On July 18, 2019, FERC issued an order denying in part and granting in part a request for clarification or rehearing of Order No. 856, which revised its regulations relating to interlocking officers and directors. FERC provided additional clarification and explanation, but declined to make any further revisions or to allow rehearing.
Interlocking directorates are directors or officers that serve on more than one board of directors, and FERC has certain notice and reporting requirements for individuals holding interlocking positions involving public utilities. FERC revised its regulations in February 2019 (see February 27, 2019 edition of the WER) to update and clarify the requirements in Parts 45 and 46, in part to comply with statutory changes made by Congress. Specifically, among other things, FERC amended (i) §§ 45.4 and 45.5 of its regulations to state that supplemental applications and notices of change are not required when a person already authorized to hold interlocks identified in § 45.9(a) assumes new or different positions that are still among those identified by § 45.9(a) and (ii) § 45.2 of its regulations to add that an applicant for an interlocking position 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” does not need Commission authorization when certain circumstances are present. El Paso Electric Company (“El Paso”) filed a request for rehearing and clarification in March, focusing on these two revisions. FERC denied rehearing, but granted clarification and provided additional explanation for each of the two areas.
First, El Paso asked whether the changes identified in § 45.9 should apply to any interlock authorized in any section under Part 45, such that supplemental applications and notices of change need not be filed in the case of a person already authorized to hold interlocks with respect to all interlocks authorized under part 45 generally, and is not limited solely to interlocks identified in § 45.9. FERC denied clarification and rehearing on this point, and explained that the changes to interlocks identified in § 45.9 should not apply to the other kinds of interlocks authorized under Part 45. FERC reasoned that holding interlocks between two or more commonly-owned or -controlled public utilities and, for example, holding interlocks for a public utility and an electrical equipment supplier warrant different levels of review from the Commission. Moreover, interlocks that fall under § 45.2 are not between two or more commonly-owned or commonly-controlled public utilities and would not have sufficient reporting absent FERC’s requirement.
Second, El Paso questioned how the revisions apply to individuals with the types of interlocking positions affected by the order. FERC first clarified that individuals that no longer hold an interlock that requires FERC authorization no longer need to adhere to the requirements in Parts 45 and 46. FERC next clarified that individuals currently holding interlocking positions that no longer require FERC authorization must make a notice of change filing under § 45.5 within 45 days from the effective date of the order to inform FERC that they no longer hold an interlock that requires FERC authorization.
A copy of the order is available here.