On February 21, 2019, FERC issued a Final Rule, Order No. 856, amending its regulations related to interlocking officers and directors in response to a Notice of Proposed Rulemaking (“NOPR”) issued on July 18, 2018 to revise Parts 45 and 46 of its regulations (see July 24, 2018 edition of the WER).

In Order No. 856, FERC adopted six revisions to its regulations.  First, FERC revised Section 45.2 to remove the requirement that an applicant, who would otherwise require FERC authorization to hold an interlocking position, obtain FERC approval in specific situations (e.g., the public utility s/he serves or proposes to serve as an officer or director selects underwriters by competitive procedures).  FERC did not change, however, the reporting requirement for interlocking positions between a public utility and a bank, trust company, banking association, or firm that is authorized by law to underwrite or participate in the marketing of public utility securities in Form No. 561 under Section 46.5 of its regulations.

Second, FERC amended Sections 45.3(a) and 45.9(b) to allow for the consideration of late-filed applications for interlocking positions on a case-by-case basis.  FERC clarified that it expects applicants to be attentive to their filing obligation and that errors and oversights be both promptly identified and expeditiously rectified.

Third, FERC revised Sections 45.4 and 45.5 to state that supplemental applications and notices of change need not be filed in the case of a person already authorized to hold interlocking positions identified in Section 45.9(a) who may assume new or different positions that are still among those identified in Section 45.9(a).  In response to comments, FERC clarified that when interlocking positions are identified in Section 45.9(a), a notice of change only needs to be filed when the officer or director resigns or withdraws as an on officer or director from all previously-held interlocking officer and director positions.  All other instances should only be reported in Form No. 561.  The same is also true for an officer or director who has a new or different interlocking positions within a holding company system.  FERC also revised its regulations to allow filers 60 days, as opposed to 30 days, to file a notice of change.

Fourth, FERC updated Section 45.8(c)(1) to state that applicants under part 45 are not required to list in their applications public utilities that do not have officers or directors.

Fifth, FERC revised Section 45.9 to add the word “person” when defining the corporate relationship within the scope of the automatic authorizations addressed in 45.9—largely because it is possible that a natural person could own a public utility.

Finally, FERC removed Section 46.2(b), which referenced the definition of “holding company system” and “registered holding company system” in the Public Utility Holding Company Act of 1935 (“PUHCA”), because the Energy Policy Act of 2005 repealed PUHCA.  FERC also updated Part 46 of its regulations to change “Rural Electrification Administration” to “Rural Utilities Service” to reflect that organization’s name change.

Additionally, FERC held that a person holding a temporary interlocking appointment for 90 days or less may do so without FERC approval or having to report the appointment in Form No. 561.  FERC clarified that this temporary appointment exemption only applies where a person who has not previously held an interlocking position is temporarily appointed to a position at an affiliate company, and that a person may not be reappointed for multiple 90-day periods.

The Final Rule goes into effect 60 days from publication in the Federal Register.  A copy of the Final Order may be found here.