§ 79k. — Simplification of holding company systems.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC79k]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2C--PUBLIC UTILITY HOLDING COMPANIES
Sec. 79k. Simplification of holding company systems
(a) Examination by Commission with view to simplification
It shall be the duty of the Commission to examine the corporate
structure of every registered holding company and subsidiary company
thereof, the relationships among the companies in the holding-company
system of every such company and the character of the interests thereof
and the properties owned or controlled thereby to determine the extent
to which the corporate structure of such holding-company system and the
companies therein may be simplified, unnecessary complexities therein
eliminated, voting power fairly and equitably distributed among the
holders of securities thereof, and the properties and business thereof
confined to those necessary or appropriate to the operations of an
integrated public-utility system.
(b) Limitations on operations of holding company systems
It shall be the duty of the Commission, as soon as practicable after
January 1, 1938:
(1) To require by order, after notice and opportunity for
hearing, that each registered holding company, and each subsidiary
company thereof, shall take such action as the Commission shall find
necessary to limit the operations of the holding-company system of
which such company is a part to a single integrated public-utility
system, and to such other businesses as are reasonably incidental,
or economically necessary or appropriate to the operations of such
integrated public-utility system: Provided, however, That the
Commission shall permit a registered holding company to continue to
control one or more additional integrated public-utility systems,
if, after notice and opportunity for hearing, it finds that--
(A) Each of such additional systems cannot be operated as an
independent system without the loss of substantial economies
which can be secured by the retention of control by such holding
company of such system;
(B) All of such additional systems are located in one State,
or in adjoining States, or in a contiguous foreign country; and
(C) The continued combination of such systems under the
control of such holding company is not so large (considering the
state of the art and the area or region affected) as to impair
the advantages of localized management, efficient operation, or
the effectiveness of regulation.
The Commission may permit as reasonably incidental, or economically
necessary or appropriate to the operations of one or more integrated
public-utility systems the retention of an interest in any business
(other than the business of a public-utility company as such) which
the Commission shall find necessary or appropriate in the public
interest or for the protection of investors or consumers and not
detrimental to the proper functioning of such system or systems.
(2) To require by order, after notice and opportunity for
hearing, that each registered holding company, and each subsidiary
company thereof, shall take such steps as the Commission shall find
necessary to ensure that the corporate structure or continued
existence of any company in the holding-company system does not
unduly or unnecessarily complicate the structure, or unfairly or
inequitably distribute voting power among security holders, of such
holding-company system. In carrying out the provisions of this
paragraph the Commission shall require each registered holding
company (and any company in the same holding-company system with
such holding company) to take such action as the Commission shall
find necessary in order that such holding company shall cease to be
a holding company with respect to each of its subsidiary companies
which itself has a subsidiary company which is a holding company.
Except for the purpose of fairly and equitably distributing voting
power among the security holders of such company, nothing in this
paragraph shall authorize the Commission to require any change in
the corporate structure or existence of any company which is not a
holding company, or of any company whose principal business is that
of a public-utility company.
The Commission may by order revoke or modify any order previously made
under this subsection, if, after notice and opportunity for hearing, it
finds that the conditions upon which the order was predicated do not
exist. Any order made under this subsection shall be subject to judicial
review as provided in section 79x of this title.
(c) Time for compliance with order limiting operations
Any order under subsection (b) of this section shall be complied
with within one year from the date of such order; but the Commission
shall, upon a showing (made before or after the entry of such order)
that the applicant has been or will be unable in the exercise of due
diligence to comply with such order within such time, extend such time
for an additional period not exceeding one year if it finds such
extension necessary or appropriate in the public interest or for the
protection of investors or consumers.
(d) Court enforcement of order for simplification; appointment of
trustee; disposition of assets; reorganization plan
The Commission may apply to a court, in accordance with the
provisions of subsection (f) \1\ of section 79r of this title, to
enforce compliance with any order issued under subsection (b) of this
section. In any such proceeding, the court as a court of equity may, to
such extent as it deems necessary for purposes of enforcement of such
order, take exclusive jurisdiction and possession of the company or
companies and the assets thereof, wherever located; and the court shall
have jurisdiction, in any such proceeding, to appoint a trustee, and the
court may constitute and appoint the Commission as sole trustee, to hold
or administer under the direction of the court the assets so possessed.
In any proceeding for the enforcement of an order of the Commission
issued under subsection (b) of this section, the trustee with the
approval of the court shall have power to dispose of any or all of such
assets and, subject to such terms and conditions as the court may
prescribe, may make such disposition in accordance with a fair and
equitable reorganization plan which shall have been approved by the
Commission after opportunity for hearing. Such reorganization plan may
be proposed in the first instance by the Commission, or, subject to such
rules and regulations as the Commission may deem necessary or
appropriate in the public interest or for the protection of investors,
by any person having a bona fide interest (as defined by the rules and
regulations of the Commission) in the reorganization.
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\1\ See References in Text note below.
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(e) Submission by company of plan for simplification; court enforcement
of order of approval; appointment of trustee
In accordance with such rules and regulations or order as the
Commission may deem necessary or appropriate in the public interest or
for the protection of investors or consumers, any registered holding
company or any subsidiary company of a registered holding company may,
at any time after January 1, 1936, submit a plan to the Commission for
the divestment of control, securities, or other assets, or for other
action by such company or any subsidiary company thereof for the purpose
of enabling such company or any subsidiary company thereof to comply
with the provisions of subsection (b) of this section. If, after notice
and opportunity for hearing, the Commission shall find such plan, as
submitted or as modified, necessary to effectuate the provisions of
subsection (b) of this section and fair and equitable to the persons
affected by such plan, the Commission shall make an order approving such
plan; and the Commission, at the request of the company, may apply to a
court, in accordance with the provisions of subsection (f) \1\ of
section 79r of this title, to enforce and carry out the terms and
provisions of such plan. If, upon any such application, the court, after
notice and opportunity for hearing, shall approve such plan as fair and
equitable and as appropriate to effectuate the provisions of this
section, the court as a court of equity may, to such extent as it deems
necessary for the purpose of carrying out the terms and provisions of
such plan, take exclusive jurisdiction and possession of the company or
companies and the assets thereof, wherever located; and the court shall
have jurisdiction to appoint a trustee, and the court may constitute and
appoint the Commission as sole trustee, to hold or administer, under the
direction of the court and in accordance with the plan theretofore
approved by the court and the Commission, the assets so possessed.
(f) Commission as trustee; submission of reorganization plan by
Commission or interested party
In any proceeding in a court of the United States, whether under
this section or otherwise, in which a receiver or trustee is appointed
for any registered holding company, or any subsidiary company thereof,
the court may constitute and appoint the Commission as sole trustee or
receiver, subject to the directions and orders of the court, whether or
not a trustee or receiver shall theretofore have been appointed, and in
any such proceeding the court shall not appoint any person other than
the Commission as trustee or receiver without notifying the Commission
and giving it an opportunity to be heard before making any such
appointment. In no proceeding under this section or otherwise shall the
Commission be appointed as trustee or receiver without its express
consent. In any such proceeding a reorganization plan for a registered
holding company or any subsidiary company thereof shall not become
effective unless such plan shall have been approved by the Commission
after opportunity for hearing prior to its submission to the court.
Notwithstanding any other provision of law, any such reorganization plan
may be proposed in the first instance by the Commission or, subject to
such rules and regulations as the Commission may deem necessary or
appropriate in the public interest or for the protection of investors,
by any person having a bona fide interest (as defined by the rules and
regulations of the Commission) in the reorganization. The Commission
may, by such rules and regulations or order as it may deem necessary or
appropriate in the public interest or for the protection of investors or
consumers, require that any or all fees, expenses, and remuneration, to
whomsoever paid, in connection with any reorganization, dissolution,
liquidation, case under title 11, or receivership of a registered
holding company or subsidiary company thereof, in any such proceeding,
shall be subject to approval by the Commission.
(g) Solicitation of proxies, powers of attorney, etc., in respect of
reorganization plan
It shall be unlawful for any person to solicit or permit the use of
his or its name to solicit, by use of the mails or any means or
instrumentality of interstate commerce, or otherwise, any proxy,
consent, authorization, power of attorney, deposit, or dissent in
respect of any reorganization plan of a registered holding company or
any subsidiary company thereof under this section, or otherwise, or in
respect of any plan under this section for the divestment of control,
securities, or other assets, or for the dissolution of any registered
holding company or any subsidiary company thereof, unless--
(1) the plan has been proposed by the Commission, or the plan
and such information regarding it and its sponsors as the Commission
may deem necessary or appropriate in the public interest or for the
protection of investors or consumers has been submitted to the
Commission by a person having a bona fide interest (as defined by
the rules and regulations of the Commission) in such reorganization;
(2) each such solicitation is accompanied or preceded by a copy
of a report on the plan which shall be made by the Commission after
an opportunity for a hearing on the plan and other plans submitted
to it, or by an abstract of such report made or approved by the
Commission; and
(3) each such solicitation is made not in contravention of such
rules and regulations or orders as the Commission may deem necessary
or appropriate in the public interest or for the protection of
investors or consumers.
Nothing in this subsection or the rules and regulations thereunder shall
prevent any person from appearing before the Commission or any court
through an attorney or proxy.
(Aug. 26, 1935, ch. 687, title I, Sec. 11, 49 Stat. 820; Pub. L. 95-598,
title III, Sec. 309, Nov. 6, 1978, 92 Stat. 2676.)
References in Text
Subsection (f) of section 79r of this title, referred to in subsecs.
(d) and (e), was redesignated as subsection (e) of that section by Pub.
L. 100-181, title IV, Sec. 402(1), Dec. 4, 1987, 101 Stat. 1259.
Amendments
1978--Subsec. (f). Pub. L. 95-598 substituted ``case under title
11'' for ``bankruptcy''.
Effective Date of 1978 Amendment
Amendment by Pub. L. 95-598 effective Oct. 1, 1979, see section
402(a) of Pub. L. 95-598, set out as an Effective Date note preceding
section 101 of Title 11, Bankruptcy.
Transfer of Functions
For transfer of functions of Securities and Exchange Commission,
with certain exceptions, to Chairman of such Commission, see Reorg. Plan
No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat.
1265, set out under section 78d of this title.
Gas Related Activities
Pub. L. 101-572, Nov. 15, 1990, 104 Stat. 2810, provided that:
``SECTION 1. SHORT TITLE.
``This Act may be cited as the `Gas Related Activities Act of 1990'.
``SEC. 2. RULE OF CONSTRUCTION.
``(a) Treatment of Certain Acquisitions Involving Gas Companies or
Gas Transportation or Storage.--The acquisition by a registered company
of any interest in any natural gas company or of any interest in any
company organized to participate in activities involving the
transportation or storage of natural gas, shall be deemed, for the
purposes of section 11(b)(1) of the Act [15 U.S.C. 79k(b)(1)], to be
reasonably incidental or economically necessary or appropriate to the
operation of such gas utility companies.
``(b) Treatment of Acquisitions Related to Supply of Natural Gas;
Commission Determination of Customer Interest.--The acquisition by a
registered company of any interest in any company organized to
participate in activities (other than those of a natural gas company or
involving the transportation or storage of natural gas) related to the
supply of natural gas, including exploration, development, production,
marketing, manufacture, or other similar activities related to the
supply of natural or manufactured gas, shall be deemed, for purposes of
section 11(b)(1) of the Act [15 U.S.C. 79k(b)(1)], to be reasonably
incidental or economically necessary or appropriate to the operation of
such gas utility companies, if--
``(1) the Commission determines, after notice and opportunity
for hearing in which the company proposing the acquisition shall
have the burden of proving, that such acquisition is in the interest
of consumers of each gas utility company of such registered company
or consumers of any other subsidiary of such registered company; and
``(2) the Commission determines that such acquisition will not
be detrimental to the interest of consumers of any such gas utility
company or other subsidiary or to the proper functioning of the
registered holding company system.
``(c) Case-By-Case Decisions Required.--Each such determination
under this section shall be made on a case-by-case basis, and not be
based on any preset criteria.
``(d) Savings Provision.--Nothing herein shall be construed to
affect the applicability of any other provisions of the Act to the
acquisition or retention of any such interest by any such company.
``(e) Definitions.--For purposes of this section--
``(1) the term `registered company' means a company registered
under the Act solely by reason of direct or indirect ownership of
voting securities of one or more gas utility companies, or any
subsidiary company of such registered company;
``(2) the term `natural gas company' has the meaning given such
term under the Natural Gas Act (15 U.S.C. 717(a) et seq.) [15 U.S.C.
717 et seq.; term defined in 15 U.S.C. 717a]; and
``(3) the term `the Act' means the Public Utility Holding
Company Act of 1935 [15 U.S.C. 79 et seq.].''
Cogeneration Activities by Gas Utility Holding Company Systems
Pub. L. 99-186, Dec. 18, 1985, 99 Stat. 1180, as amended by Pub. L.
99-553, Oct. 27, 1986, 100 Stat. 3087; Pub. L. 102-486, title VII,
Sec. 713, Oct. 24, 1992, 106 Stat. 2911, provided that:
``Section 1. Notwithstanding section 11(b)(1) of the Public Utility
Holding Company Act of 1935 [15 U.S.C. 79k(b)(1)], a company registered
under said Act [15 U.S.C. 79 et seq.], or a subsidiary company of such
registered company, may acquire or retain, in any geographic area, an
interest in any qualifying cogeneration facilities and qualifying small
power production facilities as defined pursuant to the Public Utility
Regulatory Policies Act of 1978 [see Short Title note set out under 16
U.S.C. 2601], and shall qualify for any exemption relating to the Public
Utility Holding Company Act of 1935 prescribed pursuant to section 210
of the Public Utility Regulatory Policies Act of 1978 [16 U.S.C. 824a-
3].
``Sec. 2. Nothing herein shall be construed to affect the
applicability of section 3(17)(C) or section 3(18)(B) of the Federal
Power Act [16 U.S.C. 796(17)(C), (18)(B)] or any provision of the Public
Utility Holding Company Act of 1935, other than section 11(b)(1), to the
acquisition or retention of any such interest by any such company.''
Section Referred to in Other Sections
This section is referred to in sections 79j, 79z-3, 79z-5a, 79z-5b,
79z-5c of this title; title 26 sections 1081, 1083; title 42 section
8221.
