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Session Information

2006 Regular Session Highlights

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Commerce & Consumer Protection

by: Jeff Oblesbee
(225) 342-0597

On August 29, 2005 Hurricane Katrina made landfall and devastated the lives of thousands of Louisiana citizens and businesses located in the greater New Orleans area. Nearly a month later, Hurricane Rita added to the misery and devastation as it rolled through southwestern Louisiana. Seeking to address numerous issues vital to the recovery and revitalization of the state of Louisiana and her weary citizens, Governor Kathleen Blanco and the Louisiana legislature came together in two historic special sessions to begin the healing.

In addition to the focus on hurricane recovery, the legislature also handled various other measures which affected the areas of commerce and consumer protection.

HURRICANE RECOVERY

As the hurricanes shockingly demonstrated, many of the residential structures located in south Louisiana were ill-prepared for the intense winds associated with the storms. Senate Bill 44 of the First Extraordinary Session of 2005 by Senator Hollis (Act 12) established a mandatory state uniform construction code for Louisiana. In addition to establishing the Louisiana State Uniform Construction Code Council which will be responsible for adopting and amending a mandatory statewide construction code, the legislation also required the emergency adoption and enforcement of wind and flood mitigation requirements in the eleven most severely impacted parishes. The remainder of the state will be required to implement and enforce the statewide code beginning January 1, 2007.

Another important issue to homeowner's in the affected region revolved around the handling of insurance settlement funds. As a condition of most mortgages, insurance settlement funds were made jointly payable to both the homeowner and the mortgage company. Senate Bill 31 of the First Extraordinary Session of 2006 by Senator Schedler (Act 14) required that if such funds were to be held by the mortgage company for more than thirty days as repairs were being made by the homeowner, then the settlement funds must be placed in an interest-bearing account, with such interest accruing to the benefit of the homeowner. Rather than maintain their mortgage and make necessary repairs to their home, many homeowners simply wanted the option to pay-off their loans and move on with their lives. House Bill 4 of the First Extraordinary Session of 2006 by Representative Lafonta (Act 21) allows the homeowner to request in writing that any excess funds received from an insurance settlement must be returned to the homeowner within 30 days.

Seeking to protect consumers from unknowingly purchasing water-damaged vehicles, House Bill 11 of the First Extraordinary Session of 2005 by Representative Smiley (Act 42) required any insurance company that acquired ownership of a water-damaged vehicle to apply for a certificate of destruction, following settlement of the claim, and to arrange to have the vehicle dismantled, sold for useable parts, or crushed. In a related matter, the Senate Commerce, Consumer Protection, and International Affairs held hearings during the 2006 Regular Session to investigate the awarding of a contract to remove flooded vehicles from public property in south Louisiana. As of this date, a contract to remove the flooded vehicles has been awarded and removal has begun in the greater New Orleans area.

In the days and weeks following Hurricane Katrina, communication systems in south Louisiana were either overwhelmed or completely destroyed and severally hampered rescue and recovery efforts. Seeking to statutorily enact Governor Kathleen Blanco's executive order KBB 2006-4 which created the "Statewide Interoperable Communication System Executive Committee", Senate Bill 739 by Senator Boasso (Involuntarily deferred House Judiciary) would have created the office of interoperability with the office of homeland security and emergency preparedness and would have been charged with developing and implementing a comprehensive statewide communications interoperability plan involving local, state, and federal agencies. Likewise, House Bill 540 by Representative Burns (pending Senate Commerce) and House Bill 619 by Representative Burns (pending Senate Commerce) would have placed specific requirements on the governor's office of homeland security and emergency preparedness to develop an emergency communications system.

TELECOMMUNICATIONS/UTILITIES

One of the more intensely debated issues during the 2006 Regular Session, House Bill 699 by Representative Montgomery and Senator Ellington (VETOED) would have created the Competitive Cable and Video Services Act. As initially proposed, both the cable industry and local government were opposed to the measure which would replace the local franchising of television services with a statewide franchise system. Following much negotiation and debate, the legislation was amended to clarify that local franchise fees would continue to be paid, would provide an additional fee to be paid to local government in order to compensate for the loss of certain in-kind services, and would permit cable companies to opt-out of their existing franchise agreements and apply for a statewide franchise agreement. It was anticipated that this legislation would have spurred on greater competition in the cable and video service industry and will improve services and reduce rates for the consumer.

Attempting to assist electric utility companies still recovering from losses sustained as a result of hurricanes Katrina and Rita, House Bill 887 by Representative Pinac and Senator Hollis (Act 64) established the Louisiana Electric Utility Storm Recovery Securitization Act which will allow an electric utility to take advantage of certain IRS regulations by bonding out future "storm recovery charges" to be imposed on consumers and borrowing against such funds at a reduced rate. The Louisiana Public Service Commission will retain their ability to examine and approve any request from a utility to impose such "storm recovery charges" prior to obtaining such bonds. By utilizing this procedure, the consumer will benefit since the utility will have to borrow less money to make the necessary repairs. Likewise, in order to allow utilities to be eligible to receive certain federal disaster and recovery funds, Senate Bill 8 of the First Extraordinary Session of 2005 by Senator Murray (Act 1) recognized that the restoration and rebuilding of electrical and gas utilities following a natural disaster is a valid public purpose and is in the best interest of the citizens and businesses of the state of Louisiana.

One unintended consequence of the extended declaration of emergency issued by Governor Blanco was a complete prohibition against all telemarketing activity in the state. In particular, this complete prohibition preventing companies which had an existing business relationship with a consumer from contacting them and providing them with important information immediately following the hurricanes. House Bill 1137 by Representative Pinac (Act 418) will allow certain defined telemarketing activity during a state of emergency declared by the governor, in addition to making certain technical changes to the state "Do Not Call" program.

Finally, Senate Bill 211 by Senator Murray (pending Senate Commerce) and House Bill 1188 by Representative Lafonta (pending Senate Commerce) would have exempted local governments from the Local Government Fair Competition Act for a limited time in order to offer free wireless Internet service to its citizens. It was anticipated that in addition to providing another avenue for local government to communicate with its citizens immediately following a gubernatorially declared disaster or emergency, first responders in the area would be able to better communicate with each other through the wireless service.

CONSUMER PROTECTION

The legislature addressed a variety of issues related to consumer protection during the 2006 Regular Session. One issue of substantial interest was Senate Bill 642 by Senator Ellington (Act 550) which exempts any person selling property through an Internet-based trading platform from the regulations of the Louisiana Auctioneers Licensing Board. The issue was originally raised following an effort by the board to license certain eBay "trading assistants" who sell merchandise on behalf of other people.

In an effort to assist consumers who wish to resell unwanted admission tickets, House Bill 1299 by Representative Montgomery and Senator Ellington (Act 238) amends the state "anti-scalping law" by allowing any person with an unwanted admission ticket to sell it for above face value through the organizer of the event or the operator of the location where the event is being held. The legislation specifically prohibits the reselling for above face value of any university sports event ticket allocated to a Louisiana legislator or a student of the university.

As part of a continuing effort to protect Louisiana citizen's from unwanted computer intrusion, numerous measures were introduced to further prohibit and penalize such activity. Senate Bill 641 by Senator Michot (Act 549) will prohibit "phishing" activity and provide civil penalties for violators. "Phishing" is a particularly devious method of identity theft which is carried out through the creation of a website that seems to represent a legitimate company. The visitors to the site, thinking they are buying something from a real business, submit their personal information to the site. The criminals then use the personal information for their own purposes, or sell the information to other criminal parties.

House Bill 690 by Representative Schneider and Senator Michot (Act 392) establishes a criminal penalty of up to 10 years in prison or fined $25,000, or both for the willfully and knowingly transmitting of spyware, adware, or other forms of malware onto computers. In addition to the criminal penalties, any violation will also be considered an unfair trade practice and subject the violator to additional civil penalties.

BANKING/FINANCIAL INSTITUTIONS

Several pieces of legislation were offered during the 2006 Regular Session in the area of banking to address the powers and duties of the commissioner of financial institutions, to "clean-up" various other statutes under the supervision of the office of financial institutions ("OFI"), as well as other related concerns.

Although not widely enforced, numerous mortgages obligated homeowners who sought to payoff their loans following the hurricanes to pay a pre-payment penalty. House Bill 602 by Representative Pinac (Act 188) will prohibit prepayment penalties for consumer credit transactions and residential mortgage loans when such loans are paid in connection with a gubernatorially declared disaster from proceeds obtained from an insurance settlement. Another related measure, House Bill 448 by Representative Marchand (Act 475) authorizes the commissioner spend existing funds to publicize deferment and repayment options being offered following a gubernatorially declared disaster and to prohibit a lending institution from requiring payment-in-full following such a deferment period.

House Bill 1269 by Representative Ritchie (Act 236) clarifies the authority of the commissioner to obtain certain state and federal criminal data as it relates to an applicant for licensure. Senate Bill 344 by Senator Hollis (Act 456) adds to the information that the commissioner may disclose at his discretion, including certain statistical information and actions taken by the commissioner related to the denial, suspension, or revocation of a license.

Senate Bill 95 by Senator Broome (Act 510) establishes the Louisiana Habitat for Humanity Loan Purchase Program Act within the La. Housing Finance Agency (LHFA) which will provide for a partnership under which the LHFA could purchase homeowner loans from habitat affiliates in order to assist low-income individuals and families, and particularly individuals and families who have mental or physical disabilities, in accessing and acquiring affordable housing.

Finally, Senate Bill 743 by Senator Murray (Subj. to call - House final passage) would have created the Louisiana Motor Vehicle Title Loan Act which would have allowed for short-term loans secured by a vehicle certificate of title at interest rates not to exceed 25% per month for a maximum of a 10-month period. The amount of the loan would be limited to either the value of the vehicle or $3,000, whichever was less. It was argued that this legislation would have filled the gap for persons with no-credit or bad credit who were in need of a short-term loan.

MISCELLANEOUS

In an effort to streamline government procedures for businesses, House Bill 203 by Representative Pinac (Act 153) will enable a business entity to convert from one type of business organization to another type without going through a dissolution process. For example, a business entity which was organized as a corporation could convert to a limited liability company after meeting certain requirements.

Seeking to provide additional disclosure to consumers, House Bill 119 by Representative Pinac (Act 333) and House Bill 787 by Representative Pinac (Act 280) will provide for the use of a uniform purchase agreement form to be used by realtors and the use of a uniform sales and finance contract for sales of motor vehicles, respectively.

Addressing a problem encountered following the hurricanes, House Bill 96 by Representative Hutter (Act 330) will require funeral establishments to affix certain identifying information on all caskets which will be used for burial.

Hoping to avoid another tragedy similar to one which occurred in New Orleans during which an entire family perished in a apartment fire, Senate Bill 6 by Senator Shepherd (Act 557) will require that any mattress or box spring sold at retail after January 1, 2007 must be fire retardant in accordance with rules and regulations promulgated by the state fire marshal.

Finally, seeking to protect the unique and distinctive culture and lifestyle of south Louisiana, Senate Bill 525 by Senator Nick Gautreaux (Act 124) will restrict the use of the terms "Cajun" and "Louisiana Creole" to services or goods which are substantially connected with, or have been substantially transformed in the state of Louisiana. The commissioner of agriculture will be authorized to enforce the newly enacted "Cajun and Creole Goods and Consumer Protection Law."

 



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