By Counts                                             H.B. No. 2690
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the acquisition of small and rural telephone exchanges.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subchapter B, Chapter 53, Utilities Code, is
 1-5     amended by adding Section 53.088 to read as follows:
 1-6           SEC. 53.066.  SALE, TRANSFER, AND MERGER REVIEW OF CERTAIN
 1-7     QUALIFIED EXCHANGES.  (a)  A telecommunications utility, reporting
 1-8     its acquisition or purchase of an exchange or exchanges, pursuant
 1-9     to Sections 14.101 or 51.010, may elect to be subject to Commission
1-10     review under this section to the extent an acquisition qualifies
1-11     herein and the utility makes the commitment specified herein.
1-12           (b)  An acquisition qualifies for review pursuant to this
1-13     section to the extent:
1-14                 (1)  that each individual exchange subject to
1-15     acquisition involves less than 10,000 access lines;
1-16                 (2)  all exchanges acquired by a utility total, in the
1-17     aggregate, less than 100,000 access lines;
1-18                 (3)  in combination with all other exchanges already
1-19     owned by the acquiring utility, the acquisition would bring the
1-20     utility's total ownership to not more than 100,000 access lines;
1-21                 (4)  the exchanges subject to acquisition were
 2-1     previously owned by an incumbent local exchange company which has
 2-2     elected to be subject to commission jurisdiction pursuant to
 2-3     Chapter 58 or 59 of this Act; and
 2-4                 (5)  the exchanges are purchased by a
 2-5     telecommunications utility which is not subject to commission
 2-6     jurisdiction pursuant to Chapter 58 or 59 of this Act.
 2-7           (c)  For the acquisition to be considered a Qualified
 2-8     Acquisition, the acquiring utility must commit:
 2-9                 (1)  not to increase the present basic local exchange
2-10     rate on or before the 5th anniversary of the acquisition date;
2-11                 (2)  to set intrastate switched access rates at the
2-12     same level as the acquiring company's interstate switched access
2-13     rates; or the level of the selling company;
2-14                 (3)  to withdraw the acquired exchanges from commission
2-15     jurisdiction pursuant to Chapter 58 or 59 of this act, and include
2-16     such exchanges within the jurisdiction of the commission for the
2-17     acquiring company; and
2-18                 (4)  to establish a level of service quality and
2-19     infrastructure which meets or exceeds the selling company's service
2-20     quality requirements at the time of the acquisition.
2-21           (d)  To the extent a telecommunications utility makes the
2-22     commitments specified in this section with regard to a Qualified
2-23     Acquisition, the Commission shall authorize Universal Service Fund
2-24     disbursements pursuant to Section 56.021(1) to the acquiring
2-25     utility for the residual revenue requirements necessary for the
 3-1     acquiring utility, pursuant to Section 53.051, to obtain a rate of
 3-2     return equal to that allowed by the Federal Communications
 3-3     Commission for the interstate jurisdiction.  The revenue
 3-4     requirement which would otherwise be considered for the acquiring
 3-5     utility is limited only to the extent that the acquiring utility
 3-6     purchased the exchanges above the selling utility net book value.
 3-7     If circumstances justify in the public interest, the Commission may
 3-8     also consider a rate of return above the federal level.
 3-9           (e)  To the extent the acquiring utility meets the
3-10     specifications of this section, the Commission may approve the
3-11     review and authorize universal service disbursements by
3-12     administrative review.
3-13           (f)  The Commission shall conduct its review pursuant to this
3-14     section based upon either the individual application of an
3-15     acquiring utility or based upon the joint application by utilities
3-16     which have made the acquisitions jointly with intent to partition
3-17     the exchanges among them so long as the partitioned acquisitions
3-18     otherwise meet the requirements of a Qualified Acquisition.
3-19           SECTION 2.  The importance of this legislation and the
3-20     crowded condition of the calendars in both houses create an
3-21     emergency and an imperative public necessity that the
3-22     constitutional rule requiring bills to be read on three several
3-23     days in each house be suspended, and this rule is hereby suspended,
3-24     and that this Act take effect and be in force from the after its
3-25     passage, and it is so enacted.