
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: 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.
