Document ID: FERC-2019-0189-0001
Agency: ferc
Document Type: Rule
Title: Mergers or Consolidations by a Public Utility
Posted Date: 2019-02-26T05:00Z

[Federal Register Volume 84, Number 38 (Tuesday, February 26, 2019)]
[Rules and Regulations]
[Pages 6069-6076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03326]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 33

[Docket No. RM19-4-000; Order No. 855]

Mergers or Consolidations by a Public Utility

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Final rule.

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SUMMARY: Pursuant to ``An Act to amend section 203 of the Federal Power 
Act'' (Act), the Federal Energy Regulatory Commission (Commission) 
revises its regulations relating to mergers or consolidations by a 
public utility.

DATES: This rule will become effective March 27, 2019.

[[Page 6070]]

FOR FURTHER INFORMATION CONTACT: Eric Olesh (Technical Information), 
Office of Energy Market Regulation, Federal Energy Regulatory 
Commission, 888 First Street NE, Washington, DC 20426, (202) 502-6524, 
Eric.Olesh@ferc.gov.
    Regine Baus (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street NE, Washington, 
DC 20426, (202) 502-8757, Regine.Baus@ferc.gov.

SUPPLEMENTARY INFORMATION:  In this final rule, the Commission amends 
its regulations to establish that a public utility must seek 
authorization under amended section 203(a)(1)(B) of the Federal Power 
Act (FPA) to merge or consolidate, directly or indirectly, its 
facilities subject to the jurisdiction of the Commission, or any part 
thereof, with the facilities of any other person, or any part thereof, 
that are subject to the jurisdiction of the Commission and have a value 
in excess of $10 million, by any means whatsoever. In addition, as 
required by the Act, the Commission establishes a requirement to submit 
a notification filing for mergers or consolidations by a public utility 
if the facilities to be acquired have a value in excess of $1 million 
and such public utility is not required to secure Commission 
authorization under amended section 203(a)(1)(B).

I. Background

    1. On November 15, 2018, the Commission issued a notice of proposed 
rulemaking (NOPR) \1\ implementing ``An Act to amend section 203 of the 
Federal Power Act'' (Act), Public Law 115-247, 132 Stat. 3152. Section 
1 of the Act amended section 203(a)(1)(B) to provide that no public 
utility shall, without first having secured an order of the Commission 
authorizing it to do so, merge or consolidate, directly or indirectly, 
its facilities subject to the jurisdiction of the Commission, or any 
part thereof, with the facilities of any other person, or any part 
thereof, that are subject to the jurisdiction of the Commission and 
have a value in excess of $10 million, by any means whatsoever. Section 
3 of the Act provides that the amendment to section 203(a)(1)(B) shall 
take effect 180 days after the date of enactment of the Act. The 
primary effect of this amendment is to establish a $10 million 
threshold on transactions that will be subject to the Commission's 
review and authorization under section 203(a)(1)(B).
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    \1\ Implementation of Amended Section 203(a)(1)(B) of the 
Federal Power Act, Notice of Proposed Rulemaking, 83 FR 61338 (Nov. 
29, 2018), 165 FERC ] 61,091 (2018).
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    2. In section 2 of the Act, Congress amended section 203(a) to add 
section 203(a)(7) to require notification for certain transactions. 
Section 203(a)(7) provides that, not later than 180 days after the date 
of the enactment of section 203(a)(7), the Commission shall promulgate 
a rule requiring any public utility that is seeking to merge or 
consolidate, directly or indirectly, its facilities subject to the 
jurisdiction of the Commission, or any part thereof, with those of any 
other person, to notify the Commission of such transactions not later 
than 30 days after the date on which the transaction is consummated if: 
(1) The facilities, or any part thereof, to be acquired are of a value 
in excess of $1 million; and (2) such public utility is not required to 
secure a Commission order under amended section 203(a)(1)(B).
    3. The Act also specifies that, not later than two years after the 
date of enactment of this Act, the Commission shall submit to Congress 
a report that assesses the effects of the amendment made by section 1 
and that such report shall take into account any information collected 
under section 203(a)(7). The Act also requires that the Commission 
provide for public notice and comment with respect to the report.

II. Discussion

    4. As discussed below, commenters generally support the proposals 
in the NOPR, including the proposed changes to implement amended 
section 203(a)(1)(B) and to establish a notification filing requirement 
pursuant to section 203(a)(7). Certain commenters request clarification 
of the procedures associated with the notification filing while others 
recommend that the Commission require additional information about the 
transactions subject to the notification filing. In light of amended 
section 203(a)(1)(B), commenters also request clarification on the 
Commission's jurisdiction over acquisitions of facilities from non-
public utilities. Lastly, commenters request that the Commission 
continue to consider and act on other pending Commission rulemakings. 
We address these issues below.

A. Section 203(a)(1)(B) Dollar Threshold

1. NOPR
    5. In the NOPR, the Commission proposed two changes to part 33 of 
its regulations to bring them into conformance with the Act. First, the 
Commission proposed to revise Sec.  33.1(a)(1)(ii) to provide that part 
33 will apply to any public utility seeking authorization under section 
203 to merge or consolidate, directly or indirectly, its facilities 
subject to the jurisdiction of the Commission, or any part thereof, 
with the facilities of any other person, or any part thereof, that are 
subject to the jurisdiction of the Commission and have a value in 
excess of $10 million, by any means whatsoever.\2\
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    \2\ Id. P 3. In the NOPR, the Commission stated that public 
utilities required to maintain their books of account in accordance 
with the Commission's Uniform System of Accounts under 18 CFR part 
101 must continue to file with the Commission proposed journal 
entries for the purchase or sale of electric plant, consistent with 
the instructions to Account 102, Electric Plant Purchased and Sold. 
The Commission explained that the dollar threshold proposed in the 
NOPR does not apply to this accounting filing requirement. Id. at 
n.1.
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2. Comments
    6. American Public Power Association (APPA), Edison Electric 
Institute (EEI), Idaho Power Company (Idaho Power), International 
Transmission Company (ITC),\3\ National Rural Electric Cooperative 
Association (NRECA), and Transmission Access Policy Study Group (TAPS) 
support the proposed changes to part 33 of the Commission's regulations 
to implement the $10 million dollar threshold in amended section 
203(a)(1)(B). APPA, EEI, Idaho Power, NRECA, and TAPS add that the 
change appropriately reflects the amended language of section 203, and 
Idaho Power states that it will ensure the Commission focuses its time 
and effort on larger, potentially more impactful transactions.\4\ EEI 
and ITC explain that it will also reduce administrative burdens on 
regulated entities and the Commission.\5\
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    \3\ ITC filed comments on behalf of itself, Michigan Electric 
Transmission Company, LLC, ITC Midwest LLC, and ITC Great Plains, 
LLC.
    \4\ See APPA Comments at 3; EEI Comments at 5; Idaho Power 
Comments at 1; NRECA Comments at 3; TAPS Comments at 3.
    \5\ See ITC Comments at 1; EEI Comments at 6.
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3. Commission Determination
    7. We will revise the language in Sec.  33.1(a)(1)(ii) of the 
Commission's regulations as proposed in the NOPR.

B. Notification Filing

1. NOPR
    8. The Commission also proposed to add Sec.  33.12 to its 
regulations to require public utilities whose transactions are subject 
to section 203(a)(7) to file notification of such transactions with the 
Commission. In particular, the Commission proposed that any public 
utility that is seeking to merge or consolidate, directly or 
indirectly, its facilities subject to the jurisdiction of the 
Commission, or any part thereof, with those of any other person must

[[Page 6071]]

notify the Commission of such transaction not later than 30 days after 
the date on which the transaction is consummated if: (1) The 
facilities, or any part thereof, to be acquired are of a value in 
excess of $1 million; and (2) such public utility is not required to 
secure an order of the Commission under section 203(a)(1)(B).\6\
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    \6\ NOPR, 165 FERC ] 61,091 at P 4.
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    9. The Commission proposed that public utilities subject to section 
203(a)(7) file the following information in this notification filing: 
(1) The exact name of the public utility and its principal business 
address; and (2) a narrative description of the transaction, including 
the identity of all parties involved in the transaction and all 
jurisdictional facilities associated with or affected by the 
transaction, the location of such jurisdictional facilities involved in 
the transaction, the date on which the transaction was consummated, the 
consideration for the transaction, and the effect of the transaction on 
the ownership and control of such jurisdictional facilities.\7\
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    \7\ Id. P 5.
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    10. The Commission proposed that the notification filings be filed 
in the first docket for section 203 filings for the fiscal year (FY). 
For example, all notification filings made in FY2019 would be filed in 
Docket No. EC19-1-000; all notification filings made in FY2020 would be 
filed in Docket No. EC20-1-000, etc.\8\
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    \8\ Id. P 8.
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2. Comments
    11. Most commenters support the proposed notification filing.\9\ 
NRECA explains that proposed Sec.  33.12(a) implementing the 
notification requirement tracks the statutory language.\10\ EEI 
supports the Commission's proposal regarding the notification 
requirement for transactions valued between $1 million but at or below 
$10 million, which it states is consistent with the legislative goals 
of reducing regulatory burden and paperwork burdens while still 
providing transparency.\11\ Idaho Power also supports the proposal that 
there be no filing requirement for transactions involving facilities 
with a value of less than $1 million, which it states will streamline 
the process for utilities and reduce the oversight burden on the 
Commission.\12\
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    \9\ Idaho Power, EEI, APPA, ITC, and NRECA support the proposed 
notification filing.
    \10\ NRECA Comments at 4.
    \11\ EEI Comments at 7.
    \12\ Idaho Power Comments at 2.
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    12. Some commenters request clarification on associated process and 
service requirements and notice procedures. EEI requests clarification 
on whether the notification filings can be filed in standard word-
document formats via eFiling. EEI and ITC also ask whether these 
filings are purely informational. Specifically, they ask that the 
Commission clarify that: (1) It will not notice these proceedings for 
public comment; (2) other persons are not entitled to file responsive 
comments; and (3) the Commission will not take any action on the 
filings. EEI and ITC request clarification that persons are not 
obligated to serve copies of these notification filings under 18 CFR 
385.2010 (Rule 2010 of the Commission's Rules of Practice and 
Procedure).\13\ In contrast, Public Citizen, Inc. requests that the 
Commission clarify whether the proposed notification filing will be 
subject to public notice so that the public can track transactions 
valued between $1 million but at or below $10 million.\14\
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    \13\ See EEI Comments at 7-8; ITC Comments at 3-4. Rule 2010 
requires, among other things, that participants in a proceeding must 
serve copies of their documents according to specified guidelines. 
18 CFR 385.2010.
    \14\ Public Citizen, Inc. Comments at 1-2.
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    13. Others contend that the information proposed to be collected in 
the notification filing is insufficient. American Antitrust Institute 
(AAI) suggests that more information should be included in the 
notification filing to account for (1) small, successive horizontal or 
vertical acquisitions that can result in accretion of market power over 
time (serial transactions); (2) acquisitions of partial ownership 
shares in strategic assets that can raise competitive concerns due to 
common and cross-ownership issues; and (3) strategic acquisitions. AAI 
explains that, through serial transactions, a utility may enhance its 
ability and incentive to engage in unilateral economic withholding of 
physical capacity or to strategically operate its transmission or fuel 
transportation assets to frustrate rivals' access to or foreclose them 
from wholesale markets.\15\ In addition, AAI states that cross-
ownership can facilitate the anticompetitive exchange of information 
and common ownership can dampen incentives to compete because more 
vigorous competition is less profitable than ``cooperation'' for 
investors with partial shares in each of those rivals. AAI explains 
that, for example, private equity firms, which are numerous and active 
in electricity markets, can control or influence managerial decision-
making even with a partial or minority ownership share in an asset, and 
such influence may be obtained with an investment of less than $10 
million.\16\ Further, AAI states that, because electricity markets are 
susceptible to the exercise of market power due to the inelasticity of 
demand and supply during times when capacity is constrained. AAI also 
states that even small, strategic acquisitions can incentivize capacity 
withholding.\17\
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    \15\ AAI Comments at 3-4.
    \16\ Id. at 5-7.
    \17\ Id. at 7-8.
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    14. AAI therefore recommends that the notification filing include: 
(1) The wholesale markets in which the jurisdictional facilities 
associated with or affected by the transaction participate; (2) a 
current, 10-year history of ownership changes involving the 
jurisdictional facilities associated with the transaction; and (3) the 
identity of all energy affiliates and energy subsidiaries owned by the 
acquirer of the jurisdictional facilities that are the subject of the 
transaction. AAI also encourages the Commission to undertake a 
technical conference to review how the Commission will analyze these 
transactions to monitor market changes, given that the Commission is 
required to submit a report to Congress within two years regarding the 
effects of amended section 203(a)(1)(B).\18\
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    \18\ Id. at 9.
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    15. APPA, NRECA, and TAPS also request that the notification filing 
include a requirement to identify energy affiliates and energy 
subsidiaries and to include pre- and post-transaction organizational 
charts.\19\ APPA explains that the affiliate information is important 
because it will allow the Commission and other stakeholders to monitor 
whether a market participant is engaged in multiple accretive 
transactions valued at less than $10 million, which APPA notes was a 
concern of the Commission in a 2016 notice of inquiry on requirements 
for section 203 transactions and section 205 market-based rate 
applications.\20\ NRECA and TAPS explain that the information will be 
useful because ownership structures and affiliate relationships are 
growing more complex.\21\ APPA states that the affiliate information 
and organizational charts will result in only an incremental burden to 
paperwork, but that the

[[Page 6072]]

information will be useful to include in the Commission's report to 
Congress.\22\ NRECA also requests that the Commission require 
information on the wholesale and transmission tariffs on file with the 
Commission that are related to the jurisdictional facilities involved 
in the transaction, which it claims will be useful to monitor the rates 
associated with those facilities.\23\ TAPS maintains that the proposed 
notification filing includes little information compared to full 
section 203 applications and, because Congress required these filings, 
the information the Commission receives must be sufficient for consumer 
protection purposes and to produce a meaningful report for 
Congress.\24\
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    \19\ See APPA Comments at 3-4; NRECA Comments at 5-6; TAPS 
Comments at 4.
    \20\ APPA Comments at 4-5 (citing Modifications to Commission 
Requirements for Review of Transactions under Section 203 of the 
Federal Power Act and Market-Based Rate Applications under Section 
205 of the Federal Power Act, Notice of Inquiry, 81 FR 66649 (Sept. 
28, 2016), 156 FERC ] 61,214 (2016) (Market Power NOI)).
    \21\ See NRECA Comments at 5-6; TAPS Comments at 5.
    \22\ APPA Comments at 5-6.
    \23\ NRECA Comments at 6-7.
    \24\ TAPS Comments at 4.
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3. Commission Determination
    16. We will add Sec.  33.12 to the Commission's regulations as 
proposed in the NOPR to require that public utilities submit a 
notification filing for transactions subject to section 203(a)(7). In 
response to the comments, we first clarify filing requirements 
associated with the notification filings. Each notification filing 
should be filed in the first docket for section 203 filings of the FY. 
For example, all notification filings made in FY2019 would be filed in 
the Docket No. EC19-1-000; all notification filings for FY2020 would be 
filed in Docket No. EC20-1-000, etc. The notification filings may be 
filed in any format accepted in eLibrary as listed on the Commission's 
website.\25\ In addition, we clarify that the notification filings are 
intended to be informational. The Commission will not notice the 
notification filings submitted into the placeholder docket (i.e., 
Docket No. EC19-1-000, etc.) and will not accept responsive comments 
from any persons on the notification filings. The Commission will not 
act on the notification filings that it receives. Because the 
notification filings are informational in nature, there is no 
requirement to serve copies of the notification filings under Rule 2010 
of the Commission's Rules of Practice and Procedure.
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    \25\ FERC, Acceptable File Formats, http://www.ferc.gov/docs-filing/elibrary/accept-file-formats.asp (last updated Nov. 16, 
2015).
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    17. With one exception, we decline to require additional 
information as requested by certain commenters. Section 203(a)(7) 
provides the Commission with limited authority to collect information 
in the notification filings about transactions for which prior 
Commission authorization under section 203(a)(1) is no longer required. 
Because the Commission has limited authority to review these 
transactions under section 203, we will not hold a technical conference 
on how the Commission will analyze these transactions. Interested 
persons may track these transactions as they are filed in the 
placeholder dockets described above which provide a readily searchable 
format for doing so.
    18. However, AAI, APPA, NRECA, and TAPS raise a compelling argument 
regarding the transparency of information as to energy affiliates. 
Therefore, in addition to the information that the NOPR proposed to be 
collected, we will require notification filings to contain a statement 
regarding whether the parties to the transaction are affiliates. This 
will allow additional transparency as to whether these transactions are 
negotiated at arm's length and whether these transactions could have an 
effect on a public utility's rates. We will add a requirement for such 
a statement in the description of the transaction in Sec.  
33.12(b)(2)(i).
    19. As to the Commission's report to Congress that assesses the 
effects of amended section 203(a)(1)(B), the Commission will provide 
for public notice and comments on the report prior to submitting it to 
Congress.

C. Clarification on Jurisdiction of the Commission Under Section 
203(a)(1)(B)

1. NOPR
    20. In the NOPR, the Commission clarified that, except for mergers 
or consolidations that are valued at $10 million or less, the 
Commission will not change its interpretation of the transactions that 
are subject to the jurisdiction of the Commission under the ``merge or 
consolidate'' clause of section 203(a)(1)(B). The Commission further 
explained that it interprets the amendment by Congress to section 
203(a)(1)(B) as establishing a $10 million threshold, but not removing 
the Commission's jurisdiction to review transactions with a higher 
value that involve a public utility's acquisition of facilities from 
non-public utilities \26\ if those facilities will be subject to the 
Commission's jurisdiction after the transaction is consummated.\27\
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    \26\ Non-public utilities refers to entities described in 
section 201(f) of the FPA. 16 U.S.C. 824(f).
    \27\ See Duke Power Co. v. FPC, 401 F.2d 930, 941 (DC Cir. 1968) 
(Duke Power Co.) (``We have no doubt that any acquisition from [a 
non-public utility] by a public utility of what would normally be a 
jurisdictional facility, such as a transmission line conducting 
interstate energy, would fall within the purview of the clause under 
consideration.'').
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2. Comments
    21. Two commenters, EEI and ITC, take issue with the Commission's 
clarification on its jurisdiction. Specifically, EEI claims that the 
amended language of section 203(a)(1)(B) states that Commission 
approval is required only if the facilities being acquired by the 
public utility are subject to the Commission's jurisdiction, which is 
``plainly read to mean that the facilities are jurisdictional before 
consummation of the proposed transaction.'' \28\ EEI states that the 
Commission should recognize that, as amended, the language of section 
203(a)(1)(B) has materially changed from the language that preceded the 
amendment. As a result, EEI explains that the Duke Power Co. v. FPC 
case cited by the Commission does not squarely address the question 
raised by the amendment. EEI requests that, for regulatory certainty, 
the Commission reconsider and clarify its interpretation of the types 
of facilities to which amended section 203(a)(1)(B) will apply.\29\
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    \28\ EEI Comments at 9.
    \29\ Id. at 8-9.
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    22. Similarly, ITC argues that the plain language of amended 
section 203(a)(1)(B) does not grant the Commission authority to review 
transactions that involve a public utility's acquisition of facilities 
from non-public utilities. ITC asserts that, under amended section 
203(a)(1)(B), a public utility must obtain Commission authorization 
only when proposing to merge or consolidate its own Commission-
jurisdictional facilities with another person's Commission-
jurisdictional facilities. ITC contends that if the facilities would be 
Commission-jurisdictional if owned by a jurisdictional entity, or will 
become so after the transaction is approved by the Commission and 
consummated, is immaterial because the statutory language requires that 
the facilities ``are'' within the jurisdiction of the Commission, not 
that they will be at some future time.\30\ ITC also maintains that the 
Commission's reliance on Duke Power Co. is unavailing because the case 
involved the interpretation of older, no-longer effective section 
203(a)(1)(B) language, which conferred upon the Commission authority to 
review a public utility's proposed merger or consolidation of its own 
facilities with the facilities of ``any other person.'' \31\ In 
addition, ITC claims that the court's observation about the 
Commission's

[[Page 6073]]

jurisdiction in that case is dicta because the case concerned whether a 
public utility's acquisition of unambiguously non-jurisdictional 
distribution assets was within section 203(a)(1)(B)'s ambit.\32\
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    \30\ ITC Comments at 2-3.
    \31\ Id. at 3 (citing Duke Power Co., 401 F.2d at 933).
    \32\ Id.
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3. Commission Determination
    23. We disagree with EEI's and ITC's interpretation of the language 
of amended section 203(a)(1)(B). Rather, we interpret the new statutory 
language as codifying the D.C. Circuit's holding in Duke Power Co. that 
the Commission has no jurisdiction over the acquisition of distribution 
or other facilities that are non-jurisdictional even when owned by a 
public utility. In amended section 203(a)(1)(B), the phrase ``subject 
to the jurisdiction of the Commission'' was used twice.\33\ First, the 
phrase was used to describe the facilities of a ``public utility'' that 
must be involved in a transaction in order for the Commission to have 
jurisdiction. By adding ``subject to the jurisdiction of the 
Commission'' to describe the facilities of a ``public utility,'' we 
conclude that Congress intended to exclude facilities, such as 
distribution facilities, that are not otherwise subject to the 
jurisdiction of the Commission when owned by a public utility. When 
Congress again uses the phrase ``subject to the jurisdiction of the 
Commission'' to modify the facilities of a ``person,'' we interpret the 
phrase as having the same meaning, rather than removing the 
Commission's jurisdiction over a public utility's acquisition of 
transmission facilities previously owned by a non-public utility.
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    \33\ Amended section 203(a)(1)(B) provides that no public 
utility shall, without first having secured an order of the 
Commission authorizing it to do so, ``merge or consolidate, directly 
or indirectly, its facilities subject to the jurisdiction of the 
Commission, or any part thereof, with the facilities of any other 
person, or any part thereof, that are subject to the jurisdiction of 
the Commission and have a value in excess of $10 million, by any 
means whatsoever.'' 16 U.S.C. 824b(a)(1)(B), amended by ``An Act to 
amend section 203 of the Federal Power Act,'' Public Law 115-247, 
132 Stat. 3152 (2018) (emphasis added).
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    24. That Congress did not intend to limit the Commission's 
jurisdiction to the acquisition of transmission facilities subject to 
the Commission's jurisdiction prior to the transaction is further 
supported by the fact that Congress retained the language requiring 
that the facilities being acquired be owned by a ``person,'' instead of 
changing the language to require that the facilities be owned by a 
``public utility.'' Under section 201(e), a ``public utility'' is ``any 
person who owns or operates facilities subject to the jurisdiction of 
the Commission under this part,'' \34\ which means that, if facilities 
being acquired are subject to the Commission's jurisdiction prior to 
the transaction, their owner by definition is a public utility. The use 
of the word ``person,'' and not ``public utility,'' when describing the 
facilities to be acquired suggests that Congress intended the 
Commission to have jurisdiction over the acquisition of facilities 
owned both by public utilities and non-public utilities, provided that 
those facilities are subject to the Commission's jurisdiction after 
their acquisition by the public utility.
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    \34\ 16 U.S.C. 824(e).
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    25. Our interpretation is reinforced by the legislative history of 
the Act, which indicates that Congress intended amended section 
203(a)(1)(B) only to establish a $10 million threshold for transactions 
subject to the Commission's jurisdiction and not to alter any other 
aspect of the Commission's jurisdiction over transactions. The House 
Report described the purpose of the amendment as ``amend[ing] the 
Federal Power Act to exempt facilities of a value of $10,000,000 or 
less from this prohibition.'' \35\ The Senate Report similarly 
describes the purpose of the amendment as to: ``reduce the compliance 
burden of certain transactions valued under $10 million, including 
significant legal and regulatory costs which are collected from 
customers.'' \36\ Notably, as part of its background discussion, the 
Senate Report also includes a discussion of the Duke Power Co. decision 
and its holding regarding the Commission's jurisdiction to approve 
transactions, but that report does not assert that the decision was 
erroneous or otherwise suggest that the amendment was intended to 
reverse the Commission's longstanding reliance on Duke Power Co. to 
assert jurisdiction over a public utility's acquisition of transmission 
facilities from a non-public utility.\37\ That neither the House Report 
nor the Senate Report suggests that the amendment was intended to 
remove the Commission's jurisdiction over the acquisition of facilities 
from non-public utilities also supports the conclusion that the 
amendment should not be read to have such an effect.
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    \35\ H.R. Rep. No. 115-167, at 1 (2018).
    \36\ S. Rep. No. 115-253, at 2 (2018).
    \37\ Id. at 3.
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D. Other Pending Proceedings

1. Comments
    26. AAI requests that the Commission carefully consider whether the 
revised regulations for small transactions will have an effect on the 
questions posed in outstanding rulemakings. AAI argues, among other 
things, that if small transactions are excluded from Commission review 
under section 203(a)(1)(B), the Commission should maintain close 
oversight over the workings of regional transmission organization 
markets and not relieve sellers with market-based rate authority from 
filing a competitive analysis with the Commission, as was proposed in 
the Notice of Proposed Rulemaking in Refinements to Horizontal Market 
Power Analysis for Sellers in Certain Regional Transmission 
Organization and Independent System Operator Markets.\38\ AAI further 
notes that the Commission has not acted on two critical rulemakings and 
requests that the Commission make these a high priority: Data 
Collection for Analytics and Surveillance and Market-Based Rate 
Purposes in Docket No. RM16-17-000 (Data Collection NOPR) \39\ and 
Modifications to Commission Requirements for Review of Transactions 
under Section 203 of the Federal Power Act and Market-Based Rate 
Applications under Section 205 of the Federal Power Act in RM16-21-
000.\40\
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    \38\ AAI Comments at 9-10 (citing Refinements to Horizontal 
Market Power Analysis for Sellers in Certain Regional Transmission 
Organization and Independent System Operator Markets, Notice of 
Proposed Rulemaking, 165 FERC ] 61,268 (2018)).
    \39\ Id. at 10.
    \40\ Id. (citing Market Power NOI, 81 FR 66649, 156 FERC ] 
61,214).
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    27. APPA and TAPS request that, if the Commission does not expand 
the information to be collected in the notification filing, it should 
act on the Data Collection NOPR and proceed with the relational 
database proposed therein.\41\
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    \41\ See APPA Comments at 6-7; TAPS Comments at 5-6.
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2. Commission Determination
    28. We acknowledge commenters' support and requests for action on 
other pending rulemaking proceedings. However, we emphasize that this 
proceeding is limited in scope and only implements the changes 
specified in amended section 203. We will not address the status of 
other proceedings here. In addition, as explained above, we find that 
the information we will collect under Sec.  33.12 is sufficient to 
satisfy the directive in the Act that the Commission establish a 
notification requirement.

III. Information Collection Statement

    29. The Paperwork Reduction Act (PRA) \42\ requires each federal 
agency to

[[Page 6074]]

seek and obtain Office of Management and Budget (OMB) approval before 
undertaking a collection of information directed to 10 or more persons 
or contained in a rule of general applicability. OMB's regulations \43\ 
require approval of certain information collection requirements imposed 
by agency rules. Upon approval of a collection of information, OMB will 
assign an OMB control number and an expiration date. Respondents 
subject to the filing requirements of an agency rule will not be 
penalized for failing to respond to the collection of information 
unless the collection of information displays a valid OMB control 
number.
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    \42\ 44 U.S.C. 3501-3520.
    \43\ 5 CFR part 1320.
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    30. The revisions to the Commission's regulations required in this 
final rule will bring the regulations in conformance with the 
amendments to section 203 enacted by Congress. The first revision would 
implement Congress' amendment to section 203(a)(1)(B), which provides 
that a public utility must seek authorization to merge or consolidate, 
directly or indirectly, its facilities subject to the jurisdiction of 
the Commission, or any part thereof, with the facilities of any other 
person, or any part thereof, that are subject to the jurisdiction of 
the Commission and have a value in excess of $10 million, by any means 
whatsoever. In addition, this final rule adds Sec.  33.12 to the 
Commission's regulations to implement the directive in new section 
203(a)(7) that the Commission require a notification filing for mergers 
or consolidations by a public utility if the facilities to be acquired 
have a value in excess of $1 million and such public utility is not 
required to secure Commission authorization under amended section 
203(a)(1)(B). We anticipate that the revisions to the Commission's 
regulations, once effective, would reduce regulatory burdens. The 
Commission will submit the proposed reporting requirements to OMB for 
its review and approval under section 3507(d) of the PRA.\44\
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    \44\ 44 U.S.C. 3507(d).
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    31. In the NOPR, the Commission solicited comments on the 
Commission's need for this information, whether the information will 
have practical utility, the accuracy of the burden estimates, ways to 
enhance the quality, utility, and clarity of the information to be 
collected or retained, and any suggested methods for minimizing 
respondents' burden, including the use of automated information 
techniques. Nonetheless, while we expect that the regulatory revisions 
discussed herein will reduce the burdens on affected entities, we 
solicit public comment regarding the accuracy of the burden and cost 
estimates below.
    32. Internal Review: The Commission has reviewed the changes and 
has determined that such changes are necessary.
    33. Burden Estimate \45\: The estimated burden and cost for the 
requirements contained in this final rule follow.
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    \45\ ``Burden'' is the total time, effort, or financial 
resources expended by persons to generate, maintain, retain, or 
disclose or provide information to or for a Federal agency. For 
further explanation of what is included in the information 
collection burden, refer to 5 CFR 1320.3.
    \46\ Commission staff estimates that approximately 26 section 
203 filings will change from full section 203 filings to the 
notification filing described above and will take respondents one 
burden hour to complete. The number of respondents and responses is 
based on Commission staff's estimate that 13 percent of the 
approximately 200 section 203 filings received will be affected by 
the changes herein, which represents a significant reduction in 
burden hours.

                        FERC-519, as Modified by This Final Rule in Docket No. RM19-4-000
----------------------------------------------------------------------------------------------------------------
                                 Number and       Number of                     Average burden     Total burden
         Requirements              type of      responses per   Total number   hours & cost per   hours & total
                                 respondents     respondent     of responses       response            cost
                                          (1)             (2)     (1) * (2) =  (4).............  (3) * (4)
                                                                          (3)
----------------------------------------------------------------------------------------------------------------
FERC-519 (FPA Section 203                  26               1              26  1 hr.; $79.00...  26 hrs.;
 Filings) \46\.                                                                                   $2,054.00.
----------------------------------------------------------------------------------------------------------------

    Title: FERC-519, Application under Federal Power Act Section 203.
    OMB Control No.: 1902-0082.
    Action: Amendment to 18 CFR part 33.
    Respondents: Public utilities subject to Federal Power Act.
    Abstract: Pursuant to ``An Act to amend section 203 of the Federal 
Power Act'', the Commission will revise part 33 of its regulations to 
establish that mergers or consolidations by a public utility of 
facilities subject to the jurisdiction of the Commission that have a 
value in excess of $10 million are subject to Commission authorization. 
In addition, the Commission will add Sec.  33.12 to its regulations to 
establish a notification requirement for mergers or consolidations by a 
public utility if the facilities to be acquired have a value in excess 
of $1 million and such public utility is not required to secure 
Commission authorization under amended section 203(a)(1)(B).
    Overview of the Data Collection: The FERC-519, ``Application under 
Federal Power Act section 203,'' is necessary to enable the Commission 
to carry out its responsibilities in implementing the statutory 
provisions of section 203. Section 203 requires a public utility to 
seek Commission authorization of transactions in which a public utility 
disposes of jurisdictional facilities, merges such facilities with the 
facilities owned by another person, or acquires the securities of 
another public utility. The Commission must authorize these 
transactions if it finds that they will be consistent with the public 
interest.
    34. By entering into a certain transaction, a public utility may 
gain an increased incentive and ability to exercise market power that 
can be to the detriment of effective competition and customers. As a 
result, the Commission must review all jurisdictional dispositions, 
mergers, and acquisitions to evaluate that transaction's effect on 
competition. The Commission also evaluates whether such transactions 
have an effect on rates and regulation and whether they result in 
cross-subsidization. The Commission implements the filing requirements 
associated with this review in the Code of Federal Regulations (CFR) 
under 18 CFR part 33.
    35. This final rule is limited to implementing amended FPA section 
203(a)(1)(B) and proposing a notification requirement for certain 
transactions, both of which together represent a reduction in the 
filing requirements for public utilities under section 203. The 
Commission implements these changes by mandate of Congress.

[[Page 6075]]

    36. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street NE, Washington, DC 20426 [Attention: Ellen 
Brown, Office of the Executive Director] Email: DataClearance@ferc.gov, 
Phone: (202) 502-8663; fax: (202) 273-0873.
    37. Comments concerning the collection of information and the 
associated burden estimate(s) may also be sent to: Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
725 17th Street NW, Washington, DC 20503 [Attention: Desk Officer for 
the Federal Energy Regulatory Commission]. Due to security concerns, 
comments should be sent electronically to the following email address: 
oira_submission@omb.eop.gov. Please refer to FERC-519, OMB Control No. 
1902-0082 in your submission.

IV. Environmental Analysis

    38. The Commission is required to prepare an Environmental 
Assessment or an Environmental Impact Statement for any action that may 
have a significant adverse effect on the human environment.\47\ We 
conclude that neither an Environmental Assessment nor an Environmental 
Impact Statement is required for this final rule under Sec.  380.4(a) 
of the Commission's regulations, which provides a categorical exemption 
for ``approval of actions under section[] . . . 203 . . . of the 
Federal Power Act relating to . . . acquisition or disposition of 
property . . . .'' \48\
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    \47\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. 
] 30,783 (1987).
    \48\ 18 CFR 380.4(a)(16).
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V. Regulatory Flexibility Act

    39. The Regulatory Flexibility Act of 1980 (RFA) \49\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The Small Business Administration's (SBA) Office of Size Standards 
develops the numerical definition of a small entity. These standards 
are provided in the SBA regulations at 13 CFR 121.201.\50\ The RFA does 
not mandate any particular outcome in a rulemaking. It only requires 
consideration of alternatives that are less burdensome to small 
entities and an agency explanation of why alternatives were rejected.
---------------------------------------------------------------------------

    \49\ 5 U.S.C. 601-612.
    \50\ 13 CFR 121.201. See also U.S. Small Business 
Administration, Table of Small Business Size Standards Matched to 
North American Industry Classification System Codes (effective Feb. 
26, 2016), https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.
---------------------------------------------------------------------------

    40. The SBA size standards for electric utilities is based on the 
number of employees, including affiliates. Under SBA's standards, some 
transmission owners will fall under the following category and 
associated size threshold: Electric bulk power transmission and 
control, at 500 employees.\51\
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    \51\ 13 CFR 121.201, Sector 22 (Utilities), NAICS code 221121 
(Electric Bulk Power Transmission and Control).
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    41. The Commission estimates that 26 respondents could file 
notification filings over the course of a year, with an estimated 
burden of 1 hour per response, at an estimated cost of $79.00 per 
respondent. The Commission believes that none of the filers will be 
small entities. Therefore, the Commission certifies that this final 
rule will not have a significant economic impact on small entities.

VI. Document Availability

    42. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
internet through FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5:00 
p.m. Eastern time) at 888 First Street NE, Room 2A, Washington DC 
20426.
    43. From FERC's Home Page on the internet, this information is 
available on eLibrary. The full text of this document is available on 
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or 
downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field.
    44. User assistance is available for eLibrary and the FERC's 
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or email at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
public.referenceroom@ferc.gov.

VII. Effective Date and Congressional Notification

    45. These regulations are effective March 27, 2019. The Commission 
has determined that this rule is not a ``major rule'' as defined in 
section 351 of the Small Business Regulatory Enforcement Fairness Act 
of 1996.

List of Subjects in 18 CFR Part 33

    Electric utilities, Reporting and recordkeeping requirements, 
Securities.

    By the Commission.

    Issued: February 21, 2019.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

    In consideration of the foregoing, the Commission amends part 33, 
chapter I, title 18, Code of Federal Regulations, as follows:

PART 33--APPLICATIONS UNDER FEDERAL POWER ACT SECTION 203

0
1. The authority citation for part 33 continues to read as follows:

    Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 
U.S.C. 7101-7352.

0
2. Amend Sec.  33.1 by revising paragraph (a)(1)(ii) to read as 
follows:

Sec.  33.1  Applicability, definitions, and blanket authorizations.

    (a) * * *
    (1) * * *
    (ii) Merge or consolidate, directly or indirectly, its facilities 
subject to the jurisdiction of the Commission, or any part thereof, 
with the facilities of any other person, or any part thereof, that are 
subject to the jurisdiction of the Commission and have a value in 
excess of $10 million, by any means whatsoever;
* * * * *

0
3. Add Sec.  33.12 to read as follows:

 Sec.  33.12   Notification requirement for certain transactions.

    (a) Any public utility that is seeking to merge or consolidate, 
directly or indirectly, its facilities subject to the jurisdiction of 
the Commission, or any part thereof, with those of any other person, 
shall notify the Commission of such transaction not later than 30 days 
after the date on which the transaction is consummated if:
    (1) The facilities, or any part thereof, to be acquired are of a 
value in excess of $1 million; and
    (2) Such public utility is not required to secure an order of the 
Commission under section 203(a)(1)(B) of the Federal Power Act.
    (b) Such notification shall consist of the following information:
    (1) The exact name of the public utility and its principal business 
address; and
    (2) A narrative description of the transaction, including:
    (i) The identity of all parties involved in the transaction, 
whether such parties are affiliates, and all jurisdictional facilities 
associated with or affected by the transaction;

[[Page 6076]]

    (ii) The location of such jurisdictional facilities involved in the 
transaction;
    (iii) The date on which the transaction was consummated;
    (iv) The consideration for the transaction; and
    (v) The effect of the transaction on the ownership and control of 
such jurisdictional facilities.

[FR Doc. 2019-03326 Filed 2-25-19; 8:45 am]
 BILLING CODE 6717-01-P