On September 28, 2018, President Donald Trump signed into law Public Law No: 115-247, amending Federal Power Act (“FPA”) section 203 to add a $10 million threshold for public utility mergers and acquisitions requiring FERC approval. The new law will also require FERC to (i) issue a rule to require any public utility to notify FERC, after 30 days of the close of the transaction, if the value of the merger is more than $1 million but less than $10 million and (ii) submit a report to Congress assessing the impacts of the new law. The amendments to FPA section 203 will become effective on March 27, 2019.
FPA Section 203 currently requires public utilities to seek FERC approval before engaging in a wide range of corporate transactions. For certain types of transactions, Congress established a minimum threshold of $10 million for requiring FERC approval under FPA section 203(a)(1). FERC previously determined, however, that based on the plain language of section 203(a)(1)(B), there is no minimum threshold for mergers and consolidations. As such, FERC authorization was required for merger or consolidation transactions of nominal value, even as small as only $1.
Under amended Section 203, the $10 million threshold will apply to mergers and consolidations. Specifically, FERC authorization will be required for any public utility seeking to “merge or consolidate, directly or indirectly, its facilities…[with] a value in excess of $10,000,000.” In addition, the law requires FERC to promulgate a rule requiring public utilities to notify FERC of the close of a transaction that is valued at more than $1 million but less than $10 million. Transactions valued at less than $1 million will not require authorization or notice. Finally, the law anticipates that FERC will submit a report to Congress within two years of the effective date, assessing the effects of the amendment.
The text of Public Law No: 115-247 can be found here.