[Federal Register Volume 59, Number 81 (Thursday, April 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10090]


[Federal Register: April 28, 1994]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 250 and 259

[Release No. 35-26031; File No. S7-35-92]
RIN 3235-AF68


Public Utility Holding Company Act Rules

AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Final rules.

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SUMMARY: The Commission today is adopting amendments to rules and forms 
under the Public Utility Holding Company Act of 1935 (``Act''). The 
amendments will expand certain exemptions, and generally update and 
clarify the requirements of the rules. The Commission is rescinding 
rule 50, which required competitive bidding in connection with the 
purchase or underwriting of securities of companies in a registered 
system. The rulemaking is intended to reduce regulatory burdens under 
the Act.

EFFECTIVE DATE: May 31, 1994.

FOR FURTHER INFORMATION CONTACT: Joanne C. Rutkowski, Assistant 
Director, (202) 942-0545, or Brian P. Spires, Attorney, (202) 942-0557, 
Office of Public Utility Regulation, Division of Investment Management, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC. 20549.

SUPPLEMENTARY INFORMATION: On November 4, 1992, the Commission proposed 
for comment a rulemaking intended to modernize and streamline 
regulation under the Act.1 The Commission is adopting the proposed 
amendments to rules 7 (17 CFR 250.7), 26 (17 CFR 250.26), 27 (17 CFR 
250.27), 29 (17 CFR 250.29), 40(a)(5) (17 CFR 250.40(a)(5)), 41(c) (17 
CFR 250.41(c)), 42(b) (17 CFR 250.42(b)), 43(b) (17 CFR 250.43(b)), 
44(b) (17 CFR 250.44(b)), 49 (17 CFR 250.49), 52 (17 CFR 250.52), 62 
(17 CFR 250.62), 63 (17 CFR 250.63), 65(b)(2) (17 CFR 250.65(b)(2)), 
and 71(b) (17 CFR 250.71(b)) under the Act [15 U.S.C. 79 et seq.] and 
forms U5S, U-12(I)-A and U-12(I)-B, and rescinding rule 50 (17 CFR 
250.50). The Commission is deferring action on the proposed amendments 
to rule 83(d) (17 CFR 250.83(d)) and to the annual report on Form U-13-
60 for service company subsidiaries of registered holding companies (17 
CFR 259.313), pending further consideration.
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    \1\See Holding Co. Act Release No. 25668, 57 FR 54025 (Nov. 16, 
1992).
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    Comments were received from eight registered holding 
companies,2 two service company subsidiaries of registered holding 
companies,3 and two other parties.4 The Commission has 
carefully considered these comments, and is incorporating a number of 
the suggestions in the rule and form amendments that it is adopting 
today.
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    \2\The Southern Company (``Southern''), American Electric Power 
Company (``AEP''), Central and South West Corporation (``CSW''), The 
Columbia Gas System, Inc. (``Columbia''), Consolidated Natural Gas 
Company (``CNG''), Northeast Utilities (``Northeast''), General 
Public Utilities Corporation (``GPU'') and New England Electric 
System (``NEES'') filed comments.
    \3\EUA Service Corporation and GPU Service Corporation, service 
company subsidiaries of Eastern Utilities Associates, a registered 
holding company, and GPU, respectively, filed comments.
    \4\Comments were filed by the Investment Company Institute 
(``ICI''), a national association of investment companies, and by 
Heritage Propane Corporation (``Heritage''), a Delaware corporation 
engaged, through subsidiaries, in the sale of propane in enclosed 
portable containers and through metered systems.
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I. Introduction

    The Commission is adopting various measures intended generally to 
modernize the rules under the Act and, in particular, to reduce undue 
regulatory burdens on companies in a registered holding company system. 
These measures grew out of the Commission's continuing assessment of 
the appropriateness of existing regulatory requirements.

A. Rule 7(a): Companies Deemed Not To Be Electric or Gas Utility 
Companies

    Under rule 7(a), a company is deemed not to be an electric utility 
company or a gas utility company, within the meaning of sections 
2(a)(3) and 2(a)(4) of the Act, respectively, if the company is 
primarily engaged in one or more nonutility businesses, and the 
company's gross sales of electricity, or of natural or manufactured gas 
distributed at retail, do not exceed a specified amount.5 At 
present, the rule permits such companies to make annual utility sales 
of up to $100,000. The proposed amendment would allow average annual 
sales of up to $5 million.6
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    \5\17 CFR 250.7(a).
    \6\The rule employs a three-year test period. Use of a three-
year average should eliminate the need for an application when sales 
in a given year unexpectedly exceed the dollar limitation.
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    Columbia, CNG and Heritage support adoption of the amendment. 
Northeast suggests that the amendment, as it relates to sales of 
electricity, is unnecessary in view of the broad exemptions already 
provided under the Public Utility Regulatory Policies Act of 1978 
(``PURPA'') [16 U.S.C. Sec. 824a-3(e)],7 and the Energy Policy Act 
of 1992.8 The exemption under rule 7(a), however, is not related 
to the exemptions under PURPA and the Energy Policy Act. The rule is 
intended to accommodate a small amount of energy sales by a company 
that is otherwise engaged in a nonutility business. In comparison, the 
exemptions under PURPA and the Energy Policy Act are intended to 
encourage the growth of a competitive energy market. The proposed 
amendment does not conflict with these statutes or the legislative 
policies that underlie them.
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    \7\Pursuant to section 210 of PURPA, the Federal Energy 
Regulatory Commission has adopted rules generally exempting 
cogeneration facilities and small power production facilities from 
treatment as public-utility companies for purposes of the Act. See 
18 CFR 292.602(b).
    \8\Pub. L. No. 102-486, 106 Stat. 2776. The Energy Policy Act 
amended the Act to create two new classes of exempt entities, exempt 
wholesale generators and foreign utility companies. See sections 32 
and 33 of the Act, as amended.
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    Columbia and Heritage ask the Commission to adopt a different test 
of revenues. Columbia suggests that the exemption should apply to a 
company with gas utility revenues no greater than 5% of its nonutility 
revenues.9 Under the Heritage proposal, a company that is not a 
state-regulated utility could receive up to 20% of its gross revenues 
from the sale of manufactured gas at retail. The Commission is 
concerned that these approaches could vitiate the rationale for the 
exemption, which is the small absolute size of the utility operations, 
not the relative size of utility and nonutility operations, and so 
declines to adopt them.
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    \9\Columbia cites the example of a company that is primarily 
engaged in the business of distribution of natural or manufactured 
gas in enclosed portable containers, but derives revenues of more 
than $5 million from the distribution of natural gas to a central 
storage tank and through underground pipeline systems. Such an 
arrangement may be found in real estate developments and small 
towns.
    Section 2(c) exempts municipalities from the scope of the Act. 
In addition, a company such as that described by Columbia can apply 
for an order declaring it not to be a public-utility company for 
purposes of the Act. See, e.g., AmeriGas Propane, Holding Co. Act 
Release No. 25434, 50 SEC Docket 918 (Dec. 20, 1991) (propane 
company declared not to be a public-utility company where 
underground pipeline sales were less than 5% of total revenues).
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    The Commission believes that the increase in the dollar limit to $5 
million is appropriate in view of the changes in the industry since 
rule 7(a) was adopted in 1941.10 A company with annual utility 
revenues that exceed $5 million may request an order, upon application, 
declaring it not to be a utility company for purposes of the 
Act.11
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    \1\0Holding Co. Act Release No. 2694 (Apr. 17, 1941) (adopting 
release).
    \1\1See sections 2(a)(3) and 2(a)(4) of the Act. See, e.g., 
Petrolane Gas Service Limited Partnership, Holding Co. Act Release 
No. 25846, 54 SEC Docket 1389 (July 7, 1993) (distributor of propane 
in enclosed portable containers with distribution sales of 
approximately $16 million); AmeriGas Propane, Holding Co. Act 
Release No. 25434, 50 SEC Docket 918 (Dec. 20, 1991) (distributor of 
propane in enclosed portable containers with distribution sales of 
approximately $16 million); Cal Gas Corp., Holding Co. Act Release 
No. 24407, 38 SEC Docket 999 (June 10, 1987) (liquefied petroleum 
gas marketing company with distribution sales of approximately $11 
million); Enron Corp., Holding Co. Act Release No. 24428, 38 SEC 
Docket 1535 (July 23, 1987) (gas transportation company with 
distribution sales of approximately $5 million); LTV Steel Mining 
Co., Holding Co. Act Release No. 25360, 49 SEC Docket 936 (Aug. 12, 
1991) (iron ore mining company with electricity sales of 
approximately $2.2 million).
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    Accordingly, the Commission is adopting the amendment substantially 
as proposed.12
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    \1\2The rule, as amended, deletes an outdated reference to sales 
of electricity at wholesale ``during the existence of the national 
emergency.''
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B. Rule 29: Filing of Reports to State Commissions

    Rule 29(a), adopted under sections 14 and 15 of the Act, requires a 
company in a registered holding company system to file with the 
Commission two copies of each report submitted to stockholders.13 
The Commission believes that the reporting requirement under the rule 
is no longer necessary. The Commission receives copies of system 
companies' annual reports to shareholders as exhibits to the Form U5S 
filed by the parent company.14 System companies are also subject 
to extensive disclosure requirements under the other federal securities 
laws. Among other things, the companies file with the Commission 
periodic reports on Forms 10-K and 10-Q and current reports on Form 8-
K, in addition to the special reports that may be required under 
circumstances such as a proxy solicitation or tender offer.
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    \1\3 17 CFR 250.29(a).
    \1\4See Holding Co. Act Release No. 23214, 49 FR 4717 (Feb. 8, 
1984).
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    The commenters uniformly favor amendment of rule 29 to delete the 
reporting requirement as it applies to shareholder reports. 
Accordingly, the rule is so amended.

C. Rule 40(a)(5): Exemption of Acquisitions From Nonaffiliates

    Companies in a registered system generally require prior Commission 
approval, under the standards of section 10, for the acquisition of any 
security.15 Rule 40(a)(5) provides a limited exemption to this 
requirement for the acquisition of securities of local industrial or 
other nonutility enterprises.16 Under the rule, the acquisition 
cannot result in an affiliation between the system company and the 
local enterprise. Further, the rule limits to $50,000 the aggregate 
amount that a system company can invest each year ``for the purpose of, 
and in accordance with a State law specifically relating to, promoting 
the development of business and industry in such territory,'' and to 
$10,000 the aggregate annual amount that a system company can invest in 
other local nonutility enterprises.
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    \1\5See section 9(a) of the Act.
    \1\617 CFR 250.40(a)(5). The rule was adopted under section 
9(c)(3) which provides that:
    [Section 9(a)] shall not apply to the acquisition by a 
registered holding company, or a subsidiary thereof, of . . . such 
commercial paper and other securities, within such limitations, as 
the Commission may by rules and regulations or order prescribe as 
appropriate in the ordinary course of business of a registered 
holding company or subsidiary company thereof and as not detrimental 
to the public interest or the interest of investors or consumers.
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    These dollar amounts have not been increased since the rule was 
adopted more than 50 years ago. The Commission, however, has authorized 
by order a number of ``good citizen'' investments in larger 
amounts.17 In light of these orders, and to increase the 
usefulness of the rule, the Commission proposed to remove the dollar 
limit on investments pursuant to state business development laws, and 
to increase to $1 million the annual limit on investments in other 
local enterprises. The amended rule would exempt investments in 
nonutility enterprises located in the service territory of the 
acquiring public-utility company or, if the acquiring company were not 
a public-utility company, in the service territory of the registered 
system.
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    \1\7See, e.g., Hope Gas, Inc., Holding Co. Act Release No. 
25407, 50 SEC Docket 344 (Nov. 8, 1991) (authorizing investment of 
$2 million for venture capital investments pursuant to state law).
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    Upon further consideration, the Commission believes that the 
proposed amendment may be overbroad as it relates to investments 
pursuant to state business development laws. It does not appear 
necessary at this time to provide an unlimited exception for such 
investments. The rule provides a narrow exception to the requirements 
of section 9(a)(1) for investments in industrial development and 
similar entities. The Commission is concerned that an unbounded rule 
could encourage investments unrelated to the purpose of the rule. 
Accordingly, the Commission is not removing the dollar limitation but, 
instead, is increasing it from $50,000 to $5 million per year for 
investments pursuant to state business development laws. In addition, 
the Commission is adopting the proposal to increase to $1 million 
annually the limit on investments in other local enterprises.
    The commenters have suggested several modifications to the proposed 
amendment. Northeast asks the Commission to expand the geographic scope 
to include the entire area served by the entity in which an investment 
is to be made or in which the activities of the entity have an economic 
impact, and to the entire state or states in which the system companies 
operate. Such an expansion could encourage investments that have little 
or no relationship to the system's service territory, and thus undercut 
the rationale for the exemption.18 Accordingly, the Commission 
declines to grant this request.
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    \1\8Without the strict geographic restriction, the rule could be 
used for purposes of diversification. As noted above, a registered 
holding company generally requires prior Commission approval, by 
order upon application, to acquire any interest in any other 
business. Among other things, such nonutility acquisitions must be 
functionally related to the operations of the system's integrated 
public-utility system. It is well settled that section 9(c)(3) 
cannot be used to circumvent this requirement. See Michigan Consol. 
Gas Co., 44 S.E.C. 361, 366 (1973), aff'd, 444 F.2d 913 (D.C. Cir. 
1971) (providing that section 9(c)(3) cannot be employed to evade 
the proscriptions of section 11(b)(1)).
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    CSW urges the Commission to increase to $5 million annually the 
permissible aggregate investment in local enterprises that are not 
organized pursuant to state business development laws. The comment 
suggests that this dollar amount is necessary to provide a meaningful 
stimulus in a given region. The Commission declines to adopt this 
suggestion. The $1 million limit is intended to facilitate certain 
limited ``good citizen'' investments. The nominal dollar amount 
provides a safeguard against potential abuses. A company seeking to 
engage in a transaction that is not within the terms of the rule may, 
of course, seek Commission approval by order upon application.
    Northeast also recommends that the Commission amend the rule to 
permit an acquisition of up to 10% of the voting securities of a local 
enterprise.19 Under Northeast's proposal, a regulated company 
could become an affiliate or a holding company of a local business, 
without the need to apply for or receive Commission approval. The 
Commission declines to follow this recommendation. Rule 40(a)(5) 
requires that an acquisition not result in an affiliation with the 
issuer. This requirement is intended to ensure that the rule is not 
used to circumvent the requirements of sections 9, 10 and 11, 
consistent with the limited scope of section 9(c)(3).20 The 
Commission declines to expand the scope of the rule, as requested by 
Northeast.21
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    \1\9Rule 40(a)(5) provides in pertinent part that the exemption 
will not apply where ``by reason of such acquisition, [the local 
enterprise] will become an affiliate of the company acquiring the 
securities.'' The Act defines an affiliate to include any company of 
which 5% or more of the outstanding voting securities are owned by a 
specified company.
    \2\0Michigan Consol. Gas Co., 44 S.E.C. at 367 (acquisitions 
under section 9(c)(3) have involved only ``investments in, and have 
not involved ownership and control of, another business'').
    \2\1The Commission's precedent under section 9(c)(3) is uniform 
in this regard. See, e.g., Hope Gas, Inc., Holding Co. Act Release 
No. 25407, 50 SEC Docket 344 (Nov. 8, 1991); East Ohio Gas Co., 
Holding Co. Act Release No. 25046, 45 SEC Docket 1225 (Feb. 27, 
1990) (applicants represented that the registered company would not 
acquire more than 5% of the securities of the subject industrial 
development company).
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    The Commission is also amending Form U5S to require disclosure of 
the aggregate amount of investments in entities operating in the 
service territory of the registered holding company.

D. Rule 41(c): Exemption of Public-Utility Subsidiaries With Respect to 
Limited Acquisition of Utility Assets

    Under section 9(a)(1) of the Act, companies in a registered system 
generally require Commission approval, by order upon application, 
before acquiring utility assets. Rule 41(c) provides a limited 
exception to this requirement for the acquisition by a system public-
utility company of electric utility assets that are, or immediately 
following the transaction will be, connected with electric utility 
assets that the acquiring company already owns and operates, or gas 
utility assets that are located in, or adjacent to, the service area in 
which the acquiring company already owns and operates gas utility 
assets.22 The existing rule limits the amount of such acquisitions 
to the lesser of $100,000 or 5% of the acquirer's gross utility 
revenues in a given calendar year.
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    \2\217 CFR 250.41(c). Compare section 9(b)(1) (a system company 
can acquire an unlimited amount of utility assets if the 
acquisitions have been expressly authorized by a state commission). 
Rule 41(c) was adopted under section 3(d), which authorizes the 
Commission to make rules exempting companies from the obligations, 
duties, or liabilities imposed on them as ``subsidiary companies'' 
or ``affiliates,'' as defined by the Act.
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    The proposed amendment would increase the annual limit to the 
lesser of $5 million or 5% of the gross annual revenues that the 
acquiring company derived from its operations as a public-utility 
company during the preceding calendar year. The commenters uniformly 
supported this amendment. The Commission is adopting the rule as 
proposed.23
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    \2\3Item 2 of Form U5S generally requires a registered holding 
company to disclose any acquisitions of ``utility plant in service 
or under construction of any electric utility company or retail gas 
utility company for the production, transmission or distribution of 
electric energy or distribution of natural or manufactured gas.''
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E. Rule 42(b): Acquisition, Retirement and Redemption of Securities by 
the Issuer Thereof

    Transactions by which a company in a registered system acquires, 
retires or redeems a security of which it is the issuer (or which it 
has assumed or guaranteed) generally require Commission approval by 
order upon application under sections 9(a), 10 and 12(c), and rules 
thereunder. At present, rule 42(b) provides a limited exemption to this 
requirement.24 The proposed amendment would expand the rule to 
exempt all transactions in which a system company acquires, retires or 
redeems a security of which it is the issuer (or which it has assumed 
or guaranteed).
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    \2\4Paragraph (b) of the present rule exempts: (1) the 
retirement of treasury securities; (2) the acquisition, retirement 
or redemption of any evidence of indebtedness, at maturity or 
otherwise, for the consideration specifically designated therein; 
(3) the acquisition, retirement or redemption of any security 
pursuant to a conversion privilege; (4) the acquisition, retirement 
or redemption of any evidence of indebtedness in accordance with any 
indenture requirement then applicable, or in an aggregate amount 
estimated not to exceed the amount of any sinking fund or other 
periodic requirement for the following twelve months; (5) the 
acquisition, retirement or redemption in any calendar year of not 
more than two percent of the amount of a given class of securities; 
and (6) the acquisition, retirement or redemption of any securities, 
other than common stock, at a cost not exceeding $50,000 in any 
calendar year. 17 CFR 250.42(b).
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    Under the amendment, system companies could more easily adjust 
their capital ratios in response to changing economic conditions. 
Commenters, citing the important role of the capital markets in 
regulating the capital structures of publicly-held corporations, 
uniformly support expansion of the exemption. The Commission recognizes 
that rating agencies, financial institutions and state regulators play 
important roles in ensuring appropriate capital ratios for public-
utility companies.25
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    \2\5In other matters, the Commission has recognized the role of 
rating agencies in analyzing structured financings. See Exclusion 
from the Definition of Investment Company for Structured Financings, 
Investment Company Act Release No. 19105, 57 FR 56248 (Nov. 27, 
1992).
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    To forestall potential abuse, the exemption remains unavailable for 
affiliate transactions.26 CNG asks the Commission to modify this 
exclusion to exempt the acquisition of shares of common stock pursuant 
to the exchange and tax withholding provisions of an employee benefit 
plan. The commenter states that the modification is necessary because 
the rule, at present, does not exempt transactions with the officers 
and directors of system companies, who are affiliates of such companies 
within the meaning of the Act.27 The Commission declines to adopt 
this recommendation. A party may continue to seek Commission approval, 
by order upon application, for these types of transactions.
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    \2\6The legislative history indicates that the regulation of 
intercompany transactions under section 12 was intended ``to prevent 
the milking of operating companies for undue advantage to the 
controlling holding company groups.'' H.R. Rep. No. 1318, 74th 
Cong., 1st Sess. 17 (1935). The Senate report stated, in regard to 
section 12: ``Unless appropriate discretion is given to the 
Commission, new devices will spring up and may result in nullifying 
the provisions of [the Act].'' S. Rep. No. 621, 74th Cong., 1st 
Sess. 34 (1935).
    \2\7Section 2(a)(11)(C) of the Act defines ``affiliate'' to 
include officers and directors of system companies.
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    The acquisition by a registered holding company of its own 
securities as part of a ``going-private'' transaction is exempt from 
the requirements otherwise applicable to such transactions under the 
Securities Exchange Act of 1934.28 To ensure that these 
transactions do not escape review, the amended rule will not exempt 
transactions within the meaning of rule 13e-3(a)(3) under the 
Securities Exchange Act.29
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    \2\8See 17 CFR 240.13e-3(g)(3) (the rules that govern going-
private transactions do not apply to transactions by a registered 
holding company in compliance with the requirements of the Act).
    \2\9See, e.g., 17 CFR 240.13e-3(a)(3). As here relevant, rules 
adopted pursuant to section 13(e)(1) of the Securities Exchange Act 
impose reporting requirements on an issuer's acquisition of its own 
common stock, whether in response to a tender offer [rule 13e-1], as 
part of a going-private transaction [rule 13e-3], or as a self-
tender offer [rule 13e-4]. See 17 CFR 240.13e-1, 240.13e-3, 240.13e-
4.
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    Accordingly, the Commission adopts the amendment substantially as 
proposed.

F. Rule 43(b): Sales to Affiliates

    Rule 43, adopted under sections 12(d) and 12(g) of the Act, 
generally requires prior Commission approval for sales to an affiliate 
of securities, utility assets, or any other interest in any 
business.30 Under the present rule, a sale of securities is 
excepted from this requirement if the acquisition is within the terms 
of section 9(b)(2),31 the consideration is less than $100,000 and 
the acquisition does not require Commission approval,32 or the 
transaction involves the sale of securities of a subsidiary service 
company.33 The proposed amendment would create a single class of 
exemptions for sales to affiliates of securities, utility assets, or 
any other interests in any business up to a total annual aggregate 
consideration of $5 million when the acquisition does not require 
Commission approval.34
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    \3\017 CFR 250.43.
    \3\1Section 9(b)(2) provides an exemption from section 9(a) for 
the acquisition by a public-utility company of the securities of its 
subsidiary public-utility company in a wholly intrastate holding 
company system.
    \3\2Rule 41(c) provides an exemption for limited acquisitions of 
utility assets. Any sales corresponding to these exempt acquisitions 
would also be exempt under rule 43(b), as amended. Further, rules 40 
and 42 provide exemptions for limited acquisitions of nonutility 
interests and for an issuer's acquisition of its own securities, 
respectively, while rule 52 exempts certain security issuances and 
acquisitions.
    \3\3A service company is a subsidiary company of a registered 
holding company that performs services or construction for, or sells 
goods to, an associate company.
    \3\4Acquisitions not subject to Commission approval would 
include, for example, an acquisition of utility assets within the 
exemption provided by section 9(b) or 9(c), or rule 41.
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    The Commission believes that existing reporting requirements under 
the Act should guard against potential abuses.35 The commenters 
generally favor the proposed amendment.36 CNG asks whether the 
dollar limitation applies to each transaction or the annual aggregate 
amount of such transactions. The $5 million limit is intended as an 
annual aggregate maximum amount for all transactions under the rule. 
CNG also seeks an additional exemption for intrasystem transactions 
when the acquisition is otherwise subject to approval of the 
Commission. The Commission does not perceive the need for such an 
exemption. The rule, therefore, is adopted substantially as proposed.
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    \3\5Form U5S requires annual reporting of sales in excess of $1 
million of ``utility plant in service or under construction of any 
electric utility company or retail gas utility company for the 
production, transmission or distribution of electric energy or 
distribution of natural or manufactured gas.''
    A registered holding company also must report ``issuances, sales 
or pledges of securities of system companies or guaranty or 
assumption by system companies of securities of other persons, 
including system companies or exempted subsidiaries, stating the 
name of the issuer, the name of the system company if different, 
describing the securities, the date and form of the transaction, the 
consideration and the exemption claimed.'' Id.
    \3\6The commenters cited the protections afforded by existing 
state and federal law, together with the reporting requirement of 
Form U5S under the Act, as safeguards for the interests of investors 
and consumers.
    A registered holding company also must report ``issuances, sales 
or pledges of securities of system companies or guaranty or 
assumption by system companies of securities of other persons, 
including system companies or exempted subsidiaries, stating the 
name of the issuer, the name of the system company if different, 
describing the securities, the date and form of the transaction, the 
consideration and the exemption claimed.'' Id.
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G. Rule 44(b): Sales of Securities and Assets

    Rule 44, adopted under section 12(d) of the Act, governs sales of 
utility securities or utility assets by a registered holding company to 
any person.37 The rule, at present, exempts four classes of such 
sales from the general requirement of Commission approval by order upon 
application. The proposed amendment would replace the existing 
exemptions with a single one that would exempt all sales up to an 
annual aggregate amount of $5 million where the acquisition of the 
securities or assets does not require Commission approval. The 
Commission believes that existing reporting requirements under the Act 
offer a safeguard against potential abuses. The commenters generally 
support this amendment. Accordingly, the rule is amended.
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    \3\717 CFR 250.44.
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H. Rule 50: Requirement of Public Invitation of Proposals for the 
Purchase or Underwriting of Securities

    The Commission is rescinding rule 50.38 The rule, which 
established a requirement of competitive bidding with respect to the 
issuance or sale of securities by a registered holding company or its 
subsidiary, was intended to prevent abuses in the issue and sale of 
securities. In practice, many system companies relied upon various 
exceptions to this requirement. The Commission believes that the rule 
is no longer necessary in view of the extensive reporting requirements 
imposed by the Act and the other federal securities laws. In addition, 
unless otherwise exempted, the underlying financing will remain subject 
to Commission review.39 Rescission of the rule will permit 
companies in a registered holding company system to choose the 
marketing method that offers the most advantageous terms. The 
commenters strongly support this proposal.40 The rule is hereby 
rescinded.
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    \3\817 CFR 250.50.
    \3\9In particular, the Commission must consider, under section 
7(d)(4) of the Act, whether the fees or other remuneration paid in 
connection with the issue, sale or distribution of a security are 
reasonable. Rule 52 (17 CFR 250.52) provides a limited exemption for 
the issuance and sale of certain securities by public-utility 
companies in a registered system. A company seeking to rely upon 
rule 52 must report, on Form U-6B-2, the terms and conditions of 
such transaction.
    \4\0CNG expressed concern that rescission of the rule would 
eliminate the option to bid securities competitively and thus 
endanger a company's ability to rely upon rule 415 under the 
Securities Act of 1933, the ``shelf-registration'' rule. The 
elimination of the requirement of competitive bidding does not 
affect a registered holding company's ability to offer securities 
subject to a competitive process. In addition, the Commission notes 
that the availability of rule 415 under the Securities Act depends 
on the type of securities that are to be offered, not the 
competitive bidding requirements of rule 50. Indeed, rule 50 had 
been amended to allow for shelf registration by registered holding 
companies. See Holding Co. Act Release No. 22623, 47 FR 39810 (Sept. 
2, 1982).
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I. Rule 65: Expenditures in Connection With Solicitation of Proxies

    Rule 65, adopted under section 12(i) of the Act, generally requires 
prior Commission approval for certain expenditures in connection with 
the solicitation of proxies by a company in a registered system.41 
The rule currently provides an exemption for annual aggregate 
expenditures of $1,000. The proposed amendment would increase the 
annual exemption to $100,000.
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    \4\117 CFR 250.65.
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    The commenters generally support this proposal. Columbia, however, 
asks the Commission to rescind the rule. The commenter notes that 
regulated companies are already subject to the proxy solicitation rules 
under the Securities Exchange Act of 1934,42 and contends that 
there are no current abuses that justify the additional restrictions 
under the Act.43 Northeast asks the Commission to amend the rule 
to require only that proxy solicitations be conducted in conformity 
with the Commission's proxy rules.
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    \4\2Proxy solicitations and related expenses are subject to 
Commission review under the Securities Exchange Act of 1934 [15 
U.S.C. Secs. 78a-78ll] and rules thereunder [17 CFR 240.14a-1-
240.14f-1].
    \4\3Columbia at 4-5. The commenter also asserted that the 
requirements of rule 65 are inconsistent with recent amendments to 
the Commission's proxy rules that decrease regulation of 
communications among shareholders. See Securities Exchange Act 
Release No. 34-31326, 57 FR 48276 (Oct. 22, 1992) (adopting 
amendments to the proxy rules).
---------------------------------------------------------------------------

    Both the proxy rules and rule 65 require the disclosure of the 
identity of paid solicitors and the cost of the solicitations.44 A 
proposal to rescind rule 65 may be an appropriate subject for a future 
rulemaking. In the meantime, however, the rule is amended as proposed.
---------------------------------------------------------------------------

    \4\4See 17 CFR 240.14a-101, item 4. For solicitations not 
subject to election contests, item 4(a) provides, in pertinent part,
    (2) If the solicitation is made otherwise than by the 
registrant, so state and give the names of the participants in the 
solicitation * * *.
    (3) * * * If the solicitation is to be made by specially engaged 
employees or paid solicitors, state (i) the material features of any 
contract or arrangement for such solicitation and identify the 
parties, and (ii) the cost or anticipated cost thereof.
    (4) State the names of the persons by whom the cost of the 
solicitation has been or will be borne, directly or indirectly.
    For solicitations subject to election contests, item 4(b) 
provides, in pertinent part,
    (1) State by whom the solicitation is made and describe the 
methods employed and to be employed to solicit security holders.
    (2) If regular employees of the registrant or any other 
participant in a solicitation have been or are to be employed to 
solicit security holders, describe the class or classes of employees 
to be so employed, and the manner and nature of their employment for 
such purpose.
    (3) If specially engaged employees, representatives or other 
persons have been or are to be employed to solicit security holders, 
state (i) the material features of any contract or arrangement for 
such solicitation and the identity of the parties, (ii) the cost or 
anticipated cost thereof, and (iii) the approximate number of such 
employees or employees of any other person (naming such other 
person) who will solicit security holders.
    (4) State the total amount estimated to be spent and the total 
expenditures to date for, in furtherance of, or in connection with 
the solicitation of security holders.
    (5) State by whom the cost of the solicitation will be borne. * 
* *
    Compare Holding Co. Act Release No. 2681 (Apr. 9, 1941) (rule 65 
was intended to ``prevent substantial expenditures of corporate 
funds by the management of a registered holding company to employ 
solicitors to aid them in obtaining proxies in a contested 
election'').
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J. Rule 71: Statements To Be Filed Pursuant to Section 12(i) of the Act

    Under section 12(i) of the Act, persons employed or retained by any 
registered holding company or its subsidiary, who engage in activities 
before Congress, the Federal Energy Regulatory Commission (``FERC'') or 
the Commission, must disclose the nature and character of their 
employment and related compensation. Rule 71(a) currently requires a 
report on Form U-12(I)-A within 10 days of the date of such 
activities.45 Rule 71(b) permits the filing of an advance 
statement on Form U-12(I)-B covering anticipated activities for the 
remainder of the calendar year. The proposed amendment would lengthen 
the advance statement period to three years.
---------------------------------------------------------------------------

    \4\517 CFR 250.71(a).
---------------------------------------------------------------------------

    The commenters generally support the amendment. CNG asks the 
Commission to clarify the types of persons that are required to file 
under the rule. In general, support staff, such as secretarial staff, 
are not subject to the filing requirement, in contrast to officers and 
attorneys who represent the companies.46
---------------------------------------------------------------------------

    \4\6See, e.g., SEC v. Morgan, Lewis & Bockius, 209 F.2d 44 (9th 
Cir. 1953) (attorneys representing holding companies before the 
Commission in a matter affecting a registered holding company are 
required to file under rule 71).
---------------------------------------------------------------------------

    Columbia suggests that the Commission exempt from filing all 
regular employees in the holding company whose expenses do not exceed 
$30,000 per year. By its terms, however, section 12(i) does not appear 
to permit a de minimis exemption.47 The Commission therefore 
declines to adopt this suggestion. Accordingly, the rule is adopted as 
proposed.
---------------------------------------------------------------------------

    \4\7 Section 12(i) requires the filing of forms with the 
Commission with respect to individuals who ``present, advocate, or 
oppose any matter.''
---------------------------------------------------------------------------

K. Rule 83: Exemption in the Case of Transactions With Foreign 
Associates

    Section 13 of the Act requires that service, sales and construction 
contracts be performed economically and efficiently for the benefit of 
associate companies at cost, fairly and equitably allocated among the 
companies.
    Under rule 83(d), any subsidiary company can perform service, sales 
and construction contracts for a foreign associate company without 
complying with the standards of section 13(b), and without the need to 
apply for, and receive, prior Commission approval, so long as the 
aggregate cost of such contracts does not exceed $10,000 
annually.48 The Commission proposed to amend the rule to extend 
the exemption to all transactions, at not less than cost, with foreign 
associate companies.
---------------------------------------------------------------------------

    \4\8 17 CFR 250.83(d).
---------------------------------------------------------------------------

    The Commission had believed that the pricing requirement under the 
proposed amended rule would provide an adequate safeguard against 
abuse. A question has arisen, however, whether the rule would protect 
against a diversion of management and other expertise away from the 
needs of the system's core utility operations. The Commission will 
consider these issues in a companion rulemaking involving a proposed 
amendment to rule 87.49 Accordingly, the Commission is deferring 
action for further consideration of the proposed amendment to rule 83.
---------------------------------------------------------------------------

    \4\9 The Commission proposed to amend rule 87 to clarify the 
requirement of prior approval, by order upon application, for 
service, sales or construction contracts involving an exempt 
wholesale generator or foreign utility company and an associate 
company. See Holding Company Act Release No. 25887, International 
Series Release No. 584 (Sept. 23, 1993), 58 FR 51508 (Oct. 1, 1993).
---------------------------------------------------------------------------

L. Uniform System of Accounts and Form U-13-60: Annual Report for 
Mutual and Subsidiary Service Companies

    The Commission is deferring action on a proposed amendment to the 
annual report form for mutual and subsidiary service companies, Form U-
13-60.50 The proposed amendment was intended to harmonize the 
Commission's Uniform System of Accounts for Mutual and Subsidiary 
Service Companies and the FERC's standard accounts for utility 
companies.
---------------------------------------------------------------------------

    \5\0 See Holding Co. Act Release No. 1858 (Dec. 29, 1939) 
(adopting Form U-13-60); Holding Co. Act Release No. 21447 (Feb. 22, 
1980) (amendment). The Uniform System of Accounts are found in 17 
CFR 256.
---------------------------------------------------------------------------

    Most commenters expressed confusion as to the proposed changes and 
the degree of flexibility they would afford. These commenters asked the 
Commission to clarify its proposal. In light of these comments, the 
Commission has decided to defer action to enable it to consider the 
matter more closely.

M. Other Matters

    Finally, the Commission is amending or deleting obsolete language 
in certain rules, including references to the Federal Power Commission, 
the Atomic Energy Commission and the Bankruptcy Act.51
---------------------------------------------------------------------------

    \5\1 See, e.g., 17 CFR 250.7, 250.26, 250.27, 250.49, 250.52, 
250.62, 250.63.
---------------------------------------------------------------------------

II. Summary of the Final Regulatory Flexibility Analysis

    The Commission has prepared a Final Regulatory Flexibility Analysis 
in accordance with section 603 of the Regulatory Flexibility Act, 5 
U.S.C. 603, regarding the amendment to rule 7. The Analysis explains 
that the amendment is intended to expand the exemption from regulation 
for companies that are primarily engaged in nonutility businesses. The 
Analysis describes the present regulatory framework under which a 
company operating public-utility facilities must obtain a Commission 
order declaring it not to be an electric or gas utility company, unless 
the gross sales of electric energy, or of natural or manufactured gas 
distributed at retail by means of the facilities owned or operated by 
such company, did not exceed $100,000 during the previous calendar 
year. The exemption by order is not available for companies that own 
but do not operate such facilities. The amendment would increase the 
dollar sales allowable under the exemption to $5 million. The Analysis 
states that several significant alternatives to the amendment were 
considered, including continuing to grant exemptions by order on a 
case-by-case basis, but concludes that the amendment provides the least 
impact on, or cost to, small businesses. A copy of the Final Regulatory 
Flexibility Analysis may be obtained from Brian P. Spires, at Mail Stop 
10-6, Securities and Exchange Commission, 450 5th Street, N.W., 
Washington, D.C. 20549.
    The other rule and form amendments will not affect any small 
entities as defined in rule 110. Pursuant to section 605(b) of the 
Regulatory Flexibility Act, 5 U.S.C. 605(b), the Chairman of the 
Commission has certified that the amended rules would not have a 
significant economic impact on a substantial number of small entities. 
The Commission did not receive any comments with respect to the 
Chairman's certification.

III. Cost/Benefit of Proposed Actions

    The amendments will decrease regulatory compliance costs for 
companies in a registered holding company system. In fiscal year 1993, 
for example, the amendments would have eliminated the need for 22 
applications and approximately 545 forms, and would have reduced the 
regulatory burden associated with an additional 86 applications, for an 
estimated savings of more than 4,114 hours per year. Moreover, the 
amendments would have reduced by approximately 1,576 hours the staff 
time associated with reviewing and analyzing these applications. The 
only cost to the companies complying with the amended rules will be the 
cost of reporting on Form U5S the information required by rule 
40(a)(5). It is estimated that no more than one-half hour will be 
required to complete the additional information required by the change 
to Form U5S.

IV. Paperwork Reduction Act

    The Office of Management and Budget has approved the amended rules 
and forms for continued use through December 31, 1995 and February 28, 
1996 (Control No. 3235-AF68).

V. Statutory Authority

    Commission is amending rule 7 pursuant to sections 2(a)(3), 2(a)(4) 
and 20(a) [15 U.S.C. Secs. 79b(a)(4), 79b(a)(4), 79t(a)] of the Act; 
amending rule 26 pursuant to section 20(a) [15 U.S.C. Sec. 79t(a)] of 
the Act; amending rule 27 pursuant to section 20(a) [15 U.S.C. 
Sec. 79t(a)] of the Act; amending rule 29 pursuant to sections 14, 15 
and 20(a) [15 U.S.C. Secs. 79n, 79o, 79t(a)] of the Act; amending rule 
40(a)(5) and Form U5S pursuant to sections 3(d), 5(c), 9(c)(3), 14 and 
20(a) [15 U.S.C. Secs. 79c(d), 79e(c), 79i(c)(3), 79n, 79t(a)] of the 
Act; amending rule 41(c) pursuant to section 3(d) [15 U.S.C. 
Sec. 79c(d)] of the Act; amending rule 42 pursuant to section 9(c)(3), 
12(c) and 20(a) [15 U.S.C. Secs. 79i(c)(3), 79l(c), 79t(a)] of the Act; 
amending rule 43(b) pursuant to sections 6(b), 12(d), 12(f) and 27(a) 
[15 U.S.C. Secs. 79f(b), 79l(d), 79l(f), 79aa(a)] of the Act; amending 
rule 44(b) pursuant to section 12(d) [15 U.S.C. Sec. 79l(d)] of the 
Act; amending rule 49 pursuant to section 20(a) [15 U.S.C. Sec. 79t(a)] 
of the Act; rescinding rule 50 pursuant to section 20(a) [15 U.S.C. 
Sec. 79t(a)] of the Act; amending rule 52 pursuant to section 20(a) [15 
U.S.C. Sec. 79t(a)] of the Act; amending rule 62 pursuant to section 
20(a) [15 U.S.C. Sec. 79t(a)] of the Act; amending rule 63 pursuant to 
section 20(a) [15 U.S.C. Sec. 79t(a)] of the Act; amending rule 65 
pursuant to sections 12(e) and 20(a) [15 U.S.C. Secs. 79l(e), 79t(a)] 
of the Act; and amending rule 71(b) and Forms U-12(I)-A and U-12(I)-B 
pursuant to section 12(i) and 20(a) [15 U.S.C. Secs. 79l(i), 79t(a)] of 
the Act. The authority citations for these actions precede the text of 
the actions.

VI. Text of Rule and Form Amendments

List of Subjects in 17 CFR Parts 250 and 259

    Utilities.

    For the reasons set out in the preamble, the Commission is amending 
Chapter II, Title 17 of the Code of Federal Regulations as follows:

PART 250--GENERAL RULES AND REGULATIONS, PUBLIC UTILITY HOLDING 
COMPANY ACT OF 1935

    1. The authority citation for Part 250 continues to read as 
follows:

    Authority: 15 U.S.C. 79c, 79f(b), 79i(c)(3), 79t, unless 
otherwise noted.

    2. The authority citations at the end of the following sections are 
removed: 250.7, 250.26, and 250.29.
    3. Section 250.7 is amended by removing ``Atomic Energy 
Commission'' in paragraphs (b)(2)(i) and (b)(3)(i) and adding in its 
place ``Nuclear Regulatory Commission'' and by revising paragraph (a) 
to read as follows:


Sec. 250.7  Companies deemed not to be electric or gas utility 
companies.

    (a) Any company which is primarily engaged in one or more 
businesses other than the business of an electric or gas utility 
company, shall not be deemed an electric or gas utility company within 
the meaning of section 2(a)(3) or section 2(a)(4) of the Act if the 
gross sales of electric energy, or of natural or manufactured gas 
distributed at retail by means of the facilities owned or operated by 
such company, did not exceed an average annual amount of $5,000,000 
over the preceding three calendar years. There may be excluded from the 
gross sales specified:
    (1) Sales of electric energy or natural or manufactured gas to 
tenants or employees of the operating company for their own use and not 
for resale; and
    (2) Sales of gas to industrial consumers or in enclosed portable 
containers.
* * * * *


Sec. 250.26  [Amended]

    4. Section 250.26 is amended by removing ``Federal Power 
Commission'' each time it appears in paragraph (b)(2), and adding in 
its place ``Federal Energy Regulatory Commission''.


Sec. 250.27  [Amended]

    5. Section 250.27 is amended by removing ``Federal Power 
Commission'' each time it appears in paragraph (a), and adding in its 
place ``Federal Energy Regulatory Commission''.
    6. Section 250.29 is revised to read as follows:


Sec. 250.29  Filing of Reports to State Commissions.

    Preliminary Note: Reports to State Commissions shall be submitted 
to the Commission in paper only, whether or not the filer is otherwise 
required to file in electronic format.

    A copy of each annual report submitted by any registered holding 
company or any subsidiary thereof to a State Commission covering 
operations not reported to the Federal Energy Regulatory Commission 
shall be filed with the Securities and Exchange Commission no later 
than ten days after such submission.
    7. Section 250.40 is amended by revising paragraph (a)(5) to read 
as follows:


Sec. 250.40  Exemption of certain acquisitions from nonaffiliates.

    (a) * * *
    (5) Securities of local enterprises. Any security issued by an 
industrial or other nonutility enterprise located in the service 
territory of the acquiring public-utility company or, if the acquiring 
company is not a public-utility company, in the service territory of 
the registered holding-company system: Provided,
    (i) The total cost of acquisitions by the acquiring company of 
securities of industrial development companies organized for the 
purpose of, and in accordance with a State law that specifically 
relates to, promoting the development of business and industry in such 
state does not exceed an annual aggregate amount of $5 million, and
    (ii) The total cost of acquisitions of securities of other local 
industrial or nonutility enterprises does not exceed an annual 
aggregate amount of $1 million. In no event, however, will the above 
exemption apply where, by reason of such acquisition, the acquiring 
company would become an affiliate of the issuer.
* * * * *
    8. Section 250.41 is amended by revising paragraph (c) to read as 
follows:


Sec. 250.41  Exemption of public utility subsidiaries with respect to 
limited acquisition of utility assets.

* * * * *
    (c) Limit in Amount. The total consideration paid for utility 
assets acquired pursuant to the exemption granted by this section does 
not exceed in any calendar year the lesser of $5 million or five 
percent of the gross annual revenues of the acquiring company derived 
from its operations as a public-utility company during the preceding 
calendar year.
* * * * *
    9. Section 250.42 is revised to read as follows:


Sec. 250.42  Acquisition, retirement and redemption of securities by 
the issuer thereof.

    A registered holding company or its subsidiary company may acquire, 
retire or redeem any security of which it is the issuer (or which it 
has assumed or guaranteed) without the need for prior Commission 
approval under sections 9(a), 10 and 12(c) of the Act: Provided, This 
section shall not apply to a transaction by a registered holding 
company or its subsidiary company with an associate company, an 
affiliate, or an affiliate of an associate company, or to a transaction 
by a registered holding company, as defined in Sec. 240.13e-3(a)(3) of 
this chapter.
    10. Section 250.43 is amended by revising paragraph (b) to read as 
follows:


Sec. 250.43  Sales to affiliates.

* * * * *
    (b) Exception. The foregoing requirement in paragraph (a) shall not 
apply to any sale of securities or utility assets or any other interest 
in any business in an aggregate amount of up to $5,000,000 during any 
calendar year if the acquisition of such securities, assets or other 
interest does not require prior Commission approval.
    11. Section 250.44 is amended by revising paragraph (b) to read as 
follows:


Sec. 250.44  Sales of securities and assets.

* * * * *
    (b) Exception. The foregoing requirement in paragraph (a) shall not 
apply to any sale of securities or of utility assets in an aggregate 
amount of up to $5,000,000 during any calendar year if the acquisition 
of such securities or assets does not require prior Commission 
approval.
* * * * *


Sec. 250.49  [Amended]

    12. Section 250.49 is amended by revising the phrase ``section 208 
of Chapter X of the Bankruptcy Act, as amended (52 Stat. 894; 11 U.S.C. 
608)'' in paragraph (c) to read ``section 1109(a) of Chapter 11 of the 
Bankruptcy Code (11 U.S.C. 1109(a))'' and by removing the clauses 
``section 106(13) of said Chapter X (52 Stat. 883; 11 U.S.C. 506), or 
of'' and ``section 106.(13) of said Chapter X or of'' where they appear 
in paragraph (c).


Sec. 250.50  [Removed and Reserved]

    13. Section 250.50 is removed and reserved.


Sec. 250.52  [Amended]

    14. Section 250.52 is amended by removing the phrase ``paragraph 
(d)'' in paragraph (c) and replacing it with ``paragraph (c).''


Sec. 250.62  [Amended]

    15. Section 250.62 is amended by removing the phrase ``or by a 
confirmed telegram'' in paragraph (d)(2), and removing the phrase ``or 
telegraphic'' in paragraph (d)(3).


Sec. 250.63  [Amended]

    16. Section 250.63 is amended by revising the phrase ``section 208 
of Chapter X of the Bankruptcy Act as amended (52 Stat. 894; 11 U.S.C. 
608)'' to read ``section 1109(a) of Chapter 11 of the Bankruptcy Code 
(11 U.S.C. 1109(a))''.
    17. Section 250.65 is amended by revising paragraph (b)(2) to read 
as follows:


Sec. 250.65  Expenditures in connection with solicitation of proxies.

* * * * *
    (b) Exceptions. * * *
    (2) Other expenditures not in excess of $100,000 during any one 
calendar year.
* * * * *
    18. Section 250.71 is amended by revising the section heading and 
paragraph (b) to read as follows:


Sec. 250.71  Statements to be filed pursuant to section 12(i).

* * * * *
    (b) Advance statement. An advance statement, covering anticipated 
activity for the remainder of the present calendar year, and the next 
two calendar years, may be filed on Form U-12(I)-B by any person 
(whether or not the compensation of such person has been fixed in 
advance) who is a salaried officer or employee or an attorney, 
accountant or other expert regularly retained by any company or by 
companies in the same holding-company system, or any person specially 
retained in connection with a particular proceeding or enterprise which 
is expected to involve a series of appearances or activities, if such 
employment or retainer does not contemplate any expenses other than 
ordinary personal, traveling or sustenance expenses, stationery, 
postage, telephone, telecopier and telegraphic service, stenographic 
and clerical assistance, expenditures for the printing of briefs or 
other documents to be submitted to any agencies specified in section 
12(i) of the Act, and similar items.
* * * * *

PART 259--FORMS PRESCRIBED UNDER THE PUBLIC UTILITY HOLDING COMPANY 
ACT OF 1935

    19. The authority citation for Part 259 continues to read as 
follows:

    Authority: 15 U.S.C. 79e, 79f, 79g, 79j, 79l, 79m, 79n, 79q, 
79t.

Subpart A--Forms for Registration and Annual Supplements

    20. Form U5S (referenced in Sec. 259.5s) is amended by revising 
paragraph 1 of Item 5 to read as follows:

    Note: These amendments and the forms do not appear in the Code 
of Federal Regulations.

Form U5S

* * * * *

Item 5. Investments in Securities of Nonsystem Companies

* * * * *
    1. Aggregate amount of investments in persons operating in the 
retail service area of the owner, or of its subsidiaries. State the 
number of persons included and describe generally the kind of persons 
included. If investments were made pursuant to State law, cite the 
State law under which they were made.
* * * * *

Subpart C--Forms for Statements and Reports

    21. Form U-12(I)-A (referenced in Sec. 259.212a) is amended by 
revising paragraph (b) of rule U-71 to read as follows:

Form U-12(I)-A

* * * * *

Statements to Be Filed Pursuant to Section 12(i)

* * * * *
    (b) Advance Statement. An advance statement, covering anticipated 
activity for the remainder of the present calendar year and the next 
two calendar years, may be filed on Form U-12(I)-B by any person 
(whether or not the compensation of such person has been fixed in 
advance) who is a salaried officer or employee or an attorney, 
accountant or other expert regularly retained by any company or by 
companies in the same holding-company system, or any person specially 
retained in connection with a particular proceeding or enterprise which 
is expected to involve a series of appearances or activities, if such 
employment or retainer does not contemplate any expenses other than 
ordinary personal, traveling or sustenance expenses, stationery, 
postage, telephone, telecopier and telegraphic service, stenographic 
and clerical assistance, expenditures for the printing of briefs or 
other documents to be submitted to any agencies specified in section 
12(i) of the Act, and similar items.
* * * * *
    22. Form U-12(I)-B (referenced in Sec. 259.212b) is amended by 
revising the heading, revising the phrase ``during the prior year and 
to be received during the calendar year'' to read ``during the current 
year and estimated to be received over the next two calendar years'' in 
paragraph 5(a) and removing the phrase ``during prior year'' in column 
(a) of the table in paragraph 5(a), revising paragraph (b) of rule U-
71, revising the General Instruction to Form U-12(I)-B, removing the 
phrase ``at end of year'' in Item 5(a) of the General Instruction, and 
removing the phrase ``at end of year'' in Item 6 of the General 
Instruction, to read as follows:

Form U-12(I)-B (Three-Year Statement)

Securities and Exchange Commission, Washington, D.C. Three year period 
ending 19 ____.

Form U-12(I)-B (Three-Year Statement)

* * * * *

Statements to Be Filed Pursuant to Section 12(i).

* * * * *
    (b) Advance Statement. An advance statement, covering anticipated 
activity for the remainder of the present calendar year and the next 
two calendar years, may be filed on Form U-12(I)-B by any person 
(whether or not the compensation of such person has been fixed in 
advance) who is a salaried officer or employee or an attorney, 
accountant or other expert regularly retained by any company or by 
companies in the same holding-company system, or any person specially 
retained in connection with a particular proceeding or enterprise which 
is expected to involve a series of appearances or activities, if such 
employment or retainer does not contemplate any expenses other than 
ordinary personal, traveling or sustenance expenses, stationery, 
postage, telephone, telecopier and telegraphic service, stenographic 
and clerical assistance, expenditures for the printing of briefs or 
other documents to be submitted to any agencies specified in section 
12(i) of the Act, and similar items.
* * * * *

Instructions

    General Instruction.--Advance Statement on this form shall continue 
in effect until January 30 of the year following the end of the three-
year period covered by the advance statement, unless and except as 
previously supplemented or renewed. Supplementary statements during the 
three-year period may be filed in the event of material changes such as 
in information called for by items 1 through 6. Changes of rank or 
salary within the organization would not ordinarily be deemed material.
* * * * *
    Dated: April 20, 1994.

    By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-10090 Filed 4-26-94; 8:45 am]
BILLING CODE 8010-01-P