Before Edwards, Chief Judge, and Wald and Buckley, Circuit Judges.
FOR THE DISTRICT OF COLUMBIA CIRCUIT
The Southern Company, et al., Intervenors
Petition for Review of an Order of the Securities & Exchange Commission
Opinion for the court filed by Circuit Judge Buckley.
In 1992, Congress amended the Public Utility Holding Company Act to encourage competition in the market for electric power. The Securities & Exchange Commission promulgated regulations implementing the amendments. The National Association of Regulatory Utility Commissioners now petitions for review, challenging the regulations on the ground that they are inconsistent with the amendments. We deny the petition.
In an effort to simplify the public utility holding company system, Congress enacted the Public Utility Holding Company Act of 1935 ("Act"), 15 U.S.C. Section(s) 79 (1994), which compelled utility holding companies to "integrate and coordinate their systems and to divest themselves of security holdings of geographically and economically unrelated properties." North Am. Co. v. SEC, 327 U.S. 686, 704 (1946). To achieve this integration, the Act requires all holding companies that own securities in a public utility to register with the SEC, 15 U.S.C. 79d(a)(6); see also id. Section(s) 79b(a)(7)(A) (defining "holding company"), and to obtain SEC approval before issuing or selling any of its securities. Id. Section(s) 79f(a), 79g(b). Furthermore, the Commission may refuse to authorize the issuance of a security if, among other things, (1) the security is not reasonably adapted to the security structure of the declarant and other companies in the same holding-company system;
(2) the security is not reasonably adapted to the earning power of the declarant;
(5) in the case of a security that is a guarantee of, or assumption of liability on, a security of another company, the circumstances are such as to constitute the making of such guaranty or the assumption of such liability an improper risk for the declarant....
Id. Section(s) 79g(d)(1), (2) & (5).
In 1992, Congress adopted the Energy Policy Act, Pub. L. No. 102-486, 106 Stat. 2776, 2905-10 (1992). Its purpose was to encourage "stead[y] increases [in] U.S. energy security in cost-effective ... ways" by "us[ing] the market rather than government regulation wherever possible both to advance energy security goals and to protect consumers." H.R. Rep. No. 474(I), 102d Cong., 2d Sess. 132, 133 (1992) ("House Report"), reprinted in 1992 U.S.C.C.A.N. 1953, 1956. In order to facilitate the development of a competitive market for wholesale electric power, Congress amended the Act to make it easier for holding companies to invest in an "exempt wholesale generator" or "EWG," which ...