Federal Renewable Reserve Depository (FRRD), Federal Taxes, PCD’s and EPA

 Foreign Power Plant Corporation Ownership


Don’t raise taxes on anyone.


Tackle Medicare, Medicaid and Social Security benefits and entitlements.


Issue and or work with congress to create a balanced budget.


Eliminate the death tax.


Lower Federal corporate taxes to at least 20% and reward development investment.


Eliminate tax loop wholes for the rich which Trump knows about.


Allocate a standard deduction for everyone earning less then 25,000.00 or 50,0000.00 combined, to include same sex marriages for tax relief, so a low income house hold’s tax foot print is very light, maybe non existence, but know in advance all those $15.00 an hour earners will fall in this category of low income earners, so increasing minimum wage would not in the end bring in federal taxes and with the welfare ceiling up to $2,100.00 depending on the situation, food stamps and if children are involved, high rent and baby setting expenses, proven expenses, could result in minimum wage earners continuing into the future to need federal assistance. Some employers will reduce hours as well and in the end, unless the economy can create say 5 percent growth nationally, then maybe a national minimum wage increase for all occupations could be considered rather then restaurants at present.


Tax Credits for renewable energy technologies remains on the table.


Ethanol subsidies must go and ethanol used for a fuel additive instead as a fuel would result in tax credits, continuing existing contracts of subsidies for five years in order to change over to a fuel additive or specialty fuel (requiring less producers yet products can be made that would burn ethanol more so then now).


Fair tax, equal tax and or a tax on products or goods, and or lower taxes for all, eliminating hedge tax profits by taxing them the same as other earners pay in taxes for the equivalent wealth are issues for policies on how our monetary system should evolve or whether capitalism is dying out through an elected socialist republic rather then democracy. You would still be allowed sexual behaviors I’m thinking, free condoms, abortions and pre pregnancy tools at your employer’s expense and free college, food stamps, housing and low income health care paid for by the government from those working in a socialist government.


Clearly, investment capital must mean investments that stimulate economies like infrastructure projects that create revenue, power plants, bridge and highways with tolls or PCD’s housing how many Syrians “Coming to America?”


You will need power sources as well. If you continue to tax at 15 percent for capital gains on development projects offered by FRRD, then 15 percent federal taxes on investment for participating corporations in FRRD sanctioned projects would be essential for FRRD corporate participants involved in activities offered by FRRD for corporations and citizens investing.


In conjunction with a federal consumption, product, appliance, vehicle and service and goods tax or equal tax of 9 percent off setting federal pay roll tax with holdings to 12 to 15 percent, FRRD would create revenue and in five years begin allocating the treasure department hundreds of millions of dollars monthly in addition to the tax liability for Americans reduced but continued to a degree, deductions in tax liability for Americans gradually over 20-years with the first deduction at the beginning during the off set fair tax or consumption and or goods and service tax, adjusting the tax code and system. The latter most sound, as annual evaluations will determine any raise between the index that shows both at say 9 percent tax = service & goods & 20 percent federal pay roll tax with holdings for the first five years for earnings over $60,000.00, yet FRRD’s activities will off set the federal governments budget income in five years time by the hundreds of billions a year to trillions in ten years and by the end of twenty years, FRRD will have replaced the Fed’s and paid off the national deficit while eliminating pay roll tax with a 20 year beginning 19 percent service and goods or equal tax, death tax eliminated twenty years before we can only hope, a lighter federal foot print in business and commerce beginning in 2017 if only Trump could see the benefit FRRD would play on healing our monetary system doomed to eventually fail, an economist worst reality, but very possible for an economy to tumble. Obama is still blaming Bush after 7 years for our slow economy he spouts as growing.


Tackle the National Deficit using FRRD and issue permits for power plants.


Real in the EPA and other regulations trifling the market in order to allow jobs to be created by placing them under the FRRD (No more status of Cabinet-rank and becomes under the jurisdiction of FRRD (appreciate the same status that the fed’s have but must answer to an over site congressional budget committee and veto power over the President if the congressional committee believes the chairman of the FRRD has over stepped there authority), with its own mission to build power plants, canals, mediate through the EPA pollutants as a result of manufacturers, making the EPA a mediation environmental steward, highway and bridge toll construction (PIMTED – Productive Interstate Transport Exploitation Development).


Invest into canals, freeways and highways that create wealth through FRRD;

Build ocean distillation plants.


Where we need federal intrusion is in the ports searching ships with containers thoroughly before they get to shore and off shore un loading floating docks powered by tug boats and other barges that deliver cargo ashore, as bombs will surely pass through suggesting every container must be x-rayed.


Offering a simpler tax code, a more fair and equitable way for businesses to raise capital, borrow funds, creating community projects offered by counties with state and federal sponsorship or offered through the Federal Renewable Reserve Depository, creating 40 percent profit on every dollar invested in behalf of the American People nationally, while offering municipal bond purchase for county citizens to invest in 40 percent of FRRD projects offered by FRRD and corporations eligible to invest 20 percent into any FRRD Project. Corporation will assume control of power or waste plant or development, be responsible to its share holders that would include the government. Once the plant or development is completed, FRRD’s role would change from investor and public guarantor of investment to stock holder. FRRD will have rules of partnership but the federal government’s involvement in the investment will cease upon completion. Once a FRRD project is up and running or completed and being used by the public or supplying the public power, the corporation becomes the guarantor of all public debt in the form of stock that has a value with monthly dividends.


Everyone makes money mediating pollutants from animal waste (not for drinking – enerwaste technologies, distillation of liquid brown water for fuel, etc.), bridges and highways with tolls and power development. Other countries can buy our countries infrastructure, power plants or fossil fuels, so why can’t the American People invest in said same on a federal level through the FRRD and replace the Federal Reserve Banks in twenty years, gradually decreasing its control over our present monetary system, and on a state level, allow counties populous to benefit from a FRRD Project investment.


The EPA would be placed under the jurisdiction the FRRD. The director nominated by the President, yet the Director of the FRRD would be independent of the executive branch, and would fund the treasury department its annual profits less 20 percent operating budget and 30 percent investment cash, invested each year in major projects that stimulates economic growth, jobs and advance lower energy costs, environmental stewardess protecting the environment through mediation.


Anything can be stored in the ground or mediated, ask the EPA where there million gallon mine water went?


Fracking waste water by the million gallons per five acre site is hauled to pre drilled sites the EPA approved for companies to use and or is on Indian lands. EPA involvement however is active in this area of exploiting oil or natural gas.


A developer knows about these things to include over stressing a cities sewage treatment facility to locations best suited for brown water mediation, pond mediations, golf course or park drip fields and much more to soil samples taken, natural rain fall topographical movement, land slide or boulder concerns, etc. Then there is the design, construction and energy platform for a power plant and construction of homes, business districts, open space, etc.


When the EPA controls the environment like an eagle protects its baby chick, land is ceased because of laws that protect endangered species. The world looses tens of thousands of species annually.


A smaller government that lives within a budget that doesn’t borrow us into 20 trillion of debt at present is not possible, so the next President will have to support the dirty shell oil from Canada, increased federal oil leases issued, EPA directed to mediate by its new boss, the FRRD Director or a President that has vision and knows that a manufacture that employees ten thousand folks, will need a brown water septic sewage treatment facility coupled with energywaste technologies would be necessary, to include heavy metals and chemical removal systems, storage and removal of garbage, etc. will result in job creation.


All federal taxes would within five years be channeled through the FRRD. FRRD funds the Treasury Department that funds the government but is its own federal department in regards to other branches of government, its director serving at the pleasure of the President but approved by the senate. Serving the position just like the present chairman of the Federal Reserve Board. Once approved for this position to over see FRRD, the President may request an audience with the FRRD Director no more then once a quarter. The President however, cannot dictate which project will be or not be funded, yet the congress will pass congressional by laws for FRRD to follow with an over site committee. FRRD’s first annual budget will be 600 billion and given a directive to invest in power plants at first, yet FRRD will have its own mission guidelines to include being the corner stone of revamping the tax code and restructure the monetary system.


Investors would be exempt from taxes on FRRD approved projects since 20% off the top goes to the maintenance, repair, replacement, modification, trunk line expenditures up keep and human and natural disasters foot print economically.


There is much I could address further in regards to FRRD, yet it’s basically an eventual replacement for the FRB’s, and the means to create wealth.



Since the Federal Government doesn’t want to build the Federal Renewable Reserve Depository thereby replacing the Federal Reserve Bank, then it will be up to States to make the change.


North Dakota is the only state so far that has established a publicly owned bank.   Founded in 1919, the Bank of North Dakota has a mission to “promote agriculture, commerce, and industry” and “be helpful to and assist in the development of… financial institutions… within the State.”


BND functions primarily as a “banker’s bank.”  Aside from student loans, BND does little in the way of direct lending.   Much of its $2.8 billion loan portfolio consists of participation loans in which BND finances part of a loan made by a local community bank.  By sharing in these loans, most of which fund businesses and farms, BND expands the lending capacity of North Dakota’s community banks and absorbs some of the risk associated with each loan.  BND also provides a secondary market for residential mortgages, buying loans originated by community banks and thus freeing them to make more loans.


Thanks in large part to BND, community

Thanks in large part to BND, community banks are much more robust in North Dakota than in other states.  North Dakota has 35 percent more banks per capita than South Dakota, and four times as many as the national average (see our graph).  While locally owned small and mid-sized banks (under $10 billion in assets) account for only 30 percent of deposits nationally, in North Dakota they have 72 percent of the market.

By helping to sustain a larger number of community banks than have survived elsewhere and by enabling them to devote more of their assets to productive loans (as detailed below), BND has strengthened North Dakota’s economy, helped small businesses and farms grow, and spurred job creation in the state.

History and Structure

Desperately poor and tired of being at the mercy of out-of-state economic powers, North Dakota’s farmers launched the Nonpartisan League in 1915.  This political party united progressives, reformers, and radicals behind a platform that called for returning control of the state’s economy to its people.  At the time, farmers were utterly dependent on out-of-state grain milling companies, national railroads, and Minneapolis banks, all of which had been gouging farmers.

In the 1918 elections, the League won both houses of the legislature.  One of the first bills these new lawmakers passed created a publicly owned grain mill, the North Dakota Mill and Elevator, and a publicly owned bank, the Bank of North Dakota (BND).

BND is governed by the state’s Industrial Commission, consisting of the governor, attorney general and the commissioner of agriculture, all elected officials. The commission, in effect, serves as the bank’s board of directors.  The bank also has a seven-member advisory board, which is appointed by the Governor and consists of people with expertise in banking, including representatives of community banks.

The primary deposit base of the BND is the State of North Dakota.  All state funds and funds of state agencies (excluding pension funds and trusts managed by the state) are deposited with the bank as required by law.  The bank pays a competitive interest rate that is generally at about the midpoint of rates paid by other banks in the state.

Individuals may also open accounts at the bank, but BND does not market these services and does not have ATMs, branch offices, and other standard features common to retail banks.  Deposits from individuals account for less than 2 percent of the bank’s total.

In contrast to most commercial banks, BND is not a member of the Federal Depository Insurance Corporation.  Its deposits are instead guaranteed by the state of North Dakota.

Support for Community Banks and Economic Development

Part of the core mission of the Bank of North Dakota is to assist and support North Dakota’s community banks.  BND has relationships with almost all of the state’s 94 local banks.

One of the chief ways BND strengthens these institutions is by participating in loans originated by local banks and credit unions.  This expands the lending capacity of local banks.  At the end of 2010, BND had about $1.2 billion in participation loans in its portfolio, an amount equal to 19 percent of the total value of loans outstanding on the books of the state’s small and mid-sized community banks.  Being able to split loans with BND enables community banks to make larger loans than they could on their own.  As their business and farm customers grow, they can continue to meet their lending needs, rather than see them migrate to larger banks.

BND also provides a secondary market for loans originated by local banks.  About 15 years ago, the bank began buying residential mortgages.  At the time, local banks were looking for an alternative.  They no longer wanted to sell their home loans to larger banks like Wells Fargo, which would then market other products and services to those customers.  BND stepped in and provided a secondary market that allows local banks to free up lending capacity without handing customers over to their competitors.  BND services the loans it buys, ensuring that North Dakota borrowers continue to have in-state servicing for their mortgages.  In 2010, BND purchased about 7 percent of the home loans originated in the state.  It currently holds about $500 million in residential mortgages.

Part of BND’s mission is to expand local ownership of banks and increase their capitalization.  To this end, the bank has a bank stock loan program, which provides loans to finance the purchase of bank stock by North Dakota residents.  In 2008, for example, BND provided a loan to help the employees of Ramsey National Bank & Trust in Devil’s Lake, North Dakota, gain a controlling interest in the bank, ensuring that this institution, which was founded in 1892 and has about $200 million in assets, will continue to be owned locally.

BND also functions as a kind of mini Federal Reserve.  It clears checks for both banks and credit unions, provides coin and currency, and maintains an Automated Clearing House system that allows local banks to offer direct deposit and automated payment services to their customers. BND’s Federal Funds program assists local banks with short-term liquidity needs and has a daily volume of over $300 million.

Although municipal and county governments can deposit their funds with BND, the bank encourages them to establish accounts with local community banks instead.  BND facilitates this by providing local banks with letters of credit for public funds.  In other states, banks must meet fairly onerous collateral requirements in order to accept public deposits, which can make taking public funds more costly than it’s worth.   But in North Dakota, those collateral requirements are waived by a letter of credit from BND.

BND has helped North Dakota maintain a local banking sector that is markedly more robust than that of other states.  As noted above, North Dakota has more local banks (relative to population) than all other states.  Over the last ten years, the amount of lending per capita by small community banks (those under $1 billion in assets) in North Dakota has averaged about $12,000, compared to $9,000 in South Dakota and $3,000 nationally.  The gap is even greater for small business lending.  North Dakota community banks averaged 49 percent more lending for small businesses over the last decade than those in South Dakota and 434 percent more than the national average (see our graphs).

Not only are community banks more numerous and more active in North Dakota, but there is some indication that the Bank of North Dakota has enabled them to maintain a higher average loan-to-asset ratio — meaning they are able to devote more of their assets to economically productive lending, rather than safer holdings like U.S. government securities.  North Dakota’s community banks have generally maintained a higher average loan-to-asset ratio than their counterparts in four neighboring states and nationwide (see our graph).  That ratio has also declined much less steeply during the recession.  North Dakota banks have contracted lending slightly in the last three years, but not nearly as much as banks have elsewhere.

In the wake of the financial crisis, regulators demanded that banks increase their capital and reserves.  While many small banks have struggled to meet these requirements in a weak economy, North Dakota’s local banks have had the benefit of BND, which has helped them increase their capital ratios by buying loans on their books and assisted them with raising equity investments through the bank stock loan program.

By and large, BND is run on a for-profit basis.  The bank evaluates loan opportunities according to how likely they are to be repaid and provide a return for BND.  As the bank’s president and chief executive, Eric Hardmeyer, said in an interview with American Banker magazine, “If you are going to have a state-owned bank, you have to staff it with bankers.  If you staff it with economic developers you are going to have a very short-lived, very expensive experiment. Economic developers have never seen a deal they didn’t like. We deal with that every day.”

BND does forego some profit, however, in order to further economic development in the state.  The bank offers several programs that accept higher levels of risk or lower returns on certain kinds of loans.  Through its PACE Fund (“Partnership in Assisting Community Expansion”), for example, BND buys down the interest rate by 1-5 percent for some job-creating business loans.  In 2009, this program saved business borrowers $3.5 million in interest payments.  BND makes about 50 of these loans a year (all in partnership with a community bank and a local economic development entity) and currently has about 300 outstanding, valued at $50 million.  BND operates a similar program for farmers called Ag PACE.

BND also has a Business Development Loan Program, which enables new and existing businesses to obtain loans that have a higher degree of risk than would normally be acceptable to a lending institution, while its Beginning Entrepreneur Loan Guarantee Program guarantees 85 percent of a loan of up to $100,000 made by a local bank to a start-up entrepreneur.

Returns for the State

At the of end of 2010, the Bank of North Dakota had $327 million in capital and $4.1 billion in assets.  The bank has grown substantially over the last two decades.  Its assets have quadrupled, and its net income rose from $13 million in 1990 to $62 million in 2010.

Part of the bank’s earnings are used to expand its capital base, which in turn enables it to make more loans.  The rest of its profits are paid into the state government’s general fund, reducing the amount of tax revenue the state needs to collect.  How much of each year’s earnings are transferred to the state is determined by negotiation between the legislature and the bank’s Governing Board.  Over the last decade, BND has made $300 million in payments to the general fund.  This amounts to about $1,200 per family.

Although BND has foregone some profit in order to expand credit and lower the cost of loans for businesses in North Dakota, the bank still has a relatively high return on assets (ROA), a standard measure of bank performance.  Its ROA was 1.46 percent in 2010, compared to a median ROA for all banks in the country of 0.61 percent.  In 2006, BND’s ROA was 1.99 percent, compared to a median of 1.00 percent for banks nationally.

The bank provides other direct financial benefits to the state.  BND can borrow at the Federal Reserve’s discount window and lend directly to local governments at lower rates than the municipal bond market provides.

BND can also provide emergency financing that would otherwise have to be shouldered solely by state and local government.  When the Red River valley underwent massive flooding in 1997, BND quickly established a $25 million line of credit for the City of Grand Forks, $12 million for the University of North Dakota in Grand Forks, and $25 million for state emergency management.  It also set up a disaster relief loan program for families and businesses.  Partly as result of this support, the Grand Forks economy recovered much more quickly than its sister city of East Grand Forks just across the river in Minnesota.

Other States

Several states have begun to look at the idea of establishing a state-owned bank modeled on the Bank of North Dakota.  Oregon, Washington, Hawaii, Maine, and Maryland are among the states considering bills in 2010-11 that would either create or study the idea of creating a state bank. This analysis from the Center for State Innovation provides a good examination of how such a bank could be capitalized and its potential growth trajectory.


Bank of North Dakota web site

Video: Bank of North Dakota
This 26-minute video, produced by Prairie Public Broadcasting, chronicles the bank’s history and current operations.



North Dakota State Statutes
See sections beginning at 6-09 for the portion of the code that establishes the bank and governs its operations.



Oregonians for a State Bank


Investing in Oregon, not Wall Street.


The State of Oregon deposits billions of our tax dollars into the same “Too Big To Fail” banks that crashed our economy. Oregonians for a State Bank believes that we should bring that money home, and invest it into creating jobs here.


Building a Movement for a More Resilient Local Economy.


OfSB, along with our allies the Oregon Working Families, the Main Street Alliance, Oregon Action, the Rural Organizing Project and many others have organized and advocated for proposals aimed at creating a State Bank, modeled after the Bank of North Dakota which has been in successful operation for over 90 years. We continue to be leaders in the fight for a more self-sufficient and resilient local economy in the state of Oregon.


Eat Local. Buy Local. Bank Local. 


Oregon’s economy continues to be far too vulnerable the ups and downs of Wall Street banks.  Currently 66% of all bank deposits in the state of Oregon–both public and private–are held by just five mega-banks.  If we want to create a truly local economy, we need to break this dependence.  To find out what you and your community can do to “bank local” visit our friends at Oregon Banks Local.



Oregon State Bank FAQ



Center for State Innovation’s Analysis of an Oregon State Bank



Banking on America:  How Main Street Partnership Banks Can Improve  Local Economies, Demos, April 2011




April 21, 2011


Heather C. McGhee,

Jason Judd

Across the country, states are considering proposals to move general revenue deposits out of the Wall Street banks that dominate the banking business today, and use them to capitalize a new local public structure with a mission to grow the local economy. A “Main Street Partnership Bank” would be modeled on the nearly 100-year-old public Bank of North Dakota (BND). This public policy innovation—also known as a Public Bank or State Bank—could contribute to the health of local community banks, state budgets and small business job growth in an era of rapid banking concentration, budget deficits and disinvestment on Main Street.

Partnership Banks can raise revenue for states without raising taxes, and increase loans to small businesses precisely when Wall Street banks have cut back on lending and raised public borrowing costs. A Partnership Bank would act as a “banker’s bank” to in-state community banks and provide the state government with both banking services at fair terms and an annual multi-million dollar dividend.

If modeled on the successful Bank of North Dakota, Partnership Banks in other states would:

Generate new revenues for states directly, through annual bank dividend payments, and indirectly by creating jobs and spurring local economic growth. The table above shows projected dividends for established Partnership Banks in the states considering such proposals, based on BND’s 2009 dividend payment to North Dakota’s General Fund. 

Lower debt costs for local governments. Like the Bank of North Dakota, Partnership Banks can get access to low-cost funds from the regional Federal Home Loan Banks. The banks can pass savings on to local governments when they buy debt for infrastructure investments. The banks can also provide Letters of Credit for tax-exempt bonds at lower interest rates.

Strengthen local banks even out credit cycles, and preserve real competition in local credit markets. There have been no bank failures in North Dakota during the financial crisis. BND’s charter is clear that its goal is to “be helpful to and to assist in the development of [North Dakota banks]... and not, in any manner, to destroy or to be harmful to existing financial institutions.” By purchasing local bank stock, partnering with them on large loans and providing other support, Partnership Banks would strengthen small banks in an era when federal policy encourages bank consolidation.

Build up small businesses. Surveys by the Main Street Alliance in Oregon and Washington show at least 75 percent support among small business owners. In markets increasingly dominated by large corporations and the banks that fund them, Partnership Banks would increase lending capabilities at the smaller banks that provide the majority of small business loans in America.



New England Public Policy Center

Research Report 11 - 2

May 2011


In August 2010, Massachusetts enacted legislation (Chapter 240 of the acts of 2010) pertaining to the state government’s role in economic growth and development. The law restructures state agencies that finance development projects, and introduces new mechanisms to address the credit needs of small businesses in particular.


The law merges two funding sources into a new entity called the Massachusetts Growth

Capital Corporation, which provides capital and advice to small businesses, and calls for enhanced oversight of all the state’s public and quasi-public economic development agencies.


The law also institutes new requirements for the state treasurer to report the names of institutions where the Commonwealth’s cash reserves are deposited, and it encourages the state treasurer to deposit those funds in institutions with an above-average orientation toward small business lending. Going beyond these immediate reforms, the law further calls for the creation of “a commission to study the feasibility of establishing a bank owned by the commonwealth or by a public authority constituted by the commonwealth.”



Or you can continue allowing foreign countries or foreign businesses tom own you’re power grid and fossil fuels like uranium inn the U. S., some where around 50 percent owned by Russia.


This list of power supply owners clearly suggests Americans could own future power plants:


American Public Power Association - Overview of Investor-Owned ...


The following list shows holding company names, operating utility names, .... Company owns U.S. and foreign power plants through a non-regulated ... Energy East Corp was acquired by Iberdrola, SA, a Spanish corporation, in September 2008. .... and gas company, power marketer, and owner of power generation facilities.



List of companies in the nuclear sector - Wikipedia, the free ...


Cameco owns and operates mines in Canada and the United States and holds land ... Through its 97% ownership in OmegaCorp Limited, an Australian uranium mining ... 15% of Denison Mines is owned by Korea Electric Power Corporation. ... It has minority stakes in the Olkiluoto Nuclear Power Plant in Finland and the ...



Nuclear Power in the USA - World Nuclear Association


Nuclear Power in the USA

(Updated 29 September 2015)

The USA is the world's largest producer of nuclear power, accounting for more than 30% of worldwide nuclear generation of electricity.

The country's 100 nuclear reactors produced 798 billion kWh in 2014, over 19% of total electrical output. There are now 99 units operable (98.7 GWe) and five under construction.

Following a 30-year period in which few new reactors were built, it is expected that six new units may come on line by 2020, four of those resulting from 16 licence applications made since mid-2007 to build 24 new nuclear reactors.

However, lower gas prices since 2009 have put the economic viability of some existing reactors and proposed projects in doubt.

Government policy changes since the late 1990s have helped pave the way for significant growth in nuclear capacity. Government and industry are working closely on expedited approval for construction and new plant designs.

In 2013, the US electricity generation was 4294 TWh (billion kWh) gross, 1717 TWh (40%) of it from coal-fired plant, 1150 TWh (27%) from gas, 822 TWh (19%) nuclear, 291 TWh from hydro, 170 TWh from wind, 12 TWh from solar and 18 TWh from geothermal (IEA data). The Nuclear Energy Institute (NEI) put 2013 nuclear output at 789 TWh. Import from Canada in 2012 was 46.6 TWh net and from Mexico 0.7 TWh net. Annual electricity demand is projected to increase to 5,000 billion kWh in 2030, though in the short term it is depressed and is not expected to recover to the 2007 level until about 2015. Annual per capita electricity consumption in 2012 was 11,900 kWh. Total capacity is 1068 GWe, less than one- tenth of which is nuclear.


The USA has 99 nuclear power reactors in 30 states, operated by 30 different power companies. Since 2001 these plants have achieved an average capacity factor of over 90%, generating up to 807 billion kWh per year and accounting for 20% of total electricity generated. Capacity factor has risen from 50% in the early 1970s, to 70% in 1991, and it passed 90% in 2002, remaining at around this level since. In 2014 it was a record 91.9%. The industry invests about $7.5 billion per year in maintenance and upgrades of these.

There are 65 pressurized water reactors (PWRs) with combined capacity of about 64 GWe and 35 boiling water reactors (BWRs) with combined capacity of about 34 GWe – for a total capacity of 98,662 MWe (see Nuclear Power in the USA Appendix 1: US Operating Nuclear Reactors). Almost all the US nuclear generating capacity comes from reactors built between 1967 and 1990. Until 2013 there had been no new construction starts since 1977, largely because for a number of years gas generation was considered more economically attractive and because construction schedules during the 1970s and 1980s had frequently been extended by opposition, compounded by heightened safety fears following the Three Mile Island accident in 1979. A further PWR – Watts Bar 2 – is expected to start up in 2015 following Tennessee Valley Authority's (TVA's) decision in 2007 to complete the construction of the unit.


Despite a near halt in new construction of more than 30 years, US reliance on nuclear power has grown. In 1980, nuclear plants produced 251 billion kWh, accounting for 11% of the country's electricity generation. In 2008, that output had risen to 809 billion kWh and nearly 20% of electricity, providing more than 30% of the electricity generated from nuclear power worldwide. Much of the increase came from the 47 reactors, all approved for construction before 1977, that came on line in the late 1970s and 1980s, more than doubling US nuclear generation capacity. The US nuclear industry has also achieved remarkable gains in power plant utilisation through improved refuelling, maintenance and safety systems at existing plants.


While there are plans for a number of new reactors (see section on Preparing for new build below), no more than four new units will come on line by 2020. Since about 2010 the prospect of low natural gas prices continuing for several years has dampened plans for new nuclear capacity.


In February 2013 Duke Energy's 860 MWe Crystal River PWR in Florida was decommissioned due to damage to the containment structure sustained when new steam generators were fitted in 2009-10, under previous owner Progress Energy. Its 40-year operating licence was due to expire in 2016. Some $835 million in insurance was claimed. Dominion Energy's 566 MWe Kewaunee PWR in Wisconsin was decommissioned in May 2013, after 39 years operation. Then in June 2013 the two 30-year old PWR reactors (1070 & 1080 MWe) at San Onofre nuclear plant in California were retired permanently due to regulatory delay and uncertainty following damage in the steam generators of one unit. In August 2013 Entergy announced that its 635 MWe Vermont Yankee reactor would be closed down at the end of 2014 as it had become uneconomic, and this was done.


Ten other nuclear plants (13 reactors) are considered (at the start of 2014) to be at risk of closure, all but one of these in the northeast of the country, in deregulated states. The factors giving rise to uncertainty are high costs with low power prices, regulatory issues, and local concerns with safety and reliability.


US power plant shutdowns over 2010 to 2013 comprised 19,772 MWe of coal plant, 12,167 MWe natural gas, 6793 MWe oil-fired, 3554 MWe nuclear and less than 1000 MWe other (NEI, quoting Ventyx).


Coal is projected to retain the largest share of the electricity generation mix to 2035, though by 2020 about 49 GWe of coal-fired capacity is expected to be retired, due to environmental constraints and low efficiency, coupled with a continued drop in the fuel price of gas relative to coal. Coal-fired capacity in 2011 was 318 GWe. In 2014 the USA added 15.45 GWe of new generation capacity, 7.9 GWe of which was gas-fired, almost entirely (92%) CCGT. The predominance of CCGT is driven by low gas prices, strict regulation of coal-fired plants, and the need to back-up intermittent renewables input.


Given that nuclear plants generate nearly 20% of the nation’s electricity overall and 63% of its carbonfree electricity, even a modest increase in electricity demand would require 13.2 GWe of new nuclear capacity by 2025 in addition to the five nuclear plants currently under construction in order to maintain this share. If today’s nuclear plants retire after 60 years of operation, 22 GWe of new nuclear capacity would be needed by 2030, and 55 GWe by 2035 to maintain a 20% nuclear share.



NRC: List of Power Reactor Units


United States Nuclear Regulatory Commission - Protecting People and the Environment ... For more information, see Map of Power Reactor Sites and our annually published Information Digest ... Type, Location, Owner/Operator, NRC Region .... 05000277, BWR, 17.9 miles S of Lancaster, PA, Exelon Generation Co ., LLC, 1. http://www.nrc.gov/reactors/operating/list-power-reactor-units.html


When Foreign Countries Want to Buy into U.S. Nuclear Power Plants – What Then?

3 Comments Posted by Moderator on February 28, 2011


The United States has historically struggled to balance its commitment to economic openness and foreign investment with national security concerns. For example, U.S. national policy makers have worked to make sure sensitive military and defense technology and production remain with American companies.

After 9/11, concerns grew that foreign ownership of U.S. infrastructure could increase our vulnerability to terrorist attacks. One example is the heated debate triggered by the 2006 purchase of a company that ran U.S. ports by the United Arab Emirates-owned company Dubai Ports World. (Dubai Ports eventually sold its interests to a U.S. company.) More recently, globalization of the nuclear industry and the weak U.S. economy have attracted significant levels of foreign investment in the U.S. nuclear industry.

The Atomic Energy Act prohibits the NRC from issuing a license to any entity that the Commission believes is “owned, controlled or dominated by an alien, a foreign corporation or foreign government.” Broadly speaking, the foreign ownership prohibition protects the “common defense and security” of the United States, even though this may prevent some nations from participating in U.S. nuclear joint ventures.

However, the NRC can permit foreign investment in nuclear power reactors if certain conditions are met. What are these conditions?

The licensee must submit a plan that describes how it will mitigate foreign control issues. For example, the licensee could exclude foreign board directors from nuclear safety and security decisions or establish “Nuclear Advisory Committees” made up of U.S. citizens to oversee safety and security practices.

For any proposed foreign joint venture, the NRC staff reviews many aspects of the proposed corporate structures of the owners, including parent companies and subsidiaries, financial arrangements, operating agreements, voting requirements, and decision-making authorities. The staff can impose license conditions specific to the situation.

Foreign investment will continue to play a critical part in the U.S. nuclear industry. Through effective staff review and implementation of effective mitigation measures, the NRC can continue to protect the common defense and security regardless of ownership.

Anneliese Simmons
Nuclear Reactor Financial Analyst


Foreign Ownership, Control, or Domination (FOCD) of Commercial Nuclear Power Plants

Section 103d of the Atomic Energy Act of 1954, as amended (AEA) provide, in relevant part, that:

No license may be issued to an alien or any corporation or other entity if the Commission knows or has reason to believe it is owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government.  In any event, no license may be issued to any person within the United States if, in the opinion of the Commission, the issue of a license to such person would be inimical to the common defense and security or to the health and safety of the public.


Section 104d of the AEA contains a nearly identical prohibition.  Section 50.38 of Title 10 of the Code of Federal Regulations (10 CFR) implements this statutory prohibition, providing that:

Any person who is a citizen, national, or agent of a foreign country, or any corporation, or other entity which the Commission knows or has reason to believe is owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government, shall be ineligible to apply for and obtain a license.



The NRC’s Foreign Ownership Policy: Charting a New Course for the 21st Century
James A. Glasgow, Stephen L. Markus


This article was published in Law360 on July 25, 2013.

In spite of the growing globalization of the nuclear energy industry, the prohibition on foreign ownership, control or domination (FOCD) of U.S. nuclear power plants has substantially hindered foreign investment in new U.S. nuclear plants and ownership of existing plants. Recently, FOCD determinations by the Nuclear Regulatory Commission (NRC) have precluded the issuance of a combined construction and operating license (COL) for proposed new reactors at the South Texas Project and Calvert Cliffs nuclear power stations. However, the NRC’s newly initiated proceeding to reevaluate its FOCD policy may result in new guidelines that could add needed clarity to a Cold War-era policy and ultimately remove, or at least reduce, a significant obstacle to foreign investment in U.S. nuclear power stations. Through submission of comments by August 2, 2013, interested persons have a prime opportunity to help guide the NRC’s development of a new or modified policy.

The AEA’s Restriction: An Outmoded Vestige of the Cold War?

The prohibition on foreign ownership, control or domination of U.S. nuclear power plants is embodied in the Atomic Energy Act of 1954, as amended (AEA), and NRC implementing regulations. Section 103d of the AEA prohibits the NRC’s issuance of a license to own or operate a power reactor to “any corporation or other entity if the Commission knows or has reason to believe it is owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government.”1 The NRC’s regulations implement this requirement by providing that “[a]ny person who is a citizen, national, or agent of a foreign country, or any corporation, or other entity which the Commission knows or has reason to believe is owned, controlled, or dominated by an alien, a foreign corporation, or a foreign government, shall be ineligible to apply for and obtain a license.” 2 As a result of the Commission’s longstanding interpretation of the AEA’s requirements, all owners of a nuclear power plant – including even owners of a small minority interest – are required to obtain an NRC license to hold such a “possessory” interest.3 Accordingly, such persons are subject to the FOCD prohibition contained in the AEA and the NRC’s implementing regulations and may not obtain such a license without the NRC’s finding of an absence or sufficient negation of FOCD.

Read More: The NRC’s Foreign Ownership Policy: Charting a New Course for the 21st Century




NRC to Use Graded Approach on Foreign Ownership Staff to develop “graded” approach to foreign ownership of nuclear facilities Commission agrees new rules must reflect realities of today’s global markets Foreign financing and indirect control should be allowed on case-by-case basis May 7, 2015—The U.S. Nuclear Regulatory Commission will update its approach to its decades-old positions concerning foreign ownership, control or domination (FOCD) of U.S. nuclear energy facilities. NRC commissioners this week unanimously directed agency staff to develop graded criteria to assess project applications by nuclear suppliers that may be partly owned, controlled or dominated by foreign entities.


The move, which does not change the agency’s reading of its statutory obligation, recognizes that reviews of nuclear energy facility license applications should take into account “the realities of today’s interconnected and global nuclear energy markets,” NEI Vice President, General Counsel and Secretary Ellen Ginsberg said.

“The overall success of the staff’s effort will depend on the details of the revised standard review plan and guidance and whether the guidance will be applied in a way that avoids imposition of unduly burdensome obligations that ultimately do not add significant value in terms of ensuring nuclear safety or protecting national security,” she added.

The industry has expressed concern for years that the NRC’s Cold War-era statutory prohibition on foreign ownership, control or domination of the domestic nuclear energy industry is outdated and unnecessarily hampers foreign investment. In 2012, the NRC’s Atomic Safety and Licensing Board ruled that UniStar Nuclear Energy could not build and operate its proposed Calvert Cliffs 3 nuclear power plant in Maryland because it was 100 percent owned by Électricité de France, itself majority-owned by the French government. The NRC denied UniStar’s appeal in 2013.

NEI’s noted in November 2014 comments to the agency that nuclear technology “is no longer limited to the United States and a few select other nations; power reactor technology is now owned and controlled by international companies.” 

The commission’s direction this week for staff to develop criteria for a graded approach to mitigating any potential foreign ownership, control or domination “should result in agency reviews that more realistically evaluate whether a foreign entity can exercise control over nuclear materials and facility operation or undermine national defense and security,” Ginsberg said.

“NEI believes a graded approach could range from a presumption of no control to requiring significantly enhanced governance controls. But, in all cases, FOCD negation actions should be appropriately tailored to meet the specific facts of the case and the potential safety or security implications.”

In light of NEI’s longstanding view that using license conditions to resolve FOCD issues at the time of licensing would provide regulatory certainty to investors and other parties, Ginsberg said the industry “is pleased that the commission has affirmed our position and given staff explicit direction to rely on license conditions as part of its approach to FOCD issues.” 



Foreign Ownership of U.S. Infrastructure

Authors: Eben Kaplan, and Lee Hudson Teslik
Updated: February 13, 2007

This publication is now archived.


· Introduction

· What new measures are under review in Congress?

· What are the business community’s objections to the bill?

· What concerns are there over foreign companies owning U.S. infrastructure?

· What has changed since the Dubai Ports World controversy?

· What are the benefits of foreign investment for the United States?

· What is “critical infrastructure?”

· What foreign entities are most invested in the United States? What do they own?

· How are foreign investments reviewed?

· Is the CFIUS review process sufficient to protect national security?

· Has foreign investment aroused security concerns in the past?

Congress is again taking up the issue of foreign investment in U.S. infrastructure, nearly one year after the United Arab Emirates-owned company Dubai Ports World set off heated debate with its purchase of a company that ran U.S. ports. Dubai Ports World eventually sold its U.S. operations to an American company, but the central issues of the foreign ownership debate remain far from settled. These questions include how to balance economic openness with national security and how much control foreign companies should be allowed to have over U.S. infrastructure. Right after the Dubai Ports World controversy, Congress proposed the sweeping National Defense Critical Infrastructure Protection Act, aimed at blocking foreign-owned companies from purchasing or operating critical infrastructure. That bill never passed. Meanwhile, increased publicity has only added to the burdens on the U.S. panel charged with monitoring incoming investment, the Committee on Foreign Investment in the United States (CFIUS), which received 73 percent more filings for review in 2006 than it did in 2005.

What new measures are under review in Congress?


A bill pending approval in the House Financial Services Committee aims to set up a panel to oversee the operations of CFIUS. The panel would span twelve separate government agencies and be headed by the Treasury Department. According to February 7 testimony by Clay Lowery, the Treasury Department’s assistant secretary for international affairs, two primary qualms with the bill come from the Bush administration. These are: 1) its requirement that only the two senior-most officials at CFIUS can certify the completion of a review; and 2) a requirement mandating a secondary 45-day investigation of any review involving businesses owned by a foreign government. http://www.cfr.org/business-and-foreign-policy/foreign-ownership-us-infrastructure/p10092


SEC Concept Release:
Registered Public-Utility Holding Companies and Internationalization



17 CFR Part 250

[Release No. 35-27110; International Series Release No. 1210; File No. S7-30-99]

Registered Public-Utility Holding Companies and Internationalization

Agency:   Securities and Exchange Commission

Action:   Concept release; request for comments

Summary:   We are seeking comment on various issues surrounding the acquisition of United States utilities by foreign companies that will register as holding companies following the transaction.

Dates:   Comments must be submitted on or before [insert date 45 days after the date of publication in the Federal Register].

Addresses:   Please send three copies of the comment letter to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. Comments also may be submitted electronically at the following E-mail address: rule-comments@sec.gov. All comment letters should refer to File No. S7-30-99; include this file number on the subject line if E-mail is used. Anyone can read and copy the comment letters at our Public Reference Room, 450 Fifth Street, N.W. Washington, D.C. 20549. Electronically submitted comment letters also will be posted on our Internet website (http://www.sec.gov).

For Further Information Contact:   Catherine A. Fisher, Assistant Director, or Mark F. Vilardo, Senior Counsel, both at (202) 942-0545.

Supplementary Information:   Today we are requesting comment on issues arising under the Act with respect to foreign acquisitions of U.S. utilities.

Table of Contents


I. Executive Summary and Introduction

II. Background

III. Acquisition of U.S. Utilities by Foreign Companies


A. The Legal Framework


B. Areas for Comment



1. General Policies of the Act



2. Section 11



3. Other Standards for Reviewing Acquisitions



4. Substantive Regulation of Foreign Holding Companies



5. Accounts and Records; Jurisdiction



6. Other Issues


I. Executive Summary and Introduction


In 1992, Congress adopted the Energy Policy Act of 1992 [Pub. L. 102-486, 106 Stat. 2776 (1992)] ("Energy Policy Act"). The legislation amended the Public Utility Holding Company Act of 1935 [15 U.S.C. 79(a) et seq.] ("Holding Company Act" or "Act") to create two new types of exempt entities, exempt wholesale generators ("EWGs") and foreign utility companies ("FUCOs"). The legislation was intended to facilitate investments in foreign utilities by U.S. companies.

Just as registered holding companies have pursued investment opportunities abroad, foreign companies are increasingly seeking to enter the utility business in the United States.1 Recently, two British companies engaged in the utility or energy business, Scottish Power plc ("ScottishPower") and The National Grid Group plc ("National Grid"), have announced (and, in the case of ScottishPower, completed) plans to acquire U.S. utilities or public-utility holding companies.2 ScottishPower has registered under the Act and National Grid has announced its intention to do so. The acquisition of a U.S. utility or holding company by a foreign company and the acquiror's subsequent registration raise a number of interpretative and policy issues under the Act. We will need to address these issues when such transactions are presented to us for any necessary approvals or when the foreign companies register under the Act. We are, therefore, seeking comment from the public relating to these issues.

II. Background


Congress amended the Holding Company Act in 1992 in response to changes in the United States utility industry. As discussed in greater detail below, the Energy Policy Act created new categories of exempt entities and thereby provided greater flexibility for U.S. and foreign companies to acquire EWGs and for U.S. utilities to acquire both EWGs and FUCOs.3

The utility business is rapidly evolving into a global industry, with participants seeking multinational investment opportunities. Sweeping political and economic changes worldwide have created a large demand for American utility expertise and significant investment opportunities for United States companies. Registered public utility holding companies have taken advantage of these opportunities. As of December 31, 1998, registered holding companies had invested $8.2 billion in FUCOs and $892 million in domestic and foreign EWGs. Based on publicly reported information, we believe that investments made by exempt holding companies and public utilities not part of a registered or exempt holding company system, are significantly higher.4 At the same time, foreign energy companies have made significant investments in the United States, primarily through acquisition of electric wholesale generation units which, by virtue of the Energy Policy Act, are exempt from the Act.5 In this Release, we are requesting comment on issues relating to the acquisition of U.S. utility companies by foreign holding companies.

III. Acquisition of U.S. Utilities by Foreign Companies


In 1994, in recognition of the increasingly international nature of the energy business, we requested public comment on the concept of foreign ownership of U.S. utilities.6 We asked, among other things, whether the Holding Company Act permits foreign ownership; what conditions should be placed on foreign ownership; whether there was a national security interest in restricting foreign ownership of U.S. utilities; whether there are difficulties in obtaining information from foreign companies that would support limitations on foreign ownership; and what types of safeguards or limitations on ownership might prevent or minimize such risks.

Most commenters appeared to agree that the Holding Company Act did not, or should not, prohibit foreign ownership of U.S. utilities.7 Commenters suggested that foreign ownership could bring some advantages to domestic utilities – increased sources of capital (which could reduce the cost of capital) and management experienced in dealing with competitive markets.8 Commenters agreed that foreign holding companies would and should be subject to the same regulatory requirements as U.S. companies.9 Local regulators were divided on whether foreign ownership would impede their ability to obtain information relevant to rate making.10

Since our initial request for comment, there have been significant foreign investments in domestic power projects.11 The prospect of foreign ownership of significant U.S. utilities is raised by ScottishPower's acquisition of PacifiCorp and National Grid's proposed acquisition of NEES.12 ScottishPower has registered under the Act, and National Grid has announced its intention to do so. The acquisition of a U.S. utility or holding company by a foreign company and the acquiror's subsequent registration raise a number of interpretative and policy issues under the Act. We think it appropriate, therefore, to renew our request for comment on the issues related to foreign ownership of U.S. utilities.

A. The Legal Framework


Federal law imposes various restrictions on foreign ownership of some significant industries. Some laws specifically restrict foreign ownership.13 Others provide for ownership subject to certain conditions. The Federal Aviation Act, for example, establishes percentage limitations on board membership and voting interests in determining whether an air carrier is considered a United States citizen.14

In contrast, the Holding Company Act is silent concerning foreign ownership of domestic utilities. Nowhere does the Act explicitly require that a holding company be organized under U.S. law.15 Indeed, we have noted that the Holding Company Act" contains no prohibition against foreign holding companies as such."16 We have not had occasion, however, at least in recent times, to address the registration under the Act of a foreign holding company.

It appears that Congress, in 1935, did not intend or foresee ownership of a domestic utility by a holding company domiciled outside the United States. The Act places structural and geographic limitations upon public-utility holding company systems. Section 11 of the Act generally limits a registered holding company to ownership of a single "integrated public-utility system," defined in terms of a group of naturally related operating properties. Under section 2(a)(29) of the Act, an integrated public-utility system is "confined in its operations to a single area or region, in one or more States . . . ."17

For many years, it was generally assumed that the integration provisions of the Act would generally preclude a U.S. registered holding company from owning both domestic and foreign utility properties, especially if the foreign utility operations were located in a country not contiguous to the United States.18 For virtually identical reasons, the integration provisions were understood to bar a holding company with foreign utility operations from acquiring a U.S. utility.19

In 1992, we determined that a U.S. registered holding company could acquire foreign utility properties notwithstanding the integration provision.20 In that year also, as discussed previously, Congress amended the Holding Company Act to permit the ownership of EWGs and FUCOs – utility properties that would not, when combined with existing utility properties, constitute an integrated system.

Sections 32 and 33 provide that EWGs and FUCOs are not public-utility companies. Thus, the Act's statutory integration provisions, by their terms, are not applicable to these entities. To eliminate any doubt that ownership does not implicate the Act's integration requirements, section 33(c)(3) provides that ownership of a FUCO is considered to be "consistent with the operation of a single integrated public utility system, within the meaning of section 11 . . . ."21 Section 32(h)(1) contains a similar provision for EWGs.

Section 33 is neutral on its face with respect to the ownership of a FUCO by a foreign holding company.22 It is thus possible to construe section 33(c)(1) to allow a foreign holding company to qualify its foreign utility operations as a FUCO, and the foreign holding company to acquire a U.S. utility without regard to the integration of the foreign and domestic operations. As explained above, the Act would otherwise generally raise significant barriers to an acquisition of U.S. utility properties by a foreign company with existing foreign utility properties.

In adopting the Energy Policy Act, Congress did not address this possibility and therefore may not have intended this interpretation of section 33(c)(1). The legislative history of the Energy Policy Act emphasizes that the legislation was designed to enable U.S. companies to respond to domestic and overseas investment opportunities. Nothing in the legislative history suggests that section 33 was intended to be a vehicle for foreign investment in the United States.

Moreover, although section 33(c)(1) does not expressly preclude foreign holding companies, we do not believe it should be interpreted to permit a foreign holding company to acquire a U.S. utility if doing so would undercut the fundamental purpose of the Act – to protect consumers and investors.23 We recognize that foreign registered holding companies present novel and important issues. We therefore are soliciting comments generally on the registration and regulation of foreign holding companies. These comments will inform our consideration of rule 55, our consideration of applications and requests for interpretative guidance concerning foreign holding companies and our review, under section 11, of registration statements filed by foreign holding companies. The comments may also suggest an additional rulemaking to address these issues.

B. Areas for Comment


1. General Policies of the Act


The Holding Company Act was intended to address the practices by which small groups of investors, by means of the holding company structure, were able to exploit vast networks of utility companies, to the detriment of utility consumers and other security holders. The specific problems identified by Congress included inadequate disclosure, excessive leverage, abusive affiliate transactions, evasion of state regulation, and the growth and extension of holding companies without regard to the economy of management and operation of system utility companies.24

We request comment whether foreign registered holding companies, by virtue of being foreign, are inconsistent with the Holding Company Act's policies. In general, we request comment concerning:

the effects of foreign ownership on effective Commission regulation;

the effects of foreign ownership on effective state regulation;

the effects of foreign ownership on investor protection; and

the effects of foreign ownership on consumer protection.


In particular, a registered foreign holding company would likely own significant foreign utility operations. The magnitude of these

foreign utility operations could be significantly greater than those currently owned by U.S. holding companies; they could be

significantly larger than the holding company's U.S. utility system. Will this expose U.S. ratepayers to greater risks? Should newly

registered, foreign holding companies' interests in FUCOs and EWGs be "grandfathered," with only post-registration FUCO and

EWG investments counted toward the aggregate investment test of rule 53(a)(1)?25 U.S. holding companies, in seeking

authorization to issue securities to finance the acquisition of FUCOs, have represented that they will not seek recovery in rates for

any losses, or inadequate returns, on their investments in FUCOs and EWGs. Will foreign holding companies be in a position to

make similar undertakings with respect to their FUCO operations?


We also request comments on whether structural safeguards can be developed to limit the risk that financial problems in the holding company's FUCOs will have an adverse affect on U.S. ratepayers and security holders of the holding company's U.S. subsidiaries. For example, would requiring the U.S. utility subsidiary stock to be owned by an intermediate holding company based in the U.S. and organized under state law provide any additional protection to U.S. interests? Would such intermediate holding companies be consistent with the Act's goal of simplifying the corporate structure of holding companies? We are particularly interested in the views of state regulators and consumers concerning the effects of foreign ownership on state regulation and consumer protection.

2. Section 11


Section 11 has been described by the Supreme Court as the "very heart" of the Act.26 In addition to the general requirement that a registered holding company own a single integrated public-utility system, section 11 limits nonutility businesses to those that are "reasonably incidental, or economically necessary or appropriate" to system utility operations, on our finding that the nonutility businesses are "necessary or appropriate in the public interest or for the protection of investors or consumers and not detrimental to the proper functioning of such system or systems." Section 11 further directs us to require the simplification of the corporate structure of registered systems and to ensure that voting power is fairly and equitably distributed among security holders.


The policies underlying section 11 must also enter into our consideration of the acquisition of a U.S. utility by a foreign company. Section 10(c)(1) provides that we cannot approve an acquisition if it would be detrimental to the carrying out of the provisions of section 11. Section 10(c)(2) provides that we must find that the acquisition will serve the public interest by tending towards the economical and efficient development of an integrated public-utility system.

Section 10(c)(2) "make[s] clear that the Commission was not to approve acquisitions of utility securities merely because of the absence of indications of any positive detriment to the carrying out of Section 11."27 What types of direct or indirect benefits should be considered under section 10(c)(2) when a foreign company seeks to acquire a domestic utility? For example, would a domestic public-utility system benefit from an affiliation with a financially stronger foreign holding company, or a foreign company that has experience in operating in competitive markets? Are these benefits a sufficient basis for making the findings required by section 10(c)(2)? Are there other economies and efficiencies that foreign ownership would confer upon a domestic system?

Commenters should specifically address the key goals of an integrated system as reflected in section 2(a)(29) – the "advantages of localized management, efficient operation, and the effectiveness of regulation . . . ."28 Localized management is a particular issue in this context. The advantage of localized management is that policies affecting consumers and local regulators are handled by persons who are intimately familiar with local conditions and are sensitive and responsive to the interests of the community and of consumers. This does not necessarily mean that the directors and officers of the holding company must be permanent residents of the locality. For example, the advantages of localized management can be realized where the authority and responsibility for local policy-making are properly delegated throughout the service territory of the holding company. Would a foreign holding company be able to preserve the advantages of local management?

Section 11 not only addresses the integration of utility properties but also requires us to limit the nonutility businesses of a registered holding company to those that are "reasonably incidental, or economically necessary or appropriate to the operations of" the holding company system. We have interpreted this provision to reflect a Congressional policy against nonutility acquisitions that bear no functional relationship to the core utility business of the registered holding company. We request comments on how this provision should apply with respect to non-utility businesses of a FUCO.


Federal Renewable Reserve Depository (FRRD), Federal Taxes, PCD’s and EPA