Interlocking Officers and Directors; Requirements for Applicants and Holders, 7274-7283 [2019-03419]
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Federal Register / Vol. 84, No. 42 / Monday, March 4, 2019 / Rules and Regulations
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BILLING CODE 1301–00–D
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Parts 45 and 46
[Docket No. RM18–15–000; Order No. 856]
Interlocking Officers and Directors;
Requirements for Applicants and
Holders
Federal Energy Regulatory
Commission, DOE.
ACTION: Final rule.
AGENCY:
In this final rule, the Federal
Energy Regulatory Commission
(Commission) amends its regulations
related to interlocking officers and
directors to clarify and update the
requirements for both applicants and
holders.
DATES: This rule will become effective
May 3, 2019.
FOR FURTHER INFORMATION CONTACT:
Lindsay Orphanides (Technical
Information), Office of Energy Market
Regulation, Federal Energy Regulatory
Commission, 888 First Street NE,
Washington, DC 20426, (202) 502–8372,
lindsay.orphanides@ferc.gov.
Mary Ellen Stefanou (Legal
Information), Office of the General
Counsel, Federal Energy Regulatory
Commission, 888 First Street NE,
Washington, DC 20426, (202) 502–8989,
mary.stefanou@ferc.gov.
SUMMARY:
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SUPPLEMENTARY INFORMATION:
I. Background
1. On July 19, 2018, the Commission
issued a Notice of Proposed Rulemaking
(NOPR),1 proposing to revise parts 45
and 46 of the Commission’s regulations
related to interlocking officers and
directors to clarify and update the
requirements for both applicants and
holders. The Commission proposed to:
(1) Update its regulations to reflect
statutory changes to the circumstances
in which an applicant who would
otherwise require Commission
authorization to hold an interlocking
position need not do so; (2) revise its
regulations to clarify its position on latefiled applications and informational
reports; (3) revise its regulations to
clarify that an interlock holder is not
required to file a notice of change when
merely changing positions within a
holding company; (4) revise its
regulations to state that applicants do
not need to list in their applications
public utilities that do not have officers
or directors; (5) revise its regulations
with regard to public utilities owned by
a natural person; and (6) update its
regulations to remove § 46.2(b), which
contains definitions and phrases now
rendered obsolete.
2. Comments were filed by Edison
Electric Institute (EEI), NRG Power
Marketing LLC (NRG), Just Energy (U.S.)
Corp. (Just Energy), Electric Power
Supply Association (EPSA), National
Rural Electric Cooperative Association
(NRECA), National Grid USA (National
Grid), and Golden Spread Electric
Cooperative, Inc. (Golden Spread). All
comments were generally supportive of
the proposed changes. Some
commenters requested clarification on
certain proposed changes, while others
proposed additional changes. We
address these issues below.
II. Discussion
A. No Need for Commission Approval of
Interlocking Director and Officer
Positions in Certain Circumstances
1. Proposal
3. Section 45.2 of the Commission’s
regulations describes the types of
interlocking positions that require
Commission authorization, including
those between a public utility and
entities authorized by law to underwrite
or participate in the marketing of public
utility securities.2 However, in 1999,
Congress amended Federal Power Act
1 Revisions to Parts 45 and 46 of the
Commission’s Regulations, Notice of Proposed
Rulemaking, 83 FR 37450 (Aug. 1, 2018), 164 FERC
¶ 61,032 (2018) (NOPR).
2 18 CFR 45.2(b)(2).
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(FPA) section 305(b)(2) to provide that
an applicant for certain interlocking
positions is no longer required to obtain
Commission authorization to hold such
positions.3 In the NOPR, the
Commission proposed to revise § 45.2 of
its regulations to add that an applicant
for an interlocking position between a
public utility and a ‘‘bank, trust
company, banking association, or firm
that is authorized by law to underwrite
or participate in the marketing of public
utility securities,’’ 4 does not need
Commission authorization when:
• The person does not participate in
any deliberations or decisions of the
public utility regarding the selection of
the bank, trust company, banking
association, or firm to underwrite or
participate in the marketing of securities
of the public utility, if the person serves
as an officer or director of a bank, trust
company, banking association, or firm
that is under consideration in the
deliberation process;
• the bank, trust company, banking
association, or firm of which the person
is an officer or director does not engage
in the underwriting of, or participate in
the marketing of, securities of the public
utility of which the person holds the
position of officer or director;
• the public utility for which he/she
serves or proposes to serve as an officer
or director selects underwriters by
competitive procedures; or
• the issuance of securities of the
public utility for which the person
serves or proposes to serve as an officer
or director has been approved by all
Federal and State regulatory agencies
having jurisdiction over the issuance.5
2. Comments
4. EEI, Golden Spread, Just Energy,
and NRECA all support the
Commission’s proposed revision to
§ 45.2 of its regulations.
5. Golden Spread states in its
comments that it is unclear from the
NOPR if the Commission will require
continued reporting of interlocking
positions between a public utility and a
bank, trust company, banking
association, or firm that is authorized by
law to underwrite or participate in the
marketing of public utility securities in
Form No. 561. If not, Golden Spread
states that the Commission may wish to
cross reference to § 45.2 or clarify § 46.5
of its regulations.6
3 See Public Law 106–102, sec. 737, 113 Stat.
1338, 1479 (1999).
4 18 CFR 45.2(b)(2).
5 NOPR, 164 FERC ¶ 61,032 at P 6. See also 16
U.S.C. 825d(b)(2).
6 Golden Spread Comments at 3.
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3. Commission Determination
6. We will revise the language in
§ 45.2 as proposed in the NOPR, which
brings the Commission’s regulations
into conformance with the changes
made by Congress to FPA section
305(b)(2) in 1999.
7. In response to Golden Spread’s
comments, we clarify that the
Commission will continue to require the
reporting of interlocking positions
between a public utility and a bank,
trust company, banking association, or
firm that is authorized by law to
underwrite or participate in the
marketing of public utility securities in
Form No. 561 under § 46.5 of the
Commission’s regulations as the
statutory directive to report such
information has not changed.7
B. Flexibility To Consider Late-Filed
Applications and Informational Reports
1. Proposal
8. The Commission proposed in the
NOPR to revise § 45.3(a) of its
regulations, which currently states that
‘‘late-filed applications will be denied’’
and § 45.9(b), which currently states
that ‘‘[f]ailure to timely file the
informational report will constitute a
failure to satisfy this condition and will
constitute automatic denial.’’ The
Commission stated that it expects its
regulations to be followed but
recognizes that good faith errors and
oversights may occasionally result in
the inadvertent violation of the timing
of FPA section 305(b)’s filing
requirements. In addition, the
Commission stated that it expects
applicants to be attentive to their
obligation to timely file for the required
authorizations and make every effort to
ensure they act in accordance with the
statutory directives in FPA section
305(b). Further, the Commission stated
that, if an error or oversight occurs, it
expects that those errors and oversights
will be expeditiously identified and
rectified, and applications to hold
interlocking director positions be
promptly filed. Therefore, the
Commission proposed to delete the
above-quoted language, and replace it
with language providing for
consideration of late-filed applications
for interlocking positions on a case-bycase basis.8
2. Comments
9. EEI, Golden Spread, Just Energy,
National Grid, NRECA, and NRG all
support the Commission’s proposed
changes to §§ 45.3(a) and 45.9(b). EEI
7 See
16 U.S.C. 825d(c)(1), (2)(a).
164 FERC ¶ 61,032 at PP 7–9.
8 NOPR,
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takes issue with the Commission’s
statement in the NOPR preamble that,
‘‘[i]n cases where occasional errors and
oversights occur, the Commission
expects that those errors and oversights
will be expeditiously identified and
rectified, and applications to hold
interlocking director positions promptly
filed.’’ 9 To avoid ‘‘misinterpretation,’’
EEI encourages the Commission to
restate the quoted provision to say:
‘‘When errors and oversights are
discovered, the Commission expects
that those errors and oversights will be
expeditiously rectified, and if required
applications will be promptly filed.’’ 10
3. Commission Determination
10. We adopt the changes to §§ 45.3(a)
and 45.9(b) of the Commission’s
regulations proposed in the NOPR that
will allow for consideration of late-filed
applications for interlocking positions
on a case-by-case basis.11 We do not
think that it is in the public interest to
deny otherwise-qualified applicants’
late-filed applications and informational
filings made under these regulations
when the late filing is due solely to good
faith errors and oversights, and the error
or oversight is promptly identified and
expeditiously rectified.
11. We decline to amend our
statement in the NOPR preamble to state
that the Commission’s expectation is
that errors and oversights be
expeditiously rectified ‘‘when errors
and oversights are discovered,’’ as
suggested by EEI. We expect that errors
and oversights be both promptly
identified and expeditiously rectified,
and we reiterate our expectation—
grounded in the statute 12—that
applicants be attentive to their
obligation to timely file for the required
authorizations and thus make every
effort to ensure that they act in
accordance with the statutory directives
in FPA section 305(b). The Commission
would look unfavorably on FPA section
305(b) applications where an applicant
has not been properly attentive to his/
her obligation to file for the required
authorization.
9 EEI Comments at 4 (quoting NOPR, 164 FERC
¶ 61,032 at P 9).
10 Id.
11 We note that the public utilities whose officers
and directors are subject to the statutory directive
in section 305(b) to file, as regulated entities
themselves subject to the requirements of the FPA,
and should make every effort to ensure that their
officers and directors, in turn, act in accordance
with the statutory directives in FPA section 305(b).
12 16 U.S.C. 825d(b)(1).
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C. Supplemental Applications or
Notices of Change for Positions PreAuthorized Under § 45.9
1. Proposal
12. The Commission proposed in the
NOPR to revise §§ 45.4 and 45.5 of its
regulations to clarify that supplemental
applications and notices of change need
not be filed in the case of a person
already authorized to hold interlocks
identified in § 45.9(a) who may assume
new or different positions that are still
among those identified by § 45.9(a). The
Commission stated that such changes in
positions among related public utilities
are already reported in the annual Form
No. 561s, and separate filings under
§ 45.4 or § 45.5 are unnecessary. The
NOPR specifically stated that the holder
of interlocking officer and director
positions must file a notice of change
when he/she no longer holds any
interlocking positions within the scope
of the statute and regulations because no
longer holding any interlocking
positions would constitute a ‘‘material
or substantial change.’’ 13
2. Comments
13. EEI, Golden Spread, Just Energy,
National Grid, NRECA, and NRG all
support the Commission’s proposed
revisions to §§ 45.4 and 45.5.
14. EEI asks the Commission to add
two points to its proposal to revise
§§ 45.4 and 45.5. First, EEI asks for
clarification that the Commission
‘‘means a notice is required only when
the officer or director resigns or
withdraws from all pre-authorized
interlocking officer and director
positions, not just from one such
position, as that would comport with
the logic of the changes the Commission
is adopting as to subsection 45.5(b).’’ 14
EEI asserts that ‘‘the Commission should
specify that public utility officers and
directors who are pre-approved under
the holding company provisions at
subsection 45.9(a) do not need to file
‘notice of change’ reports when they
resign, but rather can rely on updates to
their annual filings by removing the
companies from which they have
resigned during the previous year.’’ 15
15. Second, EEI also asks the
Commission to specify that § 45.9(c)
does not require an additional
informational report in the case of new
or different interlocking positions
within a holding company system for an
individual that has already filed a § 45.9
informational report.16 EEI asserts that
13 NOPR,
164 FERC ¶ 61,032 at P 10.
Comments at 7.
15 Id. at 9–10.
16 Id. at 7.
existing public utility officers and
directors pre-approved under § 45.9(a)
are not applicants as that term is used
in § 45.5; therefore, they are not
required to file applications at the
Commission, only informational
reports.17
16. Golden Spread asks the
Commission to consider making an
additional edit to § 45.5(b) to change the
requirement for filing a notice of change
(e.g., for a withdrawal, or failure of
reelection or appointment) from a
‘‘within 30 days’’ requirement to a
‘‘within 60 days’’ requirement, stating
that even when good faith efforts are
made to learn of changes from affected
officers and directors, it can take beyond
a full month to learn of changes.18
17. Just Energy recommends the
Commission adopt a number of
clarifying edits to §§ 45.4(c) and
45.9(a)(3) and (b). In § 45.4(c), Just
Energy proposes that the Commission
describe interlocking positions that
‘‘qualify for automatic authorization
pursuant’’ to § 45.9(a), as opposed to
positions that ‘‘are identified’’ in
§ 45.9(a). Just Energy suggests that, in
§ 45.9(a)(3), the Commission authorize
interlocking positions of an officer or
director of more than one public utility
where such officer or director is already
authorized under this part to hold
positions as officer or director of those
‘‘or any other public utilities’’ where the
interlock involves affiliated public
utilities. Just Energy’s proposed
amendment to § 45.9(b) would create a
new paragraph (b)(2) that states that a
person is ‘‘exempt from filing an
informational report pursuant to
[section] 45.4.’’
18. Just Energy also states that it
supports the proposal that officers and
directors do not need to file a notice of
change when they leave some but not
other positions within a corporate
family, and instead report interlock
changes among affiliates in the
applicable Form No. 561. Just Energy
accordingly recommends additional
amendments to amended § 45.5(b) to
state that a notice of change under this
section would not be required if the
only change to be reported is ‘‘a
resignation or withdrawal from fewer
than all positions held between or
among affiliated public utilities, a
reelection or reappointment to a
position that was previously
authorized,’’ or holding a different or
additional interlocking position ‘‘that
would qualify for automatic
authorization pursuant to’’ § 45.9(a). Just
Energy states that its proposed
14 EEI
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17 Id.
at 10.
Spread Comments at 4.
18 Golden
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amendments address the Commission’s
clarification regarding partial
resignations and harmonize § 45.5 with
the proposed amendments regarding
appointments with affiliated entities.19
3. Commission Determination
19. We adopt the NOPR’s proposed
revisions to §§ 45.4 and 45.5 of the
Commission’s regulations to state that
supplemental applications and notices
of change need not be filed in the case
of a person already authorized to hold
interlocks identified in § 45.9(a) who
may assume new or different positions
that are still among those identified by
§ 45.9(a), with certain clarifications and
amendments discussed below.
20. In response to EEI, we clarify that
the change to § 45.5(b) adopted in this
final rule means that, in the case of
interlocking positions that are identified
in § 45.9(a), a notice of change now need
only be filed when the officer or director
resigns or withdraws as an officer or
director from all previously held
interlocking officer and director
positions. When he/she resigns from
only one position out of several
interlocking positions for which he/she
received authorization pursuant to
§ 45.9, he/she need only include this
information in the annual Form No. 561.
21. We also clarify in response to EEI
that § 45.9(c) does not require an
additional informational report when an
officer or director has a new or different
interlocking position within a holding
company system compared to what was
reported when he/she originally filed an
informational report under § 45.9.
Instead, he/she need only include the
new or different interlocking position(s)
in the annual Form No. 561.
22. We agree with Golden Spread’s
proposal to alter the timing of the notice
of change filing requirement from 30
days to within 60 days of the triggering
event. We think this change is
reasonable because 30 days may be too
short a period to comply with the
regulation, and allowing for 60 days
may result in more accurate filings. We
therefore amend § 45.5(b) to state that
the filing of a notice of change shall be
made within 60 days.
23. We adopt Just Energy’s proposed
amendments to §§ 45.4(c), 45.9(a)(3) and
(b), and 45.5(b). We find that the
amendments proposed by Just Energy
more clearly state the revisions adopted
by this final rule.
19 Just
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D. Public Utilities Within a Holding
Company That Do Not Have Directors
and Officers
1. Proposal
24. In the NOPR, the Commission
recognized the growing complexity of
corporate structures. Thus, the
Commission proposed to revise
§ 45.8(c)(1) of its regulations to state that
applicants under part 45 do not need to
list in their applications those public
utilities that do not have officers or
directors.20
2. Comments
25. EEI, Golden Spread, and NRG
support the Commission’s proposed
revision to § 45.8(c)(1). Golden Spread
‘‘agrees that if such structures exist and
do not have officers and directors, such
information would be extraneous.’’ 21
NRECA states that it has no position on
the Commission’s proposal; it
acknowledges the growing complexity
of corporate structures ‘‘but does not
appreciate why that trend warrants
reducing the information in these
applications.’’ 22 NRECA requests that
the Commission explain in more detail
the regulatory burden that will be
relieved and the information that will be
lost by the proposed change.23
3. Commission Determination
26. We adopt the NOPR’s proposed
revisions to § 45.8(c)(1) of the
Commission’s regulations to state that
applicants under part 45 do not need to
list in their applications those public
utilities that do not have officers or
directors. While we are not aware of any
applications that have been filed where
a company does not have any officers or
any directors, we understand from EEI
that such companies do exist.24
27. In response to Golden Spread and
NRECA, we are not aware that any
material information would be lost by
making this change. We expect the
universe of companies that do not have
any officers or directors to be small, as
it is still atypical for a company to have
neither officers nor directors. We also
note that, under § 45.2(a), the obligation
to make the appropriate filings extends
to any person elected or appointed to
perform executive duties or functions
similar to those ordinarily performed by
presidents, vice presidents, directors
and others.25 This pre-existing
requirement, which the Commission has
20 NOPR,
164 FERC ¶ 61,032 at P 11.
Spread Comments at 4.
22 NRECA Comments at 2.
23 Id.
24 See Edison Electric Institute Comments, Docket
No. AD12–6–002 (Nov. 28, 2016).
25 18 CFR 45.2(a).
21 Golden
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not proposed to change, should ensure
that the change adopted above will not
materially affect the Commission’s
oversight of jurisdictional interlocking
positions.
E. Corporate Relationships Within the
Scope of Automatic Authorizations
1. Proposal
28. In the NOPR, the Commission
proposed to revise § 45.9 of its
regulations to add the word ‘‘person’’
when defining the corporate
relationships within the scope of the
automatic authorizations addressed in
§ 45.9. The Commission recognized that
public utilities can be owned not just by
a corporate entity but by a natural
person, and that the regulations should
reflect this possibility.26
2. Comments
29. EEI, Golden Spread, and NRECA
support the Commission’s proposed
revision to § 45.9. Golden Spread adds
that it thinks this proposed change does
not apply to cooperative governance
structures.
3. Commission Determination
30. We adopt the proposed revision to
§ 45.9 of the Commission’s regulations
to add the word ‘‘person’’ when
defining the corporate relationships
within the scope of the automatic
authorizations addressed in § 45.9.
Given that some public utilities can be
and are now owned by natural persons,
a change in the regulations to reflect this
development is warranted.27
F. Removal of § 46.2(b)
1. Proposal
31. The Commission proposed in the
NOPR to update its regulations in part
46 to remove § 46.2(b), because the
definitions were rendered obsolete as a
result of the enactment of the Energy
Policy Act of 2005 and the concurrent
repeal of the Public Utility Holding
Company Act of 1935 (PUHCA 1935).28
The Commission noted in the NOPR
that § 46.2(b) currently references the
definition of ‘‘holding company system’’
and ‘‘registered holding company
system’’ in PUHCA 1935.29 However,
the Energy Policy Act of 2005 repealed
26 NOPR,
164 FERC ¶ 61,032 at P 12.
response to Golden Spread, we do not
envision a cooperative governance structure where
a rural electric cooperative is owned by its
customers/ratepayers to fall within the scope of this
rule. See generally Wolverine Power Supply
Cooperative, Inc., 93 FERC ¶ 61,328, at 62,119
(2000), reh’g denied, 94 FERC ¶ 61,178, at 61,616
(2001).
28 See Public Law 109–58, sec. 1261–77, 119 Stat.
594, 972–78 (2005).
29 16 U.S.C. 79a et seq.
27 In
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PUHCA 1935.30 Thus, the Commission
proposed to remove § 46.2(b). The
Commission also proposed to update
part 46 to change ‘‘Rural Electrification
Administration’’ to ‘‘Rural Utilities
Service’’ to reflect the name change of
that organization.31
2. Comments
32. EEI, Golden Spread, and NRECA
all support the removal of § 46.2(b) and
the update of part 46 to change ‘‘Rural
Electrification Administration’’ to
‘‘Rural Utilities Service.’’
3. Commission Determination
33. We adopt the proposed removal of
§ 46.2(b) from the Commission’s
regulations, as it is now outdated, and
we update part 46 of the Commission’s
regulations to change ‘‘Rural
Electrification Administration’’ to
‘‘Rural Utilities Service’’ to reflect the
change in name of that organization.
G. Additional Issues Raised by
Commenters
1. Amending § 45.1(a)(3)
a. Comments
34. EEI requests that the Commission
amend § 45.1(a)(3) of its regulations by
changing the closing phrase ‘‘a public
utility’’ to ‘‘such public utility,’’ as
stated in the opening sentence of FPA
section 305(b)(1). EEI asserts that this
change to the regulations would align
the regulations with the statute, and it
would recognize that Congress intended
to require approval for interlocking
director and officer positions between a
utility and an electrical supplier only
when the supplier supplies equipment
to the utility involved, not just to other
utilities. EEI also states that this change
also would conform the part 45
regulations with one another.32
b. Commission Determination
35. We adopt EEI’s suggested
amendment to § 45.1(a)(3) of the
Commission’s regulations by changing
the closing phrase ‘‘a public utility’’ to
‘‘such public utility.’’ We agree with EEI
that this change will better align the
regulations with the statute, and
recognize that Congress intended to
require approval for interlocking
director and officer positions between a
utility and an electrical supplier only
when the supplier supplies electrical
equipment to the utility involved, and
not just to any utility.
30 Public Law 109–58, sec.1263, 119 Stat. 594,
974 (2005).
31 NOPR, 164 FERC ¶ 61,032 at P 13.
32 EEI Comments at 9.
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3. Blanket Authorizations for
Companies Without Captive Customers
2. Definition of Electrical Equipment
a. Comments
36. EEI asks the Commission to
modify its current definition of
‘‘electrical equipment.’’ EEI asserts that
the definition of electrical equipment
has been inappropriately construed too
broadly in some cases. EEI requests that
the Commission delete from the current
§ 46.2(f) definition the footnoted crossreference to the Uniform System of
Accounts and clarify that the definition
applies to both parts 45 and 46 of the
Commission’s regulations. EEI asserts
that the current definition found in
§ 46.2(f) is straightforward,33 and that
the cross-reference to the Uniform
System of Accounts has resulted in the
term electrical equipment being defined
to include common business equipment
such as computers, calculators, and
sprinklers.34
b. Commission Determination
37. We decline to delete from the
current § 46.2(f) definition of electrical
equipment the footnoted cross-reference
to the Uniform System of Accounts. We
disagree that the cross-reference to the
Uniform System of Accounts results in
a definition of electrical equipment that
is too broad. In this regard, we note that,
in establishing the definition of
electrical equipment in § 46.2(f), the
Commission stated that the footnoted
reference to the Commission’s Uniform
System of Accounts was ‘‘a guide only,’’
acknowledging that certain items found
in the accounts listed are clearly not
‘‘electrical equipment’’ within the scope
of § 46.2(f).35 We find that the footnoted
reference to the Uniform System of
Accounts continues to provide useful
guidance to aid the industry as well as
the Commission in determining what
does and does not constitute electrical
equipment under part 46, and thus
should be retained.
38. We do clarify that, as necessary,
the Commission, in evaluating
applications and reporting under part
45, will continue to look to § 46.2(f) and
the footnoted reference to the Uniform
System of Accounts for guidance in
determining what constitutes electrical
equipment under part 45.36
33 Id.
at 11 (citing 18 CFR 46.2(f)).
34 Id.
35 Public Utility Filing Requirement and
Requirements for Persons Holding Interlocking
Positions; Order Issuing Final Regulations, 45 FR
23413, at 23415–16 (Apr. 7, 1980), FERC Stats. &
Regs. ¶ 30,140, at 30,984 (1980).
36 See, e.g., Barry Lawson Williams, 134 FERC
¶ 61,183, at P 10 (2011).
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a. Comments
39. EEI, EPSA, Just Energy, and NRG
ask the Commission to create a blanket
authorization for interlock holders at
companies within holding company
systems without captive customers.
i. EEI
40. EEI requests that the Commission
revisit the need for interlocking
directorate applications and reporting to
cover officers and directors who hold
positions involving, within a holding
company system, multiple companies
that do not have captive customers,
such as exempt wholesale generators
and qualifying facilities, or positions
involving such companies and their
securities underwriters 37 or their
electrical equipment suppliers.38
ii. EPSA
41. EPSA requests that the
Commission consider granting a blanket
authorization to public utilities without
any captive customers, to allow
individuals to concurrently hold
positions as an officer or director of
more than one public utility within the
corporate holding company, or positions
of officer or director of a public utility
and a company supplying electrical
equipment to a public utility within the
corporate holding company.39
42. EPSA argues that this category of
public utility, which includes
independent power producers that are
structured as merchant sellers of power
only, are incapable of and do not pose
a danger of imposing excessive charges
or allocating unreasonable costs to
customers, flouting state regulation in
any way, or harming customers through
a general lack of economy of
management, operation, inefficiency, or
inadequacy of services. EPSA asserts
that, with independent entities, any
mismanagement or uneconomic
transactions are not passed on to
customers, but are borne exclusively by
shareholders. EPSA proposes that
blanket authorizations be granted solely
to those utilities on an intra-holding
company basis.40
43. EPSA suggests that, to provide
oversight to companies eligible for its
proposed blanket authorization, ‘‘an
entity with market-based rate authority
and previously granted a blanket
authorization for interlocking positions
within its holding company could
37 But
see 16 U.S.C. 825d(b)(2).
Comments at 10.
39 EPSA Comments at 2.
40 Id. at 3.
38 EEI
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declare in its triennial market-based rate
authorization filings that its holding
company structure remains fully
independent, and therefore that entity
continues to pose no threat of harm to
captive customers as a result of affiliate
abuse concerns and, as such, does not
pose a threat to pass on rate increases
driven by affiliate contracts or contracts
between independent companies with a
common set of officers or directors.’’ 41
EPSA also compares its requested
blanket authorization to blanket
authorizations under FPA section 203.42
44. EPSA asserts that granting blanket
authorization to intra-holding company
independent power producers and
marketers without captive customers is
a logical outgrowth of the NOPR and is
consistent with the NOPR’s intent, and
would serve to reduce regulatory
burdens and modernize these
regulations to better reflect the modern
state of the electricity generation and
sales landscape.43 EPSA also suggests
that the Commission could issue a
supplemental notice in order to broaden
the scope of the NOPR to implement
EPSA’s proposed changes in the final
rule.44
iii. Just Energy
45. Just Energy requests that the
Commission grant blanket
authorizations to public utilities that are
not franchised utilities and are not
affiliated with a franchised utility.
Under Just Energy’s proposal, officers
and directors of such public utilities
and their affiliates would not be
required to seek prior authorization, but
would disclose all appointments and
changes on their annual Form No. 561.45
iv. NRG
46. NRG asks the Commission to issue
a ‘‘narrow and discrete’’ blanket
authorization for individuals holding
officer positions in affiliated entities all
under the same holding company
structure without any captive
customers, regardless of whether those
positions are with public utilities,
electrical equipment supply companies,
or fuel supply companies.46 Under this
proposal, the individual would be able
to hold positions in such entities
41 Id.
at 4.
at 4–5 (citing Transactions Subject to FPA
Section 203, Order No. 669, 113 FERC ¶ 61,315, at
P 57 (2005), order on reh’g, Order No. 669–A, 115
FERC ¶ 61,097, order on reh’g, Order No. 669–B,
116 FERC ¶ 61,076 (2006)).
43 Id. at 8–9.
44 Id. at 9.
45 Just Energy Comments at 5–6.
46 We note that an interlock involving the latter,
i.e., fuel supply companies, would not be a
jurisdictional interlock under FPA section 305(b)
requiring a filing.
42 Id.
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without any filing requirements (either
a prior-notice filing or the annual Form
No. 561).47
47. Like EPSA, NRG compares its
requested blanket authorization to
section 203 blanket authorizations.48
NRG states that allowing blanket
waivers in the interlock context would
still allow the Commission to rigorously
police for the conduct that concerned
Congress in 1935 (that companies under
common control were entering into
above market contracts and passing
through those costs to retail customers),
meet the plain language of the statute,
and reduce the paperwork burden and
regulatory burdens on regulated
entities.49
48. Although NRG asserts that the
Commission could provide for a blanket
authorization as requested with no
further notice because it is a ‘‘logical
outgrowth’’ of the NOPR, NRG suggests
that the Commission could also issue,
out of an abundance of caution, a
supplemental notice describing the
blanket authorization.50
b. Commission Determination
49. We decline to create a blanket
authorization for persons holding
interlocking positions between affiliated
companies without any captive
customers. The current requirements
impose minimal burdens, and the
commenters have not made a sufficient
case for granting their requested relief of
a blanket authorization.
50. The burden that would be avoided
by a blanket authorization for
individuals serving as officers or
directors at multiple companies in a
holding company system is minimal.
Currently, in such scenarios, each
individual must file only once—and
then only a relatively minor submittal—
for authorization (under § 45.9 of the
Commission’s regulations), and then
each individual needs to file only an
annual report pursuant to FPA section
305(c) each April 30 thereafter,51 which
describes any changes in his/her
positions among the companies in the
holding company system.
51. In response to EPSA and NRG’s
comparison of an interlock blanket
authorization to blanket authorizations
in the FPA section 203 context, we note
47 NRG
Comments at 5–6.
at 6 (citing Blanket Authorization Under
FPA Section 203, Order No. 708, 122 FERC ¶ 61,156
(2008)).
49 Id.
50 Id. at 6–7.
51 Even if we were to grant the requested relief
under FPA section 305(b), that would not relieve
the persons holding such interlocks from the
separate requirement to make an annual filing, the
Form No. 561, under FPA section 305(c).
48 Id.
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that, although the Commission
implemented blanket authorizations in
the section 203 context, it was done in
response to the Energy Policy Act of
2005, which revised FPA section 203 by
adding FPA section 203(a)(5), which
required the Commission to adopt
procedures for the expeditious
consideration of applications under that
section.52 No similar circumstances
exist here.
4. Online Submission Process/Database
for Interlock Filings
a. Comments
52. Golden Spread and NRECA filed
comments requesting the creation of an
online submission process/database for
interlock filings. Golden Spread
requests that the Commission consider
moving the interlocking directorate
application, updating/supplementing,
termination process, and annual Form
No. 561 to an online submission
process. Golden Spread argues that the
current system is paper intensive and an
online system could streamline
compliance associated with parts 45 and
46 and would create an opportunity for
more robust relational databases
wherein the Commission would be
better able to track compliance with its
interlocking directorate program.53
Golden Spread and NRECA state that an
online submission process/database
would reduce regulatory burdens.54
b. Commission Determination
53. We support modernizing our
systems and processes. However, we
will not propose a new submission
process or database in this proceeding,
but may consider the creation of an
online process/database in the future.
5. Temporary Appointments
a. Comments
54. Just Energy states that it is not
uncommon for market participants to
have to appoint, remove, or reappoint
personnel to officer positions to
accommodate routine business needs
that are not always foreseeable or
permanent. For example, Just Energy
states that a company may need to make
a person an officer in order to have
signature authority for a transaction, or
when someone is on medical leave. Just
Energy requests that these
administrative, ministerial, or
temporary appointments not require any
Commission approval or reporting,
arguing that they do not pose the kinds
52 Public Law 109–58, sec. 1289, 119 Stat. 594,
982 (2005); Order No. 669, 113 FERC ¶ 61,315 at PP
55–57.
53 Golden Spread Comments at 5.
54 Id.; NRECA Comments at 3.
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of threats contemplated by Congress
when it adopted section FPA 305(b),
and are burdensome to both the
Commission and to public utilities.55
b. Commission Determination
55. We acknowledge that an
exemption from the filing requirements
for certain temporary appointments to
interlocking positions reflects the reality
of the world, where a position may be
unexpectedly left vacant due to death,
illness, etc. and a company must
quickly appoint someone to temporarily
fill the now-vacant position on an
‘‘acting’’ basis. We therefore find that a
person seeking to hold an interlocking
position covered by § 45.2 that would
otherwise require an automatic
authorization filing under § 45.9 may be
appointed to fill the vacant position
temporarily, for 90 days or less, without
the necessity of seeking Commission
approval or of reporting in, for example,
Form No. 561. To implement this
change, we add a new paragraph (c) to
§ 45.1, as well as additional language to
§ 45.9(b) that exempts a person holding
a temporary interlocking position
pursuant to the new § 45.1(c) from the
requirement to submit an informational
report.
56. We note that this temporary
appointment exemption would, in
practice, apply only in a narrow set of
circumstances—where a person who has
never held any interlock before is
temporarily appointed to a position at
an affiliate company. For example, a
person serving as an officer of Utility A
could be temporarily appointed as an
officer of affiliated Utility B, which is
part of the same holding company as
Utility A, without the necessity of
Commission approval or a reporting
requirement such as the annual Form
No. 561. In this example, if this person
had previously been authorized to hold
a non-temporary interlock between two
or more affiliated utilities, this
exemption for temporary positions
would not be necessary; the person
would already have been required to
have made an initial automatic
authorization filing under § 45.9, and
would only need to include this new
appointment in his/her annual Form
No. 561.
57. Finally, we note that a person
cannot be re-appointed for multiple 90day periods to the same interlocking
position and still consider it a
temporary position that continues to be
exempt from the automatic
authorization requirements. Under such
circumstances, the individual who seeks
to hold a position for more than 90 days
55 Just
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someone collects signatures; and (9)
someone makes the filing.56
must seek the necessary authorization
pursuant to the Commission’s
regulations.
b. Commission Determination
6. Cost Estimates for Informational
Filings and Notices of Change
a. Comments
58. Just Energy, in asserting that it is
costly and burdensome for individuals,
and in many cases their employers, to
comply with the rules as written, states
that the Commission’s estimates that
informational filings cost $632.00 each,
and that notices of change cost $19.25,
are too low. In support, Just Energy
asserts that: (1) Each filing must be
customized to the individual; (2) the
officer or director must verify the
reportable positions; (3) a notary may be
required for the attestation; (4) a
corporate secretary may have to pull
information on positions held to verify
the submission; (5) corporate structure
information may need to be pulled to
verify that the ownership chain qualifies
for an informational filing; (6) someone
reviews the materials; (7) someone
makes revisions to the filing; (8)
59. We disagree that we have
underestimated the costs of
informational filings and notices of
change. We note that the cost estimates
stated in the NOPR and in this final rule
are estimates of average costs. While the
costs of some informational filings and
notices of change will be higher than the
stated averages, some will also be less
than the stated averages.
III. Information Collection Statement
60. The collection of information
contained in this final rule is subject to
review by the Office of Management and
Budget (OMB) under section 3507(d) of
the Paperwork Reduction Act (PRA).57
The PRA requires each federal agency to
seek and obtain 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 58
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.
61. The revisions enacted by this final
rule would clarify and update the
requirements 59 for those seeking and
holding interlocking positions. The
Commission anticipates that the
revisions, once effective, would reduce
regulatory burdens. The Commission
will submit the reporting requirements
to OMB for its review and approval
under section 3507(d) of the Paperwork
Reduction Act.60
62. While the Commission expects
that the regulatory revisions herein will
reduce the burdens on affected entities,
the Commission nonetheless solicits
public comments regarding the accuracy
of the burden and cost estimates below.
63. Burden Estimate: 61 The estimated
burden and cost for the requirements
contained in this final rule follow.
FERC FORM NO. 520
[Application for authority to hold interlocking directorate positions]
Number of
respondents
Annual
number
of responses
per
respondent
Total number
of responses
Average burden &
cost per response 62
Total annual
burden hours
(total annual cost)
Cost per
respondent
($)
(1)
(2)
(1) * (2) = (3)
(4)
(3) * (4) = (5)
(5) ÷ (1)
Full ...........................
Informational ............
Notice of Change .....
16
500
100
1
1
1
16
500
100
50 hrs.; $3,950 ........
8 hrs.; $632 .............
0.25 hrs.; $19.75 .....
800 hrs.; $63,200 ....
4,000 hrs.; $316,000
25 hrs.; $1,975 ........
Total ..................
........................
........................
..............................
..................................
4,825 hrs.; $381,175
Title: FERC–520 (Application for
Authority to Hold Interlocking
Directorate Positions).
OMB Control No.: 1902–0083.
Abstract: The FPA, as amended,
mandates federal oversight and approval
of certain electric corporate activities to
ensure that neither public nor private
interests are adversely affected.
Accordingly, the Commission’s
regulations prescribe related
information filing requirements to
achieve this goal. Such filing
requirements are found in 18 CFR parts
45 and 46.
56 Id.
at 3, n.4.
U.S.C. 3507(d).
58 5 CFR part 1320.
59 18 CFR parts 45, 46.
60 44 U.S.C. 3507(d).
57 44
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3,950
632
19.75
Overview of the Data Collection.
FERC–520 provides information related
to complex electric corporate activities,
in particular, the holding of interlocking
positions, and thereby serves to
safeguard public and private interests,
as the FPA requires.
FERC–520 is divided into two types of
applications: full and informational.
The full application, as specified in 18
CFR 45.8, implements the FPA
requirement under section 305(b) that it
is unlawful for any person to
concurrently hold the positions of
officer or director of more than one
public utility; or a public utility and a
financial institution that is authorized to
underwrite or participate in the
marketing of public utility securities; or
a public utility and an electrical
equipment supplier to such public
utility, unless authorized by the
Commission. In order to obtain
authorization, an applicant must
demonstrate that neither public nor
private interests will be adversely
affected by the holding of the positions.
The full application provides the
Commission with information about any
interlocking position for which the
applicant seeks authorization including,
but not limited to, a description of
61 ‘‘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.
62 The Commission staff thinks that the average
respondent for this collection is similarly situated
to the Commission, in terms of salary plus benefits.
Based upon FERC’s 2018 annual average (for salary
plus benefits) of $164,820, the average hourly cost
is $79/hour.
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duties and the estimated time devoted
to the position.
An informational (abbreviated)
application, as specified in 18 CFR 45.9,
allows an applicant to receive automatic
authorization for an interlocked position
upon receipt of the filing by the
Commission. The informational
application applies only to those
individuals who seek authorization as:
(1) An officer or director of two or more
public utilities where the same holding
company owns, directly or indirectly,
that percentage of each utility’s stock (of
whatever class or classes) which is
required by each utility’s by-laws to
elect directors; (2) an officer or director
of two public utilities, if one utility is
owned, wholly or in part, by the other
and, as its primary business, owns or
operates transmission or generation
facilities to provide transmission service
or electric power for sale to its owners;
or (3) an officer or director of more than
one public utility, if such person is
already authorized under part 45 to hold
different positions as officer or director
of those utilities where the interlock
involves affiliated public utilities.
FERC–520 also includes the
requirement to file a notice of change if
there are new positions or changes to
the positions held. The Commission is
revising its requirements and, among
other things, will no longer require a
notice of change when a person is
merely changing positions within a
holding company system. This change is
expected to reduce the number of filed
notices of change by 50 percent
annually (from 200 filings to 100 filings)
and to reduce the corresponding total
burden.
Type of Respondents: Individuals
who plan to concurrently become or
concurrently are officers or directors of
public utilities and of certain other
entities must request authorization to
hold such interlocking positions by
submitting a FERC–520.
Internal Review: The Commission has
reviewed the information collection
requirements and has determined that
certain changes are needed and that the
remaining requirements are necessary.
These requirements conform to the
Commission’s need for efficient
information collection, communication,
and management within the energy
industry. The Commission has specific,
objective support for the burden
estimates associated with the
information collection requirements.
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
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Brown, Office of the Executive Director],
email: DataClearance@ferc.gov, Phone:
(202) 502–8663, fax: (202) 273–0873.
Comments concerning the collection of
information and the associated burden
estimate(s) may also be sent to the
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–520,
OMB Control No. 1902–0083 in your
submission.
IV. Environmental Analysis
64. 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.63 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 actions under
section 305 of the FPA relating to
interlocking directorates.64
V. Regulatory Flexibility Act
65. The Regulatory Flexibility Act of
1980 (RFA) 65 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.66 These
standards are provided in the SBA
regulations at 13 CFR 121.201.67
66. This final rule will apply to those
individuals seeking to hold and those
currently holding interlocking positions.
In order to obtain authorization, an
applicant must demonstrate that neither
public nor private interests will be
adversely affected by the holding of the
interlocking positions.
67. There are an estimated 16
respondents who could file full
63 Regulations Implementing the National
Environmental Policy Act of 1969, Order No. 486,
52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs.
¶ 30,783 (1987).
64 18 CFR 380.4(a)(16).
65 5 U.S.C. 601–612.
66 13 CFR 121.101.
67 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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7281
applications over the course of a year,
who would provide one response
annually with an estimated time
commitment of 50 hours per response,
and a resulting estimated cost of
$3,950.00 per respondent. There are an
estimated 500 respondents who could
file informational applications over the
course of a year, who would provide
one response annually with an
estimated time commitment of 8 hours
per response, and a resulting estimated
cost of $632.00 per respondent. In
addition, there are an estimated 100
respondents who could file a notice of
change annually with an estimated time
commitment of 0.25 hours, and a
resulting cost of $19.75 per respondent.
Therefore the average annual cost for
each of the 616 respondents is $618.79.
That cost is not significant. More
importantly, this final rule reduces
industry cost by eliminating the need
for the filing of some notices of change.
68. The Commission certifies that this
final rule will not have a significant
economic impact on a substantial
number of small entities.
VI. Document Availability
69. 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 the
Commission’s Home Page (https://
www.ferc.gov) and in the Commission’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.
70. From the Commission’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.
71. User assistance is available for
eLibrary and the Commission’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
72. These regulations are effective
May 3, 2019. The Commission has
determined that this rule is not a ‘‘major
rule’’ as defined in section 351 of the
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Small Business Regulatory Enforcement
Fairness Act of 1996.
List of Subjects
18 CFR Part 45
Electric utilities, Reporting and
recordkeeping requirements.
18 CFR Part 46
Antitrust, Electric utilities, Holding
companies, Reporting and
recordkeeping requirements.
By the Commission.
Issued: February 21, 2019.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
In consideration of the foregoing, the
Commission amends parts 45 and 46,
chapter I, title 18, Code of Federal
Regulations, as follows:
PART 45—APPLICATION FOR
AUTHORITY TO HOLD INTERLOCKING
POSITIONS
1. The authority citation for part 45
continues to read as follows:
■
§ 45.3
Authority: 16 U.S.C. 791a–825r, 2601–
2645; 31 U.S.C. 9701; 42 U.S.C. 7101–7352;
3 CFR 142.
2. Amend § 45.1 by revising paragraph
(a)(3) and adding paragraph (c) to read
as follows:
■
§ 45.1
Applicability; who must file.
(a) * * *
(3) Officer or director of a public
utility and of any company supplying
electrical equipment to such public
utility.
*
*
*
*
*
(c) Notwithstanding paragraphs (a)
and (b) of this section, any person may
temporarily hold an interlocking
position described in § 45.2 for no more
than 90 days within a twelve-month
period without applying for
Commission authorization under § 45.8
and without complying with the
requirements for authorization under
§ 45.9.
■ 3. Amend § 45.2 by adding paragraph
(d) to read as follows:
§ 45.2
Positions requiring authorization.
*
*
*
*
*
(d) A person that holds or proposes to
hold an interlocking position as officer
or director of a public utility and of a
corporation described by paragraph
(b)(2) of this section shall not require
authorization to hold such positions in
the following circumstances—
(1) The person does not participate in
any deliberations or decisions of the
public utility regarding the selection of
the bank, trust company, banking
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16:21 Mar 01, 2019
Jkt 247001
association, or firm to underwrite or
participate in the marketing of securities
of the public utility, if the person serves
as an officer or director of a bank, trust
company, banking association, or firm
that is under consideration in the
deliberation process;
(2) The bank, trust company, banking
association, or firm of which the person
is an officer or director does not engage
in the underwriting of, or participate in
the marketing of, securities of the public
utility of which the person holds the
position of officer or director;
(3) The public utility for which the
person serves or proposes to serve as an
officer or director selects underwriters
by competitive procedures; or
(4) The issuance of securities of the
public utility for which the person
serves or proposes to serve as an officer
or director has been approved by all
Federal and State regulatory agencies
having jurisdiction over the issuance.
■ 4. Revise § 45.3(a) to read as follows:
Timing of filing application.
(a) The holding of positions within
the purview of section 305(b) of the Act
shall be unlawful unless the holding
shall have been authorized by order of
the Commission. Nothing in this part
shall be construed as authorizing the
holding of positions within the purview
of section 305(b) of the Act prior to
order of the Commission on application
therefor. Applications must be filed and
authorization must be granted prior to
holding any interlocking positions
within the purview of section 305(b) of
the Act; the Commission will consider
late-filed applications on a case-by-case
basis. The term ‘‘holding,’’ as used in
this part, shall mean acting as, serving
as, voting as, or otherwise performing or
assuming the duties and responsibilities
of officer or director within the purview
of section 305(b) of the Act.
*
*
*
*
*
■ 5. Amend § 45.4 by adding paragraph
(c) to read as follows:
§ 45.4
Supplemental applications.
*
*
*
*
*
(c) Changes in interlocking positions
within the scope of § 45.9.
Notwithstanding paragraphs (a) and (b)
of this section, in the case of
interlocking positions that qualify for
automatic authorization pursuant to
§ 45.9(a), a filing under this section will
not be required if the only changes to be
reported are holding different or
additional interlocking positions that
would qualify for automatic
authorization pursuant to § 45.9(a).
■ 6. Revise § 45.5(b) to read as follows:
PO 00000
Frm 00022
Fmt 4700
Sfmt 4700
§ 45.5
Supplemental information.
*
*
*
*
*
(b) Notice of changes. In the event of
the applicant’s resignation, withdrawal,
or failure of reelection or appointment
in respect to any of the positions for
which authorization has been granted
by the Commission, or in the event of
any other material or substantial change
therein, the applicant shall, within 60
days after any such change occurs, give
notice thereof to the Commission setting
forth the position, corporation, and date
of termination therewith, or other
material or substantial change. In the
case of interlocking positions that
qualify for automatic authorization
pursuant to § 45.9(a), a notice of change
under this section will not be required
if the only change to be reported is a
resignation or withdrawal from fewer
than all positions held between or
among affiliated public utilities, a
reelection or reappointment to a
position that was previously authorized,
or holding a different or additional
interlocking position that would qualify
for automatic authorization pursuant to
§ 45.9(a).
*
*
*
*
*
■ 7. Revise § 45.8(c)(1) to read as
follows:
§ 45.8
Contents of application.
*
*
*
*
*
(c) * * *
(1) Name of utility, unless said utility
does not have officers or directors.
*
*
*
*
*
■ 8. Revise § 45.9(a)(1) and (3) and (b) to
read as follows:
§ 45.9 Automatic authorization of certain
interlocking positions.
(a) * * *
(1) Officer or director of one or more
other public utilities if the same holding
company or person owns, directly or
indirectly, that percentage of each
utility’s stock (of whatever class or
classes) which is required by each
utility’s by-laws to elect directors;
*
*
*
*
*
(3) Officer or director of more than
one public utility, if such officer or
director is already authorized under this
part to hold positions as officer or
director of those or any other public
utilities where the interlock involves
affiliated public utilities.
(b) Conditions of authorization. (1) As
a condition of authorization, any person
eligible to seek authorization to hold
interlocking positions under this section
must submit, prior to performing or
assuming the duties and responsibilities
of the position, an informational report
E:\FR\FM\04MRR1.SGM
04MRR1
Federal Register / Vol. 84, No. 42 / Monday, March 4, 2019 / Rules and Regulations
in accordance with paragraph (c) of this
section, unless that person:
(i) Is already authorized to hold
interlocking positions of the type
governed by this section;
(ii) Is exempt from filing an
informational report pursuant to § 45.4;
or
(iii) Will hold a temporary
interlocking position pursuant to
§ 45.1(c).
(2) The Commission will consider
failures to timely file the informational
report on a case-by-case basis.
*
*
*
*
*
PART 46—PUBLIC UTILITY FILING
REQUIREMENTS AND FILING
REQUIREMENTS FOR PERSONS
HOLDING INTERLOCKING POSITIONS
9. The authority citation for part 46
continues to read as follows:
■
10. Amend § 46.2 by revising
paragraph (a), removing and reserving
paragraph (b), and revising paragraphs
(c) and (e) to read as follows:
■
Definitions.
*
*
*
*
*
(a) Public utility has the same
meaning as in section 201(e) of the
Federal Power Act. Such term does not
include any rural electric cooperative
which is regulated by the Rural Utilities
Service of the Department of Agriculture
or any other entities covered in section
201(f) of the Federal Power Act.
*
*
*
*
*
(c) Purchaser means any individual or
corporation within the meaning of
section 3 of the Federal Power Act who
purchases electric energy from a public
utility. Such term does not include the
United States or any agency or
instrumentality of the United States or
any rural electric cooperative which is
regulated by the Rural Utilities Service
of the Department of Agriculture.
*
*
*
*
*
(e) Entity means any firm, company,
or organization including any
corporation, joint-stock company,
partnership, association, business trust,
organized group of persons, whether
incorporated or not, or a receiver or
receivers, trustee or trustees of any of
the foregoing. Such term does not
include municipality as defined in
section 3 of the Federal Power Act and
does not include any Federal, State, or
local government agencies or any rural
electric cooperative which is regulated
VerDate Sep<11>2014
16:21 Mar 01, 2019
Jkt 247001
[FR Doc. 2019–03419 Filed 3–1–19; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9850]
RIN 1545–BM28
Utility Allowance Submetering
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.
AGENCY:
This document contains final
regulations that amend the utility
allowance regulations concerning the
low-income housing credit under
section 42 of the Internal Revenue Code
(Code). These final regulations extend
the principles of the current
submetering rules. The current rules
address situations in which a building
owner purchases a utility from a utility
company and then separately charges
the tenants for the utility. In those
situations, if the utility costs paid by a
tenant are based on actual consumption
in the tenant’s submetered, rentrestricted unit and if certain other
requirements are satisfied, then the
charges for the utility are treated as paid
by the tenant directly to the utility
company, even though the payment
passes through the building owner. The
final regulations extend these principles
and apply to situations in which a
building owner sells to tenants energy
that is produced from a renewable
source and that the owner did not
purchase from or through a local utility
company. The final regulations 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.
DATES:
Effective date: These final regulations
are effective on March 4, 2019.
Applicability date: For dates of
applicability, see § 1.42–12(a)(5).
FOR FURTHER INFORMATION CONTACT:
Dillon Taylor, (202) 317–4137 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
SUMMARY:
Authority: 16 U.S.C. 792–828c; 16 U.S.C.
2601–2645; 42 U.S.C. 7101–7352; E.O. 12009,
3 CFR 142.
§ 46.2
by the Rural Utilities Service of the
Department of Agriculture.
*
*
*
*
*
Background
On March 3, 2016, the Department of
the Treasury (Treasury Department) and
PO 00000
Frm 00023
Fmt 4700
Sfmt 4700
7283
the IRS published in the Federal
Register (81 FR 11104) final and
temporary regulations (TD 9755) that
amended § 1.42–10 of the Income Tax
Regulations. The final regulations in TD
9755 clarified the circumstances in
which utility costs paid by a tenant
based on actual consumption in a
submetered, rent-restricted unit are
treated as paid by the tenant directly to
the utility company and not to the
building owner. In such a case, for
purposes of section 42, the tenant’s
payments to the owner for the utilities
are not treated as payments of gross
rent, and the rent that the owner might
otherwise have collected for the unit is
reduced by an amount that is called a
‘‘utility allowance.’’ The temporary
regulations extended the principles of
those final regulations to situations in
which a building owner sold to tenants
energy that was produced from a
renewable source and that the owner
had not purchased from or through a
local utility company.
In the same issue of the Federal
Register (81 FR 11160), the Treasury
Department and the IRS published a
notice of proposed rulemaking (REG–
123867–14) (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 and electronic
comments responding to the proposed
regulations. No requests for a public
hearing were made, and no public
hearing was held.
After consideration of all the
comments, the proposed regulations are
adopted as amended by this Treasury
Decision.
Summary of Comments and
Explanation of Provisions
The temporary regulations in TD 9755
applied the submetering principles to
energy that the building owner sold to
tenants if the energy was ‘‘produced
from a renewable source’’ and if the
owner had acquired it from the
renewable source without the
intervention of a local utility company.
Qualification for this submetering
treatment, however, depended on the
charges to the tenants for this energy
being comparable to local utility rates.
That is, under the temporary
regulations, to the extent that tenants
consumed this energy, the rate charged
by the building owner could not exceed
the rate at which the local utility
company would have charged the
tenants if they had instead acquired the
energy from that company.
A commenter requested that the final
regulations clarify how a building
E:\FR\FM\04MRR1.SGM
04MRR1
]]>Agencies
[Federal Register Volume 84, Number 42 (Monday, March 4, 2019)]
[Rules and Regulations]
[Pages 7274-7283]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03419]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 45 and 46
[Docket No. RM18-15-000; Order No. 856]
Interlocking Officers and Directors; Requirements for Applicants
and Holders
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this final rule, the Federal Energy Regulatory Commission
(Commission) amends its regulations related to interlocking officers
and directors to clarify and update the requirements for both
applicants and holders.
DATES: This rule will become effective May 3, 2019.
FOR FURTHER INFORMATION CONTACT:
Lindsay Orphanides (Technical Information), Office of Energy Market
Regulation, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426, (202) 502-8372, lindsay.orphanides@ferc.gov.
Mary Ellen Stefanou (Legal Information), Office of the General
Counsel, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426, (202) 502-8989, mary.stefanou@ferc.gov.
SUPPLEMENTARY INFORMATION:
I. Background
1. On July 19, 2018, the Commission issued a Notice of Proposed
Rulemaking (NOPR),\1\ proposing to revise parts 45 and 46 of the
Commission's regulations related to interlocking officers and directors
to clarify and update the requirements for both applicants and holders.
The Commission proposed to: (1) Update its regulations to reflect
statutory changes to the circumstances in which an applicant who would
otherwise require Commission authorization to hold an interlocking
position need not do so; (2) revise its regulations to clarify its
position on late-filed applications and informational reports; (3)
revise its regulations to clarify that an interlock holder is not
required to file a notice of change when merely changing positions
within a holding company; (4) revise its regulations to state that
applicants do not need to list in their applications public utilities
that do not have officers or directors; (5) revise its regulations with
regard to public utilities owned by a natural person; and (6) update
its regulations to remove Sec. 46.2(b), which contains definitions and
phrases now rendered obsolete.
---------------------------------------------------------------------------
\1\ Revisions to Parts 45 and 46 of the Commission's
Regulations, Notice of Proposed Rulemaking, 83 FR 37450 (Aug. 1,
2018), 164 FERC ] 61,032 (2018) (NOPR).
---------------------------------------------------------------------------
2. Comments were filed by Edison Electric Institute (EEI), NRG
Power Marketing LLC (NRG), Just Energy (U.S.) Corp. (Just Energy),
Electric Power Supply Association (EPSA), National Rural Electric
Cooperative Association (NRECA), National Grid USA (National Grid), and
Golden Spread Electric Cooperative, Inc. (Golden Spread). All comments
were generally supportive of the proposed changes. Some commenters
requested clarification on certain proposed changes, while others
proposed additional changes. We address these issues below.
II. Discussion
A. No Need for Commission Approval of Interlocking Director and Officer
Positions in Certain Circumstances
1. Proposal
3. Section 45.2 of the Commission's regulations describes the types
of interlocking positions that require Commission authorization,
including those between a public utility and entities authorized by law
to underwrite or participate in the marketing of public utility
securities.\2\ However, in 1999, Congress amended Federal Power Act
[[Page 7275]]
(FPA) section 305(b)(2) to provide that an applicant for certain
interlocking positions is no longer required to obtain Commission
authorization to hold such positions.\3\ In the NOPR, the Commission
proposed to revise Sec. 45.2 of its regulations to add that an
applicant for an interlocking position between a public utility and a
``bank, trust company, banking association, or firm that is authorized
by law to underwrite or participate in the marketing of public utility
securities,'' \4\ does not need Commission authorization when:
---------------------------------------------------------------------------
\2\ 18 CFR 45.2(b)(2).
\3\ See Public Law 106-102, sec. 737, 113 Stat. 1338, 1479
(1999).
\4\ 18 CFR 45.2(b)(2).
---------------------------------------------------------------------------
The person does not participate in any deliberations or
decisions of the public utility regarding the selection of the bank,
trust company, banking association, or firm to underwrite or
participate in the marketing of securities of the public utility, if
the person serves as an officer or director of a bank, trust company,
banking association, or firm that is under consideration in the
deliberation process;
the bank, trust company, banking association, or firm of
which the person is an officer or director does not engage in the
underwriting of, or participate in the marketing of, securities of the
public utility of which the person holds the position of officer or
director;
the public utility for which he/she serves or proposes to
serve as an officer or director selects underwriters by competitive
procedures; or
the issuance of securities of the public utility for which
the person serves or proposes to serve as an officer or director has
been approved by all Federal and State regulatory agencies having
jurisdiction over the issuance.\5\
---------------------------------------------------------------------------
\5\ NOPR, 164 FERC ] 61,032 at P 6. See also 16 U.S.C.
825d(b)(2).
---------------------------------------------------------------------------
2. Comments
4. EEI, Golden Spread, Just Energy, and NRECA all support the
Commission's proposed revision to Sec. 45.2 of its regulations.
5. Golden Spread states in its comments that it is unclear from the
NOPR if the Commission will require continued reporting of interlocking
positions between a public utility and a bank, trust company, banking
association, or firm that is authorized by law to underwrite or
participate in the marketing of public utility securities in Form No.
561. If not, Golden Spread states that the Commission may wish to cross
reference to Sec. 45.2 or clarify Sec. 46.5 of its regulations.\6\
---------------------------------------------------------------------------
\6\ Golden Spread Comments at 3.
---------------------------------------------------------------------------
3. Commission Determination
6. We will revise the language in Sec. 45.2 as proposed in the
NOPR, which brings the Commission's regulations into conformance with
the changes made by Congress to FPA section 305(b)(2) in 1999.
7. In response to Golden Spread's comments, we clarify that the
Commission will continue to require the reporting of interlocking
positions between a public utility and a bank, trust company, banking
association, or firm that is authorized by law to underwrite or
participate in the marketing of public utility securities in Form No.
561 under Sec. 46.5 of the Commission's regulations as the statutory
directive to report such information has not changed.\7\
---------------------------------------------------------------------------
\7\ See 16 U.S.C. 825d(c)(1), (2)(a).
---------------------------------------------------------------------------
B. Flexibility To Consider Late-Filed Applications and Informational
Reports
1. Proposal
8. The Commission proposed in the NOPR to revise Sec. 45.3(a) of
its regulations, which currently states that ``late-filed applications
will be denied'' and Sec. 45.9(b), which currently states that
``[f]ailure to timely file the informational report will constitute a
failure to satisfy this condition and will constitute automatic
denial.'' The Commission stated that it expects its regulations to be
followed but recognizes that good faith errors and oversights may
occasionally result in the inadvertent violation of the timing of FPA
section 305(b)'s filing requirements. In addition, the Commission
stated that it expects applicants to be attentive to their obligation
to timely file for the required authorizations and make every effort to
ensure they act in accordance with the statutory directives in FPA
section 305(b). Further, the Commission stated that, if an error or
oversight occurs, it expects that those errors and oversights will be
expeditiously identified and rectified, and applications to hold
interlocking director positions be promptly filed. Therefore, the
Commission proposed to delete the above-quoted language, and replace it
with language providing for consideration of late-filed applications
for interlocking positions on a case-by-case basis.\8\
---------------------------------------------------------------------------
\8\ NOPR, 164 FERC ] 61,032 at PP 7-9.
---------------------------------------------------------------------------
2. Comments
9. EEI, Golden Spread, Just Energy, National Grid, NRECA, and NRG
all support the Commission's proposed changes to Sec. Sec. 45.3(a) and
45.9(b). EEI takes issue with the Commission's statement in the NOPR
preamble that, ``[i]n cases where occasional errors and oversights
occur, the Commission expects that those errors and oversights will be
expeditiously identified and rectified, and applications to hold
interlocking director positions promptly filed.'' \9\ To avoid
``misinterpretation,'' EEI encourages the Commission to restate the
quoted provision to say: ``When errors and oversights are discovered,
the Commission expects that those errors and oversights will be
expeditiously rectified, and if required applications will be promptly
filed.'' \10\
---------------------------------------------------------------------------
\9\ EEI Comments at 4 (quoting NOPR, 164 FERC ] 61,032 at P 9).
\10\ Id.
---------------------------------------------------------------------------
3. Commission Determination
10. We adopt the changes to Sec. Sec. 45.3(a) and 45.9(b) of the
Commission's regulations proposed in the NOPR that will allow for
consideration of late-filed applications for interlocking positions on
a case-by-case basis.\11\ We do not think that it is in the public
interest to deny otherwise-qualified applicants' late-filed
applications and informational filings made under these regulations
when the late filing is due solely to good faith errors and oversights,
and the error or oversight is promptly identified and expeditiously
rectified.
---------------------------------------------------------------------------
\11\ We note that the public utilities whose officers and
directors are subject to the statutory directive in section 305(b)
to file, as regulated entities themselves subject to the
requirements of the FPA, and should make every effort to ensure that
their officers and directors, in turn, act in accordance with the
statutory directives in FPA section 305(b).
---------------------------------------------------------------------------
11. We decline to amend our statement in the NOPR preamble to state
that the Commission's expectation is that errors and oversights be
expeditiously rectified ``when errors and oversights are discovered,''
as suggested by EEI. We expect that errors and oversights be both
promptly identified and expeditiously rectified, and we reiterate our
expectation--grounded in the statute \12\--that applicants be attentive
to their obligation to timely file for the required authorizations and
thus make every effort to ensure that they act in accordance with the
statutory directives in FPA section 305(b). The Commission would look
unfavorably on FPA section 305(b) applications where an applicant has
not been properly attentive to his/her obligation to file for the
required authorization.
---------------------------------------------------------------------------
\12\ 16 U.S.C. 825d(b)(1).
---------------------------------------------------------------------------
[[Page 7276]]
C. Supplemental Applications or Notices of Change for Positions Pre-
Authorized Under Sec. 45.9
1. Proposal
12. The Commission proposed in the NOPR to revise Sec. Sec. 45.4
and 45.5 of its regulations to clarify that supplemental applications
and notices of change need not be filed in the case of a person already
authorized to hold interlocks identified in Sec. 45.9(a) who may
assume new or different positions that are still among those identified
by Sec. 45.9(a). The Commission stated that such changes in positions
among related public utilities are already reported in the annual Form
No. 561s, and separate filings under Sec. 45.4 or Sec. 45.5 are
unnecessary. The NOPR specifically stated that the holder of
interlocking officer and director positions must file a notice of
change when he/she no longer holds any interlocking positions within
the scope of the statute and regulations because no longer holding any
interlocking positions would constitute a ``material or substantial
change.'' \13\
---------------------------------------------------------------------------
\13\ NOPR, 164 FERC ] 61,032 at P 10.
---------------------------------------------------------------------------
2. Comments
13. EEI, Golden Spread, Just Energy, National Grid, NRECA, and NRG
all support the Commission's proposed revisions to Sec. Sec. 45.4 and
45.5.
14. EEI asks the Commission to add two points to its proposal to
revise Sec. Sec. 45.4 and 45.5. First, EEI asks for clarification that
the Commission ``means a notice is required only when the officer or
director resigns or withdraws from all pre-authorized interlocking
officer and director positions, not just from one such position, as
that would comport with the logic of the changes the Commission is
adopting as to subsection 45.5(b).'' \14\ EEI asserts that ``the
Commission should specify that public utility officers and directors
who are pre-approved under the holding company provisions at subsection
45.9(a) do not need to file `notice of change' reports when they
resign, but rather can rely on updates to their annual filings by
removing the companies from which they have resigned during the
previous year.'' \15\
---------------------------------------------------------------------------
\14\ EEI Comments at 7.
\15\ Id. at 9-10.
---------------------------------------------------------------------------
15. Second, EEI also asks the Commission to specify that Sec.
45.9(c) does not require an additional informational report in the case
of new or different interlocking positions within a holding company
system for an individual that has already filed a Sec. 45.9
informational report.\16\ EEI asserts that existing public utility
officers and directors pre-approved under Sec. 45.9(a) are not
applicants as that term is used in Sec. 45.5; therefore, they are not
required to file applications at the Commission, only informational
reports.\17\
---------------------------------------------------------------------------
\16\ Id. at 7.
\17\ Id. at 10.
---------------------------------------------------------------------------
16. Golden Spread asks the Commission to consider making an
additional edit to Sec. 45.5(b) to change the requirement for filing a
notice of change (e.g., for a withdrawal, or failure of reelection or
appointment) from a ``within 30 days'' requirement to a ``within 60
days'' requirement, stating that even when good faith efforts are made
to learn of changes from affected officers and directors, it can take
beyond a full month to learn of changes.\18\
---------------------------------------------------------------------------
\18\ Golden Spread Comments at 4.
---------------------------------------------------------------------------
17. Just Energy recommends the Commission adopt a number of
clarifying edits to Sec. Sec. 45.4(c) and 45.9(a)(3) and (b). In Sec.
45.4(c), Just Energy proposes that the Commission describe interlocking
positions that ``qualify for automatic authorization pursuant'' to
Sec. 45.9(a), as opposed to positions that ``are identified'' in Sec.
45.9(a). Just Energy suggests that, in Sec. 45.9(a)(3), the Commission
authorize interlocking positions of an officer or director of more than
one public utility where such officer or director is already authorized
under this part to hold positions as officer or director of those ``or
any other public utilities'' where the interlock involves affiliated
public utilities. Just Energy's proposed amendment to Sec. 45.9(b)
would create a new paragraph (b)(2) that states that a person is
``exempt from filing an informational report pursuant to [section]
45.4.''
18. Just Energy also states that it supports the proposal that
officers and directors do not need to file a notice of change when they
leave some but not other positions within a corporate family, and
instead report interlock changes among affiliates in the applicable
Form No. 561. Just Energy accordingly recommends additional amendments
to amended Sec. 45.5(b) to state that a notice of change under this
section would not be required if the only change to be reported is ``a
resignation or withdrawal from fewer than all positions held between or
among affiliated public utilities, a reelection or reappointment to a
position that was previously authorized,'' or holding a different or
additional interlocking position ``that would qualify for automatic
authorization pursuant to'' Sec. 45.9(a). Just Energy states that its
proposed amendments address the Commission's clarification regarding
partial resignations and harmonize Sec. 45.5 with the proposed
amendments regarding appointments with affiliated entities.\19\
---------------------------------------------------------------------------
\19\ Just Energy Comments at 6-7.
---------------------------------------------------------------------------
3. Commission Determination
19. We adopt the NOPR's proposed revisions to Sec. Sec. 45.4 and
45.5 of the Commission's regulations to state that supplemental
applications and notices of change need not be filed in the case of a
person already authorized to hold interlocks identified in Sec.
45.9(a) who may assume new or different positions that are still among
those identified by Sec. 45.9(a), with certain clarifications and
amendments discussed below.
20. In response to EEI, we clarify that the change to Sec. 45.5(b)
adopted in this final rule means that, in the case of interlocking
positions that are identified in Sec. 45.9(a), a notice of change now
need only be filed when the officer or director resigns or withdraws as
an officer or director from all previously held interlocking officer
and director positions. When he/she resigns from only one position out
of several interlocking positions for which he/she received
authorization pursuant to Sec. 45.9, he/she need only include this
information in the annual Form No. 561.
21. We also clarify in response to EEI that Sec. 45.9(c) does not
require an additional informational report when an officer or director
has a new or different interlocking position within a holding company
system compared to what was reported when he/she originally filed an
informational report under Sec. 45.9. Instead, he/she need only
include the new or different interlocking position(s) in the annual
Form No. 561.
22. We agree with Golden Spread's proposal to alter the timing of
the notice of change filing requirement from 30 days to within 60 days
of the triggering event. We think this change is reasonable because 30
days may be too short a period to comply with the regulation, and
allowing for 60 days may result in more accurate filings. We therefore
amend Sec. 45.5(b) to state that the filing of a notice of change
shall be made within 60 days.
23. We adopt Just Energy's proposed amendments to Sec. Sec.
45.4(c), 45.9(a)(3) and (b), and 45.5(b). We find that the amendments
proposed by Just Energy more clearly state the revisions adopted by
this final rule.
[[Page 7277]]
D. Public Utilities Within a Holding Company That Do Not Have Directors
and Officers
1. Proposal
24. In the NOPR, the Commission recognized the growing complexity
of corporate structures. Thus, the Commission proposed to revise Sec.
45.8(c)(1) of its regulations to state that applicants under part 45 do
not need to list in their applications those public utilities that do
not have officers or directors.\20\
---------------------------------------------------------------------------
\20\ NOPR, 164 FERC ] 61,032 at P 11.
---------------------------------------------------------------------------
2. Comments
25. EEI, Golden Spread, and NRG support the Commission's proposed
revision to Sec. 45.8(c)(1). Golden Spread ``agrees that if such
structures exist and do not have officers and directors, such
information would be extraneous.'' \21\ NRECA states that it has no
position on the Commission's proposal; it acknowledges the growing
complexity of corporate structures ``but does not appreciate why that
trend warrants reducing the information in these applications.'' \22\
NRECA requests that the Commission explain in more detail the
regulatory burden that will be relieved and the information that will
be lost by the proposed change.\23\
---------------------------------------------------------------------------
\21\ Golden Spread Comments at 4.
\22\ NRECA Comments at 2.
\23\ Id.
---------------------------------------------------------------------------
3. Commission Determination
26. We adopt the NOPR's proposed revisions to Sec. 45.8(c)(1) of
the Commission's regulations to state that applicants under part 45 do
not need to list in their applications those public utilities that do
not have officers or directors. While we are not aware of any
applications that have been filed where a company does not have any
officers or any directors, we understand from EEI that such companies
do exist.\24\
---------------------------------------------------------------------------
\24\ See Edison Electric Institute Comments, Docket No. AD12-6-
002 (Nov. 28, 2016).
---------------------------------------------------------------------------
27. In response to Golden Spread and NRECA, we are not aware that
any material information would be lost by making this change. We expect
the universe of companies that do not have any officers or directors to
be small, as it is still atypical for a company to have neither
officers nor directors. We also note that, under Sec. 45.2(a), the
obligation to make the appropriate filings extends to any person
elected or appointed to perform executive duties or functions similar
to those ordinarily performed by presidents, vice presidents, directors
and others.\25\ This pre-existing requirement, which the Commission has
not proposed to change, should ensure that the change adopted above
will not materially affect the Commission's oversight of jurisdictional
interlocking positions.
---------------------------------------------------------------------------
\25\ 18 CFR 45.2(a).
---------------------------------------------------------------------------
E. Corporate Relationships Within the Scope of Automatic Authorizations
1. Proposal
28. In the NOPR, the Commission proposed to revise Sec. 45.9 of
its regulations to add the word ``person'' when defining the corporate
relationships within the scope of the automatic authorizations
addressed in Sec. 45.9. The Commission recognized that public
utilities can be owned not just by a corporate entity but by a natural
person, and that the regulations should reflect this possibility.\26\
---------------------------------------------------------------------------
\26\ NOPR, 164 FERC ] 61,032 at P 12.
---------------------------------------------------------------------------
2. Comments
29. EEI, Golden Spread, and NRECA support the Commission's proposed
revision to Sec. 45.9. Golden Spread adds that it thinks this proposed
change does not apply to cooperative governance structures.
3. Commission Determination
30. We adopt the proposed revision to Sec. 45.9 of the
Commission's regulations to add the word ``person'' when defining the
corporate relationships within the scope of the automatic
authorizations addressed in Sec. 45.9. Given that some public
utilities can be and are now owned by natural persons, a change in the
regulations to reflect this development is warranted.\27\
---------------------------------------------------------------------------
\27\ In response to Golden Spread, we do not envision a
cooperative governance structure where a rural electric cooperative
is owned by its customers/ratepayers to fall within the scope of
this rule. See generally Wolverine Power Supply Cooperative, Inc.,
93 FERC ] 61,328, at 62,119 (2000), reh'g denied, 94 FERC ] 61,178,
at 61,616 (2001).
---------------------------------------------------------------------------
F. Removal of Sec. 46.2(b)
1. Proposal
31. The Commission proposed in the NOPR to update its regulations
in part 46 to remove Sec. 46.2(b), because the definitions were
rendered obsolete as a result of the enactment of the Energy Policy Act
of 2005 and the concurrent repeal of the Public Utility Holding Company
Act of 1935 (PUHCA 1935).\28\ The Commission noted in the NOPR that
Sec. 46.2(b) currently references the definition of ``holding company
system'' and ``registered holding company system'' in PUHCA 1935.\29\
However, the Energy Policy Act of 2005 repealed PUHCA 1935.\30\ Thus,
the Commission proposed to remove Sec. 46.2(b). The Commission also
proposed to update part 46 to change ``Rural Electrification
Administration'' to ``Rural Utilities Service'' to reflect the name
change of that organization.\31\
---------------------------------------------------------------------------
\28\ See Public Law 109-58, sec. 1261-77, 119 Stat. 594, 972-78
(2005).
\29\ 16 U.S.C. 79a et seq.
\30\ Public Law 109-58, sec.1263, 119 Stat. 594, 974 (2005).
\31\ NOPR, 164 FERC ] 61,032 at P 13.
---------------------------------------------------------------------------
2. Comments
32. EEI, Golden Spread, and NRECA all support the removal of Sec.
46.2(b) and the update of part 46 to change ``Rural Electrification
Administration'' to ``Rural Utilities Service.''
3. Commission Determination
33. We adopt the proposed removal of Sec. 46.2(b) from the
Commission's regulations, as it is now outdated, and we update part 46
of the Commission's regulations to change ``Rural Electrification
Administration'' to ``Rural Utilities Service'' to reflect the change
in name of that organization.
G. Additional Issues Raised by Commenters
1. Amending Sec. 45.1(a)(3)
a. Comments
34. EEI requests that the Commission amend Sec. 45.1(a)(3) of its
regulations by changing the closing phrase ``a public utility'' to
``such public utility,'' as stated in the opening sentence of FPA
section 305(b)(1). EEI asserts that this change to the regulations
would align the regulations with the statute, and it would recognize
that Congress intended to require approval for interlocking director
and officer positions between a utility and an electrical supplier only
when the supplier supplies equipment to the utility involved, not just
to other utilities. EEI also states that this change also would conform
the part 45 regulations with one another.\32\
---------------------------------------------------------------------------
\32\ EEI Comments at 9.
---------------------------------------------------------------------------
b. Commission Determination
35. We adopt EEI's suggested amendment to Sec. 45.1(a)(3) of the
Commission's regulations by changing the closing phrase ``a public
utility'' to ``such public utility.'' We agree with EEI that this
change will better align the regulations with the statute, and
recognize that Congress intended to require approval for interlocking
director and officer positions between a utility and an electrical
supplier only when the supplier supplies electrical equipment to the
utility involved, and not just to any utility.
[[Page 7278]]
2. Definition of Electrical Equipment
a. Comments
36. EEI asks the Commission to modify its current definition of
``electrical equipment.'' EEI asserts that the definition of electrical
equipment has been inappropriately construed too broadly in some cases.
EEI requests that the Commission delete from the current Sec. 46.2(f)
definition the footnoted cross-reference to the Uniform System of
Accounts and clarify that the definition applies to both parts 45 and
46 of the Commission's regulations. EEI asserts that the current
definition found in Sec. 46.2(f) is straightforward,\33\ and that the
cross-reference to the Uniform System of Accounts has resulted in the
term electrical equipment being defined to include common business
equipment such as computers, calculators, and sprinklers.\34\
---------------------------------------------------------------------------
\33\ Id. at 11 (citing 18 CFR 46.2(f)).
\34\ Id.
---------------------------------------------------------------------------
b. Commission Determination
37. We decline to delete from the current Sec. 46.2(f) definition
of electrical equipment the footnoted cross-reference to the Uniform
System of Accounts. We disagree that the cross-reference to the Uniform
System of Accounts results in a definition of electrical equipment that
is too broad. In this regard, we note that, in establishing the
definition of electrical equipment in Sec. 46.2(f), the Commission
stated that the footnoted reference to the Commission's Uniform System
of Accounts was ``a guide only,'' acknowledging that certain items
found in the accounts listed are clearly not ``electrical equipment''
within the scope of Sec. 46.2(f).\35\ We find that the footnoted
reference to the Uniform System of Accounts continues to provide useful
guidance to aid the industry as well as the Commission in determining
what does and does not constitute electrical equipment under part 46,
and thus should be retained.
---------------------------------------------------------------------------
\35\ Public Utility Filing Requirement and Requirements for
Persons Holding Interlocking Positions; Order Issuing Final
Regulations, 45 FR 23413, at 23415-16 (Apr. 7, 1980), FERC Stats. &
Regs. ] 30,140, at 30,984 (1980).
---------------------------------------------------------------------------
38. We do clarify that, as necessary, the Commission, in evaluating
applications and reporting under part 45, will continue to look to
Sec. 46.2(f) and the footnoted reference to the Uniform System of
Accounts for guidance in determining what constitutes electrical
equipment under part 45.\36\
---------------------------------------------------------------------------
\36\ See, e.g., Barry Lawson Williams, 134 FERC ] 61,183, at P
10 (2011).
---------------------------------------------------------------------------
3. Blanket Authorizations for Companies Without Captive Customers
a. Comments
39. EEI, EPSA, Just Energy, and NRG ask the Commission to create a
blanket authorization for interlock holders at companies within holding
company systems without captive customers.
i. EEI
40. EEI requests that the Commission revisit the need for
interlocking directorate applications and reporting to cover officers
and directors who hold positions involving, within a holding company
system, multiple companies that do not have captive customers, such as
exempt wholesale generators and qualifying facilities, or positions
involving such companies and their securities underwriters \37\ or
their electrical equipment suppliers.\38\
---------------------------------------------------------------------------
\37\ But see 16 U.S.C. 825d(b)(2).
\38\ EEI Comments at 10.
---------------------------------------------------------------------------
ii. EPSA
41. EPSA requests that the Commission consider granting a blanket
authorization to public utilities without any captive customers, to
allow individuals to concurrently hold positions as an officer or
director of more than one public utility within the corporate holding
company, or positions of officer or director of a public utility and a
company supplying electrical equipment to a public utility within the
corporate holding company.\39\
---------------------------------------------------------------------------
\39\ EPSA Comments at 2.
---------------------------------------------------------------------------
42. EPSA argues that this category of public utility, which
includes independent power producers that are structured as merchant
sellers of power only, are incapable of and do not pose a danger of
imposing excessive charges or allocating unreasonable costs to
customers, flouting state regulation in any way, or harming customers
through a general lack of economy of management, operation,
inefficiency, or inadequacy of services. EPSA asserts that, with
independent entities, any mismanagement or uneconomic transactions are
not passed on to customers, but are borne exclusively by shareholders.
EPSA proposes that blanket authorizations be granted solely to those
utilities on an intra-holding company basis.\40\
---------------------------------------------------------------------------
\40\ Id. at 3.
---------------------------------------------------------------------------
43. EPSA suggests that, to provide oversight to companies eligible
for its proposed blanket authorization, ``an entity with market-based
rate authority and previously granted a blanket authorization for
interlocking positions within its holding company could declare in its
triennial market-based rate authorization filings that its holding
company structure remains fully independent, and therefore that entity
continues to pose no threat of harm to captive customers as a result of
affiliate abuse concerns and, as such, does not pose a threat to pass
on rate increases driven by affiliate contracts or contracts between
independent companies with a common set of officers or directors.''
\41\ EPSA also compares its requested blanket authorization to blanket
authorizations under FPA section 203.\42\
---------------------------------------------------------------------------
\41\ Id. at 4.
\42\ Id. at 4-5 (citing Transactions Subject to FPA Section 203,
Order No. 669, 113 FERC ] 61,315, at P 57 (2005), order on reh'g,
Order No. 669-A, 115 FERC ] 61,097, order on reh'g, Order No. 669-B,
116 FERC ] 61,076 (2006)).
---------------------------------------------------------------------------
44. EPSA asserts that granting blanket authorization to intra-
holding company independent power producers and marketers without
captive customers is a logical outgrowth of the NOPR and is consistent
with the NOPR's intent, and would serve to reduce regulatory burdens
and modernize these regulations to better reflect the modern state of
the electricity generation and sales landscape.\43\ EPSA also suggests
that the Commission could issue a supplemental notice in order to
broaden the scope of the NOPR to implement EPSA's proposed changes in
the final rule.\44\
---------------------------------------------------------------------------
\43\ Id. at 8-9.
\44\ Id. at 9.
---------------------------------------------------------------------------
iii. Just Energy
45. Just Energy requests that the Commission grant blanket
authorizations to public utilities that are not franchised utilities
and are not affiliated with a franchised utility. Under Just Energy's
proposal, officers and directors of such public utilities and their
affiliates would not be required to seek prior authorization, but would
disclose all appointments and changes on their annual Form No. 561.\45\
---------------------------------------------------------------------------
\45\ Just Energy Comments at 5-6.
---------------------------------------------------------------------------
iv. NRG
46. NRG asks the Commission to issue a ``narrow and discrete''
blanket authorization for individuals holding officer positions in
affiliated entities all under the same holding company structure
without any captive customers, regardless of whether those positions
are with public utilities, electrical equipment supply companies, or
fuel supply companies.\46\ Under this proposal, the individual would be
able to hold positions in such entities
[[Page 7279]]
without any filing requirements (either a prior-notice filing or the
annual Form No. 561).\47\
---------------------------------------------------------------------------
\46\ We note that an interlock involving the latter, i.e., fuel
supply companies, would not be a jurisdictional interlock under FPA
section 305(b) requiring a filing.
\47\ NRG Comments at 5-6.
---------------------------------------------------------------------------
47. Like EPSA, NRG compares its requested blanket authorization to
section 203 blanket authorizations.\48\ NRG states that allowing
blanket waivers in the interlock context would still allow the
Commission to rigorously police for the conduct that concerned Congress
in 1935 (that companies under common control were entering into above
market contracts and passing through those costs to retail customers),
meet the plain language of the statute, and reduce the paperwork burden
and regulatory burdens on regulated entities.\49\
---------------------------------------------------------------------------
\48\ Id. at 6 (citing Blanket Authorization Under FPA Section
203, Order No. 708, 122 FERC ] 61,156 (2008)).
\49\ Id.
---------------------------------------------------------------------------
48. Although NRG asserts that the Commission could provide for a
blanket authorization as requested with no further notice because it is
a ``logical outgrowth'' of the NOPR, NRG suggests that the Commission
could also issue, out of an abundance of caution, a supplemental notice
describing the blanket authorization.\50\
---------------------------------------------------------------------------
\50\ Id. at 6-7.
---------------------------------------------------------------------------
b. Commission Determination
49. We decline to create a blanket authorization for persons
holding interlocking positions between affiliated companies without any
captive customers. The current requirements impose minimal burdens, and
the commenters have not made a sufficient case for granting their
requested relief of a blanket authorization.
50. The burden that would be avoided by a blanket authorization for
individuals serving as officers or directors at multiple companies in a
holding company system is minimal. Currently, in such scenarios, each
individual must file only once--and then only a relatively minor
submittal--for authorization (under Sec. 45.9 of the Commission's
regulations), and then each individual needs to file only an annual
report pursuant to FPA section 305(c) each April 30 thereafter,\51\
which describes any changes in his/her positions among the companies in
the holding company system.
---------------------------------------------------------------------------
\51\ Even if we were to grant the requested relief under FPA
section 305(b), that would not relieve the persons holding such
interlocks from the separate requirement to make an annual filing,
the Form No. 561, under FPA section 305(c).
---------------------------------------------------------------------------
51. In response to EPSA and NRG's comparison of an interlock
blanket authorization to blanket authorizations in the FPA section 203
context, we note that, although the Commission implemented blanket
authorizations in the section 203 context, it was done in response to
the Energy Policy Act of 2005, which revised FPA section 203 by adding
FPA section 203(a)(5), which required the Commission to adopt
procedures for the expeditious consideration of applications under that
section.\52\ No similar circumstances exist here.
---------------------------------------------------------------------------
\52\ Public Law 109-58, sec. 1289, 119 Stat. 594, 982 (2005);
Order No. 669, 113 FERC ] 61,315 at PP 55-57.
---------------------------------------------------------------------------
4. Online Submission Process/Database for Interlock Filings
a. Comments
52. Golden Spread and NRECA filed comments requesting the creation
of an online submission process/database for interlock filings. Golden
Spread requests that the Commission consider moving the interlocking
directorate application, updating/supplementing, termination process,
and annual Form No. 561 to an online submission process. Golden Spread
argues that the current system is paper intensive and an online system
could streamline compliance associated with parts 45 and 46 and would
create an opportunity for more robust relational databases wherein the
Commission would be better able to track compliance with its
interlocking directorate program.\53\ Golden Spread and NRECA state
that an online submission process/database would reduce regulatory
burdens.\54\
---------------------------------------------------------------------------
\53\ Golden Spread Comments at 5.
\54\ Id.; NRECA Comments at 3.
---------------------------------------------------------------------------
b. Commission Determination
53. We support modernizing our systems and processes. However, we
will not propose a new submission process or database in this
proceeding, but may consider the creation of an online process/database
in the future.
5. Temporary Appointments
a. Comments
54. Just Energy states that it is not uncommon for market
participants to have to appoint, remove, or reappoint personnel to
officer positions to accommodate routine business needs that are not
always foreseeable or permanent. For example, Just Energy states that a
company may need to make a person an officer in order to have signature
authority for a transaction, or when someone is on medical leave. Just
Energy requests that these administrative, ministerial, or temporary
appointments not require any Commission approval or reporting, arguing
that they do not pose the kinds of threats contemplated by Congress
when it adopted section FPA 305(b), and are burdensome to both the
Commission and to public utilities.\55\
---------------------------------------------------------------------------
\55\ Just Energy Comments at 6.
---------------------------------------------------------------------------
b. Commission Determination
55. We acknowledge that an exemption from the filing requirements
for certain temporary appointments to interlocking positions reflects
the reality of the world, where a position may be unexpectedly left
vacant due to death, illness, etc. and a company must quickly appoint
someone to temporarily fill the now-vacant position on an ``acting''
basis. We therefore find that a person seeking to hold an interlocking
position covered by Sec. 45.2 that would otherwise require an
automatic authorization filing under Sec. 45.9 may be appointed to
fill the vacant position temporarily, for 90 days or less, without the
necessity of seeking Commission approval or of reporting in, for
example, Form No. 561. To implement this change, we add a new paragraph
(c) to Sec. 45.1, as well as additional language to Sec. 45.9(b) that
exempts a person holding a temporary interlocking position pursuant to
the new Sec. 45.1(c) from the requirement to submit an informational
report.
56. We note that this temporary appointment exemption would, in
practice, apply only in a narrow set of circumstances--where a person
who has never held any interlock before is temporarily appointed to a
position at an affiliate company. For example, a person serving as an
officer of Utility A could be temporarily appointed as an officer of
affiliated Utility B, which is part of the same holding company as
Utility A, without the necessity of Commission approval or a reporting
requirement such as the annual Form No. 561. In this example, if this
person had previously been authorized to hold a non-temporary interlock
between two or more affiliated utilities, this exemption for temporary
positions would not be necessary; the person would already have been
required to have made an initial automatic authorization filing under
Sec. 45.9, and would only need to include this new appointment in his/
her annual Form No. 561.
57. Finally, we note that a person cannot be re-appointed for
multiple 90-day periods to the same interlocking position and still
consider it a temporary position that continues to be exempt from the
automatic authorization requirements. Under such circumstances, the
individual who seeks to hold a position for more than 90 days
[[Page 7280]]
must seek the necessary authorization pursuant to the Commission's
regulations.
6. Cost Estimates for Informational Filings and Notices of Change
a. Comments
58. Just Energy, in asserting that it is costly and burdensome for
individuals, and in many cases their employers, to comply with the
rules as written, states that the Commission's estimates that
informational filings cost $632.00 each, and that notices of change
cost $19.25, are too low. In support, Just Energy asserts that: (1)
Each filing must be customized to the individual; (2) the officer or
director must verify the reportable positions; (3) a notary may be
required for the attestation; (4) a corporate secretary may have to
pull information on positions held to verify the submission; (5)
corporate structure information may need to be pulled to verify that
the ownership chain qualifies for an informational filing; (6) someone
reviews the materials; (7) someone makes revisions to the filing; (8)
someone collects signatures; and (9) someone makes the filing.\56\
---------------------------------------------------------------------------
\56\ Id. at 3, n.4.
---------------------------------------------------------------------------
b. Commission Determination
59. We disagree that we have underestimated the costs of
informational filings and notices of change. We note that the cost
estimates stated in the NOPR and in this final rule are estimates of
average costs. While the costs of some informational filings and
notices of change will be higher than the stated averages, some will
also be less than the stated averages.
III. Information Collection Statement
60. The collection of information contained in this final rule is
subject to review by the Office of Management and Budget (OMB) under
section 3507(d) of the Paperwork Reduction Act (PRA).\57\ The PRA
requires each federal agency to seek and obtain 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 \58\
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.
---------------------------------------------------------------------------
\57\ 44 U.S.C. 3507(d).
\58\ 5 CFR part 1320.
---------------------------------------------------------------------------
61. The revisions enacted by this final rule would clarify and
update the requirements \59\ for those seeking and holding interlocking
positions. The Commission anticipates that the revisions, once
effective, would reduce regulatory burdens. The Commission will submit
the reporting requirements to OMB for its review and approval under
section 3507(d) of the Paperwork Reduction Act.\60\
---------------------------------------------------------------------------
\59\ 18 CFR parts 45, 46.
\60\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------
62. While the Commission expects that the regulatory revisions
herein will reduce the burdens on affected entities, the Commission
nonetheless solicits public comments regarding the accuracy of the
burden and cost estimates below.
63. Burden Estimate: \61\ The estimated burden and cost for the
requirements contained in this final rule follow.
---------------------------------------------------------------------------
\61\ ``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.
\62\ The Commission staff thinks that the average respondent for
this collection is similarly situated to the Commission, in terms of
salary plus benefits. Based upon FERC's 2018 annual average (for
salary plus benefits) of $164,820, the average hourly cost is $79/
hour.
FERC Form No. 520
[Application for authority to hold interlocking directorate positions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual number Total annual burden
Number of of responses Total number of Average burden & cost hours (total annual Cost per
respondents per respondent responses per response \62\ cost) respondent ($)
(1) (2) (1) * (2) = (3) (4)................... (3) * (4) = (5)...... (5) / (1)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Full............................... 16 1 16 50 hrs.; $3,950....... 800 hrs.; $63,200.... 3,950
Informational...................... 500 1 500 8 hrs.; $632.......... 4,000 hrs.; $316,000. 632
Notice of Change................... 100 1 100 0.25 hrs.; $19.75..... 25 hrs.; $1,975...... 19.75
--------------------------------------------------- ------------------
Total.......................... .............. .............. ................. ...................... 4,825 hrs.; $381,175.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title: FERC-520 (Application for Authority to Hold Interlocking
Directorate Positions).
OMB Control No.: 1902-0083.
Abstract: The FPA, as amended, mandates federal oversight and
approval of certain electric corporate activities to ensure that
neither public nor private interests are adversely affected.
Accordingly, the Commission's regulations prescribe related information
filing requirements to achieve this goal. Such filing requirements are
found in 18 CFR parts 45 and 46.
Overview of the Data Collection. FERC-520 provides information
related to complex electric corporate activities, in particular, the
holding of interlocking positions, and thereby serves to safeguard
public and private interests, as the FPA requires.
FERC-520 is divided into two types of applications: full and
informational. The full application, as specified in 18 CFR 45.8,
implements the FPA requirement under section 305(b) that it is unlawful
for any person to concurrently hold the positions of officer or
director of more than one public utility; or a public utility and a
financial institution that is authorized to underwrite or participate
in the marketing of public utility securities; or a public utility and
an electrical equipment supplier to such public utility, unless
authorized by the Commission. In order to obtain authorization, an
applicant must demonstrate that neither public nor private interests
will be adversely affected by the holding of the positions. The full
application provides the Commission with information about any
interlocking position for which the applicant seeks authorization
including, but not limited to, a description of
[[Page 7281]]
duties and the estimated time devoted to the position.
An informational (abbreviated) application, as specified in 18 CFR
45.9, allows an applicant to receive automatic authorization for an
interlocked position upon receipt of the filing by the Commission. The
informational application applies only to those individuals who seek
authorization as: (1) An officer or director of two or more public
utilities where the same holding company owns, directly or indirectly,
that percentage of each utility's stock (of whatever class or classes)
which is required by each utility's by-laws to elect directors; (2) an
officer or director of two public utilities, if one utility is owned,
wholly or in part, by the other and, as its primary business, owns or
operates transmission or generation facilities to provide transmission
service or electric power for sale to its owners; or (3) an officer or
director of more than one public utility, if such person is already
authorized under part 45 to hold different positions as officer or
director of those utilities where the interlock involves affiliated
public utilities.
FERC-520 also includes the requirement to file a notice of change
if there are new positions or changes to the positions held. The
Commission is revising its requirements and, among other things, will
no longer require a notice of change when a person is merely changing
positions within a holding company system. This change is expected to
reduce the number of filed notices of change by 50 percent annually
(from 200 filings to 100 filings) and to reduce the corresponding total
burden.
Type of Respondents: Individuals who plan to concurrently become or
concurrently are officers or directors of public utilities and of
certain other entities must request authorization to hold such
interlocking positions by submitting a FERC-520.
Internal Review: The Commission has reviewed the information
collection requirements and has determined that certain changes are
needed and that the remaining requirements are necessary. These
requirements conform to the Commission's need for efficient information
collection, communication, and management within the energy industry.
The Commission has specific, objective support for the burden estimates
associated with the information collection requirements. 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. Comments concerning the collection of
information and the associated burden estimate(s) may also be sent to
the 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-520, OMB
Control No. 1902-0083 in your submission.
IV. Environmental Analysis
64. 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.\63\ 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 actions under section 305 of the FPA relating to interlocking
directorates.\64\
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\63\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats.
& Regs. ] 30,783 (1987).
\64\ 18 CFR 380.4(a)(16).
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V. Regulatory Flexibility Act
65. The Regulatory Flexibility Act of 1980 (RFA) \65\ 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.\66\ These
standards are provided in the SBA regulations at 13 CFR 121.201.\67\
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\65\ 5 U.S.C. 601-612.
\66\ 13 CFR 121.101.
\67\ 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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66. This final rule will apply to those individuals seeking to hold
and those currently holding interlocking positions. In order to obtain
authorization, an applicant must demonstrate that neither public nor
private interests will be adversely affected by the holding of the
interlocking positions.
67. There are an estimated 16 respondents who could file full
applications over the course of a year, who would provide one response
annually with an estimated time commitment of 50 hours per response,
and a resulting estimated cost of $3,950.00 per respondent. There are
an estimated 500 respondents who could file informational applications
over the course of a year, who would provide one response annually with
an estimated time commitment of 8 hours per response, and a resulting
estimated cost of $632.00 per respondent. In addition, there are an
estimated 100 respondents who could file a notice of change annually
with an estimated time commitment of 0.25 hours, and a resulting cost
of $19.75 per respondent. Therefore the average annual cost for each of
the 616 respondents is $618.79. That cost is not significant. More
importantly, this final rule reduces industry cost by eliminating the
need for the filing of some notices of change.
68. The Commission certifies that this final rule will not have a
significant economic impact on a substantial number of small entities.
VI. Document Availability
69. 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 the Commission's Home Page (https://www.ferc.gov) and
in the Commission'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.
70. From the Commission'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.
71. User assistance is available for eLibrary and the Commission'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
72. These regulations are effective May 3, 2019. The Commission has
determined that this rule is not a ``major rule'' as defined in section
351 of the
[[Page 7282]]
Small Business Regulatory Enforcement Fairness Act of 1996.
List of Subjects
18 CFR Part 45
Electric utilities, Reporting and recordkeeping requirements.
18 CFR Part 46
Antitrust, Electric utilities, Holding companies, Reporting and
recordkeeping requirements.
By the Commission.
Issued: February 21, 2019.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
In consideration of the foregoing, the Commission amends parts 45
and 46, chapter I, title 18, Code of Federal Regulations, as follows:
PART 45--APPLICATION FOR AUTHORITY TO HOLD INTERLOCKING POSITIONS
0
1. The authority citation for part 45 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; 3 CFR 142.
0
2. Amend Sec. 45.1 by revising paragraph (a)(3) and adding paragraph
(c) to read as follows:
Sec. 45.1 Applicability; who must file.
(a) * * *
(3) Officer or director of a public utility and of any company
supplying electrical equipment to such public utility.
* * * * *
(c) Notwithstanding paragraphs (a) and (b) of this section, any
person may temporarily hold an interlocking position described in Sec.
45.2 for no more than 90 days within a twelve-month period without
applying for Commission authorization under Sec. 45.8 and without
complying with the requirements for authorization under Sec. 45.9.
0
3. Amend Sec. 45.2 by adding paragraph (d) to read as follows:
Sec. 45.2 Positions requiring authorization.
* * * * *
(d) A person that holds or proposes to hold an interlocking
position as officer or director of a public utility and of a
corporation described by paragraph (b)(2) of this section shall not
require authorization to hold such positions in the following
circumstances--
(1) The person does not participate in any deliberations or
decisions of the public utility regarding the selection of the bank,
trust company, banking association, or firm to underwrite or
participate in the marketing of securities of the public utility, if
the person serves as an officer or director of a bank, trust company,
banking association, or firm that is under consideration in the
deliberation process;
(2) The bank, trust company, banking association, or firm of which
the person is an officer or director does not engage in the
underwriting of, or participate in the marketing of, securities of the
public utility of which the person holds the position of officer or
director;
(3) The public utility for which the person serves or proposes to
serve as an officer or director selects underwriters by competitive
procedures; or
(4) The issuance of securities of the public utility for which the
person serves or proposes to serve as an officer or director has been
approved by all Federal and State regulatory agencies having
jurisdiction over the issuance.
0
4. Revise Sec. 45.3(a) to read as follows:
Sec. 45.3 Timing of filing application.
(a) The holding of positions within the purview of section 305(b)
of the Act shall be unlawful unless the holding shall have been
authorized by order of the Commission. Nothing in this part shall be
construed as authorizing the holding of positions within the purview of
section 305(b) of the Act prior to order of the Commission on
application therefor. Applications must be filed and authorization must
be granted prior to holding any interlocking positions within the
purview of section 305(b) of the Act; the Commission will consider
late-filed applications on a case-by-case basis. The term ``holding,''
as used in this part, shall mean acting as, serving as, voting as, or
otherwise performing or assuming the duties and responsibilities of
officer or director within the purview of section 305(b) of the Act.
* * * * *
0
5. Amend Sec. 45.4 by adding paragraph (c) to read as follows:
Sec. 45.4 Supplemental applications.
* * * * *
(c) Changes in interlocking positions within the scope of Sec.
45.9. Notwithstanding paragraphs (a) and (b) of this section, in the
case of interlocking positions that qualify for automatic authorization
pursuant to Sec. 45.9(a), a filing under this section will not be
required if the only changes to be reported are holding different or
additional interlocking positions that would qualify for automatic
authorization pursuant to Sec. 45.9(a).
0
6. Revise Sec. 45.5(b) to read as follows:
Sec. 45.5 Supplemental information.
* * * * *
(b) Notice of changes. In the event of the applicant's resignation,
withdrawal, or failure of reelection or appointment in respect to any
of the positions for which authorization has been granted by the
Commission, or in the event of any other material or substantial change
therein, the applicant shall, within 60 days after any such change
occurs, give notice thereof to the Commission setting forth the
position, corporation, and date of termination therewith, or other
material or substantial change. In the case of interlocking positions
that qualify for automatic authorization pursuant to Sec. 45.9(a), a
notice of change under this section will not be required if the only
change to be reported is a resignation or withdrawal from fewer than
all positions held between or among affiliated public utilities, a
reelection or reappointment to a position that was previously
authorized, or holding a different or additional interlocking position
that would qualify for automatic authorization pursuant to Sec.
45.9(a).
* * * * *
0
7. Revise Sec. 45.8(c)(1) to read as follows:
Sec. 45.8 Contents of application.
* * * * *
(c) * * *
(1) Name of utility, unless said utility does not have officers or
directors.
* * * * *
0
8. Revise Sec. 45.9(a)(1) and (3) and (b) to read as follows:
Sec. 45.9 Automatic authorization of certain interlocking positions.
(a) * * *
(1) Officer or director of one or more other public utilities if
the same holding company or person owns, directly or indirectly, that
percentage of each utility's stock (of whatever class or classes) which
is required by each utility's by-laws to elect directors;
* * * * *
(3) Officer or director of more than one public utility, if such
officer or director is already authorized under this part to hold
positions as officer or director of those or any other public utilities
where the interlock involves affiliated public utilities.
(b) Conditions of authorization. (1) As a condition of
authorization, any person eligible to seek authorization to hold
interlocking positions under this section must submit, prior to
performing or assuming the duties and responsibilities of the position,
an informational report
[[Page 7283]]
in accordance with paragraph (c) of this section, unless that person:
(i) Is already authorized to hold interlocking positions of the
type governed by this section;
(ii) Is exempt from filing an informational report pursuant to
Sec. 45.4; or
(iii) Will hold a temporary interlocking position pursuant to Sec.
45.1(c).
(2) The Commission will consider failures to timely file the
informational report on a case-by-case basis.
* * * * *
PART 46--PUBLIC UTILITY FILING REQUIREMENTS AND FILING REQUIREMENTS
FOR PERSONS HOLDING INTERLOCKING POSITIONS
0
9. The authority citation for part 46 continues to read as follows:
Authority: 16 U.S.C. 792-828c; 16 U.S.C. 2601-2645; 42 U.S.C.
7101-7352; E.O. 12009, 3 CFR 142.
0
10. Amend Sec. 46.2 by revising paragraph (a), removing and reserving
paragraph (b), and revising paragraphs (c) and (e) to read as follows:
Sec. 46.2 Definitions.
* * * * *
(a) Public utility has the same meaning as in section 201(e) of the
Federal Power Act. Such term does not include any rural electric
cooperative which is regulated by the Rural Utilities Service of the
Department of Agriculture or any other entities covered in section
201(f) of the Federal Power Act.
* * * * *
(c) Purchaser means any individual or corporation within the
meaning of section 3 of the Federal Power Act who purchases electric
energy from a public utility. Such term does not include the United
States or any agency or instrumentality of the United States or any
rural electric cooperative which is regulated by the Rural Utilities
Service of the Department of Agriculture.
* * * * *
(e) Entity means any firm, company, or organization including any
corporation, joint-stock company, partnership, association, business
trust, organized group of persons, whether incorporated or not, or a
receiver or receivers, trustee or trustees of any of the foregoing.
Such term does not include municipality as defined in section 3 of the
Federal Power Act and does not include any Federal, State, or local
government agencies or any rural electric cooperative which is
regulated by the Rural Utilities Service of the Department of
Agriculture.
* * * * *
[FR Doc. 2019-03419 Filed 3-1-19; 8:45 am]
BILLING CODE 6717-01-P
