Question
From: (Redacted)
Sent: Wednesday, November 04, 2009 3:37 PM
To: Verne, B. Michael
Subject:Assistance Rule 802.2(b)
Mike, I hope allis well. I have a somewhat technical question of what constitutes "soleand continuous possession and use of the facility" in Rule 802.2(b). TheBuyer here is a lessee of an undivided 35% interest in a power plant and isacquiring that 35% interest from the lessor who held title for financingpurposes. Buyer was one of the original owners of the facility and then theplant was transferred to the seller and this lease was entered into at the sametime the plant became operational. Thus, the Buyer was in "continuouspossession and use." Technically the Buyer was not in "sole...possession and use of the facility" because there were other lessees.However, I do not think this should bar application of the exemption. First,under Informal Interpretation 0406008, Rule 802.2(b) was applied to theacquisition of a fractional interest (although it seems the Buyer was the onlylessee). If the Rule applies to the acquisition of a fractional interest thenit should not matter if there were other lessees in possession and use.Finally, as a practical matter, the Buyer is obtaining the same interest it iscurrently leasing, 35% of the power plant, and is not obtaining more capacitythan it has pursuant to the lease. Thus, from a practical and competitivestandpoint, nothing has really changed.