The Federal Energy Regulatory Commission (“FERC” or the “Commission”) recently issued a Notice of Proposed Rulemaking (“NOPR”) proposing to revise the Commission’s regulations to include a $10 million value threshold for prior FERC authorization of mergers or consolidations involving FERC-jurisdictional facilities under Section 203(a)(1)(B) of the Federal Power Act (“FPA”). See Implementation of Amended Section 203(a)(1)(B) of the Federal Power Act, Notice of Proposed Rulemaking, 165 FERC ¶ 61,091 (2018) (“NOPR”). The NOPR further proposes to establish a 30-day post-closing notification requirement for any other transactions involving jurisdictional facilities valued in excess of $1 million. The Commission’s proposed regulatory revisions should benefit market participants by easing the regulatory burden of obtaining prior authorization for lower value transactions.
Congress recently amended FPA Section 203(a)(1)(B) to require public utilities to obtain prior FERC authorization to “merge or consolidate, directly or indirectly,” FERC-jurisdictional facilities “or any part thereof” that, “have a value in excess of $10,000,000, by any means whatsoever.” An Act To Amend Section 203 of the Federal Power Act, Pub. L. No. 115-247, Section 1 (2018). Previously, there was no value threshold for Commission review of “merge or consolidate” transactions under Section 203(a)(1)(B). See 16 U.S.C. § 824b(a)(1)(B) (2012). This left the Commission free to interpret the applicable threshold at as low as zero dollars and review transactions of minimal value that were unlikely to harm the market. In response to the amended FPA, the Commission proposes to require public utilities to seek prior Commission authorization under Section 203 only where they merge or consolidate FERC-jurisdictional facilities that have a value greater than $10 million. See NOPR, 165 FERC ¶ 61,091, at P 3. The Commission is not, however, changing its interpretation of higher-value transactions subject to its jurisdiction under Section 203(a)(1)(B). See NOPR, 165 FERC ¶ 61,091, at P 9.
Congress further amended the FPA to add Section 203(a)(7), which requires FERC to promulgate regulations governing a notification filing for certain lower value transactions. See An Act To Amend Section 203 of the Federal Power Act, Pub. L. No. 115-247, Section 2 (2018). In its NOPR, the Commission proposes to require those public utilities whose transactions are subject to Section 203(a)(7) to file a notification with the Commission no later than 30 days after closing if the value of the jurisdictional facilities in the transaction is greater than $1 million and the public utility is not otherwise required to secure Commission authorization under amended Section 203(a)(1)(B). See NOPR, 165 FERC ¶ 61,091, at P 4. As such, transactions valued greater than $1 million and up to $10 million will be subject to this new notification filings requirement. As compared to the more complete applications previously required for all “merge or consolidate” transactions subject to Section 203(a)(1)(B), the Commission claims that the new notification filings require “only a small fraction of the information contemplated in part 33.” NOPR, 165 FERC ¶ 61,091, at P 6. A notification filing must include: (1) the name and principal business address of the public utility; and (2) a narrative description of the transaction that includes the transaction date, the identity of all parties and jurisdictional facilities involved, the consideration for the transaction, and the effect of the transaction on the ownership and control of the jurisdictional facilities. See NOPR, 165 FERC ¶ 61,091, at P 5. The Commission estimates that approximately 26 Section 203 filings (13% of the approximately 200 Section 203 filings received) will change from full Section 203 filings to the less burdensome notification filing. See NOPR, 165 FERC ¶ 61,091, at P 14, n.8. Although it expects the proposed regulations to reduce the filing burden on affected entities, the Commission specifically seeks comment on whether its burden and costs estimates are correct. See NOPR, 165 FERC ¶ 61,091, at P 12.
The Commission’s proposed regulations should enable it to spend its resources on matters other than the lower value transactions subject to the NOPR. It should also ease the regulatory burden for market participants seeking prior authorization for lower value transactions.
Comments on the NOPR are due on December 31, 2018. See Implementation of Amended Section 203(a)(1)(B) of the Federal Power Act, 83 Fed. Reg. 61,338, 61,339 (Nov. 29, 2018).