[Federal Register Volume 65, Number 195 (Friday, October 6, 2000)]
[Notices]
[Pages 59833-59834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25664]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ID-2932-001]


James R. Lientz, Jr; Order Granting Interventions, Dismissing 
Rehearing As Moot, and Directing Notification of Change in Status

Issued October 2, 2000.
Before Commissioners: James J. Hoecker, Chairman; William L. Massey, 
Linda Breathitt, and Curt Hebert, Jr.

    In this order, the Commission dismisses as moot a request for 
rehearing, in light of subsequent and superseding Congressional action, 
of a letter order issued in this proceeding on August 13, 1998, that 
concluded that James R. Lientz, Jr. could only conditionally hold 
interlocking positions as Director of Georgia Power Company (Georgia 
Power) and President and Director of NationsBank of Georgia, N.A. 
(NationsBank Georgia).\1\
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    \1\ James R. Lientz, Jr., 84 FERC para. 62,143 (1998) (August 13 
Letter Order).
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    In addition, the Commission directs other individuals who have been 
granted authorization to hold an interlock and who believe they are 
affected by the above Congressional action to provide notice to us.

Background

    On January 3, 1996, Mr. Lientz filed an application pursuant to 
section 305(b) of the Federal Power Act (FPA) \2\ for Commission 
authorization to hold interlocking positions as Director of Georgia 
Power and President and Director of NationsBank Georgia. As explained 
in the August 13 Order, Georgia Power is a public utility for the 
purpose of section 305(b).\3\ While neither NationsBank Georgia nor its 
parent may directly underwrite or participate in the marketing of the 
securities of a public utility, two affiliates of NationsBank Georgia 
may underwrite or participate in the marketing of the securities of 
public utilities. The Commission has found that these securities 
underwriting and marketing authorizations are attributed to NationsBank 
Georgia, and as a consequence, the proposed interlocking positions were 
found to be jurisdictional pursuant to section 305(b).\4\
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    \2\ 16 U.S.C. 825d(b) (1994).
    \3\ 84 FERC at 64,226.
    \4\ See id. at 64,226 & n.3.
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    In the August 13 Letter Order, the Director, Division of Opinions 
and Corporate Applications, Office of Electric Power Regulation, 
pursuant to delegated authority, explained.

    [T]he Commission has observed that a senior executive or 
corporate officer has the ability to substantially influence company 
policies in such a manner as to jeopardize the best interests of the 
utility, its investors, and the consuming public. Accordingly, the 
Commission has held that this type of interlock requires the 
imposition of certain safeguards to prevent ``opportunities for 
undue influence, failures in arms length bargaining, or other 
potential improprieties.''
    After consideration, it is concluded that the conditioned 
holding of the positions identified will not adversely affect public 
or private interests. Authorization to hold them is hereby granted 
subject to the condition that NationsBank Georgia (and its 
subsidiaries and affiliates) refrain from underwriting or 
participating in the marketing of securities (other than dealing in 
the secondary securities market) of Georgia Power (and its 
subsidiaries and affiliates) during the period Mr. Lientz holds any 
of the authorized interlocking positions.\5\
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    \5\ Id. at 64,226 (footnotes omitted).


    On rehearing, Mr. Lientz requests that the Commission no longer 
impose the underwriting ban as a condition of his interlock 
authorization. Mr. Lientz asserts that the underwriting ban ``is no 
longer justified or necessary to protect the public interest,'' \6\ and 
that changed circumstances warrant the Commission

[[Page 59834]]

ceasing to impose the underwriting ban as a condition of approving the 
type of interlock at issue in this proceeding.
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    \6\ Request for Rehearing at 2.
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    Mr. Lientz also requests that, in lieu of the underwriting ban, the 
Commission consider the use of two alternative, and less onerous, 
conditions when approving an interlock between a public utility and an 
underwriting firm. Specifically, that:

    (i) the applicant would refrain from participating, directly, or 
indirectly, as director or officer of the public utility or the 
affected underwriting firm (or such underwriting firm's parent), in 
any decisions regarding the financing of the public utility (or its 
affiliate(s)) by such underwriting firm; or
    (ii) the applicant would prove, to the satisfaction of a 
majority of the disinterested directors of the public utility and 
the affected underwriting firm, respectively, that the proposed 
transactions(s) between the public utility and the underwriting firm 
are fair and reasonable to the utility's shareholders and 
ratepayers, such proof to be evidenced by a vote of the 
disinterested directors of the public utility and the affected 
underwriting firm.\7\
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    \7\ Id. at 43.

    On September 14, 1998, Georgia Power filed an untimely motion to 
intervene and a brief in support of Mr. Lientz's request for rehearing. 
On April 20, 1999, first Union Corporation (First Union) filed an 
untimely motion to intervene and an amicus brief in support of granting 
rehearing to reconsider whether the Commission's current policy on 
interlocks between banks and public utilities should be continued.

Subsequent and Superseding Congressional Action

    On November 12, 1999, the President signed into law the Gramm-
Leach-Bliley Financial Modernization Act (Financial Modernization 
Act).\8\ Among other things, this legislation amends section 305(b) to 
include four conditions, and if any one of these were met, they would 
remove from our jurisdiction a person seeking to hold an interlocking 
directorate.\9\ On November 18, 1999, First Union filed a motion to 
lodge the Financial Modernization Act.
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    \8\ Pub. L. 106-102, 113 Stat. 1338 (1999).
    \9\ 16 U.S.C.A. 825d(b)(2) (West Supp. 2000).
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Discussion

    Pursuant to Rule 214(d) of the Commission's Rules of Practice and 
Procedure, we will grant the untimely motions to intervene of Georgia 
Power and First Union, given the unique circumstances present here, 
their interest in the outcome of this proceeding, and the absence of 
any prejudice or delay.\10\
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    \10\ 18 CFR 385.214(d)(2000).
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    We will dismiss as moot the request for rehearing. As noted above, 
subsequent to the August 13 Letter Order and Mr. Lientz's request for 
rehearing, Congress amended section 305(b). Section 305(b)(2)(B) now 
provides, in relevant part, that the section 305(b) ban on holding 
interlocking directorates, absent Commission authorization, does not 
apply if the person holding the interlock:

    (i) does not participate in any deliberations or decisions of 
the public utility regarding the selection of a 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;
    (ii) 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;
    (iii) the public utility for which the person serves or proposes 
to serve as an officer or director selects underwriters by 
competitive procedures; or
    (iv) 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.\11\

    Thus, in amending section 305(b)(2), Congress has eliminated, in 
certain circumstances, the need for the holder of the interlocks to 
obtain Commission authorization for such interlocks. These 
circumstances include, as relevant here, where the underwriting 
firm\12\ involved in an interlock is under consideration to underwrite 
the securities of the public utility involved in the interlock and 
where persons who would hold the interlocks do not themselves 
participate in the public utility's selection of the underwriting 
firm.\13\
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    \11\ 16 U.S.C.A. 825d(b)(2)(B) (West Supp. 2000).
    \12\ We use the phrase ``underwriting firm'' as a short-hand 
description of the longer, statutory ``bank, trust company, banking 
association, or firm.''
    \13\ See 16 U.S.C.A. 825d(b)(2)(B)(i) (West Supp. 2000).
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    As noted above, in his request for rehearing, Mr. Lientz proposed 
that as a condition for Commission approval of an interlock, ``the 
applicant would refrain from participating, directly, or indirectly, as 
director or officer of the public utility or the affected underwriting 
firm (or such underwriting firm's parent), in any decisions affecting 
the financing of the public utility (or its affiliate(s)) by such 
underwriting firm.'' \14\ We interpret Mr. Lientz' proposed condition 
as effectively agreeing to the first condition of section 305(b)(2)(B), 
and we direct Mr. Lientz to notify the Commission within 30 days if he 
believes that further Commission action is required.
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    \14\ Request for Rehearing at 43.
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    In light of the new legislation pertaining to section 
305(b)(2)(B)(i) and our understanding that Mr. Lientz meets at least 
one of the conditions of section 305(b)(2)(B), he no longer needs 
Commission authorization to hold the interlocking directorate. Thus, we 
will dismiss as moot Mr. Lientz's request for rehearing.
    We also take this opportunity to state that if there are other 
individuals who have been granted authorization to hold interlocking 
directorates, but believe that they now do not need such Commission 
authorization because of section 305(b)(2)(B), they should notify the 
Commission of this within 30 days of the date of publication in the 
Federal Register, pursuant to section 45.5(b) of the Commission's 
regulations.\15\
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    \15\ 18 CFR 45.5(b) (2000).
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    The Commission orders:
    (A) Georgia Power's and First Union's untimely motions to intervene 
are hereby granted.
    (B) Mr. Lientz's request for rehearing of the August 13 Order is 
hereby dismissed as moot, as discussed in the body of this order.
    (C) Any individual who has been granted authorization to hold an 
interlock who believes he is affected by the Financial Modernization 
Act is hereby directed to so notify the Commission, within thirty (30) 
days of the date of publication of this order in the Federal Register, 
as discussed in the body of this order.
    (D) The Secretary is hereby directed to publish this order in the 
Federal Register.

    By the Commission.
David P. Boergers,
Secretary.
[FR Doc. 00-25664 Filed 10-5-00; 8:45 am]
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