FERC Cracks Down on Violations of Interlocking Director Rules

The Federal Energy Regulatory Commission ("FERC") has strict rules regarding who can serve as an officer or director of a public utility while also serving in such a role with specified other types of company. Prior FERC approval is required if a utility officer or director wants to be an officer or director of another public utility, a company supplying electrical equipment to the utility, or a company authorized to underwrite utility securities. On April 14, 2004, FERC denied a request by the CEO of a utility to serve as outside director of a firm supplying electrical equipment to his company. This order represents a denial of a request that in the recent past might have been approved. Importantly, the case also drew sharp rebukes and calls for more vigorous enforcement from the FERC Commissioners.