[Federal Register Volume 62, Number 118 (Thursday, June 19, 1997)]
[Rules and Regulations]
[Pages 33341-33342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16042]
[[Page 33341]]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 2
[Docket No. RM96-6-001; Order No. 592-A]
Inquiry Concerning the Commission's Merger Policy Under the
Federal Power Act; Order on Reconsideration
Issued June 12, 1997.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Order on reconsideration.
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SUMMARY: The Commission denies reconsideration of its Policy Statement
Establishing Factors the Commission Will Consider in Evaluating Whether
a Proposed Merger is Consistent With the Public Interest. In that
Policy Statement, the Commission said that it will generally allow 60
days for comments on a completed merger application. In response to
commenters who argue that 60 days will not be enough time to prepare
substantial comments on some merger applications, the Commission notes
that the Policy Statement establishes only a general policy, not a
binding rule, and states that it will lengthen the comment period in
specific cases when there is reason to do so.
FOR FURTHER INFORMATION CONTACT: Jan Macpherson, Federal Energy
Regulatory Commission, Office of the General Counsel, 888 First Street,
NE., Washington, DC 20426, (202) 208-0921.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission also provides all
interested persons an opportunity to inspect or copy the contents of
the document during normal business hours in the Public Reference Room
at 888 First Street, NE., Washington, DC 20426.
The Commission Issuance Posting System (CIPS), an electronic
bulletin board service, provides access to the texts of formal
documents issued by the Commission. CIPS is available at no charge to
the user and may be accessed using a personal computer with a modem by
dialing 202-208-1397 if dialing locally or 1-800-856-3920 if dialing
long distance. To access CIPS, set your communications software to
19200, 14400, 12000, 9600, 7200, 4800, 2400 or 1200 bps, full duplex,
no parity, 8 data bits and 1 stop bit. The full text of this order will
be available on CIPS in ASCII and WordPerfect 6.1 format. CIPS user
assistance is available at 202-208-2474.
CIPS is also available on the Internet through the Fed World
system. Telnet software is required. To access CIPS via the Internet,
point your browser to the URL address: http//www.fedworld.gov and
select the ``Go to the FedWorld Telnet Site'' button. When your Telnet
software connects you, log onto the FedWorld system, scroll down and
select FedWorld by typing: 1 and at the command line then typing: /go
FERC. FedWorld may also be accessed by Telnet at the address
fedworld.gov.
Finally, the complete text on diskette in WordPerfect format may be
purchased from the Commission's copy contractor, La Dorn Systems
Corporation. La Dorn Systems Corporation is also located in the Public
Reference Room at 888 First Street, NE., Washington, DC 20426.
Before Commissioners: Elizabeth Anne Moler, Chair; Vicky A.
Bailey, James J. Hoecker, William L. Massey, and Donald F. Santa,
Jr.
Inquiry Concerning the Commission's Merger Policy Under the
Federal Power Act; Order No. 592-A; Order on Reconsideration. Docket
No. RM96-6-001.
Issued June 12, 1997.
Introduction
The Commission recently issued a Policy Statement updating and
clarifying its procedures, criteria, and policies concerning public
utility mergers.1 Among other things, we set forth
procedures that are designed to allow our review of proposed mergers to
proceed as efficiently as possible and avoid unnecessary delays, while
ensuring that mergers are consistent with the public interest. This
order denies reconsideration 2 of our statement that we will
generally allow 60 days for comments on a merger filing. We conclude
that intervenors generally will be able to submit adequate filings
within that period. We will lengthen (or shorten) the comment period on
a case-by-case basis when there is reason to do so.
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\1\ Policy Statement Establishing Factors the Commission Will
Consider in Evaluating Whether a Proposed Merger is Consistent With
the Public Interest, Order No. 592, 61 FR 68595 (Dec. 30, 1996),
FERC Stats. & Regs. para. 31,044 (1996) (Policy Statement).
\2\ Policy statements are not subject to rehearing. See, e.g.,
Alternatives to Traditional Cost-of-Service Ratemaking for Natural
Gas Pipelines, 75 FERC para. 61,026 (1996) (rehearing does not lie
because policy statements are not directly reviewable; rather,
review is available when policy is applied in specific case), citing
American Gas Assoc. v. FERC, 888 F.2d 136, 151-2 (D.C. Cir. 1989)
(policies are not ripe until applied in specific cases). However, we
may, at our discretion, entertain reconsideration.
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Background
In the Policy Statement, we adopted an analytic ``screen'' to aid
in analyzing the effect of a proposed merger on competition. We
explained what information an applicant should submit to allow us to
apply the screen and thus to distinguish between those mergers that
require a more detailed analysis, which may include a trial-type or a
paper hearing, and those that clearly do not raise competitive
concerns. Applicants are expected to make available to the public all
data used in the screen analysis and other related data. If the screen
analysis shows that the merger would not significantly increase market
concentration and there are no interventions raising genuine issues of
material fact that cannot be resolved based on the written record, we
stated that we will not set the issue of the effect of a merger on
competition for hearing.
In the Policy Statement, we found that the analytic screen would
produce a ``reliable, conservative analysis of the competitive effects
of proposed mergers. However, it is not infallible.'' 3
Intervenors may, assuming their claims are substantial and specific,
challenge the data used or the way the applicants conducted the
analysis. They also may argue that the screen does not identify a
particular market problem. Moreover, we noted that intervenors may wish
to submit an alternative competitive analysis, accompanied by
appropriate supporting data. Recognizing that ``the need for more rigor
in interventions could require additional efforts by potential
intervenors,'' 4 we stated that we would routinely allow 60
days for comments on merger filings.5
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\3\ 61 FR at 68600, mimeo at 25.
\4\ 61 FR At 68600, mimeo at 26.
\5\ 61 FR At 68600, mimeo at 26.
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Arguments on Reconsideration
The Transmission Access Policy Study Group and the American Public
Power Association (TAPS/APPA) filed a request for reconsideration
6 in which they argue that 60 days may not be enough time to
produce the kind of substantial interventions the Commission is
expecting. They argue that if the Commission intends to rely on
interventions as the ``primary substantive basis (other than the self-
serving data provided by the applicants)'' for the Commission's
decision, 60 days is not enough time. When applicants submit data to
support their screen analysis, they naturally will
[[Page 33342]]
select data that shows the merger in the best possible light, and will
not reveal unfavorable data.
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\6\ Filed January 17, 1997. The filing is styled as a request
for rehearing, clarification, or reconsideration.
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TAPS/APPA also criticize the data we suggested applicants submit to
support their screen analyses.7 They argue that applicants
themselves would never assess a potential merger based only on these
data. For example:
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\7\ Policy Statement, mimeo at Appendix B.
[t]he complete heat rates of various units * * * which change by the
point of the output of the unit on the load curve, are not data
which are available on EIA Form 860, and the historical fuel costs
shown in FERC Form 423 are not likely to be the projected fuel costs
which would be used by any executive determining whether to commit
his or her company to a merger.8
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\8\ TAPS/APPA reconsideration at 8 (footnote omitted).
Unless the Commission decides in its planned rulemaking 9 to
require submission of all the data the company actually considered when
making the real-life decision on the merger, the screen analysis may be
misleading, according to TAPS/APPA.
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\9\ We noted in the Policy Statement that we will be issuing a
Notice of Proposed Rulemaking to set forth more specific filing
requirements and additional procedures. 61 FR at 68596, n.3.
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TAPS/APPA compare this Commission's decision-making under section
203 of the Federal Power Act to that of agencies acting under the Hart-
Scott-Rodino Act.10 They claim that the Commission will not
be collecting a large part of the information that these agencies
examine. For instance, the agencies require submission of all
information the applicants considered when deciding whether to
undertake the merger. Moreover, they can make a ``second request'' for
even more information. TAPS/APPA argue that the Commission should
require similar information. Specific information they say should be
required includes, for example, transmission studies applicants have
done that show various potential solutions to transmission constraints;
different ways the applicants considered calculating available and
total transmission capacity; information on vertical market power; and
information on power alternatives that may not be truly available in
the critical area because the power can be sold at a higher price
elsewhere.
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\10\ Hart-Scott-Rodino Antitrust Improvement Act of 1976, 15
U.S.C. 18a (1994).
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TAPS/APPA are particularly concerned that the 60-day period for
interventions will not be adequate if intervenors will be expected to
make a full-fledged case based on the limited information available.
They point out that the applicant will have had much more time than 60
days to prepare the filing and argue that it is unfair to expect a
complete, detailed response in 60 days. Finally, they suggest that the
Commission allow the clock to be stopped while discovery goes forward
and that intervenors be required to present their case 60 days after
all necessary information is submitted.11
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\11\ TAPS/APPA argue that the Commission should make it
mandatory for merger applicants who want expedited treatment to
serve potential intervenors with copies of the application by
overnight delivery and electronic versions as well. Potential
intervenors could be identified by having the applicants file a
notice of intent to file even before they file the application
itself; this would allow potential intervenors to identify
themselves.
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Discussion
At this time, we continue to believe that 60 days will generally be
enough time for adequate interventions. Intervenors are free to argue
that more time is needed in a particular case, and if we think more
time is needed, we will extend the comment/intervention
period.12 Moreover, the Policy Statement sets forth
suggested data only; we are free to request additional data in a
particular case, and have done so since the Policy Statement was
issued.13 In our upcoming rulemaking proceeding, we will
consider arguments as to what information should be required for
mergers, as well as arguments as to filing deadlines and other
procedural matters, since it is in that proceeding that we will propose
a binding rule.14
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\12\ We have stated our intention to shorten the comment period
in certain types of cases that raise minimal concerns, Enova
Corporation and Pacific Enterprises, 79 FERC para. 61,107 (1997),
and will be willing to lengthen the comment period as well when a
longer period is needed. See Pricing Policy for New and Existing
Facilities Constructed by Interstate Natural Gas Pipelines, Order
Denying Rehearing, 75 FERC para. 61,105 at 61,344 (1996) (issues
raised in requests for ``rehearing'' of Policy Statement are case-
specific in nature and should be addressed in individual cases).
\13\ Letter order of April 3, 1997 from Debbie Clark, Chief
Accountant, Federal Energy Regulatory Commission to Ohio Edison
Company, et al. in Docket No. EC97-5-000.
\14\ TAPS/APPA may raise in the rulemaking proceeding their
arguments that it should be mandatory for applicants who want
expedited treatment to make special service to potential
intervenors.
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TAPS/APPA also ask that in light of the dynamic nature of today's
industry, the Commission make it clear that we will not ignore factual
changes that occur while an application is pending. We do not intend to
ignore significant factual changes.
The Commission orders: The motion for reconsideration or
clarification is hereby denied in part and granted in part as set forth
in the body of this order.
By the Commission.
Lois D. Cashell,
Secretary.
[FR Doc. 97-16042 Filed 6-18-97; 8:45 am]
BILLING CODE 6717-01-P
