File No. 70-9153
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM U-1/A
AMENDMENT NO. 2
to
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
National Fuel Gas Company National Fuel Gas Distribution
10 Lafayette Square Corporation
Buffalo, New York 14203 10 Lafayette Square
Buffalo, New York 14203
Seneca Resources Corporation National Fuel Gas Supply 1201
Louisiana Street Corporation
Suite 400 10 Lafayette Square
Houston, Texas 77002 Buffalo, New York 14203
National Fuel Resources, Inc. Utility Constructors, Inc.
165 Lawrence Bell Drive 10 Lafayette Square
Suite 120 Buffalo, New York 14203
Williamsville, New York 14221
Horizon Energy Development, Inc. Highland Land & Minerals, Inc.
10 Lafayette Square 10 Lafayette Square
Buffalo, New York 14203 Buffalo, New York 14203
Data-Track Account Services, Inc. Leidy Hub, Inc.
10 Lafayette Square 10 Lafayette Square
Buffalo, New York 14203 Buffalo, New York 14203
Seneca Independence Pipeline Niagara Independence Marketing
Company Company
10 Lafayette Square 1201 Louisiana Street, Suite 400
Buffalo, New York 14203 Houston, Texas 77002
Niagara Energy Trading Inc.
1201 Louisiana Street, Suite 400
Houston, Texas 77002
(Names of companies filing this statement
and addresses of principal executive offices)
_____________________________________________
NATIONAL FUEL GAS COMPANY
(Name of top registered holding company)
_____________________________________________
James R. Peterson Curtis W. Lee, Esq. Robert J. Reger, Jr.,
Assistant Secretary General Manager-Finance Esq.
National Fuel Gas National Fuel Gas Reid & Priest LLP
Company Distribution 40 West 57th Street
10 Lafayette Square Corporation New York, New York
Buffalo, New York 14203 10 Lafayette Square 10019
Buffalo, New York 14203
(Names and addresses of agents for service)
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Item 1 of this Application-Declaration is amended and revised in its
entirety to read as follows:
"Item 1. Description of Proposed Transactions.
National Fuel Gas Company ("National") is a public utility
holding company registered under the Public Utility Holding Company Act of
1935, as amended ("Holding Company Act"). Each wholly-owned subsidiary of
National has joined in this Application/Declaration. Such subsidiaries
include National Fuel Gas Distribution Corporation ("Distribution"),
National Fuel Gas Supply Corporation ("Supply"), Seneca Resources
Corporation ("Seneca"), Utility Constructors, Inc. ("UCI"), Highland Land &
Minerals, Inc. ("Highland"), Leidy Hub, Inc. ("Leidy"), Horizon Energy
Development, Inc. ("Horizon"), Data-Track Account Services, Inc. ("Data-
Track"), National Fuel Resources, Inc. ("NFR"), Seneca Independence
Pipeline Company ("Seneca Independence"), Niagara Independence Marketing
Company ("Niagara Independence") and Niagara Energy Trading Inc. ("NET").
The subsidiaries listed above are collectively referred to as the
"Subsidiaries". The Subsidiaries, excluding Distribution, are collectively
referred to as the "Non-Utility Subsidiaries". National and its
Subsidiaries are collectively referred to herein as the National Fuel Gas
System ("System").
The System is seeking, as more fully described hereinafter,
Commission authorization, to the extent not exempt from Commission approval
under the Holding Company Act, or otherwise permitted or authorized under
the Holding Company Act pursuant to Commission rule, regulation or order,
for the items that follow, which authorization is to be applicable for the
period from the effective date of the order (the "Order Date") through
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December 31, 2002 (the "Authorization Period") (except as specified
herein):
I. External financing by National, including A) short-term financing in
the form of borrowings under credit facilities, issuance of commercial
paper, other borrowings from banks or financial institutions and/or
the issuance of other securities, B) long-term financing (debt and
equity), C) hedging of financing risks, including those associated
with existing and anticipated fixed and floating rate debt (whether
denominated in U.S. dollar or foreign currency), and D) financing by
means of the issuance of other securities. The proceeds of such
financings, together with other available funds, would be used by
National to make investments in Subsidiaries, to redeem, acquire or
retire outstanding securities, to make investments in Exempt Wholesale
Generators (EWGs) and Foreign Utility companies (FUCOs), subject to
the limitations of Rule 53, to make investments in Energy-Related
Companies and Gas-Related Companies, subject to the limitations of
Rule 58, and for other corporate purposes.
II. Intra-System financing of Subsidiaries, to the extent not exempt
pursuant to Rule 45, as applicable, including an intra-System Money
Pool.
III. External financing by Subsidiaries and the formation of financing
entities.
IV. Guarantees by National with respect to obligations of its
Subsidiaries.
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V. Use of proceeds to include exempt investments in EWGs, FUCOs, Energy-
Related Companies and Gas-Related Companies.
I. EXTERNAL FINANCING BY NATIONAL
A. INTRODUCTION
National currently obtains funds externally (i) through short-term
debt financing under credit facilities with banks and financial
institutions and through a commercial paper program, (ii) through long-
term debt financing through the issuance of debentures and medium-term
notes and (iii) through equity financing by means of compensation, benefits
and incentive plans, customer stock purchase plans and dividend
reinvestment plans (collectively, "Stock Issuance Plans"). Short-term
borrowings are authorized pursuant to the Order of the Commission dated
December 28, 1995 (HCAR No. 26443; File No. 70-8729). National does not
have any existing authority to issue long-term debt. Currently, National
has Stock Issuance Plans authorized pursuant to the following Orders of the
Commission: 1997 Award and Option Plan (HCAR No. 26670 dated February 18,
1997; File No. 70-8975); Shares Payment Policy (HCAR No. 26655 dated
January 24, 1997; File No. 70-8943); Customer Stock Purchase Plan (HCAR No.
26394 dated October 19, 1995; File No. 70-8657); Dividend Reinvestment and
Stock Purchase Plan (HCAR No. 26261 dated March 30, 1995; File No. 70-
8579); 401(k) Plans (HCAR No. 26176 dated November 30, 1994; File No. 70-
7674; 1993 Award and Option Plan (HCAR No. 25753 dated March 5, 1993; File
No. 70-8109); 1984 Stock Plan and 1983 Incentive Stock Option Plan (HCAR
No. 24793 dated December 28, 1988; File No. 70-7581).
National is herewith requesting authorization to issue and reissue,
from time to time during the Authorization Period, short-term debt (debt
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with a term not exceeding 270 days) aggregating not more than $750 million
outstanding at any one time. National also is requesting authority to
issue and reissue, from time to time during the Authorization Period,
additional long-term securities aggregating not more than $2 billion
outstanding at any one time. Such securities issuances would be in
addition to any common stock that may be issued pursuant to National's
Rights Plan, as previously authorized pursuant to the Order of the
Commission dated June 12, 1996 (HCAR No. 26532; File No: 70-8841).
National may issue securities covered by this Application/Declaration,
subject to the above limitations, in any of the following ways: (i) through
underwriters or dealers; (ii) directly to a limited number of purchasers or
to a single purchaser, (iii) through agents, (iv) in exchange for
securities of other companies, the acquisition of which is authorized under
a separate order of the Commission or exempt pursuant to Section 32, 33 or
34 or Rule 58, as applicable, and/or (v) through Stock Issuance Plans.
If underwriters are used in the sale of the securities, such
securities will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying
prices determined at the time of sale. The securities may be offered to
the public either through underwriting syndicates (which may be represented
by managing underwriters designated by National) or directly by one or more
underwriters acting alone. The securities may be sold directly by National
or through agents designated by National from time to time. If dealers are
utilized in the sale of any of the securities, National will sell such
securities to the dealers and any such dealer may then resell such
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securities to the public at fixed prices or varying prices to be determined
by such dealer at the time of resale. National may also sell any
securities to agents acting as principal. Such agents may then resell such
securities to the public at fixed prices or varying prices to be determined
by the agent at the time of resale. If equity securities are being sold in
an underwritten offering, National may grant the underwriters thereof an
over-allotment option permitting the purchase from National of additional
equity securities (an additional 15% under present guidelines), at the same
price as the equity securities then being offered, solely for the purpose
of covering over-allotments.
Securities issued by National may be sold pursuant to "delayed
delivery contracts" which permit the underwriters or agents to locate
buyers who will agree with National to buy the securities at an agreed
price on the trade date but accept delivery at a later date. Debt
securities may also be sold through the use of medium term note and similar
programs or in transactions whereby securities are sold to initial
purchasers (typically, investment banks or similar institutions) and then
resold by the initial purchasers in reliance upon Rule 144A or another
exemption under the Securities Act of 1933, as amended ("Securities Act")
or pursuant to Regulation S under the Securities Act.
The System intends that any authorization granted pursuant to this
Application/Declaration regarding the issuance of securities will supersede
the previous authorizations described in the first paragraph of this
Section A to the extent such previous authorizations apply to the issuance
of securities (except as specified herein).
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Parameters for Authorization
The Application/Declaration makes requests for authority, without any
additional prior Commission approvals, to engage in future financing
transactions for which the specific terms and conditions are not at this
time known. Accordingly, it is appropriate that certain conditions
concerning the financial status of National exist at the time of engaging
in such financing transactions. The general conditions for undertaking
such financing transactions without further prior approval are given
directly below.
1. National Debt of Investment Grade and Maintenance of Equity Ratio
National would be authorized to engage in the long-term debt
financing activities described herein as long as: (i) its long-term debt
rating is of investment grade as established by a nationally recognized
statistical rating organization as that term is used in Rule 15c3-
l(c)(2)(vi)(F) under the Securities Exchange Act of 1934 (the "Exchange
Act"), and (ii) its common equity (as reflected in its most recent Form
10-K or Form 10-Q, as the case may be) does not fall below 30% of its
consolidated capitalization. (For purposes of this test, consolidated
capitalization includes total capital stock equity and consolidated debt
for borrowed money appearing on a consolidated balance sheet of the Company
and its subsidiaries, with all inter-company items eliminated.) The
issuance of any long-term debt would occur over such a period of time and
in a combination with the issuance of equity such that it would not cause
National's common equity to fall below 30% of consolidated capitalization.
2. Effective Cost of Money on Borrowings
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The effective cost of money on debt borrowings made pursuant to
the authorizations granted under this Application/Declaration will not, at
the time of the issuance, exceed 300 basis points over the then current
yield to maturity of comparable term U.S. Treasury securities.
3. Effective Cost of Money on Other Approved Securities
The effective cost of money on preferred stock and other fixed
income oriented securities will not, at the time of the issuance, exceed
500 basis points over the then current yield to maturity of 30-year term
U.S. Treasury securities.
4. Maturity of Debt
The maturity of each issuance of debt will be not more than 50
years.
5. Issuance Expenses
The underwriting fees, commissions, or other similar fees paid in
connection with the issuance, sale or distribution of a security pursuant
to this Application/Declaration will not exceed 5% of the principal or
total amount of the financing.
6. Aggregate Dollar Limit
The aggregate amount of external debt and equity financing to be
issued or reissued by National during the Authorization Period will not
exceed (i) $2 billion of additional long-term debt and equity outstanding
at any one time (not including any common stock that may be issued pursuant
to National's Rights Plan authorized pursuant to the Order of the
Commission dated June 12, 1996 (HCAR No. 26532; File No. 70-8841)) and (ii)
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$750 million of short-term borrowings outstanding at any one time. The
value of debt securities will equal the aggregate principal amount of such
securities. The value of equity securities will equal the consideration
received by National at the time the securities are issued.
The proceeds from the sale of securities by National in external
financing transactions will be used by National, together with other
available funds, for general corporate purposes including (i) the
financing, in part, of capital expenditures of National and its
Subsidiaries, (ii) the financing of inventories and other working capital
requirements, (iii) the acquisition, retirement or redemption of securities
of which National is the issuer without the need for prior Commission
approval pursuant to Rule 42 or a successor rule, and/or (iv) investments
in EWGs and FUCOs, subject to the limitations of Rule 53, and in Energy-
Related Companies and Gas-Related Companies, subject to the limitations of
Rule 58.
B. SHORT-TERM FINANCING
To provide financing for general corporate purposes, including the
temporary financing of inventories and other working capital requirements
and construction spending, National requests authorization to issue and
reissue from time to time during the Authorization Period, up to $750
million at any one time outstanding of short-term debt consisting of
borrowings under its credit facilities, the issuance of commercial paper,
and/or other forms of short-term financing generally available to borrowers
with investment grade credit ratings. Specific terms of any issuance or
reissuance will comply with the applicable parameters of financing
authorization stated earlier in Section I.A.
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In order to consolidate all orders authorizing financing under one
file, National proposes that the authorization for short-term borrowings of
an amount not to exceed $600 million outstanding at any one time (HCAR No.
26443; File No. 70-8729) be superseded, as of the Order Date, by the Order
of the Commission sought herein.
1. Commercial Paper
Commercial paper would be sold by National, from time to time, in
established domestic or foreign commercial paper markets directly or
through dealers and placement agents at prevailing discount rates, or at
prevailing coupon rates, at the date of issuance for commercial paper of
comparable quality and maturities sold to commercial paper dealers
generally. It is expected that the dealers and placement agents acquiring
commercial paper from National will re-offer such paper at a discount to
corporate, institutional and, with respect to foreign commercial paper,
also to individual investors. Such corporate and institutional investors
may include, among others, commercial banks, insurance companies, pension
funds, investment trusts, mutual funds, foundations, colleges and
universities, finance companies and nonfinancial corporations.
Back-up bank lines of credit for 100% of the outstanding amount
of commercial paper are generally required by credit rating agencies.
National currently has a committed credit facility which acts as back-up to
its commercial paper program.
2. Credit Facilities with Banks and other Financial Institutions
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National proposes to establish credit facilities with various
banks and/or other financial institutions and to issue and sell, from time
to time, short-term notes.
Such notes would bear interest at rates comparable to, or lower
than, those available through other forms of short-term borrowing with
similar terms as contemplated in this Application/Declaration. The term of
any short-term notes would not exceed 270 days, and the total amount of
notes outstanding at any time, when added to the aggregate amounts of
short-term borrowing outstanding under other forms of short-term borrowing
contemplated in this Application/Declaration, would not exceed the total
amount of short-term debt for which authorization is requested. The
borrowing arrangements with the banks and financial institutions may
require compensating balances and/or commitment fees or similar fees.
National requests authority to incur, if necessary, commitment or similar
fees not to exceed one-half of one percent (.50%) of the average daily
credit facility available, and/or compensating balances not to exceed
twenty percent (20%) of the credit facility established. National, at all
times, will attempt to negotiate the most favorable effective borrowing
rate taking into account any compensating balances and/or fees.
3. Other Securities
National may engage in other types of short-term financing as it
may deem appropriate in light of its needs and market conditions at the
time of issuance. Such short-term financing may include, without
limitation, bank borrowings, and other short-term securities issued under
an indenture. The term of any such short-term borrowing would not exceed
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270 days. In no case will the outstanding balance of all short-term
borrowings exceed $750 million during the Authorization Period.
C. LONG-TERM FINANCING
Long-term securities may consist of any combination of long-term debt
(debt having terms in excess of 270 days), common stock, preferred stock,
or other equity securities, as the case may be.
1. Long-term Debt Financing
National requests Commission authorization to issue or reissue
from time to time during the Authorization Period additional long-term debt
securities in an aggregate principal amount which, when combined with the
value of the consideration received from the issuances of common stock,
preferred stock and other equity securities during the Authorization
Period, will not exceed $2 billion at any one time outstanding. The term
of any such long-term debt securities will be in excess of 270 days.
Examples of such long-term debt securities would include debentures,
convertible debt, subordinated debt, medium-term notes, bank borrowings,
and securities with call or put options. Any long-term debt security would
have such designation, aggregate principal amount, maturity, interest
rate(s) or methods of determining the same, terms of payment of interest,
redemption provisions, non-refunding provisions, sinking fund terms,
conversion or put terms, U.S. dollar or foreign currency denominations,
security and subordination provisions, and other terms and conditions as
National may determine at the time of issuance. Medium-term notes would be
issued under the Indenture dated as of October 15, 1994, between National
and The Bank of New York, Trustee (or any successor trustee), as amended
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(the "Indenture"). Debentures and other long-term debt securities may be
issued under the Indenture or under a mortgage or other indenture.
Specific terms of any issuance or reissuance will comply with the
parameters of financing authorization stated earlier in Section I.A.
2. Equity Financing
National requests Commission authorization to issue additional
equity securities from time to time during the Authorization Period, the
value of which, as determined at the time the securities are issued, when
combined with other long-term securities issued pursuant to this
Application/Declaration, would not exceed $2 billion, at any one time
outstanding. The value of equity securities will equal the consideration
received by National at the time the securities are issued. Such issuance
would include (a) common stock and the rights appurtenant thereto
(together, the "Shares"), including, but not limited to, Shares issued
during the Authorization Period pursuant to the following Stock Issuance
Plans and any successor Stock Issuance Plans: (i) the 1997 Award and
Option Plan (HCAR No. 26670) whereby awards granting the right to purchase
up to 1,900,000 Shares may be issued over a ten-year period through
December 12, 2006, (ii) the Shares Payment Policy (HCAR No. 26655), (iii)
the Customer Stock Purchase Plan (HCAR No. 26394), (iv) the Dividend
Reinvestment and Stock Purchase Plan (HCAR No. 26261), (v) the 401(k) Plans
(HCAR No. 26176), (vi) the 1993 Award and Option Plan (HCAR No. 25753),
(vii) the 1984 Stock Plan, (HCAR No. 24793) and (viii) the 1983 Incentive
Stock Option Plan (HCAR No. 24793), (b) preferred stock, (c) other
preferred securities, (d) options and/or warrants convertible into common
or preferred stock and (e) common and/or preferred stock issued upon the
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exercise of convertible debt, rights, options, warrants and/or similar
securities.
From time to time during the Authorization Period, other similar
Stock Issuance Plans may be adopted by National. For instance, a direct
stock purchase plan with a dividend reinvestment feature that allows sales
to persons not already shareholders may be implemented. National proposes
to issue Shares pursuant to the existing plans and similar plans or plan
funding arrangements hereinafter adopted and to engage in other sales of
its Shares for reasonable business purposes without any additional prior
Commission order during the Authorization Period, except that the grants of
Shares and rights to purchase Shares under the 1997 Award and Option Plan
may be issued from time to time until December 12, 2006. Transactions of
this variety would thus be treated the same as other equity transactions
permitted pursuant to this Application/Declaration. Any authorization
requested hereby regarding the issuance of securities will supersede the
authorizations cited above to the extent such previous authorizations apply
to the issuance of securities, except that the authority previously issued
in connection with the 1997 Award and Option Plan (HCAR No. 26670) shall
still apply to the extent such previous authority extends through December
12, 2006.
D. HEDGING
In addition, National requests authorization, to the extent needed, to
enter into hedging transactions ("Hedge Program") to be initiated during
the Authorization Period, with respect to all or a portion of existing or
anticipated floating rate debt or all or a portion of existing or
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anticipated fixed rate debt, using interest rate swaps or other derivative
products that may be useful for such purposes.
National is seeking authority, to the extent needed, to enter into one
or more interest rate swaps ("Swaps"), and one or more derivative
instruments, such as caps, floors, collars, ceilings, options and forwards
(collectively, "Derivative Transactions"), with one or more counterparties
from time to time during the Authorization Period, in notional amounts
aggregating not in excess of the amount of debt outstanding at any one
time.
In order to consolidate all orders authorizing hedging transactions
under one file, National proposes that the authorization for entering into
hedging transactions (HCAR No. 26443; file No. 70-8729) be superseded, as
of the Order Date, by the Order of the Commission sought herein.
National will enter into Swaps and Derivative Transactions with
counterparties whose senior secured debt ratings, or the senior secured
debt ratings of the parent companies of such counterparties, as published
by Standard & Poor's Ratings Group, are greater than or equal to "BBB+", or
an equivalent rating from Moody's Investor Service, Inc., Fitch Investor
Service or Duff & Phelps. To the extent that National must rely on the
creditworthiness of parent companies, National will obtain guarantees from
the parent companies of the counterparties.
Among other strategies that may be employed from time to time,
National may use two different interest rate swap strategies. Under one
swap strategy, National would agree to make payments to a counterparty,
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payable periodically. The rate would be payable at a variable or floating
rate index and would be calculated on a notional (i.e., principal) amount.
In return, the counterparty would agree to make payments to National based
upon the same notional amount and at an agreed upon fixed rate. This would
be a "floating-to-fixed swap" on National's part. Under another swap
strategy, National and the counterparty may exchange roles. National would
pay a fixed rate and receive a variable rate on a notional amount. This
would be a "fixed-to-floating swap" on National's part.
National also seeks authorization, to the extent needed, to enter into
an anticipatory interest rate hedging program (the "Anticipatory Hedge
Program") for anticipated debt issuances utilizing Swaps and Derivative
Transactions within a limited time prior to the issuance of short- or
long-term debt securities.
The Anticipatory Hedge Program would be utilized to fix and/or limit
the interest rate risk associated with any new issuance through (i) a
forward sale of exchange-traded U.S. Treasury futures contracts, U.S.
Treasury securities and/or a forward swap (each a "Forward Sale"), (ii) the
purchase of put options on U.S. Treasury securities (a "Put Options
Purchase"), (iii) a Put Options Purchase in combination with the sale of
call options on U.S. Treasury securities (a "Zero Cost Collar"), or (iv)
some combination of a Forward Sale, Put Options Purchase , Zero Cost Collar
and/or other Derivative Transactions appropriate for the Anticipatory Hedge
Program. The program may be executed on-exchange ("On-Exchange Trades")
with brokers through the opening of futures and/or options positions traded
on the Chicago Board of Trade ("CBOT"), the opening of over-the-counter
positions with one or more counterparties ("Off-Exchange Trades") or a
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combination of On-Exchange Trades and Off-Exchange Trades. National will
determine the optimal structure of the Anticipatory Hedge Program at the
time of execution. National may decide to lock in interest rates and/or
limit its exposure to interest rate increases. All open positions under the
Anticipatory Hedge Program will be closed on or prior to the date of the
new issuance and National will not, at any time, take possession of the
underlying U.S. Treasury securities. Further, no anticipatory hedge
position will be outstanding for more than 180 days.
The policies and guidelines of the Hedge Program and the Anticipatory
Hedge Program will be authorized by the National Fuel Gas Company Board of
Directors. All transactions entered into under the Hedge Program and the
Anticipatory Hedge Program will only be undertaken pursuant to the approval
of the National Board of Directors, a duly appointed and authorized
committee thereof, or a duly authorized committee of executive officers of
National (an "Executive Officers Hedging Committee"). National undertakes
to establish an independent committee of executive officers (a "Market Risk
Management Committee") to monitor adherence to National's policies and
guidelines regarding the Hedge Program and the Anticipatory Hedge Program
throughout the Authorization Period and prior to entering into any
transactions under the Hedge Program and Anticipatory Hedge Program.
All transactions entered into under the Hedge Program or the
Anticipatory Hedge Program will be bona fide hedges and will meet the
criteria established by the Financial Accounting Standards Board in order
to qualify for hedge accounting treatment, and National will comply with
the then existing financial disclosure requirements of the Financial
Accounting Standards Board associated with hedging transactions.
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National seeks Commission approval of the entire Hedge Program and
Anticipatory Hedge Program to ensure the maximum flexibility in structuring
effective financing-related hedging strategies.
E. OTHER SECURITIES
In addition to the specific securities for which authorization is
sought herein, National also proposes to issue other types of securities
that it deems appropriate during the Authorization Period. National
requests that the Commission reserve jurisdiction over the issuance of
additional types of securities. National also undertakes to file a
post-effective amendment which will describe the general terms of each such
security and request a supplemental order of the Commission authorizing the
issuance thereof by National. National further requests that each
supplemental order be issued by the Commission without further
time-consuming public notice. Specific terms of any additional types of
securities will comply with the applicable parameters for financing
described earlier in Section I. A.
II. INTRA-SYSTEM FINANCING BY SUBSIDIARIES
MONEY POOL/INTERNAL SHORT-TERM FINANCING
By prior Commission Order dated December 28,1995 (HCAR No. 26443; File
No. 70-8729), National, Distribution, Supply, Seneca, Highland,Leidy,
Horizon, Data-Track, NFR and UCI (collectively, the "Current Money Pool
Participants") were authorized to participate in the National System money
pool ("Money Pool") through December 31, 2000. The Current Money Pool
Participants now propose to continue to participate in, and incur short-
term borrowings from, the Money Pool. National also proposes to allow
Seneca Independence, Niagara Independence and NET to participate in, and
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incur short-term borrowings from, the Money Pool. In addition, in order to
consolidate all orders authorizing the Money Pool under one file, National
proposes that the authorization for the current Money Pool (HCAR No. 26443;
File No. 70-8729) be superseded, as of the Order Date, by the Order of the
Commission sought herein.
The Subsidiaries require short-term funds to meet normal working
capital requirements. It is proposed that the Subsidiaries borrow short-
term funds from the Money Pool. The maximum amount of Money Pool borrowing
outstanding for each Subsidiary will be determined by National and the
Subsidiaries in accordance with business needs.
At certain times during the year, National and certain of its
Subsidiaries generate surplus funds. Each Subsidiary may contribute excess
funds to the money pool from time to time.
National will administer the money pool and coordinate the System's
short-term borrowings. Borrowings outside the System, when necessary, will
be made by National. National has requested in this
Application/Declaration authority to issue or reissue from time to time
during the Authorization Period up to $750 million of short-term debt (debt
having terms less than or equal to 270 days) outstanding at any one time
consisting of borrowings under its credit facilities, the issuance and sale
of commercial paper, other borrowings from banks or other financial
institutions and/or issuances of other securities. Such borrowed amounts
will be included in the money pool. Thus, the money pool funds will be
derived from one or more of the following sources:
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1) surplus funds of National and/or of its Subsidiaries;
2) proceeds from National's sale of commercial paper;
3) borrowings by National from banks or other financial
institutions and/or issuances of other securities.
National proposes to administer the money pool by matching up, to the
extent possible, the short-term cash surpluses and borrowing requirements
of itself and its subsidiaries. In the event that at any time during the
Authorization Period there are insufficient funds available from Money Pool
sources to satisfy Money Pool borrowing requirements of all the
Subsidiaries, Distribution will receive priority over the Non-Utility
Subsidiaries. Subsidiary requests for short-term loans would be met first
from available surplus funds of the other subsidiaries, and then from
National corporate funds, to the extent available. Once these sources of
funds become insufficient to meet the short-term loan requests, borrowings
will be made by National through the issuance and sale of commercial paper,
borrowings under credit facilities, other borrowing facilities with banks
or other financial institutions and/or issuances of other securities. Such
borrowings shall not exceed $750 million outstanding at any one time during
the Authorization Period.
Borrowing from the Money Pool
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Pursuant to Rule 52, borrowings from the Money Pool by any of the Non-
Utility Subsidiaries are exempt transactions under the Holding Company Act.
Distribution hereby seeks approval to make borrowings from the Money Pool.
Distribution proposes to repay borrowings from the Money Pool principally
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by means of funds received as a result of providing services to its
customers under its tariffs, and from the possible sale of debt or equity
securities.
National, itself, will not borrow from surplus funds of its
Subsidiaries.
Borrowings from the Money Pool, and repayments thereof, will be
adequately documented and will be evidenced on the books of each
participant who is borrowing funds or lending surplus funds through the
Money Pool.
If only internal funds (surplus funds of National and the
Subsidiaries) make up the funds available in the Money Pool, the interest
rate applicable and payable to or by subsidiaries for all loans of such
internal funds will be the rates for high-grade unsecured 30-day commercial
paper sold through dealers by major corporations as quoted in The Wall
--------
Street Journal or other national financial publications.
--------------
If external funds (funds borrowed by National either through
commercial paper or borrowings from banks or other financial institutions)
make up all of the funds available in the Money Pool, or when both surplus
funds from other participating subsidiaries and external funds are
concurrently borrowed through the "Money Pool", the interest rate
applicable to all such borrowings and payable by borrowing subsidiaries
will be equal to National's net cost for such external borrowings.
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<PAGE>
Interest will be payable by the borrowing Subsidiary until the
principal amount borrowed is fully repaid.
The Subsidiaries propose to incur short-term borrowings from the
Money-Pool to provide financing for general corporate purposes, including
the temporary financing of inventories and other working capital
requirements and construction spending.
Neither National nor any of the Subsidiaries currently has an
ownership interest in an EWG, a FUCO or an exempt telecommunications
company ("ETC") as defined in Section 34 of the Holding Company Act. None
of the Money Pool funds will be used for the acquisition of an interest in
a FUCO or an ETC.
All of the terms and conditions governing the operation of, and
National's and the Subsidiaries' participation in, the Money Pool will be
contained in a written agreement to be executed within thirty (30) days of
the Order Date.
III. EXTERNAL FINANCING BY SUBSIDIARIES
A. EXTERNAL NON-EXEMPT DEBT FINANCING BY DISTRIBUTION
It may be necessary for Distribution to have the ability to issue, to
persons other than National, non-exempt debt securities. Examples of such
non-exempt debt securities would include debentures, convertible debt,
subordinated debt, medium-term notes, bank borrowings, and securities with
call or put options. To the extent such debt securities are not exempt
from the Holding Company Act or otherwise authorized or permitted by rule,
regulation or order of the Commission issued thereunder, National requests
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<PAGE>
authority under the Holding Company Act for Distribution to issue and/or
sell debt securities of any type to persons other than National (with or
without a guarantee being provided by National or a Non-Utility
Subsidiary), including banks, insurance companies, and other financial
institutions, in an aggregate principal amount which will not to exceed
$250 million. These issuances of securities will comply with the
applicable parameters for financing described earlier in Section I.A.
B. FINANCING ENTITIES
National and the Non-Utility Subsidiaries seek authority to organize
new corporations, trusts, partnerships or other entities created for the
purpose of facilitating financings through their issue to third parties of
interests in such entities. Additionally, request is made for
authorization with respect to (i) the issuance of debentures or other
evidences of indebtedness, pursuant to an indenture or otherwise by
National to a financing entity in return for the proceeds of the financing,
and (ii) the acquisition by National or a Non-Utility Subsidiary of voting
interests or equity securities issued by the financing entity to establish
National's or such Non-Utility Subsidiary's ownership of the financing
entity. National also requests authorization to enter into guarantees and
expense agreements with its financing entities, pursuant to which National
would agree to pay all amounts payable with respect to securities issued by
such entities.
Such guarantee authority with respect to National's financing entities
will not exceed $250 million in the aggregate at any one time during the
Authorization Period.
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<PAGE>
IV. GUARANTEES BY NATIONAL
National requests authorization to guarantee securities of its
Subsidiaries, and provide other forms of credit support with respect to
obligations of its Subsidiaries as may be necessary or appropriate to
enable them to carry on in the ordinary course of their respective
businesses subject to a maximum aggregate limitation on such guarantee
authority at any one time of $2 billion. The $2 billion of guarantees is
in addition to any financing requested in this Application/Declaration.
Such authorization of National to provide credit support would supersede
and replace the authorization of National to guarantee up to $500 million
of obligations as set forth in the order of the Commission dated November
12, 1993 (HCAR No. 25922). Guarantees made directly or indirectly by
National to any Subsidiary which is an EWG, FUCO, Energy Related Company or
Gas-Related Company will be subject to the limitations of Rules 53 or 58,
as applicable. National states that terms and conditions of any guarantees
will be negotiated on a case by case basis as the need arises. Guarantees
and other forms of credit support provided by National on behalf of any EWG
or FUCO would be subject to the limitations of Rule 53, and any guarantee
or other form of credit support provided on behalf of any Energy-Related
Company or Gas-Related Company would be subject to the limitations of Rule
58. National states that at the time National guarantees any securities of
its Subsidiaries, or provides other forms of credit support with respect to
obligations of its Subsidiaries, National will be in compliance with the
applicable parameters for financing described earlier in Section I.A.
Examples of such guarantees may include the guarantee of obligations
associated with: (1) gas transportation agreements entered into with
pipelines by shippers such as Distribution and Supply; (2) gas purchase
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<PAGE>
agreements entered into by producers with gas marketers such as NFR and gas
purchasers such as Distribution; (3) gas sales agreements entered into by
producers, such as Seneca, with purchasers; and (4) any and all other
agreements between parties not affiliated with the National system and any
one or combination of the Subsidiaries relating to their then existing
businesses.
V. USE OF FINANCING PROCEEDS FOR ACQUISITIONS OF EWGS, FUCOS, GAS-RELATED
COMPANIES AND ENERGY-RELATED COMPANIES
National proposes to use some or all of the proceeds of the financings
proposed herein to make exempt investments in EWGs and FUCOs in an
aggregate amount at any time outstanding which, when added to National's
"Aggregate Investment" (as defined in Rule 53(a)(1)) in any EWGs or FUCOs
at any time, shall not exceed 50% of National's "Consolidated Retained
Earnings" (also as defined in Rule 53(a)(1)).(1) This investment
limitation will supersede and replace the $150 million Investment Limit set
forth in the HCAR No. 35-26364 (File No. 70-8649) dated August 29, 1995, as
it relates to direct or indirect investments by National in EWGs and FUCOs.
Any guarantees of securities issued by, or other obligations of, any EWG or
FUCO or "Intermediate Company" organized for the purpose of acquiring and
holding the securities of any EWG or FUCO would also be included in
National's "Aggregate Investment" under Rule 53.
---------------------
1. Such investments may be made directly by National or indirectly
through Horizon or one or more "Intermediate Companies" as authorized
in HCAR No. 35-26364 (File No. 70-8649) dated August 29, 1995.
-24-
<PAGE>
National is in compliance and will comply with Rule 53(a) and all
other applicable rules under the Holding Company Act, including, without
limitation, such rules as may be promulgated in the future pursuant to
Section 33 of the Holding Company Act. Currently, National's Aggregate
Investment in EWGs and FUCOs is zero. National's average Consolidated
Retained Earnings, pursuant to Rule 53(a)(1), for the four quarters ended
September 30, 1997 is approximately $473,476,000. National and its
subsidiaries commit that they will maintain books and records and financial
statements to identify investments in and earnings from EWGs and FUCOs in
which they may directly or indirectly hold an interest. National
undertakes to provide the SEC access to such books and records and
financial statements that will be available to National upon the request of
the SEC. Thus, the Rule 53(a)(2) requirements will be satisfied. No more
than 2% of the employees of Distribution will render services, at any one
time, directly or indirectly, to the EWGs or FUCOs in which National may
directly or indirectly hold an interest, thereby satisfying Rule 53(a)(3).
All of the documents required to be filed under Rule 53(a)(4) with federal,
state and local regulators having jurisdiction over the retail rates of
Distribution have been submitted.
None of the conditions described in Rule 53(b) exist with respect to
National, thereby satisfying Rule 53(b) and making Rule 53(c) inapplicable.
National also proposes to use some or all of the proceeds of the
financings proposed herein to make exempt investments under Rule 58.
Currently, National's Aggregate Investment, as defined in Rule 58(b)(3), in
Energy-Related Companies is zero.
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<PAGE>
VI. FILING OF CERTIFICATES OF NOTIFICATION
Transactions contemplated herein which occur pursuant to the
authorization which may be granted by the Commission in this proceeding
will be reported through quarterly Rule 24 certificates of notification
which, in order to avoid duplication of reported information, may include
cross-references to National's filings with the Commission under the
Securities Act of 1933, as amended, and Securities Exchange Act of 1934, as
amended. Rule 24 certificates of notification will be filed within 60 days
after each of the first three quarters of National's fiscal year and 90
days after the fourth quarter of National's fiscal year. The first filing
will be made within 60 days after the end of the fiscal quarter in which
the Commission grants its order with respect to this
Application/Declaration. With respect to each transaction under the Hedge
Program and the Anticipatory Hedge Program such Rule 24 certificate of
notification will include: the trade date, the type of hedge transaction,
the notional principal amount, a description of the transaction, and the
material terms of the underlying instrument. The first filing of the Rule
24 certificate will include a copy of the Money Pool agreement among
National and the Subsidiaries.
VII. SUMMARY OF AUTHORIZATIONS SOUGHT
National and its Subsidiaries request Commission authorization to
undertake the following financing transaction during the Authorization
Period, without any additional Commission approvals required except as
indicated.
I. External financing by National
A) To issue or reissue from time to time during the Authorization
Period, up to $750 million of short-term debt outstanding at any one time,
-26-
<PAGE>
consisting of borrowings under its credit facilities, the issuance of
commercial paper, other forms of short-term financing generally available
to borrowers with investment grade credit ratings and/or the issuance of
other securities.
B) Authorization to issue or reissue from time to time during the
Authorization Period, additional long-term debt and equity securities in an
aggregate amount, outstanding at any time, not to exceed $2 billion. The
value of debt securities will equal the aggregate principal amount of such
securities. The value of equity securities will equal the consideration
received by the National at the time the securities are issued.
C) Authorization to enter into transactions pursuant to its Hedge
Program to be initiated during the Authorization Period, with respect to
all or a portion of existing or anticipated financings, including floating
rate debt or fixed rate debt, using interest rate swaps or other derivative
products that may be useful for such purposes.
D) Authorization is also being sought to issue, during the
Authorization Period, other types of securities that National deems
appropriate from time to time over which issuance the Commission would
reserve jurisdiction.
II. Intra-system financing by Subsidiaries
Authorization is requested for the continuance of the Money Pool
during the Authorization Period, where the maximum amount of Money Pool
borrowings outstanding for each Subsidiary will be determined by National
and the Subsidiaries in accordance with business needs.
-27-
<PAGE>
III. External Financing by Subsidiaries
A) Distribution requests Commission authorization to issue debt
securities to nonaffiliates, in an aggregate principal amount which will
not to exceed $250 million at any one time outstanding, to the extent such
issuances are not exempt from the provisions of the Holding Company Act.
B) National and the Non-Utility Subsidiaries seek authority to
organize new corporations, trusts, partnerships or other entities created
for the purpose of facilitating financings through their issue to third
parties of interests in such entities. Additionally, request is made for
authorization with respect to (i) the issuance of debentures or other
evidences of indebtedness pursuant to an indenture or otherwise by National
to a financing entity in return for the proceeds of the financing, and (ii)
the acquisition by National or a Non-Utility Subsidiary of voting interests
or equity securities issued by the financing entity to establish National's
or such Non-Utility Subsidiary's ownership of the financing. National also
requests authorization to enter into guarantees and expense agreements with
its respective financing entities, pursuant to which National would agree
to pay all amounts payable with respect to securities issued by such
entities.
Such guarantee authority with respect to National's entities will not
exceed $250 million in the aggregate at any one time during the
Authorization Period.
IV. National requests authorization to enter guarantee arrangements and
otherwise provide credit support with respect to obligations of its
subsidiaries as may be necessary or appropriate in the ordinary course of
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<PAGE>
their respective businesses. The maximum aggregate limit on all such credit
support by National at any one time will be $2 billion. The $2 billion of
guarantees is in addition to any financing requested in this Application.
Guarantees and other forms of credit support provided by National on behalf
of any EWGs, FUCOs, Energy-Related Companies or Gas-Related Companies would
be subject to the limitations of Rule 53 or Rule 58, as applicable.
V. Use of Proceeds to include Exempt Investments in EWGs, FUCOs, Energy-
Related Companies and Gas-Related Companies.
National seeks Commission authorization to use the proceeds from the
financings approved herein to invest in EWGs and FUCOs in compliance with
the standards set forth in Rule 53 and in Energy-Related Companies and Gas-
Related Companies, subject to the limitations of Rule 58.
None of the Money Pool funds will be used for the acquisition of an
interest in a FUCO or an ETC."
Item 4 of this Application-Declaration is amended and revised in its
entirety to read as follows:
"ITEM 4. REGULATORY APPROVAL
No Federal regulatory authority, other than the Commission, has
jurisdiction over the proposed transaction.
No State regulatory authority has jurisdiction over the proposed
transactions except that the Public Service Commission of New York and the
Pennsylvania Public Utility Commission have jurisdiction over the issuance
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<PAGE>
and sale of the long-term notes to be issued by Distribution and the
allocation of costs and benefits to Distribution. (See Exhibits D-1 and D-
3 for Distribution's Application and Petition.)
Distribution has state regulatory authority through May 22, 1999 to
issued up to $200 million of long-term notes. Distribution covenants to
obtain all necessary state regulatory authority needed to issue any long-
term notes beyond May 22, 1999."
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
The following exhibits are made a part of this statement:
(a) Exhibits
--------
F-1 Opinion of Reid & Priest LLP, counsel to
National.
F-2 Opinion of Stryker, Tams & Dill, L.L.P., New
Jersey counsel to National.
F-3 Opinion of A.M. Cellino, counsel to the
Subsidiaries.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this Amendment No. 2 to
the Application/Declaration to be signed on their behalf by the undersigned
thereunto duly authorized.
NATIONAL FUEL GAS COMPANY
By /s/ Philip C. Ackerman
--------------------------
Philip C. Ackerman
Senior Vice President
NATIONAL FUEL GAS DISTRIBUTION
CORPORATION
By /s/ Philip C. Ackerman
--------------------------
Philip C. Ackerman
President
SENECA RESOURCES CORPORATION
By /s/ G. T. Wehrlin
---------------------
G. T. Wehrlin
Controller
NATIONAL FUEL GAS SUPPLY CORPORATION
By /s/ Richard Hare
--------------------
Richard Hare
President
NATIONAL FUEL RESOURCES, INC.
By /s/ R. J. Kreppel
---------------------
R. J. Kreppel
President
UTILITY CONSTRUCTORS, INC.
By /s/ Philip C. Ackerman
--------------------------
Philip C. Ackerman
President
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<PAGE>
HORIZON ENERGY DEVELOPMENT, INC.
By /s/ Philip C. Ackerman
--------------------------
Philip C. Ackerman
President
HIGHLAND LAND & MINERALS, INC.
By /s/ Philip C. Ackerman
--------------------------
Philip C. Ackerman
President
DATA-TRACK ACCOUNT SERVICE, INC.
By /s/ Philip C. Ackerman
--------------------------
Philip C. Ackerman
President
LEIDY HUB, INC.
By /s/ G. T. Wehrlin
---------------------
G. T. Wehrlin
Secretary/Treasurer
SENECA INDEPENDENCE PIPELINE COMPANY
By /s/ Richard Hare
--------------------
Richard Hare
President
NIAGARA INDEPENDENCE MARKETING COMPANY
By /s/ C. H. Friedrich
-----------------------
C. H. Friedrich
Treasurer
NIAGARA ENERGY TRADING INC.
By /s/ C. H. Friedrich
-----------------------
C. H. Friedrich
Treasurer
DATED: March 19, 1998
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
F-1 Opinion of Reid & Priest LLP, counsel to National
F-2 Opinion of Stryker, Tams & Dill, L.L.P., New Jersey
counsel to National
F-3 Opinion of A. M. Cellino, counsel to the Subsidiaries
Exhibit F-1
(212) 603-2000
New York, New York
March 19, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: National Fuel Gas Company, et al.
Form U-1 Application/Declaration (File No. 70-9153)
---------------------------------------------------
Ladies and Gentlemen:
As counsel for National Fuel Gas Company
("National"), a New Jersey corporation, we deliver to you
this opinion which relates to the Joint Application-
Declaration, filed on December 10, 1997, as heretofore
amended (as amended, the "Application-Declaration"), under
the Public Utility Holding Company Act of 1935, as amended
("Holding Company Act"), by National, and each of its
wholly-owned subsidiaries, National Fuel Gas Distribution
Corporation ("Distribution"), Seneca Resources Corporation,
National Fuel Gas Supply Corporation, National Fuel
Resources, Inc., Utility Constructors, Inc., Horizon Energy
Development, Inc., Highland Land & Minerals, Inc., Data-
Track Account Services, Inc., Leidy Hub, Inc., Seneca
Independence Pipeline Company, Niagara Independence
Marketing Company and Niagara Energy Trading Inc. The
subsidiaries listed above are collectively referred to as
the "Subsidiaries." The Subsidiaries, excluding
Distribution, are collectively referred to as the "Non-
Utility Subsidiaries."
The Application-Declaration seeks authorization,
from the effective date of the order of the Securities and
Exchange Commission ("Commission") with respect to the
Application-Declaration through December 31, 2002, or such
longer period specified in the Application-Declaration, in
each case, to the extent such transactions are not exempt
from the Holding Company Act or otherwise authorized or
permitted by rule, regulation or order of the Commission
issued thereunder, for certain transactions, including for:
(a) The issuance and sale by National of not to
exceed at any one time $750,000,000 aggregate principal
amount of short-term debt securities ("National Short-Term
Debt"), including commercial paper, borrowings under credit
facilities, and other forms of short-term financing, all as
described in the Application-Declaration;
(b) The issuance and sale by National of not to
exceed at any one time $2,000,000,000 of long-term
securities, including (i) long-term debt securities
("National Long-Term Debt" and, together with the National
Short-Term Debt, "National Debt") and (ii) equity
securities, including National's common stock, $1 par
value, and the rights appurtenant thereto, preferred stock
and other preferred securities (together, "National Equity
Securities"), all as described in the Application-
Declaration;
(c) National to enter into hedging transactions
("Hedge Transactions"), with respect to all or a portion
of its existing or anticipated financings, with one or more
counterparties (each, a "Counterparty"), as described in
the Application-Declaration;
(d) The continuation of a money pool ("Money
Pool") for National and its Subsidiaries and for borrowings
by Distribution from the Money Pool, as described in the
Application-Declaration;
(e) The issuance by Distribution of up to
$250,000,000 aggregate principal amount of debt securities,
as described in the Application-Declaration;
(f) (i) National and the Non-Utility
Subsidiaries (a) to organize financing entities, and (b) to
acquire voting interests or equity securities of their
respective financing entities ("Financing Entity
Securities"), (ii) National to issue debentures or other
evidences of indebtedness ("Financing Entity Debt") to its
financing entities, (iii) National to enter into guarantees
and expense agreements in an aggregate amount of up to
$250,000,000 with its financing entities and (iv) such
financing entities to issue securities to third parties,
each as described in the Application-Declaration; and
(g) National to guarantee securities of its
Subsidiaries and provide credit support with respect to
certain other obligations of its Subsidiaries, subject to a
maximum aggregate limitation on such guarantee authority at
any one time of $2,000,000,000, as described in the
Application-Declaration.
The transactions described in paragraphs (a)-(g)
above are referred to as the "Proposed Transactions." The
Application-Declaration also relates to certain other
transactions over which National and the Subsidiaries have
asked that the Commission reserve jurisdiction.
Based upon the foregoing and subject to the
qualifications and assumptions hereinafter specified, we
are of the opinion that:
1. National is a corporation duly organized and
validly existing under the laws of the State of New Jersey.
2. If (i) the Proposed Transactions are
consummated as contemplated by the Application-Declaration
and in accordance with the terms of the order or orders of
the Commission with respect thereto, and, with respect to
any securities registered with the Commission pursuant to
the Securities Act of 1933, as amended, the registration
statement relating to such securities; (ii) the Boards of
Directors of National and the Subsidiaries, as the case may
be, or duly appointed and authorized committees thereof,
or, in the case of certain securities, duly elected and
authorized officers thereof, approve and authorize, (a)
each Proposed Transaction involving National or a
Subsidiary, as the case may be, and (b) each plan,
agreement, amendment, indenture, mortgage, deed of trust,
supplemental indenture, officer's certificate, guarantee
and any and all other documents (together, "Operative
Documents") to be used in connection with the respective
Proposed Transaction; (iii) each Operative Document (a) has
been duly executed and delivered and, to the extent
required, filed by National, (b) if applicable, has been
duly authorized, executed and delivered by, and shall be
legal, valid and binding obligations of, each other party
to such Operative Document, including, in the case of Hedge
Transactions, each Counterparty, and (c) shall have become
effective; (iv) each security to be issued pursuant to the
Proposed Transactions shall have been duly executed,
delivered and, as appropriate, authenticated, for the
consideration contemplated; (v) the issuance of securities
by Distribution shall have been authorized by the Public
Service Commission of the State of New York and the
Pennsylvania Public Utility Commission, if such
authorization shall have been required; (vi) each financing
entity shall be duly organized and validly existing under
the laws of its jurisdiction of organization and each
Financing Entity Security shall be a valid and binding
obligation of the respective financing entity enforceable
in accordance with its terms; (vii) no act or event other
than as described herein shall have occurred subsequent to
the date hereof which would change the opinions expressed
herein; and (viii) each Proposed Transaction to which this
opinion relates shall be conducted under our supervision
and all legal matters incident thereto shall be
satisfactory to us, including the receipt in satisfactory
forms of opinions of other counsel qualified to practice in
any jurisdiction in which we are not admitted to practice
and the laws of which govern such Proposed Transaction or
the parties to such Proposed Transaction:
(a) All state laws applicable to the Proposed
Transactions involving National as described in the
Application-Declaration will have been complied with;
(b) The National Equity Securities to be issued
in the Proposed Transactions will be validly issued, fully
paid and nonassessable, and the holders thereof shall be
entitled to the rights and privileges pertaining thereto as
set forth in National's certificate of incorporation or any
amendment thereto or other instrument which defines such
rights and privileges;
(c) The National Debt, Hedge Transactions,
Financing Entity Debt and any guarantees, in each case to
be issued by National, will be valid and binding
obligations of National enforceable in accordance with
their respective terms, subject as to enforceability to (i)
bankruptcy, insolvency, reorganization, fraudulent
transfer, fraudulent conveyance, moratorium or other
similar laws affecting the enforcement of creditors' rights
and remedies, and (ii) the application of general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or
at law) including, without limitation (x) the possible
unavailability of specific performance, injunctive relief
or any other remedy, and (y) concepts of materiality,
commercial reasonableness, good faith, fair dealing and
equitable subordination; and
(d) The consummation of the Proposed
Transactions involving National as described in the
Application-Declaration will not violate the legal rights
of the holders of any securities issued by National.
We express no opinion as to (i) the subject
matter jurisdiction of a federal court to consider any
dispute arising out of any Hedge Transaction or (ii) the
provision of any Hedge Transaction to the extent such
provision waives any objection by any party to the laying
of venue of any action or proceeding brought in any court
and any claim that any such action or proceeding has been
brought in any inconvenient forum.
We also express no opinion as to the
enforceability of any provision of any Hedge Transaction
relating to judgement currencies.
We are members of the New York Bar and do not
hold ourselves out as experts on the laws of any other
state. Accordingly, in giving this opinion, we have
relied, as to all matters governed by the law of the State
of New Jersey, upon the opinion of Stryker, Tams and Dill
LLP. A copy of such opinion will be filed as an exhibit to
the Application-Declaration.
We hereby consent to the use and filing of this
opinion as an exhibit to the Application-Declaration.
Very truly yours,
/s/ Reid & Priest LLP
REID & PRIEST LLP
Exhibit F-2
March 19, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: National Fuel Gas Company, et al.
Form U-1 Application/Declaration (File No. 70-9153)
---------------------------------------------------
Ladies and Gentlemen:
As New Jersey counsel for National Fuel Gas
Company ("NATIONAL"), a New Jersey corporation, we deliver
to you this opinion which relates to the Joint Application-
Declaration, filed on December 10, 1997, as heretofore
amended (as amended, the "APPLICATION-DECLARATION"), under
the Public Utility Holding Company Act of 1935, as amended
("HOLDING COMPANY ACT"), by National, and each of its
wholly-owned subsidiaries, National Fuel Gas Distribution
Corporation ("DISTRIBUTION"), Seneca Resources Corporation,
National Fuel Gas Supply Corporation, National Fuel
Resources, Inc., Utility Constructors, Inc., Horizon Energy
Development, Inc., Highland Land & Minerals, Inc., Data-
Track Account Services, Inc., Leidy Hub, Inc., Seneca
Independence Pipeline Company, Niagara Independence
Marketing Company and Niagara Energy Trading Inc. The
subsidiaries listed above are collectively referred to as
the "SUBSIDIARIES." The Subsidiaries, excluding
Distribution, are collectively referred to as the "NON-
UTILITY SUBSIDIARIES."
The Application-Declaration seeks authorization,
from the effective date of the order of the Securities and
Exchange Commission ("COMMISSION") with respect to the
Application-Declaration through December 31, 2002, or such
longer period specified in the Application-Declaration, in
each case, to the extent such transactions are not exempt
from the Holding Company Act or otherwise authorized or
permitted by rule, regulation or order of the Commission
issued thereunder, for certain transactions, including for:
(a) The issuance and sale by National of not to
exceed at any one time $750,000,000 aggregate principal
amount of short-term debt securities ("NATIONAL SHORT-TERM
DEBT"), including commercial paper, borrowings under credit
facilities, and other forms of short-term financing, all as
described in the Application-Declaration;
(b) The issuance and sale by National of not to
exceed at any one time $2,000,000,000 of long-term
securities, including (i) long-term debt securities
("NATIONAL LONG-TERM DEBT" and, together with the National
Short-Term Debt, "NATIONAL DEBT") and (ii) equity
securities, including National's common stock, $1 par
value, and the rights appurtenant thereto, preferred stock
and other preferred securities (together, "NATIONAL EQUITY
SECURITIES"), all as described in the Application-
Declaration;
(c) National to enter into hedging transactions
("HEDGE TRANSACTIONS"), with respect to all or a portion
of its existing or anticipated financings, with one or more
counterparties (each, a "COUNTERPARTY"), as described in
the Application-Declaration;
(d) The continuation of a money pool ("MONEY
POOL") for National and its Subsidiaries and for borrowings
by Distribution from the Money Pool, as described in the
Application-Declaration;
(e) The issuance by Distribution of up to
$250,000,000 aggregate principal amount of debt securities,
as described in the Application-Declaration;
(f) (i) National and the Non-Utility
Subsidiaries (a) to organize financing entities, and (b) to
acquire voting interests or equity securities of their
respective financing entities ("FINANCING ENTITY
SECURITIES"), (ii) National to issue debentures or other
evidences of indebtedness ("FINANCING ENTITY DEBT") to its
financing entities, (iii) National to enter into guarantees
and expense agreements in an aggregate amount of up to
$250,000,000 with its financing entities and (iv) such
financing entities to issue securities to third parties,
each as described in the Application-Declaration; and
(g) National to guarantee securities of its
Subsidiaries and provide credit support with respect to
certain other obligations of its Subsidiaries, subject to a
maximum aggregate limitation on such guarantee authority at
any one time of $2,000,000,000, as described in the
Application-Declaration.
The transactions described in paragraphs (a)-(g)
above are referred to as the "PROPOSED TRANSACTIONS." The
Application-Declaration also relates to certain other
transactions over which National and the Subsidiaries have
asked that the Commission reserve jurisdiction.
Based upon the foregoing and subject to the
qualifications and assumptions hereinafter specified, we
are of the opinion that:
1. National is a corporation duly organized and
validly existing under the laws of the State of New Jersey.
2. If (i) the Proposed Transactions are
consummated as contemplated by the Application-Declaration
and in accordance with the terms of the order or orders of
the Commission with respect thereto, and, with respect to
any securities registered with the Commission pursuant to
the Securities Act of 1933, as amended, the registration
statement relating to such securities; (ii) the Boards of
Directors of National and the Subsidiaries, as the case may
be, or duly appointed and authorized committees thereof,
or, in the case of certain securities, duly elected and
authorized officers thereof, approve and authorize, (a)
each Proposed Transaction involving National or a
Subsidiary, as the case may be, and (b) each plan,
agreement, amendment, indenture, mortgage, deed of trust,
supplemental indenture, officer's certificate, guarantee
and any and all other documents (together, "OPERATIVE
DOCUMENTS") to be used in connection with the respective
Proposed Transaction; (iii) each Operative Document (a) has
been duly executed and delivered and, to the extent
required, filed by National, (b) if applicable, has been
duly authorized, executed and delivered by, and shall be
legal, valid and binding obligations of, each other party
to such Operative Document, including each Counterparty,
and (c) shall have become effective; (iv) each security to
be issued pursuant to the Proposed Transactions shall have
been duly executed, authenticated and delivered, as
appropriate, for the consideration contemplated; (v) the
issuance of securities by Distribution shall have been
authorized by the Public Service Commission of the State of
New York and the Pennsylvania Public Utility Commission, if
such authorization shall have been required; (vi) each
financing entity shall be duly organized and validly
existing under the laws of its jurisdiction of organization
and each Financing Entity Security shall be a valid and
binding obligation of the respective financing entity
enforceable in accordance with its terms; (vii) no act or
event other than as described herein shall have occurred
subsequent to the date hereof which would change the
opinions expressed herein; and (viii) each Proposed
Transaction to which this opinion relates shall be
conducted under our supervision and all legal matters
incident thereto shall be satisfactory to us, including the
receipt in satisfactory forms of opinions of other counsel
qualified to practice in any jurisdiction in which we are
not admitted to practice and the laws of which govern such
Proposed Transaction or the parties to such Proposed
Transaction:
(a) All laws of the State of New Jersey
applicable to the Proposed Transactions involving National
as described in the Application-Declaration will have been
complied with;
(b) Insofar as New Jersey law is applicable, the
National Equity Securities to be issued in the Proposed
Transactions will be validly issued, fully paid and
nonassessable, and the holders thereof shall be entitled to
the rights and privileges pertaining thereto as set forth
in National's certificate of incorporation or any amendment
thereto or other instrument which defines such rights and
privileges;
(c) Insofar as New Jersey law is applicable, the
National Debt, Hedge Transactions, Financing Entity Debt
and any guarantees, in each case to be issued by National,
will be valid and binding obligations of National
enforceable in accordance with their respective terms,
subject as to enforceability to (i) bankruptcy, insolvency,
reorganization, fraudulent transfer, fraudulent conveyance,
moratorium or other similar laws affecting the enforcement
of creditors' rights and remedies, and (ii) the application
of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or
at law) including, without limitation (x) the possible
unavailability of specific performance, injunctive relief
or any other remedy, and (y) concepts of materiality,
commercial reasonableness, good faith, fair dealing and
equitable subordination;
(d) Insofar as New Jersey law is applicable,
National will legally acquire the Financing Entity
Securities; and
(e) The consummation of the Proposed
Transactions involving National as described in the
Application-Declaration will not violate the legal rights
of the holders of any securities issued by National.
We express no opinion as to (i) the subject
matter jurisdiction of a federal court to consider any
dispute arising out of any Hedge Transaction or (ii) the
provision of any Hedge Transaction to the extent such
provision waives any objection by any party to the laying
of venue of any action or proceeding brought in any court
and any claim that any such action or proceeding has been
brought in any inconvenient forum.
We also express no opinion as to the
enforceability of any provision of any Hedge Transaction
relating to judgement currencies.
In rendering the opinions expressed in paragraphs
2(c), and 2(e) hereof, we have assumed that the issuance
and sale of any National Debt or Distribution Debt or the
issuance of any Financing Entity Debt by National or any
Non-Utility Subsidiaries will be in compliance with any
restrictions on the issuance of such debt set forth in the
respective Operative Documents. In so assuming, we have
relied upon the representations set forth in the letter of
Curtis W. Lee, Esq., General Manager - Finance, of
National, dated the date hereof, a copy of which is
attached hereto as Annex I.
We express no opinion concerning the
applicability of state securities or "blue sky" laws
(including, without limitation, the New Jersey Uniform
Securities Law, as amended) to the issuance and sale of any
securities by National or to the distribution thereof by
other parties.
A copy of this opinion is being delivered to Reid
& Priest LLP who, in rendering their opinion of even date
herewith to the Commission, are hereby authorized to rely
upon the opinions expressed herein to the same extent as if
this opinion had also been addressed directly to them.
We hereby consent to the use and filing of this
opinion as an exhibit to the Application-Declaration.
Very truly yours,
/s/ Stryker, Tams & Dill LLP
STRYKER, TAMS & DILL LLP
Attachment
cc: Reid & Priest LLP (w/ attachment)
<PAGE>
National Fuel Gas Company
10 Lafayette Square
Buffalo, New York 14203
March 19, 1998
Stryker, Tams & Dill LLP
Two Penn Plaza East
Newark, New Jersey 07105
Att: Charles H. Friedrich, III, Esq.
Re: National Fuel Gas Company, et al.
Form U-1 Application/Declaration (File No. 70-9153)
---------------------------------------------------
Dear Sirs:
In connection with the above-referenced Application-
Declaration on Form U-1, as amended, filed with the Securities
and Exchange Commission, we confirm the following.
1. The capital stock of National Fuel Gas Company
("National") issued and outstanding on the date of this
letter consists solely of common stock.
2. Stryker, Tams & Dill LLP has participated in obtaining
the authorizations for the issuance of all outstanding
debentures of National.
3. Stryker, Tams & Dill LLP has participated in obtaining
the authorizations for the issuance by National of all
commercial paper, short-term notes, and/or long-term
notes outstanding at the date of this letter.
4. National and its subsidiaries will not issue and sell
any security described in the above-referenced
Application-Declaration except in compliance with the
restrictions on the issuance of such debt set forth in
the respective Operative Documents (as defined in your
opinion of even date herewith addressed to the
Securities and Exchange Commission) with respect to
such security.
Very truly yours,
/s/ Curtis W. Lee
----------------------------
Curtis W. Lee
General Manager, Finance
cc. Reid & Priest LLP
Exhibit F-3
March 19, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: National Fuel Gas Company, et al.
Form U-1 Application/Declaration (File No. 70-9153)
---------------------------------------------------
Ladies and Gentlemen:
This opinion relates to the Joint Application-
Declaration, filed on December 10, 1997, as heretofore
amended (as amended, the "Application-Declaration"), under
the Public Utility Holding Company Act of 1935, as amended
("Holding Company Act"), by National Fuel Gas Company
("National"), and each of its wholly-owned subsidiaries,
National Fuel Gas Distribution Corporation
("Distribution"), Seneca Resources Corporation, National
Fuel Gas Supply Corporation, National Fuel Resources, Inc.,
Utility Constructors, Inc., Horizon Energy Development,
Inc., Highland Land & Minerals, Inc., Data-Track Account
Services, Inc., Leidy Hub, Inc., Seneca Independence
Pipeline Company, Niagara Independence Marketing Company
and Niagara Energy Trading Inc. The subsidiaries listed
above are collectively referred to as the "Subsidiaries."
I serve as counsel for National and the Subsidiaries. The
Subsidiaries, excluding Distribution, are collectively
referred to as the "Non-Utility Subsidiaries."
The Application-Declaration seeks authorization,
from the effective date of the order of the Securities and
Exchange Commission ("Commission") with respect to the
Application-Declaration through December 31, 2002, or such
longer period specified in the Application-Declaration, in
each case, to the extent such transactions are not exempt
from the Holding Company Act or otherwise authorized or
permitted by rule, regulation or order of the Commission
issued thereunder, for certain transactions, including for:
(a) The issuance and sale by National of not to
exceed at any one time $750,000,000 aggregate principal
amount of short-term debt securities ("National Short-Term
Debt"), including commercial paper, borrowings under credit
facilities, and other forms of short-term financing, all as
described in the Application Declaration;
(b) The issuance and sale by National of not to
exceed at any one time $2,000,000,000 of long-term
securities, including (i) long-term debt securities
("National Long-Term Debt" and, together with the National
Short-Term Debt, "National Debt") and (ii) equity
securities, including National's common stock, $1 par
value, and the rights appurtenant thereto, preferred stock
and other preferred securities (together, "National Equity
Securities"), all as described in the Application-
Declaration;
(c) National to enter into hedging transactions
("Hedge Transactions"), with respect to all or a portion
of its existing or anticipated financings, with one or more
counterparties (each, a "Counterparty"), as described in
the Application Declaration;
(d) The continuation of a money pool ("Money
Pool") for National and its Subsidiaries and for borrowings
by Distribution from the Money Pool ("Distribution Short-
Term Debt"), as described in the Application-Declaration;
(e) The issuance by Distribution of up to
$250,000,000 aggregate principal amount of debt securities
("Distribution Long-Term Debt" and, together with the
Distribution Short-Term Debt, "Distribution Debt"), as
described in the Application-Declaration;
(f) (i) National and the Non-Utility
Subsidiaries (a) to organize financing entities, and (b) to
acquire voting interests or equity securities of their
respective financing entities ("Financing Entity
Securities"), (ii) National to issue debentures or other
evidences of indebtedness ("Financing Entity Debt") to its
financing entities, (iii) National to enter into guarantees
and expense agreements in an aggregate amount of up to
$250,000,000 with its financing entities and (iv) such
financing entities to issue securities to third parties,
each as described in the Application-Declaration; and
(g) National to guarantee securities of its
Subsidiaries and provide credit support with respect to
certain other obligations of its Subsidiaries, subject to a
maximum aggregate limitation on such guarantee authority at
any one time of $2,000,000,000, as described in the
Application-Declaration.
The transactions described in paragraphs (a)-(g)
above are referred to as the "Proposed Transactions." The
Application-Declaration also relates to certain other
transactions over which National and the Subsidiaries have
asked that the Commission reserve jurisdiction.
Based upon the foregoing and subject to the
qualifications and assumptions hereinafter specified, I am
of the opinion that:
1. The Subsidiaries are corporations duly
organized and validly existing under the laws of their
respective jurisdictions of incorporation.
2. If (i) the Proposed Transactions are
consummated as contemplated by the Application-Declaration
and in accordance with the terms of the order or orders of
the Commission with respect thereto, and, with respect to
any securities registered with the Commission pursuant to
the Securities Act of 1933, as amended, the registration
statement relating to such securities; (ii) the Boards of
Directors of National and the Subsidiaries, as the case may
be, or duly appointed and authorized committees thereof,
or, in the case of certain securities, duly elected and
authorized officers thereof, approve and authorize, (a)
each Proposed Transaction involving National or a
Subsidiary, as the case may be, and (b) each plan,
agreement, amendment, indenture, mortgage, deed of trust,
supplemental indenture, officer's certificate, guarantee
and any and all other documents (together, "Operative
Documents") to be used in connection with the respective
Proposed Transaction; (iii) each Operative Document (a) has
been duly executed and delivered and, to the extent
required, filed by National, (b) if applicable, has been
duly authorized, executed and delivered by, and shall be
legal, valid and binding obligations of, each other party
to such Operative Document, including each Counterparty,
and (c) shall have become effective; (iv) each security to
be issued pursuant to the Proposed Transactions shall have
been duly executed, authenticated and delivered, as
appropriate, for the consideration contemplated; (v) the
issuance of securities by Distribution shall have been
authorized by the Public Service Commission of the State of
New York and the Pennsylvania Public Utility Commission, if
such authorization shall have been required; (vi) each
financing entity shall be duly organized and validly
existing under the laws of its jurisdiction of organization
and each Financing Entity Security shall be a valid and
binding obligation of the respective financing entity
enforceable in accordance with its terms; and (vii) no act
or event other than as described herein shall have occurred
subsequent to the date hereof which would change the
opinions expressed herein:
(a) All state laws applicable to the Proposed
Transactions involving the Subsidiaries as described in the
Application-Declaration will have been complied with;
(b) The Distribution Debt and the Financing
Entity Debt issued by any Subsidiary will be valid and
binding obligations of Distribution or such Subsidiary
enforceable in accordance with their respective terms,
subject as to enforceability to (i) bankruptcy, insolvency,
reorganization, fraudulent transfer, fraudulent conveyance,
moratorium or other similar laws affecting the enforcement
of creditors' rights and remedies, and (ii) the application
of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or
at law) including, without limitation (x) the possible
unavailability of specific performance, injunctive relief
or any other remedy, and (y) concepts of materiality,
commercial reasonableness, good faith, fair dealing and
equitable subordination;
(c) National or any Non-Utility Subsidiary, as
the case may be, will legally acquire the Financing Entity
Securities; and
(d) The consummation of the Proposed
Transactions as described in the Application-Declaration
will not violate the legal rights of the holders of any
securities issued National or any Subsidiary.
I am a member of the New York Bar and do not hold
myself out as an expert on the laws of any other state.
Although I am not a member of the Bar of the Commonwealth
of Pennsylvania or the State of Delaware, I have studied
the relevant laws of those states in order to render
certain of the opinions set forth above. Accordingly, this
opinion is expressly limited to the laws of such
jurisdictions as they relate to the matters covered herein.
I hereby consent to the use and filing of this
opinion as an exhibit to the Application-Declaration.
Very truly yours,
/s/ Anna Marie Cellino
Anna Marie Cellino
