[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]



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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