[House Report 114-451]
[From the U.S. Government Publishing Office]


114th Congress   }                                      {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                      {      114-451

======================================================================



 
             AMENDING SECTION 203 OF THE FEDERAL POWER ACT

                                _______
                                

 March 14, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4427]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4427) to amend section 203 of the Federal Power 
Act, having considered the same, report favorably thereon with 
an amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
Statement of General Performance Goals and Objectives............     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     4
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     4
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................     5
Duplication of Federal Programs..................................     5
Disclosure of Directed Rule Makings..............................     5
Advisory Committee Statement.....................................     5
Applicability to Legislative Branch..............................     5
Section-by-Section Analysis of the Legislation...................     5
Changes in Existing Law Made by the Bill, as Reported............     6

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. CLARIFICATION OF FACILITY MERGER AUTHORIZATION.

  Section 203(a)(1)(B) of the Federal Power Act (16 U.S.C. 
824b(a)(1)(B)) is amended by striking ``such facilities or any part 
thereof'' and inserting ``such facilities, or any part thereof, of a 
value in excess of $10,000,000''.

SEC. 2. NOTIFICATION FOR CERTAIN TRANSACTIONS.

  Section 203(a) of the Federal Power Act (16 U.S.C. 824b(a)) is 
amended by adding at the end the following new paragraph:
          ``(7)(A) Not later than 180 days after the date of enactment 
        of this paragraph, the Commission shall promulgate a rule 
        requiring any public utility that is seeking to merge or 
        consolidate, directly or indirectly, its facilities subject to 
        the jurisdiction of the Commission, or any part thereof, with 
        those of any other person, to notify the Commission of such 
        transaction if--
                  ``(i) such facilities, or any part thereof, are of a 
                value in excess of $1,000,000; and
                  ``(ii) such public utility is not required to secure 
                an order of the Commission under paragraph (1)(B).
          ``(B) In establishing any notification requirement under 
        subparagraph (A), the Commission shall, to the maximum extent 
        practicable, minimize the paperwork burden resulting from the 
        collection of information.''.

SEC. 3. EFFECTIVE DATE.

  The amendment made by section 1 shall take effect 180 days after the 
date of enactment of this Act.

                          Purpose and Summary

    H.R. 4427, to amend section 203 of the Federal Power Act 
(FPA), was introduced by Rep. Mike Pompeo (R-KS) on February 2, 
2016. The legislation amends section 203(a)(1)(B) of the FPA to 
expressly include a minimum monetary threshold of $10,000,000 
for mergers and acquisitions of facilities subject to the 
jurisdiction of the Federal Energy Regulatory Commission 
(Commission or FERC), thereby mirroring the existing 
$10,000,000 minimum monetary threshold set forth in the other 
three subsections of FPA section 203(a)(1). The bill also 
requires any public utility seeking to merge or consolidate 
such facilities, pursuant to subsection 203(a)(1)(B) of the 
FPA, to notify the Commission within 30 days after the date on 
which the transaction is consummated if the facilities have a 
value in excess of $1,000,000 and less than $10,000,000.

                  Background and Need for Legislation

    Section 203 of the FPA establishes, in part, requirements 
for the sale, disposition, merger, purchase, and acquisition of 
certain utility assets and facilities.\1\ Pursuant to Section 
203(a)(4) of the FPA, the Commission is required to approve 
proposed transactions that are determined to ``be consistent 
with the public interest,'' which the Commission determines 
through the evaluation of three factors: (1) the effect of a 
proposed transaction on competition; (2) the effect of a 
proposed transaction on rates; and (3) the effect of a proposed 
transaction on regulation.
---------------------------------------------------------------------------
    \1\16 U.S.C. Sec. 824b.
---------------------------------------------------------------------------
    The Energy Policy Act of 2005 (EPAct 2005) amended Section 
203 by dividing the section into separate statutory 
subsections, adding a new subsection granting FERC jurisdiction 
to review sales of certain generating facilities, and 
increasing the minimum monetary threshold from $50,000 to 
$10,000,000 for three of the four statutory sub-sections.\2\ 
This monetary threshold serves as a ``floor'' to ensure that 
public utilities would only be required to file, and FERC to 
review, proposed transactions of a minimum material 
significance.
---------------------------------------------------------------------------
    \2\See EPAct 2005, Sec. 1289. See also Testimony of Max Minzner, 
General Counsel, Office of the General Counsel, Federal Energy 
Regulatory Commission, before the Subcommittee on Energy & Power (Feb. 
2, 2016) (explaining that the pre-EPAct 2005 version of Section 203 
``combined the current statutory mandates of Section 203(a)(1)(A)-(C) 
in a single subsection that included a $50,000 threshold. Under this 
statutory language, FERC had issued regulations imposing a $50,000 de 
minimis exception for all of the provisions.'').
---------------------------------------------------------------------------
    As amended by EPAct 2005, subsection 203(a)(1)(B) 
pertaining to mergers and consolidations of FERC-jurisdictional 
facilities did not include an express minimum monetary 
threshold of $10,000,000 (or any other amount). FERC 
interpreted this statutory change as eliminating the de minimis 
exception for mergers and consolidations. As a result, mergers 
and consolidations of any amount--no matter how de minimis--
require FERC approval.
    H.R. 4427 would amend Section 203 to expressly include a 
minimum monetary threshold of $10,000,000 for acquisitions of 
FERC-jurisdictional facilities, thereby mirroring the existing 
$10,000,000 minimum monetary threshold set forth in the other 
three subsections of FPA Section 203(a)(1). As explained by Max 
Minzer, General Counsel to FERC, ``adding a $10 million de 
minimis threshold to the `merge and consolidate' clause would, 
to some extent, return the statute to the situation that 
existed prior to the 2005 legislation where the same minimum 
threshold applies equally to every subsection of the 
statute.''\3\ In addition, according to FERC, adding a 
$10,000,000 de minimis threshold to Section 203(a)(1)(B) of the 
FPA:
---------------------------------------------------------------------------
    \3\Id. at 4.
---------------------------------------------------------------------------
        could ease the administrative burden on the Commission 
        staff and the regulatory burden on industry without a 
        significant negative effect on the Commission's 
        regulatory responsibilities. Transactions below the 
        proposed threshold are unlikely to impose a significant 
        negative impact on competition or the rates of utility 
        customers.\4\
---------------------------------------------------------------------------
    \4\Id. at 4-5.
---------------------------------------------------------------------------
    The Commission did, however, warn that the legislation, as 
originally introduced, could raise issues with respect to 
serial mergers, i.e., a series of transactions that 
individually are below the limit but exceed the limit in the 
aggregate.\5\ While FERC has other tools to address serial 
mergers and protect consumers and the public interest, FERC 
currently has no formal mechanism for obtaining the information 
necessary to know in a timely fashion whether such activity was 
occurring. The bill was, therefore, amended during full 
committee markup to provide a notice requirement in which 
applicants seeking to merge or consolidate FERC-jurisdictional 
facilities, pursuant to subsection 203(a)(1)(B), must notify 
the Commission within 30 days after the date on which the 
transaction is consummated if the facilities have a value in 
excess of $1,000,000 but less than $10,000,000.
---------------------------------------------------------------------------
    \5\Id. at 5.
---------------------------------------------------------------------------

                                Hearings

    The Subcommittee on Energy and Power held a hearing on H.R. 
4427 on February 2, 2016. The Subcommittee received testimony 
from:
           Ann Miles, Director, Office of Energy 
        Projects, Federal Energy Regulatory Commission;
           Max Minzner, General Counsel, Office of the 
        General Counsel, Federal Energy Regulatory Commission;
           Timothy L. Powell, CEP, Director of Land, 
        GIS and Permits, Williams Company;
           Edward Lloyd, Evan M. Frankel Clinical 
        Professor of Environmental Law, Columbia University 
        School of Law, on behalf of the New Jersey Conservation 
        Foundation and Stonybrook Millstone Watershed 
        Association;
           Bill Bottiggi, General Manager, Braintree 
        Light and Electric Department;
           Bill Marsan, Executive Vice President, 
        General Counsel and Corporate Secretary, American 
        Transmission Company;
           Tyson Slocum, Energy Program Director, 
        Public Citizen, Inc.; and,
           Jeffrey A. Leahey, Esq., Deputy Executive 
        Director, National Hydropower Association.

                        Committee Consideration

    On February 10 and 11, 2016, the Subcommittee on Energy and 
Power met in open markup session and forwarded H.R. 4427 to the 
full Committee, without amendment, by a voice vote. On February 
24 and 25, 2016, the full Committee on Energy and Commerce met 
in open markup session and ordered H.R. 4427 reported to the 
House, as amended, by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 4427 reported. A motion by Mr. Upton to order H.R. 4427 
reported to the House, as amended, was agreed to by a voice 
vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a hearing and made 
findings that are reflected in this report.

         Statement of General Performance Goals and Objectives

    The goal of H.R. 4427 is to amend section 203 of the FPA to 
expressly include a minimum monetary threshold of $10,000,000 
for acquisitions of FERC-jurisdictional facilities, thereby 
mirroring the existing $10,000,000 minimum monetary threshold 
set forth in the other three subsections of FPA section 
203(a)(1).

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
4427, would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 4427 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974. At the 
time this report was filed, the estimate was not available.

                  Congressional Budget Office Estimate

    At the time this report was filed, the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 1974 
was not available.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                    Duplication of Federal Programs

    No provision of H.R. 4427 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting H.R. 4427 
specifically directs to be completed no rule makings within the 
meaning of 5 U.S.C. 551.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Clarification of facility merger authorization

    Section 1 amends section 203(a) of the FPA to expressly 
include a minimum monetary threshold of $10,000,000 for mergers 
and acquisitions of FERC-jurisdictional facilities, thereby 
mirroring the existing $10,000,000 minimum monetary threshold 
set forth in the other three subsections of FPA section 
203(a)(1).

Section 2. Notification of certain transactions

    Section 2 amends section 203(a) to require any public 
utility seeking to merge or consolidate FERC-jurisdictional 
facilities, pursuant to subsection 203(a)(1)(B) of the FPA, to 
notify the Commission within 30 days after the date on which 
the transaction is consummated if the facilities have a value 
in excess of $1,000,000 but less than $10,000,000. In 
establishing such notification requirement the Commission 
shall, to the maximum extent practicable, minimize the 
paperwork burden resulting from the collection of information. 
In meeting this requirement to ``minimize the paperwork 
burden,'' the Committee encourages the Commission to minimize 
the amount of information to be collected, requiring only such 
information as necessary to meet the Commission's obligations 
under this section. The Commission should seek to reduce the 
burden related to completing and submitting the notice, 
including minimizing the length of the notice form and by 
providing an option for the online submission of such notice.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                           FEDERAL POWER ACT




           *       *       *       *       *       *       *
PART II--REGULATION OF ELECTRIC UTILITY COMPANIES ENGAGED IN INTERSTATE 
COMMERCE

           *       *       *       *       *       *       *



     disposition of property; consolidation; purchase of securities

  Sec. 203. (a)(1) No public utility shall, without first 
having secured an order of the Commission authorizing it to do 
so--
                  (A) sell, lease, or otherwise dispose of the 
                whole of its facilities subject to the 
                jurisdiction of the Commission, or any part 
                thereof of a value in excess of $10,000,000;
                  (B) merge or consolidate, directly or 
                indirectly, [such facilities or any part 
                thereof] such facilities, or any part thereof, 
                of a value in excess of $10,000,000 with those 
                of any other person, by any means whatsoever;
                  (C) purchase, acquire, or take any security 
                with a value in excess of $10,000,000 of any 
                other public utility; or
                  (D) purchase, lease, or otherwise acquire an 
                existing generation facility--
                          (i) that has a value in excess of 
                        $10,000,000; and
                          (ii) that is used for interstate 
                        wholesale sales and over which the 
                        Commission has jurisdiction for 
                        ratemaking purposes.
          (2) No holding company in a holding company system 
        that includes a transmitting utility or an electric 
        utility shall purchase, acquire, or take any security 
        with a value in excess of $10,000,000 of, or, by any 
        means whatsoever, directly or indirectly, merge or 
        consolidate with, a transmitting utility, an electric 
        utility company, or a holding company in a holding 
        company system that includes a transmitting utility, or 
        an electric utility company, with a value in excess of 
        $10,000,000 without first having secured an order of 
        the Commission authorizing it to do so.
          (3) Upon receipt of an application for such approval 
        the Commission shall give reasonable notice in writing 
        to the Governor and State commission of each of the 
        States in which the physical property affected, or any 
        part thereof, is situated, and to such other persons as 
        it may deem advisable.
          (4) After notice and opportunity for hearing, the 
        Commission shall approve the proposed disposition, 
        consolidation, acquisition, or change in control, if it 
        finds that the proposed transaction will be consistent 
        with the public interest, and will not result in cross-
        subsidization of a non-utility associate company or the 
        pledge or encumbrance of utility assets for the benefit 
        of an associate company, unless the Commission 
        determines that the cross-subsidization, pledge, or 
        encumbrance will be consistent with the public 
        interest.
          (5) The Commission shall, by rule, adopt procedures 
        for the expeditious consideration of applications for 
        the approval of dispositions, consolidations, or 
        acquisitions, under this section. Such rules shall 
        identify classes of transactions, or specify criteria 
        for transactions, that normally meet the standards 
        established in paragraph (4). The Commission shall 
        provide expedited review for such transactions. The 
        Commission shall grant or deny any other application 
        for approval of a transaction not later than 180 days 
        after the application is filed. If the Commission does 
        not act within 180 days, such application shall be 
        deemed granted unless the Commission finds, based on 
        good cause, that further consideration is required to 
        determine whether the proposed transaction meets the 
        standards of paragraph (4) and issues an order tolling 
        the time for acting on the application for not more 
        than 180 days, at the end of which additional period 
        the Commission shall grant or deny the application.
          (6) For purposes of this subsection, the terms 
        ``associate company'', ``holding company'', and 
        ``holding company system'' have the meaning given those 
        terms in the Public Utility Holding Company Act of 
        2005.
          (7)(A) Not later than 180 days after the date of 
        enactment of this paragraph, the Commission shall 
        promulgate a rule requiring any public utility that is 
        seeking to merge or consolidate, directly or 
        indirectly, its facilities subject to the jurisdiction 
        of the Commission, or any part thereof, with those of 
        any other person, to notify the Commission of such 
        transaction if--
                  (i) such facilities, or any part thereof, are 
                of a value in excess of $1,000,000; and
                  (ii) such public utility is not required to 
                secure an order of the Commission under 
                paragraph (1)(B).
          (B) In establishing any notification requirement 
        under subparagraph (A), the Commission shall, to the 
        maximum extent practicable, minimize the paperwork 
        burden resulting from the collection of information.
  (b) The Commission may grant any application for an order 
under this section in whole or in part and upon such terms and 
conditions as it finds necessary or appropriate to secure the 
maintenance of adequate service and the coordination in the 
public interest of facilities subject to the jurisdiction of 
the Commission. The Commission may from time to time for good 
cause shown make such orders supplemental to any order made 
under this section as it may find necessary or appropriate.

           *       *       *       *       *       *       *


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