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.
       A. 1223                             3
    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,
       A. 1223                             4
    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
       A. 1223                             5
    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.