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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4881 Introduced in House (IH)]

106th CONGRESS
  2d Session
                                H. R. 4881

 To benefit electricity consumers by promoting the reliability of the 
                           bulk-power system.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             July 18, 2000

   Mr. Smith of Washington introduced the following bill; which was 
                 referred to the Committee on Commerce

_______________________________________________________________________

                                 A BILL

 
 To benefit electricity consumers by promoting the reliability of the 
                           bulk-power system.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Electric Reliability 2000 Act''.

SEC. 2. ELECTRIC RELIABILITY ORGANIZATION.

    (a) In General.--Part II of the Federal Power Act (16 U.S.C. 824 et 
seq.) is amended by adding at the end the following:

``SEC. 215. ELECTRIC RELIABILITY ORGANIZATION.

    ``(a) Definitions.--In this section:
            ``(1) Affiliated regional reliability entity.--The term 
        `affiliated regional reliability entity' means an entity 
        delegated authority under subsection (h).
            ``(2) Bulk-power system.--
                    ``(A) In general.--The term `bulk-power system' 
                means all facilities and control systems necessary for 
                operating an interconnected electric power transmission 
                grid or any portion of an interconnected transmission 
                grid.
                    ``(B) Inclusions.--The term `bulk-power system' 
                includes--
                            ``(i) high voltage transmission lines, 
                        substations, control centers, communications, 
                        data, and operations planning facilities 
                        necessary for the operation of all or any part 
                        of the interconnected transmission grid; and
                            ``(ii) the output of generating units 
                        necessary to maintain the reliability of the 
                        transmission grid.
            ``(3) Bulk-power system user.--The term `bulk-power system 
        user' means an entity that--
                    ``(A) sells, purchases, or transmits electric 
                energy over a bulk-power system; or
                    ``(B) owns, operates, or maintains facilities or 
                control systems that are part of a bulk-power system; 
                or
                    ``(C) is a system operator.
            ``(4) Electric reliability organization.--The term 
        `electric reliability organization' means the organization 
        designated by the Commission under subsection (d).
            ``(5) Entity rule.--The term `entity rule' means a rule 
        adopted by an affiliated regional reliability entity for a 
        specific region and designed to implement or enforce 1 or more 
        organization standards.
            ``(6) Independent director.--The term `independent 
        director' means a person that--
                    ``(A) is not an officer or employee of an entity 
                that would reasonably be perceived as having a direct 
                financial interest in the outcome of a decision by the 
                board of directors of the electric reliability 
                organization; and
                    ``(B) does not have a relationship that would 
                interfere with the exercise of independent judgment in 
                carrying out the responsibilities of a director of the 
                electric reliability organization.
            ``(7) Industry sector.--The term `industry sector' means a 
        group of bulk-power system users with substantially similar 
        commercial interests, as determined by the board of directors 
        of the electric reliability organization.
            ``(8) Interconnection.--The term `interconnection' means a 
        geographic area in which the operation of bulk-power system 
        components is synchronized so that the failure of 1 or more of 
        the components may adversely affect the ability of the 
        operators of other components within the interconnection to 
        maintain safe and reliable operation of the facilities within 
        their control.
            ``(9) Organization standard.--
                    ``(A) In general.--The term `organization standard' 
                means a policy or standard adopted by the electric 
                reliability organization to provide for the reliable 
                operation of a bulk-power system.
                    ``(B) Inclusions.--The term `organization standard' 
                includes--
                            ``(i) an entity rule approved by the 
                        electric reliability organization; and
                            ``(ii) a variance approved by the electric 
                        reliability organization.
            ``(10) Public interest group.--
                    ``(A) In general.--The term `public interest group' 
                means a nonprofit private or public organization that 
                has an interest in the activities of the electric 
                reliability organization.
                    ``(B) Inclusions.--The term `public interest group' 
                includes--
                            ``(i) a ratepayer advocate;
                            ``(ii) an environmental group; and
                            ``(iii) a State or local government 
                        organization that regulates participants in, 
                        and promulgates government policy with respect 
                        to, the market for electric energy.
            ``(11) System operator.--
                    ``(A) In general.--The term `system operator' means 
                an entity that operates or is responsible for the 
                operation of a bulk-power system.
                    ``(B) Inclusions.--The term `bulk-power system' 
                includes--
                            ``(i) high voltage transmission lines, 
                        substations, control centers, communications, 
                        data, and operations planning facilities 
                        necessary for the operation of all or any part 
                        of the interconnected transmission grid; and
                            ``(ii) the output of generating units 
                        necessary to maintain the reliability of the 
                        transmission grid.
            ``(3) Bulk-power system user.--The term `bulk-power system 
        user' means an entity that--
                    ``(A) sells, purchases, or transmits electric 
                energy over a bulk-power system; or
                    ``(B) owns, operates, or maintains facilities or 
                control systems that are part of a bulk-power system; 
                or
                    ``(C) is a system operator.
            ``(4) Electric reliability organization.--The term 
        `electric reliability organization' means the organization 
        designated by the Commission under subsection (d).
            ``(5) Entity rule.--The term `entity rule' means a rule 
        adopted by an affiliated regional reliability entity for a 
        specific region and designed to implement or enforce 1 or more 
        organization standards.
            ``(6) Independent director.--The term `independent 
        director' means a person that--
                    ``(A) is not an officer or employee of an entity 
                that would reasonably be perceived as having a direct 
                financial interest in the outcome of a decision by the 
                board of directors of the electric reliability 
                organization; and
                    ``(B) does not have a relationship that would 
                interfere with the exercise of independent judgment in 
                carrying out the responsibilities of a director of the 
                electric reliability organization.
            ``(7) Industry sector.--The term `industry sector' means a 
        group of bulk-power system users with substantially similar 
        commercial interests, as determined by the board of directors 
        of the electric reliability organization.
            ``(8) Interconnection.--The term `interconnection' means a 
        geographic area in which the operation of bulk-power system 
        components is synchronized so that the failure of 1 or more of 
        the components may adversely affect the ability of the 
        operators of other components within the interconnection to 
        maintain safe and reliable operation of the facilities within 
        their control.
            ``(9) Organization standard.--
                    ``(A) In general.--The term `organization standard' 
                means a policy or standard adopted by the electric 
                reliability organization to provide for the reliable 
                operation of a bulk-power system.
                    ``(B) Inclusions.--The term `organization standard' 
                includes--
                            ``(i) an entity rule approved by the 
                        electric reliability organization; and
                            ``(ii) a variance approved by the electric 
                        reliability organization.
            ``(10) Public interest group.--
                    ``(A) In general.--The term `public interest group' 
                means a nonprofit private or public organization that 
                has an interest in the activities of the electric 
                reliability organization.
                    ``(B) Inclusions.--The term `public interest group' 
                includes--
                            ``(i) a ratepayer advocate;
                            ``(ii) an environmental group; and
                            ``(iii) a State or local government 
                        organization that regulates participants in, 
                        and promulgates government policy with respect 
                        to, the market for electric energy.
            ``(11) System operator.--
                    ``(A) In general.--The term `system operator' means 
                an entity that operates or is responsible for the 
                operation of a bulk-power system.
                    ``(B) Inclusions.--The term `system operator' 
                includes--
                            ``(i) a control area operator;
                            ``(ii) an independent system operator;
                            ``(iii) a transmission company;
                            ``(iv) a transmission system operator; and
                            ``(v) a regional security coordinator.
            ``(12) Variance.--The term `variance' means an exception 
        from the requirements of an organization standard (including a 
        proposal for an organization standard in a case in which there 
        is no organization standard) that is adopted by an affiliated 
        regional reliability entity and is applicable to all or a part 
        of the region for which the affiliated regional reliability 
        entity is responsible.
    ``(b) Commission Authority.--
            ``(1) Jurisdiction.--Notwithstanding section 201(f), within 
        the United States, the Commission shall have jurisdiction over 
        the electric reliability organization, all affiliated regional 
        reliability entities, all system operators, and all bulk-power 
        system users, including entities described in section 201(f), 
        for purposes of approving organization standards and enforcing 
        compliance with this section.
            ``(2) Definition of terms.--The Commission may by 
        regulation define any term used in this section consistent with 
        the definitions in subsection (a) and the purpose and intent of 
        this Act.
    ``(c) Existing Reliability Standards.--
            ``(1) Submission to the commission.--Before designation of 
        an electric reliability organization under subsection (d), any 
        person, including the North American Electric Reliability 
        Council and its member Regional Reliability Councils, may 
        submit to the Commission any reliability standard, guidance, 
        practice, or amendment to a reliability standard, guidance, or 
        practice that the person proposes to be made mandatory and 
        enforceable.
            ``(2) Review by the commission.--The Commission, after 
        allowing interested persons an opportunity to submit comments, 
        may approve a proposed mandatory standard, guidance, practice, 
        or amendment submitted under paragraph (1) if the Commission 
        finds that the standard, guidance, or practice is just, 
        reasonable, not unduly discriminatory or preferential, and in 
        the public interest.
            ``(3) Effect of approval.--A standard, guidance, or 
        practice shall be mandatory and applicable according to its 
        terms following approval by the Commission and shall remain in 
        effect until it is--
                    ``(A) withdrawn, disapproved, or superseded by an 
                organization standard that is issued or approved by the 
                electric reliability organization and made effective by 
                the Commission under section (e); or
                    ``(B) disapproved by the Commission if, on 
                complaint or upon motion by the Commission and after 
                notice and an opportunity for comment, the Commission 
                finds the standard, guidance, or practice to be unjust, 
                unreasonable, unduly discriminatory or preferential, or 
                not in the public interest.
            ``(4) Enforceability.--A standard, guidance, or practice in 
        effect under this subsection shall be enforceable by the 
        Commission.
    ``(d) Designation of Electric Reliability Organization.--
            ``(1) Regulations.--
                    ``(A) Proposed regulations.--Not later than 90 days 
                after the date of enactment of this section, the 
                Commission shall propose regulations specifying 
                procedures and requirements for an entity to apply for 
                designation as the electric reliability organization.
                    ``(B) Notice and comment.--The Commission shall 
                provide notice and opportunity for comment on the 
                proposed regulations.
                    ``(C) Final regulation.--Not later than 180 days 
                after the date of enactment of this section, the 
                Commission shall promulgate final regulations under 
                this subsection.
            ``(2) Application.--
                    ``(A) Submission.--Following the promulgation of 
                final regulations under paragraph (1), an entity may 
                submit an application to the Commission for designation 
                as the electric reliability organization.
                    ``(B) Contents.--The applicant shall describe in 
                the application--
                            ``(i) the governance and procedures of the 
                        applicant; and
                            ``(ii) the funding mechanism and initial 
                        funding requirements of the applicant.
            ``(3) Notice and comment.--The Commission shall--
                    ``(A) provide public notice of the application; and
                    ``(B) afford interested parties an opportunity to 
                comment.
            ``(4) Designation of electric reliability organization.--
        The Commission shall designate the applicant as the electric 
        reliability organization if the Commission determines that the 
        applicant--
                    ``(A) has the ability to develop, implement, and 
                enforce standards that provide for an adequate level of 
                reliability of bulk-power systems;
                    ``(B) permits voluntary membership to any bulk-
                power system user or public interest group;
                    ``(C) ensures fair representation of its members in 
                the selection of its directors and fair management of 
                its affairs, taking into account the need for 
                efficiency and effectiveness in decisionmaking and 
                operations and the requirements for technical 
                competency in the development of organization standards 
                and the exercise of oversight of bulk-power system 
                reliability;
                    ``(D) ensures that no 2 industry sectors have the 
                ability to control, and no 1 industry sector has the 
                ability to veto, the applicant's discharge of its 
                responsibilities as the electric reliability 
organization (including actions by committees recommending standards 
for approval by the board or other board actions to implement and 
enforce standards);
                    ``(E) provides for governance by a board wholly 
                comprised of independent directors;
                    ``(F) provides a funding mechanism and requirements 
                that--
                            ``(i) are just, reasonable, not unduly 
                        discriminatory or preferential and in the 
                        public interest; and
                            ``(ii) satisfy the requirements of 
                        subsection (l);
                    ``(G) has established procedures for development of 
                organization standards that--
                            ``(i) provide reasonable notice and 
                        opportunity for public comment, taking into 
                        account the need for efficiency and 
                        effectiveness in decisionmaking and operations 
                        and the requirements for technical competency 
                        in the development of organization standards;
                            ``(ii) ensure openness, a balancing of 
                        interests, and due process; and
                            ``(iii) includes alternative procedures to 
                        be followed in emergencies;
                    ``(H) has established fair and impartial procedures 
                for implementation and enforcement of organization 
                standards, either directly or through delegation to an 
                affiliated regional reliability entity, including the 
                imposition of penalties, limitations on activities, 
                functions, or operations, or other appropriate 
                sanctions;
                    ``(I) has established procedures for notice and 
                opportunity for public observation of all meetings, 
                except that the procedures for public observation may 
                include alternative procedures for emergencies or for 
                the discussion of information that the directors 
                reasonably determine should take place in closed 
                session, such as litigation, personnel actions, or 
                commercially sensitive information;
                    ``(J) provides for the consideration of 
                recommendations of States and State commissions; and
                    ``(K) addresses other matters that the Commission 
                considers appropriate to ensure that the procedures, 
                governance, and funding of the electric reliability 
                organization are just, reasonable, not unduly 
                discriminatory or preferential, and in the public 
                interest.
            ``(5) Exclusive designation.--
                    ``(A) In general.--The Commission shall designate 
                only 1 electric reliability organization.
                    ``(B) Multiple applications.--If the Commission 
                receives 2 or more timely applications that satisfy the 
                requirements of this subsection, the Commission shall 
                approve only the application that the Commission 
                determines will best implement this section.
    ``(e) Organization Standards.--
            ``(1) Submission of proposals to commission.--
                    ``(A) In general.--The electric reliability 
                organization shall submit to the Commission proposals 
                for any new or modified organization standards.
                    ``(B) Contents.--A proposal submitted under 
                subparagraph (A) shall include--
                            ``(i) a concise statement of the purpose of 
                        the proposal; and
                            ``(ii) a record of any proceedings 
                        conducted with respect to the proposal.
            ``(2) Review by the commission.--
                    ``(A) Notice and comment.--The Commission shall--
                            ``(i) provide notice of a proposal under 
                        paragraph (1); and
                            ``(ii) allow interested persons 30 days to 
                        submit comments on the proposal.
                    ``(B) Action by the commission.--
                            ``(i) In general.--After taking into 
                        consideration any submitted comments, the 
                        Commission shall approve or disapprove a 
                        proposed organization standard not later than 
                        the end of the 60-day period beginning on the 
                        date of the deadline for the submission of 
                        comments, except that the Commission may extend 
                        the 60-day period for an additional 90 days for 
                        good cause.
                            ``(ii) Failure to act.--If the Commission 
                        does not approve or disapprove a proposal 
                        within the period specified in clause (i), the 
                        proposed organization standard shall go into 
                        effect subject to its terms, without prejudice 
                        to the authority of the Commission to modify 
                        the organization standard in accordance with 
                        the standards and requirements of this section.
                    ``(C) Effective date.--An organization standard 
                approved by the Commission shall take effect not 
                earlier than 30 days after the date of the Commission's 
                order of approval.
                    ``(D) Standards for approval.--
                            ``(i) In general.--The Commission shall 
                        approve a proposed new or modified organization 
                        standard if the Commission determines the 
                        organization standard to be just, reasonable, 
                        not unduly discriminatory or preferential, and 
                        in the public interest.
                            ``(ii) Considerations.--In the exercise of 
                        its review responsibilities under this 
                        subsection, the Commission--
                                    ``(I) shall give due weight to the 
                                technical expertise of the electric 
                                reliability organization with respect 
                                to the content of a new or modified 
                                organization standard; but
                                    ``(II) shall not defer to the 
                                electric reliability organization with 
                                respect to the effect of the 
                                organization standard on competition.
                    ``(E) Remand.--A proposed organization standard 
                that is disapproved in whole or in part by the 
Commission shall be remanded to the electric reliability organization 
for further consideration.
            ``(3) Orders to develop or modify organization standards.--
        The Commission, on complaint or on motion of the Commission, 
        may order the electric reliability organization to develop 
and submit to the Commission, by a date specified in the order, an 
organization standard or modification to an existing organization 
standard to address a specific matter if the Commission considers a new 
or modified organization standard appropriate to carry out this 
section, and the electric reliability organization shall develop and 
submit the organization standard or modification to the Commission in 
accordance with this subsection.
            ``(4) Variances and entity rules.--
                    ``(A) Proposal.--An affiliated regional reliability 
                entity may propose a variance or entity rule to the 
                electric reliability organization.
                    ``(B) Expedited consideration.--If expedited 
                consideration is necessary to provide for bulk-power 
                system reliability, the affiliated regional reliability 
                entity may--
                            ``(i) request that the electric reliability 
                        organization expedite consideration of the 
                        proposal; and
                            ``(ii) file a notice of the request with 
                        the Commission.
                    ``(C) Failure to act.--
                            ``(i) In general.--If the electric 
                        reliability organization fails to adopt the 
                        variance or entity rule, in whole or in part, 
                        the affiliated regional reliability entity may 
                        request that the Commission review the 
                        proposal.
                            ``(ii) Action by the commission.--If the 
                        Commission determines, after a review of the 
                        request, that the action of the electric 
                        reliability organization did not conform to the 
                        applicable standards and procedures approved by 
                        the Commission, or if the Commission determines 
                        that the variance or entity rule is just, 
                        reasonable, not unduly discriminatory or 
                        preferential, and in the public interest and 
                        that the electric reliability organization has 
                        unreasonably rejected or failed to act on the 
                        proposal, the Commission may--
                                    ``(I) remand the proposal for 
                                further consideration by the electric 
                                reliability organization; or
                                    ``(II) order the electric 
                                reliability organization or the 
                                affiliated regional reliability entity 
                                to develop a variance or entity rule 
                                consistent with that requested by the 
                                affiliated regional reliability entity.
                    ``(D) Procedure.--A variance or entity rule 
                proposed by an affiliated regional reliability entity 
                shall be submitted to the electric reliability 
                organization for review and submission to the 
                Commission in accordance with the procedures specified 
                in paragraph (2).
            ``(5) Immediate effectiveness.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this subsection, a new or modified 
                organization standard shall take effect immediately on 
                submission to the Commission without notice or comment 
                if the electric reliability organization--
                            ``(i) determines that an emergency exists 
                        requiring that the new or modified organization 
                        standard take effect immediately without notice 
                        or comment;
                            ``(ii) notifies the Commission as soon as 
                        practicable after making the determination;
                            ``(iii) submits the new or modified 
                        organization standard to the Commission not 
                        later than 5 days after making the 
                        determination; and
                            ``(iv) includes in the submission an 
                        explanation of the need for immediate 
                        effectiveness.
                    ``(B) Notice and comment.--The Commission shall--
                            ``(i) provide notice of the new or modified 
                        organization standard or amendment for comment; 
                        and
                            ``(ii) follow the procedures set out in 
                        paragraphs (2) and (3) for review of the new or 
                        modified organization standard.
            ``(6) Compliance.--Each bulk power system user shall comply 
        with an organization standard that takes effect under this 
        section.
    ``(f) Coordination With Canada and Mexico.--
            ``(1) Recognition.--The electric reliability organization 
        shall take all appropriate steps to gain recognition in Canada 
        and Mexico.
            ``(2) International agreements.--
                    ``(A) In general.--The President shall use best 
                efforts to enter into international agreements with the 
                appropriate governments of Canada and Mexico to provide 
                for--
                            ``(i) effective compliance with 
                        organization standards; and
                            ``(ii) the effectiveness of the electric 
                        reliability organization in carrying out its 
                        mission and responsibilities.
                    ``(B) Compliance.--All actions taken by the 
                electric reliability organization, an affiliated 
                regional reliability entity, and the Commission shall 
                be consistent with any international agreement under 
                subparagraph (A).
    ``(g) Changes in Procedure, Governance, or Funding.--
            ``(1) Submission to the commission.--The electric 
        reliability organization shall submit to the Commission--
                    ``(A) any proposed change in a procedure, 
                governance, or funding provision; or
                    ``(B) any change in an affiliated regional 
                reliability entity's procedure, governance, or funding 
                provision relating to delegated functions.
            ``(2) Contents.--A submission under paragraph (1) shall 
        include an explanation of the basis and purpose for the change.
            ``(3) Effectiveness.--
                    ``(A) Changes in procedure.--
                            ``(i) Changes constituting a statement of 
                        policy, practice, or interpretation.--A 
                        proposed change in procedure shall take effect 
                        90 days after submission to the Commission if 
                        the change constitutes a statement of policy, 
                        practice, or interpretation with respect to the 
                        meaning or enforcement of the procedure.
                            ``(ii) Other changes.--A proposed change in 
                        procedure other than a change described in 
                        clause (i) shall take effect on a finding by 
                        the Commission, after notice and opportunity 
                        for comment, that the change--
                                    ``(I) is just, reasonable, not 
                                unduly discriminatory or preferential, 
                                and in the public interest; and
                                    ``(II) satisfies the requirements 
                                of subsection (d)(4).
                    ``(B) Changes in governance or funding.--A proposed 
                change in governance or funding shall not take effect 
                unless the Commission finds that the change--
                            ``(i) is just, reasonable, not unduly 
                        discriminatory or preferential, and in the 
                        public interest; and
                            ``(ii) satisfies the requirements of 
                        subsection (d)(4).
            ``(4) Order to amend.--
                    ``(A) In general.--The Commission, on complaint or 
                on the motion of the Commission, may require the 
                electric reliability organization to amend a 
                procedural, governance, or funding provision if the 
                Commission determines that the amendment is necessary 
                to meet the requirements of this section.
                    ``(B) Filing.--The electric reliability 
                organization shall submit the amendment in accordance 
                with paragraph (1).
    ``(h) Delegations of Authority.--
            ``(1) In general.--
                    ``(A) Implementation and enforcement of 
                compliance.--At the request of an entity, the electric 
                reliability organization shall enter into an agreement 
                with the entity for the delegation of authority to 
                implement and enforce compliance with organization 
                standards in a specified geographic area if the 
                electric reliability organization finds that--
                            ``(i) the entity satisfies the requirements 
                        of subparagraphs (A), (B), (C), (D), (F), (J), 
                        and (K) of subsection (d)(4); and
                            ``(ii) the delegation would promote the 
                        effective and efficient implementation and 
                        administration of bulk-power system 
                        reliability.
                    ``(B) Other authority.--The electric reliability 
                organization may enter into an agreement to delegate to 
                an entity any other authority, except that the electric 
                reliability organization shall reserve the right to set 
                and approve standards for bulk-power system 
                reliability.
            ``(2) Approval by the commission.--
                    ``(A) Submission to the commission.--The electric 
                reliability organization shall submit to the 
                Commission--
                            ``(i) any agreement entered into under this 
                        subsection; and
                            ``(ii) any information the Commission 
                        requires with respect to the affiliated 
                        regional reliability entity to which authority 
                        is delegated.
                    ``(B) Standards for approval.--The Commission shall 
                approve the agreement, following public notice and an 
                opportunity for comment, if the Commission finds that 
                the agreement--
                            ``(i) meets the requirements of paragraph 
                        (1); and
                            ``(ii) is just, reasonable, not unduly 
                        discriminatory or preferential, and in the 
                        public interest.
                    ``(C) Rebuttable presumption.--A proposed 
                delegation agreement with an affiliated regional 
                reliability entity organized on an interconnection-wide 
                basis shall be rebuttably presumed by the Commission to 
                promote the effective and efficient implementation and 
                administration of the reliability of the bulk-power 
                system.
                    ``(D) Invalidity absent approval.--No delegation by 
                the electric reliability organization shall be valid 
                unless the delegation is approved by the Commission.
            ``(3) Procedures for entity rules and variances.--
                    ``(A) In general.--A delegation agreement under 
                this subsection shall specify the procedures by which 
                the affiliated regional reliability entity may propose 
                entity rules or variances for review by the electric 
                reliability organization.
                    ``(B) Interconnection-wide entity rules and 
                variances.-- In the case of a proposal for an entity 
                rule or variance that would apply on an 
                interconnection-wide basis, the electric reliability 
                organization shall approve the entity rule or variance 
                unless the electric reliability organization makes a 
                written finding that the entity rule or variance--
                            ``(i) was not developed in a fair and open 
                        process that provided an opportunity for all 
                        interested parties to participate;
                            ``(ii) would have a significant adverse 
                        impact on reliability or commerce in other 
                        interconnections;
                            ``(iii) fails to provide a level of 
                        reliability of the bulk-power system within the 
                        interconnection such that the entity rule or 
                        variance would be likely to cause a serious and 
substantial threat to public health, safety, welfare, or national 
security; or
                            ``(iv) would create a serious and 
                        substantial burden on competitive markets 
                        within the interconnection that is not 
                        necessary for reliability.
                    ``(C) Noninterconnection-wide entity rules and 
                variances.--In the case of a proposal for an entity 
                rule or variance that would apply only to part of an 
                interconnection, the electric reliability organization 
                shall approve the entity rule or variance if the 
                affiliated regional reliability entity demonstrates 
                that the proposal--
                            ``(i) was developed in a fair and open 
                        process that provided an opportunity for all 
                        interested parties to participate;
                            ``(ii) would not have an adverse impact on 
                        commerce that is not necessary for reliability;
                            ``(iii) provides a level of bulk-power 
                        system reliability that is adequate to protect 
                        public health, safety, welfare, and national 
                        security and would not have a significant 
                        adverse impact on reliability; and
                            ``(iv) in the case of a variance, is based 
                        on a justifiable difference between regions or 
                        subregions within the affiliated regional 
                        reliability entity's geographic area.
                    ``(D) Action by the electric reliability 
                organization.--
                            ``(i) In general.--The electric reliability 
                        organization shall approve or disapprove a 
                        proposal under subparagraph (A) within 120 days 
                        after the proposal is submitted.
                            ``(ii) Failure to act.--If the electric 
                        reliability organization fails to act within 
                        the time specified in clause (i), the proposal 
                        shall be deemed to have been approved.
                            ``(iii) Submission to the commission.--
                        After approving a proposal under subparagraph 
                        (A), the electric reliability organization 
                        shall submit the proposal to the Commission for 
                        approval under the procedures prescribed under 
                        subsection (e).
                    ``(E) Direct submissions.--An affiliated regional 
                reliability entity may not submit a proposal for 
                approval directly to the Commission except as provided 
                in subsection (e)(4).
            ``(4) Failure to reach delegation agreement.--
                    ``(A) In general.--If an affiliated regional 
                reliability entity requests, consistent with paragraph 
                (1), that the electric reliability organization 
                delegate authority to it, but is unable within 180 days 
                to reach agreement with the electric reliability 
                organization with respect to the requested delegation, 
                the entity may seek relief from the Commission.
                    ``(B) Review by the commission.--The Commission 
                shall order the electric reliability organization to 
                enter into a delegation agreement under terms specified 
                by the Commission if, after notice and opportunity for 
                comment, the Commission determines that--
                            ``(i) a delegation to the affiliated 
                        regional reliability entity would--
                                    ``(I) meet the requirements of 
                                paragraph (1); and
                                    ``(II) would be just, reasonable, 
                                not unduly discriminatory or 
                                preferential, and in the public 
                                interest; and
                            ``(ii) the electric reliability 
                        organization unreasonably withheld the 
                        delegation.
            ``(5) Orders to modify delegation agreements.--
                    ``(A) In general.--On complaint, or on motion of 
                the Commission, after notice to the appropriate 
                affiliated regional reliability entity, the Commission 
                may order the electric reliability organization to 
                propose a modification to a delegation agreement under 
                this subsection if the Commission determines that--
                            ``(i) the affiliated regional reliability 
                        entity--
                                    ``(I) no longer has the capacity to 
                                carry out effectively or efficiently 
                                the implementation or enforcement 
                                responsibilities under the delegation 
                                agreement;
                                    ``(II) has failed to meet its 
                                obligations under the delegation 
                                agreement; or
                                    ``(III) has violated this section;
                            ``(ii) the rules, practices, or procedures 
                        of the affiliated regional reliability entity 
                        no longer provide for fair and impartial 
                        discharge of the implementation or enforcement 
                        responsibilities under the delegation 
                        agreement;
                            ``(iii) the geographic boundary of a 
                        transmission entity approved by the Commission 
                        is not wholly within the boundary of an 
                        affiliated regional reliability entity, and the 
                        difference in boundaries is inconsistent with 
                        the effective and efficient implementation and 
                        administration of bulk-power system 
                        reliability; or
                            ``(iv) the agreement is inconsistent with a 
                        delegation ordered by the Commission under 
                        paragraph (4).
                    ``(B) Suspension.--
                            ``(i) In general.--Following an order to 
                        modify a delegation agreement under 
                        subparagraph (A), the Commission may suspend 
                        the delegation agreement if the electric 
                        reliability organization or the affiliated 
                        regional reliability entity does not propose an 
appropriate and timely modification.
                            ``(ii) Assumption of responsibilities.--If 
                        a delegation agreement is suspended, the 
                        electric reliability organization shall assume 
                        the responsibilities delegated under the 
                        delegation agreement.
    ``(i) Organization Membership.--Each system operator shall be a 
member of--
            ``(1) the electric reliability organization; and
            ``(2) any affiliated regional reliability entity operating 
        under an agreement effective under subsection (h) applicable to 
        the region in which the system operator operates, or is 
        responsible for the operation of, a transmission facility.
    ``(j) Enforcement.--
            ``(1) Disciplinary actions.--
                    ``(A) In general.--Consistent with procedures 
                approved by the Commission under subsection (d)(4)(H), 
                the electric reliability organization may impose a 
                penalty, limitation on activities, functions, or 
                operations, or other disciplinary action that the 
                electric reliability organization finds appropriate 
                against a bulk-power system user if the electric 
                reliability organization, after notice and an 
                opportunity for interested parties to be heard, issues 
                a finding in writing that the bulk-power system user 
                has violated an organization standard.
                    ``(B) Notification.--The electric reliability 
                organization shall immediately notify the Commission of 
                any disciplinary action imposed with respect to an act 
                or failure to act of a bulk-power system user that 
                affected or threatened to affect bulk-power system 
                facilities located in the United States.
                    ``(C) Right to petition.--A bulk-power system user 
                that is the subject of disciplinary action under 
                paragraph (1) shall have the right to petition the 
                Commission for a modification or rescission of the 
                disciplinary action.
                    ``(D) Injunctions.--If the electric reliability 
                organization finds it necessary to prevent a serious 
                threat to reliability, the electric reliability 
                organization may seek injunctive relief in the United 
                States district court for the district in which the 
                affected facilities are located.
                    ``(E) Effective date.--
                            ``(i) In general.--Unless the Commission, 
                        on motion of the Commission or on application 
                        by the bulk-power system user that is the 
                        subject of the disciplinary action, suspends 
                        the effectiveness of a disciplinary action, the 
                        disciplinary action shall take effect on the 
                        30th day after the date on which--
                                    ``(I) the electric reliability 
                                organization submits to the 
                                Commission--
                                            ``(aa) a written finding 
                                        that the bulk-power system user 
                                        violated an organization 
                                        standard; and
                                            ``(bb) the record of 
                                        proceedings before the electric 
                                        reliability organization; and
                                    ``(II) the Commission posts the 
                                written finding on the Internet.
                            ``(ii) Duration.--A disciplinary action 
                        shall remain in effect or remain suspended 
                        unless the Commission, after notice and 
                        opportunity for hearing, affirms, sets aside, 
                        modifies, or reinstates the disciplinary 
                        action.
                            ``(iii) Expedited consideration.--The 
                        Commission shall conduct the hearing under 
                        procedures established to ensure expedited 
                        consideration of the action taken.
            ``(2) Compliance orders.-- The Commission, on complaint by 
        any person or on motion of the Commission, may order compliance 
        with an organization standard and may impose a penalty, 
        limitation on activities, functions, or operations, or take 
        such other disciplinary action as the Commission finds 
        appropriate, against a bulk-power system user with respect to 
        actions affecting or threatening to affect bulk-power system 
        facilities located in the United States if the Commission 
        finds, after notice and opportunity for a hearing, that the 
        bulk-power system user has violated or threatens to violate an 
        organization standard.
            ``(3) Other actions.--The Commission may take such action 
        as is necessary against the electric reliability organization 
        or an affiliated regional reliability entity to ensure 
        compliance with an organization standard, or any Commission 
        order affecting electric reliability organization or affiliated 
        regional reliability entity.
    ``(k) Reliability Reports.--The electric reliability organization 
shall--
            ``(1) conduct periodic assessments of the reliability and 
        adequacy of the interconnected bulk-power system in North 
        America; and
            ``(2) report annually to the Secretary of Energy and the 
        Commission its findings and recommendations for monitoring or 
        improving system reliability and adequacy.
    ``(l) Assessment and Recovery of Certain Costs.--
            ``(1) In general.--The reasonable costs of the electric 
        reliability organization, and the reasonable costs of each 
        affiliated regional reliability entity that are related to 
        implementation or enforcement of organization standards or 
        other requirements contained in a delegation agreement approved 
        under subsection (h), shall be assessed by the electric 
        reliability organization and each affiliated regional 
        reliability entity, respectively, taking into account the 
        relationship of costs to each region and based on an allocation 
that reflects an equitable sharing of the costs among all electric 
energy consumers.
            ``(2) Rules.--The Commission shall provide by rule for the 
        review of costs and allocations under paragraph (1) in 
        accordance with the standards in this subsection and subsection 
        (d)(4)(F).
    ``(m) Application of Antitrust Laws.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the following activities are rebuttably presumed to be in 
        compliance with the antitrust laws of the United States:
                    ``(A) Activities undertaken by the electric 
                reliability organization under this section or 
                affiliated regional reliability entity operating under 
                a delegation agreement under subsection (h).
                    ``(B) Activities of a member of the electric 
                reliability organization or affiliated regional 
                reliability entity in pursuit of the objectives of the 
                electric reliability organization or affiliated 
                regional reliability entity under this section 
                undertaken in good faith under the rules of the 
                organization of the electric reliability organization 
                or affiliated regional reliability entity.
            ``(2) Availability of defenses.--In a civil action brought 
        by any person or entity against the electric reliability 
        organization or an affiliated regional reliability entity 
        alleging a violation of an antitrust law based on an activity 
        under this Act, the defenses of primary jurisdiction and 
        immunity from suit and other affirmative defenses shall be 
        available to the extent applicable.
    ``(n) Regional Advisory Role.--
            ``(1) Establishment of regional advisory body.--The 
        Commission shall establish a regional advisory body on the 
        petition of the Governors of at least two-thirds of the States 
        within a region that have more than one-half of their 
        electrical loads served within the region.
            ``(2) Membership.--A regional advisory body--
                    ``(A) shall be composed of 1 member from each State 
                in the region, appointed by the Governor of the State; 
                and
                    ``(B) may include representatives of agencies, 
                States, and Provinces outside the United States, on 
                execution of an appropriate international agreement 
                described in subsection (f).
            ``(3) Functions.--A regional advisory body may provide 
        advice to the electric reliability organization, an affiliated 
        regional reliability entity, or the Commission regarding--
                    ``(A) the governance of an affiliated regional 
                reliability entity existing or proposed within a 
                region;
                    ``(B) whether a standard proposed to apply within 
                the region is just, reasonable, not unduly 
                discriminatory or preferential, and in the public 
                interest; and
                    ``(C) whether fees proposed to be assessed within 
                the region are--
                            ``(i) just, reasonable, not unduly 
                        discriminatory or preferential, and in the 
                        public interest; and
                            ``(ii) consistent with the requirements of 
                        subsection (l).
            ``(4) Deference.--In a case in which a regional advisory 
        body encompasses an entire interconnection, the Commission may 
        give deference to advice provided by the regional advisory body 
        under paragraph (3).
    ``(o) Applicability of Section.--This section does not apply 
outside the 48 contiguous States.
    ``(p) Rehearings; Court Review of Orders.--Section 313 applies to 
an order of the Commission issued under this section.''.
    (b) Enforcement.--
            (1) General penalties.--Section 316(c) of the Federal Power 
        Act (16 U.S.C. 825o(c)) is amended--
                    (A) by striking ``subsection'' and inserting 
                ``section''; and
                    (B) by striking ``or 214'' and inserting ``214 or 
                215''.
            (2) Certain provisions.--Section 316A of the Federal Power 
        Act (16 U.S.C. 825o-1) is amended by striking ``or 214'' each 
        place it appears and inserting ``214, or 215''.
    (c) Savings Clause.--[RESERVED]
                                 <all>
```