FERC Proposes to Lighten Interlocking Directorate Requirements
On July 19, 2018, FERC issued a Notice of Proposed Rulemaking (NOPR) proposing to lighten some requirements for directors holding multiple Board positions. Pursuant to the Commission’s interlocking directorate requirements, as set forth in Section 305(b) of the Federal Power Act (FPA) and 18 CFR Parts 45 and 46, individuals are prohibited from concurrently holding positions as an officer or director of more than one public utility; or concurrently holding 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; or concurrently holding the positions of officer or director of a public utility and a company supplying electrical equipment to such 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. Previously, the Commission had announced that late-filed interlocking directorate applications would be automatically denied.
In the NOPR, the Commission proposes to make several changes that will ease the compliance burden for individuals holding interlocking positions:
- An individual holding interlocking positions between a public utility and a bank, trust company banking association or firm authorized by law to underwrite or participate in the marketing of public utility securities (“banking entity”) does not need to seek prior Commission approval for such interlocking positions if (1) s/he does not participate in the deliberations or decisions of the public utility in selecting the banking entity that will underwrite or market the public utility’s securities; (2) the banking entity does not engage in underwriting or marketing the securities of the interlocked public utility; (3) the public utility selects underwriters through a competitive process; or (4) the issuance of securities for the interlocked public utility is approved by all applicable federal and state regulatory agencies.
- The Commission will no longer automatically deny late-filed applications, but will consider them on a case-by-case basis. The Commission reminded applicants of their obligation to timely file and noted that the Commission will not look with favor on applicants who disregard their obligations rather than those who make good-faith errors and oversights.
- The Commission will no longer require supplemental applications and notices of change by individuals who assume new or different positions in already authorized companies. Rather, individuals can update their positions in the annual Form 561 filing. The only events triggering a need to file an update will be taking on new positions with different companies, or no longer holding any positions.
- Individuals no longer need to list in their applications any public utilities that do not have officers or directors.
Comments are due on the NOPR by late September 2018, 60 days after publication in the Federal Register.
For questions on this NOPR, or any other energy or FERC-related issue, please contact Ruta Skučas at 202.530.6428 or firstname.lastname@example.org, or Liam Paskvan at 207.791.1306 or email@example.com.