United States: FERC Order No. 856-A Clarifies Regulations Regarding Interlocking Directorates Of Public Utilities And Certain Other Entities

The Federal Energy Regulatory Commission in Order No. 856-A on July 18, 2019 granted in part and denied in part a request for rehearing of Order No. 856. Order No. 856 eased restrictions on current or potential interlocking officers and directors, where the circumstances would not involve substantial opportunities for conflicts of interest or self-dealing. Order No. 856 and 856-A will be helpful to individuals employed at financial institutions or at public utilities who seek to or currently hold positions across both types of businesses. As described in detail below, the orders' clarifications limited the instances when applicants would be required to obtain Commission approval or file notice of changes, permitted certain temporary appoints, and also eased FERC's prior position regarding late filings.

  1. Order No. 856 clarified that an applicant ( e.g., an interlocking officer or director) no longer has to obtain the Commission's approval to hold interlocking positions between a public utility and entities authorized by law to underwrite or participate in the marketing of public securities where they meet one or more of four conditions:

    • Such person does not participate in public utility's decisions regarding the financing company that is underwriting or marketing that utility's securities, if the subject person is a director, officer, of a bank, trust company, banking association or firm that is under consideration in the deliberation process regarding the financing;
    • The financial institution where the person is an officer does not underwrite or participate in the marketing of securities of the public utility where the person holds the position of officer or director;
    • The public utility where the individual serves or wants to serve as an officer or director selects underwriters by competitive procedures; or
    • The issuance of the securities of the public utility where the person serves or wants to serve as an officer or director has been approved by all Federal and State regulatory agencies having jurisdiction over the issuance.
  2. Order No. 856 changed the Commission's position regarding late filings, so that late filings will not automatically result in an automatic denial, but instead will be considered on a case-by-case basis to accommodate for errors and oversights in the filings. The errors or oversights must be promptly identified and expeditiously rectified in order for any consideration to be made regarding the late application not being automatically denied.
  3. Order No. 856 clarified that an interlock holder is not required to file a notice of change when just changing positions within a holding company. Additional clarifications are as follows:

    • Supplemental applications and notices of change are not necessary when the person already authorized to hold interlocks assumes new positions that are still among those identified under 18 CFR 45.9(a) The notice of change is still required when the person no longer holds any interlocking positions because that constitutes a "material or substantial change."
    • Notices of change do not need to be filed for a person already authorized to hold interlocks identified in 18 CFR 45.9(a) when such person assumes new or different positions that are already identified under 18 CFR 45.9(a) (with certain clarifications detailed below).
    • In the case of interlocking positions that are identified in 18 CFR 45.9(a), a notice of change only needs to be filed when the officer/director resigns or withdraws as an officer or director from ALL previously held interlocking officer and director positions. When they resign from only one positions out of several for which such person has already received authorization, the change only needs to be included on the annual Form No. 561s filing.
    • No new filing is required when an officer or director has a new or different interlocking position within a holding company system compared to what was original reported when filing an information report under 18 CFR 45.9. Instead, they only need to include the new or different interlocking position in the annual Form No. 561s filing.
    • When applicable, a notice of change must be filed within 60 days of the triggering event.
  4. Applicants do not need to list in their applications public utilities that do not have officers or directors. This change does not carry much significance, because the number of public utilities without officers is very small; historically there have been no applications where the public utilities does not have any officer or directors; and under 18 CFR 45.2(a), the obligation to make the appropriate filings extends to any person elect or appointed to perform executive duties or functions similar to those ordinarily performed by presidents, vice presides, directors and others (even if not formally identified as an Officer or Director). As such, this change will not materially affect the Commission's oversight of jurisdictional interlocking positions.
  5. Revised regulations regarding public utilities owned by a natural person. The Commission changed 18 CFR 45.9 to add the word "person" when defining the corporate relationships within the scope of the automatic authorizations addressed in 18 CFR 45.9, because public utilities can be owned by natural people and not just corporations.
  6. Updating definitions (under 18 CFR 46.2(b)) which are obsolete. Such changes reference the now-repealed PUHCA 1935 and changing the name "Rural Electrification Administration" to "Rural Utilities Service".
  7. Temporary Appointments: a person seeking to hold an interlocking position covered by 18 CFR 45.2 that would otherwise require an automatic authorization filing under 18 CFR 45.9 may be appointed to fill for 90 days or less a vacant position without seeking Commission approval or reporting in annual Form No. 561s, if that person has never held any other interlock positions and is not re-appointed for after 90 days. After 90 days, the necessary authorization must be obtained.

Order No. 856-A clarified that :

  1. Change Limited to Interlocks Covered by 18 CFR 45.9(a). As discussed above, Order No. 856 provided that supplemental applications and notices of change are not required where a person is already authorized to hold interlocks under 18 CFR 45.9(a) where such person assumed or holds new positions that are still among those identified by 18 CFR 45.9(a), because the change was already covered in the annual Form No. 561, and the supplemental filings would be duplicative. El Paso requested that the exception for the supplemental filings not be limited to those interlocks under 18 CFR 45.9, but that the revision apply to all interlocks under 18 CFR 45. In Order No. 856-A, the Commission denied El Paso's request because its rationale for making the reporting changes under Order 856 was that any changes in positions among related public utilities are already reported in the annual Form No. 561s, so supplemental filings are unnecessary and duplicative. Pursuant to Order No. 856-A, this same rationale does not apply to any and all interlocks under 18 CFR 45 because such changes may not be covered under Form No. 561s, and thus there remains a requirement that an officer or director that seeks a new or different interlocking positions, or leaves a position, which entities are covered under 18 CFR 45.2 and not subject to automatic authorization of 18 CFR 45.9(a) must file supplemental applications and notices of change so that the Commission can review the proposed new or different positions and grant approval as necessary.
  2. Past Grants of Authorization for Interlocks that No Longer Require Commission Approval. As discussed above, Order 856 provided certain circumstances where an applicant for certain interlocking positions won't be required to obtain authorization from the Commission to hold such positions. In Order No. 856-A, the Commission clarified an additional circumstance in which the Commission's authorization is no longer required. More specifically, if a person holds interlocking positions that once required Commission approval, but such person no longer needs to obtain Commission approval (and thus comply with the requirements under 18 CFR 45 or 18 CFR 46) because of changes to the Federal Power Act, then such person is not required to receive any approval from the Commission. Instead, such person must file a notice of change under 18 CFR 45.5 on or before the date that is 45 days following the Effective Date of Order No. 856-A, which date is 60 days after the publication of Order No. 856-A in the Federal Register, advising that Commission approval is no longer required.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
6 Aug 2019, Seminar, Los Angeles, United States

The semi-annual seminar addressing changes and developments in state and federal wage and hour laws is a unique one-day program and hundreds of California employers, personnel managers, controllers, attorneys, payroll managers, and supervisors attend each year.

24 Sep 2019, Other, Los Angeles, United States

There will be networking prior to the panel from 6:30-7:00 p.m. and more networking with demo pitches from 8:00-8:30 p.m.

25 Sep 2019, Other, Los Angeles, United States

Please join Sheppard Mullin for a reception during Solar Power International 2019

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions