPORATION'S IN-STATE
40 INFRASTRUCTURE MAY BE DEEMED TO SATISFY SUCH REQUIREMENT.
41 (3) MAINTAINS OR IMPROVES THE FINANCIAL CONDITION OF THE RESULTING
42 TELEPHONE CORPORATIONS DOING BUSINESS IN THE STATE AND DOES NOT UNREA-
43 SONABLY ALLOCATE A TELEPHONE CORPORATION'S DEBT TO A DIVESTITURE ENTITY
44 CREATED FROM AN EXISTING TELEPHONE CORPORATION. FOR THE PURPOSE OF THIS
45 SECTION, A DIVESTITURE ENTITY IS A BUSINESS ENTITY CREATED BY THE
46 ASSIGNMENT, EXCHANGE, SALE, OR OTHER TRANSFER OF SOME OR ALL OF AN
47 EXISTING TELEPHONE CORPORATION'S LINES, SYSTEM, OR WORKS TO A NEW TELE-
48 PHONE CORPORATION.
49 (4) MAINTAINS OR IMPROVES THE QUALITY OF SERVICE TO TELEPHONE CORPO-
50 RATION RATEPAYERS IN THE STATE.
51 (5) MAINTAINS OR IMPROVES THE QUALITY OF MANAGEMENT OF THE RESULTING
52 TELEPHONE CORPORATION DOING BUSINESS IN THE STATE.
53 (6) IS FAIR AND REASONABLE TO AFFECTED TELEPHONE CORPORATION EMPLOY-
54 EES, INCLUDING BOTH UNION AND NONUNION EMPLOYEES.
55 (7) IS FAIR AND REASONABLE TO THE MAJORITY OF ALL AFFECTED TELEPHONE
56 CORPORATIONS.
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1 (8) IS BENEFICIAL ON AN OVERALL BASIS TO STATE AND LOCAL ECONOMIES AND
2 TO THE COMMUNITIES IN THE AREA SERVED BY THE RESULTING ENTITY AND DOES
3 NOT ALLOCATE SUBSTANTIALLY UNFUNDED PENSION OR HEALTH CARE OBLIGATIONS
4 OR OTHER EMPLOYEE BENEFITS TO A RESULTING TELEPHONE CORPORATION.
5 (9) PRESERVES THE JURISDICTION OF THE COMMISSION AND THE CAPACITY OF
6 THE COMMISSION TO EFFECTIVELY REGULATE AND AUDIT TELEPHONE CORPORATION
7 OPERATIONS IN THE STATE.
8 (10) PROVIDES MITIGATION MEASURES TO PREVENT SIGNIFICANT ADVERSE
9 CONSEQUENCES WHICH MAY RESULT.
10 (11) DOES NOT ADVERSELY AFFECT COMPETITION. IN MAKING THIS FINDING,
11 THE COMMISSION SHALL REQUEST AN ADVISORY OPINION FROM THE ATTORNEY
12 GENERAL REGARDING WHETHER OR NOT COMPETITION WILL BE ADVERSELY AFFECTED
13 AND WHAT MITIGATORY MEASURES COULD BE ADOPTED TO AVOID ANY SUCH ADVERSE
14 EFFECT.
15 (E) WHEN REVIEWING A MERGER, ACQUISITION, OR TRANSFER OF CONTROL
16 PROPOSAL, THE COMMISSION SHALL CONSIDER REASONABLE ALTERNATIVES OR
17 MODIFICATIONS TO THE PROPOSAL RECOMMENDED BY OTHER PARTIES, INCLUDING NO
18 MERGER, ACQUISITION, OR CONTROL, TO DETERMINE WHETHER OR NOT COMPARABLE
19 SHORT-TERM AND LONG-TERM ECONOMIC SAVINGS CAN BE ACHIEVED THROUGH OTHER
20 MEANS WHILE AVOIDING THE POSSIBLE ADVERSE CONSEQUENCES OF THE PROPOSAL.
21 (F) THE PERSON OR CORPORATION SEEKING ACQUISITION OR CONTROL OF A
22 TELEPHONE CORPORATION ORGANIZED AND DOING BUSINESS IN THIS STATE SHALL
23 HAVE BEFORE THE COMMISSION THE BURDEN OF PROVING BY A PREPONDERANCE OF
24 THE EVIDENCE THAT THE REQUIREMENTS OF PARAGRAPH (D) OF THIS SUBDIVISION
25 ARE MET.
26 (G) IN DETERMINING WHETHER OR NOT AN ACQUIRING TELEPHONE CORPORATION
27 HAS GROSS ANNUAL REVENUES EXCEEDING THE AMOUNT SPECIFIED IN PARAGRAPH
28 (D) OF THIS SUBDIVISION, THE REVENUES OF THAT TELEPHONE CORPORATION'S
29 AFFILIATES SHALL NOT BE CONSIDERED, UNLESS THE AFFILIATE IS TO BE
30 UTILIZED FOR THE PURPOSE OF EFFECTING SUCH MERGER, ACQUISITION, OR
31 CONTROL.
32 (H) SUBPARAGRAPHS ONE AND TWO OF PARAGRAPH (D) OF THIS SUBDIVISION
33 SHALL NOT APPLY TO THE FORMATION OF A HOLDING COMPANY.
34 (I) SUBPARAGRAPHS ONE AND TWO OF PARAGRAPH (D) OF THIS SUBDIVISION
35 SHALL NOT APPLY TO ACQUISITIONS OR CHANGES IN CONTROL THAT ARE MANDATED
36 BY EITHER THE COMMISSION OR THE LEGISLATURE.
37 (J) THIS SUBDIVISION SHALL ONLY APPLY TO ASSIGNMENTS, TRANSFERS OR
38 LEASES OF WORKS OR SYSTEMS OR OTHER TELECOMMUNICATIONS SERVICES PROVID-
39 ERS IF THE PROPOSED MERGER, ACQUISITION, ASSIGNMENT, LEASE, OR TRANSFER
40 INVOLVES A TELEPHONE COMPANY OR TELECOMMUNICATIONS SERVICE PROVIDER THAT
41 PROVIDES, AND ONLY TO THE EXTENT THE TRANSACTION INVOLVES, NON-COMPETI-
42 TIVE BASIC RATE RESIDENTIAL OR LIFELINE TELECOMMUNICATIONS SERVICE TO AT
43 LEAST ONE RESIDENTIAL CUSTOMER.
44 S 3. Section 100 of the public service law, as amended by chapter 226
45 of the laws of 2009, is amended to read as follows:
46 S 100. Transfer and ownership of stock. 1. No telegraph corporation or
47 telephone corporation, domestic or foreign, shall hereafter purchase
48 [or], acquire, take, or hold any part of the capital stock of any tele-
49 graph corporation or telephone corporation organized or existing under
50 the laws of this state unless authorized so to do by the commission.
51 2. Save where stock shall be transferred or held for the purpose of
52 collateral security, no stock corporation, domestic or foreign, company,
53 including, but not limited to, a limited liability company, association,
54 including a joint stock association, partnership, including a limited
55 liability partnership, or person, other than a telegraph corporation or
56 telephone corporation, shall, without the consent of the commission,
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1 purchase [or], acquire, take, or hold more than ten [per centum] PERCENT
2 of the voting capital stock issued by any telegraph corporation or tele-
3 phone corporation organized or existing under or by virtue of the laws
4 of this state. Any corporation now lawfully holding a majority of the
5 voting capital stock of any telegraph corporation or telephone corpo-
6 ration may, without the consent of the commission, acquire and hold the
7 remainder of the voting capital stock of such telegraph corporation or
8 telephone corporation[,] or any portion thereof.
9 3. (A) No consent shall be given by the commission to the acquisition
10 of any stock in accordance with this section unless it shall have been
11 shown that such acquisition is in the public interest[; provided, howev-
12 er, that any], WHICH THE COMMISSION SHALL DETERMINE BY FINDING THAT THE
13 PROPOSAL DOES ALL OF THE FOLLOWING, TO THE EXTENT DETERMINED TO BE
14 APPLICABLE:
15 (I) PROVIDES SHORT-TERM AND LONG-TERM ECONOMIC BENEFITS TO RATEPAYERS.
16 (II) EQUITABLY ALLOCATES, WHERE APPLICABLE AND WHERE THE COMMISSION
17 HAS RATEMAKING AUTHORITY, THE TOTAL SHORT-TERM AND LONG-TERM FORECASTED
18 ECONOMIC BENEFITS, AS DETERMINED BY THE COMMISSION, OF THE PROPOSED
19 ACQUISITION, PURCHASE, SALE, TRANSFER, OR RETENTION BETWEEN SHAREHOLDERS
20 AND RATEPAYERS. RATEPAYERS SHALL RECEIVE NOT LESS THAN FORTY PERCENT OF
21 THOSE BENEFITS; PROVIDED, HOWEVER THAT REINVESTMENT OF SUCH BENEFITS IN
22 A TELEPHONE CORPORATION'S IN-STATE INFRASTRUCTURE MAY BE DEEMED TO
23 SATISFY SUCH REQUIREMENT.
24 (III) MAINTAINS OR IMPROVES THE FINANCIAL CONDITION OF THE RESULTING
25 TELEPHONE CORPORATIONS DOING BUSINESS IN THE STATE AND DOES NOT UNREA-
26 SONABLY ALLOCATE A TELEPHONE CORPORATION'S DEBT TO A DIVESTITURE ENTITY
27 CREATED FROM AN EXISTING TELEPHONE CORPORATION. FOR THE PURPOSE OF THIS
28 SECTION, A DIVESTITURE ENTITY IS A BUSINESS ENTITY CREATED BY THE
29 ASSIGNMENT, EXCHANGE, SALE, OR OTHER TRANSFER OF SOME OR ALL OF AN
30 EXISTING TELEPHONE CORPORATION'S LINES, SYSTEM, OR WORKS TO A NEW TELE-
31 PHONE CORPORATION.
32 (IV) MAINTAINS OR IMPROVES THE QUALITY OF SERVICE TO TELEPHONE CORPO-
33 RATION RATEPAYERS IN THE STATE.
34 (V) MAINTAINS OR IMPROVES THE QUALITY OF MANAGEMENT OF THE RESULTING
35 TELEPHONE CORPORATION DOING BUSINESS IN THE STATE.
36 (VI) IS FAIR AND REASONABLE TO AFFECTED TELEPHONE CORPORATION EMPLOY-
37 EES, INCLUDING BOTH UNION AND NONUNION EMPLOYEES.
38 (VII) IS FAIR AND REASONABLE TO THE MAJORITY OF ALL AFFECTED TELEPHONE
39 CORPORATIONS.
40 (VIII) IS BENEFICIAL, ON AN OVERALL BASIS, TO STATE AND LOCAL ECONO-
41 MIES, AND TO THE COMMUNITIES IN THE AREA SERVED BY THE RESULTING ENTITY
42 AND DOES NOT ALLOCATE SUBSTANTIALLY UNFUNDED PENSION OR HEALTH CARE
43 OBLIGATIONS OR OTHER EMPLOYEE BENEFITS TO A RESULTING TELEPHONE CORPO-
44 RATION.
45 (IX) PRESERVES THE JURISDICTION OF THE COMMISSION AND THE CAPACITY OF
46 THE COMMISSION TO EFFECTIVELY REGULATE AND AUDIT TELEPHONE CORPORATION
47 OPERATIONS IN THE STATE.
48 (X) PROVIDES MITIGATION MEASURES TO PREVENT SIGNIFICANT ADVERSE CONSE-
49 QUENCES WHICH MAY RESULT FROM SUCH ACQUISITION.
50 (XI) DOES NOT ADVERSELY AFFECT COMPETITION. IN MAKING THIS FINDING,
51 THE COMMISSION SHALL REQUEST AN ADVISORY OPINION FROM THE ATTORNEY
52 GENERAL REGARDING WHETHER OR NOT COMPETITION WILL BE ADVERSELY AFFECTED
53 AND WHAT MITIGATORY MEASURES COULD BE ADOPTED TO AVOID ANY SUCH ADVERSE
54 EFFECT.
55 (B) ANY such consent HOWEVER, shall be deemed to be granted by the
56 commission ninety days after such corporation applies to the commission
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1 for its consent, unless the commission, or its designee, determines and
2 informs the applicant in writing within such ninety day period that the
3 public interest requires the commission's review and its written
4 consent. Nothing [herein] contained IN THIS SECTION shall be construed
5 to prevent the holding of any stock heretofore lawfully acquired, nor to
6 prevent, upon the surrender or exchange of such stock pursuant to a
7 reorganization plan, the purchase, acquisition, taking, or holding of a
8 proportionate amount of stock of any new corporation organized to take
9 over, at foreclosure or other sale, the property of any corporation
10 whose stock has been thus surrendered or exchanged[;], but the propor-
11 tion of the voting capital stock of the new corporation held by a stock
12 corporation, company, association, partnership or person and acquired by
13 it by any such surrender or exchange of stock shall not without the
14 consent of the commission exceed the proportion of the voting capital
15 stock held by it in the former corporation.
16 (C) THIS SUBDIVISION SHALL ONLY APPLY TO MERGERS, ACQUISITIONS,
17 ASSIGNMENTS, LEASES, OR TRANSFERS OF CONTROL OF TELEPHONE CORPORATIONS
18 OR OTHER TELECOMMUNICATIONS SERVICES PROVIDERS IF THE PROPOSED MERGER,
19 ACQUISITION, ASSIGNMENT, LEASE, OR TRANSFER INVOLVES A TELEPHONE COMPANY
20 OR TELECOMMUNICATIONS SERVICE PROVIDER THAT PROVIDES, AND ONLY TO THE
21 EXTENT THE TRANSACTION INVOLVES, NON-COMPETITIVE BASIC RATE RESIDENTIAL
22 OR LIFELINE TELECOMMUNICATIONS SERVICE TO AT LEAST ONE RESIDENTIAL
23 CUSTOMER.
24 4. Every contract, assignment, transfer, or agreement for transfer of
25 any stock by or through any person or corporation to any corporation,
26 company, association, partnership or person, in violation of any
27 provision of this chapter shall be void and of no effect, and no such
28 transfer or assignment shall be made upon the books of any such tele-
29 graph corporation or telephone corporation[,] or shall be recognized as
30 effective for any purpose.
31 5. THE PROVISIONS OF THIS SECTION SHALL ONLY APPLY TO THE OWNERSHIP
32 TRANSFER OF STOCKS WHERE ANY PARTY TO SUCH TRANSFER HAS ANNUAL NEW YORK
33 GROSS REVENUES EXCEEDING TWO HUNDRED MILLION DOLLARS.
34 S 4. This act shall take effect on the one hundred twentieth day after
35 it shall have become a law. Effective immediately, all rules and regu-
36 lations and any other measures necessary to implement any provision of
37 this act on its effective date may be promulgated and taken, respective-
38 ly, on or before the effective date of such provision.