§ 79m. — Service, sales, and construction contracts.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC79m]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2C--PUBLIC UTILITY HOLDING COMPANIES
Sec. 79m. Service, sales, and construction contracts
(a) Contracts by holding companies
After April 1, 1936, it shall be unlawful for any registered holding
company, by use of the mails or any means or instrumentality of
interstate commerce, or otherwise, to enter into or take any step in the
performance of any service, sales, or construction contract by which
such company undertakes to perform services or construction work for, or
sell goods to, any associate company thereof which is a public-utility
or mutual service company. This provision shall not apply to such
transactions, involving special or unusual circumstances or not in the
ordinary course of business, as the Commission by rules and regulations
or order may conditionally or unconditionally exempt as being necessary
or appropriate in the public interest or for the protection of investors
or consumers.
(b) Contracts by subsidiary or mutual service companies
After April 1, 1936, it shall be unlawful for any subsidiary company
of any registered holding company or for any mutual service company, by
use of the mails or any means or instrumentality of interstate commerce,
or otherwise, to enter into or take any step in the performance of any
service, sales, or construction contract by which such company
undertakes to perform services or construction work for, or sell goods
to, any associate company thereof except in accordance with such terms
and conditions and subject to such limitations and prohibitions as the
Commission by rules and regulations or order shall prescribe as
necessary or appropriate in the public interest or for the protection of
investors or consumers and to insure that such contracts are performed
economically and efficiently for the benefit of such associate companies
at cost, fairly and equitably allocated among such companies. This
provision shall not apply to such transactions as the Commission by
rules and regulations or order may conditionally or unconditionally
exempt as being necessary or appropriate in the public interest or for
the protection of investors or consumers, if such transactions (1) are
with any associate company which does not derive, directly or
indirectly, any material part of its income from sources within the
United States and which is not a public-utility company operating within
the United States, or (2) involve special or unusual circumstances or
are not in the ordinary course of business.
(c) Determination and allocation of costs; duration of contracts;
regulation by rules of Commission
The rules and regulations and orders of the Commission under this
section may prescribe, among other things, such terms and conditions
regarding the determination of costs and the allocation thereof among
specified classes of companies and for specified classes of service,
sales, and construction contracts, the duration of such contracts, the
making and keeping of accounts and cost-accounting procedures, the
filing of annual and other periodic and special reports, the maintenance
of competitive conditions, the disclosure of interests, and similar
matters, as the Commission deems necessary or appropriate in the public
interest or for the protection of investors or consumers.
(d) Application for approval as mutual service company and nature of
business; regulation by rules of Commission
The rules and regulations and orders of the Commission under this
section shall prescribe, among other things, such terms and conditions
regarding the manner in which application may be made for approval as a
mutual service company and the granting and continuance of such
approval, the nature and enforcement of agreements for the sharing of
expenses and distributing of revenues among member companies, and
matters relating to such agreements, the nature and types of businesses
and transactions in which mutual service companies may engage, and the
manner of engaging therein, and the relations and transactions with
member companies and affiliates, as the Commission deems necessary or
appropriate in the public interest or for the protection of investors or
consumers. The Commission shall not approve, or continue the approval
of, any company as a mutual service company unless the Commission finds
such company is so organized as to ownership, costs, revenues, and the
sharing thereof as reasonably to insure the efficient and economical
performance of service, sales, or construction contracts by such company
for member companies, at cost fairly and equitably allocated among such
member companies, at a reasonable saving to member companies over the
cost to such companies of comparable contracts performed by independent
persons. The Commission, upon its own motion or at the request of a
member company or a State commission, may, after notice and opportunity
for hearing, by order require a reallocation or reapportionment of costs
among member companies of a mutual service company if it finds the
existing allocation inequitable and may require the elimination of a
service or services to a member company which does not bear its fair
proportion of costs or which, by reason of its size or other
circumstances, does not require such service or services. The
Commission, after notice and opportunity for hearing, by order shall
revoke, suspend, or modify the approval given any mutual service company
if it finds that such company has persistently violated any provision of
this section or any rule, regulation, or order thereunder.
(e) Contracts by affiliate in contravention of rules and regulations of
Commission
It shall be unlawful for any affiliate of any public-utility company
engaged in interstate commerce, or of any registered holding company or
subsidiary company thereof, by use of the mails or any means or
instrumentality of interstate commerce, or otherwise, to enter into or
take any step in the performance of any service, sales, or construction
contract, by which such affiliate undertakes to perform services or
construction work for, or sell goods to, any such company of which it is
an affiliate, in contravention of such rules and regulations or orders
regarding reports, accounts, costs, maintenance of competitive
conditions, disclosure of interest, duration of contracts, and similar
matters, as the Commission deems necessary or appropriate to prevent the
circumvention of the provisions of this chapter or the rules,
regulations, or orders thereunder.
(f) Contracts by persons engaged in performance of service, sales and
construction in contravention of rules of Commission
It shall be unlawful for any person whose principal business is the
performance of service, sales, or construction contracts for public-
utility or holding companies, by use of the mails or any means or
instrumentality of interstate commerce, to enter into or take any step
in the performance of any service, sales, or construction contract with
any public-utility company, or for any such person, by use of the mails
or any means or instrumentality of interstate commerce, or otherwise, to
enter into or take any step in the performance of any service, sales, or
construction contract with any public-utility company engaged in
interstate commerce, or with any registered holding company or any
subsidiary company of a registered holding company, in contravention of
such rules and regulations or orders regarding reports, accounts, costs,
maintenance of competitive conditions, disclosure of interest, duration
of contracts, and similar matters as the Commission deems necessary or
appropriate in the public interest or for the protection of investors or
consumers or to prevent the circumvention of the provisions of this
chapter or the rules, regulations, or orders thereunder.
(g) Investigations and recommendations by Commission
The Commission, in order to obtain information to serve as a basis
for recommending further legislation, shall from time to time conduct
investigations regarding the making, performance, and costs of service,
sales, and construction contracts with holding companies and subsidiary
companies thereof and with public-utility companies, the economies
resulting therefrom, and the desirability thereof. The Commission shall
report to Congress, from time to time, the results of such
investigations, together with such recommendations for legislation as it
deems advisable. On the basis of such investigations the Commission
shall classify the different types of such contracts and the work done
thereunder, and shall make recommendations from time to time regarding
the standards and scope of such contracts in relation to public-utility
companies of different kinds and sizes and the costs incurred thereunder
and economies resulting therefrom. Such recommendations shall be made
available to State commissions, public-utility companies, and to the
public in such form and at such reasonable charge as the Commission may
prescribe.
(Aug. 26, 1935, ch. 687, title I, Sec. 13, 49 Stat. 825.)
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.
Section Referred to in Other Sections
This section is referred to in sections 79b, 79n of this title.
