As Reported by House Public Utilities Committee 1
123rd General Assembly 4
Regular Session Sub. H. B. No. 452 5
1999-2000 6
REPRESENTATIVES GOODMAN-MEAD-TIBERI-TRAKAS-GARDNER-R. MILLER- 8
VESPER-CAREY-DePIERO-OLMAN-HARTNETT-JOLIVETTE-WILLAMOWSKI- 9
HOOPS-NETZLEY-CORBIN-KRUPINSKI-THOMAS-HOUSEHOLDER-LOGAN- 10
METELSKY-TAYLOR-HOLLISTER-FLANNERY-BEATTY-D. MILLER- 11
CALLENDER-GERBERRY-JERSE-HARTLEY-SCHULER-COUGHLIN-JACOBSON- 12
PETERSON-JORDAN-LUEBBERS-MAIER-HAINES-SCHURING-AMSTUTZ-ALLEN- 13
BUEHRER-CLANCY-BRITTON-KREBS-MOTTLEY-HARRIS-BUCHY-AUSTRIA-CATES- 14
BRADING-WILSON-ASLANIDES-OGG-BOYD-DAMSCHRODER-CALVERT-PATTON- 16
A. CORE-FORD-ROBERTS-PERRY-JONES-EVANS-REDFERN-TERWILLEGER-
SMITH-MYERS-BENDER-WOMER BENJAMIN-KILBANE-VAN VYVEN-VERICH- 17
JAMES-SYKES-SCHUCK-METZGER-PRINGLE-SULZER 18
_________________________________________________________________
A B I L L
To enact section 4905.403 of the Revised Code to 20
require a report by the Public Utilities 21
Commission on whether acceptance of a hostile 22
control bid for an Ohio natural gas utility or 23
its holding company will promote the public 24
convenience and result in the provision of 25
adequate utility service at a reasonable rate and 26
to declare an emergency.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 28
Section 1. That section 4905.403 of the Revised Code be 30
enacted to read as follows: 31
Sec. 4905.403. (A) AS USED IN THIS SECTION: 33
(1) "CONTROL BID" MEANS THE PURCHASE OF, OR OFFER TO 35
PURCHASE, FROM A RESIDENT OF THIS STATE, BY TENDER OFFER, 36
INVITATION FOR TENDERS, OR OTHERWISE, ANY EQUITY SECURITY OF A 37
NATURAL GAS COMPANY IN THIS STATE THAT IS A PUBLIC UTILITY UNDER 38
2
SECTION 4905.02 OF THE REVISED CODE OR ANY EQUITY SECURITY OF A 39
HOLDING COMPANY CONTROLLING SUCH A COMPANY, IF, AFTER THAT 40
PURCHASE, THE OFFEROR WOULD BE DIRECTLY OR INDIRECTLY THE 41
BENEFICIAL OWNER OF MORE THAN TEN PER CENT OF ANY CLASS OF THE 42
ISSUED AND OUTSTANDING EQUITY SECURITIES OF THE SUBJECT NATURAL 43
GAS COMPANY OR SUBJECT HOLDING COMPANY. "CONTROL BID" EXCLUDES 44
ANY OF THE FOLLOWING:
(a) A BID MADE BY A DEALER FOR THE DEALER'S OWN ACCOUNT IN 46
THE ORDINARY COURSE OF THE BUSINESS OF BUYING AND SELLING 47
SECURITIES;
(b) AN OFFER TO ACQUIRE ANY EQUITY SECURITY SOLELY IN 49
EXCHANGE FOR ANY OTHER SECURITY, OR THE ACQUISITION OF ANY EQUITY 50
SECURITY PURSUANT TO AN OFFER, FOR THE SOLE ACCOUNT OF THE 51
OFFEROR, IN GOOD FAITH AND NOT FOR THE PURPOSE OF AVOIDING THE 52
PROVISIONS OF THIS SECTION, AND NOT INVOLVING ANY PUBLIC OFFERING 53
OF THE OTHER SECURITY WITHIN THE MEANING OF SECTION 4 OF TITLE I 55
OF THE "SECURITIES ACT OF 1933," 48 STAT. 77, 15 U.S.C.A. 77d(2), 60
AS AMENDED;
(c) PURSUANT TO A MERGER, CONSOLIDATION, COMBINATION, 62
MAJORITY SHARE ACQUISITION, OR OTHER TRANSACTION, THE ACQUISITION 64
OF ANY EQUITY SECURITY OF A NATURAL GAS COMPANY IN THIS STATE 66
THAT IS A PUBLIC UTILITY UNDER SECTION 4905.02 OF THE REVISED
CODE OR ANY EQUITY SECURITY OF A HOLDING COMPANY CONTROLLING SUCH 67
A COMPANY, IF, PRIOR TO THE DATE UPON WHICH THE OFFEROR BECOMES 69
THE OWNER OF MORE THAN TEN PER CENT OF ANY CLASS OF THE ISSUED 70
AND OUTSTANDING EQUITY SECURITIES OF THE SUBJECT NATURAL GAS 71
COMPANY OR HOLDING COMPANY, THE DIRECTORS OF THE SUBJECT NATURAL 72
GAS COMPANY OR SUBJECT HOLDING COMPANY HAD APPROVED THE 73
ACQUISITION.
(2) "DEALER" HAS THE SAME MEANING AS IN SECTION 1707.01 OF 75
THE REVISED CODE.
(3) "EQUITY SECURITY" MEANS ANY SHARE OR SIMILAR SECURITY, 77
OR ANY SECURITY CONVERTIBLE INTO ANY SUCH SECURITY, OR CARRYING 78
ANY WARRANT OR RIGHT TO SUBSCRIBE TO OR PURCHASE ANY SUCH 79
3
SECURITY, OR ANY SUCH WARRANT OR RIGHT, OR ANY OTHER SECURITY 80
THAT, FOR THE PROTECTION OF SECURITY HOLDERS, IS DEEMED AN EQUITY 81
SECURITY BY THE PUBLIC UTILITIES COMMISSION. 82
(4) "OFFEROR" MEANS A PERSON THAT MAKES, OR IN ANY WAY 84
PARTICIPATES OR AIDS IN MAKING, A CONTROL BID. "OFFEROR" 85
INCLUDES PERSONS ACTING JOINTLY OR IN CONCERT IN EXERCISING, OR 86
THAT INTEND TO EXERCISE JOINTLY OR IN CONCERT, ANY VOTING RIGHTS 88
ATTACHED TO THE SECURITIES FOR WHICH THE CONTROL BID IS MADE, BUT 89
EXCLUDES A SUBJECT NATURAL GAS COMPANY IN THIS STATE THAT IS A 90
PUBLIC UTILITY UNDER SECTION 4905.02 OF THE REVISED CODE OR A 91
SUBJECT HOLDING COMPANY CONTROLLING SUCH A COMPANY WHEN MAKING A 92
CONTROL BID FOR ITS OWN SECURITIES. 93
(B) NO OFFEROR SHALL MAKE A CONTROL BID FOR A NATURAL GAS 95
COMPANY IN THIS STATE THAT IS A PUBLIC UTILITY UNDER SECTION 97
4905.02 OF THE REVISED CODE, OR A HOLDING COMPANY CONTROLLING
SUCH A COMPANY, WITHOUT THE OFFEROR FILING THE CONTROL BID WITH 99
THE PUBLIC UTILITIES COMMISSION, IN SUCH FORM AND PURSUANT TO 100
SUCH PROCEDURES AS THE COMMISSION PRESCRIBES. NOT LATER THAN 101
THREE DAYS AFTER THE DATE OF THE FILING, THE COMMISSION SHALL FIX 102
A TIME FOR A HEARING AND SHALL NOTIFY THE OFFEROR AND THE SUBJECT 103
NATURAL GAS COMPANY OR SUBJECT HOLDING COMPANY. THE EXCLUSIVE 104
PURPOSE OF THE HEARING SHALL BE TO DETERMINE WHETHER ACCEPTANCE 105
OF THE CONTROL BID WILL PROMOTE PUBLIC CONVENIENCE IN THIS STATE 106
AND RESULT IN THE PROVISION OF ADEQUATE NATURAL GAS SERVICE IN 107
THIS STATE BY THE NATURAL GAS COMPANY AT A REASONABLE RATE, 108
RENTAL, TOLL, OR CHARGE. NOT LATER THAN TWENTY DAYS AFTER THE 109
DATE OF THE FILING OR NOT LATER THAN SUCH LATER DATE AS IS AGREED 110
TO BY BOTH THE OFFEROR AND THE SUBJECT NATURAL GAS COMPANY OR 111
SUBJECT HOLDING COMPANY, THE COMMISSION SHALL ISSUE A REPORT OF 112
ITS FINDINGS AND MAKE THE REPORT AVAILABLE TO THE GENERAL PUBLIC. 113
(C) WITH RESPECT TO A CONTROL BID TO WHICH DIVISION (B) OF 116
THIS SECTION APPLIES, THE FILING REQUIRED BY THAT DIVISION SHALL 117
BE MADE AT THE TIME OF MAKING THE CONTROL BID IN THE CASE OF A 118
CONTROL BID INITIATED ON OR AFTER THE EFFECTIVE DATE OF THIS
4
SECTION, AND SHALL BE MADE NOT LATER THAN FIVE DAYS AFTER THE 120
EFFECTIVE DATE OF THIS SECTION IN THE CASE OF A PENDING CONTROL 121
BID INITIATED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION. 122
(D) THE COMMISSION SHALL ADOPT RULES TO CARRY OUT THIS 124
SECTION, INCLUDING RULES IDENTIFYING ANY ADDITIONAL SECURITIES 125
THAT IT DEEMS EQUITY SECURITIES UNDER DIVISION (A)(3) OF THIS 126
SECTION AND RULES PRESCRIBING THE FORM AND PROCEDURES PERTAINING 127
TO A FILING UNDER DIVISION (B) OF THIS SECTION. 128
(E) THE AUTHORITY CONFERRED BY THIS SECTION IS IN ADDITION 130
TO ANY AUTHORITY OF THE COMMISSION UNDER THIS CHAPTER WITH 131
RESPECT TO A NATURAL GAS COMPANY THAT IS A PUBLIC UTILITY UNDER 132
SECTION 4905.02 OF THE REVISED CODE OR A HOLDING COMPANY 133
CONTROLLING SUCH A COMPANY.
(F) THIS SECTION DOES NOT APPLY TO ACQUISITIONS THAT, 135
PRIOR TO JULY 15, 1999, HAD RECEIVED THE APPROVAL OF THE BOARD OF 136
DIRECTORS OF THE SUBJECT NATURAL GAS COMPANY OR SUBJECT HOLDING 137
COMPANY, OR THE APPROVAL OF A MAJORITY OF THAT COMPANY'S 138
SHAREHOLDERS.
Section 2. This act is hereby declared to be an emergency 140
measure necessary for the immediate preservation of the public 141
peace, health, and safety. The reason for such necessity is to 142
establish at the earliest possible time a regulatory mechanism 143
that ensures that the Public Utilities Commission undertakes a 144
timely review of a pending hostile control bid that could affect
the adequacy and price of natural gas service provided to 145
millions of Ohio consumers and, ultimately, could affect economic 146
growth and development within the state; and that provides the 147
public and the marketplace with necessary information to use in 148
evaluating the actual merits of that bid. Therefore, this act 149
shall go into immediate effect.