Source: http://openjurist.org/149/f3d/1282
Timestamp: 2015-07-07 20:12:45
Document Index: 669124065

Matched Legal Cases: ['§ 79', '§ 79', '§ 79', '§ 79', '§ 259', '§ 79', '§ 79', '§ 79', '§ 79']

149 F3d 1282 Campaign for Prosperous Georgia v. Securities and Exchange Commission | OpenJurist
149 F. 3d 1282 - Campaign for Prosperous Georgia v. Securities and Exchange Commission	Home149 f3d 1282 campaign for prosperous georgia v. securities and exchange commission
149 F3d 1282 Campaign for Prosperous Georgia v. Securities and Exchange Commission 149 F.3d 1282
Fed. Sec. L. Rep. P 90,269, Util. L. Rep. P 14,225,11 Fla. L. Weekly Fed. C 1719
CAMPAIGN FOR A PROSPEROUS GEORGIA, Petitioner,v.SECURITIES AND EXCHANGE COMMISSION, Respondent.The Southern Company, Intervenor.
Nos. 96-8655, 97-8123.
J. Michael Walls, Walls & Glucksman, Atlanta, GA, Robert A. Jablon, Matthew W. Ward, Peter J. Hopkins, Spiegel & McDiarmid, Washington, DC, for Petitioner.
Sara Schotland, Washington, DC, for Amici Curie American Iron & Steel, APPA, ECRC.
Eric Summergrad, Mark Pennington, SEC, Washington, DC, for Respondent.
James E. Joiner, John Lamberski, James A. Lamberth, Robert W. Webb, Jr., Troutman, Sanders, LLP, Atlanta, GA, for Intervenors.
Petition for Review from Orders of the Securities And Exchange Commission.
Campaign for a Prosperous Georgia ("CPG") petitions this Court for review of orders of the Securities and Exchange Commission ("SEC") granting the Southern Company ("Southern"), a utility holding company, permission to issue or sell securities for the purpose of investing up to 100% of its retained earnings in other power producers. In its petition, CPG argues that the SEC: 1) misapplied its own rule by not requiring Southern to specify the particular investments it would make and demonstrate that each one would not have a "substantial adverse impact" upon Southern, its subsidiaries, or customers; 2) acted in an arbitrary and capricious fashion by failing to review each of Southern's investments individually; 3) lacked a substantial evidentiary basis for approving Southern's investments because it did not review them individually; and 4) lacked a substantial evidentiary basis for approving the investments because Southern did not show there would be no substantial adverse impact on Southern, its utility companies, or its customers. We hold that, because it failed to raise the first three arguments in a timely fashion before the SEC, CPG is barred from pursuing them before this Court. We reject CPG's fourth argument, which was timely raised, as meritless.
1. The Original Version of the Public Utility Holding Company Act
In 1935, following years of widespread fraud and mismanagement by the gas and electric utility holding companies, Congress enacted the Public Utility Holding Company Act ("PUHCA") to protect the interests of investors and ratepayers. See 15 U.S.C. § 79a. The PUHCA placed considerable restrictions on the ability of utility holding companies to make acquisitions and investments. Congress gave the SEC the authority and responsibility to enforce the PUHCA, including the authority to issue rules, regulations, and orders thereunder. See 15 U.S.C. §§ 79r, 79t. The Act makes the SEC responsible for insuring that all acquisitions by covered companies are consistent with the goals of the legislation. See 15 U.S.C. §§ 79i, 79j.
Under the PUHCA, SEC approval is necessary for a covered company to issue or sell its securities or to guarantee the obligations of any of its subsidiaries. See 15 U.S.C. §§ 79f, 79g, 79l(b); 17 C.F.R. § 259.101 (listing disclosure requirements for issuing securities). Under the Act, the SEC is required to withhold approval for the issuance of a security if, among other reasons, it finds that: (1) the security is not reasonably adapted to the security structure of the holding company and its subsidiaries; (2) the security is not reasonably adapted to the earning power of the holding company; or (3) the security to be issued is a guarantee of the security of another company and, under the circumstances, issuance would constitute an improper risk. See 15 U.S.C. 79g(d)(1), (2), (5).
2. The Energy Policy Act of 1992
Over the last decade, the traditional monopoly structure of the power industry has begun to break down in favor of competition. To encourage that development, Congress passed the Energy Policy Act of 1992, Pub.L. 102-486, 106 Stat. 2776, which amended the PUHCA in ways that eased some of the restrictions on acquisitions and securities financings by covered companies. In the amended PUHCA, Congress eased the restrictions for financing related to investments in two types of entities: (1) Exempt Wholesale Generators ("EWGs"), which are companies exclusively in the business of generating electricity for sale at a wholesale price and which do not own or operate systems for transmitting electricity; and (2) Foreign Utility Companies ("FUCOs"), which are companies that generate and transmit electricity outside the United States and do not derive any income from the United States electricity market.
While the 1992 amendments expanded covered companies' ability to acquire EWGs and FUCOs, they left intact the requirement that those companies obtain SEC approval of any financings used to secure such acquisitions. See 15 U.S.C. § 79z-5a(h). However, Congress did relax the standards for SEC approval of such financings somewhat. With regard to financings for acquisition of an EWG, the SEC cannot make any of the adverse findings mentioned at 15 U.S.C. § 79g(d)(1), (2), or (5) (outlined above), unless the covered company's proposed action would have a "substantial adverse impact" on the utilities that the covered company operates. See 15 U.S.C. § 79z-5a(h)(3). The SEC has the authority to promulgate regulations that establish the criteria defining a "substantial adverse impact." See 15 U.S.C. § 79z-5a(h)(4).