Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Rules and Regulations 55717 

1 16 U.S.C. 825d(b). 

2 18 CFR part 45. 

The use of volume controls allows the 

industry to fully supply spearmint oil 

markets while avoiding the negative 

consequences of over-supplying these 

markets. The use of volume controls is 

believed to have little or no effect on 

consumer prices of products containing 

spearmint oil and will not result in 

fewer retail sales of such products. 

Based on projections available at the 

meeting, the Committee considered 

alternatives to the increases. The 

Committee not only considered leaving 

the salable quantity and allotment 

percentage unchanged, but also looked 

at various increases ranging from 0 

percent to 100 percent. The Committee 

reached its recommendations to 

increase the salable quantity and 

allotment percentage for Scotch and 

Native spearmint oil after careful 

consideration of all available 

information, and believes that the levels 

recommended will achieve the 

objectives sought. Without the 

increases, the Committee believes the 

industry would not be able to meet 

market needs. 

This rule will not impose any 

additional reporting or recordkeeping 

requirements on either small or large 

spearmint oil handlers. As with all 

Federal marketing order programs, 

reports and forms are periodically 

reviewed to reduce information 

requirements and duplication by 

industry and public sector agencies. 

In addition, USDA has not identified 

any relevant Federal rules that 

duplicate, overlap or conflict with this 

rule. 

Further, the Committee’s meeting was 

widely publicized throughout the 

spearmint oil industry and all interested 

persons were invited to attend the 

meeting and participate in Committee 

deliberations. Like all Committee 

meetings, the August 24, 2005, meeting 

was a public meeting and all entities, 

both large and small, were able to 

express their views on this issue. 

Finally, interested persons are invited to 

submit information on the regulatory 

and informational impacts of this action 

on small businesses. 

A small business guide on complying 

with fruit, vegetable, and specialty crop 

marketing agreements and orders may 

be viewed at: http://www.ams.usda.gov/ 

fv/moab.html. Any questions about the 

compliance guide should be sent to Jay 

Guerber at the previously mentioned 

address in the FOR FURTHER INFORMATION

CONTACT section. 

This rule invites comments on a 

change to the salable quantities and 

allotment percentages for Scotch and 

Native spearmint oil for the 2005–2006 

marketing year. Any comments received 

will be considered prior to finalization 

of this rule. 

After consideration of all relevant 

material presented, including the 

Committee’s recommendation, and 

other information, it is found that this 

interim final rule, as hereinafter set 

forth, will tend to effectuate the 

declared policy of the Act. 

Pursuant to 5 U.S.C. 553, it is also 

found and determined upon good cause 

that it is impracticable, unnecessary, 

and contrary to the public interest to 

give preliminary notice prior to putting 

this rule into effect and that good cause 

exists for not postponing the effective 

date of this rule until 30 days after 

publication in the Federal Register 

because: (1) This rule increases the 

quantity of Scotch and Native spearmint 

oil that may be marketed during the 

marketing year which ends on May 31, 

2005; (2) the current quantity of Scotch 

and Native spearmint oil may be 

inadequate to meet demand for the 

remainder of the marketing year, thus 

making the additional oil available as 

soon as is practicable is beneficial to 

both handlers and producers; (3) the 

Committee recommended these changes 

at a public meeting and interested 

parties had an opportunity to provide 

input; and (4) this rule provides a 60- 

day comment period and any comments 

received will be considered prior to 

finalization of this rule. 

List of Subjects in 7 CFR Part 985 

Marketing agreements, Oils and fats, 

Reporting and recordkeeping 

requirements, Spearmint oil. 

■ For the reasons set forth in the 

preamble, 7 CFR part 985 is amended as 

follows: 

PART 985—MARKETING ORDER 

REGULATING THE HANDLING OF 

SPEARMINT OIL PRODUCED IN THE 

FAR WEST 

■ 1. The authority citation for 7 CFR 

part 985 continues to read as follows: 

Authority: 7 U.S.C. 601–674. 

■ 2. In § 985.224 paragraph (a) and (b) 

are revised to read as follows: 

Note: This section will not appear in the 

annual Code of Federal Regulations. 

§ 985.224 Salable quantities and allotment 

percentages—2005–2006 marketing year. 

* * * * * 

(a) Class 1 (Scotch) oil—a salable 

quantity of 1,062,898 pounds and an 

allotment percentage of 55 percent. 

(b) Class 3 (Native) oil—a salable 

quantity of 1,019,600 pounds and an 

allotment percentage of 47 percent. 

Dated: September 20, 2005. 

Lloyd C. Day, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. 05–19084 Filed 9–21–05; 9:55 am] 

BILLING CODE 3410–02–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 45 

[Docket No. RM05–6–000; Order No. 664] 

Commission Authorization To Hold 

Interlocking Positions 

September 16, 2005. 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Final rule. 

SUMMARY: The Federal Energy 

Regulatory Commission (Commission) is 

amending 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. 

EFFECTIVE DATE: The amended 

regulations will become effective 

October 24, 2005. 

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: 

Before Commissioners: Joseph T. 

Kelliher, Chairman; Nora Mead 

Brownell, and Suedeen G. Kelly. 

1. In this final rule, to meet its 

responsibility under section 305(b) of 

the Federal Power Act (FPA),1 the 

Commission amends part 45 of its 

regulations 2 to clarify that individuals 

seeking Commission authorization to 

hold interlocking positions must obtain 

such authorization from the 

Commission prior to holding that 

interlocking position. The Commission 

also clarifies the regulations to define 

55718 Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Rules and Regulations 

3 18 CFR 45.9. 

4However, section 305(b)(2) of the FPA exempts 

from this prohibition certain interlocks between 

public utilities and securities underwriters and 

marketers. 

5 18 CFR part 45. 

6 18 CFR 45.3. 

7William T. Coleman, 21 FERC ¶ 61,242 at 61,535 

n.3 (1982). 

8Paul H. Henson, 51 FERC ¶ 61,104 at 61,231 

(1990), citing John Edward Aldred, 2 FPC 247, 261 

(1940). 

9Hatch v. FERC, 654 F.2d 825, 831 (D.C. 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). 

10See Commission Authorization to Hold 

Interlocking Positions, Notice of Proposed 

Rulemaking, 70 Fed. Reg. 17,219 (April 5, 2005) 

FERC Stats. & Regs. ¶ 32,580 (2005). 

11Automatic 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. 

12 18 CFR 45.9(b). 

13 70 FR 17,219 (April 5, 2005). 

the term ‘‘holding’’ as acting as, serving 

as, voting as, or otherwise performing or 

assuming the duties and responsibilities 

of the interlocking positions requiring 

Commission authorization. 

2. The Commission also amends its 

regulations to require that individuals 

filing an informational report for 

automatic authorization under section 

45.9 of the Commission’s regulations 3

must file such informational report prior 

to holding that interlocking position and 

that the informational report must 

include a statement or affirmation that 

the individual has not yet assumed the 

duties or responsibilities of the position 

for which the automatic authorization is 

sought. 

Discussion 

3. Section 305(b) of the FPA prohibits 

individuals 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 4; 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 

such positions has been authorized by 

the Commission upon a showing that 

neither public nor private interests will 

be adversely affected thereby. 

4. The Commission implemented 

Congress’ mandate in part 45 of the 

Commission’s regulations.5 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 therefore. 

Applications shall be filed within 30 days 

after election or appointment to any positions 

within the purview of section 305(b) of the 

Act.’’ 6

The Commission has stated in previous 

orders that it does not look favorably on 

late-filed applications for authorization 

to hold interlocking positions.7

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.’’ 8 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 difficultto-prove failures in the arm’s length 

bargaining process.’’ 9

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 election or 

appointment to the interlocking position 

and also do not expressly address how 

applications filed more than 30 days 

late should be treated. The regulations 

do not allow for serving in the covered 

positions before receiving Commission 

authorization. Therefore, in a Notice of 

Proposed Rulemaking (NOPR) issued on 

March 25, 2005, the Commission 

proposed to clarify section 45.3 of the 

Commission’s regulations, to provide 

that an application must be filed, and 

authorization granted, before a person 

may hold otherwise proscribed 

interlocking positions, and that latefiled applications will be denied.10

7. In addition to clarifying section 

45.3, the Commission also proposed to 

clarify section 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 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 where the 

interlock involves affiliated public 

utilities, may apply for ‘‘automatic 

authorization’’ to hold the interlocking 

positions.11 The regulations require 

that, as a condition of such 

authorization, persons seeking such 

authorization under section 45.9 must 

file with the Commission an 

informational report containing the full 

name and business address of the 

person requesting the 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. The 

informational report is required to be 

filed ‘‘not later than 30 days after 

assuming the duties of the position.’’ 12

8. The NOPR proposed to clarify 

section 45.9 of the Commission’s 

regulations, to require that the 

informational reports required for 

automatic authorization under section 

45.9 must be filed with the Commission 

prior to an officer or director assuming 

the duties and responsibilities of the 

requested interlocking positions. The 

NOPR proposed that individuals who 

file informational reports late will not 

be entitled to automatic authorization 

under section 45.9, as the individual 

will not have satisfied the condition of 

timely submission of an informational 

report. 

9. Finally, the Commission requested, 

in the NOPR, comments on the 

possibility of no longer granting entities 

(or individuals who serve as officers or 

directors of entities) that have marketbased rate authority a waiver of the full 

requirements of part 45. 

10. The NOPR was published in the 

Federal Register 13 on April 5, 2005. 

Comments were due on or before June 

5, 2005. 

A. Prior Filing and Approval for Section 

45.3 Applications 

(i) Comments 

11. The California Electricity 

Oversight Board (CEOB) supports the 

proposed rule and states that the 

proposed rule comports completely 

with the Congressional intent behind 

Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Rules and Regulations 55719 

14Midwest ISO Comments at 6. 

15American Electric Power Company (AEP), 

Northeast Utilities Service Company (NUSCO), 

Pepco Holdings, Inc. (PHI Companies), Consumers 

Energy Company (Consumers Energy) and Exelon 

Corporation (Exelon) all support the comments filed 

by EEI. 

16EEI Comments at 3. 

17 Id. at 14. 

18 Id. at 10–11. 

19 Id. at 16, 25. 

20 16 U.S.C. 825d(b)(1). 

21EEI Comments at 14. 

22 Id. 

23 Id. at 5; see 18 CFR part 46. 

24 Id. at 21. 

section 305(b) of the FPA and the public 

policy of preventing abuses due to 

conflicts of interest. The CEOB argues 

that, under the language of section 

305(b), individuals who seek to hold 

interlocking positions are prohibited 

from holding interlocking positions 

until the Commission determines that 

‘‘neither public nor private interests will 

be adversely effected.’’ Based on this 

language, the CEOB supports the 

Commission’s proposed rule to require 

applicants to file with the Commission 

prior to holding interlocking positions. 

12. The Midwest Independent 

Transmission System Operator, Inc. 

(Midwest ISO) supports the proposed 

rule and states that requiring applicants 

for interlocking positions to file for 

Commission authorization prior to 

holding the interlocking positions will 

ensure greater transparency in the 

nation’s utility industry and promote 

and preserve independence. The 

Midwest ISO also comments that the 

Commission should expand the scope of 

the proposed rule to include officers of 

non-jurisdictional utilities seeking to 

serve on the Board of Directors of a 

regional transmission organization 

(RTO) or independent system operator 

(ISO). The Midwest ISO states that 

allowing officers of non-jurisdictional 

utilities to serve on the Boards of 

Directors of RTOs and ISOs without 

prior Commission authorization ‘‘opens 

the door to partial stakeholder Boards, 

and calls into question a public utility’s 

true independence.’’ 14 For these 

reasons, the Midwest ISO supports the 

proposed rule and requests that the 

Commission expand the scope of the 

existing rules. 

13. The Edison Electric Institute (EEI) 

opposes the proposed rule and states 

that the existing rules adequately meet 

the requirements of section 305(b).15 EEI 

argues that the existing rules strike a 

reasonable balance between the 

requirements of section 305(b) and the 

burden those requirements place on 

individuals and companies. While EEI 

agrees that officers and directors need to 

comply with the Commission’s 

regulations, they ‘‘are not aware of a 

widespread failure to comply’’ with the 

regulations.16 EEI also states that it is 

important that the Commission retain 

the 30-day window to file interlock 

applications since requiring individuals 

to file for authorization prior to holding 

interlocking positions would ‘‘pose 

significant practical difficulties and 

would disrupt the ability of public 

utilities and their affiliates to maintain 

functioning boards of directors and 

officer corps in a timely and effective 

manner.’’ 17 EEI argues that the danger 

of harm from interlocks is small, and 

that other entities provide oversight of 

corporate officers, including the 

Securities and Exchange Commission 

and the New York Stock Exchange.18 In 

addition to arguing that the 30-day postelection timeframe is consistent with 

the statute, EEI requests that the 

Commission extend the window within 

which an individual may file from 30 

days to 60 days after election or 

appointment to a covered position.19

14. AEP, NUSCO, Reliant Energy Inc. 

(Reliant) and Consumers Energy filed 

comments opposing the proposed rules. 

They state that requiring applications 

prior to holding a covered position will 

make it difficult for companies to fill 

officer or director vacancies in a timely 

fashion and lead to an inefficient 

selection process with the likely result 

of not selecting the most qualified 

individuals for the positions. This is 

exacerbated, they claim, by the fact that 

the companies and individuals often do 

not know in advance of election or 

appointment who will be selected to 

serve as an officer or director. 

(ii) Commission Determination 

15. The Commission will adopt the 

proposed regulations with one 

modification. We revise the proposed 

section 45.3 to reflect that the definition 

of the term ‘‘holding’’ applies 

throughout part 45 and not just to 

section 45.3. 

16. The proposed regulations 

requiring that individuals apply for and 

receive authorization to hold 

interlocking positions before holding 

the positions will make the 

Commission’s regulations consistent 

with the statute. Section 305(b) states 

that no person may hold interlocking 

positions ‘‘unless the holding of such 

positions shall have been authorized by 

order of the Commission * * *’’ 20

17. The Commission disagrees that 

requiring such prior authorization will 

make it difficult for companies to fill 

vacancies or disrupt utilities’ ability to 

maintain functioning boards. We find 

the possibility that a board or officer 

corps would be faced with so many 

vacancies at one time as to adversely 

effect a company’s ability to function 

very unlikely. While, as stated by EEI, 

the Commission may not be the only 

entity that requires filing and approval 

of corporate officers and directors to 

maintain corporate oversight, the 

Commission was expressly charged by 

Congress with the responsibility to 

oversee officers and directors of public 

utilities and we will not and cannot 

delegate that responsibility to another 

entity. 

18. In response to EEI’s comment that 

it ‘‘is not aware of a widespread failure 

to comply’’ 21 with section 305(b), 

section 305(b) was intended to be 

prophylactic in nature and to prevent 

any abuse of corporate positions and 

control. Furthermore, the fact that EEI 

may not be ‘‘aware of a widespread 

failure to comply’’ 22 with the statute 

and regulations does not speak to the 

need to clarify the regulations and bring 

them into conformity with the statute. 

The statute speaks of prior authorization 

and that is what the regulations should 

require; prior authorization, not 30 days 

and not 60 days after the fact. 

19. In response to Midwest ISO’s 

comments that the Commission should 

expand the scope of the proposed 

regulations to include officers of nonjurisdictional utilities seeking to serve 

on RTO or ISO boards, the Commission 

finds that section 305(b) only limits 

interlocking directorates involving 

public utility boards and does not 

authorize the Commission to bar 

interlocking directorates involving nonpublic utility boards of directors. The 

Midwest ISO request goes to the issue 

of the independence of RTO and ISO 

boards. That issue is not within the 

purview of section 305(b) or part 45 of 

the Commission’s regulations, and thus 

of this proceeding. 

B. Prior Filing of Section 45.9 

Informational Reports and Affirmation 

(i) Comments 

20. EEI opposes the proposed change 

to section 45.9, requiring individuals 

seeking automatic authorization to file 

their informational report prior to 

holding the interlocking position, for 

the same reasons explained above. 

Additionally, EEI requests that the 

Commission not require an 

informational report in deference to the 

information required on the annual 

Form 561.23 Furthermore, EEI requests 

that the Commission clarify that section 

45.9 applies to both registered and 

exempt holding companies.24

55720 Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Rules and Regulations 

25Sempra Comments at 3; Keyspan Comments at 

3; NiSource Comments at 5–6. 

26AEP Comments at 5; NUSCO Comments at 3. 

27See 18 CFR 45.9(c). 

28See 18 CFR 45.9(a); accord NOPR at P 8. 

29See 18 CFR 45.9(b). 

30Sempra Comments at 4; Reliant Comments at 

7. 

31Exelon Comments at 3. 

32EEI Comments at 23. 

33 Indeed, section 305(b) provides that ‘‘it shall be 

unlawful for any person to hold’’ interlocking 

positions ‘‘unless the holding of such positions 

shall have been authorized by order of the 

Commission.’’

34See supra note 7. 

21. Keyspan Corporation (Keyspan), 

AEP, Sempra Energy (Sempra), NUSCO, 

Reliant, NiSource, Inc. (NiSource), PHI 

Companies and Exelon filed comments 

opposing the proposed rules requiring 

individuals seeking automatic 

authorization under section 45.9 of the 

regulations to file their informational 

reports prior to holding the interlocking 

positions and also requiring information 

on the dates the individual assumed the 

interlocking positions. They state that 

requiring informational reports prior to 

holding the positions would unduly 

restrict corporate and personnel options 

and jeopardize companies’ effective 

participation in energy markets because 

changes on corporate boards often occur 

suddenly and without prior notice. 

Therefore, they argue that a requirement 

that individuals must file their 

informational reports prior to holding 

interlocking positions would be unduly 

burdensome. Sempra, Keyspan and 

NiSource state that the proposed rules 

are inconsistent, requiring informational 

reports for automatic authorization prior 

to holding interlocking positions and 

also requiring additional information on 

when the individual assumed the 

positions for which authorization is 

granted.25 NUSCO and AEP state that 

additional information is not necessary 

as the currently required informational 

report, together with the information 

required on Form 561, is sufficient.26

Exelon argues that the informational 

report is duplicative of the information 

provided in Form 561 and therefore, the 

informational report should be 

eliminated in lieu of Form 561. 

(ii) Commission Determination 

22. The Commission will adopt the 

proposed regulations, with two 

exceptions, discussed below. 

23. Section 45.9 of the Commission’s 

regulations requires that individuals 

seeking automatic authorization need 

only file with the Commission, in lieu 

of the application otherwise required, 

an informational report stating the 

individual’s name and business address, 

the names of all public utilities with 

which the person currently holds or will 

hold the positions of officer or director 

and a description of those positions, the 

names of any other entity of which the 

person serves as officer or director and 

a description of those positions and a 

brief explanation of the corporate 

relationship between or among the 

interlocking public utilities.27 Upon the 

filing of a completed informational 

report under section 45.9, the individual 

is automatically authorized to hold the 

interlocking positions listed in the 

informational report. Form 561, in 

contrast, is an annual report required by 

the Commission, and does not contain 

the same information. The annual Form 

561 is not intended nor could it be an 

appropriate substitute for the need to 

make a contemporaneous filing to 

comply with the requirements of part 45 

of the Commission’s regulations. 

Therefore, the Commission finds that 

the informational reports filed under 

section 45.9 are not duplicative of Form 

561 and it would not be appropriate to 

rely solely on Form 561. 

24. Moreover, since the automatic 

authorization is granted upon receipt of 

filed, completed informational reports, 

we do not agree that requiring the 

informational report prior to holding 

interlocking positions would be unduly 

burdensome or restrict a companies’

corporate and personnel options. 

Additionally, for those interlocking 

positions covered by section 45.9, e.g., 

officers or directors of two or more 

affiliated public utilities,28 it is a onetime filing requirement and, once 

authorization has been given, no further 

filings are required to hold further 

interlocking positions of the same 

type.29 Again, therefore, the obligation 

to make such a filing is not unduly 

burdensome. 

25. In response to several comments 

that the proposed regulations are 

inconsistent by requiring the 

identification of the date the individual 

assumed the positions at issue in an 

informational report filed prior to 

holding such positions, we agree. The 

intent behind the proposed language 

was to provide the Commission with 

information to assist in determining 

whether the informational report was 

timely filed or not. Therefore, we will 

not require identification of the date the 

individual assumed the positions at 

issue. Instead, we will require a 

statement or affirmation that the 

individual has not yet performed or 

assumed the duties or responsibilities of 

the position which necessitated the 

filing of the informational report as of 

the date of such report. We believe this 

requirement will provide the 

Commission with the information it 

needs with the least burden upon the 

applicants. 

26. We also provide additional 

clarifying language in section 45.9, 

explaining that the informational report 

shall be filed prior to performing or 

assuming the duties and responsibilities 

of the interlocking position. 

Furthermore, we clarify that the 

informational reports must also comply 

with the filing requirements outlined in 

section 45.7. 

C. Treatment of Existing Applications 

and of Late-Filed Applications 

(i) Comments 

27. Many commentors state that the 

proposal to automatically deny any late 

filed applications is unduly harsh.30

Exelon states that automatic denial of 

late applications is ‘‘draconian’’ and 

urges the Commission to consider 

another penalty for untimely 

applications, such as a fine.31 Many 

commentors urge the Commission to 

continue evaluating applications on a 

case-by-case basis, and to permit late 

applications where the applicant made 

a good faith effort to file on time. 

28. EEI also argues that the 

Commission should not institute a rule 

that automatically denies late-filed 

applications; rather, the Commission 

should continue to evaluate late-filed 

applications on a case-by-case basis, and 

also provide an amnesty period to allow 

individuals to file applications under 

the current regulations and further 

assure all individuals currently holding 

Commission authorized interlocking 

positions that they will not need to 

refile under the new rules.32

(ii) Commission Determination 

29. The Commission will adopt the 

proposed regulations. 

30. While many commentors stated 

that automatic denial of late-filed 

applications is unduly harsh, the statute 

provides that individuals seeking to 

hold interlocking positions must receive 

Commission authorization prior to 

assuming the interlocking positions.33

To permit individuals to hold 

interlocking positions before receiving 

Commission authorization would 

frustrate section 305(b) and the 

prophylactic nature of section 305(b). 

Therefore, the Commission will 

automatically deny all late-filed 

applications for authorization to hold 

interlocking positions. As for an 

amnesty period, we have long stressed 

the need to timely file,34 we repeated 

Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Rules and Regulations 55721 

35Order Advising Public Utilities and their 

Officers and Directors of Federal Power Act Section 

305(b) Obligations, 107 FERC ¶ 61,290 (2004). 

36EEI Comments at 20. 

37 Id. at 8. 

38Morgan Stanley Comments at 18. 

39 Id. 

40 Id. at 20. 

41 Id. at 18. 

42 Id. at 19. 

43 Id. 

44 5 CFR 1320.11. 

the need to timely file in June 2004, 35

and this NOPR has been pending since 

March 25, 2005, and the regulations 

adopted here will not become effective 

until 30 days from the date of 

publication in the Federal Register. 

That is amnesty enough. 

31. Regarding any currently pending 

applications for Commission 

authorization to hold interlocking 

positions, the Commission intends to 

act on these applications on a case-bycase basis. Regarding individuals 

already authorized to hold interlocking 

positions, those individuals need not 

refile under the new regulations to 

continue to hold their previously 

authorized interlocking positions 

(unless and until, of course, they seek to 

assume additional interlocking 

positions). 

D. Waiver of Full Requirements of Part 

45 for Officers and Directors of Sellers 

With Market-Based Rate Authority 

(i) Comments 

32. EEI opposes any change that 

would cease waivers of the full 

requirements of part 45 for persons who 

are officers of directors of entities 

authorized to charge market-based rates, 

and to the contrary requests that the 

Commission include such waivers in 

the regulations rather than granting 

them on a case-by-case basis.36 EEI 

argues that entities with market-based 

rates have already passed the 

Commissions screens for market power 

and affiliate transactions, and therefore, 

should not need to go through the 

duplicative process of having their 

officers and directors file a full 

application under part 45 of the 

Commission’s regulations.37

33. Sempra, NUSCO, Reliant, Edison 

Mission Energy and Morgan Stanley 

Capital Group, Inc. (Morgan Stanley) all 

filed comments opposing the possibility 

that the Commission may cease granting 

waivers of the full requirements of Part 

45 in orders granting market-based rate 

authority. They all state that companies 

that receive market-based rate authority 

undergo significant scrutiny and must 

pass the Commission’s market power 

and affiliate abuse screens to ensure that 

entities with market-based rate authority 

will not abuse any power they may 

have. Morgan Stanley requests that the 

Commission clarify aspects of the 

waivers, such as specifying the 

information required when filing the 

abbreviated application and develop a 

standardized format to submit the 

information to the Commission.38

Morgan Stanley also states that the 

Commission should clarify that the 

abbreviated filings may be made within 

30 days of holding the interlocking 

positions.39 Finally, Morgan Stanley 

states that, if the Commission eliminates 

the practice of granting waivers of the 

full requirements of part 45, the 

Commission should apply section 45.9 

to power marketers.40

(ii) Commission Determination 

34. The purpose of an application for 

authorization to hold interlocking 

positions under part 45 is to allow the 

Commission to review an individual 

officer or director’s proposed interlock 

in order to find that such individual’s 

service with more than one company 

will not adversely affect either public or 

private interests. The fact that a 

particular company may have ‘‘passed’’

the Commission’s market-based rate 

screens says little about whether to 

grant authorization for an individual 

officer or director to hold interlocking 

positions under section 305(b). The 

Commission, moreover, does not 

consider part 45 to be a burdensome 

regulation. Individuals that are officers 

or directors of entities that do not have 

market-based rate authority must fulfill 

the full requirements of part 45. The 

Commission sees no reason to continue 

to treat these entities differently and, as 

a result, we intend to no longer grant 

waivers of the full requirements of part 

45 in our orders granting market-based 

rate authority. Rather, persons seeking 

to hold interlocking positions will be 

required henceforth to comply with the 

full requirements of part 45. Since we 

intend to no longer grant such waivers, 

there is no need to address Morgan 

Stanley’s request for clarification. 

35. In response to Morgan Stanley’s 

request that the Commission should 

permit power marketers to apply for 

automatic authorization under section 

45.9, we do not grant the request. 

Allowing persons who are officers or 

directors of power marketers to seek 

automatic authorization under section 

45.9, simply because such entities are 

power marketers, would frustrate the 

prophylactic nature of section 305(b). 

Therefore, we will deny the request to 

permit individuals who are officers or 

directors of power marketers to file for 

automatic authorization under section 

45.9 simply because such entities are 

power marketers. 

36. With respect to an individual who 

currently is authorized to hold 

interlocking positions, that individual 

will not need to refile under the full 

requirements of part 45 to continue to 

hold such interlocking positions (unless 

and until, of course, that individual 

assumes different or additional 

interlocking positions). 

E. Miscellaneous 

(i) Comments 

37. EEI requests that the Commission 

‘‘indicate that an application will be 

deemed approved if not acted on or 

flagged for Commission action within 30 

or 60 days after the application is 

filed.’’ 41 EEI also requests that the 

Commission provide clarity and 

guidance as to the factors it considers in 

reviewing interlocking position 

applications, to further assist companies 

in their search for appropriate and 

qualified officers and directors.42 To 

address all of the concerns raised by 

EEI, it requests the Commission hold a 

technical conference with industry 

members.43

(ii) Commission Determination 

38. The Commission will amend the 

proposed regulatory text to provide that 

absent Commission action within 60 

days of filing a completed application to 

hold interlocking positions, an 

application will be deemed granted. 

However, the Commission will reserve 

the right to revoke such authorization or 

require further proof that such 

interlocking position will not adversely 

affect public nor private interests. 

39. In response to EEI’s request for 

clarity and guidance as to the factors the 

Commission seeks to address in 

reviewing applications for authorization 

to hold interlocking positions, the 

Commission directs EEI, and all other 

interested parties, to the extensive case 

law on this subject developed over the 

past 70 years. 

40. Finally, as we have answered all 

parties’ comments and concerns, we see 

no need to hold a technical conference 

to address such matters. 

Information Collection Statement 

41. The Office of Management and 

Budget (OMB) regulations require that 

OMB approve certain reporting and 

recordkeeping requirements (collections 

of information) imposed by an agency.44

The information collection requirements 

in this final rule are identified under the 

Commission’s data collection, FERC–

55722 Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Rules and Regulations 

45 44 U.S.C. 3507(d). 

46See 1 CFR 21.35; 5 CFR 1320.3(f)(3). 

47Regulations Implementing the National 

Environmental Policy Act, Order No. 486, 52 FR 

47897 (Dec. 17, 1987), FERC Stats. & Regulations 

Preambles 1986–1990 ¶ 30,783 (1987). 

48 18 CFR 380.4(a)(1). 

49 18 CFR 380.4(a)(16). 

50 5 U.S.C. 601–12. 

51The 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. The Small Business Size Standards 

component of the North American Industry 

Classification System defines a small electric utility 

as one 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 MWh. 13 CFR 121.201. 

520, ‘‘Application for Authority to Hold 

Interlocking Positions.’’ Under section 

3507(d) of the Paperwork Reduction Act 

of 1995,45 the reporting requirements in 

the subject rulemaking will be 

submitted to OMB for review. 

42. Respondents subject to the filing 

requirements of this final rule will not 

be penalized for failing to respond to 

this collection of information unless the 

collection of information displays a 

valid OMB control number. ‘‘Display’’ is 

defined as publishing the OMB control 

number in regulations, guidelines, forms 

or other issuances in the Federal 

Register (for example, in the preamble 

or regulatory text for the final rule 

containing the information 

collection.) 46

Public Reporting Burden: In the 

NOPR, the Commission estimated that 

requiring the additional information 

would have a minimal effect on 

respondents but sought comments about 

the time and costs to comply with the 

requirements. The Commission received 

fourteen comments on its NOPR but 

none specifically addressing its 

estimates. Therefore, the Commission 

will retain its initial estimates. 

However, several commentors stated 

that requiring informational reports 

prior to persons holding positions 

would be a burdensome task. Other 

commentors believe that the 

information required in the 

informational reports duplicates the 

information reported on the 

Commission’s FERC Form 561. The 

Commission has addressed these 

concerns elsewhere in the preamble of 

this final rule. The Commission is 

submitting a copy of this final rule to 

OMB for review and approval. In their 

notice of August 16, 2005, OMB took no 

action on the NOPR, instead deferring 

their approval until review of the final 

rule. 

Title: FERC–520 ‘‘Application for 

Authority to Hold Interlocking 

Positions’’. 

Action: Proposed Data Collection. 

OMB Control Nos. 1902–0083. 

Respondents: Business 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 FPA 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 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 

holding of such interlocks, and requires 

the applicant to show, in a form and 

manner as prescribed by the 

Commission, that neither public nor 

private interests will be adversely 

affected by the holding of the positions. 

43. The final rule clarifies: (1) 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; (2) clarifies automatic 

authorizations for certain interlocking 

positions for which authorization is 

requested; and (3) requires a statement 

or affirmation that an individual has not 

yet assumed the duties or 

responsibilities of the position which 

necessitated the filing of an 

informational report under section 45.9. 

It is necessary to make these 

clarifications and have this statement or 

affirmation to ensure the Commission 

receives timely submissions and also 

has sufficient information to make a 

determination as to the appropriateness 

of holding the interlocking positions. 

44. Interested persons may obtain 

information on this information 

collection by contacting the following: 

Federal Energy Regulatory Commission, 

888 First Street, NE., Washington, DC 

20426, Attention: Michael Miller, 

Officer of the Executive Director, phone: 

(202) 502–8415, fax: (202) 273–0873, email: michael.miller@ferc.gov. 

45. Comments concerning this 

information collection can be sent 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 

46. The Commission is required to 

prepare an Environmental Assessment 

or an Environmental Impact Statement 

for any action that may have a 

significant adverse effect on the human 

environment.47 As we stated in the 

NOPR, 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,48 as well as 

actions under section 305(b) of the 

FPA.49 This Final Rule clarifies the time 

when, and information which, an 

individual seeking Commission 

authorization to hold interlocking 

positions must file. Therefore, this rule 

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. 

Regulatory Flexibility Act Analysis or 

Certification 

47. The Regulatory Flexibility Act of 

1980 (RFA) 50 generally requires a 

description and analysis of final rules 

that will have a significant economic 

impact on a substantial number of small 

entities.51 The Commission is not 

required to make such analyses if a rule 

would not have such an effect. 

48. The Commission does not believe 

that this final rule would have such an 

impact on small entities. Most persons 

affected by this final rule are officers or 

directors of companies that do not fall 

within the RFA’s definition of a small 

entity. Further, this final 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 impact on a 

substantial number of small entities. 

Document Availability 

49. 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 (http:// 

www.ferc.gov) and in the Commission’s 

Public Reference Room during normal 

business hours (8:30 a.m. to 5 p.m. 

Eastern Time) at 888 First Street, NE., 

Room 2A, Washington, DC 20426. 

50. From the Commission’s Home 

Page on the Internet, this information is 

available in the Commission’s document 

Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Rules and Regulations 55723 

52See 5 U.S.C. 804(2). 

53See 5 U.S.C. 801(a)(1)(A). 

management system, 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. 

51. User assistance is available for 

eLibrary and the Commission’s website 

during normal business hours. For 

assistance, please contact FERC Online 

Support at 1–866–208–3676 (toll free) or 

202–502–6652 (email at 

FERCOnlineSupport@ferc.gov), or the 

Public Reference Room at 202–502–

8371, TTY 202–502–8659 (e-mail at 

public.referenceroom@ferc.gov). 

Effective Date and Congressional 

Notification 

52. This Final Rule will take effect 

October 24, 2005. The Commission has 

determined, with the concurrence of the 

Administrator of the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, that 

this rule is not a major rule within the 

meaning of section 251 of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996.52 The Commission 

will submit this final rule to both 

houses of Congress and the General 

Accountability Office.53

List of Subjects in 18 CFR Part 45 

Electric utilities, Reporting and 

recordkeeping requirements. 

By the Commission. 

Magalie R. Salas, 

Secretary. 

■ In consideration of the foregoing, the 

Commission amends 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: 

§ 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; late-filed applications will be 

denied. 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. 

(b) Absent Commission action within 

60 days of a completed application to 

hold interlocking positions, an 

application will be deemed granted. 

Such authorization is subject to 

revocation by the Commission after due 

notice to applicant and opportunity for 

hearing. In any such proceeding, the 

burden of proof shall be upon the 

applicant to show that neither public 

nor private interests will be adversely 

affected by the holding of such 

positions. 

■ 3. In § 45.9, paragraph (b) is revised 

and paragraph (c)(5) is added to read as 

follows: 

§ 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 performing or assuming 

the duties and responsibilities 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) A statement or an affirmation that 

the applicant has not yet performed or 

assumed the duties or responsibilities of 

the position which necessitated the 

filing of this informational report. 

[FR Doc. 05–19002 Filed 9–22–05; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 385 

[Docket No. RM05–33–000; Order No. 663] 

Revision of Rules of Practice and 

Procedure Regarding Issue 

Identification 

Issued September 16, 2005. 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Final rule. 

SUMMARY: The Federal Energy 

Regulatory Commission (Commission) is 

revising its regulations regarding filings. 

The regulations are revised to clarify 

that any issues that the movant wishes 

the Commission to address must be 

specifically identified in a section 

entitled ‘‘Statement of Issues.’’ This 

change will benefit the Commission by 

clarifying issues raised, and benefit 

movants by ensuring issues are 

addressed promptly and preserved for 

appeal. 

EFFECTIVE DATE: The rule will become 

effective September 23, 2005. 

FOR FURTHER INFORMATION CONTACT: 

Carol C. Johnson, Office of the General 

Counsel, GC–13, Federal Energy 

Regulatory Commission, 888 First 

Street, NE., Washington, DC 20426, 

202–502–8521. 

SUPPLEMENTARY INFORMATION: 

Before Commissioners: Joseph T. 

Kelliher, Chairman; Nora Mead 

Brownell, and Suedeen G. Kelly. 

1. The Federal Energy Regulatory 

Commission (Commission) is revising 

its rules of practice and procedure to 

clarify that any issues a movant wishes 

the Commission to address must be 

clearly set forth in a section entitled 

‘‘Statement of Issues,’’ that will 

reference representative Commission 

and court precedent on which the 

participant is relying. While the current 

rules require that pleadings include 

‘‘[t]he position taken by the participant 

filing any pleading * * * and the basis 

in fact and law for such position,’’ the 

Commission has found that movants 

sometimes fail to specify the issues they 

want the Commission to address, or the 

case law supporting their position. 18 

CFR 385.203(a)(7). This revision will 

benefit movants, and other parties to the 

proceeding, as well as the Commission. 

2. The way to ensure that an issue is 

addressed is for a movant to place it 

squarely before the Commission in a 

filing. Under the Administrative