123 FERC ¶ 61,046 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 39 

(Docket Nos. AD08-6-000 and RM05-30-000) 

Rules Concerning Certification of the Electric Reliability Organization; 

and Procedures for the Establishment, Approval, and Enforcement 

of Electric Reliability Standards 

STATEMENT OF ADMINISTRATIVE POLICY ON PROCESSING 

RELIABILITY NOTICES OF PENALTY 

AND ORDER REVISING STATEMENT IN ORDER NO. 672 

(Issued April 17, 2008) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Final Rule: Statement of Administrative Policy 

SUMMARY: On February 3, 2006, the Federal Energy Regulatory Commission issued a 

Final Rule (Order No. 672) implementing Subtitle A (Reliability Standards) of the 

Electricity Modernization Act of 2005, which is Title XII of the Energy Policy Act of 

2005 (EPAct). The Commission is issuing a policy statement that adopts administrative 

policy on Commission review of notices of penalty for violation of Reliability Standards 

and that modifies Order No. 672. 

FOR FURTHER INFORMATION CONTACT: 

Roger P. Morie 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D. C. 20426 

(202) 502-8446 
Docket Nos. AD08-6-000 and RM05-30-002 - 2 - 

Christy Walsh (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6523 

SUPPLEMENTARY INFORMATION: 
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Joseph T. Kelliher, Chairman; 

 Suedeen G. Kelly, Marc Spitzer, 

 Philip D. Moeller, and Jon Wellinghoff. 

Review of Notices of Penalty for Violations of 

Reliability Standards 

Rules Concerning Certification of the Electric 

Reliability Organization; 

and Procedures for the Establishment, Approval, and 

Enforcement of Electric Reliability Standards 

Docket Nos. AD08-6-000 

RM05-30-002 

STATEMENT OF ADMINISTRATIVE POLICY ON PROCESSING 

RELIABILITY NOTICES OF PENALTY AND 

ORDER REVISING STATEMENT IN ORDER NO. 672 

(Issued April 17, 2008) 

1. On February 3, 2006, the Commission issued a Final Rule (Order No. 672),1

implementing Subtitle A (Reliability Standards) of the Electricity Modernization Act of 

2005, which is Title XII of the Energy Policy Act of 2005.2

 Among other things, Order 

No. 672 amended the Commission’s regulations to implement section 215(e) of the 

Federal Power Act (FPA), which authorizes the Electric Reliability Organization (ERO) 

to impose a penalty for a violation of a Reliability Standard by a user, owner or operator 

 1

 Rules Concerning Certification of the Electric Reliability Organization; 

Procedures for the Establishment, Approval, and Enforcement of Electric Reliability 

Standards, Order No. 672, FERC Stats. & Regs. ¶ 31,204 (2006), order on reh’g, Order 

No. 672-A, FERC Stats. & Regs. ¶ 31,212 (2006). 

2

 Pub. L. No. 109-58, Title XII, Subtitle A, 119 Stat. 594, 941, codified at 16 

U.S.C. 824o (Supp. V 2005). 
Docket Nos. AD08-6-000 and RM05-30-002 - 2 - 

of the Bulk-Power System, subject to an opportunity for Commission review.3

 In this 

order, the Commission adopts this statement of administrative policy on Commission 

review of these penalties.4

 In addition, the Commission modifies our statement in Order 

No. 672 that any settlement of an alleged violation of a Reliability Standard that the ERO 

files with the Commission should be filed for information purposes only and that these 

settlements will not be subject to Commission review pursuant to section 39.7(e) of our 

regulations.5

 Any settlement filed by the ERO after the date of this order will be subject 

to Commission review pursuant to section 39.7(e), although the Commission continues to 

encourage these settlements and expects that it will normally allow ERO or Regional 

Entity settlements to become effective. 

I. Background

2. Pursuant to FPA section 215(e)(1),6

 the North American Electric Reliability 

Corporation (NERC), in its capacity as the nation’s ERO,7

 may impose a penalty on a 

 3

 These implementing regulations are found in Part 39 of our regulations, 18 CFR 

Part 39 (2007). 

4

 FPA section 215(e)(3) empowers the Commission itself to impose a penalty 

against a user, owner or operator for a violation of a Reliability Standard. This order 

does not address the Commission’s procedures for imposing these penalties. The 

Commission discussed these procedures in Statement of Administrative Policy Regarding 

the Process for Assessing Civil Penalties, 117 FERC ¶ 61,317, at P 5 & n.15 (2006). 

5

 See Order No. 672 at P 598. 

6

 16 U.S.C. 824o(e)(1) (Supp. V (2005)). 

7

 North American Electric Reliability Corp., 116 FERC ¶ 61,062 (ERO 

Certification Order), order on reh’g and compliance, 117 FERC ¶ 61,126 (2006). 
Docket Nos. AD08-6-000 and RM05-30-002 - 3 - 

user, owner or operator of the Bulk-Power System for a violation of a Reliability 

Standard approved by the Commission. Pursuant to FPA section 215(e)(4),8

 the 

Commission authorized NERC to delegate authority to impose such penalties to eight 

Regional Entities through Commission-approved Delegation Agreements.9

 The 

Commission also approved, subject to further modifications, NERC’s Compliance 

Monitoring and Enforcement Program (CMEP), which establishes procedures for 

Regional Entities to impose penalties and for NERC to review them, whether a registered 

entity appeals a Regional Entity determination, agrees not to contest it, or enters into a 

settlement with respect to the penalty.10 NERC itself may also impose a penalty. 

3. FPA section 215(e)(2) provides that a penalty NERC or a Regional Entity imposes 

may take effect no earlier than 31 days after NERC files with the Commission a notice of 

penalty and the record of proceedings.11 FPA section 215(e)(2) further states, “Such 

penalty shall be subject to review by the Commission, on its own motion or upon 

application by the user, owner or operator that is the subject of the penalty filed within 30 

days after the date such notice is filed with the Commission.” 

 8

 16 U.S.C. 824o(e)(4) (Supp. V (2005)). 

9

 North American Electric Reliability Corp., 119 FERC ¶ 61,060 (Delegation 

Agreement Order), order on reh’g, 120 FERC ¶ 61,260 (2007), order on responsive 

filing, 122 FERC ¶ 61,245 (2008) (Second Delegation Agreement Order). The Regional 

Entity Delegation Agreements went into effect on June 5, 2007. See Delegation 

Agreement Between the North American Electric Reliability Corp. and Texas Regional 

Entity, a division of ERCOT, 119 FERC ¶ 61,232 (2007). 

10 See id. The relevant CMEP provisions are sections 5.1 through 5.6. 

11 16 U.S.C. 824o(e)(2) (Supp. V (2005)). See also 18 CFR 39.7(e). 
Docket Nos. AD08-6-000 and RM05-30-002 - 4 - 

4. In Order No. 693, the Commission approved 83 Reliability Standards that NERC 

proposed.12 These Reliability Standards generally became effective on June 18, 2007. 

The Commission directed in Order No. 693 that NERC and the Regional Entities, as a 

matter of enforcement discretion, focus their resources on the most serious violations 

during an initial period through December 31, 2007, and that this discretion should apply 

to all users, owners and operators of the Bulk-Power System.13 The Commission expects 

that, in due course, NERC will file notices of penalty with respect to certain violations of 

Reliability Standards that occurred during the June 18 to December 31, 2007 initial 

period. The Commission further expects that NERC will file notices of penalty 

representing settlements entered into by it or a Regional Entity of violations that occurred 

or are alleged to have occurred during this period. The Commission also expects that, in 

due course, NERC will file notices of penalty for violations that occurred or are alleged 

to have occurred after this initial six-month period. Accordingly, the Commission 

believes that an explanation of how it plans to process any notice of penalty filed by 

NERC will afford entities identified in notices of penalty, and the electric industry as a 

 12 Mandatory Reliability Standards for the Bulk-Power System, Order No. 693, 

FERC Stats. & Regs. ¶ 31,242, at P 1 (2007), order on reh’g, Order No. 693-A, 120 

FERC ¶ 61,053 (2007). The Commission subsequently approved other Reliability 

Standards. North American Electric Reliability Corp., 119 FERC ¶ 61,260 (2007) 

(approving eight regional standards proposed by the Western Electricity Coordinating 

Council); Facilities Design, Connections and Maintenance Reliability Standards (Order 

No. 705), 121 FERC ¶ 61,296 (2007); Mandatory Reliability Standards for Critical 

Infrastructure Protection (Order No. 706), 122 FERC ¶ 61,040 (2008). 

13 Order No. 693 at P 222. 
Docket Nos. AD08-6-000 and RM05-30-002 - 5 - 

whole, increased transparency into the Commission’s enforcement processes involving 

Reliability Standards. 

II. Commission Review of ERO-Approved Penalties

5. Pursuant to section 39.7(e)(1) of our regulations, an entity subject to a notice of 

penalty may file an application for review of it within 30 days of the date NERC files the 

notice of penalty.14 Any answer, intervention or comment to an application for review of 

a proposed penalty must be filed within 20 days after the application is filed, unless 

otherwise ordered by the Commission.15 If the entity subject to a proposed penalty files 

an application for review of the proposed penalty, the Commission will take action on 

that application within 60 days of the date on which it is filed, unless the Commission 

determines on a case-by-case basis that an alternative expedited procedure is 

appropriate.16 

6. In addition, any proposed penalty filed by NERC is subject to review by the 

Commission on its own motion within 30 days after the date on which NERC files the 

notice of penalty.17 Should the Commission determine to review a proposed penalty on 

 14 18 CFR 39.7(e)(1). 

15 18 CFR 39.7(e)(4). All notices of penalty will receive a docket number with an 

“NP” prefix, as the Commission’s Secretary stated in a February 7, 2008 notice. 

16 18 CFR 39.7(e)(6). The Commission may determine that an alternative time 

period is appropriate at any point within the “default” 60-day period that section 

39.7(e)(6) establishes. If the Commission determines to extend that period in a particular 

proceeding, it will issue an order establishing the alternative time period. 

17 18 CFR 39.7(e)(1). 
Docket Nos. AD08-6-000 and RM05-30-002 - 6 - 

its own motion, it will issue an order initiating review of the proposed penalty and 

establishing a filing date for any answers, interventions or comments. The Commission’s 

regulations do not state when answers, interventions and comments ordinarily would be 

filed if the Commission were to initiate review of a notice of penalty. However, we 

generally will establish the filing deadline as 20 days after the date of the Commission’s 

order initiating a review of a proposed penalty on its own motion. Likewise, the 

Commission’s regulations do not specify a default time period for the Commission to 

complete the review of a notice of penalty on its own motion. The Commission 

nevertheless anticipates that it would ordinarily issue a determination within 60 days of 

ordering that review, unless issues in a particular case require a longer period for 

consideration. 

7. Section 39.7(e)(1) provides that the Commission may take action within 30 days 

after NERC files a notice of penalty, other than moving to review the notice of penalty, to 

prevent a proposed penalty from being affirmed by operation of law on the expiration of 

that 30-day period. For example, the Commission could issue an order stating that it 

requires more than 30 days to determine whether it should review a proposed penalty on 

its own motion. While we anticipate that the Commission will issue such orders rarely, 

in appropriate instances, the Commission retains the option of doing so. Such an order 

will not solicit answers, intervention or comments. If the Commission determines to 

review the notice of penalty, it will issue a subsequent order initiating review of the 

proposed penalty and establishing a filing deadline for any answers, intervention or 
Docket Nos. AD08-6-000 and RM05-30-002 - 7 - 

comments. Should the Commission decide not to review the notice of penalty, the 

Commission will issue an order terminating the proceeding. The proposed penalty shall 

be affirmed by operation of law immediately upon the issuance of that order. 

8. We wish to make clear that in an application for review of a proposed penalty filed 

by NERC, an entity may seek review of the amount of the proposed penalty or its type 

(i.e., argue that a proposed monetary penalty should be a non-monetary penalty, for 

example) as well as of any determinations underlying the proposed penalty, including 

whether a violation of a Commission-approved Reliability Standard occurred or whether 

there is a sufficient factual record to support any such determination.18 Likewise, if the 

Commission moves to review a proposed penalty, it may review the amount or type of 

the proposed penalty, as well as any determinations underlying it, such as the existence of 

one or more violations of a Commission-approved Reliability Standard. 

9. Section 215(e)(6) of the FPA states that a penalty imposed for a violation of a 

Reliability Standard “shall bear a reasonable relation to the seriousness of the violation 

and shall take into consideration the efforts of [the registered entity] to remedy the 

 18 See Order No. 672 at P 508 (allowing the Commission to remand a penalty to 

the ERO for additional fact-finding proceedings). Nevertheless, for example, it would 

not be appropriate, absent extraordinary circumstances, for an entity that applies for a 

review of a notice of penalty to contest a finding of violation included in it if that entity 

had admitted or not contested a finding of violation, as set forth in the record of 

proceedings the NERC submits with a notice of penalty. Similarly, we ordinarily would 

look with great disfavor on an entity’s attempt in an application for review to contest a 

fact or matter if that entity stipulated to it, as described in the record of proceedings. 
Docket Nos. AD08-6-000 and RM05-30-002 - 8 - 

violation in a timely manner.”19 When reviewing a notice of penalty, whether pursuant to 

an application for review or on our own motion, we will conduct a de novo review of the 

record of the proceeding below to ascertain whether the record contains adequate 

evidence that the proposed penalty determination accords with this test. 20 We observe in 

this regard that FPA section 215(e)(2) states that in any proceeding to review a notice of 

penalty, the Commission must provide notice and an opportunity for hearing that “may 

consist solely of the record before the ERO and opportunity for the presentation of 

supporting reasons to affirm, modify, or set aside the penalty.”21 As we stated in Order 

No. 672, based on this provision, we expect in most instances not to open the record set 

forth in or accompanying a notice of penalty to additional material from third parties.22 

 19 16 U.S.C. 824o(e)(6) (Supp. V (2005)). 

20 See Order No. 672 at P 614 (de novo review is consistent with the practice of 

other administrative agencies that review sanctions imposed by their associated selfregulatory organizations). We concluded in the Delegation Agreement Order that a 

Regional Entity or NERC may not impose a penalty in an adjudication without 

concluding that the preponderance of the evidence supports the penalty. Delegation 

Agreement Order at P 146. 

21 16 U.S.C. 824o(e)(2) (Supp. V (2005)). 

22 Order No. 672 at P 511. In this regard, we emphasize our agreement in the ERO 

Certification Order at P 491 that NERC affords appropriate deference in its procedures to 

the Regional Entities’ role as reliability managers and their familiarity with operating 

conditions by prohibiting NERC’s consideration on appeal of any fact that is not in the 

record compiled by the relevant Regional Entity. 
Docket Nos. AD08-6-000 and RM05-30-002 - 9 - 

However, the Commission retains the discretion in particular cases to permit additions to 

the record with respect to a notice of penalty.23 

10. We believe that entities that are subject to Reliability Standards should have notice 

of the general criteria the Commission will use to determine whether it will review 

particular notice of penalty on its own motion. We will use the following principles in 

this matter. First, the Commission does not anticipate moving to review every notice of 

penalty that NERC files, or even most. While the Commission is required to review 

every notice of penalty for which a registered entity files an application for review, the 

Commission’s limited resources would likely preclude review of all uncontested notices 

of penalty. Second, as described earlier, the Commission has approved NERC’s CMEP 

as the framework for NERC’s enforcement authority under section 215 of the FPA, as 

well as NERC’s delegation of enforcement powers to Regional Entities through the 

Delegation Agreements. The Commission sees no general need to review each notice of 

penalty for which a Regional Entity has developed a record and which it has approved, 

and which NERC has reviewed for sufficiency and consistency. Third, the Commission 

recognizes that, on a continuing basis, Regional Entities and NERC retain an element of 

 23 See 18 CFR 39.7(e)(2) (an applicant for Commission review of a penalty in a 

notice of penalty may support its explanation by providing information that is not 

included in the ERO’s record) and 39.7(e)(3) (when reviewing a notice of penalty, the 

Commission may “establish a hearing before an administrative law judge or initiate such 

further procedures as it determines to be appropriate”). However, in neither of these 

situations is the Commission required to admit into the record information or documents 

proffered by parties to the review proceeding. In particular, the Commission would look 

with disfavor on admitting into the record in a proceeding to review a notice of penalty 

documents or information that a party had an opportunity to move into the record before 

the Regional Entity, but failed to do so. 
Docket Nos. AD08-6-000 and RM05-30-002 - 10 - 

enforcement discretion similar to our own discretion in enforcement matters.24 

Reviewing every uncontested notice of penalty on our own motion would be inconsistent 

with this recognition and would ultimately weaken the enforcement efforts of the 

Regional Entities and NERC.25

11. Nonetheless, because the Commission bears ultimate responsibility for the 

enforcement of Reliability Standards, we may review a notice of penalty even if the 

registered entity that is the subject of the notice of penalty does not file an application for 

review.26 In determining whether to review a notice of penalty (which will occur prior to 

receiving an application for review), we would look first to the apparent relative 

seriousness of the violation at issue in the notice of penalty. For example, we would 

evaluate the seriousness of a violation by the combination of violation risk factor and 

violation severity level that NERC has assigned and that we have approved for particular 

 24 See Order No. 693 at P 225 (“The Commission agrees that, separate from our 

specific directive that all concerned focus their resources on the most serious violations 

during an initial period, the ERO and Regional Entities retain enforcement discretion as 

would any enforcement entity.”). 

25 Id. (observing that NERC’s Sanction Guidelines, which set forth the principles 

under which NERC and the Regional Entities will determine penalties, provide flexibility 

as to establishing the appropriate penalty within the range of applicable penalties). 

26 It is possible that a registered entity will file an application for review of a 

notice of penalty after the Commission has issued an order stating that it will review the 

notice of penalty on its own motion. In that situation, the Commission will adhere to the 

procedural provisions of section 39.7(e)(4) and (e)(6) with respect to an application for 

review of a notice of penalty. 
Docket Nos. AD08-6-000 and RM05-30-002 - 11 - 

requirements of the Reliability Standards implicated in the notice of penalty.27 We also 

will analyze notices of penalty to ascertain the potential risk to the reliability of the BulkPower System, as well as any actual harm, presented by their particular fact patterns. The 

more serious a violation described in a notice of penalty appears to be, the more likely it 

is that we would review the proposed penalty. In addition, the Commission retains the 

authority to review notices of penalty on its own motion to ensure that penalties are 

applied in a reasonably consistent manner, or to improve compliance with Reliability 

Standards and thereby increase the reliability of the Bulk-Power System.28 

12. Section 39.7(e)(3) of our regulations provides that neither an application for 

review of a notice of penalty nor the Commission’s initiation of a review of a notice of 

penalty will operate as a stay of the proposed penalty unless the Commission otherwise 

orders, upon application by the subject of an notice of penalty or upon the Commission’s 

 27 Pursuant to section 4.1 of NERC’s Sanction Guidelines, NERC and Regional 

Entities use the intersection of the violation risk factor and violation severity level in 

setting the initial range of the Base Penalty Amount that is calculated in the process of 

determining an appropriate penalty for a particular violation. See North American 

Electric Reliability Corp., 119 FERC ¶ 61,248, at P 74 (2007). While the Commission 

has approved or directed revisions to violation risk factors for all requirements of 

Reliability Standards it has currently approved to apply nationwide, NERC’s proposed 

violation severity levels for these standards are currently pending before the Commission 

in Docket No. RR08-4-000. Pending Commission review of this filing, as an interim 

measure when determining penalties, NERC and Regional Entities may use existing 

Levels of Non-Compliance assigned to particular standards to substitute for violation 

severity levels. Id. P 79. 

28 See Second Delegation Agreement Order at P 60 (The Commission’s discretion 

to review penalty determinations on its own motion includes, but is broader than, 

ascertaining whether they clearly conflict with the goal of consistent national reliability 

enforcement or whether their revision is needed for oversight of Regional Entity 

compliance activities, citing Delegation Agreement Order at P 173). 
Docket Nos. AD08-6-000 and RM05-30-002 - 12 - 

own motion. Nevertheless, as a matter of policy, the Commission intends as a general 

matter to stay any proposed penalty under Commission review. Not doing so would 

require a user, owner or operator to pay a penalty that the Commission may later set aside 

or modify. To the extent that any proposed penalty is later affirmed by the Commission, 

the penalty amount must be paid with interest from the date of the stay. 

13. Pursuant to section 39.7(e)(5) of our regulations, in any proceeding to review a 

proposed penalty, the Commission, after public notice and opportunity for hearing, may 

by order affirm, set aside, or modify the proposed penalty, or remand the determination 

of the proposed penalty, or its form or amount, to the ERO for further proceedings. Any 

party to the proceeding may seek rehearing of the Commission’s order, as described in 

Rule 713 of the Commission’s Rules of Practice and Procedure.29 

III. Commission Review of Settlements of Reliability Penalties by Regional 

Entities or NERC

A. Order No. 672

14. Order No. 672 stated the ERO should file, for informational purposes only, any 

settlement of an alleged violation regardless of whether the agreement contains an 

admission by the settling user, owner or operator. While settlements will be made public, 

Order No. 672 provided that settlements would not be noticed for public comment; nor 

 29 18 CFR 385.713 (2007). 
Docket Nos. AD08-6-000 and RM05-30-002 - 13 - 

would they be subject to Commission review pursuant to section 39.7(e) of the 

Commission’s regulations regarding Commission review of a notice of penalty.30

B. Commission Determination

15. Upon reconsideration based on our experience since Order No. 672 issued, the 

Commission revises its policy stated in Order No. 672 with regard to reviewing 

settlements of alleged violations. In modifying our policy regarding ERO and Regional 

Entity settlements, we note that the Commission may change its policy if it provides, as it 

does here, a reasoned basis for that change.31 The Commission believes that, on 

reflection, our statement in Order No. 672 is not in the public interest for several reasons. 

First, it is contrary to Commission policy regarding settlements in other contexts. For 

example, pursuant to Rule 602 of the Commission’s Rules of Practice and Procedure, the 

Commission must review written offers of settlement filed in any proceeding pending 

before the Commission.32 Further, the Commission reviews settlements entered into by 

the Commission’s Office of Enforcement.33 Second, after issuing Order No. 672, the 

 30 Order No. 672 at P 598. The Commission presumes that a settlement will 

require a registered entity that is a party to forego any right to file an application for 

Commission review of the settlement. 

31 E.g., B&J Oil and Gas v. FERC, 353 F.3d 71 (D.C. Cir. 2004). 

32 18 CFR 385.602(g)(3), (h)(1)(i) (2007). 

33 See, e.g., Statement of Administrative Policy Regarding the Process for 

Assessing Civil Penalties, 117 FERC ¶ 61,317, at P 2 (2006) (noting that “civil penalties 

often are negotiated as part of a stipulation and agreement resolving compliance issues” 

and that “[i]n such cases the civil penalty is imposed through a Commission order 

approving the negotiated agreement....”) See also, e.g., In re Gexa Energy, L.L.C., 120 

FERC ¶ 61,175 (2007); In re Cleco Power, LLC., 119 FERC ¶ 61,271 (2007). 
Docket Nos. AD08-6-000 and RM05-30-002 - 14 - 

Commission decided that the ERO should have authority on its own motion to reject 

settlements into which Regional Entities have entered.34 

16. The Commission does not believe that it should afford settlements entered into by 

the ERO or a Regional Entity relating to an alleged or confirmed violation of 

Commission-approved mandatory Reliability Standards more deference than we would 

afford to those entered into by the Office of Enforcement or approved by the 

Commission’s Administrative Law Judges. Nor should the Commission abstain from 

reviewing settlements approved by the ERO in the manner in which it has permitted the 

ERO to review Regional Entity settlements. Finally, we do not believe it reasonable to 

treat settlements as categorically different than other notices of penalty. 

17. Not allowing Commission review of a settlement would mean, for example, that 

an entity that does not contest a proposed penalty would nonetheless have its notice of 

penalty subject to review by the Commission, whereas an entity that initially contested 

the proposed penalty but subsequently settled with the Regional Entity would not have its 

settlement subject to review by the Commission. This distinction makes little sense and 

could actually increase litigation (in an effort to produce formal settlements) rather than 

reduce it. Therefore, any settlement entered into by the ERO or a Regional Entity after 

the date of this order will be subject to Commission review pursuant to section 39.7(e) of 

the Commission’s regulations. 

 34 Delegation Agreement Order at P 107. 
Docket Nos. AD08-6-000 and RM05-30-002 - 15 - 

18. As a final matter, we wish to make it clear that the Commission continues to 

encourage settlements by Regional Entities and NERC.35 Similar to the Commission’s 

statement that it does not expect the ERO to reject Regional Entity settlements as a 

normal practice, the Commission expects that it will normally allow ERO or Regional 

Entity settlements to become effective.36 

By the Commission. 

( S E A L ) 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 

 35 See ERO Certification Order at P 479; Delegation Agreement Order at P 107. 

36 Id. 
APPENDIX 

FLOW CHART ILLUSTRATING 

NOTICE OF PENALTY 

PROCESSES