[Federal Register Volume 85, Number 45 (Friday, March 6, 2020)]
[Rules and Regulations]
[Pages 13012-13024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03927]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM16-17-001; Order No. 860-A]


Data Collection for Analytics and Surveillance and Market-Based 
Rate Purposes

AGENCY: Federal Energy Regulatory Commission.

ACTION: Order on rehearing and clarification.

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SUMMARY: The Federal Energy Regulatory Commission addresses requests 
for rehearing and clarification and affirms its determinations in Order 
No. 860, which amends its regulations governing market-based rates for 
public utilities.

DATES: The order on rehearing and clarification is effective October 1, 
2020.

FOR FURTHER INFORMATION CONTACT:
    Regine Baus (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street NE, Washington, 
DC 20426, (202) 502-8757, Regine.Baus@ferc.gov.
    Byron Corum (Technical Information), Office of Energy Market 
Regulation, Federal Energy Regulatory Commission, 888 First Street NE, 
Washington, DC 20426, (202) 502-6555, Byron.Corum@ferc.gov.

SUPPLEMENTARY INFORMATION:

I. Introduction

    1. On July 18, 2019, the Commission issued Order No. 860,\1\ which 
revised certain aspects of the substance and format of information 
submitted for market-based rate purposes by Sellers.\2\ Specifically, 
the Commission adopted the approach to data collection proposed in the 
notice of proposed rulemaking issued in July 2016, i.e., to collect 
market-based rate information in a relational database.\3\ However, the 
Commission declined to adopt the proposal to require Sellers and 
entities, other than those described in FPA section 201(f),\4\ that 
trade virtual products \5\ or that hold financial transmission rights 
(FTR) \6\ (Virtual/FTR Participants) to report certain information 
about their legal and financial connections to other entities 
(Connected Entity Information). In this order, we address requests for 
rehearing and clarification of Order No. 860.\7\
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    \1\ Data Collection for Analytics & Surveillance and Market-
Based Rate Purposes, Order No. 860, 84 FR 36390 (July 26, 2019), 168 
FERC ] 61,039 (2019).
    \2\ A Seller is defined as any person that has authorization to 
or seeks authorization to engage in sales for resale of electric 
energy, capacity or ancillary services at market-based rates under 
section 205 of the Federal Power Act (FPA). 18 CFR 35.36(a)(1); 16 
U.S.C. 824d.
    \3\ Data Collection for Analytics & Surveillance and Market-
Based Rate Purposes, Notice of Proposed Rulemaking, 81 FR 51726 
(Aug. 4, 2106), 156 FERC ] 61,045 (2016) (NOPR).
    \4\ 16 U.S.C. 824(f).
    \5\ Virtual trading involves sales or purchases in the day-ahead 
market of a Regional Transmission Organization (RTO) or Independent 
System Operator (ISO) that do not go to physical delivery. By making 
virtual energy sales or purchases in the day-ahead market and 
settling these positions in the real-time market, any market 
participant can arbitrage price differences between the two markets. 
See Market-Based Rates for Wholesale Sales of Elec. Energy, Capacity 
& Ancillary Servs. by Pub. Utils., Order No. 697, 119 FERC ] 61,295, 
at P 921 n.1047, clarified, 121 FERC ] 61,260 (2007), order on 
reh'g, Order No. 697-A, 123 FERC ] 61,055, clarified, 124 FERC ] 
61,055, order on reh'g, Order No. 697-B, 125 FERC ] 61,326 (2008), 
order on reh'g, Order No. 697-C, 127 FERC ] 61,284 (2009), order on 
reh'g, Order No. 697-D, 130 FERC ] 61,206 (2010), aff'd sub nom. 
Mont. Consumer Counsel v. FERC, 659 F.3d 910 (9th Cir. 2011).
    \6\ The term ``FTR,'' as used in the NOPR and Order No. 860, was 
intended to cover not only Financial Transmission Rights, a term 
used by PJM Interconnection, L.L.C. (PJM), ISO New England Inc., and 
Midcontinent Independent System Operator, Inc., but also 
Transmission Congestion Contracts in New York Independent System 
Operator, Inc., Transmission Congestion Rights in Southwest Power 
Pool, Inc., and Congestion Revenue Rights in California Independent 
System Operator Corp. Order No. 860, 168 FERC ] 61,039 at P 2 n.6.
    \7\ Order No. 860 will become effective October 1, 2020.
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    2. Six requests for rehearing and/or clarification were filed.\8\ 
The requests for rehearing and clarification concern the following 
subjects: (1) Ownership information, including ultimate upstream 
affiliates; \9\ (2) passive owners; (3) Connected Entity proposal; (4) 
implementation and components of the Data Dictionary; (5) public 
access; and (6) due diligence requirements.
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    \8\ The requests for rehearing and/or clarification were filed 
by the following entities: (1) Edison Electric Institute (EEI); (2) 
Fund Management Parties (FMP), which includes Ares EIF Management, 
LLC, for itself and its public utility affiliates, Monolith Energy 
Trading LLC, as the sole owner of Solios Power LLC, for itself and 
its public utility affiliates and affiliates the engage in trading 
of virtual and/or financial transmission products, Southwest 
Generation Operating Company, for itself and its public utility 
affiliates, and Star West Generation LLF, for itself and its public 
utility affiliates; (3) Office of the People's Counsel for the 
District of Columbia, Delaware Division of the Public Advocate, 
Citizens Utility Board of Illinois, and West Virginia Consumer 
Advocate Division (collectively, Joint Advocates); (4) NRG Energy, 
Inc. and Vistra Energy Corp. (together, NRG/Vistra); (5) Starwood 
Energy Group Global, L.L.C. (Starwood); and (6) Transmission Access 
Policy Study Group (TAPS).
    \9\ ``Ultimate upstream affiliate'' is defined in the final rule 
as ``the furthest upstream affiliate(s) in the ownership chain--
i.e., each of the upstream affiliate(s) of a Seller, who itself does 
not have 10 percent or more of its outstanding voting securities 
owned, held or controlled, with power to vote, by any person 
(including an individual or company).'' Order No. 860, 168 FERC ] 
61,039 at P 5 n.10.
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    3. We deny the requests for rehearing, and grant in part and deny 
in part the requests for clarification, as discussed below.

II. Discussion

A. Substantive Changes to Market-Based Rate Requirements

1. Ownership Information
a. Final Rule
    4. In Order No. 860, the Commission adopted the proposal to require 
that, as part of their market-based rate applications or baselines 
submissions, Sellers must identify through the relational database 
their ultimate upstream affiliate(s). The Commission explained that, 
because this is a characteristic the Commission will rely upon in 
granting market-based rate authority, Sellers must also inform the 
Commission when they have a new ultimate upstream affiliate as part of 
their change in status reporting obligations. In addition, the 
Commission required that any new ultimate upstream affiliate 
information must also be submitted into the relational database on a 
monthly basis.\10\
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    \10\ Order No. 860, 168 FERC ] 61,039 at P 121.
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b. Request for Clarification
    5. NRG/Vistra seeks clarification solely with respect to 
implementation issues relating to identifying and reporting a Seller's 
ultimate upstream affiliate(s) where holdings of publicly traded voting 
securities are involved.\11\ NRG/Vistra first argues that an investor 
should not be considered a Seller's ultimate upstream affiliate based 
solely on holdings of publicly traded securities. According to NRG/
Vistra, where publicly traded securities are involved, applying the 
ultimate upstream affiliate definition will yield false positives and 
fail to recognize the control exercised by the publicly traded entity. 
In this regard, NRG/Vistra asserts that the Commission has granted 
financial institutions blanket

[[Page 13013]]

authorizations under FPA section 203(a)(2) to acquire 10 percent or 
more of the voting securities of public utilities based on its 
understanding that these institutions are acquiring such interests ``in 
the ordinary course of business and as a passive investor (i.e., not to 
gain control of the [public u]tilities),'' and that their holdings of 
such securities will ``not convey control of day-to-day operations of 
jurisdictional facilities.'' \12\
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    \11\ NRG/Vistra Request at 4.
    \12\ Id. at 4-5 (quoting Morgan Stanley, 121 FERC ] 61,060, at P 
9 (2007), order on clarification, 122 FERC ] 61,094 (2008)).
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    6. As an example, NRG/Vistra states that the Vanguard Group, Inc. 
(Vanguard) has reported that it, together with certain related 
entities, owns more than 10 percent of the shares of NRG's common 
stock. NRG/Vistra maintains that, although these shares are voting 
securities, there is no reason to regard Vanguard as ``controlling'' 
NRG or its Seller subsidiaries in any respect relevant to the 
Commission's analysis and monitoring of Sellers as Vanguard has 
reported its holdings of NRG's common stock to the Securities and 
Exchange Commission (SEC) through Schedule 13G filings. NRG/Vistra 
explains that the Commission has recognized that, in order to file a 
Schedule 13G, an investor must certify that the securities were not 
acquired for the purpose, or with the effect, of changing or 
influencing control over the issuer. NRG/Vistra also states that 
Vanguard has obtained a blanket section 203(a)(2) authorization similar 
to the other section 203(a)(2) blanket authorizations in recognition 
that it is acquiring the shares of entities like NRG on behalf of 
investors in its managed funds exclusively for investment purposes, not 
for the purpose of managing, controlling, or entering into business 
transactions with portfolio companies. NRG/Vistra argues that, if NRG's 
Seller subsidiaries were to identify Vanguard as their ultimate 
upstream affiliate, it would inaccurately suggest that they are under 
common control with other Sellers in which Vanguard and its affiliates 
might also own 10 percent voting interests. NRG/Vistra adds that NRG 
itself would not appear in the relational database in this case.\13\
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    \13\ Id. at 5-6.
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    7. Accordingly, NRG/Vistra requests that the Commission clarify 
that an investor (or investor group) will not be considered a Seller's 
ultimate upstream affiliate based solely on holdings of publicly traded 
securities. NRG/Vistra explains, in other words, where the voting 
securities of a Seller's upstream owner are publicly traded, the 
exercise of tracing upstream ownership will stop at the publicly traded 
entity unless the facts and circumstances suggest that a holder of 10 
percent or more of the publicly traded voting securities has an intent 
and ability to exercise control over the publicly traded entity and its 
subsidiaries. NRG/Vistra posits that the Commission could find that, 
unless the publicly traded entity states otherwise, the Commission will 
presume that any holder of 10 percent or more of the entity's 
securities does not have an intent and ability to exercise control over 
the publicly traded entity and its subsidiaries. NRG/Vistra adds that, 
if such facts and circumstances change, the publicly traded company 
could commit to notify the Commission within 30 days upon notice of 
that change. NRG/Vistra contends that, at minimum, investors that have 
made Schedule 13G filings with the SEC or that have obtained blanket 
FPA section 203 authorizations should not be considered ultimate 
upstream affiliates because such investors have affirmatively 
represented that they do not hold the securities for control 
purposes.\14\
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    \14\ Id. at 6-7.
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    8. However, if the Commission does not grant this clarification, 
NRG/Vistra requests that, where there is a change resulting from 
trading publicly traded securities, the change be deemed to occur when 
the Seller had actual or constructive notice of the change. NRG/Vistra 
argues that the Commission has acknowledged the difficulty of tracking 
secondary market transactions and that, as a general matter, publicly 
traded companies rely on after-the-fact investor filings with the SEC, 
including (but not limited to) Schedule 13D and 13G filings, for 
information about when a given investor or investor group has acquired 
significant holdings of their shares.\15\ NRG/Vistra maintains that, 
where Schedule 13D and 13G filings are made, the Seller will receive 
actual or constructive notice that an investor has acquired 10 percent 
or more of its publicly traded parent company's shares within 10 days 
after the end of the month of the underlying trades. NRG/Vistra posits 
that, by granting its request, Sellers will have a more reasonable 
amount of time to make its submission to update the database, which 
would lessen the burden on Sellers and reduce the chance of inaccurate 
submissions that would later have to be corrected.\16\
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    \15\ Id. at 7-8 (quoting FPA Section 203 Supplemental Policy 
Statement, 120 FERC ] 61,060, at P 36 (2007), on clarification and 
reconsideration, 122 FERC ] 61,157 (2008)).
    \16\ Id. at 8-9.
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c. Commission Determination
    9. We deny NRG/Vistra's request that the Commission clarify that an 
investor will not be considered a Seller's ultimate upstream affiliate 
based solely on holdings of publicly traded securities. This 
determination is consistent with current Commission requirements, i.e., 
that Sellers must identify all upstream owners.\17\ When the final rule 
takes effect, this determination will also be consistent with the 
requirement to report all ultimate upstream affiliates.\18\
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    \17\ Order No. 697-A, 123 FERC ] 61,055 at P 181 n.258.
    \18\ When Order No. 860 becomes effective, Sellers generally 
will only need to identify a subset of their upstream affiliates, 
the ultimate upstream affiliate(s). Order No. 860, 168 FERC ] 61,039 
at P 5 n.10.
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    10. More importantly, however, this determination is consistent 
with the affiliate definition in Sec.  35.36(a)(9).\19\ Among other 
things, the affiliate definition provides that an affiliate of a 
specified company means ``any person that directly or indirectly owns, 
controls, or holds with power to vote, ten percent or more of the 
outstanding voting securities of the specified company.'' \20\ The 
Commission established in the final rule that the definition of 
ultimate upstream affiliate ``means the furthest upstream affiliate(s) 
in the ownership chain'' including ``any entity described in Sec.  
35.36(a)(9)(i).'' \21\ There is no exemption under either of these 
definitions for entities that hold publicly traded securities. Rather, 
to exempt these entities from this definition would require a change to 
the affiliate definition in Sec.  35.36(a)(9)(i) because the 
determining criterion is voting securities. Neither the NOPR nor the 
final rule proposed or considered any change to the substance of the 
affiliate definition. For this reason, we also find NRG/Vistra's 
request to be outside of the scope of this rulemaking as it is not a 
logical outgrowth of the NOPR or final rule.\22\
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    \19\ 18 CFR 35.36(a)(9).
    \20\ 18 CFR 35.36(a)(9)(i).
    \21\ 18 CFR 35.36(a)(10).
    \22\ In determining whether a proposal is a logical outgrowth of 
a NOPR, the issue is whether interested parties ``ex ante, should 
have anticipated that such a requirement might be imposed.'' Small 
Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 549 (D.C. 
Cir. 1983).
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    11. In addition, once the relational database is implemented, 
consistent and complete information on ultimate upstream affiliates 
will be crucial for database integrity and accuracy, given

[[Page 13014]]

that the information in the database may affect a multitude of filers. 
Therefore, to ensure the relational database functions as intended, it 
would not be appropriate for the Commission to sever the chain of 
affiliation with respect to holders of publicly traded securities and 
preemptively find that they are not ultimate upstream affiliates. NRG/
Vistra alternatively requests that the Commission stop tracing upstream 
ownership at publicly traded entities unless the facts and 
circumstances indicate that a holder of 10 percent or more of the 
securities has an intent and ability to exercise control over the 
publicly traded entity. We decline to adopt this subjective approach, 
given that it is critical that ultimate upstream affiliates be 
consistently reported to the database.
    12. We also deny NRG/Vistra's alternative request to allow publicly 
traded Sellers or the Seller subsidiaries of publicly traded companies 
extra time to file updates to the relational database. Although we 
appreciate that tracking trading in a publicly traded ultimate upstream 
affiliate may be difficult, the requirement to identify upstream 
affiliates is not a new requirement. Currently, a Seller owned by a 
publicly traded company, like a Seller with any other type of owner, 
must timely report to the Commission any changes in the conditions the 
Commission relied upon when granting it market-based rate authority, 
which typically include any changes in ownership such as new 
affiliations. These reports must be made within 30 days of the date of 
that change.\23\ When Order No. 860 takes effect, Sellers will continue 
to have at least 15 days to incorporate, in their monthly database 
submissions, any relevant changes to their ultimate upstream 
affiliate(s).\24\ Given that Sellers will still have at least 30 days 
to submit their notice of change in status filings, we do not believe 
that Sellers potentially having as few as 15 days to make their 
database submissions is a significant change from current practice such 
that Sellers with publicly traded ultimate upstream affiliates will 
necessarily require additional time to report changes regarding their 
ultimate upstream affiliates.
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    \23\ 18 CFR 35.42.
    \24\ Because monthly database updates will be due on the 15th of 
the month following the change, updates will be due between 15 and 
45 days after the relevant change occurs (e.g., in April, Sellers 
have 15 days to make the monthly database update if the change 
occurred on March 31, but 45 days if it occurred on March 1).
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    13. In addition, granting this alternative request would affect the 
timing of quarterly notice of change in status filings, as certain 
ownership changes could be reported approximately 75 days after the 
relevant transaction occurs.\25\ This could result in Sellers not 
having the most up-to-date information in their notice of change in 
status filings and triennial filings. Consequently, we deny NRG/
Vistra's alternative request.
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    \25\ That is, if the reportable transaction occurs on March 1, 
the relevant SEC filings that serve as notice to a Seller are made 
by April 10, according to NRG/Vistra, and the monthly database 
updates would be due on May 15.
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2. Passive Owners
a. Final Rule
    14. In Order No. 860, the Commission adopted the proposal to 
require Sellers to make an affirmation, in lieu of a demonstration, in 
their market-based rate narratives concerning their passive owners. The 
Commission explained that such a demonstration is unnecessary, given 
that the Commission does not make a finding of passivity in its orders 
granting market-based rate authority and that removing this 
demonstration will ease the burden on filers.\26\
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    \26\ Order No. 860, 168 FERC ] 61,039 at P 137.
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    15. The Commission also clarified the nature of the proposed 
affirmation regarding passive owners. Specifically, ``[w]ith respect to 
any owners that a Seller represents to be passive, the Seller must 
identify such owner(s), and affirm in its narrative that the ownership 
interests consist solely of passive rights that are necessary to 
protect the passive investors' or owners' investments and do not confer 
control.'' \27\ The Commission also clarified that it will continue to 
require change in status filings when passive interests arise in a 
Seller that has received market-based rate authority, so that the 
Seller can make the necessary affirmations. However, the Commission 
provided that, in this context, a Seller only needs to make a change in 
status filing to report and affirm the status of new passive owners as 
passive and need not submit any additional information into the 
relational database.\28\
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    \27\ Id. P 138 (citing AES Creative Res., L.P., 129 FERC ] 
61,239 (2009) (AES Creative)). The Commission added that it expects 
that this affirmation will be included in the narrative of initial 
market-based rate applications and in any other market-based rate 
filing (e.g., triennial update or change in status notification) in 
which the Seller is making a passive ownership representation. Id. 
n.206.
    \28\ Id. P 139.
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    16. In addition, the Commission clarified that it is not changing 
existing policy regarding the definition of a passive investor and that 
specific clarifications on that policy are beyond the scope of this 
proceeding. The Commission explained that, in most circumstances, a 
determination as to passivity is fact-specific and that, if a Seller is 
uncertain whether an investment is passive, it may file a petition for 
declaratory order.\29\ Indeed, the Commission emphasized that nothing 
in Order No. 860 is intended to overturn the Commission's case-specific 
determinations as to passivity and an entity's reporting obligations 
under previously issued declaratory orders.\30\
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    \29\ Id. P 140. The Commission also declined to extend any safe 
harbor to affirmations made in good faith. Id. n.207.
    \30\ Id. P 140.
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    17. As to obligations regarding the relational database, the 
Commission concluded that passive owners need not be reported in the 
database as ultimate upstream affiliates. The Commission also did not 
require that a Seller report the identity of its passive owners in the 
database. Further, the Commission clarified that, if a Seller can make 
the requisite affirmation regarding passive ownership, it would not 
need to list the assets associated with any such passive owner in its 
asset appendix.\31\ The Commission stated, however, in footnote 209 of 
the final rule that ``Sellers should provide the identity of new 
passive owner(s) in their narratives when making their passive 
affirmation.'' \32\
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    \31\ Id. P 141.
    \32\ Id. n.209 (emphasis added).
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b. Requests for Clarification and/or Rehearing
    18. FMP requests clarification or, in the alternative, rehearing 
with respect to footnote 209 of the final rule. As background, FMP 
explains that many entities subject to the final rule are owned by or 
associated with one or more passive, non-managing owners. FMP states 
that the Commission has recognized the widespread nature of the passive 
ownership of public utilities and notes that the final rule referred to 
several instances where the Commission treatment of non-voting 
ownership interests indicated that they are outside the scope of the 
jurisdiction of the FPA.\33\
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    \33\ FMP Request at 1-2 (citing Starwood Energy Grp. Global, 
L.L.C., 153 FERC ] 61,332, at P 21 (2015) (Starwood); AES Creative, 
129 FERC ] 61,239).
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    19. FMP asserts that footnote 209 is inconsistent with paragraphs 
140 and 141 of the final rule, which state that Commission treatment of 
passive ownership is not being changed and that a passive owner need 
not be identified in the filing materials that are established and 
described in the final rule. FMP contends, however, that

[[Page 13015]]

footnote 209 substantially changes the Commission's existing 
policy.\34\
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    \34\ Id. at 2-3.
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    20. FMP argues next that footnote 209 is inconsistent with 
Commission precedent. FMP contends that nowhere in Starwood, for 
example, does the Commission require the submission of the identities 
of passive owners; FMP asserts that Starwood instead states that public 
utilities submitting market-based rate materials to the Commission ``do 
not need to identify the [passive investors] in any future section 205 
market-based rate application, updated market power analysis, or notice 
of change in status.'' \35\
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    \35\ Id. at 3 (quoting Starwood, 153 FERC ] 61,332 at P 21).
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    21. FMP contends that footnote 209 also substantively contradicts 
other recent, controlling precedent on this issue. FMP asserts that, 
``in Ad Hoc Renewable Energy Financing Group,[\36\] the Commission 
referenced and confirmed without deviation exactly the conclusions 
stated in AES Creative and Starwood with respect to passive ownership . 
. . .'' \37\ However, FMP argues that the final rule does not explain 
footnote 209's departure from this precedent.\38\
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    \36\ 161 FERC ] 61,010 (2017) (Ad Hoc).
    \37\ FMP Request at 3.
    \38\ Id.
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    22. In addition, FMP argues that footnote 209's use of the word 
``new'' in the context of ``new passive owners'' is unclear. FMP 
contends that Starwood expressly addresses the concept of new passive 
investors and applies to future passive investors, as long as the 
investment is actually passive.\39\ Lastly, FMP asserts that the NOPR 
did not give notice that the Commission was considering a substantial 
change to Starwood, AES Creative, and Ad Hoc along the lines of 
footnote 209.\40\
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    \39\ Id. (citing Starwood, 153 FERC ] 61,332 at PP 14, 16-19).
    \40\ Id. at 4.
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    23. If the Commission does not clarify that footnote 209 does not 
apply to a passive investment that is consistent with Starwood, AES 
Creative, or Ad Hoc, FMP requests that the Commission grant rehearing 
of footnote 209 on the grounds that: (1)The legal standard applied in 
footnote 209 is contrary to the facts present in the other provisions 
of the final rule and Commission precedent relied on in the final rule; 
(2) footnote 209 lacks adequate support and does not represent reasoned 
decision-making because it misrepresents the Commission's holdings in 
paragraphs 140 and 141 of the final rule; (3) footnote 209 lacks 
adequate support and does not represent reasoned decision-making 
because the Commission failed to examine the specific Commission orders 
on which the Commission relied on in the final rule and to apply its 
own precedent in a consistent fashion; and (4) footnote 209 departed 
from the Commission's precedent without notice in the NOPR such that 
the departure was arbitrary, capricious, or otherwise unlawful and in 
violation of FMP's rights.\41\
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    \41\ Id. at 4-5.
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    24. Starwood also requests clarification with respect to footnote 
209 of the final rule and incorporates the entirety of FMP's pleading 
as part of its own request. Starwood argues that footnote 209 is 
inconsistent with prior Commission precedent, including Starwood's own 
2015 declaratory order.\42\ Starwood contends that one of the primary 
reasons it sought a declaratory order was to obtain a definitive ruling 
from the Commission that it did not need to disclose the identity of 
its passive owners. Starwood argues that other similarly situated 
private equity funds and fund managers have relied on Starwood since 
that time. Starwood requests that the Commission clarify that nothing 
in the final rule, specifically footnote 209, will change existing 
Commission precedent, which Starwood argues clearly provides that 
parties do not need to disclose the identity of their passive 
owners.\43\
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    \42\ Starwood Request at 1-2 (citing Starwood, 153 FERC ] 
61,332).
    \43\ Id. at 2.
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    25. TAPS requests clarification regarding the affirmation a Seller 
must make if it has passive owners. According to TAPS, the 
classification of owners as active or passive is critical to the 
Commission's analysis of whether to grant market-based rate authority 
to a Seller. TAPS explains that the classification determines 
affiliation, which triggers several market-based rate reporting 
requirements, and that the Commission required in Order No. 816 that 
Sellers need not include in their asset appendices entities or 
facilities if they have claimed and demonstrated that the relationship 
with those entities or facilities is passive.\44\
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    \44\ TAPS Request at 6-7 (citing Refinements to Policies & 
Procedures for Market-Based Rates for Wholesale Sales of Elec. 
Energy, Capacity & Ancillary Servs. by Pub. Utils., Order No. 816, 
153 FERC ] 61,065, at P 284 (2015), order on reh'g and clarification 
Order No. 816-A, 155 FERC ] 61,188 (2016)).
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    26. TAPS explains that, with respect to the relational database, 
distinguishing between passive owners and affiliates takes on greater 
importance. TAPS contends that failing to do so will substantially 
frustrate the Commission's ability to regulate the exercise of market 
power and ensure just and reasonable rates.\45\
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    \45\ Id. at 7-8.
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    27. TAPS contends that the generalized affirmation requirement 
described in Order No. 860 is much less specific than what was proposed 
in the NOPR.\46\ TAPS thus requests that the Commission clarify that, 
for each owner that a Seller identifies as passive, the Seller must 
specifically (1) affirm whether each passive owner owns a separate 
class of non-voting securities, has limited consent rights, does not 
exercise day-to-day control over the company, and cannot remove the 
manager without cause; and (2) provide information sufficient to show 
that the Seller performed the requisite investigation for these 
affirmations.\47\ According to TAPS, this clarification will allow the 
Commission to ensure that Sellers are complying with the Commission's 
existing policy regarding the definition of a passive investor and 
impose little, if any, additional burden on Sellers as they must 
already identify and investigate each of these four attributes of the 
ownership interests to make the affirmation.\48\
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    \46\ Id. at 8 (quoting NOPR, 156 FERC ] 61,045 at P 26 (``[W]e 
also propose . . . that with respect to any owners than [a Seller] 
represents to be passive, the [Seller] affirm in its ownership 
narrative that its passive owner(s) own a separate class of 
securities, have limited consent rights, do not exercise day-to-day 
control over the company, and cannot remove the manager without 
cause.'')).
    \47\ Id. at 8-9.
    \48\ Id. at 10.
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    28. TAPS adds that requiring Sellers to include this basic 
information in their market-based rate filings is consistent with 
existing Commission practice and does not require a determination as to 
passivity. TAPS references the EquiPower Resources Management, LLC 
proceeding, in which Commission staff issued a letter with several 
questions regarding the passive nature of the ownership interests 
involved in the application for market-based rate authorization.\49\ 
TAPS states that the Commission then granted the application by letter 
order without making any determination as to the passive ownership 
interests. TAPS points out that these questions concern the same 
matters as the NOPR's proposed affirmation requirement. TAPS asks that 
the Commission make clear that a ``narrative that the ownership 
interests consist solely of passive rights that are necessary to 
protect the passive investors' or owners'

[[Page 13016]]

investments and do not confer control'' include responses to these 
questions.\50\
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    \49\ EquiPower Res. Mgmt., LLC, Docket No. ER10-1089-000 (June 
16, 2010) (deficiency letter).
    \50\ TAPS Request at 10-12.
---------------------------------------------------------------------------

    29. If the Commission does not grant this clarification, TAPS 
requests rehearing of the Commission's decision to allow Sellers to 
make an affirmation instead of a demonstration regarding passive 
ownership interests.\51\ TAPS asserts that this vague affirmation 
requirement is contrary to the Commission's obligations under the FPA 
and represents an unexplained departure from the Commission's prior 
requirement in Order No. 816 \52\ that Sellers demonstrate passivity. 
According to TAPS, although the Commission stated that a demonstration 
is unnecessary given that the Commission makes no findings as to 
passivity in its orders granting market-based rate authority, the 
Commission did not explain the departure from the requirement in Order 
No. 816 that Sellers demonstrate passivity before excluding certain 
information from asset appendix entries.\53\ TAPS contends that the 
Commission's statement that it is not changing the substantive 
standards governing a determination of passivity, or the timing of such 
a determination, does not justify a change in Sellers' reporting 
obligations.\54\
---------------------------------------------------------------------------

    \51\ Id. at 13 (quoting Order No. 860,168 FERC ] 61,039 at P 
137).
    \52\ See Order No. 816, 153 FERC ] 61,065 at P 284.
    \53\ TAPS Request at 13-14 (citing Order No. 860, 168 FERC ] 
61,039 at P 284). TAPS also points out that the final rule did not 
cite to Order No. 816 at all in its discussion of passive ownership. 
Id. n.9.
    \54\ Id. at 13-14.
---------------------------------------------------------------------------

c. Commission Determination
    30. We deny clarification and rehearing with respect to the 
Commission's directive in footnote 209 of the final rule that ``Sellers 
should provide the identity of new passive owner(s) in their narratives 
when making their passive affirmation.'' \55\ FMP and Starwood argue 
that this directive is inconsistent with provisions in the final rule 
as well as Commission precedent. FMP and Starwood also contend that 
footnote 209 represents a departure from Commission precedent and the 
NOPR did not provide notice of this change. We disagree for the reasons 
discussed below.
---------------------------------------------------------------------------

    \55\ Order No. 860, 168 FERC ] 61,039 at P 141 n.209.
---------------------------------------------------------------------------

    31. FMP and Starwood misread the Commission's discussion of passive 
ownership in the final rule, including the clarification regarding new 
passive owners in footnote 209. The only substantive change the 
Commission made regarding passive interests in the final rule was to 
require Sellers to make an affirmation, in lieu of a demonstration, in 
their market-based rate narratives concerning their passive ownership 
interests.\56\ The Commission concluded that such a demonstration was 
unnecessary because it makes no findings regarding passivity in its 
orders granting market-based rate authority and thus an affirmation 
would reduce the burden on filers.\57\ In addressing a comment in the 
final rule, the Commission noted that ``passive owners need not be 
reported in the database'' \58\ and, in footnote 209, it only clarified 
that Sellers should provide the identities of the owners they are 
claiming to be passive in their transmittal letters. It is not 
inconsistent to say that passive owners need to be identified in the 
narrative but do not need to be reported in the database. Moreover, 
providing the names of such owners is consistent with current 
practice.\59\ The use of ``new'' in footnote 209 means Sellers will 
only need to make the affirmation for, and provide the identify of, 
passive owners whom they have not previously identified to the 
Commission in a market-based rate proceeding.\60\
---------------------------------------------------------------------------

    \56\ Id. P 137.
    \57\ Id.
    \58\ Id. P 141.
    \59\ Order No. 697-A, 123 FERC ] 61,055 at n.258.
    \60\ In other words, this requirement will not apply to those 
Sellers who have made a passive demonstration prior to the effective 
date of the final rule.
---------------------------------------------------------------------------

    32. In addition, we disagree with FMP and Starwood that footnote 
209 is inconsistent with Commission precedent. In the final rule, the 
Commission expressly provided that nothing in the final rule would 
impact, let alone overturn, the Commission's case-specific 
determinations as to passivity and an entity's reporting obligations 
under previously issued declaratory orders.\61\ Consistent with current 
Commission policy, Sellers must continue to disclose new passive owners 
should the Seller acquire them unless those Sellers received case-
specific determinations as to passivity and reporting obligations under 
a declaratory order. Thus, the entities that are the subject of the AES 
Creative, Starwood, and Ad Hoc declaratory orders may continue to rely 
on the determinations as to passivity in those orders as well as the 
associated reporting obligations. However, to the extent that entities 
not subject to those orders have relied on those orders for reporting 
obligations, we clarify that those entities must comply with the 
Commission's current policy described above and, when the final rule 
takes effect, as articulated in the final rule.
---------------------------------------------------------------------------

    \61\ Order No. 860, 168 FERC ] 61,039 at P 140 (``Nothing in 
this [F]inal [R]ule is intended to overturn the Commission's case-
specific determinations as to passivity and an entity's reporting 
obligations under previously issued declaratory orders.'').
---------------------------------------------------------------------------

    33. For these reasons, we also disagree with FMP and Starwood that 
the NOPR provided insufficient notice of a change in filing 
requirements regarding passive ownership. The Commission changed no 
aspect of its policy on passive owners except for reducing a Seller's 
burden from a demonstration to simple affirmation. What FMP and 
Starwood characterize as a change to Commission policy in footnote 209 
is only an explanation regarding existing policy, which will remain 
unchanged when the final rule takes effect.
    34. We also deny clarification with respect to TAPS's request that 
the affirmation: (1) Affirm whether each passive owner owns a separate 
class of non-voting securities, has limited consent rights, does not 
exercise day-to-day control over the company, and cannot remove the 
manager without cause; and (2) provide sufficient information to show 
that a Seller performed an investigation for the affirmation. Likewise, 
we deny TAPS's alternative request for rehearing on the Commission's 
decision to allow Sellers to make an affirmation instead of a 
demonstration regarding passive ownership interests.
    35. Although we agree with TAPS that, for the relational database 
to function correctly and as intended, owners must be properly 
classified as passive, we decline to grant rehearing to require, as 
TAPS requests, that the affirmation specifically affirm each of the 
four attributes of passivity identified in the NOPR and for each Seller 
to provide sufficient information to show that the Seller performed the 
requisite investigation for the affirmation. First, Order No. 860's 
requirement that a Seller identify passive owners and affirm in its 
narrative that the ownership interests consist solely of passive rights 
that are necessary to protect the passive investors' or owners' 
investments and do not confer control is taken from AES Creative's 
requirements for passive ownership interests.\62\ As contemplated in 
AES Creative, passive owners cannot hold voting securities, have more 
than limited consent/veto rights, or allow day-to-day control over a 
company.\63\ In addition, the Commission clarified in Order No. 860 
that ``absent a Commission order to the

[[Page 13017]]

contrary, an owner who can remove the manager without cause is not 
considered passive.'' \64\ Thus, we reiterate here that unless the 
Commission specifically finds otherwise in a particular case, a Seller 
will not be able to make the passive affirmation where the owner can 
remove the manager without cause. Given that Sellers cannot make the 
requisite affirmation unless they can affirm that the ownership 
interests meet the AES Creative requirements and do not allow an owner 
to remove the manager without cause, we decline to require the 
specificity that TAPS requests.
---------------------------------------------------------------------------

    \62\ Order No. 860, 168 FERC ] 61,039 at P 138 & n.206.
    \63\ See AES Creative, 129 FERC ] 61,239 at PP 25-26.
    \64\ Order No. 860, 168 FERC ] 61,039 at P 140.
---------------------------------------------------------------------------

    36. Similarly, we deny clarification with respect to the 
information to be provided in the affirmation. Prior to the final rule, 
Sellers were required to make a demonstration regarding passive 
ownership, even though the Commission made no findings with respect to 
whether these ownership interests were truly passive. Accordingly, in 
the final rule, the Commission chose to reduce the filing requirements 
associated with making passive ownership representations. To require 
Sellers to show that they have sufficient information to make the 
affirmation would be to effectively continue the demonstration 
requirement. As explained, Sellers cannot affirm that their ownership 
interests consist solely of passive rights that are necessary to 
protect the passive investors' or owners' investments and do not confer 
control unless they have verified that those ownership interests meet 
the requirements of AES Creative. These Sellers must also abide by a 
duty of candor when making any filings with the Commission.\65\ For 
these reasons, we also deny TAPS's alternative request for rehearing.
---------------------------------------------------------------------------

    \65\ 18 CFR 35.41(b).
---------------------------------------------------------------------------

B. Connected Entity Information

1. Final Rule
    37. In Order No. 860, the Commission declined to adopt the proposal 
to require Sellers and Virtual/FTR Participants to submit Connected 
Entity Information. The Commission acknowledged commenters' concerns 
about the difficulties and burdens associated with this aspect of the 
NOPR and, accordingly, transferred the record to Docket No. AD19-17-000 
for possible consideration in the future as the Commission may deem 
appropriate. However, the Commission noted that the determination in 
the final rule to collect market-based rate information in a relational 
database will provide value to both the Commission's market-based rate 
and analytics and surveillance programs.\66\
---------------------------------------------------------------------------

    \66\ Order No. 860, 168 FERC ] 61,039 at P 184.
---------------------------------------------------------------------------

2. Request for Clarification and/or Rehearing
    38. Joint Advocates request limited rehearing of the final rule and 
argue that the Commission erred: (1) By not applying the requirement to 
collect Connected Entity Information from Sellers and Virtual/FTR 
Participants; and (2) in failing to require Virtual/FTR Participants to 
abide by a duty of candor.
    39. Joint Advocates first contend that the finding in the final 
rule that the Connected Entity reporting requirements are unduly 
burdensome is unsupported by the evidence and conclusory in nature. 
Joint Advocates argue that, although the final rule acknowledges that 
the Connected Entity Information proposal was among the most commented 
on, it says nothing more than there were many concerns raised about the 
difficulties and burden associated with the proposal. Joint Advocates 
contend that this statement alone does not support why the Commission 
failed to act on the proposal or why the proposal's benefits are 
outweighed by any burden. Joint Advocates assert that the final rule 
instead ignores the record except for a cursory statement about 
supporting comments.\67\
---------------------------------------------------------------------------

    \67\ Joint Advocates Request at 8-9.
---------------------------------------------------------------------------

    40. Joint Advocates argue that the final rule focuses solely on 
comments regarding the proposal's alleged burdens but takes that 
evidence out of context. Joint Advocates contend, for example, that 
AVANGRID, Inc.'s (AVANGRID) and EEI's comments were critical of the 
burden imposed by the whole NOPR and that it is not reasoned decision-
making to refer to these criticisms as if they apply only to the 
collection of Connected Entity Information.\68\ Joint Advocates explain 
that the final rule references only one other set of comments, i.e., 
Berkshire Hathaway Energy Company's (Berkshire) comments, and that 
these comments note concerns with the previous Connected Entity 
proposal; \69\ however, Joint Advocates argue that Berkshire does not 
ask the Commission to wholly set aside the Connected Entity proposal 
but rather raises issues specific to its own business model. Joint 
Advocates argue thus that Berkshire's comments do not support the final 
rule's decision to set aside the Connected Entity proposal.\70\
---------------------------------------------------------------------------

    \68\ Id. at 9-10.
    \69\ See Collection of Connected Entity Data from Reg'l 
Transmission Orgs. and Indep. Sys. Operators, Notice of Proposed 
Rulemaking, 80 FR 80302 (Dec. 24, 2015), 152 FERC ] 61,219 (2015) 
(Connected Entity NOPR); Collection of Connected Entity Data from 
Reg'l Transmission Orgs. and Indep. Sys. Operators, Withdrawal of 
Proposed Rulemaking and Termination of Rulemaking Proceeding, 81 FR 
49590 (July 28, 2016), 156 FERC ] 61,046 (2016).
    \70\ Joint Advocates Request at 10-11.
---------------------------------------------------------------------------

    41. Joint Advocates next assert that the final rule's preferential 
treatment for Virtual/FTR Participants is discriminatory in both intent 
and application. Joint Advocates assert that the Commission has long 
recognized that virtual products, transactions involving such products 
and that, accordingly, sellers of such products, i.e., Virtual/FTR 
Participants, are subject to the Commission's jurisdiction.\71\ Joint 
Advocates also point out that Virtual/FTR Participants are similarly 
situated with other market Sellers in that they are capable of 
affecting Commission-jurisdictional market prices. Joint Advocates 
contend that, even if the Commission adopted the Connected Entity 
proposal, the overall reporting requirements would still be 
significantly less than those for Sellers and that, without the 
Connected Entity requirements, Virtual/FTR Participants, unlike 
Sellers, have no duty of candor under the Commission's regulations. 
According to Joint Advocates, the failure to adopt the Connected Entity 
proposal maintains a two-tiered regulatory scheme that is both unjust 
and unduly preferential and violates section 206 of the FPA. Joint 
Advocates argue that the appropriate remedy is to adopt the Connected 
Entity proposal and subject Virtual/FTR Participants to similar 
oversight as Sellers.\72\
---------------------------------------------------------------------------

    \71\ Id. at 11.
    \72\ Id. at 12.
---------------------------------------------------------------------------

    42. Lastly, Joint Advocates assert that the final rule deprives the 
Commission of important tools to address and combat market manipulation 
and fraud. Joint Advocates echo the concerns in the dissent, including 
with respect to the GreenHat Energy, LLC's default on its FTRs in the 
PJM market, and note the harm that could result from recidivist persons 
that commit fraud is real.\73\
---------------------------------------------------------------------------

    \73\ Id. at 13-14.
---------------------------------------------------------------------------

    43. Joint Advocates request in the alternative that the Commission 
accept their comments in the record of Docket No. AD19-17-000. Joint 
Advocates also ask that the Commission expediently implement the 
Connected Entity proposal and any additional reforms offered in Docket 
No. AD19-17-000 given the clear potential for future

[[Page 13018]]

market manipulation, fraud, and default.\74\
---------------------------------------------------------------------------

    \74\ Id. at 3.
---------------------------------------------------------------------------

3. Commission Determination
    44. As discussed below, we deny Joint Advocates' request for 
rehearing. We disagree with Joint Advocates' characterization of the 
Commission's determination in the final rule. The Commission did not 
state that the Connected Entity reporting requirements are ``unduly 
burdensome,'' rather the Commission stated that it ``appreciate[s] the 
concerns raised about the difficulties of and burdens imposed by'' \75\ 
the Connected Entity proposal. Further, we disagree with Joint 
Advocates' assertion that the final rule takes evidence regarding the 
burden of the Connected Entity proposal out of context. We acknowledge 
that AVANGRID's and EEI's comments expressed concerns about the burdens 
associated with both the market-based rate and Connected Entity 
proposals. However, the final rule elsewhere addressed commenters' 
concerns with the market-based rate proposal and made adjustments, 
clarifications, and determinations as needed.\76\
---------------------------------------------------------------------------

    \75\ Order No. 860, 168 FERC ] 61,039 at P 184.
    \76\ For example, in response to commenters' concerns, the 
Commission decided to not adopt the requirement for Sellers to 
identify their relationships with foreign governments. Id. P 146.
---------------------------------------------------------------------------

    45. Regarding the Connected Entity proposal, the final rule did not 
detail all of the commenters' concerns. For example, commenters 
expressed concerns with the proposal, specifically with the proposed 
definition of ``trader,'' \77\ the scope of the proposal,\78\ and other 
aspects of the Connected Entity proposal.\79\ Ultimately, in the final 
rule, the Commission noted AVANGRID's, EEI's, and Berkshire's concerns 
while also noting that some commenters supported the Connected Entity 
proposal. After consideration of all of the comments, the Commission 
transferred the record to Docket No. AD19-17-000 ``for possible 
consideration in the future as the Commission may deem appropriate.'' 
\80\ In doing so, the Commission acknowledged that it could explore the 
Connected Entity proposal in the future. Accordingly, we accept Joint 
Advocates' alternative request and place their instant comments in the 
record of Docket No. AD19-17-000 for consideration in the future as the 
Commission may deem appropriate.
---------------------------------------------------------------------------

    \77\ Berkshire at 13-17, EEI at 11-15; International Energy 
Credit Association at 5-12; AVANGRID at 11-12; NextEra Energy, Inc. 
at 4-6; Manitoba Hydro at 3; Power Trading Institute at 5-6; 
Financial Institutions Energy Group 10-11.
    \78\ AVANGRID at 14-17; International Energy Credit Association 
at 22-23; Financial Institutions Energy Group at 4-13; Commercial 
Energy Working Group at 20-22.
    \79\ See International Energy Credit Association at 17-19; Power 
Trading Institute at 5 (opposing the requirement for Sellers to 
obtain LEIs); Berkshire at 4-8; NextEra Energy, Inc. at 3-4 
(opposing the requirements to disclose certain affiliates that would 
fall within the definition of ``connected entities'').
    \80\ Order No. 860, 168 FERC ] 61,039 at P 184.
---------------------------------------------------------------------------

C. Implementation & Data Dictionary

1. Final Rule
    46. In the final rule, the Commission revised the previous 
implementation schedule in the NOPR based on concerns regarding 
feasibility. The Commission explained that initially, after the final 
rule's issuance, documentation for the relational database will be 
posted to the Commission's website, including the extensible markup 
language document (XML), XML Schema Definition document (XSD), the Data 
Dictionary, and a test environment user guide as well as a basic 
relational database test environment. Additionally, the Commission 
stated that it intends to add to the new test environment features on a 
prioritized, scheduled basis until complete. The Commission stated that 
it would inform the public when releases will be made publicly 
available.\81\
---------------------------------------------------------------------------

    \81\ Id. PP 308-309.
---------------------------------------------------------------------------

    47. The Commission stated that, during the development and testing 
phase, it would encourage feedback from outside testers and that, to 
facilitate this feedback, Commission staff will conduct outreach with 
submitters and external software developers, making any necessary 
corrections to available requirements and/or documentation.\82\ In 
addition, the Commission explained that, in spring 2020, a user guide 
and a list of frequently asked questions regarding the process for 
preparing and submitting information into the relational database will 
be available on its website.\83\
---------------------------------------------------------------------------

    \82\ Id. P 310.
    \83\ Id. P 311.
---------------------------------------------------------------------------

    48. The Commission also explained that, in fall 2020, submitters 
will be required to obtain FERC generated IDs (GID) \84\ for any 
reportable entity \85\ that does not have a CID or LEI,\86\ as well as 
the Commission-issued ``Asset Identification'' (Asset ID) number \87\ 
for any reportable generation asset without a Plant Code, Generator ID, 
and Unit Code information from the Energy Information Agency (EIA) Form 
EIA-860 database (collectively, EIA Code).\88\ The Commission stated 
that more information on discovering or obtaining these IDs will be 
published on the Commission's website.\89\
---------------------------------------------------------------------------

    \84\ The GID is a new form of identification that was created 
alongside the final rule to serve as an identifier for reportable 
entities that do not have a Company Identifier (CID) or Legal Entity 
Identifier (LEI). The Commission explained that the system will 
allow Sellers to obtain unique GIDs for their affiliates and that 
additional information on the mechanics of this process will be made 
available on the Commission's website prior to the final rule's 
October 1, 2020 effective date. The Commission required affiliates 
to be identified using their CID if they have one, but if they do 
not, the Seller must use the LEI for the affiliate if available. If 
the affiliate has neither, the Commission required that the GID must 
be provided. Id. P 24 n.42.
    \85\ Reportable entities are any companies or natural persons 
that a Seller needs to identify in its database submissions.
    \86\ LEI is a unique 20-digit alpha-numeric code assigned to a 
single entity. They are issued by the Local Operating Units of the 
Global LEI System. Id. P 18 n.30.
    \87\ Id. P 64. The Commission added that, when creating the 
Asset ID, Sellers will be required to provide basic information 
about the generator, such as its plant name, nameplate capacity, and 
month and year it began commercial operation (if known). Id. n.108.
    \88\ Id. PP 64, 313.
    \89\ Id. P 313.
---------------------------------------------------------------------------

    49. The Commission explained that, after all necessary IDs are 
acquired, submitters must then submit their baseline submissions into 
the relational database by close of business on February 1, 2021.\90\
---------------------------------------------------------------------------

    \90\ Id. P 312.
---------------------------------------------------------------------------

    50. The Commission stated that, to the extent that the Commission 
finds that technical workshops would be helpful after publication of 
the final rule, it will provide for those workshops.\91\ In addition, 
the Commission explained that, if necessary, requests for an extension 
to the initial submission deadlines may be submitted similar to the way 
in which a current request for extension of time would be submitted to 
the Commission for consideration.\92\
---------------------------------------------------------------------------

    \91\ Id. P 317.
    \92\ Id. P 318 & n.398 (citing 18 CFR 385.212).
---------------------------------------------------------------------------

    51. The Commission determined that it would post the Data 
Dictionary and supporting documentation to the Commission's 
website.\93\ The Commission also concluded that there was no need for 
additional notice and opportunity for comment on the Data Dictionary, 
but the Commission noted

[[Page 13019]]

that Sellers may reach out to Commission staff for further 
information.\94\
---------------------------------------------------------------------------

    \93\ Id. P 209.
    \94\ Id. P 212.
---------------------------------------------------------------------------

2. Request for Clarification and/or Rehearing
    52. EEI requests clarification regarding several implementation 
issues.\95\ First, EEI argues that the implementation timeline should 
be extended to reflect the scope of the data required to be submitted 
and implementation challenges. EEI suggests that the Commission has 
adopted an unreasonably short timeline for implementing the final rule, 
considering the numerous questions as to implementation.\96\ EEI argues 
that unexpected delays could impact compliance with the final rule and 
that, while the Commission has posted information regarding the XML, 
XSD, and Data Dictionary, it should also provide clarity as to when the 
other tools mentioned in the final rule will be available to users if 
such information is known.\97\
---------------------------------------------------------------------------

    \95\ EEI Request at 4.
    \96\ Id.
    \97\ Id. at 4-5 (quoting Order No. 860, 168 FERC ] 61,039 at PP 
309-310).
---------------------------------------------------------------------------

    53. According to EEI, the scope and breadth of the data gathering 
effort will be extensive in most cases because the data to be gathered 
is nuanced and requires judgment to determine whether the data falls 
within the final rule's scope. EEI notes that the Commission now 
requests data on: (1) The contents of market-based rate tariffs and 
certain power purchase agreements (PPAs); (2) IDs associated with 
counterparties to those PPAs; (3) dates related to the various elements 
of the market-based rate tariffs and PPAs; (4) certain generation; and 
(5) certain affiliates. EEI points out that the breadth of this data is 
greater than what is collected today for asset appendices and that it 
may be difficult to identify who may hold this information, given that 
ultimate upstream owners often restrict the flow of data among 
affiliates.\98\
---------------------------------------------------------------------------

    \98\ Id. at 10-11.
---------------------------------------------------------------------------

    54. In addition, EEI explains that one of the first tasks of each 
Seller will be to determine for which generating assets it lacks EIA 
Codes and for which affiliates and counterparties, if any, it lacks a 
CID or LEI. EEI points out that in both cases the Commission must first 
generate data. EEI explains that requests for GIDs and Asset IDs are to 
be submitted in Fall 2020 and that given the compliance deadline and 
the fact that the Commission must first compile requests, this date 
occurs too late in the process to meet the Commission's current 
implementation date. EEI also submits that the Commission first must 
post a CID list that is kept up-to-date so Sellers can know whether to 
request an GID.\99\ EEI posits, however, that the Commission must 
recognize that it will take time for Sellers to determine the set of 
PPAs that require GIDs because no list of PPAs under which the Seller 
is a long-term Seller likely exists and, if a Seller's Electric 
Quarterly Report (EQR) contains such a list, it must be sorted by long-
term sales of energy or capacity. EEI provides that only then can the 
CID list be checked to determine the need for an GID.\100\
---------------------------------------------------------------------------

    \99\ Id. at 11.
    \100\ Id. at 11-12.
---------------------------------------------------------------------------

    55. EEI maintains that another issue that will affect the 
implementation timeframe is the need for internal compliance personnel 
and compliance programs to determine ongoing compliance. EEI suggests 
that such personnel will be spread over many departments and training 
will be required to establish reporting obligations and on the use of 
data collection software if data entry is not centralized.\101\
---------------------------------------------------------------------------

    \101\ Id. at 12.
---------------------------------------------------------------------------

    56. EEI contends that the data entry task will be substantial for 
some reporting entities and should be considered in estimating 
compliance time.\102\ EEI suggests that, because the data entry and 
data gathering tasks are potential sources of human error, some level 
of review may be necessary post-data collection to ensure that obvious 
errors or omissions have not occurred.
---------------------------------------------------------------------------

    \102\ Id. at 13.
---------------------------------------------------------------------------

    57. EEI next contends that technical conferences are needed to 
refine the Data Dictionary and clarify the data that must be collected. 
For example, EEI references the Commission's guidance in the final rule 
regarding reporting the number of megawatts associated with full and 
partial requirements sales agreements, i.e., ``[f]or a full 
requirements contract, the amount should equal the buyer's most recent 
historical annual peak load'' and ``for a partial requirements 
contract, the amount should equal the portion of the buyer's 
requirements served by the seller multiplied by the buyer's annual peak 
load.'' \103\ EEI argues that this guidance raises several questions, 
and entities will have difficulty knowing what data to gather and 
report. Each entity may interpret the data requirements differently 
without Commission clarification.\104\
---------------------------------------------------------------------------

    \103\ Id. (quoting Order No. 860, 168 FERC ] 61,039 at P 94).
    \104\ Id. at 6-7.
---------------------------------------------------------------------------

    58. EEI also questions the need for many of the date fields in the 
Data Dictionary. For example, EEI argues that the need for a field on 
``relationship_start_date'' in the ``entities_to_entities'' table is 
unclear. EEI contends that, unless the Commission explains the need for 
retroactive dates in this field, as well as in other fields such as the 
``cat_status_effective_date'' field in the category status table, it 
should allow the Sellers to use the date of the baseline filing and not 
seek historical dates. EEI asserts that if the Commission does not 
accept this alternative, it should allow discussion during the 
technical conference on how this burden can be reduced. In addition, 
EEI states that both outside vendors and in-house personnel will build 
data collection software for the final rule. EEI argues however that 
the Data Dictionary in and of itself does not allow software developers 
to understand what is needed in the software. EEI references several 
tables, including ``mbr_authorization,'' ``mbr_category_status,'' and 
``entities_to_genassets,'' which could each be populated in different 
ways. EEI thus maintains that, for the software to have the 
functionality needed to meet the Commission's needs, Commission staff 
and Sellers must explain to software developers how each table in the 
Data Dictionary will work.
    59. Similarly, EEI suggests that software developers will need time 
to understand how each table may be used by a variety of customers 
before they can begin coding. EEI maintains that, because Sellers will 
require new data collection software to convert the collected data into 
an XML format, technical conferences will be useful for providing 
feedback about how long this process will take. EEI suggests that 
developing new software can take between six months to more than a year 
and that the relational database is more complicated than past 
Commission endeavors because some entities will not have a vendor in 
place. EEI submits that most Sellers will need time to contract to 
develop software, the process of which will likely take several 
months.\105\
---------------------------------------------------------------------------

    \105\ Id. at 12-13.
---------------------------------------------------------------------------

    60. EEI further provides comments on specific fields, such as the 
``PPA Agreement ID'' field in the PPA table. EEI requests that the 
Commission verify that the identifier for each PPA should be the one 
used in EQR Field 20 only if the Seller is making a sale and that,

[[Page 13020]]

where the Seller is purchasing long-term, it does not need to check to 
see: (1) If the Seller files EQRs; and (2) review the EQR of that 
Seller and find its identifier in its Field 20.\106\ In regards to 
operating reserves, EEI requests that the Commission clarify that it is 
only seeking information as to Sellers who receive a Seller-specific 
order as to permit sales of operating reserves in a non-ISO/RTO 
balancing authority area in which it would otherwise be prohibited from 
selling under the model tariff wording.\107\
---------------------------------------------------------------------------

    \106\ Id. at 15.
    \107\ Id. at 17.
---------------------------------------------------------------------------

    61. Lastly, EEI seeks clarification that Commission staff can make 
changes to the Data Dictionary fields as appropriate to reflect the 
outcome of the technical conference.\108\
---------------------------------------------------------------------------

    \108\ Id.
---------------------------------------------------------------------------

3. Commission Determination
    62. We grant EEI's request for clarification in part and deny it in 
part. First, we deny EEI's request to extend the implementation 
timeline and disagree with EEI's assessment that the scope and breadth 
of the data gathering effort will be extensive. As noted in the final 
rule, Sellers already collect most of the information required to be 
submitted under the final rule, either as part of the narratives in 
their market-based rate filings, asset appendices, EQRs, or as part of 
their market-based rate tariffs.\109\ For example, Sellers should 
already have available a list of long-term PPAs in which they are the 
seller because such sales are reported in EQRs. The final rule merely 
alters the manner in which Sellers will provide this data to the 
Commission. Additionally, the current implementation timeline provides 
Sellers with over 18 months to gather any new data that they may be 
required to submit into the database.\110\ We find this to be enough 
time to gather any necessary information.
---------------------------------------------------------------------------

    \109\ Order No. 860, 168 FERC ] 61,039 at PP 88, 90, 97, 105, 
122, and 158.
    \110\ Submitters have until close of business February 1, 2021 
to make their initial baseline submissions.
---------------------------------------------------------------------------

    63. In response to EEI's concerns that Sellers and vendors will not 
have enough time to become familiar with the submission process, we 
note that on January 10, 2020, the Commission provided, on its 
website,\111\ updated versions of the Data Dictionary, XML, XSD, and a 
frequently asked questions document, as well as provided access to a 
test environment for the relational database.\112\ We expect that these 
items should provide Sellers, vendors, and other interested parties 
with a reasonable level of clarity on what Sellers will be required to 
submit and aid in the creation of tools to make those submissions. In 
regard to EEI's concerns that Sellers may not have enough time to 
determine for which affiliates or counterparties it needs to obtain a 
GID and which generating assets need Asset IDs, we note that the test 
environment (and the future portal for the relational database) should 
address these concerns. Sellers will find within the test environment 
tools to search for existing CIDs, LEIs, and GIDs, as well as the 
mechanism to create GIDs and Asset IDs.\113\ Further, because the EIA 
Codes will be pulled from EIA, Sellers may also review the most recent 
EIA-860 table to discover whether they need to create an Asset ID for 
any generation asset.\114\ Sellers will also be able to make test 
submissions into the relational database, which will help them to 
become familiar with the submission requirements of the database and 
how to format the data required.\115\
---------------------------------------------------------------------------

    \111\ This information can be found at https://www.ferc.gov/industries/electric/gen-info/mbr/important-orders/OrderNo860.asp.
    \112\ This test environment, and eventually the relational 
database, can be found at https://mbrweb.ferc.gov/.
    \113\ The ability to search for EIA Codes or Asset IDs for 
generation assets will be introduced into the test environment a 
future update.
    \114\ See https://www.eia.gov/electricity/data/eia860/.
    \115\ As noted in the January 10, 2020 notice, this is a test 
environment and all submissions into the database, specifically, 
XMLs and all created GIDs and Asset IDs, will not be part of the 
official record and will be cleared from the database before it 
officially goes live.
---------------------------------------------------------------------------

    64. We anticipate that these items, along with the technical 
workshop, will provide interested parties with sufficient information 
and tools to be able to make their submissions. While we appreciate 
EEI's argument that unexpected delays could impact compliance with the 
final rule, to date, no such delays have occurred. Nevertheless, if 
unexpected delays do occur, Sellers may seek an extension of time to 
make their baseline submissions. Further, to the extent that EEI 
remains concerned about human error, we reiterate that the Commission's 
usual practice is simply to require a corrected submittal be made 
without any sanctions.\116\
---------------------------------------------------------------------------

    \116\ Order No. 860, 168 FERC ] 61,039 at P 293.
---------------------------------------------------------------------------

    65. Next, we grant EEI's request that the Commission hold a 
technical workshop, and we note that Commission staff will be hosting a 
technical workshop on February 27, 2020.\117\ We expect that many of 
EEI's concerns with the Data Dictionary and the data that must be 
collected will be addressed at the technical workshop. Nevertheless, we 
take this opportunity to provide some clarifications.
---------------------------------------------------------------------------

    \117\ See Notice of Technical Workshop, Docket No. RM16-17-000 
(Jan. 22, 2020).
---------------------------------------------------------------------------

    66. We will allow the use of a January 1, 1960 default date for 
certain date fields, for dates that occur before the October 1, 2020 
effective date of the final rule, when populating the database.\118\ 
For example, Sellers may input January 1, 1960 for date fields such as 
``relationship_start_date'' in the ``entities_to_entities'' table if 
the relationship between the entities began before October 1, 2020 and 
the seller does not know the actual start date.\119\
---------------------------------------------------------------------------

    \118\ We will continue to require Sellers to populate the 
``authorization_effective_date'' field in the ``mbr_authorizations'' 
table with the actual date that their market-based rate tariffs 
first became effective. For most Sellers this date is easily 
discoverable as it is in their market-based rate tariff. 
Additionally, Commission staff currently maintains, and posts on the 
Commission's website, a document where Sellers can discover this 
date. See https://www.ferc.gov/industries/electric/gen-info/mbr/mbr-contact.xlsx.
---------------------------------------------------------------------------

    67. We also verify that the ``ppa_agreement_id'' field in the 
``entities_to_ppas'' table will be nullable and Sellers should only 
populate this field with the ID number in EQR Field 20 when they are 
reporting their own long-term sales. Stated another way, we do not 
expect Sellers to review the EQRs of their counterparties when 
preparing their submissions into the relational database.
    68. Regarding operating reserves, we clarify that we are not 
seeking information on operating reserve authority provided for in 
standard market-based rate tariff provisions. The Commission is only 
seeking information on Sellers who have received a seller-specific 
authority to make sales of operating reserves at market-based 
rates.\120\ Further, for specific questions about the Data Dictionary 
or other implementation issues, Sellers and

[[Page 13021]]

other interested parties may contact Commission staff at 
MBRdatabase@ferc.gov.
---------------------------------------------------------------------------

    \119\ One field that EEI specifically inquired about is the 
``cat_status_effective_date'' field in the ``mbr_category_status'' 
table. We clarify that for category statuses granted prior to 
October 1, 2020, Sellers may use the default date. For any changes 
to category statuses that occur after that date, Sellers should 
populate the effective date of the tariff that first reflects the 
changed status.
    \120\ The market-based rate standard tariff includes provisions 
for sales of ancillary services, including sales of operating 
reserves, in designated organized markets as well as for third-party 
sales. The third-party sales of ancillary service tariff provision 
specifies that authority for sales of ``Operating Reserve-Spinning 
and Operating Reserve-Supplemental do not include sales to a public 
utility that is purchasing ancillary services to satisfy its own 
open access transmission tariff requirements to offer ancillary 
services to its own customers, except where the Commission has 
granted authorization.'' See http://www.ferc.gov/industries/electric/gen-info/mbr/filings/tariff-changes/provisions.asp 
(emphasis added). The Commission will only require operating reserve 
information where such specific authorization was granted.
---------------------------------------------------------------------------

D. Public Access

1. Final Rule
    69. In Order No. 860, the Commission clarified that certain aspects 
of a Seller's market-based rate filing can appear in eLibrary as either 
public or non-public. The Commission noted that a Seller, like anyone 
else submitting information to the Commission, may request privileged 
treatment of its filing if it contains information that is claimed to 
be exempt from the Freedom of Information Act's mandatory disclosure 
requirements.\121\ The Commission stated that it did not expect that 
the information required to be submitted into the relational database 
will qualify for privileged treatment and consequently declined to 
incorporate confidentiality safeguards in the relational database.\122\
---------------------------------------------------------------------------

    \121\ See 5 U.S.C. 552.
    \122\ Order No. 860, 168 FERC ] 61,039 at P 284.
---------------------------------------------------------------------------

2. Request for Clarification and/or Rehearing
    70. TAPS requests that the Commission clarify that the public has a 
right to access the relational database.\123\ According to TAPS, in the 
final rule, the Commission repeatedly explains that its expectation is 
that the public will have access to the relational database.\124\ TAPS 
argues, however, that neither the final rule nor the amended regulatory 
text directly states that the public will have the right to access, 
search, and use information contained in the relational database. TAPS 
requests that the Commission expressly clarify that the public will 
have the right to do so.\125\
---------------------------------------------------------------------------

    \123\ TAPS Request at 4.
    \124\ Id. (citing Order No. 860, 168 FERC ] 61,039 at PP 151, 
152, 158, 234, 284).
    \125\ Id.
---------------------------------------------------------------------------

    71. TAPS points out that full access to the relational database and 
its functions is critical because the relational database will be one 
of the only remaining sources of information about the potential for 
anticompetitive market power. TAPS explains that this is because the 
final rule eliminated the requirement to submit organizational charts 
and for each Seller to report the assets of its affiliates with market-
based rate authority. TAPS adds that the Commission also eliminated, in 
a separate rulemaking, the requirement that Sellers in certain RTO/ISO 
markets submit indicative screens for assessing horizontal market 
power.\126\
---------------------------------------------------------------------------

    \126\ Id.
---------------------------------------------------------------------------

    72. TAPS explains that the final rule also implies that the public 
will have broad access rights through the relational database's 
services function. However, TAPS argues that the final rule does not 
define services function or specify that the public will have access to 
all of the relational database's functions. TAPS thus requests that the 
Commission clarify that the public's right to access the relational 
database includes the ability to use all the functions available to the 
Commission.\127\
---------------------------------------------------------------------------

    \127\ Id. at 4-5.
---------------------------------------------------------------------------

    73. In addition, TAPS requests that the Commission clarify that the 
public will have access to the following: (1) The relational database 
function that generates organizational charts; (2) the same historical 
data as filers (i.e., Sellers); and (3) the full set of market-based 
rate information, either through eLibrary or otherwise, including 
information Sellers submit into the database. TAPS also asks that the 
Commission clarify that all of the historical data preserved will be 
publicly available.\128\
---------------------------------------------------------------------------

    \128\ Id. at 5-6.
---------------------------------------------------------------------------

3. Commission Determination
    74. As TAPS requests, we clarify that the public will be able to 
access the relational database. In this regard, we clarify that we will 
make available services through which the public will be able to access 
organizational charts, asset appendices, and other reports, as well as 
have access to the same historical data as Sellers, including all 
market-based rate information submitted into the database. We also 
clarify that the database will retain information submitted by Sellers 
and that historical data can be accessed by the public.

E. Due Diligence

1. Final Rule
    75. With respect to the due diligence standard in Sec.  35.41(b), 
the Commission stated that it generally will not seek to impose 
sanctions for inadvertent errors, misstatements, or omissions in the 
data submission process. The Commission stated its expectation that 
Sellers will apply due diligence to the retrieval and reporting of the 
required information by establishing reasonable practices and 
procedures to help ensure the accuracy of their filings and 
submissions, which should minimize the occurrence of any such 
inadvertent errors, misstatements, or omissions. However, the 
Commission explained that the intentional or reckless submittal of 
incorrect or misleading information could result in the Commission 
imposing sanctions, including civil penalties. The Commission explained 
that these circumstances might include, for example, systemic or 
repeated failures to provide accurate information and a consistent 
failure to exercise due diligence to ensure the accuracy of the 
information submitted.\129\
---------------------------------------------------------------------------

    \129\ Order No. 860, 168 FERC ] 61,039 at PP 291-293.
---------------------------------------------------------------------------

    76. The Commission declined to adopt a ``safe harbor'' or a 
``presumption of good faith'' or ``good faith reliance on others 
defense,'' nor did the Commission decide to limit enforcement actions 
to only where there is evidence demonstrating that an entity 
intentionally submitted inaccurate or misleading information to the 
Commission.\130\
---------------------------------------------------------------------------

    \130\ Id. P 294.
---------------------------------------------------------------------------

    77. The Commission reiterated that a due diligence standard 
provides the Commission with sufficient latitude to consider all facts 
and circumstances related to the submission of inaccurate or misleading 
information (or omission of relevant information) in determining 
whether such submission is excusable and whether any additional remedy 
beyond correcting the submission is warranted.\131\
---------------------------------------------------------------------------

    \131\ Id. P 295.
---------------------------------------------------------------------------

    78. The Commission explained that establishing adequate due 
diligence practices and procedures ultimately depends on the totality 
of facts and circumstances and can vary case to case, depending upon 
evidence presented and whether, for example, reliance on third parties 
or affiliates is justified under the specific circumstances. The 
Commission added that most Sellers have knowledge of their affiliates' 
generation portfolios because Sellers must include this information in 
their indicative screens, so to the extent that the auto-generated 
asset appendix is clearly incongruous with the screens, the Commission 
expects that the Seller will make note of the perceived error in the 
transmittal letter.\132\
---------------------------------------------------------------------------

    \132\ Id. PP 295-296.
---------------------------------------------------------------------------

    79. The Commission explained however that, if a Seller does not 
have accurate or complete knowledge of its affiliates' market-based 
rate information, in most cases it should be able to rely on the 
information provided by its affiliates unless there is some indication 
that the information the affiliate supplies is inaccurate or 
incomplete.\133\ The Commission added that, although Sellers should not 
ignore obvious inaccuracies or omissions, relying on information from 
affiliates should be

[[Page 13022]]

sufficient to satisfy the due diligence standard provided there is a 
reasonable basis to believe that such information obtained from 
affiliates or third parties is reliable, accurate, and complete.\134\
---------------------------------------------------------------------------

    \133\ Id. P 297.
    \134\ Id. P 298.
---------------------------------------------------------------------------

2. Request for Rehearing
    80. TAPS requests rehearing as to whether the Commission erred by 
(1) failing to include safeguards during the relational database's 
initial implementation to ensure that the newly adopted relational 
database functions as intended and at least as well as the pre-Order 
No. 860 data collection regime, and (2) failing to adequately specify 
the Commission's expectations for satisfying the Commission's \135\ due 
diligence requirements under the new reporting regime.
---------------------------------------------------------------------------

    \135\ 18 CFR 35.41(b).
---------------------------------------------------------------------------

    81. According to TAPS, Order No. 860 conceded the risk of reporting 
errors and the Commission erred in declining to continue existing 
reporting requirements or other safeguards during the initial 
implementation of the relational database.\136\ TAPS contends that the 
Commission also erred in failing to specify what ongoing practices and 
procedures the Commission expects Sellers to implement to satisfy their 
due diligence obligations.\137\
---------------------------------------------------------------------------

    \136\ TAPS Request at 14-15 (citing Order No. 860, 168 FERC ] 
61,039 at PP 123, 310).
    \137\ Id. at 15 (citing Order No. 860, 168 FERC ] 61,039 at P 
291).
---------------------------------------------------------------------------

    82. TAPS asserts that the essential component of the relational 
database is identifying common ultimate upstream affiliates among 
Sellers.\138\ TAPS argues that the relational database will not work if 
Sellers fail to correctly identify their ultimate upstream affiliates 
and that, because of complex corporate organizational structures, the 
risk of such failures is significant, as the Commission acknowledged. 
TAPS maintains that the risk of error will increase over time as 
changes in ownership result in a new ultimate upstream affiliate. TAPS 
adds that other problems that could compromise the relational database 
are likely to emerge after the database is fully developed and 
implemented.\139\
---------------------------------------------------------------------------

    \138\ Id. (quoting Order No. 860, 168 FERC ] 61,039 at P 5).
    \139\ Id. at 15-16.
---------------------------------------------------------------------------

    83. TAPS contends that the final rule's response and solution to 
the problem of misreporting are inadequate. TAPS states that the final 
rule claims that the CID, LEI, and/or GID assigned by the relational 
database to each ultimate upstream affiliate will reduce the likelihood 
that Sellers attempting to report the same ultimate upstream affiliate 
inadvertently report different entities.\140\ TAPS argues however that 
the Commission conceded that this only remedies reporting errors where 
Sellers are attempting to report the same ultimate upstream affiliates, 
and that it does not address the concern that some Sellers will 
misidentify their ultimate upstream affiliates at the outset.\141\ 
According to TAPS, the final rule claims that this error can be 
identified and addressed when a Seller views its auto-generated asset 
appendix.\142\ However, TAPS argues that the auto-generated asset 
appendix may not help remedy this reporting error where there is no 
specific directive that Sellers perform an independent review of the 
asset appendix, retain the audit trail necessary to do so, or report 
errors for correction and/or correct such errors unless the errors are 
obvious. TAPS asserts that the final rule both fails to require such an 
audit trail and even allows Sellers to rely on other Sellers' 
information for accuracy.\143\
---------------------------------------------------------------------------

    \140\ Id. at 16 (quoting Order No. 860, 168 FERC ] 61,039 at P 
51).
    \141\ Id.
    \142\ Id. (quoting Order No. 860, 168 FERC ] 61,039 at P 123).
    \143\ Id. at 16-17 (quoting inter alia Order No. 860, 168 FERC ] 
61,039 at P 298).
---------------------------------------------------------------------------

    84. TAPS argues that the Commission should implement two safeguards 
to address these concerns. First, TAPS requests that, for purposes of 
accuracy, the Commission require that baseline database submissions, if 
not all submissions during the first three years of the relational 
database, include the asset appendix generated without using the 
database. TAPS contends that this will enable the Commission and others 
to check that the initial implementation of the relational database 
does not omit relevant information that would have been collected and 
made available under the previous market-based rate reporting 
regime.\144\
---------------------------------------------------------------------------

    \144\ Id. at 17-18.
---------------------------------------------------------------------------

    85. Second, TAPS requests that the Commission articulate its 
expectation for what practices Sellers should adopt after this initial 
three-year period to satisfy their due diligence obligations under 
Sec.  35.41(b). Specifically, TAPS contends that the Commission specify 
that it expects Sellers' continued due diligence practices to include: 
(1) Creating appendices of affiliated generation assets developed 
without reliance on the relational database; (2) comparing the non-
relational database asset appendices against the ones generated by the 
database; and (3) retention of those comparisons for a reasonable time 
(at least six years, or two triennial market power updates). TAPS 
maintains that these requirements will ensure Sellers are able to 
identify reporting errors, the Commission can check the accuracy of the 
database-generated asset appendixes, and the Commission can fulfill its 
statutory mandate to ensure just and reasonable rates during this 
transition.\145\
---------------------------------------------------------------------------

    \145\ Id. at 18-19 (citing Order No. 860, 168 FERC ] 61,039 at P 
292).
---------------------------------------------------------------------------

3. Commission Determination
    86. We deny TAPS's request for rehearing requesting safeguards 
during the initial implementation of the relational database and 
requesting that there be specific expectations regarding due diligence 
obligations moving forward. We agree with TAPS that, for the relational 
database to work as intended, common ultimate upstream affiliates 
between Sellers must be correctly identified, and we expect Sellers to 
exercise due diligence as they make their initial submissions in the 
relational database. As stated in the final rule, the Commission 
acknowledged that there would be some risk of reporting errors where 
there are subtle changes in ownership percentages resulting in new 
ultimate upstream affiliates that may not be universally noticed and 
reported by all affiliated Sellers.\146\ We also acknowledge that there 
will be reporting errors if, as TAPS suggests, Sellers misidentify 
their ultimate upstream affiliates at the outset. However, we believe 
these reporting errors will be minimal as the Commission's definition 
for ultimate upstream affiliate is clear.\147\
---------------------------------------------------------------------------

    \146\ Order No. 860, 168 FERC ] 61,039 at P 123.
    \147\ See supra n.9.
---------------------------------------------------------------------------

    87. As such, we affirm the Commission's due diligence findings in 
the final rule, and decline to impose the additional requirements that 
TAPS requests. The Commission explained that a due diligence standard 
provides the Commission with sufficient latitude to make case-by-case 
considerations and that due diligence practices and procedures 
ultimately depend on the totality of the facts and circumstances, 
including whether reliance on third-parties or affiliates for 
information is justified.\148\ We emphasize that the Commission's 
regulations impose a duty of candor on all Sellers to provide actual 
and factual information and to not submit false or misleading 
information in communications, or omit material information, in any 
communication with the Commission.\149\ To the extent

[[Page 13023]]

that there are inaccuracies in auto-generated asset appendices, we 
expect that Sellers will note those perceived errors in their 
transmittal letters. We reiterate that, while we expect that most 
inadvertently erroneous or incomplete submissions will be promptly 
corrected by reporting entities without the imposition of any penalty, 
the Commission will continue to exercise its discretion based on the 
circumstances to determine whether sanctions are appropriate.\150\
---------------------------------------------------------------------------

    \148\ See Order No. 860, 168 FERC ] 61,039 at PP 295-296.
    \149\ 18 CFR 35.41(b).
    \150\ Order No. 860, 168 FERC ] 61,039 at P 294.
---------------------------------------------------------------------------

    88. In addition, we find that TAPS's request for additional 
safeguards would both be burdensome and undermine the benefits of 
establishing the relational database. First, if the Commission required 
that all baseline database submissions and all submissions during the 
first three years of the relational database include asset appendices 
generated without the database, this would, in substance, continue the 
pre-final rule reporting regime except with additional filings.\151\ 
Given that a purpose of the final rule is to reduce burden, this 
requirement would run counter to the one of the goals of the final rule 
and would result in a more burdensome system for Sellers; however, the 
Commission and the public would receive little, if any, added benefit.
---------------------------------------------------------------------------

    \151\ Further, we note that Sellers will not need to submit a 
transmittal letter with their baseline database submissions. 
Instead, the baseline submissions will consist solely of the 
submission of information into the database as required by the final 
rule.
---------------------------------------------------------------------------

    89. Likewise, with respect to ongoing due diligence requirements, 
we decline to require that Sellers are expected to: (1) Create asset 
appendices without relying on the relational database; (2) compare 
those asset appendices to the ones generated by the database; and (3) 
retain those comparisons for at least six years. Although characterized 
as expectations, TAPS's request can be read as additional requirements 
that would be part of Sellers' responsibilities under Sec.  35.41(b). 
As noted above, such requirements would run counter to the purpose of 
the final rule, specifically, the goal to reduce burden on Sellers. We 
reiterate, however, that Sellers have a duty to perform due diligence 
to ensure that the information that they provide to the Commission is 
accurate and complete, and we encourage Sellers to adopt due diligence 
practices, which could include those proposed by TAPS.

III. Document Availability

    90. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
internet through FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5:00 
p.m. Eastern time) at 888 First Street NE, Room 2A, Washington DC 
20426.
    91. From FERC's Home Page on the internet, this information is 
available on eLibrary. The full text of this document is available on 
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or 
downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field.
    92. User assistance is available for eLibrary and the FERC's 
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or email at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
public.referenceroom@ferc.gov.

IV. Effective Date

    93. The order on rehearing and clarification is effective October 
1, 2020.
    By the Commission. Commissioner Glick is dissenting in part with a 
separate statement attached.

    Issued: February 20, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Data Collection for Analytics and Surveillance and Market-Based Rate 
Purposes

Docket No. RM16-17-001

GLICK, Commissioner, dissenting in part:

    1. I dissent in part from today's order, because I believe that the 
Commission should have finalized a critical aspect of the notice of 
proposed rulemaking \1\ (NOPR) that would have required Sellers \2\ and 
entities that trade virtual products or that hold financial 
transmission rights (Virtual/FTR Participants) \3\ to report 
information regarding their legal and financial connections to various 
other entities (Connected Entity Information). Frankly, many aspects of 
this Connected Entity Information proposal should have been a no-
brainer for this Commission. For example, the NOPR would have required 
Virtual/FTR Participants to be truthful in all communications with the 
Commission--not exactly a burdensome obligation. Nevertheless, the 
Commission has relegated even those common-sense reforms to a hollow 
administrative docket that has not seen any action and likely never 
will under the Commission's current construct. As I explained in my 
earlier dissent, the Commission's retreat from the NOPR proposal is 
part of a troubling pattern in which the majority seems indifferent to 
detecting and deterring market manipulation.
---------------------------------------------------------------------------

    \1\ Data Collection for Analytics and Surveillance and Market-
Based Rate Purposes, 156 FERC ] 61,045 (2016) (NOPR).
    \2\ ``Seller means any person that has authorization to or seeks 
authorization to engage in sales for resale of electric energy, 
capacity or ancillary services at market-based rates under section 
205 of the Federal Power Act.'' 18 CFR 35.36(a)(1) (2018).
    \3\ As explained in the final rule, the Commission proposed to 
define the term ``Virtual/FTR Participants'' as entities that buy, 
sell, or bid for virtual instruments or financial transmission or 
congestion rights or contracts, or hold such rights or contracts in 
organized wholesale electric markets, not including entities defined 
in section 201(f) of the FPA. Data Collection for Analytics and 
Surveillance and Market-Based Rate Purposes, 168 FERC ] 61,039, at P 
182 (2019) (Final Rule).
---------------------------------------------------------------------------

* * * * *
    2. When it comes to detecting market manipulation, context matters. 
A transaction that seems benign when viewed in isolation may raise 
serious concerns when viewed with an understanding of the relationships 
between the transacting parties and/or other market participants.\4\ 
Unfortunately, information regarding the legal and contractual 
relationships between market participants is not widely available and 
may, in some cases, be impossible to ascertain without the cooperation 
of the participants themselves. That lack of information can leave the 
Commission in the dark and unable to fully monitor wholesale market 
trading activity for potentially manipulative acts.
---------------------------------------------------------------------------

    \4\ See NOPR, 156 FERC ] 61,045 at P 43.
---------------------------------------------------------------------------

    3. That problem is particularly acute when it comes to market 
participants that transact only in virtual or FTR products. Virtual/FTR 
Participants are very active in RTO/ISO markets and surveilling their 
activity for potentially manipulative acts consumes a significant share 
of the Office of Enforcement's time and resources. It may, therefore, 
be surprising that the Commission collects only limited information 
about Virtual/FTR Participants and often cannot paint a complete 
picture of their relationships with other market participants. 
Similarly, the Commission has no mechanism for tracking recidivist 
fraudsters and manipulators who deal in

[[Page 13024]]

these products and perpetuate their fraud by moving to different 
companies or participating in more than one RTO or ISO. And, perhaps 
most egregiously, the Commission's current regulations do not impose a 
duty of candor on Virtual/FTR Participants, meaning that bad actors can 
lie with impunity, at least insofar as the Commission is concerned.\5\ 
The abandoned aspects of the NOPR would have addressed all three 
deficiencies, among others.
---------------------------------------------------------------------------

    \5\ In contrast, section 35.41(b) of the Commission's 
regulations requires a Seller to ``provide accurate and factual 
information and not submit false or misleading information, or omit 
material information, in any communication with the Commission,'' 
market monitors, RTOs/ISOs, or jurisdictional transmission 
providers, unless the ``Seller exercises due diligence to prevent 
such occurrences. Virtual/FTR Participants are not subject to this 
duty of candor. The Connected Entity portion of the NOPR proposed to 
add a new section 35.50(d) to the Commission's regulations that 
would require the same candor from Virtual/FTR Participants in all 
of their communications with the Commission, Commission-approved 
market monitors, RTOs, ISOs, and jurisdictional transmission 
providers. NOPR, 156 FERC ] 61,045 at P 20.
---------------------------------------------------------------------------

    4. The Commission ``declines to adopt'' this Connected Entity 
Information aspect of the NOPR based only on its ``appreciat[ion]'' of 
the ``difficulties of and burdens imposed by this aspect of the NOPR.'' 
\6\ That is hardly a reasoned explanation for why an unspecified burden 
outweighs the boon that Connected Entities Information would provide to 
the Commission's ability to carry out its enforcement responsibilities. 
The Commission does note that it has transferred the record to a new 
docket for ``possible consideration in the future as the Commission may 
deem appropriate.'' \7\ Unfortunately, there is every indication that 
it will languish there for the foreseeable future.
---------------------------------------------------------------------------

    \6\ Data Collection for Analytics and Surveillance and Market-
Based Rate Purposes, 170 FERC ] 61,129, at P 44 (2020).
    \7\ Id. P 45.
---------------------------------------------------------------------------

    5. That is a shame. Without the Connected Entity Information, we 
are forcing the Commission's Office of Enforcement to police the 
markets for manipulation with one arm tied behind its back. And despite 
the Office's valiant efforts, that means that market participants are 
more likely to find themselves subject to a manipulative scheme than if 
we had proceeded to a final rule on these aspects of the NOPR.
    For these reasons, I respectfully dissent in part.
-----------------------------------------------------------------------

Richard Glick,

Commissioner.

[FR Doc. 2020-03927 Filed 3-5-20; 8:45 am]
 BILLING CODE 6717-01-P


