§ 79z-5c. — Exempt telecommunications 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: 15USC79z-5c]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2C--PUBLIC UTILITY HOLDING COMPANIES
Sec. 79z-5c. Exempt telecommunications companies
(a) Definitions
For purposes of this section--
(1) Exempt telecommunications company
The term ``exempt telecommunications company'' means any person
determined by the Federal Communications Commission to be engaged
directly or indirectly, wherever located, through one or more
affiliates (as defined in section 79b(a)(11)(B) of this title), and
exclusively in the business of providing--
(A) telecommunications services;
(B) information services;
(C) other services or products subject to the jurisdiction
of the Federal Communications Commission; or
(D) products or services that are related or incidental to
the provision of a product or service described in subparagraph
(A), (B), or (C).
No person shall be deemed to be an exempt telecommunications company
under this section unless such person has applied to the Federal
Communications Commission for a determination under this paragraph.
A person applying in good faith for such a determination shall be
deemed an exempt telecommunications company under this section, with
all of the exemptions provided by this section, until the Federal
Communications Commission makes such determination. The Federal
Communications Commission shall make such determination within 60
days of its receipt of any such application filed after February 8,
1996, and shall notify the Commission whenever a determination is
made under this paragraph that any person is an exempt
telecommunications company. Not later than 12 months after February
8, 1996, the Federal Communications Commission shall promulgate
rules implementing the provisions of this paragraph which shall be
applicable to applications filed under this paragraph after the
effective date of such rules.
(2) Other terms
For purposes of this section, the terms ``telecommunications
services'' and ``information services'' shall have the same meanings
as provided in the Communications Act of 1934 [47 U.S.C. 151 et
seq.].
(b) State consent for sale of existing rate-based facilities
If a rate or charge for the sale of electric energy or natural gas
(other than any portion of a rate or charge which represents recovery of
the cost of a wholesale rate or charge) for, or in connection with,
assets of a public utility company that is an associate company or
affiliate of a registered holding company was in effect under the laws
of any State as of December 19, 1995, the public utility company owning
such assets may not sell such assets to an exempt telecommunications
company that is an associate company or affiliate unless State
commissions having jurisdiction over such public utility company approve
such sale. Nothing in this subsection shall preempt the otherwise
applicable authority of any State to approve or disapprove the sale of
such assets. The approval of the Commission under this chapter shall not
be required for the sale of assets as provided in this subsection.
(c) Ownership of ETCS by exempt holding companies
Notwithstanding any provision of this chapter, a holding company
that is exempt under section 79c of this title shall be permitted,
without condition or limitation under this chapter, to acquire and
maintain an interest in the business of one or more exempt
telecommunications companies.
(d) Ownership of ETCS by registered holding companies
Notwithstanding any provision of this chapter, a registered holding
company shall be permitted (without the need to apply for, or receive,
approval from the Commission, and otherwise without condition under this
chapter) to acquire and hold the securities, or an interest in the
business, of one or more exempt telecommunications companies.
(e) Financing and other relationships between ETCS and registered
holding companies
The relationship between an exempt telecommunications company and a
registered holding company, its affiliates and associate companies,
shall remain subject to the jurisdiction of the Commission under this
chapter: Provided, That--
(1) section 79k of this title shall not prohibit the ownership
of an interest in the business of one or more exempt
telecommunications companies by a registered holding company
(regardless of activities engaged in or where facilities owned or
operated by such exempt telecommunications companies are located),
and such ownership by a registered holding company shall be deemed
consistent with the operation of an integrated public utility
system;
(2) the ownership of an interest in the business of one or more
exempt telecommunications companies by a registered holding company
(regardless of activities engaged in or where facilities owned or
operated by such exempt telecommunications companies are located)
shall be considered as reasonably incidental, or economically
necessary or appropriate, to the operations of an integrated public
utility system;
(3) the Commission shall have no jurisdiction under this chapter
over, and there shall be no restriction or approval required under
this chapter with respect to (A) the issue or sale of a security by
a registered holding company for purposes of financing the
acquisition of an exempt telecommunications company, or (B) the
guarantee of a security of an exempt telecommunications company by a
registered holding company; and
(4) except for costs that should be fairly and equitably
allocated among companies that are associate companies of a
registered holding company, the Commission shall have no
jurisdiction under this chapter over the sales, service, and
construction contracts between an exempt telecommunications company
and a registered holding company, its affiliates and associate
companies.
(f) Reporting obligations concerning investments and activities of
registered public-utility holding company systems
(1) Obligations to report information
Any registered holding company or subsidiary thereof that
acquires or holds the securities, or an interest in the business, of
an exempt telecommunications company shall file with the Commission
such information as the Commission, by rule, may prescribe
concerning--
(A) investments and activities by the registered holding
company, or any subsidiary thereof, with respect to exempt
telecommunications companies, and
(B) any activities of an exempt telecommunications company
within the holding company system,
that are reasonably likely to have a material impact on the
financial or operational condition of the holding company system.
(2) Authority to require additional information
If, based on reports provided to the Commission pursuant to
paragraph (1) of this subsection or other available information, the
Commission reasonably concludes that it has concerns regarding the
financial or operational condition of any registered holding company
or any subsidiary thereof (including an exempt telecommunications
company), the Commission may require such registered holding company
to make additional reports and provide additional information.
(3) Authority to limit disclosure of information
Notwithstanding any other provision of law, the Commission shall
not be compelled to disclose any information required to be reported
under this subsection. Nothing in this subsection shall authorize
the Commission to withhold the information from Congress, or prevent
the Commission from complying with a request for information from
any other Federal or State department or agency requesting the
information for purposes within the scope of its jurisdiction. For
purposes of section 552 of title 5, this subsection shall be
considered a statute described in subsection (b)(3)(B) of such
section 552.
(g) Assumption of liabilities
Any public utility company that is an associate company, or an
affiliate, of a registered holding company and that is subject to the
jurisdiction of a State commission with respect to its retail electric
or gas rates shall not issue any security for the purpose of financing
the acquisition, ownership, or operation of an exempt telecommunications
company. Any public utility company that is an associate company, or an
affiliate, of a registered holding company and that is subject to the
jurisdiction of a State commission with respect to its retail electric
or gas rates shall not assume any obligation or liability as guarantor,
endorser, surety, or otherwise by the public utility company in respect
of any security of an exempt telecommunications company.
(h) Pledging or mortgaging of assets
Any public utility company that is an associate company, or
affiliate, of a registered holding company and that is subject to the
jurisdiction of a State commission with respect to its retail electric
or gas rates shall not pledge, mortgage, or otherwise use as collateral
any assets of the public utility company or assets of any subsidiary
company thereof for the benefit of an exempt telecommunications company.
(i) Protection against abusive affiliate transactions
A public utility company may enter into a contract to purchase
services or products described in subsection (a)(1) of this section from
an exempt telecommunications company that is an affiliate or associate
company of the public utility company only if--
(1) every State commission having jurisdiction over the retail
rates of such public utility company approves such contract; or
(2) such public utility company is not subject to State
commission retail rate regulation and the purchased services or
products--
(A) would not be resold to any affiliate or associate
company; or
(B) would be resold to an affiliate or associate company and
every State commission having jurisdiction over the retail rates
of such affiliate or associate company makes the determination
required by subparagraph (A).
The requirements of this subsection shall not apply in any case in which
the State or the State commission concerned publishes a notice that the
State or State commission waives its authority under this subsection.
(j) Nonpreemption of rate authority
Nothing in this chapter shall preclude the Federal Energy Regulatory
Commission or a State commission from exercising its jurisdiction under
otherwise applicable law to determine whether a public utility company
may recover in rates the costs of products or services purchased from or
sold to an associate company or affiliate that is an exempt
telecommunications company, regardless of whether such costs are
incurred through the direct or indirect purchase or sale of products or
services from such associate company or affiliate.
(k) Reciprocal arrangements prohibited
Reciprocal arrangements among companies that are not affiliates or
associate companies of each other that are entered into in order to
avoid the provisions of this section are prohibited.
(l) Books and records
(1) Upon written order of a State commission, a State commission may
examine the books, accounts, memoranda, contracts, and records of--
(A) a public utility company subject to its regulatory authority
under State law;
(B) any exempt telecommunications company selling products or
services to such public utility company or to an associate company
of such public utility company; and
(C) any associate company or affiliate of an exempt
telecommunications company which sells products or services to a
public utility company referred to in subparagraph (A),
wherever located, if such examination is required for the effective
discharge of the State commission's regulatory responsibilities
affecting the provision of electric or gas service in connection with
the activities of such exempt telecommunications company.
(2) Where a State commission issues an order pursuant to paragraph
(1), the State commission shall not publicly disclose trade secrets or
sensitive commercial information.
(3) Any United States district court located in the State in which
the State commission referred to in paragraph (1) is located shall have
jurisdiction to enforce compliance with this subsection.
(4) Nothing in this section shall--
(A) preempt applicable State law concerning the provision of
records and other information; or
(B) in any way limit rights to obtain records and other
information under Federal law, contracts, or otherwise.
(m) Independent audit authority for State commissions
(1) State may order audit
Any State commission with jurisdiction over a public utility
company that--
(A) is an associate company of a registered holding company;
and
(B) transacts business, directly or indirectly, with a
subsidiary company, an affiliate or an associate company that is
an exempt telecommunications company,
may order an independent audit to be performed, no more frequently
than on an annual basis, of all matters deemed relevant by the
selected auditor that reasonably relate to retail rates: Provided,
That such matters relate, directly or indirectly, to transactions or
transfers between the public utility company subject to its
jurisdiction and such exempt telecommunications company.
(2) Selection of firm to conduct audit
(A) If a State commission orders an audit in accordance with
paragraph (1), the public utility company and the State commission
shall jointly select, within 60 days, a firm to perform the audit.
The firm selected to perform the audit shall possess demonstrated
qualifications relating to--
(i) competency, including adequate technical training and
professional proficiency in each discipline necessary to carry
out the audit; and
(ii) independence and objectivity, including that the firm
be free from personal or external impairments to independence,
and should assume an independent position with the State
commission and auditee, making certain that the audit is based
upon an impartial consideration of all pertinent facts and
responsible opinions.
(B) The public utility company and the exempt telecommunications
company shall cooperate fully with all reasonable requests necessary
to perform the audit and the public utility company shall bear all
costs of having the audit performed.
(3) Availability of auditor's report
The auditor's report shall be provided to the State commission
not later than 6 months after the selection of the auditor, and
provided to the public utility company not later than 60 days
thereafter.
(n) Applicability of telecommunications regulation
Nothing in this section shall affect the authority of the Federal
Communications Commission under the Communications Act of 1934 [47
U.S.C. 151 et seq.], or the authority of State commissions under State
laws concerning the provision of telecommunications services, to
regulate the activities of an exempt telecommunications company.
(Aug. 26, 1935, ch. 687, title I, Sec. 34, as added Pub. L. 104-104,
title I, Sec. 103, Feb. 8, 1996, 110 Stat. 81.)
References in Text
The Communications Act of 1934, referred to in subsecs. (a)(2) and
(n), is act June 19, 1934, ch. 652, 48 Stat. 1064, as amended, which is
classified principally to chapter 5 (Sec. 151 et seq.) of Title 47,
Telegraphs, Telephones, and Radiotelegraphs. For complete classification
of this Act to the Code, see section 609 of Title 47 and Tables.
This chapter, referred to in subsecs. (b) to (e) and (j), was in the
original ``this Act'', and was translated as reading ``this title'',
meaning title I of act Aug. 26, 1935, ch. 687, known as the Public
Utility Holding Company Act of 1935, to reflect the probable intent of
Congress.
Prior Provisions
A prior section 34 of act Aug. 26, 1935, ch. 687, was renumbered
section 35 and is classified to section 79z-6 of this title.
