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the Statement of Policy of the Secretary

of Agriculture effective July 24, 1971,

(36 FR 13804) relating to notices of

proposed rulemaking and public

participation in rulemaking. These

regulations are thus issued as final. In

addition, section 1601(c)(3) of the 2002

Act provides that the Secretary, in

carrying out the rulemaking exception,

shall utilize the authority in section 808

of title 5 of the U.S. Code. Accordingly,

under 5 U.S.C. 808, it is further found

that it would be contrary to the public

interest to delay implementation of this

rule for the special Congressional

review provisions provided for in 5

U.S.C. 802 et seq., to the extent, if any,

that they would otherwise apply.

Executive Order 12866

This rule has been determined to be

‘‘Not Significant’’ under Executive

Order 12866 and has not been reviewed

by the Office of Management and

Budget (OMB).

Regulatory Flexibility Act

The Regulatory Flexibility Act does

not apply to this rule because CCC is not

required by 5 U.S.C. 553 or any other

law to publish a notice of proposed

rulemaking with respect to the subject

of this rule.

Environmental Assessment

The environmental impacts of this

rule have been considered consistent

with the provisions of the National

Environmental Policy Act of 1969

(NEPA), 42 U.S.C. 4321 et seq., the

regulations of the Council on

Environmental Quality (40 CFR parts

1500–1508), and FSA’s regulations for

compliance with NEPA, 7 CFR part 799.

To the extent these authorities may

apply, CCC has concluded that this rule

is categorically excluded from further

environmental review as evidenced by

the completion of an environmental

evaluation. No extraordinary

circumstances or other unforeseeable

factors exist which would require

preparation of an environmental

assessment or environmental impact

statement. A copy of the environmental

evaluation is available for inspection

and review upon request.

sroberts on PROD1PC70 with RULES

Executive Order 12988

The rule has been reviewed in

accordance with Executive Order 12988.

This rule preempts State laws to the

extent such laws are inconsistent with

it. This rule is not retroactive. Before

judicial action may be brought

concerning this rule, all administrative

remedies set forth at 7 CFR parts 11 and

780 must be exhausted.

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17:15 Jul 27, 2006

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§ 1425.18

Executive Order 12372

This program is not subject to

Executive Order 12372, which requires

intergovernmental consultation with

State and local officials. See the notice

related to 7 CFR part 3015, subpart V,

published at 48 FR 29115 (June 24,

1983).

Unfunded Mandates

Title II of the Unfunded Mandates

Reform Act of 1995 (UMRA) does not

apply to this rule because CCC is not

required by 5 U.S.C. 553 or any other

law to publish a notice of proposed

rulemaking for the subject of this rule.

Further, this rule contains no unfunded

mandates as defined in sections 202 and

205 of UMRA.

Paperwork Reduction Act

Under 7 U.S.C. 7991(c)(2)(A) these

regulations may be promulgated and the

program administered without regard to

chapter 5 of title 44 of the United States

Code (the Paperwork Reduction Act).

Accordingly, these regulations and the

forms and other information collection

activities needed to administer the

provisions authorized by these

regulations are not subject to review by

the Office of Management and Budget

under the Paperwork Reduction Act.

Government Paperwork Elimination

Act

Distribution of proceeds.

(a)(1) If CCC makes loans or LDP’s for

any quantity in a loan pool, the related

proceeds shall be distributed or

otherwise made available to the

members account:

(i) Based on the quantity and quality

of the commodity delivered by each

member;

(ii) Less any authorized charges for

services performed or paid by the CMA

necessary to condition or otherwise

make the commodity eligible for loans

or LDP’s, according to the marketing

agreement provided for in § 1425.13;

(iii) Within 15 work days from the

date the CMA receives loan or LDP

proceeds from CCC, or held according to

the terms of a deferred payment

agreement if requested by the member.

*

*

*

*

*

Signed in Washington, DC, on July 17,

2006.

Teresa C. Lasseter,

Executive Vice President, Commodity Credit

Corporation.

[FR Doc. E6–12068 Filed 7–27–06; 8:45 am]

BILLING CODE 3410–05–P

DEPARTMENT OF ENERGY

Federal Energy Regulatory

Commission

18 CFR Part 366

CCC is committed to compliance with

the Government Paperwork Elimination

Act (GPEA) and the Freedom to E-File

Act, which require Government

agencies in general, and the FSA in

particular, to provide the public the

option of submitting information or

transacting business electronically to

the maximum extent possible. Most

forms used by CMA’s may be submitted

to CCC by electronic submission.

[Docket No. RM05–32–002, Order No. 667–

B]

List of Subjects in 7 CFR Part 1425

Rehearing.

Agricultural commodities,

Cooperatives, Cotton, Feed grains,

Oilseeds, Price support programs.

■ For the reasons set out in the

preamble, 7 CFR part 1425 is amended

as set forth below.

PART 1425—COOPERATIVE

MARKETING ASSOCIATIONS

■ 1. The authority citation continues to

read as follows:

Authority: 7 U.S.C. 1441 and 1421, 7

U.S.C. 7931–7939; and 15 U.S.C. 714b, 714c,

and 714j.

■ 2. Amend § 1425.18 by revising

paragraph (a)(1) to read as follows:

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Repeal of the Public Utility Holding

Company Act of 1935 and Enactment

of the Public Utility Holding Company

Act of 2005

Issued July 20, 2006.

AGENCY: Federal Energy Regulatory

Commission, DoE.

ACTION: Final Order; Order on

SUMMARY: By this order, the Federal

Energy Regulatory Commission

(Commission) grants clarification and

rehearing in part of Order No. 667–A.

Order No. 667–A granted rehearing in

part and denied rehearing in part of

Order No. 667, which amended the

Commission’s regulations to implement

repeal of the Public Utility Holding

Company Act of 1935 and enactment of

the Public Utility Holding Company Act

of 2005.

DATES: Effective Date: This order is

effective on August 28, 2006.

FOR FURTHER INFORMATION CONTACT:

Lawrence Greenfield (Legal

Information), Federal Energy

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Regulatory Commission, 888 First

Street, NE., Washington, DC 20426,

(202) 502–6415.

Andrew Lyon (Legal Information),

Federal Energy Regulatory

Commission, 888 First Street, NE.,

Washington, DC 20426. (202) 502–

6614.

Laura Wilson (Legal Information),

Federal Energy Regulatory

Commission, 888 First Street, NE.,

Washington, DC 20426. (202) 502–

6128.

James Guest (Technical Information),

Federal Energy Regulatory

Commission, 888 First Street, NE.,

Washington, DC 20426. (202) 502–

6614.

SUPPLEMENTARY INFORMATION:

Before Commissioners: Joseph T. Kelliher,

Chairman; Nora Mead Brownell, and

Suedeen G. Kelly.

Order on Rehearing

1. Subtitle F of Title XII of the Energy

Policy Act of 2005 (EPAct 2005)

repealed the Public Utility Holding

Company Act of 1935 (PUHCA 1935)

and enacted the Public Utility Holding

Company Act of 2005 (PUHCA 2005).1

In Order No. 667, the Federal Energy

Regulatory Commission (Commission)

amended Subchapter U of its

regulations to implement Subtitle F.2 In

Order No. 667–A, the Commission

denied rehearing in part and granted

rehearing in part of Order No. 667.3 In

the present order, we grant clarification

and rehearing in part of Order No. 667–

A and amend our regulations

accordingly.

sroberts on PROD1PC70 with RULES

Introduction

2. On rehearing of Order No. 667–A,

commenters 4 raise five issues. First,

National Grid, EEI, Duke, and

Consumers seek clarification and/or

rehearing of changes in the regulatory

text that could be construed to place

1 Energy Policy Act of 2005, Pub. L. 109–58, 119

Stat. 594 (2005).

2 Repeal of the Public Utility Holding Company

Act of 1935 and Enactment of the Public Utility

Holding Company Act of 2005, Order No. 667, 70

FR 75592 (Dec. 20, 2005), FERC Stats. & Regs.

¶ 31,197 (2005).

3 Repeal of the Public Utility Holding Company

Act of 1935 and Enactment of the Public Utility

Holding Company Act of 2005, Order No. 667–A,

71 FR 28446 (May 16, 2006), FERC Stats. & Regs.

¶ 31,213 (2006).

4 Commenters in this second rehearing phase

include: AES Corporation (AES); ALCOA Inc.

(ALCOA); Consumers Energy Company and CMS

Energy Corporation (Consumers); Duke Energy

Corporation (Duke); Edison Electric Institute (EEI);

Edison International (Edison); Interstate Natural Gas

Association of America (INGAA); Invenergy

Investment Company LLC and Mayflower

Management Services LLC (Invenergy); National

Grid USA (National Grid); PPL Corporation (PPL);

and Sempra Energy (Sempra).

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conditions on the effectiveness of status

as an exempt wholesale generator

(EWG) or foreign utility company

(FUCO). Under the Commission’s

PUHCA 2005 regulations, a person that

is a holding company solely with

respect to an EWG or FUCO is eligible

for exemption from books-and-records,

accounting, record retention and

reporting requirements.5 In Order No.

667–A, the Commission modified the

regulatory text governing procedures for

obtaining EWG status to state that selfcertification (or a Commission

determination) would not become

effective until the relevant state

commissions had made certain

determinations under section 32(c) of

PUHCA 1935 in those cases where such

determinations were necessary under

section 32(c) of PUHCA 1935. Similar

language was included with respect to

FUCO self-certifications (and

Commission determinations); i.e., that

such status would not become effective

until the relevant state commissions had

provided certain certifications under

section 33(a)(2) of PUHCA 1935.

National Grid, EEI, Duke, and

Consumers suggest that the Commission

cannot and should not require those

determinations and certifications, and

they seek clarification or rehearing. As

discussed below, we reaffirm that EWGs

are subject to section 32(c) of PUHCA

1935.6 However, we clarify that we did

not intend that an entity that meets the

definition of a FUCO would not have

FUCO status until a state commission

certification is also provided.

Accordingly, we revise the regulatory

text that created this confusion.

3. Second, EEI, Sempra, Edison, PPL,

and AES ask for clarification or

rehearing of the Commission’s

definition of ‘‘single-state holding

company system.’’ Under the

Commission’s PUHCA 2005 regulations,

a single-state holding company system

is eligible for waiver of accounting,

record retention and reporting

requirements.7 In Order No. 667–A, for

purposes of such waiver, the

Commission defined ‘‘single-state

holding company system’’ as a system

that derives no more than thirteen

percent of its ‘‘public-utility company’’

revenues from outside of a state. The

Commission also defined ‘‘public-utility

5 18 CFR 366.7(a).

6 We note that, in practice, section 32(c) of

PUHCA only applies to EWGs whose generation

facilities’ costs were included in state-regulated

rates and rate base as of the date of enactment of

the Energy Policy Act of 1992 (October 24, 1992).

Where it does not apply and therefore where State

commission determinations are not necessary, an

EWG need merely inform us of that fact.

7 18 CFR 366.3(c)(1).

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42751

company’’ and ‘‘electric utility

company’’ to include EWGs, FUCOs,

and qualifying facilities (QFs).8 As a

result, interests in out-of-state EWGs,

FUCOs or QFs might make a system

ineligible for waiver. EEI, Sempra,

Edison, PPL, and AES suggest that this

result is unnecessary and would

discourage investment. We grant

clarification as discussed below, and

modify the regulatory text to reflect this

clarification.

4. Third, ALCOA expresses concern

as to the requirement in Order No. 667–

A that, when a subsidiary owns

jurisdictional transmission facilities, the

parent company must apply for

exemption from the Commission’s

PUHCA 2005 regulations rather than

being eligible for exemption upon the

provision of notice. ALCOA suggests

that, if the subsidiary is not primarily

engaged in the provision of transmission

service, the parent company should be

eligible for exemption upon provision of

notice. We deny rehearing as discussed

below.

5. Fourth, INGAA requests

clarification of the Commission’s

definition of ‘‘gas utility company.’’

Under Order No. 667–A, a natural gas

pipeline company that makes only

incidental retail sales is a ‘‘gas utility

company.’’ An upstream owner of the

pipeline company is therefore subject to

regulation under the Commission’s

PUHCA 2005 regulations. It asserts that

this result imposes unnecessary burdens

and should be avoided through

adoption of a de minimis standard for

retail sales. We grant clarification and

revise the relevant regulatory text to add

an additional exemption to address this

circumstance as discussed below.

6. Finally, we clarify (1) in response

to a concern raised by EEI and Duke, a

subsidiary holding company may be

eligible for an exemption or waiver even

if an upstream holding company is not;

and (2) in response to a concern raised

by Invenergy, service companies within

an exempt holding company system are

themselves exempt from the

requirements of sections 366.2, 366.22,

and 366.23.

Discussion

1. EWG and FUCO Status

Background

7. PUHCA 2005 requires the

Commission to exempt from its booksand-records requirements companies

that are holding companies solely with

respect to an ‘‘exempt wholesale

generator’’ or ‘‘foreign utility

8 See 18 CFR 366.1.

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company.’’ 9 PUHCA 2005 gives the

term ‘‘exempt wholesale generator’’ the

same meaning as in section 32 of

PUHCA 1935 and gives the term

‘‘foreign utility company’’ the same

meaning as in section 33 of PUHCA

1935.10

8. In the regulations implementing

PUHCA 2005, the Commission restated

the definition of EWG in section 32(a)(1)

of PUHCA 1935. Under that definition,

an EWG is a person that owns or

operates an ‘‘eligible facility,’’ which is

a facility that, with minor exception, is

dedicated to wholesale sales.11

9. The Commission also incorporated

into the definition of EWG the

requirement for state commission

determinations in section 32(c) of

PUHCA 1935.12 Section 32(c) applies to

generation facilities whose costs were

included in state-regulated rates and

rate base as of the date of enactment of

the Energy Policy Act of 1992 (October

24, 1992).13 Under section 32(c), for

such a facility to be considered an

‘‘eligible facility,’’ the relevant state

commission must determine that

dedication of the facility to wholesale

sales will benefit consumers, will be in

the public interest and will not violate

state law.14 Because, by definition, an

EWG can only own or operate eligible

facilities, a person seeking EWG status

whose generation facilities’ costs were

included in state-regulated rates and

rate base as of the date of enactment of

the Energy Policy Act of 1992 (October

24, 1992) would not qualify as an EWG

until the relevant state commission

issues the specified determinations.15

10. In implementing PUHCA 2005,

the Commission adopted the definition

of ‘‘foreign utility company’’ in section

33(a)(3) of PUHCA 1935.16 Under this

definition, a FUCO is a company that

owns or operates electricity or natural or

manufactured gas facilities that are not

9 EPAct 2005 1266. See also EPAct 2005 1264.

10 EPAct 2005 1262(6).

sroberts on PROD1PC70 with RULES

11 18 CFR 366.1; 15 U.S.C. 79z–5(a)(1) and (2).

12 18 CFR 366.1, definition of ‘‘exempt wholesale

generator’’ (1). See also 18 CFR 366.1, definition of

‘‘exempt wholesale generator’’ (2); 18 CFR 366.7

(conditioning EWG status on State determinations

under section 32(c) of PUHCA 1935).

13 Pub. L. 102–486, 106 Stat. 2776 (1992). To the

extent that the facilities that are at issue are not

encompassed within section 32(c) of PUHCA 1935,

e.g., the facilities are new facilities, then section

32(c) would not apply and the state commission

determinations provided for in section 32(c) would

not be necessary. The regulations state that, in such

circumstances, the EWG need simply inform the

Commission of that fact.

14 15 U.S.C. 79z–5a(a)(2) and (c).

15 As noted supra note 13, to the extent that

section 32(c) of PUHCA 1935 does not apply in a

particular instance, the person seeking EWG status

need simply inform the Commission of that fact.

16 18 CFR 366.1, definition of ‘‘foreign utility

company.’’ See also 15 U.S.C. 79z–5b(a)(3)(B).

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located in the United States, that does

not derive income from the generation,

transmission or distribution of

electricity or the distribution at retail of

natural or manufactured gas in the

United States, and that is not and has no

subsidiary that is a public-utility

company operating in the United States.

11. In modifications to the regulatory

text adopted on rehearing, the

Commission included in the definition

of ‘‘foreign utility company’’ a provision

that exempts FUCOs from all sections

but section 366.7 of the Commission’s

PUHCA 2005 regulations; 17 section

366.7 provides that FUCO status does

not become effective until the FUCO has

obtained state commission certification

consistent with section 33(a)(2) of

PUHCA 1935.18 Section 33(a)(2) of

PUHCA 1935, in turn, required state

certification as a condition on

exemption of a FUCO’s parent company

from public utility holding company

regulation under PUHCA 1935. For the

exemption to be effective, each state

commission with jurisdiction over

associated retail electricity and natural

gas suppliers needed to certify that the

state commission could adequately

protect retail ratepayers.19

Comments

12. National Grid, EEI, Duke, and

Consumers seek clarification and/or

rehearing of the requirements for state

commission determinations and

certifications. They assert that the

requirements violate PUHCA 2005 by

incorporating operative provisions of

PUHCA 1935. They add that state

involvement is unnecessary because the

Commission may prevent crosssubsidization between EWGs and

FUCOs and retail suppliers. Finally,

they assert that, if the Commission

conditions FUCO status on state

commission certification, it will prevent

companies from representing that they

have FUCO status until state

commission certification has been

obtained, and also will be inconsistent

with such companies’ ability to rely on

FUCO status under PUHCA 1935.

According to these commenters, the

associated uncertainty and delay will

put companies with United States

affiliates at a disadvantage in bidding

for foreign utility companies.

Decision

13. We will deny rehearing with

respect to EWGs, but grant relief with

respect to FUCOs.

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17 Id.

18 18 CFR 366.7.

19 See 15 U.S.C. 79z–5b(a)(1) and (2).

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14. For some entities, EWG status

does not take effect until state

commission determinations have been

obtained consistent with section 32(c) of

PUHCA 1935.20 PUHCA 2005 gives the

term ‘‘exempt wholesale generator’’ the

same meaning as in section 32 of

PUHCA 1935.21 Section 32(a)(1) of

PUHCA 1935 defines ‘‘exempt

wholesale generator’’ as a person that

owns or operates an ‘‘eligible facility.’’

Section 32(c) of PUHCA 1935 states that

certain facilities, i.e., those whose costs

were included in state-regulated rates

and rate base as of the date of enactment

of the Energy Policy Act of 1992

(October 24, 1992), are not eligible

facilities until specified state

commission determinations are

obtained.22 Thus, because, by

definition, an EWG can only own or

operate eligible facilities, and certain

facilities can only be eligible facilities

with state commission determinations, a

person cannot be an EWG if it owns or

operates such facilities (i.e., if it owns or

operates generation facilities whose

costs were included in state-regulated

rates and rate base as of the date of

enactment of the Energy Policy Act of

1992 (October 24, 1992)) without having

obtained the necessary State

commission determinations.

15. With respect to FUCOs, we clarify

that the Commission did not intend to

establish a requirement that an entity

cannot meet the definition of a FUCO

without first obtaining state commission

certification. In contrast to the statutory

definition of EWG in section 32 of

PUHCA 1935, the statutory definition of

FUCO in section 33 of PUHCA 1935 is

not tied to state commission

certification, and PUHCA 2005 gives the

term ‘‘foreign utility company’’ the same

meaning as in section 33 of PUHCA

1935. Under section 33 of PUHCA 1935,

state commission certification affected

only the availability of an exemption

from public utility holding company

regulation under PUHCA 1935, but was

not part of the definition of ‘‘foreign

utility company.’’ 23 As a result, state

commission certification is not required

by PUHCA 2005 as a condition of FUCO

status, and we will eliminate the

reference to such state commission

certification in the regulatory text.

16. Consistent with the foregoing, we

also will move paragraph (2) of the

definitions of EWG and FUCO to a new

section 366.7(e).

20 As noted supra note 13, to the extent that

section 32(c) of PUHCA 1935 does not apply in a

particular instance, the person seeking EWG status

need simply inform the Commission of that fact.

21 EPAct 2005 1262.

22 See 15 U.S.C. 79z–5a(a)(1) and (c).

23 See 15 U.S.C. 79z–5b(a).

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2. Single-State Holding Companies

Background

17. In implementing PUHCA 2005,

the Commission provided for waiver of

accounting, recordkeeping and reporting

requirements for single state holding

company systems.24 The waiver reflects

the principle that, when a system

operates substantially within a single

state, ratepayers are adequately

protected by state oversight as well as

by federal oversight under the Federal

Power Act, 16 U.S.C. 824 et seq.

18. In Order No. 667–A, the

Commission defined ‘‘single-state

holding company system’’ with

reference to revenues from in-state

versus out-of-state activities. For

purposes of waiver from the

Commission’s accounting, recordkeeping and reporting requirements, the

Commission defined a single-state

holding company system as a system

that derives no more than thirteen

percent of its ‘‘public-utility company

revenues’’ from outside of a single

state.25 The Commission also defined

‘‘public-utility company’’ and ‘‘electric

utility company’’ to include EWGs,

FUCOs and QFs.26 As a result, a system

whose traditional utility operations are

largely confined to a single state might

be subject to federal accounting, recordkeeping and reporting requirements as a

result of owning out-of-state EWGs,

FUCOs or QFs.

sroberts on PROD1PC70 with RULES

Comments

19. EEI, Sempra, Edison, PPL, and

AES suggest that ownership of out-ofstate EWGs, FUCOs or QFs should not

affect a system’s eligibility for waiver of

federal accounting, recordkeeping and

reporting requirements. They state that

ownership of out-of-state EWGs, FUCOs

and QFs did not affect a system’s

eligibility for the single-state exemption

from public utility holding company

regulation under PUHCA 1935. They

suggest that considering ownership of

out-of-state EWGs, FUCOs and QFs now

would subject holding company systems

to new obligations and would therefore

contradict Congress’s goal in PUHCA

2005 of removing regulatory obstacles to

investment.

Decision

20. The Commission’s intent in

adopting the 13 percent of revenues

standard to identify who is a single state

holding company system entitled to a

waiver was to use the same 13 percent

standard applied by the SEC under

24 18 CFR 366.3(c).

25 18 CFR 366.3(c)(1).

26 18 CFR 366.1.

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PUHCA 1935. Although we have

defined ‘‘public-utility company’’ and

‘‘electric utility company’’ to include

EWGs, FUCOs, and QFs, we clarify that

we did not intend to include such

entities’ revenues for purposes of

applying the 13 percent of revenues

standard to identify who is a single state

holding company system entitled to

waiver. We will revise the relevant

regulatory text in 18 CFR 366.3(c)(1)

accordingly.

21. This approach is similar to the

section 3(a) exemption under PUHCA

1935, which exempted single-state

holding company systems from plenary

federal oversight of the system’s

corporate and financial structure.27 The

section 3(a) exemption of PUHCA 1935

reflected Congress’s assessment that the

states and the federal government,

through corporate and rate regulation,

could otherwise effectively oversee a

single-state system without the

necessity of public utility holding

company regulation. Existing state and

federal regulation should continue to be

sufficient to protect against any abuses

associated with ownership of out-ofstate EWGs, FUCOs and QFs.

22. Accordingly, we will amend our

regulations to provide that, for purposes

of waiver under section 366.3(c)(1),

revenues derived from EWGs, FUCOs

and QFs will not be considered to be

‘‘public-utility company’’ revenues and

therefore will not affect the availability

of waiver of federal accounting and

related requirements.28

3. Companies That Are Not Primarily

Engaged in Transmission

Background

23. In Order No. 667–A, the

Commission exempted from its PUHCA

2005 regulations persons that are

holding companies with respect to

Commission-jurisdictional utilities

when (1) neither the utility nor an

affiliate has captive customers and (2)

neither the utility nor an affiliate owns

Commission-jurisdictional transmission

27 15 U.S.C. 79c(a).

28 In the separate context of the statutory

exemption of PUHCA 2005 section 1275(d), as

reflected in 18 CFR 366.5, involving cost allocation

for non-power goods and services in the case of a

holding company system whose public utility

operations are confined substantially to a single

state, EEI asks that the Commission not require that

a holding company file a petition for declaratory

order in order to obtain a Commission

determination that the holding company’s public

utility operations are confined substantially to a

single state. EEI Rehearing Request at 4, 12–13. As

a Commission determination that a holding

company’s public utility operations are confined

substantially to a single state would be a declaratory

order, the appropriate vehicle to seek such a

determination would be a petition for a declaratory

order.

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42753

facilities or provides Commissionjurisdictional transmission services.29

Comments

24. ALCOA suggests that the

Commission should exempt, under 18

CFR 366.3(b)(2) and 366.4(b)(1), i.e., by

way of FERC–65A, companies whose

subsidiaries have no captive customers

and are not primarily engaged in

transmission in interstate commerce,

regardless of whether a subsidiary owns

transmission facilities. According to

ALCOA, the Commission’s regulations

as they stand require companies such as

ALCOA to instead apply for exemption,

under 18 CFR 366.3(d) and 366.4(b)(3),

when a subsidiary owns discrete

transmission facilities and acquired

those facilities by what it characterizes

as historical coincidence. ALCOA

suggests that there is no regulatory

interest in oversight of the parent

company in those circumstances and

that, therefore, the parent company

should not be required to apply for

exemption.

25. ALCOA also suggests that the

Commission must make the exemption

process provided in 18 CFR 366.3(b)(2)

and 366.4(b)(1), i.e., by way of FERC–

65A, available to companies such as

ALCOA because (1) those companies

were exempted from public utility

holding company regulation under

PUHCA 1935, (2) the Commission’s

notice of proposed rulemaking in this

proceeding suggested that the

Commission did not intend to impose

burdens beyond those in PUHCA 1935,

and (3) the Commission did not make

the parent company of a transmission

owner ineligible for the notification

process until rehearing of the

Commission’s initial order in this

proceeding. According to ALCOA, to

now require ALCOA to apply for

exemption would violate notice

requirements of the Administrative

Procedure Act, 5 U.S.C. 551–59, and

ALCOA’s constitutional right to the

equal protection of the laws.

Decision

26. At issue is not whether ALCOA

and similar companies are eligible for

exemption from the Commission’s

PUHCA 2005 regulations but whether

those companies must individually and

formally apply for exemption under 18

CFR 366.3(d) and 366.4(b)(3), rather

than submitting an exemption

notification, i.e., a FERC–65A, under 18

CFR 366.4(b)(1). Contrary to ALCOA’s

suggestion, at this early stage in our

implementation of PUHCA 2005, there

is a strong regulatory interest in

29 See 18 CFR 366.3(b)(2)(ii).

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requiring holding companies that do not

qualify for the exemptions or waivers

identified in 18 CFR 366.3(b)(2) and

366.3(c) to apply formally for

exemption. As relevant here, that would

include, where no other exemption or

waiver applies, where the company or a

subsidiary owns jurisdictional

transmission facilities or provides

jurisdictional transmission service. We

do not mean to suggest that on the facts

and circumstances of a particular case

an exemption or waiver might not be

appropriate. Rather, at this point in

time, the formal application process

gives the Commission the opportunity

to make such determinations on the

facts and circumstances of each case.

For example, the process gives the

Commission the opportunity to

determine whether there might be

significant potential for transmission

service customers to subsidize

wholesale sales and, if so, whether the

cross-subsidies could be adequately

addressed through rate regulation.

Based on that analysis, the Commission

would or would not, as the facts and

circumstances dictate, permit

exemption from oversight under the

Commission’s PUHCA 2005

regulations.30

27. Moreover, the requirement does

not impose undue regulatory burdens.

In its request for rehearing, ALCOA cites

cases in which the SEC determined that

ALCOA was exempt from holding

company regulation under PUHCA

1935. In light of the SEC’s past, active

involvement in determining eligibility

for exemption under PUHCA 1935, our

requirement that companies formally

apply to us for exemption under the

Commission’s PUHCA 2005 regulations

(rather than obtaining exemption by

filing a FERC–65A) is unexceptional. It

is true that companies like ALCOA must

apply anew for exemption rather than

relying on prior SEC determinations.

That obligation flows directly from

Congress’s decision to change the

governing law and is not an

unreasonable cost of doing business.

28. Finally, the Administrative

Procedure Act does not require us to

issue a new notice of proposed

rulemaking every time that we make a

change to a proposed rule. The express

purpose of the comment, decision, and

rehearing process is to allow the

Commission to make changes to a

proposed rule. As evidenced by

ALCOA’s request for rehearing,

moreover, ALCOA had actual and

timely notice and opportunity to

30 In fact, ALCOA has made a formal filing, in

Docket No. EL06–75–000, seeking an exemption.

That filing is presently pending.

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17:15 Jul 27, 2006

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address provisions and changes that

affected ALCOA.

4. Pipeline Companies That Make

Incidental Retail Gas Sales

Background

29. Pursuant to PUHCA 1935, and

specifically section 2(a)(4) of PUHCA

1935, a natural gas pipeline that was not

‘‘primarily engaged’’ in the sale of

natural gas at retail was not considered

to be a ‘‘gas utility company.’’ 31 As a

result, under PUHCA 1935, a holding

company with interests in that pipeline

would not, by virtue of those interests,

be subject to public utility holding

company regulation.32

30. PUHCA 2005 defines ‘‘gas utility

company’’ without regard to whether a

company is primarily engaged in the

retail sale of natural gas.33 In

implementing PUHCA 2005, the

Commission adopted the statutory

definition of ‘‘gas utility company,’’

with the added clarification that an

entity that is engaged only in the

marketing of natural gas is not a ‘‘gas

utility company’’:

The term ‘‘gas utility company’’ means any

company that owns or operates facilities used

for distribution at retail (other than the

distribution only in enclosed portable

containers or distribution to tenants or

employees of the company operating such

facilities for their own use and not for resale)

of natural or manufactured gas for heat, light,

or power. For the purposes of this

subchapter, ‘‘gas utility company’’ shall not

include entities that engage only in

marketing of natural and manufactured gas.34

Under that definition, a pipeline that

makes incidental retail sales of natural

gas could be interpreted to be a ‘‘gas

utility company,’’ such that a parent of

the pipeline would be subject to the

Commission’s PUHCA 2005

regulations.35

Comments

31. INGAA seeks clarification of the

Commission’s interpretation of ‘‘gas

utility company’’ and asks us to find

that a company that ‘‘owns an interstate

natural gas pipeline company, which

pipeline makes deliveries to industrial

customers and power plants and/or de

minimis deliveries to farmers and/or

ranchers located adjacent to the

pipeline’s rights-of-way is not, due to

31 15 U.S.C. 79b(a)(4).

32 15 U.S.C. 79b(a)(7); see also 17 CFR 250.7(a) (a

pipeline company was not ‘‘primarily engaged’’ in

the sale of natural gas at retail if gross revenues

from retail sales were less than an average, annual

amount of $5,000,000 over the preceding three

calendar years).

33 EPAct 2005 1262(7).

34 18 CFR 366.1.

35 EPAct 2005 1262(8) and (13); 18 CFR 366.1.

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Fmt 4700

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such ownership, a ‘holding company’

under the Commission’s PUHCA [2005]

regulations.’’ INGAA relies primarily on

section 2(a)(4) of PUHCA 1935, which

allowed the SEC to except from the

definition of ‘‘gas utility company’’

companies that were not ‘‘primarily

engaged in’’ retail sales of natural gas.

According to INGAA, section 2(a)(4) of

PUHCA 1935 demonstrated

Congressional intent not to impose

holding company regulation in the

context of pipeline companies that make

incidental retail sales. INGAA suggests

there is no need to change that

longstanding practice under PUHCA

1935 and, in particular, to impose

regulatory obligations under PUHCA

2005 where none existed under PUHCA

1935. It also points out that under

PUHCA 1935 the SEC promulgated a

regulation exempting entities from the

definition of ‘‘gas utility company’’ if

their revenues from retail distribution of

natural gas were de minimis and that

the most recent monetary limit was an

average annual amount of $5 million

over the preceding three calendar years.

Decision

32. A holding company is defined in

PUHCA 2005 and in the Commission’s

PUHCA 2005 regulations based on its

ownership of a public-utility company.

A public-utility company, in turn,

includes a gas utility company, but does

not include a natural gas company. So,

for a public-utility company that is a gas

utility company, its parent may fall

within the definition of a holding

company. In contrast, for a public-utility

company that is a natural gas company

and not a gas utility company, its parent

would not fall within the definition of

a holding company. INGAA’s concern is

that some pipelines may make

incidental sales of natural gas at retail.

That fact would result in their also

being considered gas utility companies

rather than solely natural gas

companies—thus resulting in regulation

of their parent companies as holding

companies.

33. The relevant language in PUHCA

2005 at issue here defining ‘‘gas utility

company’’ and when exemptions would

be warranted under PUHCA 2005 is not

identical to the corresponding language

in PUHCA 1935 highlighted by INGAA

above defining ‘‘gas utility company’’

and when exemptions were warranted

under PUHCA 1935. That fact

notwithstanding, we agree with INGAA

and believe that the fact that a pipeline

makes sales of natural gas to end-use

customers located adjacent to the

pipeline’s right of way should not, on

that basis alone, lead to the pipeline’s

parent being considered a holding

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Federal Register / Vol. 71, No. 145 / Friday, July 28, 2006 / Rules and Regulations

company under PUHCA 2005.36 We will

revise the regulatory text accordingly to

add an additional exemption to address

such circumstances.

5. Additional Clarifications

34. We hereby grant two clarifications

to Order No. 667–A. The first

clarification relates to the following

statement in the narrative preamble of

Order No. 667–A:

Where the parent holding company

qualifies for an exemption or waiver, the

subsidiary holding company would

necessarily equally qualify; phrased

differently, if the subsidiary did not qualify

for a particular exemption or waiver, then the

parent would not qualify for that same

exemption or waiver either.37

EEI and Duke urge us to delete the

latter portion of the quoted sentence

that begins with ‘‘phrased differently’’

on the grounds that it creates

unnecessary confusion. Upon further

review, the first portion of the abovequoted sentence is sufficiently clear on

its own. We therefore void the latter,

‘‘phrased differently’’ portion of the

sentence.

The second clarification relates to

section 366.3(a) of our regulations,

which states that holding companies

that meet the requirements of that

section are exempt from specified

provisions of the Commission’s PUHCA

2005 regulations:

Any person that is a holding company

solely with respect to one or more of the

following will be exempt from the

requirements of § 366.2 and the accounting,

record-retention, and reporting requirements

of §§ 366.21, 366.22, and 366.23 * * * .38

35. The specified provisions include

two provisions—sections 366.22 and

366.23—that apply to service

companies. Invenergy requests

clarification that, if a holding company

is exempt as provided in section

366.3(a), service companies within the

holding company system are exempt

from sections 366.22 and 366.23. We

agree with the requested clarification

and will change section 366.3(a)

accordingly.

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Information Collection Statement

36. The regulations of the Office of

Management and Budget (OMB) 39

require that OMB approve information36 As we previously noted in both Order No. 667

and Order No. 667–A, we again note that we have

independent authority under the Natural Gas Act to

obtain the books and records of regulated

companies and any person that controls such

companies if relevant to jurisdictional activities. 15

U.S.C. 717g.

37 Order No. 667–A at P 20, n.41.

38 18 CFR 366.3(a).

39 5 CFR 1320.12.

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17:15 Jul 27, 2006

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collection burdens that are imposed by

an agency. OMB has approved the

information-collection burdens that

were imposed in Order Nos. 667 and

667–A.40 The present order clarifies

those orders. Accordingly, OMB

approval for this order is not necessary.

The Commission will send a copy of

this order to OMB for informational

purposes.

37. Interested persons may obtain

information on the information

requirements by contacting the

following: Federal Energy Regulatory

Commission, 888 First Street, NE.,

Washington, DC 20426 [Attention:

Michael Miller, Office of the Executive

Director, ED–34], Phone: (202) 502–

8415, Fax: (202) 273–0873, e-mail:

michael.miller@ferc.gov.

The Commission Orders

Rehearing and clarification is hereby

granted in part and denied in part as

discussed in the body of this order.

By the Commission.

Magalie R. Salas,

Secretary.

List of Subjects in 18 CFR Part 366

Electric power, Natural gas, Public

utility holding companies and service

companies, Reporting and

recordkeeping requirements.

■ In consideration of the foregoing,

under the authority of PUHCA 2005, the

Commission is amending Part 366 in

Chapter I of Title 18 of the Code of

Federal Regulations, as set forth below:

Subchapter U—Regulations Under the

Public Utility Holding Company Act of 2005

PART 366—PUBLIC UTILITY HOLDING

COMPANY ACT OF 2005

Subpart A—PUHCA 2005 Definitions

and Provisions

■ 1. The authority citation for part 366

continues to read as follows:

Authority: Pub. L. 109–58, 1261 et seq.,

119 Stat. 594, 972 et seq.

■ 2. Section 366.1 is amended by

revising the definitions of ‘‘exempt

wholesale generator’’ and ‘‘foreign

utility company’’ to read as follows:

Subpart A—PUHCA 2005 Definitions

and Provisions

§ 366.1

Definitions.

For purposes of this part:

*

*

*

*

*

Exempt wholesale generator. The term

‘‘exempt wholesale generator’’ means

any person engaged directly, or

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Frm 00007

Fmt 4700

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42755

indirectly through one or more affiliates

as defined in this subchapter, and

exclusively in the business of owning or

operating, or both owning and

operating, all or part of one or more

eligible facilities and selling electric

energy at wholesale. For purposes of

establishing or determining whether an

entity qualifies for exempt wholesale

generator status, sections 32(a)(2)

through (4), and sections 32(b) through

(d) of the Public Utility Holding

Company Act of 1935 (15 U.S.C. 79z–

5a(a)(2)–(4), 79z–5a(b)–(d)) shall apply.

Foreign utility company. The term

‘‘foreign utility company’’ means any

company that owns or operates facilities

that are not located in any state and that

are used for the generation,

transmission, or distribution of electric

energy for sale or the distribution at

retail of natural or manufactured gas for

heat, light, or power, if such company:

(1) Derives no part of its income,

directly or indirectly, from the

generation, transmission, or distribution

of electric energy for sale or the

distribution at retail of natural or

manufactured gas for heat, light, or

power, within the United States; and

(2) Neither the company nor any of its

subsidiary companies is a public-utility

company operating in the United States.

*

*

*

*

*

■ 3. Section 366.3 is amended by

revising paragraphs (a) introductory

text, (b)(2) introductory text, (c)

introductory text, and (c)(1), and by

adding paragraph (b)(2)(vii) to read as

follows:

§ 366.3 Exemption from Commission

access to books and records; waivers of

accounting, record-retention, and reporting

requirements.

(a) Exempt classes of entities. Any

person that is a holding company solely

with respect to one or more of the

following will be exempt from the

requirements of §§ 366.2 and 366.21 and

any associated service company will be

exempt from the requirements of

§§ 366.2, 366.22, and 366.23; such

person need not make the filings

provided in § 366.4(a) or (b):

*

*

*

*

*

(b) * * *

(2) Commission exemption of

additional persons and classes of

transactions.

The Commission has determined that

the following persons and classes of

transactions satisfy the requirements of

paragraph (b)(1) of this section, and any

person that is a holding company solely

with respect to one or more of the

following may file to obtain an

exemption for that person or class of

transactions, as appropriate, from the

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requirements of §§ 366.2 and 366.21

(applicable to holding companies) and

§§ 366.2, 366.22, and 366.23 (applicable

to the holding companies’ associated

service companies), pursuant to the

notification procedure contained in

§ 366.4(b):

*

*

*

*

*

(vii) Natural gas companies that

distribute natural or manufactured gas

at retail to industrial or electric

generation customers and/or distribute

de minimis amounts of natural or

manufactured gas at retail to farmer or

rancher customers located adjacent to

the natural gas company’s rights-of-way.

(c) Waivers. Any person that is a

holding company solely with respect to

one or more of the following may file to

obtain a waiver of the accounting,

record-retention, and reporting

requirements of § 366.21 (applicable to

holding companies) and §§ 366.22 and

366.23 (applicable to the holding

companies’ associated service

companies), pursuant to the notification

procedures contained in § 366.4(c):

(1) Single-state holding company

systems; for purposes of § 366.3(c)(1), a

holding company system will be

deemed to be a single-state holding

company system if the holding company

system derives no more than 13 percent

of its public-utility company revenues

from outside a single state (for purposes

of this waiver, revenues derived from

exempt wholesale generators, foreign

utility companies and qualifying

facilities will not be considered publicutility company revenues);

*

*

*

*

*

■ 4. In § 366.7, paragraphs (a) and (b) are

revised to read as follows, and

paragraph (e) is added to read as

follows:

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§ 366.7 Procedures for obtaining exempt

wholesale generator and foreign utility

company status.

(a) Self-certification notice procedure.

An exempt wholesale generator or a

foreign utility company, or its

representative, may file with the

Commission a notice of self-certification

demonstrating that it satisfies the

definition of exempt wholesale

generator or foreign utility company

(including stating the location of its

generation); such notices of selfcertification must be subscribed,

consistent with § 385.2005(a) of this

chapter, but need not be verified. In the

case of exempt wholesale generators, the

person filing a notice of self-certification

under this section must also file a copy

of the notice of self-certification with

the state regulatory authority of the state

in which the facility is located, and that

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17:15 Jul 27, 2006

Jkt 208001

person must also represent to this

Commission in its submittal with this

Commission that it has filed a copy of

the notice of self-certification with the

state regulatory authority of the state in

which the facility is located. Notice of

the filing of a notice of self-certification

will be published in the Federal

Register. Persons that file a notice of

self-certification must include a form of

notice suitable for publication in the

Federal Register in accordance with the

specifications in § 385.203(d) of this

chapter. A person filing a notice of selfcertification in good faith will be

deemed to have temporary exempt

wholesale generator or foreign utility

company status. If the Commission

takes no action within 60 days from the

date of filing of the notice of selfcertification, the self-certification shall

be deemed to have been granted;

however, consistent with section 32(c)

of the Public Utility Holding Company

Act of 1935 (15 U.S.C. 79z–5a (c)) any

self-certification of an exempt wholesale

generator may not become effective

until the relevant state commissions

have made the determinations provided

for therein if such determinations are

necessary (if such determinations are

not necessary, the notice of selfcertification should state so). The

Commission may toll the 60-day period

to request additional information, or for

further consideration of the request; in

such cases, the person’s exempt

wholesale generator or foreign utility

company status will remain temporary

until such time as the Commission has

determined whether to grant or deny

exempt wholesale generator or foreign

utility company status; however,

consistent with section 32(c) of the

Public Utility Holding Company Act of

1935 (15 U.S.C. 79z–5a (c)), any selfcertification of an exempt wholesale

generator may not become effective

until the relevant state commissions

have made the determinations provided

for therein if such determinations are

necessary (if such determinations are

not necessary, the notice of selfcertification should state so). Authority

to toll the 60-day period is delegated to

the Secretary or the Secretary’s

designee, and authority to act on

uncontested notices of self-certification

is delegated to the General Counsel or

the General Counsel’s designee.

(b) Optional procedure for

Commission determination of exempt

wholesale generator status or foreign

utility company status. A person may

file for a Commission determination of

exempt wholesale generator status or

foreign utility company status under

§ 366.1 by filing a petition for

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Frm 00008

Fmt 4700

Sfmt 4700

declaratory order pursuant to

§ 385.207(a) of this chapter, justifying

the request for such status; however,

consistent with section 32(c) of the

Public Utility Holding Company Act of

1935 (15 U.S.C. 79z–5a (c)), a

Commission determination of exempt

wholesale generator status may not

become effective until the relevant state

commissions have made the

determinations provided for therein if

such determinations are necessary. (If

such determinations are not necessary,

the petition for declaratory order should

state so.) Persons that file petitions must

include a form of notice suitable for

publication in the Federal Register in

accordance with the specifications in

§ 385.203(d) of this chapter.

*

*

*

*

*

(e) An exempt wholesale generator

shall not be subject to any requirements

of this part other than § 366.7, i.e.,

procedures for obtaining exempt

wholesale generator status. A foreign

utility company shall not be subject to

any requirements of this part other than

§ 366.7, i.e., procedures for obtaining

foreign utility company status.

[FR Doc. E6–12048 Filed 7–27–06; 8:45 am]

BILLING CODE 6717–01–P

DEPARTMENT OF DEFENSE

Office of the Secretary

[DOD–2006–OS–0077; 0790–AG31]

32 CFR Part 202

Department of Defense Restoration

Advisory Boards

AGENCY: Department of Defense.

ACTION: Final rule; correction.

SUMMARY: The Department of Defense

(DoD) published a final rule document

on May 12, 2006 promulgating the

Restoration Advisory Board (RAB) rule

regarding the scope, characteristics,

composition, funding, establishment,

operation, adjournment, and dissolution

of RABs. That rule implemented the

requirement established in 10 U.S.C.

2705(d)(2)(A), which requires the

Secretary of Defense to prescribe

regulations regarding RABs. That rule

was based on DoD’s current policies for

establishing and operating RABs, as

well as the Department’s experience

over the past ten years. This document

makes administrative corrections to the

preamble of that document.

DATES: This rule is effective July 28,

2006.

FOR FURTHER INFORMATION CONTACT: Ms.

Patricia Ferrebee, Office of the Deputy

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