I
104TH CONGRESS
2D SESSION
H. R. 3601
To repeal the Public Utility Holding Company Act of 1935, to enact the
Public Utility Holding Company Act of 1996, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 6, 1996
Mr. TAUZIN (for himself, Mr. BARTON of Texas, Mr. HAYES, Mr. NORWOOD,
Mr. LINDER, Mr. OXLEY, Mr. STEARNS, Mr. TOWNS, and Mr. BAKER
of Louisiana) introduced the following bill; which was referred to the
Committee on Commerce
A BILL
To repeal the Public Utility Holding Company Act of 1935,
to enact the Public Utility Holding Company Act of
1996, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Public Utility Holding
Company Act of 1996’’.
TITLE I—REPEAL OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935
SEC. 101. PURPOSE.
(a) The Public Utility Holding Company Act of 1935
was intended to facilitate the work of State and Federal
regulators by placing certain constraints on the activities
of holding company systems. Developments since 1935, in-
cluding changes in other regulation and in the industry
itself, have called into question the continued relevance of
the model of regulation established by the statute.
(b) There is, however, a continuing need for limited
Federal regulation in this area to ensure the rate protec-
tion of utility consumers. The Public Utility Holding Com-
pany Act of 1996 is intended to eliminate unnecessary reg-
ulation, yet still provide for consumer protection by provid-
ing for State commission access to books and records of
all companies in a holding company system, and for Fed-
eral audit authority and oversight of affiliate transactions,
to the extent that such activities affect rates, while, at the
same time, affording companies the flexibility required to
compete in today’s energy markets.
SEC. 102. REPEAL OF THE PUBLIC UTILITY HOLDING COM-
PANY ACT OF 1935.
The Public Utility Holding Company Act of 1935, as
amended, is hereby repealed, effective one year from the
date of enactment of this Act.
TITLE II—ENACTMENT OF THE PUBLIC
UTILITY HOLDING COMPANY ACT OF 1996
SEC. 201. PURPOSE.
Limited Federal regulation is necessary to supple-
ment the work of State commissions for the continued rate
protection of electric and gas utility consumers. This Act
is intended to address these concerns by providing for
Federal and State access to books and records of all com-
panies in a holding company system and for federal over-
sight of affiliate transactions, to the extent that such ac-
tivities affect rates.
SEC. 202. DEFINITIONS.
(a) When used in this title:
(1) ‘‘Person’’ means an individual or company.
(2) ‘‘Company’’ means a corporation, joint
stock company, partnership, association, business
trust, organized group of persons, whether incor-
porated or not, or a receiver or receivers, trustee or
trustees of any of the foregoing.
(3) ‘‘Electric utility company’’ means any com-
pany that owns or operates facilities used for the
generation, transmission, or distribution of electric
energy for sale.
(4) ‘‘Gas utility company’’ means any company
that owns or operates facilities used for distribution
at retail (other than the distribution only in enclosed
portable containers) of natural or manufactured gas
for heat, light or power.
(5) ‘‘Public utility company’’ means an electric
utility company or gas utility company but does not
mean a qualifying facility as defined in the Public
Utility Regulatory Policies Act of 1992, or an ex-
empt wholesale generator or a foreign utility com-
pany defined by the Energy Policy Act of 1992.
(6) ‘‘Holding company’’ means (A) any com-
pany that directly or indirectly owns, controls, or
holds with power to vote, 10 percent or more of the
outstanding voting securities of a public utility com-
pany or of a holding company of any public utility
company; and (B) any person, determined by the
Commission, after notice and opportunity for hear-
ing, to exercise directly or indirectly (either alone or
pursuant to an arrangement or understanding with
one or more persons) such a controlling influence
over the management or policies of any public utility
or holding company as to make it necessary or ap-
propriate for the protection of consumers with re-
spect to rates that such person be subject to the ob-
ligations, duties, and liabilities imposed in this title
upon holding companies.
(7) ‘‘Subsidiary company’’ of a holding com-
pany means (A) any company 10 percent or more of
the outstanding voting securities of which are di-
rectly or indirectly owned, controlled, or held with
power to vote, by such holding company; and (B)
any person the management or policies of which the
Commission, after notice and opportunity for hear-
ing, determines to be subject to a controlling influ-
ence, directly or indirectly, by such holding company
(either alone or pursuant to an arrangement or un-
derstanding with one or more other persons) so as
to make it necessary for the protection of consumers
with respect to rates that such person be subject to
the obligations, duties, and liabilities imposed in this
title upon subsidiary companies of holding compa-
nies.
(8) ‘‘Holding company system’’ means a hold-
ing company together with its subsidiary companies.
(9) ‘‘Associate company’’ of a company means
any company in the same holding company system
with such company.
(10) ‘‘Affiliate’’ of a company means any com-
pany 5 percent or more of whose outstanding voting
securities are owned, controlled, or held with power
to vote, directly or indirectly, by such company.
(11) ‘‘Voting security’’ means any security pres-
ently entitling the owner or holder thereof to vote in
the direction or management of the affairs of a com-
pany.
(12) ‘‘Commission’’ means the Federal Energy
Regulatory Commission.
(13) ‘‘State Commission’’ means any commis-
sion, board, agency, or officer, by whatever name
designated, of a State, municipality, or other politi-
cal subdivision of a State that under the law of such
State has jurisdiction to regulate public utility com-
panies.
(b) No provision in this Act shall apply to, or be
deemed to include: (1) the United States, (2) a State or
any political subdivision of a State, (3) any foreign govern-
mental authority not operating in the United States, (4)
any agency, authority, or instrumentality of any of the
foregoing, or (5) any officer, agent, or employee of any
of the foregoing acting as such in the course of his official
duty.
SEC. 205. STATE ACCESS TO BOOKS AND RECORDS.
(a) Upon the written request of a State commission
having jurisdiction to regulate a public utility company in
a holding company system, and subject to such terms and
conditions as may be necessary and appropriate to safe-
guard against unwarranted disclosure to the public of any
trade secrets or sensitive commercial information, a hold-
ing company or its associate company or affiliate thereof,
wherever located, shall produce for inspection such books
and records as have been identified in reasonable detail
in a proceeding before the State commission, are relevant
to costs incurred by such public utility company and are
necessary for the effective discharge of the State commis-
sion’s responsibilities with respect to such proceeding.
(b) Nothing in this section shall preempt applicable
State law concerning the provision of records and other
information, or in any way limit a State’s rights to obtain
books and records and other information under Federal
law, contract, or otherwise.
SEC. 206. AFFILIATE TRANSACTIONS.
Nothing in this Act shall preclude the Commission
or a State commission from exercising its jurisdiction
under otherwise applicable law to determine whether a
public utility company may recover in rates any costs of
an activity performed by an associate company, or any
costs of goods or services acquired by such public utility
company from an associate company.
SEC. 207. EFFECT ON OTHER REGULATION.
Nothing in this Act shall preclude a State commission
from exercising its jurisdiction under otherwise applicable
law to protect utility consumers.
SEC. 208. ENFORCEMENT.
The Commission shall have the same powers as set
forth in Sections 306 through 317 of the Federal Power
Act (16 U.S.C. 825d–825p) to enforce the provisions of
this Act.
SEC. 209. SAVINGS PROVISION.
Nothing in this Act prohibits a person from engaging
in activities in which it is legally engaged or authorized
to engage on the effective date of the Public Utility Hold-
ing Company Act of 1996, provided that it continues to
comply with the terms of any authorization, whether by
rule or by order.
SEC. 210. IMPLEMENTATION.
The Commission shall promulgate regulations nec-
essary or appropriate to implement this Act not later than
one year after the date of the enactment of this title.
SEC. 211. RESOURCES.
All books and records that relate primarily to the
function hereby vested in the Commission shall be trans-
ferred from the Securities and Exchange Commission to
the Commission. It is the sense of the Congress that, sub-
ject to the approval of the Director of the Office of Man-
agement and Budget and the Chairman of the Securities
and Exchange Commission all personnel of the Office of
Public Utility Regulation of the Securities and Exchange
Commission as of the date of enactment of this title should
be transferred to the Commission.
SEC. 212. EFFECTIVE DATE.
This Act shall take effect one year after the date of
enactment.
SEC. 213. SEVERABILITY.
If any provision of this Act, or the application of such
provision to any person or circumstance, shall be held in-
valid, the remainder of the Act, and the application of
such provision to persons or circumstances other than
those as to which it is held invalid, shall not be affected
thereby.
TITLE III—CONFORMING CHANGES TO OTHER
STATUTES
SEC. 301. FEDERAL POWER ACT.
Section 318 of the Federal Power Act (16 U.S.C.
285g) if hereby repealed.
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