[Federal Register: April 5, 2005 (Volume 70, Number 64)]
[Proposed Rules]
[Page 17219-17223]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05ap05-8]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 45
[Docket No. RM05-6-000]
Commission Authorization To Hold Interlocking Directorates
March 25, 2005.
AGENCY: Federal Energy Regulatory Commission, Energy.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Energy Regulatory Commission is proposing to amend
its regulations to clarify the time frame within which individuals must
file applications for authorization to hold interlocking positions, and
the information provided in certain informational reports required for
automatic authorization of certain interlocking positions.
DATES: Comments are due June 6, 2005.
ADDRESSES: Comments may be filed electronically via the eFiling link on
the Commission's Web site at http://www.ferc.gov. Commentors unable to
file comments electronically must send original and 14 copies of their
comments to: Federal Energy Regulatory Commission, Office of the
Secretary, 888 First Street NE., Washington, DC 20426. Refer to the
Comment Procedures section of the preamble for additional information
on how to file comments.
FOR FURTHER INFORMATION CONTACT:
James Akers (Technical Information), Office of Markets, Tariffs and
Rates, Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-8101.
Melissa Mitchell (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-6038.
SUPPLEMENTARY INFORMATION:
1. Section 305(b) of the Federal Power Act (FPA) \1\ prohibits
individuals from concurrently holding positions as officer or director
of more than one public utility; or to hold the positions of officer or
director of a public utility and of an entity authorized by law to
underwrite or participate in the marketing of public utility
securities; or to hold the positions of officer or director of a public
utility and a company supplying electrical equipment to that particular
public utility, unless the holding of
[[Page 17220]]
such positions has been authorized by the Commission upon a showing
that neither public nor private interests will be adversely affected
thereby.\2\
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\1\ 16 U.S.C. 825d(b)(2000).
\2\ Id.
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2. The Commission implemented Congress' mandate in part 45 of the
Commission's regulations.\3\ Section 45.3 of the regulations currently
states that ``the holding of positions within the purview of [section
305(b)] 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 prior to the order of the
Commission on application therefor. Applications shall be filed within
30 days after election or appointment to any positions within the
purview of section 305(b) of the Act.'' \4\
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\3\ 18 CFR part 45 (2004).
\4\ 18 CFR 45.3 (2004).
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3. In this Notice of Proposed Rulemaking (NOPR), the Commission is
proposing to clarify the time at which a person must apply for
authorization to hold interlocking positions under section 305(b) of
the FPA and part 45 of the Commission's regulations. Specifically, and
as described more fully below, we propose to clarify in revised section
45.3 that persons are prohibited from holding interlocking positions
prior to receiving authorization from the Commission, and that
``holding'' shall mean acting as, serving as, voting as, or otherwise
performing or assuming the duties and responsibilities of the
interlocking positions for which the authorization is requested.
Similarly, we propose to clarify in revised section 45.9 when filings
need to be made. Finally, we solicit comments on the continued waiver
of the full requirements of part 45 for officers and directors of
certain public utilities with market-based rate authority.
Background
4. Section 305(b) of the FPA prohibits persons from concurrently
holding positions as an officer or director of more than one public
utility; or to hold the positions of officer or director of a public
utility and of an entity authorized by law to underwrite or participate
in the marketing of public utility securities; \5\ or to hold the
positions of an officer or director of a public utility and of a
company supplying electrical equipment to that particular public
utility, unless the holding of such positions ``shall have been
authorized by order of the Commission'' upon a finding that neither
public nor private interests will be adversely affected thereby. The
Commission's regulations, 18 CFR part 45 (2004), currently require that
an application for approval be filed within 30 days of election or
appointment to a qualifying position. If an application is filed after
30 days, it is considered late. The Commission has stated in previous
orders that it does not look favorably on late-filed applications for
authorization to hold interlocking positions.\6\
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\5\ However, section 305(b)(2) of the FPA, 16 U.S.C. 825d(b)(2)
(2000), exempts from this prohibition certain interlocks between
public utilities and securities underwriters and marketers.
\6\ William T. Coleman, 21 FERC ] 61,242 at 61,535 n.3 (1982).
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5. In examining Congress' intent in enacting section 305(b) of the
FPA, the Commission has explained that ``among the evils sought to be
eliminated by the enactment of section 305(b)'' was ``the lack of arm's
length dealings between public utilities and organizations furnishing
financial services or electrical equipment.'' \7\ In this regard, the
legislative history indicates that with respect to section 305(b) of
the FPA ``Congress exhibited a relentless interest in, bordering on an
obsession with, the evils of concentration of economic power in the
hands of a few individuals. It recognized that the conflicts of
interest stemming from the presence of the same few persons on boards
of companies with intersecting interests generated subtle and
difficult-to-prove failures in the arm's length bargaining process.''
\8\
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\7\ Paul H. Henson, 51 FERC ] 61,104 at 61,231 (1990), citing
John Edward Aldred, 2 FPC 247,261 (1940).
\8\ Hatch v. FERC, 654 f.2d 825, 831 (DC Cir. 1981) (Hatch),
citing, e.g., 79 Cong. Rec. 10379 (1935) (remarks of Representative
Lea), 79 Cong. Rec. 8524 (1935) (remarks of Sen. Norris), and 15
U.S.C. 79a(b)(2)(2000); see also Paul H. Henson, 51 FERC ] 61,104 at
61,230 n.5 (1990) (discussing this quotation).
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Applications for Authorization to Hold Interlocking Positions
6. While the statute requires prior authorization to hold otherwise
proscribed interlocking positions, the regulations allow for
applications to be filed up to 30 days after the fact and also do not
expressly address how applications filed more than 30 days late should
be treated.
7. Consistent with the statute's express direction as well as its
underlying intent, the Commission proposes to clarify Sec. 45.3 to
provide that an application must be filed, and authorization granted,
before a person may hold otherwise proscribed interlocking positions,
and that late-filed applications will be denied.
Automatic Authorization of Certain Interlocking Positions
8. In addition to clarifying Sec. 45.3, the Commission also
proposes to clarify Sec. 45.9, which governs automatic authorization
for certain interlocking positions. Section 45.9 of the Commission's
regulations provides that a person seeking to hold the positions of (1)
an officer or director of a public utility and officer or director of
another public utility (or utilities), where the same holding company
owns, directly or indirectly, wholly or in part, the other public
utility, (2) an officer or director of two public utilities, if one
utility is owned, wholly or in part, by the other and (3) an officer or
director of more than one public utility, if such person is already
authorized under part 45 to hold different positions where the
interlock involves affiliated public utilities, may apply for
``automatic authorization'' to hold the interlocking positions.\9\ The
regulations require that, as a condition of such authorization, persons
seeking automatic authorization under Sec. 45.9 must file with the
Commission an informational report containing the full name and
business address of the person requesting authorization, the names of
all public utilities that the person holds or seeks to hold positions
with, the names of any other entity that the person serves as an
officer or director of and a brief description of those positions, and
an explanation of the corporate relationship between or among the
public utilities involved. This informational report is required to be
filed ``not later than 30 days after assuming the duties of the
position.'' \10\ The Commission proposes to change the current
regulation to require that informational reports for automatic
authorization must be filed with the Commission prior to an officer or
director assuming the duties of the requested interlocking position.
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\9\ Automatic authorization is only for interlocking positions
between two or more public utilities; it does not authorize a person
to hold an interlocking position with, for example, an electrical
equipment supplier. For those interlocking positions, an application
under section 45.3 is required.
\10\ 18 CFR 45.9(b) (2004)
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9. The Commission proposes to address the issue of the timeliness
of the informational filings for automatic authorization. Increasingly,
the Commission is receiving informational reports under Sec. 45.9 that
are filed after the 30-day deadline specified for submitting the
informational reports. While the Commission believes that the current
regulation regarding automatic authorization is clear with regard to
[[Page 17221]]
when a person must file an informational report, the Commission
proposes to include an additional requirement in the informational
report. Currently, the informational report outlined in Sec. 45.9(c)
does not require persons to state when they assumed the positions for
which they seek automatic authorization. Therefore, in order to assist
the Commission in determining the timeliness of the informational
report, the Commission proposes to add a requirement that persons state
the dates that they assumed the positions for which they seek automatic
authorization under Sec. 45.9; a person will not be entitled to
automatic authorization if that person's informational report is
untimely, as the person will not have satisfied the condition of timely
submission of an informational report.
Waiver of Part 45 in Commission Orders Granting Market-Based Rate
Authority
10. The Commission provides certain persons with a waiver of the
full requirements of part 45. An ``abbreviated'' filing requirement,
with essentially ``automatic authorization'', has developed in
Commission orders granting market-based rates for certain public
utilities. While the Commission has explained that it cannot waive the
statutory requirements regarding authorization of interlocking
positions, the Commission did lessen the filing requirements and permit
the filing of an ``abbreviated statement identifying any jurisdictional
interlock.'' \11\ The authority to make these abbreviated filings is
granted in orders that permit companies to charge market-based rates.
Typical language in these market-based rates orders, regarding
abbreviated filings, states:
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\11\ E.g. Citizens Energy Corporation, 35 FERC ] 61,198 at
61,455 (1986); Howell Gas Management Company, 40 FERC ] 61,336 at
62,025 (1987); Torco Energy Marketing, Inc., 48 FERC ] 61,294 at
61,948 (1989); National Electric Associates. Limited Partnership, 50
FERC ] 61,378 at 62,157 (1990).
[U]ntil further order of this Commission, the full requirements of
Part 45 of the Commission's regulations, except as noted below, are
hereby waived with respect to any person now holding or who may hold
an otherwise proscribed interlocking directorate involving the
applicants. Any such person instead shall file a sworn application
providing the following information:
(a) Full name and business address; and
(b) All jurisdictional interlocks, identifying the affected
companies and the positions held by that person.\12\
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\12\ CLECO Energy, LLC, 82 FERC ] 61,152 at 61,557 (1998).
11. Since the abbreviated filings only require the identification
of affected companies and positions held by the applicant, there is no
description in the abbreviated filing of what business the affected
company is engaged in. This lack of information makes it difficult for
the Commission to determine the nature of the interlock and how, if at
all, it might adversely affect public or private interests. In
addition, this abbreviated filing is not required before the person
begins holding the interlocking position. Since the provisions of
section 305(b) of the FPA are intended to be prophylactic in nature and
prevent any harm from a person holding otherwise prohibited
interlocking positions, the lack of timely information from these
abbreviated filings can make it very difficult to determine if the
interlock might adversely affect public or private interests.
12. Therefore, the Commission is examining the possibility of no
longer granting a waiver of the full requirements of part 45 in its
orders granting market-based rate authority. Rather, the Commission
would require that for public utilities that receive authority to
charge market-based rates, their officers and directors would still
need to comply with the full requirements of part 45 and timely file
any applications for Commission authorization to hold any interlocking
positions that meet the requirements set forth in Sec. 305(b) of the
FPA. The Commission seeks comments.
13. It is important to note, however, that this proposal
essentially to cease granting waivers of part 45 in orders granting
market-based rate authority would not apply to those persons who may
qualify for automatic authorization of their interlocking positions
under Sec. 45.9 of the Commission's regulations. Automatic
authorization would remain unchanged should we cease to grant waivers
of the full requirements of part 45 in orders granting market-based
rate authority.
Information Collection Statement
14. The following collection of information contained in this
proposed rule has been submitted to the Office of Management and Budget
(OMB) for review under Sec. 3507(d) of the Paperwork Reduction Act of
1995.\13\ OMB's regulations require OMB to approve certain information
collection requirements imposed by agency rule.\14\
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\13\ 44 U.S.C. 3507(d).
\14\ 5 CFR 1320.11.
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Comments are solicited on the need for this information, whether
the information will have practical utility, the accuracy of the
provided burden estimates, ways to enhance the quality, utility, and
clarity of the information to be collected, and any suggested methods
for minimizing respondent's burden, including the use of automated
information techniques. The additional information the Commission
proposes to require should have a minimal impact on the current
reporting burden which is as follows:
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Number of Number of Hours per Total annual
Data collection respondents responses response hours
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FERC-520.................................... 28 1 51.8 1,450
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Total Annual Hours for Collection (reporting + recordkeeping, if
appropriate) = 1,450.
Information Collection Costs: The Commission seeks comments on the
costs to comply with these requirements. It has projected the average
annualized cost of all respondents to be: 1,450 hours / 2,080 hours x
$108,558 = $75,677. Cost per respondent is $2,703. The estimate of
costs for respondents is based upon salaries for professional and
clerical support, as well as direct and indirect costs. Direct costs
include all costs directly attributable to providing this information,
such as administrative costs and the cost of information technology.
Indirect or overhead costs are costs incurred by an organization in
support of its mission. These costs apply to activities which benefit
the whole organization rather than any one particular function or
activity.
Title: FERC-520, ``Application for Authority to Hold Interlocking
Positions''.
Action: Proposed Data Collection.
OMB Control Nos. 1902-0083.
The applicant will not be penalized for failure to respond to this
information collection unless the information collection displays a
valid OMB control
[[Page 17222]]
number or the Commission has provided justification as to why the
control number should not be displayed.
Respondents: Businesses or other for profit.
Necessity of the Information: The information collected under the
requirements of FERC-520 is used by the Commission to implement the
statutory provisions of Section 305(b) of the Federal Power Act and
implemented by the Commission in the Code of Federal Regulations under
18 CFR part 45. Under part 45, each person that desires to hold an
interlocking position(s) must submit an application to the Commission,
or if qualified, comply with the requirements for automatic
authorization. Section 305(b) of the FPA makes the holding of certain
defined interlocking positions unlawful unless the Commission has
authorized the interlocks to be held, and requires the applicant to
show in a form or manner as prescribed by the Commission, that neither
public nor private interests will be adversely affected by the holding
of the position. The proposed rule will clarify (1) the time at which a
person must apply for authorization to hold interlocking positions
under section 305(b) of the Federal Power Act and part 45 of the
Commission's regulations, (2) clarify automatic authorizations for
certain interlocking positions authorization is requested and (3) add a
requirement that persons state the dates that they assumed the
positions for which they seek automatic authorization under section
45.9. It is necessary to make these clarifications and require the
additional information to ensure the Commission receives timely
submissions and also to have sufficient information to make a
determination as the appropriateness of the position.
Internal Review: The Commission has reviewed these requirements
pertaining to holding of interlocking positions and has determined the
proposed revision is necessary because the Commission needs to have
adequate information filed in a timely manner. These requirements
conform to the Commission's plan for efficient information collection,
communication, and management within the electric industries. The
Commission has assured itself, by means of internal review, that there
is specific, objective support for the burden estimates associated with
the information requirements.
15. Interested persons may obtain information on the information
collection by contacting the following: Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, Attention:
Michael Miller, Office of the Executive Director, Phone: (202) 502-
8415, fax: (202) 273-0873, e-mail: michael.miller@ferc.gov.
16. For submitting comments concerning the collection of
information and the associated burden estimate, please send your
comments to the contact listed above and to the Office of Management
and Budget, Office of Information and Regulatory Affairs, Washington,
DC 20503, Attention: Desk Officer for the Federal Energy Regulatory
Commission, phone: (202) 395-4650, fax: (202) 395-7285.
Environmental Analysis
17. 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.\15\ The
Commission has categorically excluded certain actions from this
requirement as not having a significant effect on the human
environment. Included in the exclusion are rules that are procedural,
ministerial, or internal management programs or decisions,\16\ as well
as actions under section 305(b) of the FPA.\17\ The rules proposed in
this NOPR address the need to make a timely filing of an application
for authorization to hold otherwise prohibited interlocking positions.
Therefore, this NOPR falls within the categorical exemptions provided
in the Commission's regulations, and, as a result neither an
environmental impact statement nor an environmental assessment is
required.
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\15\ Regulations Implementing National Environmental Policy Act,
52 FR 47897 (Order No. 486, 1987), FERC Stats. & Regulations
Preambles 1986-1990 ] 30,783 (Dec. 10, 1987).
\16\ 18 CFR 380.4(a)(1) (2004).
\17\ 18 CFR 380.4(a)(16) (2004).
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Regulatory Flexibility Act [Analysis or Certification]
18. The Regulatory Flexibility Act of 1980 (RFA) \18\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small
entities.\19\The Commission is not required to make such analyses if a
rule would not have such an effect.
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\18\ 5 U.S.C. 601-12 (2000).
\19\ The RFA definition of ``small entity'' refers to the
definition provided in the Small Business Act, which defines a
``small business concern'' as a business that is independently owned
and operated and that is not dominant in its field of operation. 15
U.S.C. 632 (2000). The Small Business Size Standards component of
the North American Industry Classification System defines a small
electric utility as on that, including its affiliates, is primarily
engaged in the generation, transmission, and/or distribution of
electric energy for sale and whose total electric output for the
preceding fiscal years did not exceed 4 million MWh. 13 CFR 121.201
(2004) (Section 22, Utilities, North American Industry
Classification System, NAICS).
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19. The Commission does not believe that this proposed rule would
have such an impact on small entities. Most persons affected by this
proposed rule are officers or directors of companies that do not fall
within the RFA's definition of a small entity. Further, the proposed
rule does not substantially change the current requirements and
regulations that persons who are officers and directors must comply
with. Therefore, the Commission certifies that this rule will not have
a significant economic impact on a substantial number of small
entities.
Comment Procedures
20. The Commission invites comments on the matters and proposals in
this notice, including any related matters or alternative proposals
that commentors may wish to discuss. Comments are due June 6, 2005.
Reply comments will be due 30 days thereafter. Comments must refer to
Docket No. RM05-6-000, and must include the commentor's name, the
organization they represent, if applicable, and their address in their
comments. Comments may be filed either in electronic or paper format.
21. Comments may be filed electronically via the eFiling link on
the Commission's Web site at http://www.ferc.gov. The Commission
accepts most standard word processing formats and commentors may attach
additional files with supporting information in certain other file
formats. Commentors filing electronically do not need to make a paper
filing. Commentors that are not able to file comments electronically
must send original and 14 copies of their comments to: Federal Energy
Regulatory Commission, Office of the Secretary, 888 First Street NE.,
Washington, DC 20426.
22. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commentors on this proposal are
not required to serve copies of their comments on other commentors.
Document Availability
23. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m.
eastern time) at 888 First
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Street, NE., Room 2A, Washington DC 20426.
24. From FERC's Home Page on the Internet, this information is
available in the Federal Energy Regulatory Records Information System
(FERRIS). The full text of this document is available on FERRIS in PDF
and Microsoft Word format for viewing, printing, and/or downloading. To
access this document in FERRIS, type the docket number excluding the
last three digits of this document in the docket number field.
25. User assistance is available for FERRIS and the FERC's Web site
during normal business hours from our Help line at (202) 502-8222 or
the Public Reference Room at (202) 502-8371 Press 0, TTY (202) 502-
8659. E-Mail the Public Reference Room at
public.referenceroom@ferc.gov.
List of Subjects in 18 CFR part 45
Electric utilities; Reporting and recordkeeping requirements.
By direction of the Commission.
Linda Mitry,
Deputy Secretary.
In consideration of the foregoing, the Commission proposes to amend
part 45, 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 is revised 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.
2. Section 45.3 is revised to read as follows:
Sec. 45.3 Timing of filing application.
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; late-filed applications will be denied. The
term ``holding'', as used in this section, 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.
3. In Sec. 45.9, paragraph (b) is revised and paragraph (c)(5) is
added to read as follows:
Sec. 45.9 Automatic authorization of certain interlocking positions.
* * * * *
(b) Conditions of authorization. As a condition of authorization,
any person authorized to hold interlocking positions under this section
must submit, prior to assuming the duties of the position, an
informational report in accordance with paragraph (c) of this section,
unless that person is already authorized to hold interlocking positions
of the type governed by this section. Failure to timely file the
informational report will constitute a failure to satisfy this
condition, and will constitute automatic denial.
(c) Informational report. * * *
(5) The dates that the person assumed the duties and
responsibilities of each position listed in paragraphs (c)(2) and
(c)(3) of this section.
[FR Doc. 05-6690 Filed 4-4-05; 8:45 am]
BILLING CODE 6717-01-P