Chap. 366.—An ACT relating to public service companies, providing for addi-
tional supervision and regulation of their relations and practices with affili-
ated interests, and declaring an emergency. [S B 216]

Approved March 29, 1934

1. Be it enacted by the General Assembly of Virginia, as follows:

Section 1. The term “commission” when used in this act shall mean
the State Corporation Commission of the Commonwealth of Virginia.

The term “public service company” shall mean every person, firm,
corporation or association, or their lessees, trustees or receivers, other
than a municipal corporation, now or hereafter engaged in business in
this State as a public utility and subject to regulation as to rates and
service by the State Corporation Commission; provided, that the term
shall not include and this act shall not include transportation com-
panies, subject directly or indirectly to the control of the Interstate
Commerce Commission.

The term “affiliated interest” when used in this act shall mean and
include the following: ,

a. Every corporation, partnership, association, or person owning
or holding directly or indirectly ten per centum or more of the voting
securities of any public service company engaged in any intrastate busi-
ness in this State.

_ b. Every corporation, partnership, association, or person, other than
those specified in paragraph (a) hereof, in any chain of successive own-
ership of ten per centum or more of voting securities, the chain begin-
ning with the holder or holders of the voting securities of such public
service company.

cc. Every corporation, partnership, association, or person ten per
centum or more of whose voting securities are owned by any person,
corporation, partnership, or association owning ten per centum or more
of the voting securities of such public service company or by any
person, corporation, association, or partnership in any such chain of
successive ownership of ten per centum or more of voting securities.

d. Every corporation, partnership, association, or person with which
the public service company has a management or service contract.

e. Every corporation in which two or more of the corporate direc-
tors are common to those of the public service company, or is managed
or supervised by the same individual, group, corporation or corpora-
tions.

{. Every corporation or person which the commission may deter-
mine as a matter of fact after investigation and hearing is actually
avnericing any enhetantal Infiuence over the nolicies and actors of such
public service company even though such influence is not based upon
stockholding, stockholders, directors or officers to the extent specified
in this section. |

g. Every person or corporation who or which the commission may
determine as a matter of fact after investigation and hearing is actually
exercising such substantial influence over the policies and actions of
such public service company in conjunction with one or more other
corporations and/or persons with which or whom they are related by
ownership and/or blood relationship or by action in concert that to-
gether they are affiliated with such public service company within the
meaning of this section even though no one of them alone is so affili-
ated.

Provided, however, that no such person or corporation shall be con-
sidered as affiliated within the meaning of this section if such person
or corporation is otherwise subject to the jurisdiction of the commis-
sion or such person or corporation shall not have had transactions or
dealings other than the holding of stock and the receipt of dividends
thereon with such public service company during the two-year period
next preceding.

Section 2. No contract or arrangement providing for the furnish-
ing of management, supervisory, construction, engineering, accounting,
legal, financial, or similar services, and no contract or arrangement for
the purchase, sale, lease or exchange of any property right or thing
other than those above enumerated, or for the purchase and/or sale
of treasury bonds and/or treasury capital stock hereafter made or en-
tered into between a public service company and any affiliated interest
as defined in this act shall be valid or effective unless and until it shall
have been filed with and approved by the commission. It shall be the
duty of every public service company to file with the commission a
verified copy of any such contract and arrangements hereinabove de-
scribed, regardless of amount, and said general rule herein referred to
shall remain in full force and effect as to all other public service com-
panies.

Section 3. In any proceeding, whether upon the commission’s own
motion or upon complaint, involving the rates or practices of any public
service company, the commission may exclude in whole or in part from
the accounts of such public service company any payment or compen-
sation to an affiliated interest for any services rendered or property or
service furnished, as above described, under existing contracts or ar-
rangements with such affiliated interest, if it shall appear and be estab-
lished upon investigation that such payment or compensation or such
contract or arrangement is not consistent with the public interest. In
such proceeding any payment or compensation may be disapproved or
disallowed by the commission, in whole or in part, unless satisfactory
proof is submitted to the commission of the cost to the affiliated interest
rendering the service or furnishing the property or service above de-
scribed.

Section 4. No proof shall be satisfactory, within the meaning of the
foregoing sections, unless it includes the original (or verified copies )
of the relevant cost records and other revelant accounts of the affiliated
interest, or such abstract thereof or summary taken therefrom, as the
commission may deem adequate, properly identified and duly authenti-
cated: Provided, however, that the commission may, where reasonable,
approve or disapprove such contracts or arrangements without the
submission of such cost records or accounts.

Section 5. The commission shall have continuing supervisory con-
trol over the terms and conditions of such contracts and arrangements
as are herein described so far as necessary to protect and promote the
public interest. The commission shall have the same jurisdiction over
the modifications or amendments of contracts or arrangements as are
herein described as it has over such original contracts or arrange-
ments. ‘he fact that the commission shall have approved entry into
such contracts or arrangements as described herein shall not preclude
disallowance or disapproval of payments made pursuant thereto in
the future, if upon actual experience under such contract or arrange-
ment, it appears that the payments provided for or made were or are
unreasonable. Every order of the commission approving any such
contract or arrangement shall be expressly conditioned upon the re-
served power of the commission to revise and amend the terms and
conditions thereof, if, when and as necessary to protect and promote
the public interest.

Section 6. Whenever the commission shall find upon investigation
that any public service company is giving effect to any such contract
or arrangement hereafter entered into without such contract or
arrangement having been filed with the commission as required by
this act, the commission may issue a summary order prohibiting the
public service company from treating any payments made under the
terms of such contract or arrangement as operating expenses or as
capital expenditures for rate or valuation purposes, unless and until
such payments shall have received the approval of the commission.

Section 7. Whenever the commission shall find, upon investigation,
that any public service company is making payments to an affiliated
interest, although such payments have been disallowed and disapproved
by the commission under this act or in a proceeding involving the public
service company’s rates or practices, the commission shall issue a sum-
mary order prohibiting the public service company from treating such
payments as operating expenses or capital expenditures for rate or
valuation purposes, unless and until such payments shall have received
the approval of the commission.

Section 8. No public service company shall henceforth make, extend
or renew any loan of money to any affiliated interest or assume any
obligation or liability whatsoever of any affiliated interest, whether as
guarantor, endorser, surety or otherwise, unless the commission shall
first have approved such loan or assumption as being consistent with the
public interest, and then only upon the terms and conditions set forth in
the order of the commission approving such loan or agreement. This
section shall not be construed so as to invalidate or impair any such
loan or agreement lawfully made or entered into prior to the effective
date of this act. Every public service company and every affiliated
interest participating in any loan or assumption in violation of this
section and every officer or director of any public service company, or
of any affiliated interest, knowingly authorizing, directing, aiding in
or executing or causing to be executed, any loan or assumption in vio-
lation of this section, shall be guilty of a misdemeanor.

Section 9. Any public service company or affiliated interest deem-
ing any decision or order of the commission to be in any respect or
manner improper, unjust or unreasonable may appeal the same to the
court of appeals in the same manner and by the same procedure as 1s
now provided by law for review of any other order or decision of the
commission.

Section 10. If any part of this act is held to be unconstitutional or
void, such decision shall not affect the validity of the remaining parts
of this act. ,

The commission is empowered to promulgate such rules and regu-
lations as it may deem necessary or proper to carry out the provisions
of this act. ,

2. An emergency existing, this act shall be in force from its passage.