As Passed by the Senate 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-SULLIVAN-STAPLETON- 18
GOODING-BARNES-ROMAN-SUTTON-SALERNO-BARRETT-SENATORS BLESSING- 19
JOHNSON-HERINGTON-DiDONATO-McLIN-FURNEY-HAGAN-WACHTMANN-MUMPER- 20
LATELL-OELSLAGER-PRENTISS-GARDNER-MALLORY-HOTTINGER-ARMBRUSTER- 21
ESPY 22
_________________________________________________________________ 24
A B I L L
To enact section 4905.403 of the Revised Code to 26
require a report by the Public Utilities 27
Commission on whether acceptance of a hostile 28
control bid for an Ohio natural gas utility or 29
its holding company will promote the public 30
convenience and result in the provision of 31
adequate utility service at a reasonable rate and 32
to declare an emergency.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 34
Section 1. That section 4905.403 of the Revised Code be 36
enacted to read as follows: 37
Sec. 4905.403. (A) AS USED IN THIS SECTION: 39
2
(1) "CONTROL BID" MEANS THE PURCHASE OF, OR OFFER TO 41
PURCHASE, FROM A RESIDENT OF THIS STATE, BY TENDER OFFER, 42
INVITATION FOR TENDERS, OR OTHERWISE, ANY EQUITY SECURITY OF A 43
NATURAL GAS COMPANY IN THIS STATE THAT IS A PUBLIC UTILITY UNDER 44
SECTION 4905.02 OF THE REVISED CODE OR ANY EQUITY SECURITY OF A 45
HOLDING COMPANY CONTROLLING SUCH A COMPANY, IF, AFTER THAT 46
PURCHASE, THE OFFEROR WOULD BE DIRECTLY OR INDIRECTLY THE 47
BENEFICIAL OWNER OF MORE THAN TEN PER CENT OF ANY CLASS OF THE 48
ISSUED AND OUTSTANDING EQUITY SECURITIES OF THE SUBJECT NATURAL 49
GAS COMPANY OR SUBJECT HOLDING COMPANY. "CONTROL BID" EXCLUDES 50
ANY OF THE FOLLOWING:
(a) A BID MADE BY A DEALER FOR THE DEALER'S OWN ACCOUNT IN 52
THE ORDINARY COURSE OF THE BUSINESS OF BUYING AND SELLING 53
SECURITIES;
(b) AN OFFER TO ACQUIRE ANY EQUITY SECURITY SOLELY IN 55
EXCHANGE FOR ANY OTHER SECURITY, OR THE ACQUISITION OF ANY EQUITY 56
SECURITY PURSUANT TO AN OFFER, FOR THE SOLE ACCOUNT OF THE 57
OFFEROR, IN GOOD FAITH AND NOT FOR THE PURPOSE OF AVOIDING THE 58
PROVISIONS OF THIS SECTION, AND NOT INVOLVING ANY PUBLIC OFFERING 59
OF THE OTHER SECURITY WITHIN THE MEANING OF SECTION 4 OF TITLE I 61
OF THE "SECURITIES ACT OF 1933," 48 STAT. 77, 15 U.S.C.A. 77d(2), 66
AS AMENDED;
(c) PURSUANT TO A MERGER, CONSOLIDATION, COMBINATION, 68
MAJORITY SHARE ACQUISITION, OR OTHER TRANSACTION, THE ACQUISITION 70
OF ANY EQUITY SECURITY OF A NATURAL GAS COMPANY IN THIS STATE 72
THAT IS A PUBLIC UTILITY UNDER SECTION 4905.02 OF THE REVISED
CODE OR ANY EQUITY SECURITY OF A HOLDING COMPANY CONTROLLING SUCH 73
A COMPANY, IF, PRIOR TO THE DATE UPON WHICH THE OFFEROR BECOMES 75
THE OWNER OF MORE THAN TEN PER CENT OF ANY CLASS OF THE ISSUED 76
AND OUTSTANDING EQUITY SECURITIES OF THE SUBJECT NATURAL GAS 77
COMPANY OR HOLDING COMPANY, THE DIRECTORS OF THE SUBJECT NATURAL 78
GAS COMPANY OR SUBJECT HOLDING COMPANY HAD APPROVED THE 79
ACQUISITION.
(2) "DEALER" HAS THE SAME MEANING AS IN SECTION 1707.01 OF 81
3
THE REVISED CODE.
(3) "EQUITY SECURITY" MEANS ANY SHARE OR SIMILAR SECURITY, 83
OR ANY SECURITY CONVERTIBLE INTO ANY SUCH SECURITY, OR CARRYING 84
ANY WARRANT OR RIGHT TO SUBSCRIBE TO OR PURCHASE ANY SUCH 85
SECURITY, OR ANY SUCH WARRANT OR RIGHT, OR ANY OTHER SECURITY 86
THAT, FOR THE PROTECTION OF SECURITY HOLDERS, IS DEEMED AN EQUITY 87
SECURITY BY THE PUBLIC UTILITIES COMMISSION. 88
(4) "OFFEROR" MEANS A PERSON THAT MAKES, OR IN ANY WAY 90
PARTICIPATES OR AIDS IN MAKING, A CONTROL BID. "OFFEROR" 91
INCLUDES PERSONS ACTING JOINTLY OR IN CONCERT IN EXERCISING, OR 92
THAT INTEND TO EXERCISE JOINTLY OR IN CONCERT, ANY VOTING RIGHTS 94
ATTACHED TO THE SECURITIES FOR WHICH THE CONTROL BID IS MADE, BUT 95
EXCLUDES A SUBJECT NATURAL GAS COMPANY IN THIS STATE THAT IS A 96
PUBLIC UTILITY UNDER SECTION 4905.02 OF THE REVISED CODE OR A 97
SUBJECT HOLDING COMPANY CONTROLLING SUCH A COMPANY WHEN MAKING A 98
CONTROL BID FOR ITS OWN SECURITIES. 99
(B) NO OFFEROR SHALL MAKE A CONTROL BID FOR A NATURAL GAS 101
COMPANY IN THIS STATE THAT IS A PUBLIC UTILITY UNDER SECTION 103
4905.02 OF THE REVISED CODE, OR A HOLDING COMPANY CONTROLLING
SUCH A COMPANY, WITHOUT THE OFFEROR FILING THE CONTROL BID WITH 105
THE PUBLIC UTILITIES COMMISSION, IN SUCH FORM AND PURSUANT TO 106
SUCH PROCEDURES AS THE COMMISSION PRESCRIBES. NOT LATER THAN 107
THREE DAYS AFTER THE DATE OF THE FILING, THE COMMISSION SHALL FIX 108
A TIME FOR A HEARING AND SHALL NOTIFY THE OFFEROR AND THE SUBJECT 109
NATURAL GAS COMPANY OR SUBJECT HOLDING COMPANY. THE EXCLUSIVE 110
PURPOSE OF THE HEARING SHALL BE TO DETERMINE WHETHER ACCEPTANCE 111
OF THE CONTROL BID WILL PROMOTE PUBLIC CONVENIENCE IN THIS STATE 112
AND RESULT IN THE PROVISION OF ADEQUATE NATURAL GAS SERVICE IN 113
THIS STATE BY THE NATURAL GAS COMPANY AT A REASONABLE RATE, 114
RENTAL, TOLL, OR CHARGE. NOT LATER THAN TWENTY DAYS AFTER THE 115
DATE OF THE FILING OR NOT LATER THAN SUCH LATER DATE AS IS AGREED 116
TO BY BOTH THE OFFEROR AND THE SUBJECT NATURAL GAS COMPANY OR 117
SUBJECT HOLDING COMPANY, THE COMMISSION SHALL ISSUE A REPORT OF 118
ITS FINDINGS AND MAKE THE REPORT AVAILABLE TO THE GENERAL PUBLIC. 119
4
(C) WITH RESPECT TO A CONTROL BID TO WHICH DIVISION (B) OF 122
THIS SECTION APPLIES, THE FILING REQUIRED BY THAT DIVISION SHALL 123
BE MADE AT THE TIME OF MAKING THE CONTROL BID IN THE CASE OF A 124
CONTROL BID INITIATED ON OR AFTER THE EFFECTIVE DATE OF THIS
SECTION, AND SHALL BE MADE NOT LATER THAN FIVE DAYS AFTER THE 126
EFFECTIVE DATE OF THIS SECTION IN THE CASE OF A PENDING CONTROL 127
BID INITIATED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION. 128
(D) THE COMMISSION SHALL ADOPT RULES TO CARRY OUT THIS 130
SECTION, INCLUDING RULES IDENTIFYING ANY ADDITIONAL SECURITIES 131
THAT IT DEEMS EQUITY SECURITIES UNDER DIVISION (A)(3) OF THIS 132
SECTION AND RULES PRESCRIBING THE FORM AND PROCEDURES PERTAINING 133
TO A FILING UNDER DIVISION (B) OF THIS SECTION. 134
(E) THE AUTHORITY CONFERRED BY THIS SECTION IS IN ADDITION 136
TO ANY AUTHORITY OF THE COMMISSION UNDER THIS CHAPTER WITH 137
RESPECT TO A NATURAL GAS COMPANY THAT IS A PUBLIC UTILITY UNDER 138
SECTION 4905.02 OF THE REVISED CODE OR A HOLDING COMPANY 139
CONTROLLING SUCH A COMPANY.
(F) THIS SECTION DOES NOT APPLY TO ACQUISITIONS THAT, 141
PRIOR TO JULY 15, 1999, HAD RECEIVED THE APPROVAL OF THE BOARD OF 142
DIRECTORS OF THE SUBJECT NATURAL GAS COMPANY OR SUBJECT HOLDING 143
COMPANY, OR THE APPROVAL OF A MAJORITY OF THAT COMPANY'S 144
SHAREHOLDERS.
Section 2. This act is hereby declared to be an emergency 146
measure necessary for the immediate preservation of the public 147
peace, health, and safety. The reason for such necessity is to 148
establish at the earliest possible time a regulatory mechanism 149
that ensures that the Public Utilities Commission undertakes a 150
timely review of a pending hostile control bid that could affect
the adequacy and price of natural gas service provided to 151
millions of Ohio consumers and, ultimately, could affect economic 152
growth and development within the state; and that provides the 153
public and the marketplace with necessary information to use in 154
evaluating the actual merits of that bid. Therefore, this act 155
shall go into immediate effect.