Mergers or Consolidations by a Public Utility, 6069-6076 [2019-03326]
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Federal Register / Vol. 84, No. 38 / Tuesday, February 26, 2019 / Rules and Regulations
(4) Will not have a significant
economic impact, positive or negative,
on a substantial number of small entities
under the criteria of the Regulatory
Flexibility Act.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation
safety, Incorporation by reference,
Safety.
Adoption of the Amendment
Accordingly, under the authority
delegated to me by the Administrator,
the FAA amends 14 CFR part 39 as
follows:
PART 39—AIRWORTHINESS
DIRECTIVES
1. The authority citation for part 39
continues to read as follows:
■
Authority: 49 U.S.C. 106(g), 40113, 44701.
§ 39.13
[Amended]
2. The FAA amends § 39.13 by adding
the following new airworthiness
directive (AD):
■
2019–03–08 Airbus SAS: Amendment 39–
19560; Docket No. FAA–2018–0962;
Product Identifier 2018–NM–125–AD.
(a) Effective Date
This AD is effective April 2, 2019.
(b) Affected ADs
None.
(c) Applicability
This AD applies to Airbus SAS Model
A350–941 airplanes, certificated in any
category, all serial numbers.
(d) Subject
Air Transport Association (ATA) of
America Code 29, Hydraulic power.
(e) Reason
This AD was prompted by reports of an
overheat failure mode of the hydraulic
engine-driven pump (EDP), and a
determination that the affected EDP needs to
be replaced with an improved EDP. We are
issuing this AD to address the overheat
failure mode of the hydraulic EDP, which
may cause a fast temperature rise of the
hydraulic fluid, and, if combined with an
inoperative fuel tank inerting system, could
lead to an uncontrolled overheat of the
hydraulic fluid, possibly resulting in ignition
of the fuel-air mixture of the affected fuel
tank.
(f) Compliance
Comply with this AD within the
compliance times specified, unless already
done.
(g) Required Action
Before February 6, 2020, replace each EDP
having part number (P/N) 53098–04 with an
improved EDP, having P/N 53098–06, in
accordance with the Accomplishment
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Instructions of Airbus Service Bulletin A350–
29–P013, dated March 12, 2018.
(h) Parts Installation Prohibition
At the applicable time specified in
paragraph (h)(1) or (h)(2) of this AD: No
person may install an EDP having P/N
53098–04 on any airplane.
(1) For airplanes that, as of the effective
date of this AD, have any EDP having P/N
53098–04 installed: After modification of the
airplane as specified by paragraph (g) of this
AD.
(2) For airplanes that, as of the effective
date of this AD, are post-Modification 112192
and do not have any EDP having P/N 53098–
04 installed: As of the effective date of this
AD.
(i) Other FAA AD Provisions
The following provisions also apply to this
AD:
(1) Alternative Methods of Compliance
(AMOCs): The Manager, International
Section, Transport Standards Branch, FAA,
has the authority to approve AMOCs for this
AD, if requested using the procedures found
in 14 CFR 39.19. In accordance with 14 CFR
39.19, send your request to your principal
inspector or local Flight Standards District
Office, as appropriate. If sending information
directly to the International Section, send it
to the attention of the person identified in
paragraph (j)(2) of this AD. Information may
be emailed to: 9-ANM-116-AMOCREQUESTS@faa.gov. Before using any
approved AMOC, notify your appropriate
principal inspector, or lacking a principal
inspector, the manager of the local flight
standards district office/certificate holding
district office.
(2) Contacting the Manufacturer: For any
requirement in this AD to obtain corrective
actions from a manufacturer, the action must
be accomplished using a method approved
by the Manager, International Section,
Transport Standards Branch, FAA; or the
European Aviation Safety Agency (EASA); or
Airbus SAS’s EASA Design Organization
Approval (DOA). If approved by the DOA,
the approval must include the DOAauthorized signature.
(3) Required for Compliance (RC): If any
service information contains procedures or
tests that are identified as RC, those
procedures and tests must be done to comply
with this AD; any procedures or tests that are
not identified as RC are recommended. Those
procedures and tests that are not identified
as RC may be deviated from using accepted
methods in accordance with the operator’s
maintenance or inspection program without
obtaining approval of an AMOC, provided
the procedures and tests identified as RC can
be done and the airplane can be put back in
an airworthy condition. Any substitutions or
changes to procedures or tests identified as
RC require approval of an AMOC.
(j) Related Information
(1) Refer to Mandatory Continuing
Airworthiness Information (MCAI) EASA AD
2018–0178, dated August 23, 2018, for
related information. This MCAI may be
found in the AD docket on the internet at
https://www.regulations.gov by searching for
and locating Docket No. FAA–2018–0962.
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6069
(2) For more information about this AD,
contact Kathleen Arrigotti, Aerospace
Engineer, International Section, Transport
Standards Branch, FAA, 2200 South 216th
St., Des Moines, WA 98198; telephone and
fax 206–231–3218.
(k) Material Incorporated by Reference
(1) The Director of the Federal Register
approved the incorporation by reference
(IBR) of the service information listed in this
paragraph under 5 U.S.C. 552(a) and 1 CFR
part 51.
(2) You must use this service information
as applicable to do the actions required by
this AD, unless this AD specifies otherwise.
(i) Airbus Service Bulletin A350–29–P013,
dated March 12, 2018.
(ii) [Reserved]
(3) For service information identified in
this AD, contact Airbus SAS, Airworthiness
Office—EAL, Rond-Point Emile Dewoitine
No: 2, 31700 Blagnac Cedex, France;
telephone +33 5 61 93 36 96; fax +33 5 61
93 45 80; email continuedairworthiness.a350@airbus.com; internet
https://www.airbus.com.
(4) You may view this service information
at the FAA, Transport Standards Branch,
2200 South 216th St., Des Moines, WA. For
information on the availability of this
material at the FAA, call 206–231–3195.
(5) You may view this service information
that is incorporated by reference at the
National Archives and Records
Administration (NARA). For information on
the availability of this material at NARA, call
202–741–6030, or go to: https://
www.archives.gov/federal-register/cfr/ibrlocations.html.
Issued in Des Moines, Washington, on
February 8, 2019.
Michael Kaszycki,
Acting Director, System Oversight Division,
Aircraft Certification Service.
[FR Doc. 2019–03125 Filed 2–25–19; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 33
[Docket No. RM19–4–000; Order No. 855]
Mergers or Consolidations by a Public
Utility
Federal Energy Regulatory
Commission, Department of Energy.
ACTION: Final rule.
AGENCY:
Pursuant to ‘‘An Act to amend
section 203 of the Federal Power Act’’
(Act), the Federal Energy Regulatory
Commission (Commission) revises its
regulations relating to mergers or
consolidations by a public utility.
DATES: This rule will become effective
March 27, 2019.
SUMMARY:
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Federal Register / Vol. 84, No. 38 / Tuesday, February 26, 2019 / Rules and Regulations
Eric
Olesh (Technical Information), Office of
Energy Market Regulation, Federal
Energy Regulatory Commission, 888
First Street NE, Washington, DC 20426,
(202) 502–6524, Eric.Olesh@ferc.gov.
Regine Baus (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street NE, Washington, DC 20426,
(202) 502–8757, Regine.Baus@ferc.gov.
FOR FURTHER INFORMATION CONTACT:
In this
final rule, the Commission amends its
regulations to establish that a public
utility must seek authorization under
amended section 203(a)(1)(B) of the
Federal Power Act (FPA) to merge or
consolidate, directly or indirectly, its
facilities subject to the jurisdiction of
the Commission, or any part thereof,
with the facilities of any other person,
or any part thereof, that are subject to
the jurisdiction of the Commission and
have a value in excess of $10 million,
by any means whatsoever. In addition,
as required by the Act, the Commission
establishes a requirement to submit a
notification filing for mergers or
consolidations by a public utility if the
facilities to be acquired have a value in
excess of $1 million and such public
utility is not required to secure
Commission authorization under
amended section 203(a)(1)(B).
SUPPLEMENTARY INFORMATION:
I. Background
1. On November 15, 2018, the
Commission issued a notice of proposed
rulemaking (NOPR) 1 implementing ‘‘An
Act to amend section 203 of the Federal
Power Act’’ (Act), Public Law 115–247,
132 Stat. 3152. Section 1 of the Act
amended section 203(a)(1)(B) to provide
that no public utility shall, without first
having secured an order of the
Commission authorizing it to do so,
merge or consolidate, directly or
indirectly, its facilities subject to the
jurisdiction of the Commission, or any
part thereof, with the facilities of any
other person, or any part thereof, that
are subject to the jurisdiction of the
Commission and have a value in excess
of $10 million, by any means
whatsoever. Section 3 of the Act
provides that the amendment to section
203(a)(1)(B) shall take effect 180 days
after the date of enactment of the Act.
The primary effect of this amendment is
to establish a $10 million threshold on
transactions that will be subject to the
Commission’s review and authorization
under section 203(a)(1)(B).
1 Implementation of Amended Section
203(a)(1)(B) of the Federal Power Act, Notice of
Proposed Rulemaking, 83 FR 61338 (Nov. 29, 2018),
165 FERC ¶ 61,091 (2018).
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2. In section 2 of the Act, Congress
amended section 203(a) to add section
203(a)(7) to require notification for
certain transactions. Section 203(a)(7)
provides that, not later than 180 days
after the date of the enactment of section
203(a)(7), the Commission shall
promulgate a rule requiring any public
utility that is seeking to merge or
consolidate, directly or indirectly, its
facilities subject to the jurisdiction of
the Commission, or any part thereof,
with those of any other person, to notify
the Commission of such transactions not
later than 30 days after the date on
which the transaction is consummated
if: (1) The facilities, or any part thereof,
to be acquired are of a value in excess
of $1 million; and (2) such public utility
is not required to secure a Commission
order under amended section
203(a)(1)(B).
3. The Act also specifies that, not later
than two years after the date of
enactment of this Act, the Commission
shall submit to Congress a report that
assesses the effects of the amendment
made by section 1 and that such report
shall take into account any information
collected under section 203(a)(7). The
Act also requires that the Commission
provide for public notice and comment
with respect to the report.
II. Discussion
4. As discussed below, commenters
generally support the proposals in the
NOPR, including the proposed changes
to implement amended section
203(a)(1)(B) and to establish a
notification filing requirement pursuant
to section 203(a)(7). Certain commenters
request clarification of the procedures
associated with the notification filing
while others recommend that the
Commission require additional
information about the transactions
subject to the notification filing. In light
of amended section 203(a)(1)(B),
commenters also request clarification on
the Commission’s jurisdiction over
acquisitions of facilities from nonpublic utilities. Lastly, commenters
request that the Commission continue to
consider and act on other pending
Commission rulemakings. We address
these issues below.
A. Section 203(a)(1)(B) Dollar Threshold
1. NOPR
5. In the NOPR, the Commission
proposed two changes to part 33 of its
regulations to bring them into
conformance with the Act. First, the
Commission proposed to revise
§ 33.1(a)(1)(ii) to provide that part 33
will apply to any public utility seeking
authorization under section 203 to
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merge or consolidate, directly or
indirectly, its facilities subject to the
jurisdiction of the Commission, or any
part thereof, with the facilities of any
other person, or any part thereof, that
are subject to the jurisdiction of the
Commission and have a value in excess
of $10 million, by any means
whatsoever.2
2. Comments
6. American Public Power Association
(APPA), Edison Electric Institute (EEI),
Idaho Power Company (Idaho Power),
International Transmission Company
(ITC),3 National Rural Electric
Cooperative Association (NRECA), and
Transmission Access Policy Study
Group (TAPS) support the proposed
changes to part 33 of the Commission’s
regulations to implement the $10
million dollar threshold in amended
section 203(a)(1)(B). APPA, EEI, Idaho
Power, NRECA, and TAPS add that the
change appropriately reflects the
amended language of section 203, and
Idaho Power states that it will ensure
the Commission focuses its time and
effort on larger, potentially more
impactful transactions.4 EEI and ITC
explain that it will also reduce
administrative burdens on regulated
entities and the Commission.5
3. Commission Determination
7. We will revise the language in
§ 33.1(a)(1)(ii) of the Commission’s
regulations as proposed in the NOPR.
B. Notification Filing
1. NOPR
8. The Commission also proposed to
add § 33.12 to its regulations to require
public utilities whose transactions are
subject to section 203(a)(7) to file
notification of such transactions with
the Commission. In particular, the
Commission proposed that any public
utility that is seeking to merge or
consolidate, directly or indirectly, its
facilities subject to the jurisdiction of
the Commission, or any part thereof,
with those of any other person must
2 Id. P 3. In the NOPR, the Commission stated that
public utilities required to maintain their books of
account in accordance with the Commission’s
Uniform System of Accounts under 18 CFR part 101
must continue to file with the Commission
proposed journal entries for the purchase or sale of
electric plant, consistent with the instructions to
Account 102, Electric Plant Purchased and Sold.
The Commission explained that the dollar
threshold proposed in the NOPR does not apply to
this accounting filing requirement. Id. at n.1.
3 ITC filed comments on behalf of itself, Michigan
Electric Transmission Company, LLC, ITC Midwest
LLC, and ITC Great Plains, LLC.
4 See APPA Comments at 3; EEI Comments at 5;
Idaho Power Comments at 1; NRECA Comments at
3; TAPS Comments at 3.
5 See ITC Comments at 1; EEI Comments at 6.
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notify the Commission of such
transaction not later than 30 days after
the date on which the transaction is
consummated if: (1) The facilities, or
any part thereof, to be acquired are of
a value in excess of $1 million; and (2)
such public utility is not required to
secure an order of the Commission
under section 203(a)(1)(B).6
9. The Commission proposed that
public utilities subject to section
203(a)(7) file the following information
in this notification filing: (1) The exact
name of the public utility and its
principal business address; and (2) a
narrative description of the transaction,
including the identity of all parties
involved in the transaction and all
jurisdictional facilities associated with
or affected by the transaction, the
location of such jurisdictional facilities
involved in the transaction, the date on
which the transaction was
consummated, the consideration for the
transaction, and the effect of the
transaction on the ownership and
control of such jurisdictional facilities.7
10. The Commission proposed that
the notification filings be filed in the
first docket for section 203 filings for the
fiscal year (FY). For example, all
notification filings made in FY2019
would be filed in Docket No. EC19–1–
000; all notification filings made in
FY2020 would be filed in Docket No.
EC20–1–000, etc.8
2. Comments
11. Most commenters support the
proposed notification filing.9 NRECA
explains that proposed § 33.12(a)
implementing the notification
requirement tracks the statutory
language.10 EEI supports the
Commission’s proposal regarding the
notification requirement for transactions
valued between $1 million but at or
below $10 million, which it states is
consistent with the legislative goals of
reducing regulatory burden and
paperwork burdens while still providing
transparency.11 Idaho Power also
supports the proposal that there be no
filing requirement for transactions
involving facilities with a value of less
than $1 million, which it states will
streamline the process for utilities and
reduce the oversight burden on the
Commission.12
12. Some commenters request
clarification on associated process and
6 NOPR,
165 FERC ¶ 61,091 at P 4.
P 5.
8 Id. P 8.
9 Idaho Power, EEI, APPA, ITC, and NRECA
support the proposed notification filing.
10 NRECA Comments at 4.
11 EEI Comments at 7.
12 Idaho Power Comments at 2.
7 Id.
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service requirements and notice
procedures. EEI requests clarification on
whether the notification filings can be
filed in standard word-document
formats via eFiling. EEI and ITC also ask
whether these filings are purely
informational. Specifically, they ask that
the Commission clarify that: (1) It will
not notice these proceedings for public
comment; (2) other persons are not
entitled to file responsive comments;
and (3) the Commission will not take
any action on the filings. EEI and ITC
request clarification that persons are not
obligated to serve copies of these
notification filings under 18 CFR
385.2010 (Rule 2010 of the
Commission’s Rules of Practice and
Procedure).13 In contrast, Public Citizen,
Inc. requests that the Commission
clarify whether the proposed
notification filing will be subject to
public notice so that the public can
track transactions valued between $1
million but at or below $10 million.14
13. Others contend that the
information proposed to be collected in
the notification filing is insufficient.
American Antitrust Institute (AAI)
suggests that more information should
be included in the notification filing to
account for (1) small, successive
horizontal or vertical acquisitions that
can result in accretion of market power
over time (serial transactions); (2)
acquisitions of partial ownership shares
in strategic assets that can raise
competitive concerns due to common
and cross-ownership issues; and (3)
strategic acquisitions. AAI explains that,
through serial transactions, a utility may
enhance its ability and incentive to
engage in unilateral economic
withholding of physical capacity or to
strategically operate its transmission or
fuel transportation assets to frustrate
rivals’ access to or foreclose them from
wholesale markets.15 In addition, AAI
states that cross-ownership can facilitate
the anticompetitive exchange of
information and common ownership
can dampen incentives to compete
because more vigorous competition is
less profitable than ‘‘cooperation’’ for
investors with partial shares in each of
those rivals. AAI explains that, for
example, private equity firms, which are
numerous and active in electricity
markets, can control or influence
managerial decision-making even with a
partial or minority ownership share in
an asset, and such influence may be
13 See EEI Comments at 7–8; ITC Comments at 3–
4. Rule 2010 requires, among other things, that
participants in a proceeding must serve copies of
their documents according to specified guidelines.
18 CFR 385.2010.
14 Public Citizen, Inc. Comments at 1–2.
15 AAI Comments at 3–4.
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6071
obtained with an investment of less than
$10 million.16 Further, AAI states that,
because electricity markets are
susceptible to the exercise of market
power due to the inelasticity of demand
and supply during times when capacity
is constrained. AAI also states that even
small, strategic acquisitions can
incentivize capacity withholding.17
14. AAI therefore recommends that
the notification filing include: (1) The
wholesale markets in which the
jurisdictional facilities associated with
or affected by the transaction
participate; (2) a current, 10-year history
of ownership changes involving the
jurisdictional facilities associated with
the transaction; and (3) the identity of
all energy affiliates and energy
subsidiaries owned by the acquirer of
the jurisdictional facilities that are the
subject of the transaction. AAI also
encourages the Commission to
undertake a technical conference to
review how the Commission will
analyze these transactions to monitor
market changes, given that the
Commission is required to submit a
report to Congress within two years
regarding the effects of amended section
203(a)(1)(B).18
15. APPA, NRECA, and TAPS also
request that the notification filing
include a requirement to identify energy
affiliates and energy subsidiaries and to
include pre- and post-transaction
organizational charts.19 APPA explains
that the affiliate information is
important because it will allow the
Commission and other stakeholders to
monitor whether a market participant is
engaged in multiple accretive
transactions valued at less than $10
million, which APPA notes was a
concern of the Commission in a 2016
notice of inquiry on requirements for
section 203 transactions and section 205
market-based rate applications.20
NRECA and TAPS explain that the
information will be useful because
ownership structures and affiliate
relationships are growing more
complex.21 APPA states that the affiliate
information and organizational charts
will result in only an incremental
burden to paperwork, but that the
16 Id.
at 5–7.
at 7–8.
18 Id. at 9.
19 See APPA Comments at 3–4; NRECA
Comments at 5–6; TAPS Comments at 4.
20 APPA Comments at 4–5 (citing Modifications
to Commission Requirements for Review of
Transactions under Section 203 of the Federal
Power Act and Market-Based Rate Applications
under Section 205 of the Federal Power Act, Notice
of Inquiry, 81 FR 66649 (Sept. 28, 2016), 156 FERC
¶ 61,214 (2016) (Market Power NOI)).
21 See NRECA Comments at 5–6; TAPS
Comments at 5.
17 Id.
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information will be useful to include in
the Commission’s report to Congress.22
NRECA also requests that the
Commission require information on the
wholesale and transmission tariffs on
file with the Commission that are
related to the jurisdictional facilities
involved in the transaction, which it
claims will be useful to monitor the
rates associated with those facilities.23
TAPS maintains that the proposed
notification filing includes little
information compared to full section
203 applications and, because Congress
required these filings, the information
the Commission receives must be
sufficient for consumer protection
purposes and to produce a meaningful
report for Congress.24
3. Commission Determination
16. We will add § 33.12 to the
Commission’s regulations as proposed
in the NOPR to require that public
utilities submit a notification filing for
transactions subject to section 203(a)(7).
In response to the comments, we first
clarify filing requirements associated
with the notification filings. Each
notification filing should be filed in the
first docket for section 203 filings of the
FY. For example, all notification filings
made in FY2019 would be filed in the
Docket No. EC19–1–000; all notification
filings for FY2020 would be filed in
Docket No. EC20–1–000, etc. The
notification filings may be filed in any
format accepted in eLibrary as listed on
the Commission’s website.25 In
addition, we clarify that the notification
filings are intended to be informational.
The Commission will not notice the
notification filings submitted into the
placeholder docket (i.e., Docket No.
EC19–1–000, etc.) and will not accept
responsive comments from any persons
on the notification filings. The
Commission will not act on the
notification filings that it receives.
Because the notification filings are
informational in nature, there is no
requirement to serve copies of the
notification filings under Rule 2010 of
the Commission’s Rules of Practice and
Procedure.
17. With one exception, we decline to
require additional information as
requested by certain commenters.
Section 203(a)(7) provides the
Commission with limited authority to
collect information in the notification
filings about transactions for which
prior Commission authorization under
22 APPA
Comments at 5–6.
Comments at 6–7.
24 TAPS Comments at 4.
25 FERC, Acceptable File Formats, https://
www.ferc.gov/docs-filing/elibrary/accept-fileformats.asp (last updated Nov. 16, 2015).
23 NRECA
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section 203(a)(1) is no longer required.
Because the Commission has limited
authority to review these transactions
under section 203, we will not hold a
technical conference on how the
Commission will analyze these
transactions. Interested persons may
track these transactions as they are filed
in the placeholder dockets described
above which provide a readily
searchable format for doing so.
18. However, AAI, APPA, NRECA,
and TAPS raise a compelling argument
regarding the transparency of
information as to energy affiliates.
Therefore, in addition to the
information that the NOPR proposed to
be collected, we will require notification
filings to contain a statement regarding
whether the parties to the transaction
are affiliates. This will allow additional
transparency as to whether these
transactions are negotiated at arm’s
length and whether these transactions
could have an effect on a public utility’s
rates. We will add a requirement for
such a statement in the description of
the transaction in § 33.12(b)(2)(i).
19. As to the Commission’s report to
Congress that assesses the effects of
amended section 203(a)(1)(B), the
Commission will provide for public
notice and comments on the report prior
to submitting it to Congress.
C. Clarification on Jurisdiction of the
Commission Under Section 203(a)(1)(B)
1. NOPR
20. In the NOPR, the Commission
clarified that, except for mergers or
consolidations that are valued at $10
million or less, the Commission will not
change its interpretation of the
transactions that are subject to the
jurisdiction of the Commission under
the ‘‘merge or consolidate’’ clause of
section 203(a)(1)(B). The Commission
further explained that it interprets the
amendment by Congress to section
203(a)(1)(B) as establishing a $10
million threshold, but not removing the
Commission’s jurisdiction to review
transactions with a higher value that
involve a public utility’s acquisition of
facilities from non-public utilities 26 if
those facilities will be subject to the
Commission’s jurisdiction after the
transaction is consummated.27
26 Non-public utilities refers to entities described
in section 201(f) of the FPA. 16 U.S.C. 824(f).
27 See Duke Power Co. v. FPC, 401 F.2d 930, 941
(DC Cir. 1968) (Duke Power Co.) (‘‘We have no
doubt that any acquisition from [a non-public
utility] by a public utility of what would normally
be a jurisdictional facility, such as a transmission
line conducting interstate energy, would fall within
the purview of the clause under consideration.’’).
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2. Comments
21. Two commenters, EEI and ITC,
take issue with the Commission’s
clarification on its jurisdiction.
Specifically, EEI claims that the
amended language of section
203(a)(1)(B) states that Commission
approval is required only if the facilities
being acquired by the public utility are
subject to the Commission’s
jurisdiction, which is ‘‘plainly read to
mean that the facilities are jurisdictional
before consummation of the proposed
transaction.’’ 28 EEI states that the
Commission should recognize that, as
amended, the language of section
203(a)(1)(B) has materially changed
from the language that preceded the
amendment. As a result, EEI explains
that the Duke Power Co. v. FPC case
cited by the Commission does not
squarely address the question raised by
the amendment. EEI requests that, for
regulatory certainty, the Commission
reconsider and clarify its interpretation
of the types of facilities to which
amended section 203(a)(1)(B) will
apply.29
22. Similarly, ITC argues that the
plain language of amended section
203(a)(1)(B) does not grant the
Commission authority to review
transactions that involve a public
utility’s acquisition of facilities from
non-public utilities. ITC asserts that,
under amended section 203(a)(1)(B), a
public utility must obtain Commission
authorization only when proposing to
merge or consolidate its own
Commission-jurisdictional facilities
with another person’s Commissionjurisdictional facilities. ITC contends
that if the facilities would be
Commission-jurisdictional if owned by
a jurisdictional entity, or will become so
after the transaction is approved by the
Commission and consummated, is
immaterial because the statutory
language requires that the facilities
‘‘are’’ within the jurisdiction of the
Commission, not that they will be at
some future time.30 ITC also maintains
that the Commission’s reliance on Duke
Power Co. is unavailing because the case
involved the interpretation of older, nolonger effective section 203(a)(1)(B)
language, which conferred upon the
Commission authority to review a
public utility’s proposed merger or
consolidation of its own facilities with
the facilities of ‘‘any other person.’’ 31 In
addition, ITC claims that the court’s
observation about the Commission’s
28 EEI
Comments at 9.
at 8–9.
30 ITC Comments at 2–3.
31 Id. at 3 (citing Duke Power Co., 401 F.2d at
933).
29 Id.
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jurisdiction in that case is dicta because
the case concerned whether a public
utility’s acquisition of unambiguously
non-jurisdictional distribution assets
was within section 203(a)(1)(B)’s
ambit.32
3. Commission Determination
23. We disagree with EEI’s and ITC’s
interpretation of the language of
amended section 203(a)(1)(B). Rather,
we interpret the new statutory language
as codifying the D.C. Circuit’s holding
in Duke Power Co. that the Commission
has no jurisdiction over the acquisition
of distribution or other facilities that are
non-jurisdictional even when owned by
a public utility. In amended section
203(a)(1)(B), the phrase ‘‘subject to the
jurisdiction of the Commission’’ was
used twice.33 First, the phrase was used
to describe the facilities of a ‘‘public
utility’’ that must be involved in a
transaction in order for the Commission
to have jurisdiction. By adding ‘‘subject
to the jurisdiction of the Commission’’
to describe the facilities of a ‘‘public
utility,’’ we conclude that Congress
intended to exclude facilities, such as
distribution facilities, that are not
otherwise subject to the jurisdiction of
the Commission when owned by a
public utility. When Congress again
uses the phrase ‘‘subject to the
jurisdiction of the Commission’’ to
modify the facilities of a ‘‘person,’’ we
interpret the phrase as having the same
meaning, rather than removing the
Commission’s jurisdiction over a public
utility’s acquisition of transmission
facilities previously owned by a nonpublic utility.
24. That Congress did not intend to
limit the Commission’s jurisdiction to
the acquisition of transmission facilities
subject to the Commission’s jurisdiction
prior to the transaction is further
supported by the fact that Congress
retained the language requiring that the
facilities being acquired be owned by a
‘‘person,’’ instead of changing the
language to require that the facilities be
owned by a ‘‘public utility.’’ Under
section 201(e), a ‘‘public utility’’ is ‘‘any
person who owns or operates facilities
subject to the jurisdiction of the
32 Id.
33 Amended section 203(a)(1)(B) provides that no
public utility shall, without first having secured an
order of the Commission authorizing it to do so,
‘‘merge or consolidate, directly or indirectly, its
facilities subject to the jurisdiction of the
Commission, or any part thereof, with the facilities
of any other person, or any part thereof, that are
subject to the jurisdiction of the Commission and
have a value in excess of $10 million, by any means
whatsoever.’’ 16 U.S.C. 824b(a)(1)(B), amended by
‘‘An Act to amend section 203 of the Federal Power
Act,’’ Public Law 115–247, 132 Stat. 3152 (2018)
(emphasis added).
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Commission under this part,’’ 34 which
means that, if facilities being acquired
are subject to the Commission’s
jurisdiction prior to the transaction,
their owner by definition is a public
utility. The use of the word ‘‘person,’’
and not ‘‘public utility,’’ when
describing the facilities to be acquired
suggests that Congress intended the
Commission to have jurisdiction over
the acquisition of facilities owned both
by public utilities and non-public
utilities, provided that those facilities
are subject to the Commission’s
jurisdiction after their acquisition by the
public utility.
25. Our interpretation is reinforced by
the legislative history of the Act, which
indicates that Congress intended
amended section 203(a)(1)(B) only to
establish a $10 million threshold for
transactions subject to the Commission’s
jurisdiction and not to alter any other
aspect of the Commission’s jurisdiction
over transactions. The House Report
described the purpose of the
amendment as ‘‘amend[ing] the Federal
Power Act to exempt facilities of a value
of $10,000,000 or less from this
prohibition.’’ 35 The Senate Report
similarly describes the purpose of the
amendment as to: ‘‘reduce the
compliance burden of certain
transactions valued under $10 million,
including significant legal and
regulatory costs which are collected
from customers.’’ 36 Notably, as part of
its background discussion, the Senate
Report also includes a discussion of the
Duke Power Co. decision and its holding
regarding the Commission’s jurisdiction
to approve transactions, but that report
does not assert that the decision was
erroneous or otherwise suggest that the
amendment was intended to reverse the
Commission’s longstanding reliance on
Duke Power Co. to assert jurisdiction
over a public utility’s acquisition of
transmission facilities from a non-public
utility.37 That neither the House Report
nor the Senate Report suggests that the
amendment was intended to remove the
Commission’s jurisdiction over the
acquisition of facilities from non-public
utilities also supports the conclusion
that the amendment should not be read
to have such an effect.
D. Other Pending Proceedings
1. Comments
26. AAI requests that the Commission
carefully consider whether the revised
regulations for small transactions will
have an effect on the questions posed in
34 16
U.S.C. 824(e).
Rep. No. 115–167, at 1 (2018).
36 S. Rep. No. 115–253, at 2 (2018).
37 Id. at 3.
35 H.R.
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outstanding rulemakings. AAI argues,
among other things, that if small
transactions are excluded from
Commission review under section
203(a)(1)(B), the Commission should
maintain close oversight over the
workings of regional transmission
organization markets and not relieve
sellers with market-based rate authority
from filing a competitive analysis with
the Commission, as was proposed in the
Notice of Proposed Rulemaking in
Refinements to Horizontal Market Power
Analysis for Sellers in Certain Regional
Transmission Organization and
Independent System Operator
Markets.38 AAI further notes that the
Commission has not acted on two
critical rulemakings and requests that
the Commission make these a high
priority: Data Collection for Analytics
and Surveillance and Market-Based
Rate Purposes in Docket No. RM16–17–
000 (Data Collection NOPR) 39 and
Modifications to Commission
Requirements for Review of
Transactions under Section 203 of the
Federal Power Act and Market-Based
Rate Applications under Section 205 of
the Federal Power Act in RM16–21–
000.40
27. APPA and TAPS request that, if
the Commission does not expand the
information to be collected in the
notification filing, it should act on the
Data Collection NOPR and proceed with
the relational database proposed
therein.41
2. Commission Determination
28. We acknowledge commenters’
support and requests for action on other
pending rulemaking proceedings.
However, we emphasize that this
proceeding is limited in scope and only
implements the changes specified in
amended section 203. We will not
address the status of other proceedings
here. In addition, as explained above,
we find that the information we will
collect under § 33.12 is sufficient to
satisfy the directive in the Act that the
Commission establish a notification
requirement.
III. Information Collection Statement
29. The Paperwork Reduction Act
(PRA) 42 requires each federal agency to
38 AAI Comments at 9–10 (citing Refinements to
Horizontal Market Power Analysis for Sellers in
Certain Regional Transmission Organization and
Independent System Operator Markets, Notice of
Proposed Rulemaking, 165 FERC ¶ 61,268 (2018)).
39 Id. at 10.
40 Id. (citing Market Power NOI, 81 FR 66649, 156
FERC ¶ 61,214).
41 See APPA Comments at 6–7; TAPS Comments
at 5–6.
42 44 U.S.C. 3501–3520.
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seek and obtain Office of Management
and Budget (OMB) approval before
undertaking a collection of information
directed to 10 or more persons or
contained in a rule of general
applicability. OMB’s regulations 43
require approval of certain information
collection requirements imposed by
agency rules. Upon approval of a
collection of information, OMB will
assign an OMB control number and an
expiration date. Respondents subject to
the filing requirements of an agency rule
will not be penalized for failing to
respond to the collection of information
unless the collection of information
displays a valid OMB control number.
30. The revisions to the Commission’s
regulations required in this final rule
will bring the regulations in
conformance with the amendments to
section 203 enacted by Congress. The
first revision would implement
Congress’ amendment to section
203(a)(1)(B), which provides that a
public utility must seek authorization to
merge or consolidate, directly or
indirectly, its facilities subject to the
jurisdiction of the Commission, or any
part thereof, with the facilities of any
other person, or any part thereof, that
are subject to the jurisdiction of the
Commission and have a value in excess
of $10 million, by any means
whatsoever. In addition, this final rule
adds § 33.12 to the Commission’s
regulations to implement the directive
in new section 203(a)(7) that the
Commission require a notification filing
for mergers or consolidations by a
public utility if the facilities to be
acquired have a value in excess of $1
million and such public utility is not
required to secure Commission
authorization under amended section
203(a)(1)(B). We anticipate that the
revisions to the Commission’s
regulations, once effective, would
reduce regulatory burdens. The
Commission will submit the proposed
reporting requirements to OMB for its
review and approval under section
3507(d) of the PRA.44
31. In the NOPR, the Commission
solicited comments on the
Commission’s need for this information,
whether the information will have
practical utility, the accuracy of the
burden estimates, ways to enhance the
quality, utility, and clarity of the
information to be collected or retained,
and any suggested methods for
minimizing respondents’ burden,
including the use of automated
information techniques. Nonetheless,
while we expect that the regulatory
revisions discussed herein will reduce
the burdens on affected entities, we
solicit public comment regarding the
accuracy of the burden and cost
estimates below.
32. Internal Review: The Commission
has reviewed the changes and has
determined that such changes are
necessary.
33. Burden Estimate 45: The estimated
burden and cost for the requirements
contained in this final rule follow.
FERC–519, AS MODIFIED BY THIS FINAL RULE IN DOCKET NO. RM19–4–000
Requirements
Number and
type of
respondents
Number of
responses
per
respondent
Total number
of responses
Average burden
hours & cost
per response
Total burden
hours &
total cost
(1)
(2)
(1) * (2) = (3)
(4)
(3) * (4)
FERC–519 (FPA Section 203
Filings) 46.
26
Title: FERC–519, Application under
Federal Power Act Section 203.
OMB Control No.: 1902–0082.
Action: Amendment to 18 CFR part
33.
Respondents: Public utilities subject
to Federal Power Act.
Abstract: Pursuant to ‘‘An Act to
amend section 203 of the Federal Power
Act’’, the Commission will revise part
33 of its regulations to establish that
mergers or consolidations by a public
utility of facilities subject to the
jurisdiction of the Commission that
have a value in excess of $10 million are
subject to Commission authorization. In
addition, the Commission will add
§ 33.12 to its regulations to establish a
notification requirement for mergers or
consolidations by a public utility if the
facilities to be acquired have a value in
excess of $1 million and such public
utility is not required to secure
43 5
CFR part 1320.
U.S.C. 3507(d).
45 ‘‘Burden’’ is the total time, effort, or financial
resources expended by persons to generate,
maintain, retain, or disclose or provide information
to or for a Federal agency. For further explanation
44 44
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1
26
1 hr.; $79.00 .........................
26 hrs.; $2,054.00.
Commission authorization under
amended section 203(a)(1)(B).
Overview of the Data Collection: The
FERC–519, ‘‘Application under Federal
Power Act section 203,’’ is necessary to
enable the Commission to carry out its
responsibilities in implementing the
statutory provisions of section 203.
Section 203 requires a public utility to
seek Commission authorization of
transactions in which a public utility
disposes of jurisdictional facilities,
merges such facilities with the facilities
owned by another person, or acquires
the securities of another public utility.
The Commission must authorize these
transactions if it finds that they will be
consistent with the public interest.
34. By entering into a certain
transaction, a public utility may gain an
increased incentive and ability to
exercise market power that can be to the
detriment of effective competition and
customers. As a result, the Commission
must review all jurisdictional
dispositions, mergers, and acquisitions
to evaluate that transaction’s effect on
competition. The Commission also
evaluates whether such transactions
have an effect on rates and regulation
and whether they result in crosssubsidization. The Commission
implements the filing requirements
associated with this review in the Code
of Federal Regulations (CFR) under 18
CFR part 33.
35. This final rule is limited to
implementing amended FPA section
203(a)(1)(B) and proposing a notification
requirement for certain transactions,
both of which together represent a
reduction in the filing requirements for
public utilities under section 203. The
Commission implements these changes
by mandate of Congress.
of what is included in the information collection
burden, refer to 5 CFR 1320.3.
46 Commission staff estimates that approximately
26 section 203 filings will change from full section
203 filings to the notification filing described above
and will take respondents one burden hour to
complete. The number of respondents and
responses is based on Commission staff’s estimate
that 13 percent of the approximately 200 section
203 filings received will be affected by the changes
herein, which represents a significant reduction in
burden hours.
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36. Interested persons may obtain
information on the reporting
requirements by contacting the
following: Federal Energy Regulatory
Commission, 888 First Street NE,
Washington, DC 20426 [Attention: Ellen
Brown, Office of the Executive Director]
Email: DataClearance@ferc.gov, Phone:
(202) 502–8663; fax: (202) 273–0873.
37. Comments concerning the
collection of information and the
associated burden estimate(s) may also
be sent to: Office of Information and
Regulatory Affairs, Office of
Management and Budget, 725 17th
Street NW, Washington, DC 20503
[Attention: Desk Officer for the Federal
Energy Regulatory Commission]. Due to
security concerns, comments should be
sent electronically to the following
email address: oira_submission@
omb.eop.gov. Please refer to FERC–519,
OMB Control No. 1902–0082 in your
submission.
IV. Environmental Analysis
38. The Commission is required to
prepare an Environmental Assessment
or an Environmental Impact Statement
for any action that may have a
significant adverse effect on the human
environment.47 We conclude that
neither an Environmental Assessment
nor an Environmental Impact Statement
is required for this final rule under
§ 380.4(a) of the Commission’s
regulations, which provides a
categorical exemption for ‘‘approval of
actions under section[] . . . 203 . . . of
the Federal Power Act relating to . . .
acquisition or disposition of property
. . . .’’ 48
V. Regulatory Flexibility Act
39. The Regulatory Flexibility Act of
1980 (RFA) 49 generally requires a
description and analysis of final rules
that will have significant economic
impact on a substantial number of small
entities. The Small Business
Administration’s (SBA) Office of Size
Standards develops the numerical
definition of a small entity. These
standards are provided in the SBA
regulations at 13 CFR 121.201.50 The
RFA does not mandate any particular
outcome in a rulemaking. It only
requires consideration of alternatives
47 Regulations Implementing the National
Environmental Policy Act, Order No. 486, 52 FR
47897 (Dec. 17, 1987), FERC Stats. & Regs. ¶ 30,783
(1987).
48 18 CFR 380.4(a)(16).
49 5 U.S.C. 601–612.
50 13 CFR 121.201. See also U.S. Small Business
Administration, Table of Small Business Size
Standards Matched to North American Industry
Classification System Codes (effective Feb. 26,
2016), https://www.sba.gov/sites/default/files/files/
Size_Standards_Table.pdf.
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that are less burdensome to small
entities and an agency explanation of
why alternatives were rejected.
40. The SBA size standards for
electric utilities is based on the number
of employees, including affiliates.
Under SBA’s standards, some
transmission owners will fall under the
following category and associated size
threshold: Electric bulk power
transmission and control, at 500
employees.51
41. The Commission estimates that 26
respondents could file notification
filings over the course of a year, with an
estimated burden of 1 hour per
response, at an estimated cost of $79.00
per respondent. The Commission
believes that none of the filers will be
small entities. Therefore, the
Commission certifies that this final rule
will not have a significant economic
impact on small entities.
VI. Document Availability
42. In addition to publishing the full
text of this document in the Federal
Register, the Commission provides all
interested persons an opportunity to
view and/or print the contents of this
document via the internet through
FERC’s Home Page (https://
www.ferc.gov) and in FERC’s Public
Reference Room during normal business
hours (8:30 a.m. to 5:00 p.m. Eastern
time) at 888 First Street NE, Room 2A,
Washington DC 20426.
43. From FERC’s Home Page on the
internet, this information is available on
eLibrary. The full text of this document
is available on eLibrary in PDF and
Microsoft Word format for viewing,
printing, and/or downloading. To access
this document in eLibrary, type the
docket number excluding the last three
digits of this document in the docket
number field.
44. User assistance is available for
eLibrary and the FERC’s website during
normal business hours from FERC
Online Support at 202–502–6652 (toll
free at 1–866–208–3676) or email at
ferconlinesupport@ferc.gov, or the
Public Reference Room at (202) 502–
8371, TTY (202) 502–8659. Email the
Public Reference Room at
public.referenceroom@ferc.gov.
VII. Effective Date and Congressional
Notification
45. These regulations are effective
March 27, 2019. The Commission has
determined that this rule is not a ‘‘major
rule’’ as defined in section 351 of the
Small Business Regulatory Enforcement
Fairness Act of 1996.
51 13 CFR 121.201, Sector 22 (Utilities), NAICS
code 221121 (Electric Bulk Power Transmission and
Control).
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List of Subjects in 18 CFR Part 33
Electric utilities, Reporting and
recordkeeping requirements, Securities.
By the Commission.
Issued: February 21, 2019.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
In consideration of the foregoing, the
Commission amends part 33, chapter I,
title 18, Code of Federal Regulations, as
follows:
PART 33—APPLICATIONS UNDER
FEDERAL POWER ACT SECTION 203
1. The authority citation for part 33
continues to read as follows:
■
Authority: 16 U.S.C. 791a-825r, 2601–
2645; 31 U.S.C. 9701; 42 U.S.C. 7101–7352.
2. Amend § 33.1 by revising paragraph
(a)(1)(ii) to read as follows:
■
§ 33.1 Applicability, definitions, and
blanket authorizations.
(a) * * *
(1) * * *
(ii) Merge or consolidate, directly or
indirectly, its facilities subject to the
jurisdiction of the Commission, or any
part thereof, with the facilities of any
other person, or any part thereof, that
are subject to the jurisdiction of the
Commission and have a value in excess
of $10 million, by any means
whatsoever;
*
*
*
*
*
■ 3. Add § 33.12 to read as follows:
§ 33.12 Notification requirement for certain
transactions.
(a) Any public utility that is seeking
to merge or consolidate, directly or
indirectly, its facilities subject to the
jurisdiction of the Commission, or any
part thereof, with those of any other
person, shall notify the Commission of
such transaction not later than 30 days
after the date on which the transaction
is consummated if:
(1) The facilities, or any part thereof,
to be acquired are of a value in excess
of $1 million; and
(2) Such public utility is not required
to secure an order of the Commission
under section 203(a)(1)(B) of the Federal
Power Act.
(b) Such notification shall consist of
the following information:
(1) The exact name of the public
utility and its principal business
address; and
(2) A narrative description of the
transaction, including:
(i) The identity of all parties involved
in the transaction, whether such parties
are affiliates, and all jurisdictional
facilities associated with or affected by
the transaction;
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(ii) The location of such jurisdictional
facilities involved in the transaction;
(iii) The date on which the transaction
was consummated;
(iv) The consideration for the
transaction; and
(v) The effect of the transaction on the
ownership and control of such
jurisdictional facilities.
[FR Doc. 2019–03326 Filed 2–25–19; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9848]
RIN 1545–BL39
Amendments to the Low-Income
Housing Credit Compliance-Monitoring
Regulations
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
AGENCY:
This document contains final
regulations that amend the compliance
monitoring regulations concerning the
low-income housing credit under
section 42 of the Internal Revenue Code
(Code). These final regulations revise
and clarify the requirement to conduct
physical inspections and review lowincome certifications and other
documentation. The final regulations
will affect owners of low-income
housing projects that claim the credit,
the tenants in those low-income housing
projects, and the State and local housing
credit agencies that administer the
credit.
SUMMARY:
Effective date: These regulations
are effective on February 26, 2019.
Applicability Dates: For dates of
applicability see § 1.42–5(h)(2).
FOR FURTHER INFORMATION CONTACT:
Barbara Campbell or YoungNa Lee,
(202) 317–4137 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
DATES:
Background
This document amends 26 CFR part 1
to finalize rules relating to section 42 of
the Code. On February 25, 2016, the
Department of the Treasury (Treasury
Department) and the IRS published
temporary regulations (T.D. 9753) in the
Federal Register (81 FR 9333), which
amended § 1.42–5 of the Income Tax
Regulations.
Section 42(m)(1) provides that the
owners of an otherwise-qualifying
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15:57 Feb 25, 2019
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building are not entitled to the housing
credit dollar amount that is allocated to
the building unless, among other
requirements, the allocation is pursuant
to a qualified allocation plan (QAP). A
QAP provides standards by which a
State or local housing credit agency or
its Authorized Delegate within the
meaning of § 1.42–5(f)(1) (Agency) is to
make these allocations. A QAP also
provides a procedure that an Agency
must follow in monitoring for
compliance with the provisions of
section 42. A plan fails to be a QAP
unless, in addition to other
requirements, it provides a procedure
that the agency (or an agent or other
private contractor of such agency) will
follow in monitoring for noncompliance
with the provisions of section 42 and in
notifying the Internal Revenue Service
of such noncompliance which such
agency becomes aware of and in
monitoring for noncompliance with
habitability standards through regular
site visits. (Section 42(m)(1)(B)(iii)).
Section 1.42–5 (the compliancemonitoring regulations) describes some
of the provisions that must be part of
any QAP. As part of its compliancemonitoring responsibilities, an Agency
must perform physical inspections and
low-income certification review.
The compliance-monitoring
regulations specifically provide that, for
each low-income housing project, an
Agency must conduct on-site
inspections of all buildings within its
jurisdiction by the end of the second
calendar year following the year the last
building in the project is placed in
service (the all-buildings requirement).
Prior to the issuance of the temporary
regulations, the regulations also
provided that, for at least 20 percent of
the project’s low-income units (the 20percent rule), the Agency must both
inspect the units and review the lowincome certifications, the
documentation supporting the
certifications, and the rent records for
the tenants in those same units (the
same-units requirement).
Under the temporary regulations,
guidance published in the Internal
Revenue Bulletin may provide
exceptions from, or alternative means of
satisfying, the inspection provisions of
§ 1.42–5(d). Rev. Proc. 2016–15 (2016–
11 I.R.B. 435) was published
concurrently with the temporary
regulations and provides that the U.S.
Housing and Urban Development (HUD)
Real Estate Assessment Center Protocol
(the REAC protocol) satisfies both
§ 1.42–5(d) and the physical inspection
requirements of § 1.42–5T(c)(2)(ii) and
(iii). The revenue procedure provides
that, in a low-income housing project,
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the minimum number of low-income
units that must undergo physical
inspection is the lesser of 20 percent of
the low-income units in the project,
rounded up to the nearest whole
number of units, or the number of lowincome units set forth in the LowIncome Housing Credit Minimum Unit
Sample Size Reference Chart in the
revenue procedure (the REAC numbers).
The revenue procedure also applies the
same rule to determine the minimum
number of units that must undergo lowincome certification review.
The temporary regulations also
required that Agencies continue to
comply with the all-buildings
requirement unless guidance published
in the Internal Revenue Bulletin
pursuant to § 1.42–5T(a)(iii) provides
otherwise. Rev. Proc. 2016–15 provides
for such an exception. Under Rev. Proc.
2016–15, the all-buildings requirement
does not apply to an Agency that uses
the REAC protocol to satisfy the
physical inspection requirement,
because the Treasury Department and
the IRS have determined that the REAC
protocol is an acceptable method for
satisfying both § 1.42–5(d) and the
physical inspection requirement of
§ 1.42–5T(c)(2)(ii) and (iii).
Finally, the temporary regulations
decoupled the physical inspection and
low-income certification review and
ended the same-units requirement.
Accordingly, an Agency is no longer
required to conduct a physical
inspection and low-income certification
review of the same unit. Because the
units no longer needed to be the same,
an Agency may choose a different
number of units for physical inspection
and for low-income certification review
provided the Agency chooses at least
the minimum number of low-income
units. Further, an Agency may choose to
conduct a physical inspection and lowincome certification review at different
times.
On the same day the temporary
regulations were published, the
Treasury Department and the IRS also
published a notice of proposed
rulemaking (REG–150349–12, 81 FR
9379) (the proposed regulations). The
text of the proposed regulations
incorporated by cross-reference the text
of the temporary regulations. The
Treasury Department and the IRS
received written comments on the
proposed regulations. No requests for a
public hearing were made, and no
public hearing was held.
The Treasury Department and the IRS
considered the written comments in
light of the questions presented in the
preamble of the temporary regulations.
The Treasury Department and the IRS
E:\FR\FM\26FER1.SGM
26FER1
]]>Agencies
[Federal Register Volume 84, Number 38 (Tuesday, February 26, 2019)]
[Rules and Regulations]
[Pages 6069-6076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03326]
=======================================================================
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 33
[Docket No. RM19-4-000; Order No. 855]
Mergers or Consolidations by a Public Utility
AGENCY: Federal Energy Regulatory Commission, Department of Energy.
ACTION: Final rule.
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SUMMARY: Pursuant to ``An Act to amend section 203 of the Federal Power
Act'' (Act), the Federal Energy Regulatory Commission (Commission)
revises its regulations relating to mergers or consolidations by a
public utility.
DATES: This rule will become effective March 27, 2019.
[[Page 6070]]
FOR FURTHER INFORMATION CONTACT: Eric Olesh (Technical Information),
Office of Energy Market Regulation, Federal Energy Regulatory
Commission, 888 First Street NE, Washington, DC 20426, (202) 502-6524,
Eric.Olesh@ferc.gov.
Regine Baus (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426, (202) 502-8757, Regine.Baus@ferc.gov.
SUPPLEMENTARY INFORMATION: In this final rule, the Commission amends
its regulations to establish that a public utility must seek
authorization under amended section 203(a)(1)(B) of the Federal Power
Act (FPA) to merge or consolidate, directly or indirectly, its
facilities subject to the jurisdiction of the Commission, or any part
thereof, with the facilities of any other person, or any part thereof,
that are subject to the jurisdiction of the Commission and have a value
in excess of $10 million, by any means whatsoever. In addition, as
required by the Act, the Commission establishes a requirement to submit
a notification filing for mergers or consolidations by a public utility
if the facilities to be acquired have a value in excess of $1 million
and such public utility is not required to secure Commission
authorization under amended section 203(a)(1)(B).
I. Background
1. On November 15, 2018, the Commission issued a notice of proposed
rulemaking (NOPR) \1\ implementing ``An Act to amend section 203 of the
Federal Power Act'' (Act), Public Law 115-247, 132 Stat. 3152. Section
1 of the Act amended section 203(a)(1)(B) to provide that no public
utility shall, without first having secured an order of the Commission
authorizing it to do so, merge or consolidate, directly or indirectly,
its facilities subject to the jurisdiction of the Commission, or any
part thereof, with the facilities of any other person, or any part
thereof, that are subject to the jurisdiction of the Commission and
have a value in excess of $10 million, by any means whatsoever. Section
3 of the Act provides that the amendment to section 203(a)(1)(B) shall
take effect 180 days after the date of enactment of the Act. The
primary effect of this amendment is to establish a $10 million
threshold on transactions that will be subject to the Commission's
review and authorization under section 203(a)(1)(B).
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\1\ Implementation of Amended Section 203(a)(1)(B) of the
Federal Power Act, Notice of Proposed Rulemaking, 83 FR 61338 (Nov.
29, 2018), 165 FERC ] 61,091 (2018).
---------------------------------------------------------------------------
2. In section 2 of the Act, Congress amended section 203(a) to add
section 203(a)(7) to require notification for certain transactions.
Section 203(a)(7) provides that, not later than 180 days after the date
of the enactment of section 203(a)(7), the Commission shall promulgate
a rule requiring any public utility that is seeking to merge or
consolidate, directly or indirectly, its facilities subject to the
jurisdiction of the Commission, or any part thereof, with those of any
other person, to notify the Commission of such transactions not later
than 30 days after the date on which the transaction is consummated if:
(1) The facilities, or any part thereof, to be acquired are of a value
in excess of $1 million; and (2) such public utility is not required to
secure a Commission order under amended section 203(a)(1)(B).
3. The Act also specifies that, not later than two years after the
date of enactment of this Act, the Commission shall submit to Congress
a report that assesses the effects of the amendment made by section 1
and that such report shall take into account any information collected
under section 203(a)(7). The Act also requires that the Commission
provide for public notice and comment with respect to the report.
II. Discussion
4. As discussed below, commenters generally support the proposals
in the NOPR, including the proposed changes to implement amended
section 203(a)(1)(B) and to establish a notification filing requirement
pursuant to section 203(a)(7). Certain commenters request clarification
of the procedures associated with the notification filing while others
recommend that the Commission require additional information about the
transactions subject to the notification filing. In light of amended
section 203(a)(1)(B), commenters also request clarification on the
Commission's jurisdiction over acquisitions of facilities from non-
public utilities. Lastly, commenters request that the Commission
continue to consider and act on other pending Commission rulemakings.
We address these issues below.
A. Section 203(a)(1)(B) Dollar Threshold
1. NOPR
5. In the NOPR, the Commission proposed two changes to part 33 of
its regulations to bring them into conformance with the Act. First, the
Commission proposed to revise Sec. 33.1(a)(1)(ii) to provide that part
33 will apply to any public utility seeking authorization under section
203 to merge or consolidate, directly or indirectly, its facilities
subject to the jurisdiction of the Commission, or any part thereof,
with the facilities of any other person, or any part thereof, that are
subject to the jurisdiction of the Commission and have a value in
excess of $10 million, by any means whatsoever.\2\
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\2\ Id. P 3. In the NOPR, the Commission stated that public
utilities required to maintain their books of account in accordance
with the Commission's Uniform System of Accounts under 18 CFR part
101 must continue to file with the Commission proposed journal
entries for the purchase or sale of electric plant, consistent with
the instructions to Account 102, Electric Plant Purchased and Sold.
The Commission explained that the dollar threshold proposed in the
NOPR does not apply to this accounting filing requirement. Id. at
n.1.
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2. Comments
6. American Public Power Association (APPA), Edison Electric
Institute (EEI), Idaho Power Company (Idaho Power), International
Transmission Company (ITC),\3\ National Rural Electric Cooperative
Association (NRECA), and Transmission Access Policy Study Group (TAPS)
support the proposed changes to part 33 of the Commission's regulations
to implement the $10 million dollar threshold in amended section
203(a)(1)(B). APPA, EEI, Idaho Power, NRECA, and TAPS add that the
change appropriately reflects the amended language of section 203, and
Idaho Power states that it will ensure the Commission focuses its time
and effort on larger, potentially more impactful transactions.\4\ EEI
and ITC explain that it will also reduce administrative burdens on
regulated entities and the Commission.\5\
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\3\ ITC filed comments on behalf of itself, Michigan Electric
Transmission Company, LLC, ITC Midwest LLC, and ITC Great Plains,
LLC.
\4\ See APPA Comments at 3; EEI Comments at 5; Idaho Power
Comments at 1; NRECA Comments at 3; TAPS Comments at 3.
\5\ See ITC Comments at 1; EEI Comments at 6.
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3. Commission Determination
7. We will revise the language in Sec. 33.1(a)(1)(ii) of the
Commission's regulations as proposed in the NOPR.
B. Notification Filing
1. NOPR
8. The Commission also proposed to add Sec. 33.12 to its
regulations to require public utilities whose transactions are subject
to section 203(a)(7) to file notification of such transactions with the
Commission. In particular, the Commission proposed that any public
utility that is seeking to merge or consolidate, directly or
indirectly, its facilities subject to the jurisdiction of the
Commission, or any part thereof, with those of any other person must
[[Page 6071]]
notify the Commission of such transaction not later than 30 days after
the date on which the transaction is consummated if: (1) The
facilities, or any part thereof, to be acquired are of a value in
excess of $1 million; and (2) such public utility is not required to
secure an order of the Commission under section 203(a)(1)(B).\6\
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\6\ NOPR, 165 FERC ] 61,091 at P 4.
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9. The Commission proposed that public utilities subject to section
203(a)(7) file the following information in this notification filing:
(1) The exact name of the public utility and its principal business
address; and (2) a narrative description of the transaction, including
the identity of all parties involved in the transaction and all
jurisdictional facilities associated with or affected by the
transaction, the location of such jurisdictional facilities involved in
the transaction, the date on which the transaction was consummated, the
consideration for the transaction, and the effect of the transaction on
the ownership and control of such jurisdictional facilities.\7\
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\7\ Id. P 5.
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10. The Commission proposed that the notification filings be filed
in the first docket for section 203 filings for the fiscal year (FY).
For example, all notification filings made in FY2019 would be filed in
Docket No. EC19-1-000; all notification filings made in FY2020 would be
filed in Docket No. EC20-1-000, etc.\8\
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\8\ Id. P 8.
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2. Comments
11. Most commenters support the proposed notification filing.\9\
NRECA explains that proposed Sec. 33.12(a) implementing the
notification requirement tracks the statutory language.\10\ EEI
supports the Commission's proposal regarding the notification
requirement for transactions valued between $1 million but at or below
$10 million, which it states is consistent with the legislative goals
of reducing regulatory burden and paperwork burdens while still
providing transparency.\11\ Idaho Power also supports the proposal that
there be no filing requirement for transactions involving facilities
with a value of less than $1 million, which it states will streamline
the process for utilities and reduce the oversight burden on the
Commission.\12\
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\9\ Idaho Power, EEI, APPA, ITC, and NRECA support the proposed
notification filing.
\10\ NRECA Comments at 4.
\11\ EEI Comments at 7.
\12\ Idaho Power Comments at 2.
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12. Some commenters request clarification on associated process and
service requirements and notice procedures. EEI requests clarification
on whether the notification filings can be filed in standard word-
document formats via eFiling. EEI and ITC also ask whether these
filings are purely informational. Specifically, they ask that the
Commission clarify that: (1) It will not notice these proceedings for
public comment; (2) other persons are not entitled to file responsive
comments; and (3) the Commission will not take any action on the
filings. EEI and ITC request clarification that persons are not
obligated to serve copies of these notification filings under 18 CFR
385.2010 (Rule 2010 of the Commission's Rules of Practice and
Procedure).\13\ In contrast, Public Citizen, Inc. requests that the
Commission clarify whether the proposed notification filing will be
subject to public notice so that the public can track transactions
valued between $1 million but at or below $10 million.\14\
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\13\ See EEI Comments at 7-8; ITC Comments at 3-4. Rule 2010
requires, among other things, that participants in a proceeding must
serve copies of their documents according to specified guidelines.
18 CFR 385.2010.
\14\ Public Citizen, Inc. Comments at 1-2.
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13. Others contend that the information proposed to be collected in
the notification filing is insufficient. American Antitrust Institute
(AAI) suggests that more information should be included in the
notification filing to account for (1) small, successive horizontal or
vertical acquisitions that can result in accretion of market power over
time (serial transactions); (2) acquisitions of partial ownership
shares in strategic assets that can raise competitive concerns due to
common and cross-ownership issues; and (3) strategic acquisitions. AAI
explains that, through serial transactions, a utility may enhance its
ability and incentive to engage in unilateral economic withholding of
physical capacity or to strategically operate its transmission or fuel
transportation assets to frustrate rivals' access to or foreclose them
from wholesale markets.\15\ In addition, AAI states that cross-
ownership can facilitate the anticompetitive exchange of information
and common ownership can dampen incentives to compete because more
vigorous competition is less profitable than ``cooperation'' for
investors with partial shares in each of those rivals. AAI explains
that, for example, private equity firms, which are numerous and active
in electricity markets, can control or influence managerial decision-
making even with a partial or minority ownership share in an asset, and
such influence may be obtained with an investment of less than $10
million.\16\ Further, AAI states that, because electricity markets are
susceptible to the exercise of market power due to the inelasticity of
demand and supply during times when capacity is constrained. AAI also
states that even small, strategic acquisitions can incentivize capacity
withholding.\17\
---------------------------------------------------------------------------
\15\ AAI Comments at 3-4.
\16\ Id. at 5-7.
\17\ Id. at 7-8.
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14. AAI therefore recommends that the notification filing include:
(1) The wholesale markets in which the jurisdictional facilities
associated with or affected by the transaction participate; (2) a
current, 10-year history of ownership changes involving the
jurisdictional facilities associated with the transaction; and (3) the
identity of all energy affiliates and energy subsidiaries owned by the
acquirer of the jurisdictional facilities that are the subject of the
transaction. AAI also encourages the Commission to undertake a
technical conference to review how the Commission will analyze these
transactions to monitor market changes, given that the Commission is
required to submit a report to Congress within two years regarding the
effects of amended section 203(a)(1)(B).\18\
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\18\ Id. at 9.
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15. APPA, NRECA, and TAPS also request that the notification filing
include a requirement to identify energy affiliates and energy
subsidiaries and to include pre- and post-transaction organizational
charts.\19\ APPA explains that the affiliate information is important
because it will allow the Commission and other stakeholders to monitor
whether a market participant is engaged in multiple accretive
transactions valued at less than $10 million, which APPA notes was a
concern of the Commission in a 2016 notice of inquiry on requirements
for section 203 transactions and section 205 market-based rate
applications.\20\ NRECA and TAPS explain that the information will be
useful because ownership structures and affiliate relationships are
growing more complex.\21\ APPA states that the affiliate information
and organizational charts will result in only an incremental burden to
paperwork, but that the
[[Page 6072]]
information will be useful to include in the Commission's report to
Congress.\22\ NRECA also requests that the Commission require
information on the wholesale and transmission tariffs on file with the
Commission that are related to the jurisdictional facilities involved
in the transaction, which it claims will be useful to monitor the rates
associated with those facilities.\23\ TAPS maintains that the proposed
notification filing includes little information compared to full
section 203 applications and, because Congress required these filings,
the information the Commission receives must be sufficient for consumer
protection purposes and to produce a meaningful report for
Congress.\24\
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\19\ See APPA Comments at 3-4; NRECA Comments at 5-6; TAPS
Comments at 4.
\20\ APPA Comments at 4-5 (citing Modifications to Commission
Requirements for Review of Transactions under Section 203 of the
Federal Power Act and Market-Based Rate Applications under Section
205 of the Federal Power Act, Notice of Inquiry, 81 FR 66649 (Sept.
28, 2016), 156 FERC ] 61,214 (2016) (Market Power NOI)).
\21\ See NRECA Comments at 5-6; TAPS Comments at 5.
\22\ APPA Comments at 5-6.
\23\ NRECA Comments at 6-7.
\24\ TAPS Comments at 4.
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3. Commission Determination
16. We will add Sec. 33.12 to the Commission's regulations as
proposed in the NOPR to require that public utilities submit a
notification filing for transactions subject to section 203(a)(7). In
response to the comments, we first clarify filing requirements
associated with the notification filings. Each notification filing
should be filed in the first docket for section 203 filings of the FY.
For example, all notification filings made in FY2019 would be filed in
the Docket No. EC19-1-000; all notification filings for FY2020 would be
filed in Docket No. EC20-1-000, etc. The notification filings may be
filed in any format accepted in eLibrary as listed on the Commission's
website.\25\ In addition, we clarify that the notification filings are
intended to be informational. The Commission will not notice the
notification filings submitted into the placeholder docket (i.e.,
Docket No. EC19-1-000, etc.) and will not accept responsive comments
from any persons on the notification filings. The Commission will not
act on the notification filings that it receives. Because the
notification filings are informational in nature, there is no
requirement to serve copies of the notification filings under Rule 2010
of the Commission's Rules of Practice and Procedure.
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\25\ FERC, Acceptable File Formats, https://www.ferc.gov/docs-filing/elibrary/accept-file-formats.asp (last updated Nov. 16,
2015).
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17. With one exception, we decline to require additional
information as requested by certain commenters. Section 203(a)(7)
provides the Commission with limited authority to collect information
in the notification filings about transactions for which prior
Commission authorization under section 203(a)(1) is no longer required.
Because the Commission has limited authority to review these
transactions under section 203, we will not hold a technical conference
on how the Commission will analyze these transactions. Interested
persons may track these transactions as they are filed in the
placeholder dockets described above which provide a readily searchable
format for doing so.
18. However, AAI, APPA, NRECA, and TAPS raise a compelling argument
regarding the transparency of information as to energy affiliates.
Therefore, in addition to the information that the NOPR proposed to be
collected, we will require notification filings to contain a statement
regarding whether the parties to the transaction are affiliates. This
will allow additional transparency as to whether these transactions are
negotiated at arm's length and whether these transactions could have an
effect on a public utility's rates. We will add a requirement for such
a statement in the description of the transaction in Sec.
33.12(b)(2)(i).
19. As to the Commission's report to Congress that assesses the
effects of amended section 203(a)(1)(B), the Commission will provide
for public notice and comments on the report prior to submitting it to
Congress.
C. Clarification on Jurisdiction of the Commission Under Section
203(a)(1)(B)
1. NOPR
20. In the NOPR, the Commission clarified that, except for mergers
or consolidations that are valued at $10 million or less, the
Commission will not change its interpretation of the transactions that
are subject to the jurisdiction of the Commission under the ``merge or
consolidate'' clause of section 203(a)(1)(B). The Commission further
explained that it interprets the amendment by Congress to section
203(a)(1)(B) as establishing a $10 million threshold, but not removing
the Commission's jurisdiction to review transactions with a higher
value that involve a public utility's acquisition of facilities from
non-public utilities \26\ if those facilities will be subject to the
Commission's jurisdiction after the transaction is consummated.\27\
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\26\ Non-public utilities refers to entities described in
section 201(f) of the FPA. 16 U.S.C. 824(f).
\27\ See Duke Power Co. v. FPC, 401 F.2d 930, 941 (DC Cir. 1968)
(Duke Power Co.) (``We have no doubt that any acquisition from [a
non-public utility] by a public utility of what would normally be a
jurisdictional facility, such as a transmission line conducting
interstate energy, would fall within the purview of the clause under
consideration.'').
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2. Comments
21. Two commenters, EEI and ITC, take issue with the Commission's
clarification on its jurisdiction. Specifically, EEI claims that the
amended language of section 203(a)(1)(B) states that Commission
approval is required only if the facilities being acquired by the
public utility are subject to the Commission's jurisdiction, which is
``plainly read to mean that the facilities are jurisdictional before
consummation of the proposed transaction.'' \28\ EEI states that the
Commission should recognize that, as amended, the language of section
203(a)(1)(B) has materially changed from the language that preceded the
amendment. As a result, EEI explains that the Duke Power Co. v. FPC
case cited by the Commission does not squarely address the question
raised by the amendment. EEI requests that, for regulatory certainty,
the Commission reconsider and clarify its interpretation of the types
of facilities to which amended section 203(a)(1)(B) will apply.\29\
---------------------------------------------------------------------------
\28\ EEI Comments at 9.
\29\ Id. at 8-9.
---------------------------------------------------------------------------
22. Similarly, ITC argues that the plain language of amended
section 203(a)(1)(B) does not grant the Commission authority to review
transactions that involve a public utility's acquisition of facilities
from non-public utilities. ITC asserts that, under amended section
203(a)(1)(B), a public utility must obtain Commission authorization
only when proposing to merge or consolidate its own Commission-
jurisdictional facilities with another person's Commission-
jurisdictional facilities. ITC contends that if the facilities would be
Commission-jurisdictional if owned by a jurisdictional entity, or will
become so after the transaction is approved by the Commission and
consummated, is immaterial because the statutory language requires that
the facilities ``are'' within the jurisdiction of the Commission, not
that they will be at some future time.\30\ ITC also maintains that the
Commission's reliance on Duke Power Co. is unavailing because the case
involved the interpretation of older, no-longer effective section
203(a)(1)(B) language, which conferred upon the Commission authority to
review a public utility's proposed merger or consolidation of its own
facilities with the facilities of ``any other person.'' \31\ In
addition, ITC claims that the court's observation about the
Commission's
[[Page 6073]]
jurisdiction in that case is dicta because the case concerned whether a
public utility's acquisition of unambiguously non-jurisdictional
distribution assets was within section 203(a)(1)(B)'s ambit.\32\
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\30\ ITC Comments at 2-3.
\31\ Id. at 3 (citing Duke Power Co., 401 F.2d at 933).
\32\ Id.
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3. Commission Determination
23. We disagree with EEI's and ITC's interpretation of the language
of amended section 203(a)(1)(B). Rather, we interpret the new statutory
language as codifying the D.C. Circuit's holding in Duke Power Co. that
the Commission has no jurisdiction over the acquisition of distribution
or other facilities that are non-jurisdictional even when owned by a
public utility. In amended section 203(a)(1)(B), the phrase ``subject
to the jurisdiction of the Commission'' was used twice.\33\ First, the
phrase was used to describe the facilities of a ``public utility'' that
must be involved in a transaction in order for the Commission to have
jurisdiction. By adding ``subject to the jurisdiction of the
Commission'' to describe the facilities of a ``public utility,'' we
conclude that Congress intended to exclude facilities, such as
distribution facilities, that are not otherwise subject to the
jurisdiction of the Commission when owned by a public utility. When
Congress again uses the phrase ``subject to the jurisdiction of the
Commission'' to modify the facilities of a ``person,'' we interpret the
phrase as having the same meaning, rather than removing the
Commission's jurisdiction over a public utility's acquisition of
transmission facilities previously owned by a non-public utility.
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\33\ Amended section 203(a)(1)(B) provides that no public
utility shall, without first having secured an order of the
Commission authorizing it to do so, ``merge or consolidate, directly
or indirectly, its facilities subject to the jurisdiction of the
Commission, or any part thereof, with the facilities of any other
person, or any part thereof, that are subject to the jurisdiction of
the Commission and have a value in excess of $10 million, by any
means whatsoever.'' 16 U.S.C. 824b(a)(1)(B), amended by ``An Act to
amend section 203 of the Federal Power Act,'' Public Law 115-247,
132 Stat. 3152 (2018) (emphasis added).
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24. That Congress did not intend to limit the Commission's
jurisdiction to the acquisition of transmission facilities subject to
the Commission's jurisdiction prior to the transaction is further
supported by the fact that Congress retained the language requiring
that the facilities being acquired be owned by a ``person,'' instead of
changing the language to require that the facilities be owned by a
``public utility.'' Under section 201(e), a ``public utility'' is ``any
person who owns or operates facilities subject to the jurisdiction of
the Commission under this part,'' \34\ which means that, if facilities
being acquired are subject to the Commission's jurisdiction prior to
the transaction, their owner by definition is a public utility. The use
of the word ``person,'' and not ``public utility,'' when describing the
facilities to be acquired suggests that Congress intended the
Commission to have jurisdiction over the acquisition of facilities
owned both by public utilities and non-public utilities, provided that
those facilities are subject to the Commission's jurisdiction after
their acquisition by the public utility.
---------------------------------------------------------------------------
\34\ 16 U.S.C. 824(e).
---------------------------------------------------------------------------
25. Our interpretation is reinforced by the legislative history of
the Act, which indicates that Congress intended amended section
203(a)(1)(B) only to establish a $10 million threshold for transactions
subject to the Commission's jurisdiction and not to alter any other
aspect of the Commission's jurisdiction over transactions. The House
Report described the purpose of the amendment as ``amend[ing] the
Federal Power Act to exempt facilities of a value of $10,000,000 or
less from this prohibition.'' \35\ The Senate Report similarly
describes the purpose of the amendment as to: ``reduce the compliance
burden of certain transactions valued under $10 million, including
significant legal and regulatory costs which are collected from
customers.'' \36\ Notably, as part of its background discussion, the
Senate Report also includes a discussion of the Duke Power Co. decision
and its holding regarding the Commission's jurisdiction to approve
transactions, but that report does not assert that the decision was
erroneous or otherwise suggest that the amendment was intended to
reverse the Commission's longstanding reliance on Duke Power Co. to
assert jurisdiction over a public utility's acquisition of transmission
facilities from a non-public utility.\37\ That neither the House Report
nor the Senate Report suggests that the amendment was intended to
remove the Commission's jurisdiction over the acquisition of facilities
from non-public utilities also supports the conclusion that the
amendment should not be read to have such an effect.
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\35\ H.R. Rep. No. 115-167, at 1 (2018).
\36\ S. Rep. No. 115-253, at 2 (2018).
\37\ Id. at 3.
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D. Other Pending Proceedings
1. Comments
26. AAI requests that the Commission carefully consider whether the
revised regulations for small transactions will have an effect on the
questions posed in outstanding rulemakings. AAI argues, among other
things, that if small transactions are excluded from Commission review
under section 203(a)(1)(B), the Commission should maintain close
oversight over the workings of regional transmission organization
markets and not relieve sellers with market-based rate authority from
filing a competitive analysis with the Commission, as was proposed in
the Notice of Proposed Rulemaking in Refinements to Horizontal Market
Power Analysis for Sellers in Certain Regional Transmission
Organization and Independent System Operator Markets.\38\ AAI further
notes that the Commission has not acted on two critical rulemakings and
requests that the Commission make these a high priority: Data
Collection for Analytics and Surveillance and Market-Based Rate
Purposes in Docket No. RM16-17-000 (Data Collection NOPR) \39\ and
Modifications to Commission Requirements for Review of Transactions
under Section 203 of the Federal Power Act and Market-Based Rate
Applications under Section 205 of the Federal Power Act in RM16-21-
000.\40\
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\38\ AAI Comments at 9-10 (citing Refinements to Horizontal
Market Power Analysis for Sellers in Certain Regional Transmission
Organization and Independent System Operator Markets, Notice of
Proposed Rulemaking, 165 FERC ] 61,268 (2018)).
\39\ Id. at 10.
\40\ Id. (citing Market Power NOI, 81 FR 66649, 156 FERC ]
61,214).
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27. APPA and TAPS request that, if the Commission does not expand
the information to be collected in the notification filing, it should
act on the Data Collection NOPR and proceed with the relational
database proposed therein.\41\
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\41\ See APPA Comments at 6-7; TAPS Comments at 5-6.
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2. Commission Determination
28. We acknowledge commenters' support and requests for action on
other pending rulemaking proceedings. However, we emphasize that this
proceeding is limited in scope and only implements the changes
specified in amended section 203. We will not address the status of
other proceedings here. In addition, as explained above, we find that
the information we will collect under Sec. 33.12 is sufficient to
satisfy the directive in the Act that the Commission establish a
notification requirement.
III. Information Collection Statement
29. The Paperwork Reduction Act (PRA) \42\ requires each federal
agency to
[[Page 6074]]
seek and obtain Office of Management and Budget (OMB) approval before
undertaking a collection of information directed to 10 or more persons
or contained in a rule of general applicability. OMB's regulations \43\
require approval of certain information collection requirements imposed
by agency rules. Upon approval of a collection of information, OMB will
assign an OMB control number and an expiration date. Respondents
subject to the filing requirements of an agency rule will not be
penalized for failing to respond to the collection of information
unless the collection of information displays a valid OMB control
number.
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\42\ 44 U.S.C. 3501-3520.
\43\ 5 CFR part 1320.
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30. The revisions to the Commission's regulations required in this
final rule will bring the regulations in conformance with the
amendments to section 203 enacted by Congress. The first revision would
implement Congress' amendment to section 203(a)(1)(B), which provides
that a public utility must seek authorization to merge or consolidate,
directly or indirectly, its facilities subject to the jurisdiction of
the Commission, or any part thereof, with the facilities of any other
person, or any part thereof, that are subject to the jurisdiction of
the Commission and have a value in excess of $10 million, by any means
whatsoever. In addition, this final rule adds Sec. 33.12 to the
Commission's regulations to implement the directive in new section
203(a)(7) that the Commission require a notification filing for mergers
or consolidations by a public utility if the facilities to be acquired
have a value in excess of $1 million and such public utility is not
required to secure Commission authorization under amended section
203(a)(1)(B). We anticipate that the revisions to the Commission's
regulations, once effective, would reduce regulatory burdens. The
Commission will submit the proposed reporting requirements to OMB for
its review and approval under section 3507(d) of the PRA.\44\
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\44\ 44 U.S.C. 3507(d).
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31. In the NOPR, the Commission solicited comments on the
Commission's need for this information, whether the information will
have practical utility, the accuracy of the burden estimates, ways to
enhance the quality, utility, and clarity of the information to be
collected or retained, and any suggested methods for minimizing
respondents' burden, including the use of automated information
techniques. Nonetheless, while we expect that the regulatory revisions
discussed herein will reduce the burdens on affected entities, we
solicit public comment regarding the accuracy of the burden and cost
estimates below.
32. Internal Review: The Commission has reviewed the changes and
has determined that such changes are necessary.
33. Burden Estimate \45\: The estimated burden and cost for the
requirements contained in this final rule follow.
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\45\ ``Burden'' is the total time, effort, or financial
resources expended by persons to generate, maintain, retain, or
disclose or provide information to or for a Federal agency. For
further explanation of what is included in the information
collection burden, refer to 5 CFR 1320.3.
\46\ Commission staff estimates that approximately 26 section
203 filings will change from full section 203 filings to the
notification filing described above and will take respondents one
burden hour to complete. The number of respondents and responses is
based on Commission staff's estimate that 13 percent of the
approximately 200 section 203 filings received will be affected by
the changes herein, which represents a significant reduction in
burden hours.
FERC-519, as Modified by This Final Rule in Docket No. RM19-4-000
----------------------------------------------------------------------------------------------------------------
Number and Number of Average burden Total burden
Requirements type of responses per Total number hours & cost per hours & total
respondents respondent of responses response cost
(1) (2) (1) * (2) = (4)............. (3) * (4)
(3)
----------------------------------------------------------------------------------------------------------------
FERC-519 (FPA Section 203 26 1 26 1 hr.; $79.00... 26 hrs.;
Filings) \46\. $2,054.00.
----------------------------------------------------------------------------------------------------------------
Title: FERC-519, Application under Federal Power Act Section 203.
OMB Control No.: 1902-0082.
Action: Amendment to 18 CFR part 33.
Respondents: Public utilities subject to Federal Power Act.
Abstract: Pursuant to ``An Act to amend section 203 of the Federal
Power Act'', the Commission will revise part 33 of its regulations to
establish that mergers or consolidations by a public utility of
facilities subject to the jurisdiction of the Commission that have a
value in excess of $10 million are subject to Commission authorization.
In addition, the Commission will add Sec. 33.12 to its regulations to
establish a notification requirement for mergers or consolidations by a
public utility if the facilities to be acquired have a value in excess
of $1 million and such public utility is not required to secure
Commission authorization under amended section 203(a)(1)(B).
Overview of the Data Collection: The FERC-519, ``Application under
Federal Power Act section 203,'' is necessary to enable the Commission
to carry out its responsibilities in implementing the statutory
provisions of section 203. Section 203 requires a public utility to
seek Commission authorization of transactions in which a public utility
disposes of jurisdictional facilities, merges such facilities with the
facilities owned by another person, or acquires the securities of
another public utility. The Commission must authorize these
transactions if it finds that they will be consistent with the public
interest.
34. By entering into a certain transaction, a public utility may
gain an increased incentive and ability to exercise market power that
can be to the detriment of effective competition and customers. As a
result, the Commission must review all jurisdictional dispositions,
mergers, and acquisitions to evaluate that transaction's effect on
competition. The Commission also evaluates whether such transactions
have an effect on rates and regulation and whether they result in
cross-subsidization. The Commission implements the filing requirements
associated with this review in the Code of Federal Regulations (CFR)
under 18 CFR part 33.
35. This final rule is limited to implementing amended FPA section
203(a)(1)(B) and proposing a notification requirement for certain
transactions, both of which together represent a reduction in the
filing requirements for public utilities under section 203. The
Commission implements these changes by mandate of Congress.
[[Page 6075]]
36. Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street NE, Washington, DC 20426 [Attention: Ellen
Brown, Office of the Executive Director] Email: DataClearance@ferc.gov,
Phone: (202) 502-8663; fax: (202) 273-0873.
37. Comments concerning the collection of information and the
associated burden estimate(s) may also be sent to: Office of
Information and Regulatory Affairs, Office of Management and Budget,
725 17th Street NW, Washington, DC 20503 [Attention: Desk Officer for
the Federal Energy Regulatory Commission]. Due to security concerns,
comments should be sent electronically to the following email address:
oira_submission@omb.eop.gov. Please refer to FERC-519, OMB Control No.
1902-0082 in your submission.
IV. Environmental Analysis
38. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\47\ We
conclude that neither an Environmental Assessment nor an Environmental
Impact Statement is required for this final rule under Sec. 380.4(a)
of the Commission's regulations, which provides a categorical exemption
for ``approval of actions under section[] . . . 203 . . . of the
Federal Power Act relating to . . . acquisition or disposition of
property . . . .'' \48\
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\47\ Regulations Implementing the National Environmental Policy
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs.
] 30,783 (1987).
\48\ 18 CFR 380.4(a)(16).
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V. Regulatory Flexibility Act
39. The Regulatory Flexibility Act of 1980 (RFA) \49\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
The Small Business Administration's (SBA) Office of Size Standards
develops the numerical definition of a small entity. These standards
are provided in the SBA regulations at 13 CFR 121.201.\50\ The RFA does
not mandate any particular outcome in a rulemaking. It only requires
consideration of alternatives that are less burdensome to small
entities and an agency explanation of why alternatives were rejected.
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\49\ 5 U.S.C. 601-612.
\50\ 13 CFR 121.201. See also U.S. Small Business
Administration, Table of Small Business Size Standards Matched to
North American Industry Classification System Codes (effective Feb.
26, 2016), https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.
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40. The SBA size standards for electric utilities is based on the
number of employees, including affiliates. Under SBA's standards, some
transmission owners will fall under the following category and
associated size threshold: Electric bulk power transmission and
control, at 500 employees.\51\
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\51\ 13 CFR 121.201, Sector 22 (Utilities), NAICS code 221121
(Electric Bulk Power Transmission and Control).
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41. The Commission estimates that 26 respondents could file
notification filings over the course of a year, with an estimated
burden of 1 hour per response, at an estimated cost of $79.00 per
respondent. The Commission believes that none of the filers will be
small entities. Therefore, the Commission certifies that this final
rule will not have a significant economic impact on small entities.
VI. Document Availability
42. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through FERC's Home Page (https://www.ferc.gov) and in FERC's
Public Reference Room during normal business hours (8:30 a.m. to 5:00
p.m. Eastern time) at 888 First Street NE, Room 2A, Washington DC
20426.
43. From FERC's Home Page on the internet, this information is
available on eLibrary. The full text of this document is available on
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or
downloading. To access this document in eLibrary, type the docket
number excluding the last three digits of this document in the docket
number field.
44. User assistance is available for eLibrary and the FERC's
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or email at
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at
public.referenceroom@ferc.gov.
VII. Effective Date and Congressional Notification
45. These regulations are effective March 27, 2019. The Commission
has determined that this rule is not a ``major rule'' as defined in
section 351 of the Small Business Regulatory Enforcement Fairness Act
of 1996.
List of Subjects in 18 CFR Part 33
Electric utilities, Reporting and recordkeeping requirements,
Securities.
By the Commission.
Issued: February 21, 2019.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
In consideration of the foregoing, the Commission amends part 33,
chapter I, title 18, Code of Federal Regulations, as follows:
PART 33--APPLICATIONS UNDER FEDERAL POWER ACT SECTION 203
0
1. The authority citation for part 33 continues to read as follows:
Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.
0
2. Amend Sec. 33.1 by revising paragraph (a)(1)(ii) to read as
follows:
Sec. 33.1 Applicability, definitions, and blanket authorizations.
(a) * * *
(1) * * *
(ii) Merge or consolidate, directly or indirectly, its facilities
subject to the jurisdiction of the Commission, or any part thereof,
with the facilities of any other person, or any part thereof, that are
subject to the jurisdiction of the Commission and have a value in
excess of $10 million, by any means whatsoever;
* * * * *
0
3. Add Sec. 33.12 to read as follows:
Sec. 33.12 Notification requirement for certain transactions.
(a) Any public utility that is seeking to merge or consolidate,
directly or indirectly, its facilities subject to the jurisdiction of
the Commission, or any part thereof, with those of any other person,
shall notify the Commission of such transaction not later than 30 days
after the date on which the transaction is consummated if:
(1) The facilities, or any part thereof, to be acquired are of a
value in excess of $1 million; and
(2) Such public utility is not required to secure an order of the
Commission under section 203(a)(1)(B) of the Federal Power Act.
(b) Such notification shall consist of the following information:
(1) The exact name of the public utility and its principal business
address; and
(2) A narrative description of the transaction, including:
(i) The identity of all parties involved in the transaction,
whether such parties are affiliates, and all jurisdictional facilities
associated with or affected by the transaction;
[[Page 6076]]
(ii) The location of such jurisdictional facilities involved in the
transaction;
(iii) The date on which the transaction was consummated;
(iv) The consideration for the transaction; and
(v) The effect of the transaction on the ownership and control of
such jurisdictional facilities.
[FR Doc. 2019-03326 Filed 2-25-19; 8:45 am]
BILLING CODE 6717-01-P
