
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 15USC79a]

 
                      TITLE 15--COMMERCE AND TRADE
 
              CHAPTER 2C--PUBLIC UTILITY HOLDING COMPANIES
 
Sec. 79a. Necessity for control of holding companies


(a) Interstate nature of holding companies

    Public-utility holding companies and their subsidiary companies are 
affected with a national public interest in that, among other things, 
(1) their securities are widely marketed and distributed by means of the 
mails and instrumentalities of interstate commerce and are sold to a 
large number of investors in different States; (2) their service, sales, 
construction, and other contracts and arrangements are often made and 
performed by means of the mails and instrumentalities of interstate 
commerce; (3) their subsidiary public-utility companies often sell and 
transport gas and electric energy by the use of means and 
instrumentalities of interstate commerce; (4) their practices in respect 
of and control over subsidiary companies often materially affect the 
interstate commerce in which those companies engage; (5) their 
activities extending over many States are not susceptible of effective 
control by any State and make difficult, if not impossible, effective 
State regulation of public-utility companies.

(b) Protection of investors and interests of consumers

    Upon the basis of facts disclosed by the reports of the Federal 
Trade Commission made pursuant to S. Res. 83 (Seventieth Congress, first 
session), the reports of the Committee on Interstate and Foreign 
Commerce, House of Representatives, made pursuant to H. Res. 59 
(Seventy-second Congress, first session) and H. J. Res. 572 (Seventy-
second Congress, second session) and otherwise disclosed and 
ascertained, it is declared that the national public interest, the 
interest of investors in the securities of holding companies and their 
subsidiary companies and affiliates, and the interest of consumers of 
electric energy and natural and manufactured gas, are or may be 
adversely affected--
        (1) when such investors cannot obtain the information necessary 
    to appraise the financial position or earning power of the issuers, 
    because of the absence of uniform standard accounts; when such 
    securities are issued without the approval or consent of the States 
    having jurisdiction over subsidiary public-utility companies; when 
    such securities are issued upon the basis of fictitious or unsound 
    asset values having no fair relation to the sums invested in or the 
    earning capacity of the properties and upon the basis of paper 
    profits from intercompany transactions, or in anticipation of 
    excessive revenues from subsidiary public-utility companies; when 
    such securities are issued by a subsidiary public-utility company 
    under circumstances which subject such company to the burden of 
    supporting an overcapitalized structure and tend to prevent 
    voluntary rate reductions;
        (2) when subsidiary public-utility companies are subjected to 
    excessive charges for services, construction work, equipment, and 
    materials, or enter into transactions in which evils result from an 
    absence of arm's-length bargaining or from restraint of free and 
    independent competition; when service, management, construction, and 
    other contracts involve the allocation of charges among subsidiary 
    public-utility companies in different States so as to present 
    problems of regulation which cannot be dealt with effectively by the 
    States;
        (3) when control of subsidiary public-utility companies affects 
    the accounting practices and rate, dividend, and other policies of 
    such companies so as to complicate and obstruct State regulation of 
    such companies, or when control of such companies is exerted through 
    disproportionately small investment;
        (4) when the growth and extension of holding companies bears no 
    relation to economy of management and operation or the integration 
    and coordination of related operating properties; or
        (5) when in any other respect there is lack of economy of 
    management and operation of public-utility companies or lack of 
    efficiency and adequacy of service rendered by such companies, or 
    lack of effective public regulation, or lack of economies in the 
    raising of capital.

(c) Declaration of policy of chapter

    When abuses of the character above enumerated become persistent and 
wide-spread the holding company becomes an agency which, unless 
regulated, is injurious to investors, consumers, and the general public; 
and it is declared to be the policy of this chapter, in accordance with 
which policy all the provisions of this chapter shall be interpreted, to 
meet the problems and eliminate the evils as enumerated in this section, 
connected with public-utility holding companies which are engaged in 
interstate commerce or in activities which directly affect or burden 
interstate commerce; and for the purpose of effectuating such policy to 
compel the simplification of public-utility holding-company systems and 
the elimination therefrom of properties detrimental to the proper 
functioning of such systems, and to provide as soon as practicable for 
the elimination of public-utility holding companies except as otherwise 
expressly provided in this chapter.

(Aug. 26, 1935, ch. 687, title I, Sec. 1, 49 Stat. 803.)

                         Change of Name

    Committee on Interstate and Foreign Commerce of House of 
Representatives changed to Committee on Energy and Commerce immediately 
prior to noon on Jan. 3, 1981, by House Resolution No. 549, Ninety-sixth 
Congress, Mar. 25, 1980. Committee on Energy and Commerce of House of 
Representatives treated as referring to Committee on Commerce of House 
of Representatives by section 1(a) of Pub. L. 104-14, set out as a note 
preceding section 21 of Title 2, The Congress. Committee on Commerce of 
House of Representatives changed to Committee on Energy and Commerce of 
House of Representatives, and jurisdiction over matters relating to 
securities and exchanges and insurance generally transferred to 
Committee on Financial Services of House of Representatives by House 
Resolution No. 5, One Hundred Seventh Congress, Jan. 3, 2001.

                  Section Referred to in Other Sections

    This section is referred to in title 16 section 839f.
