Joint Corporations Minutes

D r a f t O n l y

A p p r o v a l P e n d i n g

SS UUMMMMAARRYY ooff

PP RROOCCEEEEDDIINNGGSS J OINT CORPORATIONS, ELECTIONS & POLITICAL SUBDIVISIONS COMMITTEE

COMM ITTEE M EETING I NFORM ATIO N April 12, 2011 Room 302, Capitol Building Cheyenne, Wyoming

COMM ITTEE M EM BERS PRESENT Senator Cale Case, Cochairman Representative Pete Illoway, Cochairman Senator John Hines Senator Wayne Johnson Senator Marty Martin Senator Charlie Scott Representative Gregg Blikre Representative Jim Byrd Representative Allen Jaggi Representative Kendell Kroeker Representative John Patton Representative Jim Roscoe Representative Lisa Shepperson (via telephone) Representative Tim Stubson

LEGISL ATIVE SERVICE OFFICE ST AF F Lynda Cook, Staff Attorney Kelly Shepp, Associate Research Analyst

OTHERS PRESENT AT M EETING Representative Lorraine Quarberg Please refer to Appendix 1 to review the Subcommittee Sign-in Sheet for a list of other individuals who attended the meeting.

The Committee Meeting Summary of Proceedings (meeting minutes) is prepared by the Legislative Service Office (LSO) and is the official record of the proceedings of a legislative committee meeting. This document does not represent a transcript of the meeting; it is a digest of the meeting and provides a record of official actions taken by the Committee. All meeting materials and handouts provided to the Committee by the Legislative Service Office, public officials, lobbyists, and the public are on file at the Legislative Service Office and are part of the official record of the meeting. An index of these materials is provided at the end of this document and these materials are on file at the Legislative Service Office. For more information or to review meeting materials, please contact the Legislative Service Office at (307) 777-7881 or by e-mail at [email protected]. The Summary of Proceedings for each legislative committee meeting can be found on the Wyoming Legislature’s website at http://legisweb.state.wy.us. PAGE 2 OF 8

EXECUTIVE SUMMARY The committee met in Cheyenne and discussed insurance department regulations and telecommunications regulations, including state universal service funds and voice over internet protocol. The committee also began the process of consideration of redistricting based on the 2010 census.

CALL TO ORDER Co-Chairman Cale Case called the meeting to order at 8:05 a.m. The following sections summarize the Committee proceedings by topic. Please refer to Appendix 2 to review the Committee Meeting Agenda.

APPROV AL OF MINUTES Minutes from the November, 2010 Committee meeting were approved.

DEPARTMENT OF INSURANCE Ken Vines, Insurance Commissioner, Linda Johnson, Chief Examiner and Jim Mitchell, Chief Counsel testified.

Accreditation Legislation

Mr. Vines explained that statutory changes need to be made to the Risk Based Capital statutes and Hazardous Financial Condition statutes to maintain state accreditation. (Appendix 3). Mr. Vines explained why accreditation is important.

With respect to Risk Based Capital, the insurance department proposes a revision to the trend test for life insurance companies. Risk Based Capital is a test to assess risk for solvency for each company. The department’s proposal is to change the trend test from between 200% and 250% to between 200% and 300%. The proposal would also add a trend test to health insurance companies’ RBC that is similar to that required for property and casualty insurance companies.

With respect to Hazardous Financial Conditions, the proposal is to add several items to the list of issues that the insurance commissioner can consider when determining if an insurer’s continued operation is hazardous to its policy holders, creditors and the general public. The list includes audit reports, NAIC financial analysis solvency tools, actuarial opinions and summaries, material adverse loss reserve development and holding company transactions. The proposal also adds several new actions that the insurance commissioner can take in order to address these issues. These actions include disallowing certain asset valuations, requiring improvements to corporate governance practices, requiring business plans and requiring the insurer to adjust its non-life premium rates.

Surplus Lines

Last session the legislature passed a bare bones bill that modified the surplus lines laws to adhere to recent federal legislation. Mr. Vines testified that this interim they are seeking further legislation to make uniform how insurance commissions deal with surplus lines on a national basis. (Appendix 4). The new federal law allows for payment of premiums in one state and sharing of those premiums between states affected by the risk being insured. Surplus lines are risks that are unique and separately insured such as ski resorts, oil and gas operations, wind energy, etc.

The NAIC is still working on draft language. Mr. Vines expects to have specific language to propose later in the summer and asked to work with LSO to bring draft legislation to the next committee meeting.

JOINT CORPORATIONS, ELECTIONS, & POLITICAL SUBDIVISIONS COMMITTEE Summary of Proceedings

WYOMING LEGISLATIVE SERVICE OFFICE • 213 State Capitol • Cheyenne, Wyoming 82002 TELEPHONE (307) 777-7881 • FAX 307-777-5466 • E-MAIL [email protected] • WEB SITE http://legisweb.state.wy.us PAGE 3 OF 8

Rep. Stubson asked about SlimPac laws. SlimPac is an interstate compact proposed by NCOIL. Mr. Vines testified that the NIMA agreement proposed by NAIC is less complicated. He noted that the legislation passed already this year is broad enough for the commissioner to enter into either and they are analyzing both options. However, a compact is much less flexible than a multi-state agreement.

Dave Uchner, American Insurance commission, noted that they will follow the progress of the bills and comment at a later date.

The committee asked staff to draft a bill for RBC and Hazardous Conditions. The committee also asked staff to work with the commissioner on surplus lines legislation.

TELECOMMUNICATIONS

Update on Mergers in the Industry

Mike Ceballos and David Gibson, Qwest, updated the committee on Qwest's merger with CenturyLink. (Appendix 5). Mike Ceballos noted that he is retiring and introduced the replacement team. David Gibson will be taking over Mr. Ceballos' position but will be located in Montana. Mr. Gibson introduced Dave Johnson, Area Operations Manager and Kristen Lee, Wyoming Legislative and Regulatory Relations Director. He also noted that Edie Ortega will become a local governments specialist and that Gail Geringer will be on staff too.

Mr. Gibson testified that the target for full re-branding of the merged company is in August. Mr. Johnson testified that they are excited to expand bandwidth to schools and state offices in accord with Governor Mead’s broadband initiative.

Beth Canuteson, AT&T and Dave Picard discussed AT&T’s acquisition of the Al-Tel network and T- Mobile. She provided a map of the state’s current coverage and the new state coverage after the acquisition. (Appendix 6). Mr. Picard explained the evolution of 4G networks and the advantages of those networks.

Telecom regulation panel

Al Minier, Art Schmidt and Chris Petrie, Public Service Commission, testified. The panel is trying to work through where the Universal Service Fund is and where the state wants to go. The fund is a tax on phone service that is used to subsidize relatively high service rates. Mr. Minier explained how the USF is paid out to service providers. He also explained the PSC's auditing procedures.

Mr. Minier explained the difference between fixed VoiP providers and nomadic VoiP providers. He noted that Bresnan prices are not related to price to provide service like other providers. The PSC used Qwest’s price for essential service in their core area as a better base number for Bresnan because Bresnan doesn’t have the cost based pricing and they directly compete with Qwest in that area. He testified that Bresnan does not provide services to the rural high cost areas. He also noted that cost information is now out of date as a result of deregulation. Mr. Minier noted that it is not fair to provide USF funds to a company that does not provide service to rural areas and not to the companies that do. He also noted that the number of land lines is decreasing as the number of cell lines are increasing.

JOINT CORPORATIONS, ELECTIONS, & POLITICAL SUBDIVISIONS COMMITTEE Summary of Proceedings

Mr. Minier testified that when a company has both land and cell services, they can use all their USF funding to support cell service. He noted that as long as there is a state USF Wyoming is in a better position to leverage federal USF funds. The federal USF is proposing rules that would limit funding to providers that provide broadband. Ultimately, if something is passed, Mr. Minier suggested that they would need some statutory changes in the PSC authority to handle the changes. He noted that this would not be this legislative session.

Senator Scott discussed the issues of fixed and variable costs. He also noted that coverage with wireless has decreased with the national change from analog to digital. Mr. Minier noted that part of the problem is they have too little information on costs to make informed decisions. Additionally, while cell providers pay into the state USF, they have not taken funds from the program. That may be because of the requirement that the provider provide unlimited local calling throughout the service area. The committee discussed the pros and cons of changing the program to include building of cell towers. Mr. Minier expressed concern about putting the PSC in the position of grant making.

Chairman Illoway asked if the state has outgrown the need for a state USF. Mr. Minier testified that we have not – there are still places in this state that do not have adequate service and the state needs the state program if the changes to the federal program come to pass.

Mr. Schmidt explained the state USF program and compared the program to the federal USF program. Six companies get USF funds, three have been consistent throughout the years. More could receive funds but opt not to because the administrative costs would outweigh the amount they would receive. The benchmark for receipt of funds has been fairly consistently around $32 per month.

Larry Wolfe, Adam Falk & Shawn Beqaj, representing Bresnan and Cablevision, testified. Mr. Falk testified about the history of Cablevision and Bresnan, which merged last year. He testified that a market based approach to regulation leads to better services. He testified that the USF needs to be reexamined to provide a level playing field. He suggested the current program is unfair because fixed providers pay into the fund while nomadic providers do not. He also suggested that the fund is not efficient in meeting the needs of the customers. The program does not adequately reflect the availability of competition and subsidizes the incumbent carriers to the detriment of others. Mr. Falk suggested a better program would provide the subsidies directly to the consumer rather than to the provider.

Mr. Falk testified that any regulation of VoiP should be consistent between fixed and nomadic providers.

The committee discussed the policy issues of providing subsidies.

Edie Ortega, Liz Zerga, Don Jackson and Jason Hendrix, representing independent local carriers testified. Ms. Ortega testified that a state USF is important and eliminating it or significantly changing it will change how telecommunications are provided in this state. Ms. Ortega noted that with the taking of USF funds come responsibilities and obligations to provide service of last resort. She noted that traditional telephone regulation does not work for the industry as it exists today. She suggested that the committee should look at what is eligible service, how certification occurs and what responsibilities come with acceptance of the funds.

Ms. Zerga testified that for her companies the biggest concern is the changes to the federal USF and how that will affect the needs from the state USF. She noted that those federal changes will shape what the group is looking for in terms of changes to the state program. With respect to VoiP she expressed preference for lack of regulation but would like to see those providers contribute to the USF and 911 fees.

JOINT CORPORATIONS, ELECTIONS, & POLITICAL SUBDIVISIONS COMMITTEE Summary of Proceedings

Don Jackson explained the proposed changes to the federal USF. The federal agency wants to extend the federal USF to cover broadband but they do not want to increase the fund. They want to shift funds away from current recipients to midsize and larger companies. The federal changes propose to remove rate of return regulation. They are also attempting to bring about consolidation of rural telephone service.

Beth Canuteson, AT&T, echoed the comments already received. She suggested a wait and see approach in order to see what the federal changes will be and how they will affect the need for state funds. She would like to see a move from implicit subsidies to explicit subsidies.

Denise Parrish, Office of Consumer Advocate, testified that they are interested in this topic and will participate in this discussion as it progresses.

REDISTRICTING

Matt Obrecht, Dan Pauli and Matt Sackett, LSO, testified. Mr. Obrecht provided a memo outlining the current state of the law regarding redistricting. (Appendix 7). The basic principle of redistricting is one person one vote. To achieve that goal, legislative districts should fall within a standard deviation of no more than 10%. Mr. Obrecht explained the concepts of communities of interest and the requirements of the Voting Rights Act. He noted that political gerrymandering is when one party draws districts that do not meet redistricting principals in order to keep that party in office. Mr. Obrecht explained the legal constructs of redistricting and the following dominant redistricting principals. Districts should be contiguous, compact and should follow recognized geographic boundaries. Census blocks are the smallest geographic entity and cannot be split in a redistricting plan. Voting districts are a collection of census blocks put together by the Census Bureau with the input of the county clerks. The Wyoming constitutional requirement that each county be a separate district has been held null and void in violation of the one man one vote concept. Nested districts are house districts which fall completely within one senate district. Multimember districts are districts where more than one legislator is elected at large in a particular area. While this is not per se unconstitutional, it is very suspect under previous court analysis.

Mr. Obrecht handed out the guidelines and goals for redistricting adopted by Management Council. (Appendix 8).

Matt Sackett explained the census figures the state has received. (Appendix 9). The state population grew by 14.1% for a total population of 563,626. Two counties grew substantially (Campbell and Sublette) and two lost population (Hot Springs and Platte). Given these numbers, the ideal senate district should contain 18,788 people and the ideal house district should contain 9,394 people. Rep. Patton noted that the ideal numbers are purely mathematical in that the only restriction is that the number of house members should be no less than twice nor more than three times the number of senate members and that whatever number of seats in each house, they must be no more than 10% from the ideal.

Mr. Sackett provided a handout showing how current districts are now deviating from the ideal population (Appendix 9). Mr. Sackett then gave a presentation of how the Maptitude software works.

Mary Lankford, Sublette County Clerk, explained that counties establish their precincts to fit the voting blocks after the redistricting plan has been adopted.

JOINT CORPORATIONS, ELECTIONS, & POLITICAL SUBDIVISIONS COMMITTEE Summary of Proceedings

The committee discussed avoidance of party affiliation in consideration of the data. The committee also discussed the need to protect the interests of Native Americans in those areas where they are a significant voting block.

Mr. Sackett noted that there will be a link on the legislative website for private citizens to see the proposed plans and comment on them. It will also give notice of future meetings.

Rep. Patton discussed the possibility of opening up the discussion to change the number of members of each house.

Senator Scott suggested that the committee create regions that could be feasibly self-contained. Then the committee should have the local legislators in those regions prepare a plan for that region that would meet the needs of the local citizenry. (Appendix 10).

Sherri Daigle, Teton County Clerk, testified that the clerks are here today to express their deep interest in the process. They want to make themselves available with whatever information they have.

Dan Neil, ESPC, asked that no draft plan be treated as confidential.

Dr. Pat Arp, Deputy SOS, testified that her office is most interested in the detail work with the final drawing of the plans. She asked that the committee pay attention to splitting streets and where people go to vote.

The committee voted on the following principles:

1. Election districts should be contiguous, compact and reflect a community of interest (adopted); 2. Population of election districts should be substantially equal, with the range of deviation not to exceed 10% (adopted); 3. To the greatest extent possible, in establishing election districts: a. County boundaries should be followed; b. The majority of the population of each county should be in one district; c. Census blocks should be followed (adopted); 4. The plan should avoid diluting voting power of minorities in violation of the Voting Rights Act (adopted); 5. The house shall have 60 seats and the senate shall have 30 seats; (The committee discussed this issue extensively and adopted – Patton opposed). 6. Consideration should be given to two contiguous house districts in each senate district (adopted); 7. Significant geographical features should be considered in establishing districts (adopted); and 8. Consideration of residence of current legislators should be avoided (The committee discussed this issue extensively and failed this provision). 9. Residence of current legislators should be shown on all maps drawn. (Failed).

Regional meetings were scheduled as follows:

1. Rock Springs May 25 morning 2. Pinedale May 25 evening 3. Casper June 14 morning 4. Wright June 14 evening 5. Laramie June 28 morning

JOINT CORPORATIONS, ELECTIONS, & POLITICAL SUBDIVISIONS COMMITTEE Summary of Proceedings

6. Cheyenne June 28 evening 7. Powell July 12 morning 8. Worland July 12 evening 9. Lander July 13 morning 10. Rawlins July 13 evening 11. Torrington August 15 evening.

The committee set its next regular meeting for August 15 & 16 in Cheyenne.

MEETING ADJOURNMENT There being no further business, Co-Chairman Pete Illoway adjourned the meeting at 5:00 p.m.

Respectfully submitted,

Cale Case, Co-Chairman Pete Illoway, Co-Chairman

JOINT CORPORATIONS, ELECTIONS, & POLITICAL SUBDIVISIONS COMMITTEE Summary of Proceedings

CCoommmmiitttteeee MMeeeettiinngg

MMaatteerriiaallss IInnddeexx

Appendix Appendix Item Appendix Description Appendix Provider

1 Committee Sign-In Sheet Lists meeting attendees Legislative Service Office

2 Committee Meeting Provides an outline of the topics the Legislative Service Office Agenda Committee planned to address at meeting

3 Insurance Proposed accreditation legislation Dept. of Insurance

4 Insurance Surplus Lines Laws Dept. of Insurance

5 Telecommunications CenturyLink/Qwest merger coverage Qwest

6 Telecommunications AT&T/T-Mobile merger coverage AT&T

7 Redistricting Principals of state legislative redistricting Legislative Service Office law

8 Redistricting Guidelines/Goals for redistricting 2012 Legislative Service Office

9 Redistricting Census data and maps Legislative Service Office

10 Redistricting Regional districting concepts Senator Scott

JOINT CORPORATIONS, ELECTIONS, & POLITICAL SUBDIVISIONS COMMITTEE Summary of Proceedings