I

106TH CONGRESS

2D SESSION H. R. 4881

To benefit electricity consumers by promoting the reliability of the bulkpower 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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Electric Reliability

5 2000 Act’’.

6 SEC. 2. ELECTRIC RELIABILITY ORGANIZATION.

7 (a) IN GENERAL.—Part II of the Federal Power Act

8 (16 U.S.C. 824 et seq.) is amended by adding at the end

9 the following:
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1 ‘‘SEC. 215. ELECTRIC RELIABILITY ORGANIZATION.

2 ‘‘(a) DEFINITIONS.—In this section:

3 ‘‘(1) AFFILIATED REGIONAL RELIABILITY ENTI4 TY.—The term ‘affiliated regional reliability entity’

5 means an entity delegated authority under sub6 section (h).

7 ‘‘(2) BULK-POWER SYSTEM.—

8 ‘‘(A) IN GENERAL.—The term ‘bulk-power

9 system’ means all facilities and control systems

10 necessary for operating an interconnected elec11 tric power transmission grid or any portion of

12 an interconnected transmission grid.

13 ‘‘(B) INCLUSIONS.—The term ‘bulk-power

14 system’ includes—

15 ‘‘(i) high voltage transmission lines,

16 substations, control centers, communica17 tions, data, and operations planning facili18 ties necessary for the operation of all or

19 any part of the interconnected trans20 mission grid; and

21 ‘‘(ii) the output of generating units

22 necessary to maintain the reliability of the

23 transmission grid.

24 ‘‘(3) BULK-POWER SYSTEM USER.—The term

25 ‘bulk-power system user’ means an entity that—
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1 ‘‘(A) sells, purchases, or transmits electric

2 energy over a bulk-power system; or

3 ‘‘(B) owns, operates, or maintains facilities

4 or control systems that are part of a bulk-power

5 system; or

6 ‘‘(C) is a system operator.

7 ‘‘(4) ELECTRIC RELIABILITY ORGANIZATION.—

8 The term ‘electric reliability organization’ means the

9 organization designated by the Commission under

10 subsection (d).

11 ‘‘(5) ENTITY RULE.—The term ‘entity rule’

12 means a rule adopted by an affiliated regional reli13 ability entity for a specific region and designed to

14 implement or enforce 1 or more organization stand15 ards.

16 ‘‘(6) INDEPENDENT DIRECTOR.—The term

17 ‘independent director’ means a person that—

18 ‘‘(A) is not an officer or employee of an

19 entity that would reasonably be perceived as

20 having a direct financial interest in the outcome

21 of a decision by the board of directors of the

22 electric reliability organization; and

23 ‘‘(B) does not have a relationship that

24 would interfere with the exercise of independent
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1 judgment in carrying out the responsibilities of

2 a director of the electric reliability organization.

3 ‘‘(7) INDUSTRY SECTOR.—The term ‘industry

4 sector’ means a group of bulk-power system users

5 with substantially similar commercial interests, as

6 determined by the board of directors of the electric

7 reliability organization.

8 ‘‘(8) INTERCONNECTION.—The term ‘inter9 connection’ means a geographic area in which the

10 operation of bulk-power system components is syn11 chronized so that the failure of 1 or more of the

12 components may adversely affect the ability of the

13 operators of other components within the inter14 connection to maintain safe and reliable operation of

15 the facilities within their control.

16 ‘‘(9) ORGANIZATION STANDARD.—

17 ‘‘(A) IN GENERAL.—The term ‘organiza18 tion standard’ means a policy or standard

19 adopted by the electric reliability organization

20 to provide for the reliable operation of a bulk21 power system.

22 ‘‘(B) INCLUSIONS.—The term ‘organiza23 tion standard’ includes—

24 ‘‘(i) an entity rule approved by the

25 electric reliability organization; and
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1 ‘‘(ii) a variance approved by the elec2 tric reliability organization.

3 ‘‘(10) PUBLIC INTEREST GROUP.—

4 ‘‘(A) IN GENERAL.—The term ‘public in5 terest group’ means a nonprofit private or pub6 lic organization that has an interest in the ac7 tivities of the electric reliability organization.

8 ‘‘(B) INCLUSIONS.—The term ‘public in9 terest group’ includes—

10 ‘‘(i) a ratepayer advocate;

11 ‘‘(ii) an environmental group; and

12 ‘‘(iii) a State or local government or13 ganization that regulates participants in,

14 and promulgates government policy with

15 respect to, the market for electric energy.

16 ‘‘(11) SYSTEM OPERATOR.—

17 ‘‘(A) IN GENERAL.—The term ‘system op18 erator’ means an entity that operates or is re19 sponsible for the operation of a bulk-power sys20 tem.

21 ‘‘(B) INCLUSIONS.—The term ‘bulk-power

22 system’ includes—

23 ‘‘(i) high voltage transmission lines,

24 substations, control centers, communica25 tions, data, and operations planning facili-
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1 ties necessary for the operation of all or

2 any part of the interconnected trans3 mission grid; and

4 ‘‘(ii) the output of generating units

5 necessary to maintain the reliability of the

6 transmission grid.

7 ‘‘(3) BULK-POWER SYSTEM USER.—The term

8 ‘bulk-power system user’ means an entity that—

9 ‘‘(A) sells, purchases, or transmits electric

10 energy over a bulk-power system; or

11 ‘‘(B) owns, operates, or maintains facilities

12 or control systems that are part of a bulk-power

13 system; or

14 ‘‘(C) is a system operator.

15 ‘‘(4) ELECTRIC RELIABILITY ORGANIZATION.—

16 The term ‘electric reliability organization’ means the

17 organization designated by the Commission under

18 subsection (d).

19 ‘‘(5) ENTITY RULE.—The term ‘entity rule’

20 means a rule adopted by an affiliated regional reli21 ability entity for a specific region and designed to

22 implement or enforce 1 or more organization stand23 ards.

24 ‘‘(6) INDEPENDENT DIRECTOR.—The term

25 ‘independent director’ means a person that—
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1 ‘‘(A) is not an officer or employee of an

2 entity that would reasonably be perceived as

3 having a direct financial interest in the outcome

4 of a decision by the board of directors of the

5 electric reliability organization; and

6 ‘‘(B) does not have a relationship that

7 would interfere with the exercise of independent

8 judgment in carrying out the responsibilities of

9 a director of the electric reliability organization.

10 ‘‘(7) INDUSTRY SECTOR.—The term ‘industry

11 sector’ means a group of bulk-power system users

12 with substantially similar commercial interests, as

13 determined by the board of directors of the electric

14 reliability organization.

15 ‘‘(8) INTERCONNECTION.—The term ‘inter16 connection’ means a geographic area in which the

17 operation of bulk-power system components is syn18 chronized so that the failure of 1 or more of the

19 components may adversely affect the ability of the

20 operators of other components within the inter21 connection to maintain safe and reliable operation of

22 the facilities within their control.

23 ‘‘(9) ORGANIZATION STANDARD.—

24 ‘‘(A) IN GENERAL.—The term ‘organiza25 tion standard’ means a policy or standard
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1 adopted by the electric reliability organization

2 to provide for the reliable operation of a bulk3 power system.

4 ‘‘(B) INCLUSIONS.—The term ‘organiza5 tion standard’ includes—

6 ‘‘(i) an entity rule approved by the

7 electric reliability organization; and

8 ‘‘(ii) a variance approved by the elec9 tric reliability organization.

10 ‘‘(10) PUBLIC INTEREST GROUP.—

11 ‘‘(A) IN GENERAL.—The term ‘public in12 terest group’ means a nonprofit private or pub13 lic organization that has an interest in the ac14 tivities of the electric reliability organization.

15 ‘‘(B) INCLUSIONS.—The term ‘public in16 terest group’ includes—

17 ‘‘(i) a ratepayer advocate;

18 ‘‘(ii) an environmental group; and

19 ‘‘(iii) a State or local government or20 ganization that regulates participants in,

21 and promulgates government policy with

22 respect to, the market for electric energy.

23 ‘‘(11) SYSTEM OPERATOR.—

24 ‘‘(A) IN GENERAL.—The term ‘system op25 erator’ means an entity that operates or is re-
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1 sponsible for the operation of a bulk-power sys2 tem.

3 ‘‘(B) INCLUSIONS.—The term ‘system op4 erator’ includes—

5 ‘‘(i) a control area operator;

6 ‘‘(ii) an independent system operator;

7 ‘‘(iii) a transmission company;

8 ‘‘(iv) a transmission system operator;

9 and

10 ‘‘(v) a regional security coordinator.

11 ‘‘(12) VARIANCE.—The term ‘variance’ means

12 an exception from the requirements of an organiza13 tion standard (including a proposal for an organiza14 tion standard in a case in which there is no organi15 zation standard) that is adopted by an affiliated re16 gional reliability entity and is applicable to all or a

17 part of the region for which the affiliated regional

18 reliability entity is responsible.

19 ‘‘(b) COMMISSION AUTHORITY.—

20 ‘‘(1) JURISDICTION.—Notwithstanding section

21 201(f), within the United States, the Commission

22 shall have jurisdiction over the electric reliability or23 ganization, all affiliated regional reliability entities,

24 all system operators, and all bulk-power system

25 users, including entities described in section 201(f),
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1 for purposes of approving organization standards

2 and enforcing compliance with this section.

3 ‘‘(2) DEFINITION OF TERMS.—The Commission

4 may by regulation define any term used in this sec5 tion consistent with the definitions in subsection (a)

6 and the purpose and intent of this Act.

7 ‘‘(c) EXISTING RELIABILITY STANDARDS.—

8 ‘‘(1) SUBMISSION TO THE COMMISSION.—Be9 fore designation of an electric reliability organization

10 under subsection (d), any person, including the

11 North American Electric Reliability Council and its

12 member Regional Reliability Councils, may submit

13 to the Commission any reliability standard, guid14 ance, practice, or amendment to a reliability stand15 ard, guidance, or practice that the person proposes

16 to be made mandatory and enforceable.

17 ‘‘(2) REVIEW BY THE COMMISSION.—The Com18 mission, after allowing interested persons an oppor19 tunity to submit comments, may approve a proposed

20 mandatory standard, guidance, practice, or amend21 ment submitted under paragraph (1) if the Commis22 sion finds that the standard, guidance, or practice is

23 just, reasonable, not unduly discriminatory or pref24 erential, and in the public interest.
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1 ‘‘(3) EFFECT OF APPROVAL.—A standard, guid2 ance, or practice shall be mandatory and applicable

3 according to its terms following approval by the

4 Commission and shall remain in effect until it is—

5 ‘‘(A) withdrawn, disapproved, or super6 seded by an organization standard that is

7 issued or approved by the electric reliability or8 ganization and made effective by the Commis9 sion under section (e); or

10 ‘‘(B) disapproved by the Commission if, on

11 complaint or upon motion by the Commission

12 and after notice and an opportunity for com13 ment, the Commission finds the standard, guid14 ance, or practice to be unjust, unreasonable,

15 unduly discriminatory or preferential, or not in

16 the public interest.

17 ‘‘(4) ENFORCEABILITY.—A standard, guidance,

18 or practice in effect under this subsection shall be

19 enforceable by the Commission.

20 ‘‘(d) DESIGNATION OF ELECTRIC RELIABILITY OR21 GANIZATION.—

22 ‘‘(1) REGULATIONS.—

23 ‘‘(A) PROPOSED REGULATIONS.—Not later

24 than 90 days after the date of enactment of

25 this section, the Commission shall propose regu-
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1 lations specifying procedures and requirements

2 for an entity to apply for designation as the

3 electric reliability organization.

4 ‘‘(B) NOTICE AND COMMENT.—The Com5 mission shall provide notice and opportunity for

6 comment on the proposed regulations.

7 ‘‘(C) FINAL REGULATION.—Not later than

8 180 days after the date of enactment of this

9 section, the Commission shall promulgate final

10 regulations under this subsection.

11 ‘‘(2) APPLICATION.—

12 ‘‘(A) SUBMISSION.—Following the promul13 gation of final regulations under paragraph (1),

14 an entity may submit an application to the

15 Commission for designation as the electric reli16 ability organization.

17 ‘‘(B) CONTENTS.—The applicant shall de18 scribe in the application—

19 ‘‘(i) the governance and procedures of

20 the applicant; and

21 ‘‘(ii) the funding mechanism and ini22 tial funding requirements of the applicant.

23 ‘‘(3) NOTICE AND COMMENT.—The Commission

24 shall—
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1 ‘‘(A) provide public notice of the applica2 tion; and

3 ‘‘(B) afford interested parties an oppor4 tunity to comment.

5 ‘‘(4) DESIGNATION OF ELECTRIC RELIABILITY

6 ORGANIZATION.—The Commission shall designate

7 the applicant as the electric reliability organization

8 if the Commission determines that the applicant—

9 ‘‘(A) has the ability to develop, implement,

10 and enforce standards that provide for an ade11 quate level of reliability of bulk-power systems;

12 ‘‘(B) permits voluntary membership to any

13 bulk-power system user or public interest

14 group;

15 ‘‘(C) ensures fair representation of its

16 members in the selection of its directors and

17 fair management of its affairs, taking into ac18 count the need for efficiency and effectiveness

19 in decisionmaking and operations and the re20 quirements for technical competency in the de21 velopment of organization standards and the ex22 ercise of oversight of bulk-power system reli23 ability;

24 ‘‘(D) ensures that no 2 industry sectors

25 have the ability to control, and no 1 industry
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1 sector has the ability to veto, the applicant’s

2 discharge of its responsibilities as the electric

3 reliability organization (including actions by

4 committees recommending standards for ap5 proval by the board or other board actions to

6 implement and enforce standards);

7 ‘‘(E) provides for governance by a board

8 wholly comprised of independent directors;

9 ‘‘(F) provides a funding mechanism and

10 requirements that—

11 ‘‘(i) are just, reasonable, not unduly

12 discriminatory or preferential and in the

13 public interest; and

14 ‘‘(ii) satisfy the requirements of sub15 section (l);

16 ‘‘(G) has established procedures for devel17 opment of organization standards that—

18 ‘‘(i) provide reasonable notice and op19 portunity for public comment, taking into

20 account the need for efficiency and effec21 tiveness in decisionmaking and operations

22 and the requirements for technical com23 petency in the development of organization

24 standards;
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1 ‘‘(ii) ensure openness, a balancing of

2 interests, and due process; and

3 ‘‘(iii) includes alternative procedures

4 to be followed in emergencies;

5 ‘‘(H) has established fair and impartial

6 procedures for implementation and enforcement

7 of organization standards, either directly or

8 through delegation to an affiliated regional reli9 ability entity, including the imposition of pen10 alties, limitations on activities, functions, or op11 erations, or other appropriate sanctions;

12 ‘‘(I) has established procedures for notice

13 and opportunity for public observation of all

14 meetings, except that the procedures for public

15 observation may include alternative procedures

16 for emergencies or for the discussion of infor17 mation that the directors reasonably determine

18 should take place in closed session, such as liti19 gation, personnel actions, or commercially sen20 sitive information;

21 ‘‘(J) provides for the consideration of rec22 ommendations of States and State commissions;

23 and

24 ‘‘(K) addresses other matters that the

25 Commission considers appropriate to ensure
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1 that the procedures, governance, and funding of

2 the electric reliability organization are just, rea3 sonable, not unduly discriminatory or pref4 erential, and in the public interest.

5 ‘‘(5) EXCLUSIVE DESIGNATION.—

6 ‘‘(A) IN GENERAL.—The Commission shall

7 designate only 1 electric reliability organization.

8 ‘‘(B) MULTIPLE APPLICATIONS.—If the

9 Commission receives 2 or more timely applica10 tions that satisfy the requirements of this sub11 section, the Commission shall approve only the

12 application that the Commission determines will

13 best implement this section.

14 ‘‘(e) ORGANIZATION STANDARDS.—

15 ‘‘(1) SUBMISSION OF PROPOSALS TO COMMIS16 SION.—

17 ‘‘(A) IN GENERAL.—The electric reliability

18 organization shall submit to the Commission

19 proposals for any new or modified organization

20 standards.

21 ‘‘(B) CONTENTS.—A proposal submitted

22 under subparagraph (A) shall include—

23 ‘‘(i) a concise statement of the pur24 pose of the proposal; and
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1 ‘‘(ii) a record of any proceedings con2 ducted with respect to the proposal.

3 ‘‘(2) REVIEW BY THE COMMISSION.—

4 ‘‘(A) NOTICE AND COMMENT.—The Com5 mission shall—

6 ‘‘(i) provide notice of a proposal under

7 paragraph (1); and

8 ‘‘(ii) allow interested persons 30 days

9 to submit comments on the proposal.

10 ‘‘(B) ACTION BY THE COMMISSION.—

11 ‘‘(i) IN GENERAL.—After taking into

12 consideration any submitted comments, the

13 Commission shall approve or disapprove a

14 proposed organization standard not later

15 than the end of the 60-day period begin16 ning on the date of the deadline for the

17 submission of comments, except that the

18 Commission may extend the 60-day period

19 for an additional 90 days for good cause.

20 ‘‘(ii) FAILURE TO ACT.—If the Com21 mission does not approve or disapprove a

22 proposal within the period specified in

23 clause (i), the proposed organization stand24 ard shall go into effect subject to its terms,

25 without prejudice to the authority of the
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1 Commission to modify the organization

2 standard in accordance with the standards

3 and requirements of this section.

4 ‘‘(C) EFFECTIVE DATE.—An organization

5 standard approved by the Commission shall

6 take effect not earlier than 30 days after the

7 date of the Commission’s order of approval.

8 ‘‘(D) STANDARDS FOR APPROVAL.—

9 ‘‘(i) IN GENERAL.—The Commission

10 shall approve a proposed new or modified

11 organization standard if the Commission

12 determines the organization standard to be

13 just, reasonable, not unduly discriminatory

14 or preferential, and in the public interest.

15 ‘‘(ii) CONSIDERATIONS.—In the exer16 cise of its review responsibilities under this

17 subsection, the Commission—

18 ‘‘(I) shall give due weight to the

19 technical expertise of the electric reli20 ability organization with respect to

21 the content of a new or modified orga22 nization standard; but

23 ‘‘(II) shall not defer to the elec24 tric reliability organization with re-
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1 spect to the effect of the organization

2 standard on competition.

3 ‘‘(E) REMAND.—A proposed organization

4 standard that is disapproved in whole or in part

5 by the Commission shall be remanded to the

6 electric reliability organization for further con7 sideration.

8 ‘‘(3) ORDERS TO DEVELOP OR MODIFY ORGANI9 ZATION STANDARDS.—The Commission, on com10 plaint or on motion of the Commission, may order

11 the electric reliability organization to develop and

12 submit to the Commission, by a date specified in the

13 order, an organization standard or modification to

14 an existing organization standard to address a spe15 cific matter if the Commission considers a new or

16 modified organization standard appropriate to carry

17 out this section, and the electric reliability organiza18 tion shall develop and submit the organization

19 standard or modification to the Commission in ac20 cordance with this subsection.

21 ‘‘(4) VARIANCES AND ENTITY RULES.—

22 ‘‘(A) PROPOSAL.—An affiliated regional

23 reliability entity may propose a variance or enti24 ty rule to the electric reliability organization.
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1 ‘‘(B) EXPEDITED CONSIDERATION.—If ex2 pedited consideration is necessary to provide for

3 bulk-power system reliability, the affiliated re4 gional reliability entity may—

5 ‘‘(i) request that the electric reliability

6 organization expedite consideration of the

7 proposal; and

8 ‘‘(ii) file a notice of the request with

9 the Commission.

10 ‘‘(C) FAILURE TO ACT.—

11 ‘‘(i) IN GENERAL.—If the electric reli12 ability organization fails to adopt the vari13 ance or entity rule, in whole or in part, the

14 affiliated regional reliability entity may re15 quest that the Commission review the pro16 posal.

17 ‘‘(ii) ACTION BY THE COMMISSION.—

18 If the Commission determines, after a re19 view of the request, that the action of the

20 electric reliability organization did not con21 form to the applicable standards and pro22 cedures approved by the Commission, or if

23 the Commission determines that the vari24 ance or entity rule is just, reasonable, not

25 unduly discriminatory or preferential, and
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1 in the public interest and that the electric

2 reliability organization has unreasonably

3 rejected or failed to act on the proposal,

4 the Commission may—

5 ‘‘(I) remand the proposal for fur6 ther consideration by the electric reli7 ability organization; or

8 ‘‘(II) order the electric reliability

9 organization or the affiliated regional

10 reliability entity to develop a variance

11 or entity rule consistent with that re12 quested by the affiliated regional reli13 ability entity.

14 ‘‘(D) PROCEDURE.—A variance or entity

15 rule proposed by an affiliated regional reliability

16 entity shall be submitted to the electric reli17 ability organization for review and submission

18 to the Commission in accordance with the pro19 cedures specified in paragraph (2).

20 ‘‘(5) IMMEDIATE EFFECTIVENESS.—

21 ‘‘(A) IN GENERAL.—Notwithstanding any

22 other provision of this subsection, a new or

23 modified organization standard shall take effect

24 immediately on submission to the Commission
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1 without notice or comment if the electric reli2 ability organization—

3 ‘‘(i) determines that an emergency ex4 ists requiring that the new or modified or5 ganization standard take effect imme6 diately without notice or comment;

7 ‘‘(ii) notifies the Commission as soon

8 as practicable after making the determina9 tion;

10 ‘‘(iii) submits the new or modified or11 ganization standard to the Commission not

12 later than 5 days after making the deter13 mination; and

14 ‘‘(iv) includes in the submission an ex15 planation of the need for immediate effec16 tiveness.

17 ‘‘(B) NOTICE AND COMMENT.—The Com18 mission shall—

19 ‘‘(i) provide notice of the new or modi20 fied organization standard or amendment

21 for comment; and

22 ‘‘(ii) follow the procedures set out in

23 paragraphs (2) and (3) for review of the

24 new or modified organization standard.
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1 ‘‘(6) COMPLIANCE.—Each bulk power system

2 user shall comply with an organization standard that

3 takes effect under this section.

4 ‘‘(f) COORDINATION WITH CANADA AND MEXICO.—

5 ‘‘(1) RECOGNITION.—The electric reliability or6 ganization shall take all appropriate steps to gain

7 recognition in Canada and Mexico.

8 ‘‘(2) INTERNATIONAL AGREEMENTS.—

9 ‘‘(A) IN GENERAL.—The President shall

10 use best efforts to enter into international

11 agreements with the appropriate governments

12 of Canada and Mexico to provide for—

13 ‘‘(i) effective compliance with organi14 zation standards; and

15 ‘‘(ii) the effectiveness of the electric

16 reliability organization in carrying out its

17 mission and responsibilities.

18 ‘‘(B) COMPLIANCE.—All actions taken by

19 the electric reliability organization, an affiliated

20 regional reliability entity, and the Commission

21 shall be consistent with any international agree22 ment under subparagraph (A).

23 ‘‘(g) CHANGES IN PROCEDURE, GOVERNANCE, OR

24 FUNDING.—
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1 ‘‘(1) SUBMISSION TO THE COMMISSION.—The

2 electric reliability organization shall submit to the

3 Commission—

4 ‘‘(A) any proposed change in a procedure,

5 governance, or funding provision; or

6 ‘‘(B) any change in an affiliated regional

7 reliability entity’s procedure, governance, or

8 funding provision relating to delegated func9 tions.

10 ‘‘(2) CONTENTS.—A submission under para11 graph (1) shall include an explanation of the basis

12 and purpose for the change.

13 ‘‘(3) EFFECTIVENESS.—

14 ‘‘(A) CHANGES IN PROCEDURE.—

15 ‘‘(i) CHANGES CONSTITUTING A

16 STATEMENT OF POLICY, PRACTICE, OR IN17 TERPRETATION.—A proposed change in

18 procedure shall take effect 90 days after

19 submission to the Commission if the

20 change constitutes a statement of policy,

21 practice, or interpretation with respect to

22 the meaning or enforcement of the proce23 dure.

24 ‘‘(ii) OTHER CHANGES.—A proposed

25 change in procedure other than a change
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1 described in clause (i) shall take effect on

2 a finding by the Commission, after notice

3 and opportunity for comment, that the

4 change—

5 ‘‘(I) is just, reasonable, not un6 duly discriminatory or preferential,

7 and in the public interest; and

8 ‘‘(II) satisfies the requirements

9 of subsection (d)(4).

10 ‘‘(B) CHANGES IN GOVERNANCE OR FUND11 ING.—A proposed change in governance or

12 funding shall not take effect unless the Com13 mission finds that the change—

14 ‘‘(i) is just, reasonable, not unduly

15 discriminatory or preferential, and in the

16 public interest; and

17 ‘‘(ii) satisfies the requirements of sub18 section (d)(4).

19 ‘‘(4) ORDER TO AMEND.—

20 ‘‘(A) IN GENERAL.—The Commission, on

21 complaint or on the motion of the Commission,

22 may require the electric reliability organization

23 to amend a procedural, governance, or funding

24 provision if the Commission determines that the
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1 amendment is necessary to meet the require2 ments of this section.

3 ‘‘(B) FILING.—The electric reliability or4 ganization shall submit the amendment in ac5 cordance with paragraph (1).

6 ‘‘(h) DELEGATIONS OF AUTHORITY.—

7 ‘‘(1) IN GENERAL.—

8 ‘‘(A) IMPLEMENTATION AND ENFORCE9 MENT OF COMPLIANCE.—At the request of an

10 entity, the electric reliability organization shall

11 enter into an agreement with the entity for the

12 delegation of authority to implement and en13 force compliance with organization standards in

14 a specified geographic area if the electric reli15 ability organization finds that—

16 ‘‘(i) the entity satisfies the require17 ments of subparagraphs (A), (B), (C), (D),

18 (F), (J), and (K) of subsection (d)(4); and

19 ‘‘(ii) the delegation would promote the

20 effective and efficient implementation and

21 administration of bulk-power system reli22 ability.

23 ‘‘(B) OTHER AUTHORITY.—The electric re24 liability organization may enter into an agree25 ment to delegate to an entity any other author-
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1 ity, except that the electric reliability organiza2 tion shall reserve the right to set and approve

3 standards for bulk-power system reliability.

4 ‘‘(2) APPROVAL BY THE COMMISSION.—

5 ‘‘(A) SUBMISSION TO THE COMMISSION.—

6 The electric reliability organization shall submit

7 to the Commission—

8 ‘‘(i) any agreement entered into under

9 this subsection; and

10 ‘‘(ii) any information the Commission

11 requires with respect to the affiliated re12 gional reliability entity to which authority

13 is delegated.

14 ‘‘(B) STANDARDS FOR APPROVAL.—The

15 Commission shall approve the agreement, fol16 lowing public notice and an opportunity for

17 comment, if the Commission finds that the

18 agreement—

19 ‘‘(i) meets the requirements of para20 graph (1); and

21 ‘‘(ii) is just, reasonable, not unduly

22 discriminatory or preferential, and in the

23 public interest.

24 ‘‘(C) REBUTTABLE PRESUMPTION.—A pro25 posed delegation agreement with an affiliated
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1 regional reliability entity organized on an inter2 connection-wide basis shall be rebuttably pre3 sumed by the Commission to promote the effec4 tive and efficient implementation and adminis5 tration of the reliability of the bulk-power sys6 tem.

7 ‘‘(D) INVALIDITY ABSENT APPROVAL.—No

8 delegation by the electric reliability organization

9 shall be valid unless the delegation is approved

10 by the Commission.

11 ‘‘(3) PROCEDURES FOR ENTITY RULES AND

12 VARIANCES.—

13 ‘‘(A) IN GENERAL.—A delegation agree14 ment under this subsection shall specify the

15 procedures by which the affiliated regional reli16 ability entity may propose entity rules or

17 variances for review by the electric reliability

18 organization.

19 ‘‘(B) INTERCONNECTION-WIDE ENTITY

20 RULES AND VARIANCES.— In the case of a pro21 posal for an entity rule or variance that would

22 apply on an interconnection-wide basis, the elec23 tric reliability organization shall approve the en24 tity rule or variance unless the electric reli-
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1 ability organization makes a written finding

2 that the entity rule or variance—

3 ‘‘(i) was not developed in a fair and

4 open process that provided an opportunity

5 for all interested parties to participate;

6 ‘‘(ii) would have a significant adverse

7 impact on reliability or commerce in other

8 interconnections;

9 ‘‘(iii) fails to provide a level of reli10 ability of the bulk-power system within the

11 interconnection such that the entity rule or

12 variance would be likely to cause a serious

13 and substantial threat to public health,

14 safety, welfare, or national security; or

15 ‘‘(iv) would create a serious and sub16 stantial burden on competitive markets

17 within the interconnection that is not nec18 essary for reliability.

19 ‘‘(C) NONINTERCONNECTION-WIDE ENTITY

20 RULES AND VARIANCES.—In the case of a pro21 posal for an entity rule or variance that would

22 apply only to part of an interconnection, the

23 electric reliability organization shall approve the

24 entity rule or variance if the affiliated regional
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1 reliability entity demonstrates that the

2 proposal—

3 ‘‘(i) was developed in a fair and open

4 process that provided an opportunity for

5 all interested parties to participate;

6 ‘‘(ii) would not have an adverse im7 pact on commerce that is not necessary for

8 reliability;

9 ‘‘(iii) provides a level of bulk-power

10 system reliability that is adequate to pro11 tect public health, safety, welfare, and na12 tional security and would not have a sig13 nificant adverse impact on reliability; and

14 ‘‘(iv) in the case of a variance, is

15 based on a justifiable difference between

16 regions or subregions within the affiliated

17 regional reliability entity’s geographic area.

18 ‘‘(D) ACTION BY THE ELECTRIC RELI19 ABILITY ORGANIZATION.—

20 ‘‘(i) IN GENERAL.—The electric reli21 ability organization shall approve or dis22 approve a proposal under subparagraph

23 (A) within 120 days after the proposal is

24 submitted.
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1 ‘‘(ii) FAILURE TO ACT.—If the electric

2 reliability organization fails to act within

3 the time specified in clause (i), the pro4 posal shall be deemed to have been ap5 proved.

6 ‘‘(iii) SUBMISSION TO THE COMMIS7 SION.—After approving a proposal under

8 subparagraph (A), the electric reliability

9 organization shall submit the proposal to

10 the Commission for approval under the

11 procedures prescribed under subsection (e).

12 ‘‘(E) DIRECT SUBMISSIONS.—An affiliated

13 regional reliability entity may not submit a pro14 posal for approval directly to the Commission

15 except as provided in subsection (e)(4).

16 ‘‘(4) FAILURE TO REACH DELEGATION AGREE17 MENT.—

18 ‘‘(A) IN GENERAL.—If an affiliated re19 gional reliability entity requests, consistent with

20 paragraph (1), that the electric reliability orga21 nization delegate authority to it, but is unable

22 within 180 days to reach agreement with the

23 electric reliability organization with respect to

24 the requested delegation, the entity may seek

25 relief from the Commission.
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1 ‘‘(B) REVIEW BY THE COMMISSION.—The

2 Commission shall order the electric reliability

3 organization to enter into a delegation agree4 ment under terms specified by the Commission

5 if, after notice and opportunity for comment,

6 the Commission determines that—

7 ‘‘(i) a delegation to the affiliated re8 gional reliability entity would—

9 ‘‘(I) meet the requirements of

10 paragraph (1); and

11 ‘‘(II) would be just, reasonable,

12 not unduly discriminatory or pref13 erential, and in the public interest;

14 and

15 ‘‘(ii) the electric reliability organiza16 tion unreasonably withheld the delegation.

17 ‘‘(5) ORDERS TO MODIFY DELEGATION AGREE18 MENTS.—

19 ‘‘(A) IN GENERAL.—On complaint, or on

20 motion of the Commission, after notice to the

21 appropriate affiliated regional reliability entity,

22 the Commission may order the electric reli23 ability organization to propose a modification to

24 a delegation agreement under this subsection if

25 the Commission determines that—
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•HR 4881 IH

1 ‘‘(i) the affiliated regional reliability

2 entity—

3 ‘‘(I) no longer has the capacity to

4 carry out effectively or efficiently the

5 implementation or enforcement re6 sponsibilities under the delegation

7 agreement;

8 ‘‘(II) has failed to meet its obli9 gations under the delegation agree10 ment; or

11 ‘‘(III) has violated this section;

12 ‘‘(ii) the rules, practices, or proce13 dures of the affiliated regional reliability

14 entity no longer provide for fair and im15 partial discharge of the implementation or

16 enforcement responsibilities under the dele17 gation agreement;

18 ‘‘(iii) the geographic boundary of a

19 transmission entity approved by the Com20 mission is not wholly within the boundary

21 of an affiliated regional reliability entity,

22 and the difference in boundaries is incon23 sistent with the effective and efficient im24 plementation and administration of bulk25 power system reliability; or
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•HR 4881 IH

1 ‘‘(iv) the agreement is inconsistent

2 with a delegation ordered by the Commis3 sion under paragraph (4).

4 ‘‘(B) SUSPENSION.—

5 ‘‘(i) IN GENERAL.—Following an

6 order to modify a delegation agreement

7 under subparagraph (A), the Commission

8 may suspend the delegation agreement if

9 the electric reliability organization or the

10 affiliated regional reliability entity does not

11 propose an appropriate and timely modi12 fication.

13 ‘‘(ii) ASSUMPTION OF RESPONSIBIL14 ITIES.—If a delegation agreement is sus15 pended, the electric reliability organization

16 shall assume the responsibilities delegated

17 under the delegation agreement.

18 ‘‘(i) ORGANIZATION MEMBERSHIP.—Each system op19 erator shall be a member of—

20 ‘‘(1) the electric reliability organization; and

21 ‘‘(2) any affiliated regional reliability entity op22 erating under an agreement effective under sub23 section (h) applicable to the region in which the sys24 tem operator operates, or is responsible for the oper25 ation of, a transmission facility.
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•HR 4881 IH

1 ‘‘(j) ENFORCEMENT.—

2 ‘‘(1) DISCIPLINARY ACTIONS.—

3 ‘‘(A) IN GENERAL.—Consistent with proce4 dures approved by the Commission under sub5 section (d)(4)(H), the electric reliability organi6 zation may impose a penalty, limitation on ac7 tivities, functions, or operations, or other dis8 ciplinary action that the electric reliability orga9 nization finds appropriate against a bulk-power

10 system user if the electric reliability organiza11 tion, after notice and an opportunity for inter12 ested parties to be heard, issues a finding in

13 writing that the bulk-power system user has

14 violated an organization standard.

15 ‘‘(B) NOTIFICATION.—The electric reli16 ability organization shall immediately notify the

17 Commission of any disciplinary action imposed

18 with respect to an act or failure to act of a

19 bulk-power system user that affected or threat20 ened to affect bulk-power system facilities lo21 cated in the United States.

22 ‘‘(C) RIGHT TO PETITION.—A bulk-power

23 system user that is the subject of disciplinary

24 action under paragraph (1) shall have the right
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1 to petition the Commission for a modification

2 or rescission of the disciplinary action.

3 ‘‘(D) INJUNCTIONS.—If the electric reli4 ability organization finds it necessary to prevent

5 a serious threat to reliability, the electric reli6 ability organization may seek injunctive relief in

7 the United States district court for the district

8 in which the affected facilities are located.

9 ‘‘(E) EFFECTIVE DATE.—

10 ‘‘(i) IN GENERAL.—Unless the Com11 mission, on motion of the Commission or

12 on application by the bulk-power system

13 user that is the subject of the disciplinary

14 action, suspends the effectiveness of a dis15 ciplinary action, the disciplinary action

16 shall take effect on the 30th day after the

17 date on which—

18 ‘‘(I) the electric reliability organi19 zation submits to the Commission—

20 ‘‘(aa) a written finding that

21 the bulk-power system user vio22 lated an organization standard;

23 and
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•HR 4881 IH

1 ‘‘(bb) the record of pro2 ceedings before the electric reli3 ability organization; and

4 ‘‘(II) the Commission posts the

5 written finding on the Internet.

6 ‘‘(ii) DURATION.—A disciplinary ac7 tion shall remain in effect or remain sus8 pended unless the Commission, after notice

9 and opportunity for hearing, affirms, sets

10 aside, modifies, or reinstates the discipli11 nary action.

12 ‘‘(iii) EXPEDITED CONSIDERATION.—

13 The Commission shall conduct the hearing

14 under procedures established to ensure ex15 pedited consideration of the action taken.

16 ‘‘(2) COMPLIANCE ORDERS.— The Commission,

17 on complaint by any person or on motion of the

18 Commission, may order compliance with an organi19 zation standard and may impose a penalty, limita20 tion on activities, functions, or operations, or take

21 such other disciplinary action as the Commission

22 finds appropriate, against a bulk-power system user

23 with respect to actions affecting or threatening to

24 affect bulk-power system facilities located in the

25 United States if the Commission finds, after notice
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•HR 4881 IH

1 and opportunity for a hearing, that the bulk-power

2 system user has violated or threatens to violate an

3 organization standard.

4 ‘‘(3) OTHER ACTIONS.—The Commission may

5 take such action as is necessary against the electric

6 reliability organization or an affiliated regional reli7 ability entity to ensure compliance with an organiza8 tion standard, or any Commission order affecting

9 electric reliability organization or affiliated regional

10 reliability entity.

11 ‘‘(k) RELIABILITY REPORTS.—The electric reliability

12 organization shall—

13 ‘‘(1) conduct periodic assessments of the reli14 ability and adequacy of the interconnected bulk15 power system in North America; and

16 ‘‘(2) report annually to the Secretary of Energy

17 and the Commission its findings and recommenda18 tions for monitoring or improving system reliability

19 and adequacy.

20 ‘‘(l) ASSESSMENT AND RECOVERY OF CERTAIN

21 COSTS.—

22 ‘‘(1) IN GENERAL.—The reasonable costs of the

23 electric reliability organization, and the reasonable

24 costs of each affiliated regional reliability entity that

25 are related to implementation or enforcement of or-
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•HR 4881 IH

1 ganization standards or other requirements con2 tained in a delegation agreement approved under

3 subsection (h), shall be assessed by the electric reli4 ability organization and each affiliated regional reli5 ability entity, respectively, taking into account the

6 relationship of costs to each region and based on an

7 allocation that reflects an equitable sharing of the

8 costs among all electric energy consumers.

9 ‘‘(2) RULES.—The Commission shall provide by

10 rule for the review of costs and allocations under

11 paragraph (1) in accordance with the standards in

12 this subsection and subsection (d)(4)(F).

13 ‘‘(m) APPLICATION OF ANTITRUST LAWS.—

14 ‘‘(1) IN GENERAL.—Notwithstanding any other

15 provision of law, the following activities are

16 rebuttably presumed to be in compliance with the

17 antitrust laws of the United States:

18 ‘‘(A) Activities undertaken by the electric

19 reliability organization under this section or af20 filiated regional reliability entity operating

21 under a delegation agreement under subsection

22 (h).

23 ‘‘(B) Activities of a member of the electric

24 reliability organization or affiliated regional re25 liability entity in pursuit of the objectives of the
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•HR 4881 IH

1 electric reliability organization or affiliated re2 gional reliability entity under this section un3 dertaken in good faith under the rules of the

4 organization of the electric reliability organiza5 tion or affiliated regional reliability entity.

6 ‘‘(2) AVAILABILITY OF DEFENSES.—In a civil

7 action brought by any person or entity against the

8 electric reliability organization or an affiliated re9 gional reliability entity alleging a violation of an

10 antitrust law based on an activity under this Act,

11 the defenses of primary jurisdiction and immunity

12 from suit and other affirmative defenses shall be

13 available to the extent applicable.

14 ‘‘(n) REGIONAL ADVISORY ROLE.—

15 ‘‘(1) ESTABLISHMENT OF REGIONAL ADVISORY

16 BODY.—The Commission shall establish a regional

17 advisory body on the petition of the Governors of at

18 least two-thirds of the States within a region that

19 have more than one-half of their electrical loads

20 served within the region.

21 ‘‘(2) MEMBERSHIP.—A regional advisory

22 body—

23 ‘‘(A) shall be composed of 1 member from

24 each State in the region, appointed by the Gov25 ernor of the State; and
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•HR 4881 IH

1 ‘‘(B) may include representatives of agen2 cies, States, and Provinces outside the United

3 States, on execution of an appropriate inter4 national agreement described in subsection (f).

5 ‘‘(3) FUNCTIONS.—A regional advisory body

6 may provide advice to the electric reliability organi7 zation, an affiliated regional reliability entity, or the

8 Commission regarding—

9 ‘‘(A) the governance of an affiliated re10 gional reliability entity existing or proposed

11 within a region;

12 ‘‘(B) whether a standard proposed to apply

13 within the region is just, reasonable, not unduly

14 discriminatory or preferential, and in the public

15 interest; and

16 ‘‘(C) whether fees proposed to be assessed

17 within the region are—

18 ‘‘(i) just, reasonable, not unduly dis19 criminatory or preferential, and in the pub20 lic interest; and

21 ‘‘(ii) consistent with the requirements

22 of subsection (l).

23 ‘‘(4) DEFERENCE.—In a case in which a re24 gional advisory body encompasses an entire inter25 connection, the Commission may give deference to
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1 advice provided by the regional advisory body under

2 paragraph (3).

3 ‘‘(o) APPLICABILITY OF SECTION.—This section does

4 not apply outside the 48 contiguous States.

5 ‘‘(p) REHEARINGS; COURT REVIEW OF ORDERS.—

6 Section 313 applies to an order of the Commission issued

7 under this section.’’.

8 (b) ENFORCEMENT.—

9 (1) GENERAL PENALTIES.—Section 316(c) of

10 the Federal Power Act (16 U.S.C. 825o(c)) is

11 amended—

12 (A) by striking ‘‘subsection’’ and inserting

13 ‘‘section’’; and

14 (B) by striking ‘‘or 214’’ and inserting

15 ‘‘214 or 215’’.

16 (2) CERTAIN PROVISIONS.—Section 316A of the

17 Federal Power Act (16 U.S.C. 825o–1) is amended

18 by striking ‘‘or 214’’ each place it appears and in19 serting ‘‘214, or 215’’.

20 (c) SAVINGS CLAUSE.—[RESERVED]

Æ