As midnight fast approached on March 14, 2006, the legislature adjourned “sine die”, marking the end of the 2006 session of the Indiana General Assembly. Although this was a short (non-budget) session, an abundance of substantive issues were in play from beginning to end, making this one of the more action-packed short sessions in recent history.

HEA 1279 (Telecommunications) occupied a large amount of our time at the Statehouse. This massive telecommunications deregulation bill (and its counterpart in the Senate, SB 245) was muscled through the legislative process despite our efforts, in coalition with AARP Indiana and a number of other consumer and media groups, to carve out protections for individual and small business ratepayers from unjustifiable rate increases and service quality decreases resulting from the elimination of Indiana Utility Regulatory Commission (IURC) jurisdiction over basic telecommunications service. Misrepresentation abounded as the bills’ main authors and sponsors, as well as numerous telecommunications industry lobbyists packing the hallways, argued that expansion of broadband was dependent on deregulation of basic telecommunications service.

Our efforts to dispel this and other myths began with the distribution of a 35 page White Paper citing the IURC, Office of Utility Consumer Counselor (OUCC), other national advocacy groups and AT&T’s own reports and statements in support of our argument that HB 1279 and SB 245 were unnecessary and, at the very least, the IURC must retain jurisdiction over basic telecommunications service. We followed up with testimony at hearings on each bill, daily dialogue with legislators and distribution of written commentary at key points along the way. We also generated regular action alerts and mobilized thousands of grass roots advocates to contact their legislators with specific concerns about both bills.

Despite these efforts, legislators voted in large numbers to support final passage of HEA 1279, signifying a willingness to support the interests of mega-monopoly telecommunications companies like AT&T and Verizon over those of their constituents. Only days after the House voted to concur on Senate amendments to HB 1279, AT&T announced its $67 billion acquisition of BellSouth. Meanwhile, HEA 1279 was signed by the Governor on 3/14/06, setting the stage for rate increases that will be available to finance the acquisition while up to 10,000 more workers are laid off, with absolutely no provisions requiring any investment in Indiana.

HEA 1315 (Video Service Franchises) became a “trailer bill” to HEA 1279 in the final day of session, providing additional proof of a pattern and practice by the Indiana General Assembly of placing business interests above the interests of consumers. Until 3/14/06 HB 1315 contained provisions requiring all nursing homes to have automatic fire sprinkler systems installed before July, 2011 and requiring the Department of Health to publish the types of automatic fire sprinkler systems and smoke detectors in nursing homes in its consumer guides. On 3/14/06 HB 1315 was stripped of this language, and language was inserted ensuring that video service (cable) providers who opted to participate in the state video franchise program created in HEA 1279 would not be bound by any obligations to consumers or local units of government under previously negotiated local franchise agreements.

Despite the fact that no Senate conferees had been appointed and no quorum was present when HB 1315 was heard in conference committee on 3/14/06 (CAC testified against HB 1315 at the hearing), hours later a conference committee report signed by all four conferees, including newly discovered Senate conferees Hershman and Hume, miraculously appeared, was adopted in the Rules committees in both chambers and passed the House and Senate by wide margins, sending HEA on its way to the Governor for signature. Meanwhile, key legislation requiring fire sprinkler systems in nursing homes and public disclosure of fire sprinkler systems and smoke detectors in nursing homes is dead, despite countless hours of dedication by consumer advocates, spanning several years, to reach agreement with nursing home industry representatives.

HEA 1001, containing various property tax relief measures, also ranked high on the list of substantive issues debated in this year’s legislative session. Passing in the final hours of the legislative session, HB 1001 will provide homeowners a roughly 4% reduction in property taxes this year, and roughly 6% in reduced property taxes in 2007.

Language from former HB 1081, exempting sales tax from home energy bills for persons who qualify under the Low Income Home Energy Assistance Program (LIHEAP), remained in HB 1001 upon final passage. The sales tax exemption applies only to LIHEAP assistance between 6/30/06 and 6/30/07, essentially covering next winter’s heating bills. Nevertheless, the exemption provides additional funds to assist more eligible households with their heating expenses.

HR 23 was adopted by voice vote in the House on 3/6/06. HR 23 urges the Legislative Council to assign the issue of renewable energy development to the Regulatory Flexibility Committee. HR 23 was introduced following a hearing on HB 1379 (Renewable Energy Resources) on 1/25/06 in the House Utilities and Energy Committee. The hearing offered evidence of growing support for the requirement that electricity suppliers begin developing and increasing reliance on renewable energy resources for the generation of electricity. CAC helped to secure a hearing on HB 1379, organized testimony and testified in support of the bill at the hearing.

Renewable energy resources include wind, solar photovoltaic cells and panels, fuel cells, hydropower from existing resources, organic waste biomass, dedicated crops grown for energy production, methane recovered from landfills, heat and water without combustion and other similar sources. HB 1379 would have required electricity suppliers to supply electricity generated by renewable energy resources to Indiana customers as a percentage of the total electricity supplied by the electricity supplier, with at least 10% of energy coming from renewable energy resources by the year 2016.

At the hearing, utility companies raised concerns about mandates. An alternative plan, providing tax incentives for producers of renewable energy, was also discussed. Developers argued that tax incentives, without a corresponding requirement allowing interconnection to utility power grids, are insufficient to stimulate investment in renewable energy resources. Representative Lehe, the bill’s author, agreed to introduce a resolution calling for further study of these issues in lieu of advancing HB 1379 further.

The Regulatory Flexibility Committee is one of many study committees that meets on a periodic basis between regular sessions of the Indiana General Assembly. HR 23 recommends that the committee study the potential for various renewable energy resources to be used as a fuel source or to generate electricity in a manner that is economically and environmentally sound, taking various factors into consideration. Efforts to secure hearings this summer on a renewable energy standard are underway.

HEA 1008, the Governor’s Major Moves initiative, occupied center stage throughout the legislative process, ultimately passing by a narrow margin in the House (51-48) along party lines, with the exception of Republican Representative David Wolkins (District 18, Winona Lake), who broke ranks to vote with House Democrats against the bill. HB 1008 passed more easily in the Republican-dominated Senate by a vote of 31-19, with two Democrats joining twenty-nine Republicans in favor of the bill, and four Republicans joining fifteen Democrats against it.

Having passed both the House and Senate, HB 1008 becomes House Enrolled Act (HEA) 1008, where it is signed by the Speaker of the House and the President of the Senate and forwarded to the Governor for signature into law. Another major policy issue, daylight saving time, was not put into play despite the filing of several bills on the subject at the beginning of the session, leaving last year’s decision to place much of Indiana in the Eastern time zone for observance of daylight saving time undisturbed.

Bills that CAC tracked during the 2006 session, including those that died along the way, are listed according to four distinct categories below. A digest and last action report is included for each bill.

If you need additional information for any of the bills listed in this report or other information regarding the 2006 session of the Indiana General Assembly (IGA), please visit the IGA’s official website at www.in.gov/legislative.

Paul Chase, J.D.
CAC Governmental Affairs Liaison

Read the full legislative report in PDF format...

House Bill 1279, soon to become law, is a sweeping telecommunications deregulation bill that calls for automatic rate increases starting at the end of March. Right after final passage of HB 1279, AT&T (formerly SBC) announced that they now want to merge with Bell South for $67 billion, increasing their stranglehold on the local telecommunications market nationwide. They would also gain 100% ownership of Cingular wireless. At the same time, however, AT&T will increase its debt substantially.

Despite mega-mergers between SBC and AT&T late last year and the recently approved merger between number two phone giant Verizon and MCI, the Indiana General Assembly bowed to intense lobbying pressure from AT&T who spent more than $1.1 million in 2005 on lobbying expenditures. Those expenditures also allowed AT&T to manipulate the legislative process right down to getting the bill passed just a few days prior to announcing its merger with Bell South, in order, no doubt, to avoid looking too greedy – if that’s possible.

The ad campaign from AT&T left the public with the false impression that deregulating phone rates would somehow encourage mega-phone companies to compete against the cable companies. However, SBC (before buying AT&T) announced plans to compete with cable companies by deploying high-speed Internet/video technology years prior to the passage of HB 1279 and then again in January.

Indeed, a main purpose behind the bill was to increase revenues by allowing monopoly phone companies to determine their own local rates. HB 1279 had nothing to do with broadband deployment.

Broadband was defined in the legislation to accommodate copper-wire data transfer speeds, not high-speed fiber optic cable. Why? It’s an underhanded way to base automatic rate increases on investments already made. Rate increases will occur in areas where 50% of customers in an exchange have access to (not actually have) broadband service – in other words, in urban areas.

As phone rates begin to increase $12 per year for the next few years and then become completely deregulated, consumers will wonder how higher phone rates will benefit them, particularly for those who do not take cable and other telecom services. Undoubtedly, the revenue from these unjustified rate increases will help alleviate merger costs for AT&T as it takes over Bell South.

AT&T and job loss go hand-in-hand, too. SBC eliminated 57,390 jobs sending the company from 220,090 jobs in 2001 to 162,700 jobs in February of 2005. SBC’s acquisition of AT&T was no different with the planned elimination of another 13,000 jobs. Now AT&T envisions another 10,000 job cuts between 2007 and 2009 after the Bell South merger.

Make no mistake. HB 1279 was purchased. The entire ill-gotten deal smacks of crony capitalism. Those legislators who sponsored the legislation should apologize profusely to their constituents and vow to reverse the ill-advised passage of HB 1279. Higher utility rates and fewer jobs are not a good combination for the Indiana economy.

Thursday, March 2, 2006 marked the final day for bills to pass third reading in the House and Senate. Bills that failed to pass are now dead. Bills that pass third reading in the second chamber, without further amendment (i.e., in committee and/or on second or third reading), become eligible for signature into law.

A bill that has been amended in the second chamber returns to its house of origin, where the bill’s author must decide whether to file a concurrence with or dissent from the changes. The concurrence or dissent must then receive majority approval in the House (if a House bill) or the Senate (if a Senate bill). If the majority approves the decision to concur (standard procedure), the bill becomes eligible for signature into law by the Governor. If the majority approves the decision to dissent (also standard procedure), remaining issues must be resolved in a conference committee, made up of two members (“conferees”) each from the House and Senate (usually, the bill’s author, co-author, sponsor and co-sponsor, with equal representation from both political parties).

Conferees have already been appointed on some of the bills headed for conference committee. Conferees on remaining bills will be appointed by early next week, when conference committees will begin meeting to reconcile differences between House and Senate versions of bills for which a dissent has been recorded. The conference committee process is less structured than the regular committee process. Conference committees may meet within one (Senate rule) or two (House rule) hours after notice of the meeting is posted, and are open to the public “whenever feasible”. No further posting is required if additional meetings are necessary, and it is within the chair’s discretion to be forthcoming about time and place of any additional meetings.

Were it not for HB 1008 (Major Moves), telecommunications deregulation, discussed more fully below, would have been the single greatest issue facing the legislature this session. After unsuccessful attempts by Senate Democrats to amend HB 1008 on second reading to keep the Toll Road in state hands, the bill passed third reading on 3/2/06 by a vote of 29-20, with one Democrat (Glenn Howard-Indianapolis) voting in favor of the bill and 5 Republicans (Ron Alting-Lafayette, Dennis Kruse-Auburn, Allen Paul-Richmond, Brent Waltz-Greenwood, and John Waterman-Shelburn) voting against it. HB 1008 now moves to conference committee.

A discussion of recent actions on bills Citizens Action Coalition is tracking precedes the chart in each category containing the status for all relevant bills. Please note the last column in the charts, which in limited instances already contains the names of conferees for several of the bills headed to conference committee.

Paul Chase, J.D.
CAC Governmental Affairs Liaison

I. Consumer/Regulatory Issues

SB 22 passed third reading 90-0 on 3/1/06. The bill expands the definition of pipeline transportation to include hazardous liquids and carbon dioxide fluid in addition to gas. Hazardous liquid is defined as petroleum, petroleum products or anhydrous ammonia. Carbon dioxide fluid is defined as fluid consisting of more than 90% carbon dioxide molecules compressed to a supercritical state.

The IURC’s Division of Pipeline Safety is charged with the regulation of transportation and related pipeline facilities and their operations in order to promote public safety. As amended on second reading in the House, if the IURC or Division determines that disclosure of a report or a part thereof may threaten public safety by exposing a vulnerability to terrorist attack, that part of the report may be excepted from public disclosure. SB 22 is now returned to the Senate, where a decision to concur with or dissent from House amendments has yet to be made.

SB 72, extending the authority of the IURC to deliberate in executive session on proposed IURC orders after all evidence has been received and before final action is taken, passed third reading in the House on 2/23/06. SB 72 is returned to the Senate without amendments, making it eligible for signature into law.

II. Energy

As reported last week, HB 1081, exempting state sales tax from home energy bills for persons who qualify under the Low Income Home Energy Assistance Program (LIHEAP), was amended into HB 1001, a mammoth property tax relief measure that, among other things, increases the homestead deduction and authorizes local government units to raise local income taxes to fund increases in their operating costs or reduce property taxes.

As amended, the sales tax exemption applies only to LIHEAP assistance between 6/30/06 and 6/30/07, essentially covering next winter’s heating bills. Nevertheless, the exemption provides additional funds to assist more eligible households with their heating expenses. HB 1001 passed third reading in the Senate by a vote of 37-12 and is returned to the House with amendments. A dissent has been filed, but conferees have yet to be appointed. The dissent concerns provisions in the bill other than the LIHEAP sales tax exemption, giving hope that this provision will remain in the final version of HB 1001.

III. Telecommunications

As reported last week, HB 1279 passed third reading in the Senate on 2/21/06 by a vote of 42-7 and was returned to the House with amendments. On 2/28/06 Representative Mike Murphy (R, Indianapolis) filed a motion to concur with Senate amendments, and a few hours later the House concurred by a vote of 78-18. The bill now awaits signature into law by the Governor. As a result of the concurrence on HB 1279, it became unnecessary to call SB 245 down for a vote on second reading. Having failed to meet the second reading deadline, SB 245 is now dead.

It is important to note that CAC and AARP’s lobbying and grass roots advocacy efforts were largely successful, despite the fact that 78 Representatives voted in favor of HB 1279. Legislators received numerous calls and messages urging them to oppose the bill, and those we spoke with said constituents opposing HB 1279 far outweighed those urging support for the bill. The reality is that consumer concerns were hijacked in favor of corporate profits. Much of the political jockeying and the delays that occurred prior to the concurrence vote reflect concern among many legislators that their vote may come back to haunt them in the upcoming election cycle. It is incumbent upon us to keep their votes on HB 1279 in mind when we go to the polls this November.

IV. Environment

SB 353 passed third reading in the House by a vote of 88-8 on 3/2/06. The bill requires the Indiana Economic Development Corporation (IEDC) to work with automobile manufacturers and appropriate entities to improve E85 fuel (a fuel blend nominally consisting of 85% ethanol and 15% gasoline) awareness and labeling, including updates of global positioning navigation software to include more and more gas stations selling E85. The bill also provides a 10 cent reduction in state sales tax to be remitted by retail merchants on every gallon of E85 gas sold for reporting periods ending 7/1/08. The total amount of deductions may not exceed $2 million for all retail merchants in all reporting periods.

SB 353 also increases the tax credit for companies that produce biodiesel fuel from $20 million to $50 million and bestows multiple tax credits for qualified investment in an integrated coal gasification power plant, meaning investment in fluidized bed combustion technology. SB 353 is now returned to the Senate. A decision to concur with or dissent from House amendments has yet to be made.

Most legislators went to sleep when it came to protecting consumer interests with respect to HB 1279 (which passed) and SB 245 (a companion bill), the worst anti-consumer legislation in years. However, there are those who well deserve the Consumer Zero moniker.

Indiana Senate

Senators Brandt Hershman (R-Monticello/Wheatfield) and Tom Wyss (R- Ft. Wayne)

In particular, Senator Hershman was the author of SB 245 and lead Senate sponsor of HB 1279. Senator Wyss (chairman of the Homeland Securities, Utilities and Public Policy Committee) prohibited many people, who opposed SB 245, from testifying in his committee. A total of 19 citizens, some of whom drove many miles to the hearing at the Statehouse, were not allowed to testify. Senator Wyss also co-sponsored HB 1279.

The following Senators co-sponsored SB 245 and/or HB 1279:

• Lindel Hume (D-Princeton)
• Earline Rogers (D-Gary)
• Sue Landske (R-Cedar Lake)
• Dennis Kruse (R-Auburn)
• Allen Paul (R-Richmond)
• Johnny Nugent (R-Lawrenceburg)
• Tom Weatherwax (R-Logansport)
• Jim Lewis (R-Charlestown)
• Vic Heinold (R-Kouts)
• Larry Lutz (D-Evansville)

(Also see voting records. 22 Senators voted against consumers 100% of the time on SB 245 and HB 1279.)

Indiana House

Representatives Mike Murphy (R- Indpls) and Eric Koch (R-Bedford)

Representative Murphy authored HB 1279. Representative Koch was the House sponsor of SB 245.

The following Representatives sponsored HB 1279 and/or SB 245:

• Representative Ed Mahern (D-Indpls)
• Representative Bob Kuzman (D-Crown Point)
• Representative Dale Grubb (D-Covington)
• Representative Carolene Mays (D-Indpls)

(Also see voting records. 75 Representatives voted against consumers 100% of the time record on SB 245 and HB 1279.)

Indiana Senate

Senators David Ford (R-Hartford City) and Tim Lanane (D-Anderson)

In particular, CAC recognizes Senators Ford and Lanane (D-Anderson). Both of these policy makers attempted to amend anti-consumer telecommunications legislation, HB 1279, to protect consumers by keeping just and reasonable rates in place for local telephone service. They also had a 100% pro-consumer voting record on both HB 1279 and SB 245.

Senators Vaneta Becker (R-Evansville), Anita Bowser (D-Michigan City), Vi Simpson (D-Bloomington), Tim Skinner (D-Terre Haute)

Each of these Senators voted 100% pro-consumer voting record on HB 1279 and SB 245.

Indiana House of Representatives

Representatives Terri Austin (D-Anderson), David Crooks (D-Washington), Win Moses (D-Ft. Wayne), Matt Pierce (D-Bloomington)

In particular, CAC recognizes Representatives Austin, Crooks, Moses and Pierce for their attempts to thwart AT&T from getting HB 1279 passed. Representative Austin filed amendments to protect consumers from local telephone rate deregulation. Representatives Crooks, Moses, and Pierce held a Press conference to express their opposition to the bill. Representative Pierce has been a consumer leader on the telecommunications issue since he entered the General Assembly.

Representatives Jeb Bardon (D-Indpls), Pat Bauer (D-South Bend), Bill Crawford (D-Indpls), John Day (D-Indpls), Ryan Dvorak (D-South Bend), Steve Heim (R-Culver), Win Moses (D- Ft. Wayne), David Orentlicher (D- Indpls), Vanessa Summers (D-Indpls), Vern Tincher (D- Terre Haute), David Wolkins (R-Winona Lake)

Each of these legislators voted 100% pro-consumer on HB 1279 and SB 245.