Interlocking Officer and Director Reporting 101: Practice Pointers on FERC Form … ·...

©2010 Sutherland Asbill & Brennan LLP

Energy Bar AssociationYoung Lawyers Committee 101 Lunchtime Presentation

March 10, 2010

Presented by:Daniel E. FrankSutherland

Interlocking Officer and Director Reporting 101:

Practice Pointers on FERC Form 561


First Things First – Who Cares?

Officers and directors of “public utilities”

Part of the company’s culture of compliance

Statutory obligations

2


Overview of Interlocking Director Regulations

Two sets of requirements:Initial approval of interlocks – FPA Section 305(b) prohibits, absent prior FERC approval, an individual from holding an officer or director position in one public utility and an officer or director position in certain other companies

See 16 U.S.C. § 825d(b); 18 C.F.R. Part 45

Annual filing – FPA Section 305(c) requires an annual filing of positions held by an officer or director of a public utility in certain other companies

See 16 U.S.C. § 825d(c); 18 C.F.R. Part 46

3


Prior-Approval Requirement(Part 45)

Absent prior FERC approval, an individual is prohibited from holding an officer or director position in one public utility and an officer or director position in:

Another public utility (including an affiliated public utility);

A bank or other firm authorized by law to underwrite or participate in the marketing of public utility securities (some exceptions apply); or

A company that supplies electrical equipment to the public utility

See 18 C.F.R. § 45.2(b) (2009)

4

©2010 Sutherland Asbill & Brennan LLP5

Positions Covered by Part 45

Positions covered include:Chief Executive Officer

President

Vice President

Secretary

Treasurer

Controller

General Manager

Chief Purchasing Agent

Other executive positions with similar duties and functions (including directors and partners)

See 18 C.F.R. § 45.2(a) (2009)


Automatic Authorizations

No waivers allowed; “abbreviated filing” process eliminated

But, certain authorizations granted upon filing of an Informational Report, including for interlocking officer and director positions between two public utilities if:

The same holding company appoints or elects the officers and directors of the two public utilities,

One public utility is owned by the other and its primary business is to own or operate transmission or generating facilities to provide transmission service or electric for sale to its owners, or

If the officer or director is already authorized to hold different positions in the two public utilities where the two public utilities are affiliates

See 18 C.F.R. § 45.9(a) (2009)


Changes and Revocation

A “material or substantial change” in an interlocking position, such as resignation, withdrawal or failure to be reelected or reappointed to the interlocking position, must be reported to FERC within 30 days of the change

See 18 C.F.R. § 45.5(b) (2009)

Authorization to hold interlocking positions is subject to revocation after due notice to the applicant and opportunity forhearing

See 18 C.F.R. § 45.3 (b) (2009)


Annual Reporting Requirement(Part 46)

Form 561 – Annual Report of Interlocking Positions

Any person who is an officer or director of a public utility must annually identify to FERC any officer or director positions heldby the person in certain other specified types of companies during all or part of the preceding calendar year

See 18 C.F.R. § 46.4

Filing deadline: April 30See 18 C.F.R. § 46.6(d)(1)


Scope of Entities Covered byPart 46

Positions requiring disclosure include those in:Another public utility, including traditional utility, power marketer, independent generator, etc.Insurance companyMutual savings bankSavings and loan associationInvestment bank, bank holding company, or foreign bank or subsidiary thereof doing business in the U.S.Any firm or organization primarily engaged in the business of providing financial services or credit


Scope of Entities Covered byPart 46 (cont.)

Positions requiring disclosure include those in:Any entity authorized by law to underwrite or participate in the marketing of securities of a public utilityAny entity which produces or supplies electrical equipment for the use of any public utilityAny entity which produces or supplies coal, natural gas, oil, nuclear fuel or other fuel for the use of any public utilityAn entity that was one of the 20 largest purchasers of electricity from the public utility in the last 3 yearsAny entity controlled by any of the foregoing entities

See 18 C.F.R. § 46.5 (2009)


Scope of Positions Covered byPart 46

Positions covered include:DirectorChief Executive OfficerPresidentVice PresidentSecretaryTreasurerGeneral ManagerComptroller


Scope of Positions Covered byPart 46 (cont.)

Positions covered include:Chief Purchasing AgentPartnerRepresentative authorized to transact business on behalf of the company (other than lawyers and accountants)Advisor on policy or management decisions of the companyAny person performing similar executive duties or functions

See 18 C.F.R. § 46.4 (2009)


Form 561 – Required Information

The following information must be included on each Form 561:

The person’s full name and business address;

The full legal name of the companies in which reportable interlocking positions were held in the prior calendar year;

The reportable interlocking positions (FERC provides “drop down”menus);

The nature of the company (FERC provides a list of abbreviations to be used); and

Signature of the person on whose behalf it is being filed


Form 561 – Other Requirements

The following information also is required (if applicable):Total revenues (for electrical equipment suppliers); and

Interlocking Director (“ID”) docket number and authorization date


FERC Form 561


Do’s and Don’t’s of Form 561

Do:Name each electronic Form 561 file using the naming convention:

Lastname Firstname Middleinitial 2009.xls

Complete a separate form for each individual

Use the current Form 561 (FERC will reject prior versions)

Don’t:File an Adobe PDF

Embed the Excel file with other files

“Stack” files or create multiple tabs within one file


Filing FERC Form 561

There are 4 parts to an official filing: Cover letter (list the name of each officer and director for whom the company is filing)

The interlocking director (ID) docket number for each person, ifapplicable

Contact information of a company contact person

Completed Form 561 for each officer and director listed in the cover letter

The filing may be made electronically at:

http://www.ferc.gov/docs-filing/efiling.asp


FERC’s Annual Notice

FERC’s practice is to send an annual “reminder” to entities that have filed FERC Form 561s the prior year

FERC generally includes an instructional letter, a copy of the current Form 561, and a file of the entity’s Form 561 filings made the preceding year

Entities should not rely on the filing made the preceding year


Top Ten Tips for Form 561

1. Start early. It always takes more time than you think.

2. The filing obligation is on the individual. Be sure the officers and directors know that – it can facilitate cooperation, and it will help focus your collection and review of the necessary data.

3. The scope of entities covered by the Part 46 rules is broader than the scope of entities covered by Part 45. Just because someone did not require approval under Part 45 does not mean that he or she is in the clear.

4. Non-ERCOT QFs selling power at wholesale are “public utilities.”Part 46 is issued under FPA Section 305(c), from which QFs are not exempt.

5. Affiliates are separate legal entities and should be reported as such on the Form 561.


Top Ten Tips for Form 561 (cont.)

6. A Form 561 should still be filed for individuals who are no longer with the company if they held their position at any point during the relevant year.

7. Look behind the “titles.” Ask who is performing what functions.

8. When collecting position data, be overbroad – ask for everything. The lawyers or compliance professionals should decide whether a position should be reported.

9. The “million dollars a day” civil penalty provision does not apply to Part 46 violations, but that does not excuse errors, omissions and other problems. The policies outlined in FERC’s Policy Statements on Compliance and Enforcement still apply.

10.In grey areas, use a “rule of reason,” be consistent, and document your decision and the basis for it. You can always call FERC Staff to ask for assistance, but be prepared to live with the advice or guidance that you receive.


For More Information

FERC’s website: Form 561 – Frequently Asked Questions http://www.ferc.gov/docs-filing/forms/form-561/faq.asp


Questions?

Dan Frank [email protected]

Interlocking Officer and Director Reporting 101:

Practice Pointers on FERC Form 561

Date post:	07-Jul-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

Interlocking Officer and Director Reporting 101: Practice Pointers on FERC Form … ·...

Documents