Document ID: FERC-2018-1529-0001
Agency: ferc
Document Type: Proposed Rule
Title: Mergers or Consolidations by a Public Utility
Posted Date: 2018-11-29T05:00Z

[Federal Register Volume 83, Number 230 (Thursday, November 29, 2018)]
[Proposed Rules]
[Pages 61338-61342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25369]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 33

[Docket No. RM19-4-000]

Implementation of Amended Section 203(a)(1)(B) of the Federal 
Power Act

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Notice of proposed rulemaking.

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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) 
proposes to revise its regulations relating to mergers or 
consolidations by a public utility.

[[Page 61339]]

Specifically, the Commission proposes to revise its regulations to 
establish that a public utility must seek authorization under amended 
section 203(a)(1)(B) of the Federal Power Act 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 
proposes 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).

DATES: Comments are due December 31, 2018.

ADDRESSES: Comments, identified by docket number, may be filed 
electronically at http://www.ferc.gov in acceptable native applications 
and print-to-PDF, but not in scanned or picture format. For those 
unable to file electronically, comments may be filed by mail or hand-
delivery to: Federal Energy Regulatory Commission, Secretary of the 
Commission, 888 First Street NE, Washington, DC 20426. The Comment 
Procedures Section of this document contains more detailed filing 
procedures.

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.
Regine Baus (Legal Information), Office of the General Counsel, Federal 
Energy Regulatory Commission, 888 First Street NE, Washington, DC 
20426, (202) 502-8757.

SUPPLEMENTARY INFORMATION:

I. Background

    1. On September 28, 2018, ``An Act to amend section 203 of the 
Federal Power Act'' (Act) was signed into law. 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).
    2. In section 2 of the Act, Congress amended section 203(a) to add 
section (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). The 
Commission's proposed implementation of the above changes is discussed 
below.

II. Discussion

    3. The Commission proposes two changes to part 33 of its 
regulations to bring them into conformance with the Act. First, the 
Commission proposes 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.\1\
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    \1\ 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 dollar threshold established in this 
proposed rulemaking does not apply to this accounting filing 
requirement.
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    4. Second, the Commission proposes to require public utilities 
whose transactions are subject to section 203(a)(7) to file 
notification of such transactions with the Commission. Specifically, 
the Commission proposes 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 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).
    5. In this notification filing, the Commission proposes that public 
utilities subject to section 203(a)(7) file 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 
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.
    6. New section 203(a)(7)(B) requires that, ``[i]n establishing any 
notification requirement under subparagraph (A), the Commission shall, 
to the maximum extent practicable, minimize the paperwork burden 
resulting from the collection of information.'' We believe that the 
information to be included in the proposed notification filing 
represents a substantial reduction in paperwork from the full filing 
requirements under part 33 for applications for transactions that are 
required to secure an order from the Commission under amended section 
203(a)(1)(B). Public utilities subject to section 203(a)(7) were 
previously required to submit complete applications with all relevant 
information required by part 33. The information to be included in the 
proposed notification filing represents only a small fraction of the 
information contemplated in part 33.
    7. Further, the information the Commission proposes to require in 
the notification filing will allow the Commission to monitor the merger 
or consolidation of facilities subject to its jurisdiction. Although 
the transactions contemplated pursuant to section 203(a)(7) are 
unlikely to present concerns under the Commission's public interest 
analysis and public utilities entering into these transactions are not 
required to secure an order of the Commission under amended section 
203(a)(1)(B), the information the Commission proposes to require in the 
notification filing will allow the

[[Page 61340]]

Commission to collect information about the transaction should a 
question arise related to the underlying facilities and the 
Commission's oversight under the Federal Power Act.
    8. We propose that the notification filing should be filed in the 
first docket for section 203 filings of the fiscal year (FY). For 
example, all notification filings made in FY2019 would be filed in 
Docket No. EC19-1-000; all notification filings for FY2020 would be 
filed in Docket No. EC20-1-000, etc. We believe that this approach 
would allow the Commission to track the transactions that fall under 
section 203(a)(7).
    9. Lastly, the Commission clarifies 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). That is, the Commission 
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 
\2\ if those facilities will be subject to the Commission's 
jurisdiction after the transaction is consummated.\3\
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    \2\ Non-public utilities refers to entities described in section 
201(f) of the Federal Power Act (FPA). 16 U.S.C. 824(f).
    \3\ See Duke Power Co. v. FPC, 401 F.2d 930, 941 (DC Cir. 1968) 
(``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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III. Information Collection Statement

    10. The collection of information contained in this Notice of 
Proposed Rulemaking is subject to review by the Office of Management 
and Budget (OMB) under section 3507(d) of the Paperwork Reduction Act 
(PRA).\4\ The PRA requires each federal agency to seek and obtain 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 \5\ 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. The Commission solicits comments on the Commission's 
need for the specific information it proposes to collect, 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.
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    \4\ 44 U.S.C. 3507(d).
    \5\ 5 CFR 1320.
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    11. The revisions to the Commission's regulations proposed in this 
NOPR would 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, the Commission proposes to add Sec.  33.12 to 
its 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). The Commission anticipates that the revisions, 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.\6\
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    \6\ 44 U.S.C. 3507(d).
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    12. While the Commission expects that the regulatory revisions 
proposed herein will reduce the burdens on affected entities, the 
Commission nonetheless solicits public comments regarding the accuracy 
of the burden and cost estimates below.
    13. Internal review: The Commission has reviewed the proposed 
changes and has determined that the changes are necessary.
    14. Burden Estimate \7\: The estimated burden and cost for the 
requirements contained in this NOPR follow.
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    \7\ ``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.

                                                 FERC-519, as Modified by NOPR in Docket No. RM19-4-000
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                                           Number and type     Number of     Total number of
               Requirements                 of respondents   responses per   responses (1) *    Average burden hours and    Total burden hours and total
                                                 (1)         respondent (2)     (2) = (3)         cost per response (4)            cost (3) * (4)
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FERC-519 (FPA Section 203 Filings) \8\...              26                1               26   1 hr.;......................  26 hrs.; $2,054.00
                                                                                              $79.00......................
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    Title: FERC-519, Application under Federal Power Act Section 203.
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    \8\ 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 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 NOPR, which 
represents a significant reduction in burden hours.
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    OMB Control No.: 1902-0082.
    Action: Proposed 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'' (Act), the Commission proposes to 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 proposes to

[[Page 61341]]

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.
    15. One of the Commission's overarching goals is to promote 
competition in wholesale power markets, and it has determined that 
effective competition, as opposed to traditional forms of price 
regulation, can best protect ratepayer interests. 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.
    16. This NOPR is limited to implementing amended FPA section 
203(a)(1)(B) and proposing a notification requirement for certain other 
transactions, both of which together represent a reduction in the 
filing requirements for public utilities under section 203. The 
Commission proposes this rule by mandate of Congress.
    17. 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: [email protected], 
Phone: (202) 502-8663; fax: (202) 273-0873.
    18. 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: 
[email protected]. Please refer to FERC-520, OMB Control No. 
1902-0083 in your submission.

IV. Environmental Analysis

    19. 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.\9\ We 
conclude that neither an Environmental Assessment nor an Environmental 
Impact Statement is required for this NOPR under section 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. . . .'' \10\
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    \9\ Regulations Implementing the National Environmental Policy 
Act of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
    \10\ 18 CFR 380.4(a)(16).
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V. Regulatory Flexibility Act Certification

    20. The Regulatory Flexibility Act of 1980 (RFA) \11\ generally 
requires a description and analysis of proposed 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.\12\ 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.
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    \11\ 5 U.S.C. 601-612.
    \12\ 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.
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    21. 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.\13\
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    \13\ 13 CFR 121.201, Sector 22 (Utilities), NAICS code 221121 
(Electric Bulk Power Transmission and Control).
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    22. 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. Therefore, the Commission certifies that this proposed rule will 
not have a significant economic impact on small entities.

VI. Comment Procedures

    23. The Commission invites interested persons to submit comments on 
the matters and issues proposed in this document to be adopted, 
including any related matters or alternative proposals that commenters 
may wish to discuss. Comments are due December 31, 2018. Comments must 
refer to Docket No. RM19-4-000, and must include the commenter's name, 
the organization they represent, if applicable, and their address in 
their comments.
    24. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's website at http://www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents created electronically using word processing 
software should be filed in native applications or print-to-PDF format 
and not in a scanned format. Commenters filing electronically do not 
need to make a paper filing.
    25. Commenters that are not able to file comments electronically 
must send an original of their comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE, 
Washington, DC 20426.
    26. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

VII. Document Availability

    27. 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 5:00 p.m.

[[Page 61342]]

Eastern time) at 888 First Street NE, Room 2A, Washington, DC 20426.
    28. From the Commission'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.
    29. User assistance is available for eLibrary and the Commission's 
website during normal business hours from the Commission's Online 
Support at 202-502-6652 (toll free at 1-866-208-3676) or email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202)502-8659. Email the Public Reference Room at 
[email protected].

List of Subjects in 18 CFR Part 33

    Electric utilities, Reporting and recordkeeping requirements, 
Securities.

    By direction of the Commission. Commissioner McIntyre is not 
voting on this order.
    Issued: November 15, 2018.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

    In consideration of the foregoing, the Commission proposes to amend 
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; 41 
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 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.

[FR Doc. 2018-25369 Filed 11-28-18; 8:45 am]
 BILLING CODE 6717-01-P