News
July-September 2005
News Release: September 15, 2005 | ![]() |
Docket Number: Docket No. RM05-6-000 |
Commission finalizes interlocking directorate rules, emphasizes
that prior authorization is required
The Federal Energy Regulatory Commission today adopted final rules
on interlocking corporate directorates. The rules are designed
to protect both public and private interests. The Commission's
rules emphasize the need for corporate board members to receive
prior authorization before entering into interlocking directorates
and provide greater specificity regarding the Commission's regulatory
requirements.
"For some, meeting the Federal Power Act's provisions addressing
interlocking corporate directorates has been a casual afterthought.
With today's final rule, there should be no question that the
Commission takes compliance with section 305 of the Federal Power
Act seriously," said Commission Chairman Joseph T. Kelliher.
In order to protect the interests of the nation's electric power
customers and prevent any abuse of corporate positions, the Federal
Power Act generally prohibits individuals from being an officer
or director of more than one public utility, or from holding such
a position with a public utility and a company that may underwrite
or market public utility securities without prior commission authorization.
In addition, an individual may not be an officer or director of
a public utility and a company that supplies electrical equipment
to that utility without prior Commission authorization.
In March 2005, the Commission proposed amending its regulations
proposing that prior authorization must be obtained from FERC
before an individual may assume an interlocking position and that
any late-filed applications would be denied.
Today's rule provides greater clarity and brings Commission regulations
more in line with the Federal Power Act's intent. Dismissing requests
that the Commission provide an amnesty period for late-filed applications,
the Commission said that it will automatically deny all late-filed
applications for interlocking directorate authorization, noting
that the Commission has long emphasized that filings be made on
a timely basis.
The Commission clarified that "holding", as defined in the Commission's
statutes, means acting as, serving as, voting as, or otherwise
performing or assuming the duties and responsibilities of the
interlocking position.
The final rule also imposes a requirement on the Commission. After
taking into consideration commenters' concerns, the Commission
will require that it take action within 60 days on a completed
application or the application is deemed granted. That will ensure
timely action by the Commission on interlocking directorate applications.
The final rule, Commission Authorization to Hold Interlocking
Positions, is effective 30 days after the order's publication
in the Federal Register.
Copies of the Final Rule may be found in eLibrary on the Commission's
website, www.ferc.gov.
R-05-57
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