S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         4888
                              2015-2016 Regular Sessions
                                   I N  S E N A T E
                                    April 22, 2015
                                      ___________
       Introduced by Sen. PANEPINTO -- read twice and ordered printed, and when
         printed  to  be  committed to the Committee on Energy and Telecommuni-
         cations
       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
   18  the written consent of the commission.  [Notwithstanding the  foregoing,
   19  any  such  transfer  or  lease  between  affiliated corporations with an
   20  original cost of (a) less than one hundred thousand dollars proposed  by
   21  a  telephone  corporation  having annual gross revenues in excess of two
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD02448-01-5
       S. 4888                             2
    1  hundred million dollars, (b)  less  than  twenty-five  thousand  dollars
    2  proposed by a telephone corporation having annual gross revenues of less
    3  than  two  hundred million but more than ten million dollars or (c) less
    4  than  ten  thousand  dollars  proposed by a telephone corporation having
    5  annual gross revenues of less than ten million  dollars  and  any  other
    6  transfer  or  lease  between  non-affiliates regardless of cost shall be
    7  effective without the commission's written consent  within  ninety  days
    8  after such corporation notifies the commission that it plans to complete
    9  such  transfer  or  lease  and  submits a description of the transfer or
   10  lease, unless the commission, or its designee,  determines  within  such
   11  ninety  days  that  the public interest requires the commission's review
   12  and written consent.]
   13    (C) (1) NO CONSENT SHALL BE GIVEN BY THE COMMISSION TO THE ASSIGNMENT,
   14  TRANSFER, OR LEASE OF ANY RIGHT OR FRANCHISE TO OPERATE A TELEGRAPH LINE
   15  OR TELEPHONE LINE UNLESS IT SHALL HAVE BEEN SHOWN THAT SUCH  ASSIGNMENT,
   16  TRANSFER, OR LEASE IS IN THE PUBLIC INTEREST.
   17    (2)  NO  CONSENT  SHALL  BE GIVEN BY THE COMMISSION TO THE ASSIGNMENT,
   18  TRANSFER, OR LEASE OF ANY RIGHT OR FRANCHISE TO OPERATE ANY  PART  OF  A
   19  TELEPHONE CORPORATION'S WORKS OR SYSTEM, OR TO A CONTRACT FOR THE OPERA-
   20  TION  OF  SUCH ENTITY'S WORKS OR SYSTEM, UNLESS IT SHALL HAVE BEEN SHOWN
   21  THAT SUCH ASSIGNMENT, TRANSFER, OR LEASE OR CONTRACT IS  IN  THE  PUBLIC
   22  INTEREST.
   23    (D)  BEFORE AUTHORIZING THE MERGER, ACQUISITION, ASSIGNMENT, LEASE, OR
   24  TRANSFER OF CONTROL OF ANY TELEPHONE  CORPORATION  ORGANIZED  AND  DOING
   25  BUSINESS  IN  THIS  STATE,  AND  ONLY WHERE ANY OF THE ENTITIES THAT ARE
   26  PARTIES TO THE PROPOSED TRANSACTION HAS GROSS ANNUAL NEW  YORK  REVENUES
   27  EXCEEDING TWO HUNDRED MILLION DOLLARS THE COMMISSION SHALL FIND THAT THE
   28  PROPOSAL DOES ALL OF THE FOLLOWING:
   29    (1) PROVIDES SHORT-TERM AND LONG-TERM ECONOMIC BENEFITS TO RATEPAYERS.
   30    (2)  EQUITABLY ALLOCATES, WHERE THE COMMISSION HAS RATEMAKING AUTHORI-
   31  TY, THE TOTAL SHORT-TERM AND LONG-TERM FORECASTED ECONOMIC BENEFITS,  AS
   32  DETERMINED  BY  THE  COMMISSION, OF THE PROPOSED MERGER, ACQUISITION, OR
   33  CONTROL BETWEEN SHAREHOLDERS AND RATEPAYERS.  RATEPAYERS  SHALL  RECEIVE
   34  NOT  LESS  THAN  FORTY  PERCENT OF SUCH BENEFITS; PROVIDED, HOWEVER THAT
   35  REINVESTMENT OF SUCH BENEFITS  IN  A  TELEPHONE  CORPORATION'S  IN-STATE
   36  INFRASTRUCTURE MAY BE DEEMED TO SATISFY SUCH REQUIREMENT.
   37    (3)  MAINTAINS  OR  IMPROVES  THE FINANCIAL CONDITION OF THE RESULTING
   38  TELEPHONE CORPORATIONS DOING BUSINESS IN THE STATE AND DOES  NOT  UNREA-
   39  SONABLY  ALLOCATE A TELEPHONE CORPORATION'S DEBT TO A DIVESTITURE ENTITY
   40  CREATED FROM AN EXISTING TELEPHONE CORPORATION. FOR THE PURPOSE OF  THIS
   41  SECTION,  A  DIVESTITURE  ENTITY  IS  A  BUSINESS  ENTITY CREATED BY THE
   42  ASSIGNMENT, EXCHANGE, SALE, OR OTHER TRANSFER  OF  SOME  OR  ALL  OF  AN
   43  EXISTING  TELEPHONE CORPORATION'S LINES, SYSTEM, OR WORKS TO A NEW TELE-
   44  PHONE CORPORATION.
   45    (4) MAINTAINS OR IMPROVES THE QUALITY OF SERVICE TO  TELEPHONE  CORPO-
   46  RATION RATEPAYERS IN THE STATE.
   47    (5)  MAINTAINS  OR IMPROVES THE QUALITY OF MANAGEMENT OF THE RESULTING
   48  TELEPHONE CORPORATION DOING BUSINESS IN THE STATE.
   49    (6) IS FAIR AND REASONABLE TO AFFECTED TELEPHONE  CORPORATION  EMPLOY-
   50  EES, INCLUDING BOTH UNION AND NONUNION EMPLOYEES.
   51    (7)  IS  FAIR AND REASONABLE TO THE MAJORITY OF ALL AFFECTED TELEPHONE
   52  CORPORATIONS.
   53    (8) IS BENEFICIAL ON AN OVERALL BASIS TO STATE AND LOCAL ECONOMIES AND
   54  TO THE COMMUNITIES IN THE AREA SERVED BY THE RESULTING ENTITY  AND  DOES
   55  NOT  ALLOCATE  SUBSTANTIALLY UNFUNDED PENSION OR HEALTH CARE OBLIGATIONS
   56  OR OTHER EMPLOYEE BENEFITS TO A RESULTING TELEPHONE CORPORATION.
       S. 4888                             3
    1    (9) PRESERVES THE JURISDICTION OF THE COMMISSION AND THE  CAPACITY  OF
    2  THE  COMMISSION  TO EFFECTIVELY REGULATE AND AUDIT TELEPHONE CORPORATION
    3  OPERATIONS IN THE STATE.
    4    (10)  PROVIDES  MITIGATION  MEASURES  TO  PREVENT  SIGNIFICANT ADVERSE
    5  CONSEQUENCES WHICH MAY RESULT.
    6    (11) DOES NOT ADVERSELY AFFECT COMPETITION. IN  MAKING  THIS  FINDING,
    7  THE  COMMISSION  SHALL  REQUEST  AN  ADVISORY  OPINION FROM THE ATTORNEY
    8  GENERAL REGARDING WHETHER OR NOT COMPETITION WILL BE ADVERSELY  AFFECTED
    9  AND  WHAT MITIGATORY MEASURES COULD BE ADOPTED TO AVOID ANY SUCH ADVERSE
   10  EFFECT.
   11    (E) WHEN REVIEWING A  MERGER,  ACQUISITION,  OR  TRANSFER  OF  CONTROL
   12  PROPOSAL,  THE  COMMISSION  SHALL  CONSIDER  REASONABLE  ALTERNATIVES OR
   13  MODIFICATIONS TO THE PROPOSAL RECOMMENDED BY OTHER PARTIES, INCLUDING NO
   14  MERGER, ACQUISITION, OR CONTROL, TO DETERMINE WHETHER OR NOT  COMPARABLE
   15  SHORT-TERM  AND LONG-TERM ECONOMIC SAVINGS CAN BE ACHIEVED THROUGH OTHER
   16  MEANS WHILE AVOIDING THE POSSIBLE ADVERSE CONSEQUENCES OF THE PROPOSAL.
   17    (F) THE PERSON OR CORPORATION SEEKING  ACQUISITION  OR  CONTROL  OF  A
   18  TELEPHONE  CORPORATION  ORGANIZED AND DOING BUSINESS IN THIS STATE SHALL
   19  HAVE BEFORE THE COMMISSION THE BURDEN OF PROVING BY A  PREPONDERANCE  OF
   20  THE  EVIDENCE THAT THE REQUIREMENTS OF PARAGRAPH (D) OF THIS SUBDIVISION
   21  ARE MET.
   22    (G) IN DETERMINING WHETHER OR NOT AN ACQUIRING  TELEPHONE  CORPORATION
   23  HAS  GROSS  ANNUAL  REVENUES EXCEEDING THE AMOUNT SPECIFIED IN PARAGRAPH
   24  (D) OF THIS SUBDIVISION, THE REVENUES OF  THAT  TELEPHONE  CORPORATION'S
   25  AFFILIATES  SHALL  NOT  BE  CONSIDERED,  UNLESS  THE  AFFILIATE IS TO BE
   26  UTILIZED FOR THE PURPOSE  OF  EFFECTING  SUCH  MERGER,  ACQUISITION,  OR
   27  CONTROL.
   28    (H)  SUBPARAGRAPHS  ONE  AND  TWO OF PARAGRAPH (D) OF THIS SUBDIVISION
   29  SHALL NOT APPLY TO THE FORMATION OF A HOLDING COMPANY.
   30    (I) SUBPARAGRAPHS ONE AND TWO OF PARAGRAPH  (D)  OF  THIS  SUBDIVISION
   31  SHALL  NOT APPLY TO ACQUISITIONS OR CHANGES IN CONTROL THAT ARE MANDATED
   32  BY EITHER THE COMMISSION OR THE LEGISLATURE.
   33    (J) THIS SUBDIVISION SHALL ONLY APPLY  TO  ASSIGNMENTS,  TRANSFERS  OR
   34  LEASES  OF WORKS OR SYSTEMS OR OTHER TELECOMMUNICATIONS SERVICES PROVID-
   35  ERS IF THE PROPOSED MERGER, ACQUISITION, ASSIGNMENT, LEASE, OR  TRANSFER
   36  INVOLVES A TELEPHONE COMPANY OR TELECOMMUNICATIONS SERVICE PROVIDER THAT
   37  PROVIDES,  AND ONLY TO THE EXTENT THE TRANSACTION INVOLVES, NON-COMPETI-
   38  TIVE BASIC RATE RESIDENTIAL OR LIFELINE TELECOMMUNICATIONS SERVICE TO AT
   39  LEAST ONE RESIDENTIAL CUSTOMER.
   40    S 3. Section 100 of the public service law, as amended by chapter  226
   41  of the laws of 2009, is amended to read as follows:
   42    S 100. Transfer and ownership of stock. 1. No telegraph corporation or
   43  telephone  corporation,  domestic  or  foreign, shall hereafter purchase
   44  [or], acquire, take, or hold any part of the capital stock of any  tele-
   45  graph  corporation  or telephone corporation organized or existing under
   46  the laws of this state unless authorized so to do by the commission.
   47    2. Save where stock shall be transferred or held for  the  purpose  of
   48  collateral security, no stock corporation, domestic or foreign, company,
   49  including, but not limited to, a limited liability company, association,
   50  including  a  joint  stock association, partnership, including a limited
   51  liability partnership, or person, other than a telegraph corporation  or
   52  telephone  corporation,  shall,  without  the consent of the commission,
   53  purchase [or], acquire, take, or hold more than ten [per centum] PERCENT
   54  of the voting capital stock issued by any telegraph corporation or tele-
   55  phone corporation organized or existing under or by virtue of  the  laws
   56  of  this  state.  Any corporation now lawfully holding a majority of the
       S. 4888                             4
    1  voting capital stock of any telegraph corporation  or  telephone  corpo-
    2  ration  may, without the consent of the commission, acquire and hold the
    3  remainder of the voting capital stock of such telegraph  corporation  or
    4  telephone corporation[,] or any portion thereof.
    5    3.  (A) No consent shall be given by the commission to the acquisition
    6  of any stock in accordance with this section unless it shall  have  been
    7  shown that such acquisition is in the public interest[; provided, howev-
    8  er,  that any], WHICH THE COMMISSION SHALL DETERMINE BY FINDING THAT THE
    9  PROPOSAL DOES ALL OF THE FOLLOWING,  TO  THE  EXTENT  DETERMINED  TO  BE
   10  APPLICABLE:
   11    (I) PROVIDES SHORT-TERM AND LONG-TERM ECONOMIC BENEFITS TO RATEPAYERS.
   12    (II)  EQUITABLY  ALLOCATES,  WHERE APPLICABLE AND WHERE THE COMMISSION
   13  HAS RATEMAKING AUTHORITY, THE TOTAL SHORT-TERM AND LONG-TERM  FORECASTED
   14  ECONOMIC  BENEFITS,  AS  DETERMINED  BY  THE COMMISSION, OF THE PROPOSED
   15  ACQUISITION, PURCHASE, SALE, TRANSFER, OR RETENTION BETWEEN SHAREHOLDERS
   16  AND RATEPAYERS. RATEPAYERS SHALL RECEIVE NOT LESS THAN FORTY PERCENT  OF
   17  THOSE  BENEFITS; PROVIDED, HOWEVER THAT REINVESTMENT OF SUCH BENEFITS IN
   18  A TELEPHONE CORPORATION'S  IN-STATE  INFRASTRUCTURE  MAY  BE  DEEMED  TO
   19  SATISFY SUCH REQUIREMENT.
   20    (III)  MAINTAINS  OR IMPROVES THE FINANCIAL CONDITION OF THE RESULTING
   21  TELEPHONE CORPORATIONS DOING BUSINESS IN THE STATE AND DOES  NOT  UNREA-
   22  SONABLY  ALLOCATE A TELEPHONE CORPORATION'S DEBT TO A DIVESTITURE ENTITY
   23  CREATED FROM AN EXISTING TELEPHONE CORPORATION. FOR THE PURPOSE OF  THIS
   24  SECTION,  A  DIVESTITURE  ENTITY  IS  A  BUSINESS  ENTITY CREATED BY THE
   25  ASSIGNMENT, EXCHANGE, SALE, OR OTHER TRANSFER  OF  SOME  OR  ALL  OF  AN
   26  EXISTING  TELEPHONE CORPORATION'S LINES, SYSTEM, OR WORKS TO A NEW TELE-
   27  PHONE CORPORATION.
   28    (IV) MAINTAINS OR IMPROVES THE QUALITY OF SERVICE TO TELEPHONE  CORPO-
   29  RATION RATEPAYERS IN THE STATE.
   30    (V)  MAINTAINS  OR IMPROVES THE QUALITY OF MANAGEMENT OF THE RESULTING
   31  TELEPHONE CORPORATION DOING BUSINESS IN THE STATE.
   32    (VI) IS FAIR AND REASONABLE TO AFFECTED TELEPHONE CORPORATION  EMPLOY-
   33  EES, INCLUDING BOTH UNION AND NONUNION EMPLOYEES.
   34    (VII) IS FAIR AND REASONABLE TO THE MAJORITY OF ALL AFFECTED TELEPHONE
   35  CORPORATIONS.
   36    (VIII)  IS  BENEFICIAL, ON AN OVERALL BASIS, TO STATE AND LOCAL ECONO-
   37  MIES, AND TO THE COMMUNITIES IN THE AREA SERVED BY THE RESULTING  ENTITY
   38  AND  DOES  NOT  ALLOCATE  SUBSTANTIALLY  UNFUNDED PENSION OR HEALTH CARE
   39  OBLIGATIONS OR OTHER EMPLOYEE BENEFITS TO A RESULTING  TELEPHONE  CORPO-
   40  RATION.
   41    (IX)  PRESERVES THE JURISDICTION OF THE COMMISSION AND THE CAPACITY OF
   42  THE COMMISSION TO EFFECTIVELY REGULATE AND AUDIT  TELEPHONE  CORPORATION
   43  OPERATIONS IN THE STATE.
   44    (X) PROVIDES MITIGATION MEASURES TO PREVENT SIGNIFICANT ADVERSE CONSE-
   45  QUENCES WHICH MAY RESULT FROM SUCH ACQUISITION.
   46    (XI)  DOES  NOT  ADVERSELY AFFECT COMPETITION. IN MAKING THIS FINDING,
   47  THE COMMISSION SHALL REQUEST  AN  ADVISORY  OPINION  FROM  THE  ATTORNEY
   48  GENERAL  REGARDING WHETHER OR NOT COMPETITION WILL BE ADVERSELY AFFECTED
   49  AND WHAT MITIGATORY MEASURES COULD BE ADOPTED TO AVOID ANY SUCH  ADVERSE
   50  EFFECT.
   51    (B)  ANY  such  consent  HOWEVER, shall be deemed to be granted by the
   52  commission ninety days after such corporation applies to the  commission
   53  for  its consent, unless the commission, or its designee, determines and
   54  informs the applicant in writing within such ninety day period that  the
   55  public  interest  requires  the  commission's  review  and  its  written
   56  consent.  Nothing [herein] contained IN THIS SECTION shall be  construed
       S. 4888                             5
    1  to prevent the holding of any stock heretofore lawfully acquired, nor to
    2  prevent,  upon  the  surrender  or  exchange of such stock pursuant to a
    3  reorganization plan, the purchase, acquisition, taking, or holding of  a
    4  proportionate  amount  of stock of any new corporation organized to take
    5  over, at foreclosure or other sale,  the  property  of  any  corporation
    6  whose  stock  has been thus surrendered or exchanged[;], but the propor-
    7  tion of the voting capital stock of the new corporation held by a  stock
    8  corporation, company, association, partnership or person and acquired by
    9  it  by  any  such  surrender  or exchange of stock shall not without the
   10  consent of the commission exceed the proportion of  the  voting  capital
   11  stock held by it in the former corporation.
   12    (C)  THIS  SUBDIVISION  SHALL  ONLY  APPLY  TO  MERGERS, ACQUISITIONS,
   13  ASSIGNMENTS, LEASES, OR TRANSFERS OF CONTROL OF  TELEPHONE  CORPORATIONS
   14  OR  OTHER  TELECOMMUNICATIONS SERVICES PROVIDERS IF THE PROPOSED MERGER,
   15  ACQUISITION, ASSIGNMENT, LEASE, OR TRANSFER INVOLVES A TELEPHONE COMPANY
   16  OR TELECOMMUNICATIONS SERVICE PROVIDER THAT PROVIDES, AND  ONLY  TO  THE
   17  EXTENT  THE TRANSACTION INVOLVES, NON-COMPETITIVE BASIC RATE RESIDENTIAL
   18  OR LIFELINE TELECOMMUNICATIONS  SERVICE  TO  AT  LEAST  ONE  RESIDENTIAL
   19  CUSTOMER.
   20    4.  Every contract, assignment, transfer, or agreement for transfer of
   21  any stock by or through any person or corporation  to  any  corporation,
   22  company,  association,  partnership  or  person,  in  violation  of  any
   23  provision of this chapter shall be void and of no effect,  and  no  such
   24  transfer  or  assignment  shall be made upon the books of any such tele-
   25  graph corporation or telephone corporation[,] or shall be recognized  as
   26  effective for any purpose.
   27    5.  THE  PROVISIONS  OF THIS SECTION SHALL ONLY APPLY TO THE OWNERSHIP
   28  TRANSFER OF STOCKS WHERE ANY PARTY TO SUCH TRANSFER HAS ANNUAL NEW  YORK
   29  GROSS REVENUES EXCEEDING TWO HUNDRED MILLION DOLLARS.
   30    S 4. This act shall take effect on the one hundred twentieth day after
   31  it  shall  have become a law. Effective immediately, all rules and regu-
   32  lations and any other measures necessary to implement any  provision  of
   33  this act on its effective date may be promulgated and taken, respective-
   34  ly, on or before the effective date of such provision.