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

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

The use of volume controls allows the

industry to fully supply spearmint oil

markets while avoiding the negative

consequences of over-supplying these

markets. The use of volume controls is

believed to have little or no effect on

consumer prices of products containing

spearmint oil and will not result in

fewer retail sales of such products.

Based on projections available at the

meeting, the Committee considered

alternatives to the increases. The

Committee not only considered leaving

the salable quantity and allotment

percentage unchanged, but also looked

at various increases ranging from 0

percent to 100 percent. The Committee

reached its recommendations to

increase the salable quantity and

allotment percentage for Scotch and

Native spearmint oil after careful

consideration of all available

information, and believes that the levels

recommended will achieve the

objectives sought. Without the

increases, the Committee believes the

industry would not be able to meet

market needs.

This rule will not impose any

additional reporting or recordkeeping

requirements on either small or large

spearmint oil handlers. As with all

Federal marketing order programs,

reports and forms are periodically

reviewed to reduce information

requirements and duplication by

industry and public sector agencies.

In addition, USDA has not identified

any relevant Federal rules that

duplicate, overlap or conflict with this

rule.

Further, the Committee’s meeting was

widely publicized throughout the

spearmint oil industry and all interested

persons were invited to attend the

meeting and participate in Committee

deliberations. Like all Committee

meetings, the August 24, 2005, meeting

was a public meeting and all entities,

both large and small, were able to

express their views on this issue.

Finally, interested persons are invited to

submit information on the regulatory

and informational impacts of this action

on small businesses.

A small business guide on complying

with fruit, vegetable, and specialty crop

marketing agreements and orders may

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

fv/moab.html. Any questions about the

compliance guide should be sent to Jay

Guerber at the previously mentioned

address in the FOR FURTHER INFORMATION

CONTACT section.

This rule invites comments on a

change to the salable quantities and

allotment percentages for Scotch and

Native spearmint oil for the 2005–2006

marketing year. Any comments received

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14:48 Sep 22, 2005

Jkt 205001

will be considered prior to finalization

of this rule.

After consideration of all relevant

material presented, including the

Committee’s recommendation, and

other information, it is found that this

interim final rule, as hereinafter set

forth, will tend to effectuate the

declared policy of the Act.

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

found and determined upon good cause

that it is impracticable, unnecessary,

and contrary to the public interest to

give preliminary notice prior to putting

this rule into effect and that good cause

exists for not postponing the effective

date of this rule until 30 days after

publication in the Federal Register

because: (1) This rule increases the

quantity of Scotch and Native spearmint

oil that may be marketed during the

marketing year which ends on May 31,

2005; (2) the current quantity of Scotch

and Native spearmint oil may be

inadequate to meet demand for the

remainder of the marketing year, thus

making the additional oil available as

soon as is practicable is beneficial to

both handlers and producers; (3) the

Committee recommended these changes

at a public meeting and interested

parties had an opportunity to provide

input; and (4) this rule provides a 60day comment period and any comments

received will be considered prior to

finalization of this rule.

List of Subjects in 7 CFR Part 985

Marketing agreements, Oils and fats,

Reporting and recordkeeping

requirements, Spearmint oil.

■ For the reasons set forth in the

preamble, 7 CFR part 985 is amended as

follows:

PART 985—MARKETING ORDER

REGULATING THE HANDLING OF

SPEARMINT OIL PRODUCED IN THE

FAR WEST

■ 1. The authority citation for 7 CFR

part 985 continues to read as follows:

Authority: 7 U.S.C. 601–674.

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

are revised to read as follows:

Note: This section will not appear in the

annual Code of Federal Regulations.

§ 985.224 Salable quantities and allotment

percentages—2005–2006 marketing year.

*

*

*

*

*

(a) Class 1 (Scotch) oil—a salable

quantity of 1,062,898 pounds and an

allotment percentage of 55 percent.

(b) Class 3 (Native) oil—a salable

quantity of 1,019,600 pounds and an

allotment percentage of 47 percent.

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Dated: September 20, 2005.

Lloyd C. Day,

Administrator, Agricultural Marketing

Service.

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

BILLING CODE 3410–02–P

DEPARTMENT OF ENERGY

Federal Energy Regulatory

Commission

18 CFR Part 45

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

Commission Authorization To Hold

Interlocking Positions

September 16, 2005.

AGENCY: Federal Energy Regulatory

Commission.

ACTION: Final rule.

SUMMARY: The Federal Energy

Regulatory Commission (Commission) is

amending its regulations to clarify the

time frame within which individuals

must file applications for authorization

to hold interlocking positions, and the

information provided in certain

informational reports required for

automatic authorization of certain

interlocking positions.

EFFECTIVE DATE: The amended

regulations will become effective

October 24, 2005.

FOR FURTHER INFORMATION CONTACT:

James Akers (Technical Information),

Office of Markets, Tariffs and Rates,

Federal Energy Regulatory

Commission, 888 First Street, NE.,

Washington, DC 20426, (202) 502–

8101.

Melissa Mitchell (Legal Information),

Office of the General Counsel, Federal

Energy Regulatory Commission, 888

First Street, NE., Washington, DC

20426, (202) 502–6038.

SUPPLEMENTARY INFORMATION:

Before Commissioners: Joseph T.

Kelliher, Chairman; Nora Mead

Brownell, and Suedeen G. Kelly.

1. In this final rule, to meet its

responsibility under section 305(b) of

the Federal Power Act (FPA),1 the

Commission amends part 45 of its

regulations 2 to clarify that individuals

seeking Commission authorization to

hold interlocking positions must obtain

such authorization from the

Commission prior to holding that

interlocking position. The Commission

also clarifies the regulations to define

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

2 18 CFR part 45.

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

as, voting as, or otherwise performing or

assuming the duties and responsibilities

of the interlocking positions requiring

Commission authorization.

2. The Commission also amends its

regulations to require that individuals

filing an informational report for

automatic authorization under section

45.9 of the Commission’s regulations 3

must file such informational report prior

to holding that interlocking position and

that the informational report must

include a statement or affirmation that

the individual has not yet assumed the

duties or responsibilities of the position

for which the automatic authorization is

sought.

Discussion

3. Section 305(b) of the FPA prohibits

individuals from concurrently holding

positions as an officer or director of

more than one public utility; or to hold

the positions of officer or director of a

public utility and of an entity

authorized by law to underwrite or

participate in the marketing of public

utility securities 4; or to hold the

positions of officer or director of a

public utility and a company supplying

electrical equipment to that particular

public utility, unless the holding of

such positions has been authorized by

the Commission upon a showing that

neither public nor private interests will

be adversely affected thereby.

4. The Commission implemented

Congress’ mandate in part 45 of the

Commission’s regulations.5 Section 45.3

of the regulations currently states that:

the holding of positions within the purview

of [section 305(b)] shall be unlawful unless

the holding shall have been authorized by

order of the Commission. Nothing in this part

shall be construed as authorizing the holding

of positions prior to the order of the

Commission on application therefore.

Applications shall be filed within 30 days

after election or appointment to any positions

within the purview of section 305(b) of the

Act.’’ 6

The Commission has stated in previous

orders that it does not look favorably on

late-filed applications for authorization

to hold interlocking positions.7

5. In examining Congress’ intent in

enacting section 305(b) of the FPA, the

Commission has explained that ‘‘among

the evils sought to be eliminated by the

3 18 CFR 45.9.

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

from this prohibition certain interlocks between

public utilities and securities underwriters and

marketers.

5 18 CFR part 45.

6 18 CFR 45.3.

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

n.3 (1982).

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14:48 Sep 22, 2005

Jkt 205001

enactment of section 305(b)’’ was ‘‘the

lack of arm’s length dealings between

public utilities and organizations

furnishing financial services or

electrical equipment.’’ 8 In this regard,

the legislative history indicates that,

with respect to section 305(b) of the

FPA, ‘‘Congress exhibited a relentless

interest in, bordering on an obsession

with, the evils of concentration of

economic power in the hands of a few

individuals. It recognized that the

conflicts of interest stemming from the

presence of the same few persons on

boards of companies with intersecting

interests generated subtle and difficultto-prove failures in the arm’s length

bargaining process.’’ 9

6. While the statute requires prior

authorization to hold otherwise

proscribed interlocking positions, the

regulations allow for applications to be

filed up to 30 days after election or

appointment to the interlocking position

and also do not expressly address how

applications filed more than 30 days

late should be treated. The regulations

do not allow for serving in the covered

positions before receiving Commission

authorization. Therefore, in a Notice of

Proposed Rulemaking (NOPR) issued on

March 25, 2005, the Commission

proposed to clarify section 45.3 of the

Commission’s regulations, to provide

that an application must be filed, and

authorization granted, before a person

may hold otherwise proscribed

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

7. In addition to clarifying section

45.3, the Commission also proposed to

clarify section 45.9, which governs

automatic authorization for certain

interlocking positions. Section 45.9 of

the Commission’s regulations provides

that a person seeking to hold the

positions of (1) an officer or director of

a public utility and officer or director of

another public utility (or utilities),

where the same holding company owns,

directly or indirectly, wholly or in part,

the other public utility, (2) an officer or

director of two public utilities, if one

utility is owned, wholly or in part, by

the other or (3) an officer or director of

more than one public utility, if such

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).

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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person is already authorized under part

45 to hold different positions where the

interlock involves affiliated public

utilities, may apply for ‘‘automatic

authorization’’ to hold the interlocking

positions.11 The regulations require

that, as a condition of such

authorization, persons seeking such

authorization under section 45.9 must

file with the Commission an

informational report containing the full

name and business address of the

person requesting the authorization, the

names of all public utilities that the

person holds or seeks to hold positions

with, the names of any other entity that

the person serves as an officer or

director of and a brief description of

those positions, and an explanation of

the corporate relationship between or

among the public utilities involved. The

informational report is required to be

filed ‘‘not later than 30 days after

assuming the duties of the position.’’ 12

8. The NOPR proposed to clarify

section 45.9 of the Commission’s

regulations, to require that the

informational reports required for

automatic authorization under section

45.9 must be filed with the Commission

prior to an officer or director assuming

the duties and responsibilities of the

requested interlocking positions. The

NOPR proposed that individuals who

file informational reports late will not

be entitled to automatic authorization

under section 45.9, as the individual

will not have satisfied the condition of

timely submission of an informational

report.

9. Finally, the Commission requested,

in the NOPR, comments on the

possibility of no longer granting entities

(or individuals who serve as officers or

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

requirements of part 45.

10. The NOPR was published in the

Federal Register 13 on April 5, 2005.

Comments were due on or before June

5, 2005.

A. Prior Filing and Approval for Section

45.3 Applications

(i) Comments

11. The California Electricity

Oversight Board (CEOB) supports the

proposed rule and states that the

proposed rule comports completely

with the Congressional intent behind

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).

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

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section 305(b) of the FPA and the public

policy of preventing abuses due to

conflicts of interest. The CEOB argues

that, under the language of section

305(b), individuals who seek to hold

interlocking positions are prohibited

from holding interlocking positions

until the Commission determines that

‘‘neither public nor private interests will

be adversely effected.’’ Based on this

language, the CEOB supports the

Commission’s proposed rule to require

applicants to file with the Commission

prior to holding interlocking positions.

12. The Midwest Independent

Transmission System Operator, Inc.

(Midwest ISO) supports the proposed

rule and states that requiring applicants

for interlocking positions to file for

Commission authorization prior to

holding the interlocking positions will

ensure greater transparency in the

nation’s utility industry and promote

and preserve independence. The

Midwest ISO also comments that the

Commission should expand the scope of

the proposed rule to include officers of

non-jurisdictional utilities seeking to

serve on the Board of Directors of a

regional transmission organization

(RTO) or independent system operator

(ISO). The Midwest ISO states that

allowing officers of non-jurisdictional

utilities to serve on the Boards of

Directors of RTOs and ISOs without

prior Commission authorization ‘‘opens

the door to partial stakeholder Boards,

and calls into question a public utility’s

true independence.’’ 14 For these

reasons, the Midwest ISO supports the

proposed rule and requests that the

Commission expand the scope of the

existing rules.

13. The Edison Electric Institute (EEI)

opposes the proposed rule and states

that the existing rules adequately meet

the requirements of section 305(b).15 EEI

argues that the existing rules strike a

reasonable balance between the

requirements of section 305(b) and the

burden those requirements place on

individuals and companies. While EEI

agrees that officers and directors need to

comply with the Commission’s

regulations, they ‘‘are not aware of a

widespread failure to comply’’ with the

regulations.16 EEI also states that it is

important that the Commission retain

the 30-day window to file interlock

applications since requiring individuals

to file for authorization prior to holding

14 Midwest ISO Comments at 6.

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.

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14:48 Sep 22, 2005

Jkt 205001

interlocking positions would ‘‘pose

significant practical difficulties and

would disrupt the ability of public

utilities and their affiliates to maintain

functioning boards of directors and

officer corps in a timely and effective

manner.’’ 17 EEI argues that the danger

of harm from interlocks is small, and

that other entities provide oversight of

corporate officers, including the

Securities and Exchange Commission

and the New York Stock Exchange.18 In

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

the statute, EEI requests that the

Commission extend the window within

which an individual may file from 30

days to 60 days after election or

appointment to a covered position.19

14. AEP, NUSCO, Reliant Energy Inc.

(Reliant) and Consumers Energy filed

comments opposing the proposed rules.

They state that requiring applications

prior to holding a covered position will

make it difficult for companies to fill

officer or director vacancies in a timely

fashion and lead to an inefficient

selection process with the likely result

of not selecting the most qualified

individuals for the positions. This is

exacerbated, they claim, by the fact that

the companies and individuals often do

not know in advance of election or

appointment who will be selected to

serve as an officer or director.

(ii) Commission Determination

15. The Commission will adopt the

proposed regulations with one

modification. We revise the proposed

section 45.3 to reflect that the definition

of the term ‘‘holding’’ applies

throughout part 45 and not just to

section 45.3.

16. The proposed regulations

requiring that individuals apply for and

receive authorization to hold

interlocking positions before holding

the positions will make the

Commission’s regulations consistent

with the statute. Section 305(b) states

that no person may hold interlocking

positions ‘‘unless the holding of such

positions shall have been authorized by

order of the Commission * * *’’ 20

17. The Commission disagrees that

requiring such prior authorization will

make it difficult for companies to fill

vacancies or disrupt utilities’ ability to

maintain functioning boards. We find

the possibility that a board or officer

corps would be faced with so many

vacancies at one time as to adversely

effect a company’s ability to function

very unlikely. While, as stated by EEI,

the Commission may not be the only

entity that requires filing and approval

of corporate officers and directors to

maintain corporate oversight, the

Commission was expressly charged by

Congress with the responsibility to

oversee officers and directors of public

utilities and we will not and cannot

delegate that responsibility to another

entity.

18. In response to EEI’s comment that

it ‘‘is not aware of a widespread failure

to comply’’ 21 with section 305(b),

section 305(b) was intended to be

prophylactic in nature and to prevent

any abuse of corporate positions and

control. Furthermore, the fact that EEI

may not be ‘‘aware of a widespread

failure to comply’’ 22 with the statute

and regulations does not speak to the

need to clarify the regulations and bring

them into conformity with the statute.

The statute speaks of prior authorization

and that is what the regulations should

require; prior authorization, not 30 days

and not 60 days after the fact.

19. In response to Midwest ISO’s

comments that the Commission should

expand the scope of the proposed

regulations to include officers of nonjurisdictional utilities seeking to serve

on RTO or ISO boards, the Commission

finds that section 305(b) only limits

interlocking directorates involving

public utility boards and does not

authorize the Commission to bar

interlocking directorates involving nonpublic utility boards of directors. The

Midwest ISO request goes to the issue

of the independence of RTO and ISO

boards. That issue is not within the

purview of section 305(b) or part 45 of

the Commission’s regulations, and thus

of this proceeding.

B. Prior Filing of Section 45.9

Informational Reports and Affirmation

(i) Comments

20. EEI opposes the proposed change

to section 45.9, requiring individuals

seeking automatic authorization to file

their informational report prior to

holding the interlocking position, for

the same reasons explained above.

Additionally, EEI requests that the

Commission not require an

informational report in deference to the

information required on the annual

Form 561.23 Furthermore, EEI requests

that the Commission clarify that section

45.9 applies to both registered and

exempt holding companies.24

17 Id. at 14.

21 EEI Comments at 14.

18 Id. at 10–11.

22 Id.

19 Id. at 16, 25.

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

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

24 Id. at 21.

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21. Keyspan Corporation (Keyspan),

AEP, Sempra Energy (Sempra), NUSCO,

Reliant, NiSource, Inc. (NiSource), PHI

Companies and Exelon filed comments

opposing the proposed rules requiring

individuals seeking automatic

authorization under section 45.9 of the

regulations to file their informational

reports prior to holding the interlocking

positions and also requiring information

on the dates the individual assumed the

interlocking positions. They state that

requiring informational reports prior to

holding the positions would unduly

restrict corporate and personnel options

and jeopardize companies’ effective

participation in energy markets because

changes on corporate boards often occur

suddenly and without prior notice.

Therefore, they argue that a requirement

that individuals must file their

informational reports prior to holding

interlocking positions would be unduly

burdensome. Sempra, Keyspan and

NiSource state that the proposed rules

are inconsistent, requiring informational

reports for automatic authorization prior

to holding interlocking positions and

also requiring additional information on

when the individual assumed the

positions for which authorization is

granted.25 NUSCO and AEP state that

additional information is not necessary

as the currently required informational

report, together with the information

required on Form 561, is sufficient.26

Exelon argues that the informational

report is duplicative of the information

provided in Form 561 and therefore, the

informational report should be

eliminated in lieu of Form 561.

(ii) Commission Determination

22. The Commission will adopt the

proposed regulations, with two

exceptions, discussed below.

23. Section 45.9 of the Commission’s

regulations requires that individuals

seeking automatic authorization need

only file with the Commission, in lieu

of the application otherwise required,

an informational report stating the

individual’s name and business address,

the names of all public utilities with

which the person currently holds or will

hold the positions of officer or director

and a description of those positions, the

names of any other entity of which the

person serves as officer or director and

a description of those positions and a

brief explanation of the corporate

relationship between or among the

interlocking public utilities.27 Upon the

filing of a completed informational

25 Sempra Comments at 3; Keyspan Comments at

3; NiSource Comments at 5–6.

26 AEP Comments at 5; NUSCO Comments at 3.

27 See 18 CFR 45.9(c).

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14:48 Sep 22, 2005

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report under section 45.9, the individual

is automatically authorized to hold the

interlocking positions listed in the

informational report. Form 561, in

contrast, is an annual report required by

the Commission, and does not contain

the same information. The annual Form

561 is not intended nor could it be an

appropriate substitute for the need to

make a contemporaneous filing to

comply with the requirements of part 45

of the Commission’s regulations.

Therefore, the Commission finds that

the informational reports filed under

section 45.9 are not duplicative of Form

561 and it would not be appropriate to

rely solely on Form 561.

24. Moreover, since the automatic

authorization is granted upon receipt of

filed, completed informational reports,

we do not agree that requiring the

informational report prior to holding

interlocking positions would be unduly

burdensome or restrict a companies’

corporate and personnel options.

Additionally, for those interlocking

positions covered by section 45.9, e.g.,

officers or directors of two or more

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

authorization has been given, no further

filings are required to hold further

interlocking positions of the same

type.29 Again, therefore, the obligation

to make such a filing is not unduly

burdensome.

25. In response to several comments

that the proposed regulations are

inconsistent by requiring the

identification of the date the individual

assumed the positions at issue in an

informational report filed prior to

holding such positions, we agree. The

intent behind the proposed language

was to provide the Commission with

information to assist in determining

whether the informational report was

timely filed or not. Therefore, we will

not require identification of the date the

individual assumed the positions at

issue. Instead, we will require a

statement or affirmation that the

individual has not yet performed or

assumed the duties or responsibilities of

the position which necessitated the

filing of the informational report as of

the date of such report. We believe this

requirement will provide the

Commission with the information it

needs with the least burden upon the

applicants.

26. We also provide additional

clarifying language in section 45.9,

explaining that the informational report

shall be filed prior to performing or

assuming the duties and responsibilities

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

29 See 18 CFR 45.9(b).

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of the interlocking position.

Furthermore, we clarify that the

informational reports must also comply

with the filing requirements outlined in

section 45.7.

C. Treatment of Existing Applications

and of Late-Filed Applications

(i) Comments

27. Many commentors state that the

proposal to automatically deny any late

filed applications is unduly harsh.30

Exelon states that automatic denial of

late applications is ‘‘draconian’’ and

urges the Commission to consider

another penalty for untimely

applications, such as a fine.31 Many

commentors urge the Commission to

continue evaluating applications on a

case-by-case basis, and to permit late

applications where the applicant made

a good faith effort to file on time.

28. EEI also argues that the

Commission should not institute a rule

that automatically denies late-filed

applications; rather, the Commission

should continue to evaluate late-filed

applications on a case-by-case basis, and

also provide an amnesty period to allow

individuals to file applications under

the current regulations and further

assure all individuals currently holding

Commission authorized interlocking

positions that they will not need to

refile under the new rules.32

(ii) Commission Determination

29. The Commission will adopt the

proposed regulations.

30. While many commentors stated

that automatic denial of late-filed

applications is unduly harsh, the statute

provides that individuals seeking to

hold interlocking positions must receive

Commission authorization prior to

assuming the interlocking positions.33

To permit individuals to hold

interlocking positions before receiving

Commission authorization would

frustrate section 305(b) and the

prophylactic nature of section 305(b).

Therefore, the Commission will

automatically deny all late-filed

applications for authorization to hold

interlocking positions. As for an

amnesty period, we have long stressed

the need to timely file,34 we repeated

30 Sempra Comments at 4; Reliant Comments at

7.

31 Exelon Comments at 3.

32 EEI Comments at 23.

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

unlawful for any person to hold’’ interlocking

positions ‘‘unless the holding of such positions

shall have been authorized by order of the

Commission.’’

34 See supra note 7.

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the need to timely file in June 2004, 35

and this NOPR has been pending since

March 25, 2005, and the regulations

adopted here will not become effective

until 30 days from the date of

publication in the Federal Register.

That is amnesty enough.

31. Regarding any currently pending

applications for Commission

authorization to hold interlocking

positions, the Commission intends to

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

already authorized to hold interlocking

positions, those individuals need not

refile under the new regulations to

continue to hold their previously

authorized interlocking positions

(unless and until, of course, they seek to

assume additional interlocking

positions).

D. Waiver of Full Requirements of Part

45 for Officers and Directors of Sellers

With Market-Based Rate Authority

(i) Comments

32. EEI opposes any change that

would cease waivers of the full

requirements of part 45 for persons who

are officers of directors of entities

authorized to charge market-based rates,

and to the contrary requests that the

Commission include such waivers in

the regulations rather than granting

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

argues that entities with market-based

rates have already passed the

Commissions screens for market power

and affiliate transactions, and therefore,

should not need to go through the

duplicative process of having their

officers and directors file a full

application under part 45 of the

Commission’s regulations.37

33. Sempra, NUSCO, Reliant, Edison

Mission Energy and Morgan Stanley

Capital Group, Inc. (Morgan Stanley) all

filed comments opposing the possibility

that the Commission may cease granting

waivers of the full requirements of Part

45 in orders granting market-based rate

authority. They all state that companies

that receive market-based rate authority

undergo significant scrutiny and must

pass the Commission’s market power

and affiliate abuse screens to ensure that

entities with market-based rate authority

will not abuse any power they may

have. Morgan Stanley requests that the

Commission clarify aspects of the

waivers, such as specifying the

information required when filing the

abbreviated application and develop a

35 Order Advising Public Utilities and their

Officers and Directors of Federal Power Act Section

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

36 EEI Comments at 20.

37 Id. at 8.

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standardized format to submit the

information to the Commission.38

Morgan Stanley also states that the

Commission should clarify that the

abbreviated filings may be made within

30 days of holding the interlocking

positions.39 Finally, Morgan Stanley

states that, if the Commission eliminates

the practice of granting waivers of the

full requirements of part 45, the

Commission should apply section 45.9

to power marketers.40

(ii) Commission Determination

34. The purpose of an application for

authorization to hold interlocking

positions under part 45 is to allow the

Commission to review an individual

officer or director’s proposed interlock

in order to find that such individual’s

service with more than one company

will not adversely affect either public or

private interests. The fact that a

particular company may have ‘‘passed’’

the Commission’s market-based rate

screens says little about whether to

grant authorization for an individual

officer or director to hold interlocking

positions under section 305(b). The

Commission, moreover, does not

consider part 45 to be a burdensome

regulation. Individuals that are officers

or directors of entities that do not have

market-based rate authority must fulfill

the full requirements of part 45. The

Commission sees no reason to continue

to treat these entities differently and, as

a result, we intend to no longer grant

waivers of the full requirements of part

45 in our orders granting market-based

rate authority. Rather, persons seeking

to hold interlocking positions will be

required henceforth to comply with the

full requirements of part 45. Since we

intend to no longer grant such waivers,

there is no need to address Morgan

Stanley’s request for clarification.

35. In response to Morgan Stanley’s

request that the Commission should

permit power marketers to apply for

automatic authorization under section

45.9, we do not grant the request.

Allowing persons who are officers or

directors of power marketers to seek

automatic authorization under section

45.9, simply because such entities are

power marketers, would frustrate the

prophylactic nature of section 305(b).

Therefore, we will deny the request to

permit individuals who are officers or

directors of power marketers to file for

automatic authorization under section

45.9 simply because such entities are

power marketers.

36. With respect to an individual who

currently is authorized to hold

interlocking positions, that individual

will not need to refile under the full

requirements of part 45 to continue to

hold such interlocking positions (unless

and until, of course, that individual

assumes different or additional

interlocking positions).

E. Miscellaneous

(i) Comments

37. EEI requests that the Commission

‘‘indicate that an application will be

deemed approved if not acted on or

flagged for Commission action within 30

or 60 days after the application is

filed.’’ 41 EEI also requests that the

Commission provide clarity and

guidance as to the factors it considers in

reviewing interlocking position

applications, to further assist companies

in their search for appropriate and

qualified officers and directors.42 To

address all of the concerns raised by

EEI, it requests the Commission hold a

technical conference with industry

members.43

(ii) Commission Determination

38. The Commission will amend the

proposed regulatory text to provide that

absent Commission action within 60

days of filing a completed application to

hold interlocking positions, an

application will be deemed granted.

However, the Commission will reserve

the right to revoke such authorization or

require further proof that such

interlocking position will not adversely

affect public nor private interests.

39. In response to EEI’s request for

clarity and guidance as to the factors the

Commission seeks to address in

reviewing applications for authorization

to hold interlocking positions, the

Commission directs EEI, and all other

interested parties, to the extensive case

law on this subject developed over the

past 70 years.

40. Finally, as we have answered all

parties’ comments and concerns, we see

no need to hold a technical conference

to address such matters.

Information Collection Statement

41. The Office of Management and

Budget (OMB) regulations require that

OMB approve certain reporting and

recordkeeping requirements (collections

of information) imposed by an agency.44

The information collection requirements

in this final rule are identified under the

Commission’s data collection, FERC–

41 Id. at 18.

38 Morgan Stanley Comments at 18.

42 Id. at 19.

39 Id.

43 Id.

40 Id. at 20.

44 5 CFR 1320.11.

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

520, ‘‘Application for Authority to Hold

Interlocking Positions.’’ Under section

3507(d) of the Paperwork Reduction Act

of 1995,45 the reporting requirements in

the subject rulemaking will be

submitted to OMB for review.

42. Respondents subject to the filing

requirements of this final rule will not

be penalized for failing to respond to

this collection of information unless the

collection of information displays a

valid OMB control number. ‘‘Display’’ is

defined as publishing the OMB control

number in regulations, guidelines, forms

or other issuances in the Federal

Register (for example, in the preamble

or regulatory text for the final rule

containing the information

collection.) 46

Public Reporting Burden: In the

NOPR, the Commission estimated that

requiring the additional information

would have a minimal effect on

respondents but sought comments about

the time and costs to comply with the

requirements. The Commission received

fourteen comments on its NOPR but

none specifically addressing its

estimates. Therefore, the Commission

will retain its initial estimates.

However, several commentors stated

that requiring informational reports

prior to persons holding positions

would be a burdensome task. Other

commentors believe that the

information required in the

informational reports duplicates the

information reported on the

Commission’s FERC Form 561. The

Commission has addressed these

concerns elsewhere in the preamble of

this final rule. The Commission is

submitting a copy of this final rule to

OMB for review and approval. In their

notice of August 16, 2005, OMB took no

action on the NOPR, instead deferring

their approval until review of the final

rule.

Title: FERC–520 ‘‘Application for

Authority to Hold Interlocking

Positions’’.

Action: Proposed Data Collection.

OMB Control Nos. 1902–0083.

Respondents: Business or other for

profit.

Necessity of the Information: The

information collected under the

requirements of FERC–520 is used by

the Commission to implement the

statutory provisions of section 305(b) of

the FPA and implemented by the

Commission in the Code of Federal

Regulations under 18 CFR part 45.

Under part 45, each person that desires

to hold interlocking position(s) must

submit an application to the

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

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

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Commission or, if qualified, comply

with the requirements for automatic

authorization. Section 305(b) of the FPA

makes the holding of certain defined

interlocking positions unlawful unless

the Commission has authorized the

holding of such interlocks, and requires

the applicant to show, in a form and

manner as prescribed by the

Commission, that neither public nor

private interests will be adversely

affected by the holding of the positions.

43. The final rule clarifies: (1) The

time at which a person must apply for

authorization to hold interlocking

positions under section 305(b) of the

FPA and part 45 of the Commission’s

regulations; (2) clarifies automatic

authorizations for certain interlocking

positions for which authorization is

requested; and (3) requires a statement

or affirmation that an individual has not

yet assumed the duties or

responsibilities of the position which

necessitated the filing of an

informational report under section 45.9.

It is necessary to make these

clarifications and have this statement or

affirmation to ensure the Commission

receives timely submissions and also

has sufficient information to make a

determination as to the appropriateness

of holding the interlocking positions.

44. Interested persons may obtain

information on this information

collection by contacting the following:

Federal Energy Regulatory Commission,

888 First Street, NE., Washington, DC

20426, Attention: Michael Miller,

Officer of the Executive Director, phone:

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

45. Comments concerning this

information collection can be sent to the

Office of Management and Budget,

Office of Information and Regulatory

Affairs, Washington, DC 20503

[Attention: Desk Officer for the Federal

Energy Regulatory Commission, phone:

(202) 395–4650, fax: (202) 395–7285.]

Environmental Analysis

46. The Commission is required to

prepare an Environmental Assessment

or an Environmental Impact Statement

for any action that may have a

significant adverse effect on the human

environment.47 As we stated in the

NOPR, the Commission has

categorically excluded certain actions

from this requirement as not having a

significant effect on the human

environment. Included in the exclusion

are rules that are procedural,

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).

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ministerial, or internal management

programs or decisions,48 as well as

actions under section 305(b) of the

FPA.49 This Final Rule clarifies the time

when, and information which, an

individual seeking Commission

authorization to hold interlocking

positions must file. Therefore, this rule

falls within the categorical exemptions

provided in the Commission’s

regulations, and, as a result, neither an

environmental impact statement nor an

environmental assessment is required.

Regulatory Flexibility Act Analysis or

Certification

47. The Regulatory Flexibility Act of

1980 (RFA) 50 generally requires a

description and analysis of final rules

that will have a significant economic

impact on a substantial number of small

entities.51 The Commission is not

required to make such analyses if a rule

would not have such an effect.

48. The Commission does not believe

that this final rule would have such an

impact on small entities. Most persons

affected by this final rule are officers or

directors of companies that do not fall

within the RFA’s definition of a small

entity. Further, this final rule does not

substantially change the current

requirements and regulations that

persons who are officers and directors

must comply with. Therefore, the

Commission certifies that this rule will

not have a significant impact on a

substantial number of small entities.

Document Availability

49. In addition to publishing the full

text of this document in the Federal

Register, the Commission provides all

interested persons an opportunity to

view and/or print the contents of this

document via the Internet through the

Commission’s Home Page (http://

www.ferc.gov) and in the Commission’s

Public Reference Room during normal

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

Eastern Time) at 888 First Street, NE.,

Room 2A, Washington, DC 20426.

50. From the Commission’s Home

Page on the Internet, this information is

available in the Commission’s document

48 18 CFR 380.4(a)(1).

49 18 CFR 380.4(a)(16).

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

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

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

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

follows:

§ 45.9 Automatic authorization of certain

interlocking positions.

*

List of Subjects in 18 CFR Part 45

Electric utilities, Reporting and

recordkeeping requirements.

By the Commission.

Magalie R. Salas,

Secretary.

■ In consideration of the foregoing, the

Commission amends part 45, Chapter I,

Title 18, Code of Federal Regulations, as

follows.

PART 45—APPLICATION FOR

AUTHORITY TO HOLD INTERLOCKING

POSITIONS

■ 1. The authority citation for part 45 is

revised to read as follows:

Authority: 16 U.S.C. 791a–825r, 2601–

2645; 31 U.S.C. 9701; 42 U.S.C. 7101–7352;

3 CFR 142.

■ 2. Section 45.3 is revised to read as

follows:

§ 45.3

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.

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

*

*

*

*

(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

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

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

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55723

DEPARTMENT OF ENERGY

Federal Energy Regulatory

Commission

18 CFR Part 385

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

Revision of Rules of Practice and

Procedure Regarding Issue

Identification

Issued September 16, 2005.

AGENCY: Federal Energy Regulatory

Commission.

ACTION: Final rule.

SUMMARY: The Federal Energy

Regulatory Commission (Commission) is

revising its regulations regarding filings.

The regulations are revised to clarify

that any issues that the movant wishes

the Commission to address must be

specifically identified in a section

entitled ‘‘Statement of Issues.’’ This

change will benefit the Commission by

clarifying issues raised, and benefit

movants by ensuring issues are

addressed promptly and preserved for

appeal.

EFFECTIVE DATE: The rule will become

effective September 23, 2005.

FOR FURTHER INFORMATION CONTACT:

Carol C. Johnson, Office of the General

Counsel, GC–13, Federal Energy

Regulatory Commission, 888 First

Street, NE., Washington, DC 20426,

202–502–8521.

SUPPLEMENTARY INFORMATION:

Before Commissioners: Joseph T.

Kelliher, Chairman; Nora Mead

Brownell, and Suedeen G. Kelly.

1. The Federal Energy Regulatory

Commission (Commission) is revising

its rules of practice and procedure to

clarify that any issues a movant wishes

the Commission to address must be

clearly set forth in a section entitled

‘‘Statement of Issues,’’ that will

reference representative Commission

and court precedent on which the

participant is relying. While the current

rules require that pleadings include

‘‘[t]he position taken by the participant

filing any pleading * * * and the basis

in fact and law for such position,’’ the

Commission has found that movants

sometimes fail to specify the issues they

want the Commission to address, or the

case law supporting their position. 18

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

benefit movants, and other parties to the

proceeding, as well as the Commission.

2. The way to ensure that an issue is

addressed is for a movant to place it

squarely before the Commission in a

filing. Under the Administrative

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