§ 79a. — Necessity for control of holding companies.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC79a]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2C--PUBLIC UTILITY HOLDING COMPANIES
Sec. 79a. Necessity for control of holding companies
(a) Interstate nature of holding companies
Public-utility holding companies and their subsidiary companies are
affected with a national public interest in that, among other things,
(1) their securities are widely marketed and distributed by means of the
mails and instrumentalities of interstate commerce and are sold to a
large number of investors in different States; (2) their service, sales,
construction, and other contracts and arrangements are often made and
performed by means of the mails and instrumentalities of interstate
commerce; (3) their subsidiary public-utility companies often sell and
transport gas and electric energy by the use of means and
instrumentalities of interstate commerce; (4) their practices in respect
of and control over subsidiary companies often materially affect the
interstate commerce in which those companies engage; (5) their
activities extending over many States are not susceptible of effective
control by any State and make difficult, if not impossible, effective
State regulation of public-utility companies.
(b) Protection of investors and interests of consumers
Upon the basis of facts disclosed by the reports of the Federal
Trade Commission made pursuant to S. Res. 83 (Seventieth Congress, first
session), the reports of the Committee on Interstate and Foreign
Commerce, House of Representatives, made pursuant to H. Res. 59
(Seventy-second Congress, first session) and H. J. Res. 572 (Seventy-
second Congress, second session) and otherwise disclosed and
ascertained, it is declared that the national public interest, the
interest of investors in the securities of holding companies and their
subsidiary companies and affiliates, and the interest of consumers of
electric energy and natural and manufactured gas, are or may be
adversely affected--
(1) when such investors cannot obtain the information necessary
to appraise the financial position or earning power of the issuers,
because of the absence of uniform standard accounts; when such
securities are issued without the approval or consent of the States
having jurisdiction over subsidiary public-utility companies; when
such securities are issued upon the basis of fictitious or unsound
asset values having no fair relation to the sums invested in or the
earning capacity of the properties and upon the basis of paper
profits from intercompany transactions, or in anticipation of
excessive revenues from subsidiary public-utility companies; when
such securities are issued by a subsidiary public-utility company
under circumstances which subject such company to the burden of
supporting an overcapitalized structure and tend to prevent
voluntary rate reductions;
(2) when subsidiary public-utility companies are subjected to
excessive charges for services, construction work, equipment, and
materials, or enter into transactions in which evils result from an
absence of arm's-length bargaining or from restraint of free and
independent competition; when service, management, construction, and
other contracts involve the allocation of charges among subsidiary
public-utility companies in different States so as to present
problems of regulation which cannot be dealt with effectively by the
States;
(3) when control of subsidiary public-utility companies affects
the accounting practices and rate, dividend, and other policies of
such companies so as to complicate and obstruct State regulation of
such companies, or when control of such companies is exerted through
disproportionately small investment;
(4) when the growth and extension of holding companies bears no
relation to economy of management and operation or the integration
and coordination of related operating properties; or
(5) when in any other respect there is lack of economy of
management and operation of public-utility companies or lack of
efficiency and adequacy of service rendered by such companies, or
lack of effective public regulation, or lack of economies in the
raising of capital.
(c) Declaration of policy of chapter
When abuses of the character above enumerated become persistent and
wide-spread the holding company becomes an agency which, unless
regulated, is injurious to investors, consumers, and the general public;
and it is declared to be the policy of this chapter, in accordance with
which policy all the provisions of this chapter shall be interpreted, to
meet the problems and eliminate the evils as enumerated in this section,
connected with public-utility holding companies which are engaged in
interstate commerce or in activities which directly affect or burden
interstate commerce; and for the purpose of effectuating such policy to
compel the simplification of public-utility holding-company systems and
the elimination therefrom of properties detrimental to the proper
functioning of such systems, and to provide as soon as practicable for
the elimination of public-utility holding companies except as otherwise
expressly provided in this chapter.
(Aug. 26, 1935, ch. 687, title I, Sec. 1, 49 Stat. 803.)
Change of Name
Committee on Interstate and Foreign Commerce of House of
Representatives changed to Committee on Energy and Commerce immediately
prior to noon on Jan. 3, 1981, by House Resolution No. 549, Ninety-sixth
Congress, Mar. 25, 1980. Committee on Energy and Commerce of House of
Representatives treated as referring to Committee on Commerce of House
of Representatives by section 1(a) of Pub. L. 104-14, set out as a note
preceding section 21 of Title 2, The Congress. Committee on Commerce of
House of Representatives changed to Committee on Energy and Commerce of
House of Representatives, and jurisdiction over matters relating to
securities and exchanges and insurance generally transferred to
Committee on Financial Services of House of Representatives by House
Resolution No. 5, One Hundred Seventh Congress, Jan. 3, 2001.
Section Referred to in Other Sections
This section is referred to in title 16 section 839f.
