Document ID: FERC-2005-0004-0001
Agency: ferc
Document Type: Rule
Title: Commission Authorization To Hold Interlocking Positions
Posted Date: 2005-09-23T04:00Z

[Federal Register: September 23, 2005 (Volume 70, Number 184)]
[Rules and Regulations]               
[Page 55717-55723]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23se05-5]                         

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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.

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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

[[Page 55718]]

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.
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    \1\ 16 U.S.C. 825d(b).
    \2\ 18 CFR part 45.
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    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.
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    \3\ 18 CFR 45.9.
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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.
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    \4\ However, section 305(b)(2) of the FPA exempts from this 
prohibition certain interlocks between public utilities and 
securities underwriters and marketers.
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    4. The Commission implemented Congress' mandate in part 45 of the 
Commission's regulations.\5\ Section 45.3 of the regulations currently 
states that:
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    \5\ 18 CFR part 45.

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\
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    \6\ 18 CFR 45.3.

The Commission has stated in previous orders that it does not look 
favorably on late-filed applications for authorization to hold 
interlocking positions.\7\
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    \7\ William T. Coleman, 21 FERC ] 61,242 at 61,535 n.3 (1982).
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    5. In examining Congress' intent in enacting section 305(b) of the 
FPA, the Commission has explained that ``among the evils sought to be 
eliminated by the enactment of section 305(b)'' was ``the lack of arm's 
length dealings between public utilities and organizations furnishing 
financial services or electrical equipment.'' \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 
difficult-to-prove failures in the arm's length bargaining process.'' 
\9\
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    \8\ Paul H. Henson, 51 FERC ] 61,104 at 61,231 (1990), citing 
John Edward Aldred, 2 FPC 247, 261 (1940).
    \9\ Hatch 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).
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    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 
late-filed applications will be denied.\10\
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    \10\ See Commission Authorization to Hold Interlocking 
Positions, Notice of Proposed Rulemaking, 70 Fed. Reg. 17,219 (April 
5, 2005) FERC Stats. & Regs. ] 32,580 (2005).
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    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\
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    \11\ Automatic authorization is only for interlocking positions 
between two or more public utilities; it does not authorize a person 
to hold an interlocking position with, for example, an electrical 
equipment supplier. For those interlocking positions, an application 
under section 45.3 is required.
    \12\ 18 CFR 45.9(b).
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    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 market-based 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.
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    \13\ 70 FR 17,219 (April 5, 2005).
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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

[[Page 55719]]

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.
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    \14\ Midwest ISO Comments at 6.
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    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 post-election 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\
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    \15\ American 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.
    \16\ EEI Comments at 3.
    \17\ Id. at 14.
    \18\ Id. at 10-11.
    \19\ Id. at 16, 25.
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    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\
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    \20\ 16 U.S.C. 825d(b)(1).
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    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.
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    \21\ EEI Comments at 14.
    \22\ Id.
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    19. In response to Midwest ISO's comments that the Commission 
should expand the scope of the proposed regulations to include officers 
of non-jurisdictional 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 non-public 
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\
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    \23\ Id. at 5; see 18 CFR part 46.
    \24\ Id. at 21.

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[[Page 55720]]

    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.
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    \25\ Sempra Comments at 3; Keyspan Comments at 3; NiSource 
Comments at 5-6.
    \26\ AEP Comments at 5; NUSCO Comments at 3.
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(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.
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    \27\ See 18 CFR 45.9(c).
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    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 one-time 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.
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    \28\ See 18 CFR 45.9(a); accord NOPR at P 8.
    \29\ See 18 CFR 45.9(b).
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    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.
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    \30\ Sempra Comments at 4; Reliant Comments at 7.
    \31\ Exelon Comments at 3.
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    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\
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    \32\ EEI Comments at 23.
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(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

[[Page 55721]]

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.
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    \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.''
    \34\ See supra note 7.
    \35\ Order Advising Public Utilities and their Officers and 
Directors of Federal Power Act Section 305(b) Obligations, 107 FERC 
] 61,290 (2004).
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    31. Regarding any currently pending applications for Commission 
authorization to hold interlocking positions, the Commission intends to 
act on these applications on a case-by-case 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\
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    \36\ EEI Comments at 20.
    \37\ Id. at 8.
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    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\
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    \38\ Morgan Stanley Comments at 18.
    \39\ Id.
    \40\ Id. at 20.
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(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\
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    \41\ Id. at 18.
    \42\ Id. at 19.
    \43\ Id.
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(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-

[[Page 55722]]

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.
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    \44\ 5 CFR 1320.11.
    \45\ 44 U.S.C. 3507(d).
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    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\
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    \46\ See 1 CFR 21.35; 5 CFR 1320.3(f)(3).
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    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, e-mail: 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.
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    \47\ Regulations 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).
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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.
---------------------------------------------------------------------------

    \50\ 5 U.S.C. 601-12.
    \51\ The RFA definition of ``small entity'' refers to the 
definition provided in the Small Business Act, which defines a 
``small business concern'' as a business that is independently owned 
and operated and that is not dominant in its field of operation. 15 
U.S.C. 632. 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.
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    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

[[Page 55723]]

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\
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    \52\ See 5 U.S.C. 804(2).
    \53\ See 5 U.S.C. 801(a)(1)(A).
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List of Subjects in 18 CFR Part 45

    Electric utilities, Reporting and recordkeeping requirements.

    By the Commission.
Magalie R. Salas,
Secretary.

0
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

0
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.

0
2. Section 45.3 is revised to read as follows:

Sec.  45.3  Timing of filing application.

    (a) The holding of positions within the purview of section 305(b) 
of the Act shall be unlawful unless the holding shall have been 
authorized by order of the Commission. Nothing in this part shall be 
construed as authorizing the holding of positions within the purview of 
section 305(b) of the Act prior to order of the Commission on 
application therefor. Applications must be filed and authorization must 
be granted prior to holding any interlocking positions within the 
purview of section 305(b) of the Act; 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.

0
3. In Sec.  45.9, paragraph (b) is revised and paragraph (c)(5) is 
added to read as follows:

Sec.  45.9  Automatic authorization of certain interlocking positions.

* * * * *
    (b) Conditions of authorization. As a condition of authorization, 
any person authorized to hold interlocking positions under this section 
must submit, prior to 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