Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Proposed Rules 14251 

By the Office of Thrift Supervision. 

John M. Reich, 

Director. 

[FR Doc. E7–5453 Filed 3–26–07; 8:45 am] 

BILLING CODE 6720–01–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR PARTS 748 and 749 

RIN 3133–AD24 

Records Preservation Program and 

Appendices—Record Retention 

Guidelines; Catastrophic Act 

Preparedness Guidelines 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Proposed rule. 

SUMMARY: NCUA proposes to amend its 

regulations to address a federallyinsured credit union’s obligation to 

maintain a records preservation 

program. The proposed rule draws from 

existing guidance to clarify 

requirements for preserving vital 

records and to suggest important items 

for consideration in restoring vital 

member services. NCUA believes the 

revised language and new appendix will 

facilitate the recovery of essential 

operations after a catastrophic act 

resulting in continued member 

confidence in the credit union system. 

The agency also proposes to amend its 

regulations to clarify the meaning of 

catastrophic act. 

DATES: Comments must be received on 

or before May 11, 2007. 

ADDRESSES: You may submit comments 

by any of the following methods (Please 

send comments by one method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• NCUA Web Site: http:// 

www.ncua.gov/ 

RegulationsOpinionsLaws/ 

proposed_regs/proposed_regs. html. 

Follow the instructions for submitting 

comments. 

• E-mail: Address to 

regcomments@ncua.gov. Include ‘‘[Your 

name] Comments on Proposed Rule 

Parts 748 and 749,’’ in the e-mail subject 

line. 

• Fax: (703) 518–6319. Use the 

subject line described above for e-mail. 

• Mail: Address to Mary F. Rupp, 

Secretary of the Board, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314–

3428. 

• Hand Delivery/Courier: Same as 

mail address. 

Public inspection: All public 

comments are available on the agency’s 

Web site at http://www.ncua.gov/ 

RegulationsOpinionsLaws/comments as 

submitted, except as may not be 

possible for technical reasons. Public 

comments will not be edited to remove 

any identifying or contact information. 

Paper copies of comments may be 

inspected in NCUA’s law library, at 

1775 Duke Street, Alexandria, Virginia 

22314, by appointment weekdays 

between 9 a.m. and 3 p.m. To make an 

appointment, call (703) 518–6540 or 

send an e-mail to OGCMail@ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

Andrew Healey, Program Officer, 

Division of Supervision, Office of 

Examination and Insurance, at (703) 

518–6360 or Linda K. Dent, Staff 

Attorney, Office of General Counsel, at 

(703) 518–6540. 

SUPPLEMENTARY INFORMATION: 

Background 

Lessons learned from previous 

catastrophic acts, including the 

dramatic effects of the Katrina and Rita 

hurricanes, indicate the importance of 

preserving vital records and swiftly 

restoring vital member services. In 

particular, NCUA’s review of events in 

the hurricanes’ aftermath demonstrates 

the need for advance planning and 

preparation in successfully responding 

to a catastrophic act. 

Challenges such as providing 

members with access to funds and 

account information, loss of, or lack of, 

access to facilities, and locating and 

communicating with staff were some of 

the immediate issues credit unions 

faced. Fortunately, affected credit 

unions did not face these challenges 

alone. Help came from NCUA, other 

credit unions, trade organizations, and 

service providers. For example, NCUA 

operated a call center to assist credit 

union members in contacting their 

institutions. Agency field staff checked 

on credit union facilities, helped locate 

staff, assisted credit unions with 

equipment needs, and helped credit 

unions restore share and loan data 

where necessary. Other credit unions 

mobilized to send needed cash, 

provided operating space, made staff 

available, and sent needed equipment to 

affected credit unions. Trade 

organizations served as a clearinghouse 

to match those with resources with 

those in need. Shared branch facilities 

signed on institutions enabling them to 

service displaced members. 

In reviewing these experiences, the 

Board determined credit unions, which 

had considered potential threats and 

identified critical functions necessary 

for the retrieval of vital records, were 

able to address anticipated challenges 

and unforeseen difficulties and restore 

vital member services. These 

institutions were able to provide 

members with access to their funds and 

handle member inquiries in a relatively 

short time period. The proposed 

amendments draw from these 

experiences to identify program 

elements the Board considers essential 

to restoring vital records and member 

services. 

Many of these elements are covered in 

previous NCUA guidance issued to 

federally-insured credit unions (FICUs) 

on disaster recovery planning. Despite 

the existence of this guidance, the Board 

is concerned that some credit unions 

may not be maintaining sufficient plans 

and safeguards to respond to events 

causing the destruction of vital records 

or catastrophic acts. The Board believes 

this proposal is necessary to ensure 

credit unions address these critical 

issues in the paramount interest of 

maintaining services to members and 

confidence in the credit union system if 

a catastrophic act occurs. 

Proposed Changes 

The proposed changes specifically 

address the Board’s concerns regarding 

restoration of vital member records and 

services. The proposed changes 

establish minimum standards for 

preserving vital records and include 

recommendations concerning restoring 

member services considered vital to a 

credit union’s continued operation. 

Part 748 

The Board proposes to revise the 

definition of catastrophic act to clarify 

that any event causing an interruption 

in vital member services for more than 

two business days is a qualifying event. 

Part 749 

Several of the proposed changes 

pertain to format and grammar and are 

made to clarify the rule’s language. For 

example, the Board proposes to 

eliminate the question format currently 

used in the section headings and replace 

these with language simply describing 

each section’s contents. Section 749.1 

includes two changes of note. Changes 

to the vital records definition clarify 

that share, deposit, and loan balances 

for each member’s account should be 

available as of the most recent business 

day, while a financial report of the 

credit union’s asset and liability 

accounts and bank reconcilements 

should be available as of the most recent 

month’s end. All other vital records 

should be updated as changes occur. A 

new paragraph (d) is added requiring 


jlentini on PROD1PC65 with PROPOSAL
14252 Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Proposed Rules 

credit unions to maintain certain 

emergency contact information. 

The definition of a vital records center 

remains the same, essentially a fixed 

site in a geographic area different from 

the credit union’s primary site and that 

is unlikely to be negatively affected by 

the same catastrophic act whether 

natural or otherwise, for example, a 

power grid failure. The Board proposes 

to add a phrase which clarifies the backup site may be another federally-insured 

credit union. The Board also proposes to 

add a sentence to the end of this section 

to address the importance of having any 

equipment or software necessary to 

access the vital records at the center. 

The proposed rule also includes 

recommendations on restoring vital 

member services for a credit union. 

Specifically, § 749.0 suggests a credit 

union should complement its plans for 

safeguarding and reconstructing vital 

records by establishing a method for 

restoring vital member services in the 

event of a catastrophic act. Similarly, 

§ 749.2 recommends that procedures for 

maintaining duplicate vital records 

should include a method for using these 

records to restore vital member services. 

Appendix B—Catastrophic Act 

Preparedness Guidelines 

NCUA has issued considerable 

guidance relative to disaster 

preparedness which parallels 

preparation for a catastrophic act as set 

forth below: 

Letter to Credit Unions 01–CU–21 

Disaster Recovery and Business 

Resumption Contingency Plans; Letter 

to Credit Unions 03–CU–07 FFIEC 

Release of Information Technology 

Examination Handbook; Risk Alert 06– 

Risk–01 Disaster Planning and 

Response; Letter to Credit Unions 06– 

CU–06 Influenza Pandemic 

Preparedness; Letter to Credit Unions 

06–CU–10 NCUA’s Information System 

and Technology Program—Business 

Continuity Planning Questionnaire; 

Letter to Credit Unions 06–CU–11 

Interagency Guidance Lessons Learned 

By Institutions Affected by Hurricane 

Katrina; and Letter to Credit Unions 06– 

CU–12 Disaster Preparedness & 

Response Examination Procedures. 

The Board recognizes credit unions 

generally engage in some form of 

planning for responses to catastrophic 

acts and have access to existing 

guidance. The Board is specifically 

interested in commenters’ feedback on 

the usefulness and/or need of including 

a new appendix providing 

recommended information credit unions 

could use in preparing for a catastrophic 

act. 

Regulatory Procedures 

NCUA Interpretive Ruling and Policy 

Statement 87–2 

The comment period for this proposal 

has been shortened to 45 days. The 

NCUA Board believes it is important to 

expedite the rulemaking process in this 

matter to allow for its completion prior 

to the height of the approaching 

hurricane season. 

Paperwork Reduction Act 

The proposed changes involve 

information collection requirements. As 

required by the Paperwork Reduction 

Act of 1995 (44 U.S.C. 3507(d)), NCUA 

is submitting a copy of this proposed 

rule as part of an information collection 

package to the Office of Management 

and Budget (OMB) for its review. 

The proposed rulemaking amends an 

existing requirement for a records 

preservation program by requiring the 

program be in writing and include 

emergency contact information for 

designated persons. 

The Board believes these 

requirements will not create an undue 

burden on credit unions as it expects 

credit unions will document existing 

plans and practices. The Board 

estimates 8,405 respondents will take an 

average of one hour to comply with 

these requirements. Additionally, 15 

respondents representing newlychartered credit unions will take an 

average of seven hours to develop a 

written records preservation program. 

The total annual collection burden is 

estimated to be approximately 8,510 

hours. 

The Paperwork Reduction Act and 

OMB regulations require that the public 

be provided an opportunity to comment 

on the paperwork requirements, 

including an agency’s estimate of the 

burden of the paperwork requirements. 

The NCUA Board invites comment on: 

(1) Whether the paperwork 

requirements are necessary; (2) the 

accuracy of NCUA’s estimates on the 

burden of the paperwork requirements; 

(3) ways to enhance the quality, utility, 

and clarity of the paperwork 

requirements; and (4) ways to minimize 

the burden of the paperwork 

requirements. 

Comments should be sent to: OMB 

Reports Management Branch, New 

Executive Office Building, Room 10202, 

Washington, DC 20503; Attention: Mark 

Menchik, Desk Officer for NCUA. Please 

send NCUA a copy of any comments 

submitted to OMB. 

The Paperwork Reduction Act 

requires OMB to make a decision 

concerning the collection of information 

contained in these proposed regulations 

between 30 and 60 days after 

publication of this document in the 

Federal Register. Therefore, a comment 

to OMB is best assured of having its full 

effect if OMB receives it within 30 days 

of publication. This does not affect the 

deadline for the public to comment to 

the NCUA on the proposed regulation. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

requires NCUA to prepare an analysis to 

describe any significant economic 

impact a proposed regulation may have 

on a substantial number of small 

entities. 5 U.S.C. 601–612. NCUA 

considers credit unions having less than 

ten million dollars in assets to be small 

for purposes of RFA. Interpretive Ruling 

and Policy Statement (IRPS) 87–2 as 

amended by IRPS 03–2. 

The NCUA has determined and 

certifies that this proposed rule, if 

adopted, will not have a significant 

economic impact on a substantial 

number of small credit unions. 

Accordingly, the NCUA has determined 

that an RFA analysis is not required. 

NCUA solicits comment on this analysis 

and welcomes any information that 

would suggest a different conclusion. 

Executive Order 13132 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their regulatory 

actions on state and local interests. In 

adherence to fundamental federalism 

principles, NCUA, an independent 

regulatory agency as defined in 44 

U.S.C. 3502(5), voluntary complies with 

the executive order. This proposed rule, 

if adopted, will not have substantial 

direct effects on the states, on the 

relationship between the national 

government and states, or on the 

distribution of power and 

responsibilities among the various 

levels of government. NCUA has 

determined the proposed rule does not 

constitute a policy that has federalism 

implications for purposes of the 

executive order. 

Treasury and General Government 

Appropriations Act, 1999 

NCUA has determined that the 

proposed rule will not affect family 

well-being within the meaning of 

section 654 of the Treasury and General 

Appropriations Act, 1999, Public Law 

105–277, 112 Stat. 2681 (1998). 

List of Subjects 

12 CFR Part 748 

Credit unions, Reporting and 

recordkeeping requirements. 


jlentini on PROD1PC65 with PROPOSAL
Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Proposed Rules 14253 

1See 12 CFR 748.1(b) concerning a FICU’s 

reporting of any catastrophic act that occurs at its 

office to its regional director and 12 CFR 749.3 

concerning the location of a FICU’s vital records 

center to avoid the simultaneous loss of both sets 

of records in the event of disaster. 

12 CFR Part 749 

Credit unions, Reporting and 

recordkeeping requirements. 

By the National Credit Union 

Administration Board on March 15, 2007. 

Mary Rupp, 

Secretary of the Board. 

Accordingly, NCUA proposes to 

amend 12 CFR part 748 as follows: 

PART 748—SECURITY PROGRAM, 

REPORT OF SUSPECTED CRIMES, 

SUSPICIOUS TRANSACTIONS, 

CATASTROPHIC ACTS AND BANK 

SECRECY ACT COMPLIANCE 

1. The authority citation for parts 748 

and 749 continues to read as follows: 

Authority: 12 U.S.C. 1766(a) and 1786(q); 

15 U.S.C. 6801 and 6805(b); 31 U.S.C. 5311 

and 5318. 

2. Amend § 748.1 by revising the 

second sentence of paragraph (b) to read 

as follows: 

§ 748.1 Filing of reports. 

* * * * * 

(b) * * * A catastrophic act is any 

event, natural or otherwise, resulting in 

physical destruction or damage to the 

credit union or an interruption in vital 

member services projected to last more 

than 2 business days. * * * 

* * * * * 

PART 749—RECORDS 

PRESERVATION PROGRAM AND 

APPENDICES—RECORD RETENTION 

GUIDELINES; CATASTROPHIC ACT 

PREPAREDNESS GUIDELINES 

1. The authority citation for part 749 

continues to read as follows: 

Authority: 12 U.S.C. 1766, 1783 and 1789; 

15 U.S.C. 7001(d). 

2. Amend part 749 by revising the 

part heading to read as set forth above. 

3. Revise § 749.0 to read as follows: 

§ 749.0 Purpose and scope. 

(a) This part describes the obligations 

of all federally-insured credit unions to 

maintain a records preservation program 

to identify, store and reconstruct vital 

records in the event that the credit 

union’s records are destroyed and 

provides recommendations for restoring 

vital member services. All credit unions 

must have a written program that 

includes plans for safeguarding records 

and reconstructing vital records. To 

complement these plans, it is 

recommended a credit union develop a 

method for restoring vital member 

services in the event of a catastrophic 

act. Additionally, the regulation 

establishes flexibility in the format 

credit unions may use for maintaining 

writings, records or information 

required by other NCUA regulations. 

(b) Appendix A to this part provides 

guidance concerning the appropriate 

length of time credit unions should 

retain various types of operational 

records. Appendix B to this part also 

provides guidance for developing a 

program for responding to a catastrophic 

act to ensure duplicate vital records can 

be used for restoration of vital member 

services. 

4. Revise § 749.1 to read as follows: 

§ 749.1 Definitions. 

For purposes of this part: 

Vital member services mean 

informational account inquiries, share 

withdrawals and deposits, and loan 

payments and disbursements. 

Vital records refer to the following 

records: 

(a) A list of share, deposit, and loan 

balances for each member’s account as 

of the most recent business day that: 

(1) Shows each balance individually 

identified by a name or number; 

(2) Lists multiple loans of one account 

separately; and 

(3) Contains information sufficient to 

enable the credit union to locate each 

member, such as address and telephone 

number. 

(b) A financial report, which lists all 

of the credit union’s asset and liability 

accounts and bank reconcilements, 

current as of the most recent month-end. 

(c) A list of the credit union’s 

accounts at financial institutions, 

insurance policies, and investments 

along with related contact information, 

current as of the most recent month-end. 

(d) Emergency contact information for 

employees, officials, regulatory offices, 

and vendors used to support vital 

records. 

5. Revise § 749.2 to read as follows: 

§ 749.2 Vital records preservation 

program. 

The board of directors of a credit 

union is responsible for establishing a 

vital records preservation program 

within 6 months after its insurance 

certificate is issued. The program must 

be in writing and contain procedures for 

maintaining duplicate vital records at a 

vital records center. The procedures 

must include: designated staff 

responsible for vital records 

preservation, a schedule for the storage 

and destruction of records, and a 

records preservation log detailing for 

each record stored, its name, storage 

location, storage date, and name of the 

person sending the record for storage. It 

is recommended credit unions include 

in these procedures a method for using 

duplicate records to restore vital 

member services in the event of 

catastrophic act. Credit unions which 

have some or all of their records 

maintained by an off-site data processor 

are considered to be in compliance for 

the storage of those records if the service 

agreement specifies the data processor 

safeguards against the simultaneous 

destruction of production and back-up 

information. 

6. Revise § 749.3 to read as follows: 

§ 749.3 Vital records center. 

A vital records center is defined as a 

storage facility, which may include 

another federally-insured credit union, 

at any location far enough from the 

credit union’s offices to avoid the 

simultaneous loss of both sets of records 

in the event of a catastrophic act. A 

credit union must maintain or contract 

with a third party to maintain any 

equipment or software for its vital 

records center necessary to access 

records. 

7. Revise § 749.4 to read as follows: 

§ 749.4 Format for vital records 

preservation. 

Preserved records may be in any 

format that can be used to reconstruct 

the credit union’s records. The format 

used must accurately reflect the 

information in the record, remain 

accessible to all persons entitled to 

access by statute, regulation or rule of 

law, and be capable of reproduction by 

transmission, printing, or otherwise. 

8. Revise § 749.5 to read as follows: 

§ 749.5 Format for records required by 

other NCUA regulations. 

Where NCUA regulations require 

credit unions to retain certain writings, 

records or information, credit unions 

may use any format that accurately 

reflects the information in the record, is 

accessible to all persons entitled to 

access by statute, regulation or rule of 

law, and is capable of being reproduced 

by transmission, printing, or otherwise. 

The credit union must maintain the 

necessary equipment or software to 

permit an examiner to access the 

records during the examination process. 

9. Add new Appendix B to Part 749 

to read as follows: 

Appendix B to Part 749—Catastrophic 

Act Preparedness Guidelines 

Credit unions often look to NCUA for 

guidance on preparing for a catastrophic act. 

While NCUA has minimal regulation in this 

area 1, as an aid to credit unions it is 


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14254 Federal Register / Vol. 72, No. 58 / Tuesday, March 27, 2007 / Proposed Rules 

1 16 U.S.C. 824o. 

2Energy Policy Act of 2005, Pub. L. No 109–58, 

Title XII, Subtitle A, 119 Stat. 594, 941 (2005). 

3 16 U.S.C. 824o. 

4Rules Concerning Certification of the Electric 

Reliability Organization; Procedures for the 

Establishment, Approval and Enforcement of 

Electric Reliability Standards, Order No. 672, 71 FR 

8662 (Feb. 17, 2006), FERC Stats. & Regs. ¶ 31,204 

(2006), order on reh’g, Order No. 672–A, 71 FR 

19814 (Apr. 18, 2006), FERC Stats. & Regs. ¶ 31,212 

(2006). 

5North American Electric Reliability Corporation, 

116 FERC ¶ 61,062 (2006). 

6 Mandatory Reliability Standards for the BulkPower Market, 72 FR 64770 (Oct. 20, 2006), FERC 

Stats. & Regs. ¶ 32,608 (2006) (Reliability NOPR). 

7 18 CFR 292.601(c). 

8Revised Regulations Governing Small Power 

Production and Cogeneration Facilities, Order No. 

671, 71 FR 7852 (Feb. 2, 2006), FERC Stats. & Regs. 

¶ 31,203 (2006), order on rehearing, Order No. 771–

A, 71 FERC 30583 (May 22, 2006), FERC Stats. & 

Regs. ¶ 31.219 (2006). 

9 16 U.S.C. 824t–v. 

publishing this appendix of suggested 

guidelines. It is recommended that all credit 

unions develop a program to prepare for a 

catastrophic act. The program should be 

developed with oversight and approval of the 

board of directors. It is recommended the 

program address the following five elements: 

(1) A business impact analysis to evaluate 

potential threats; 

(2) A risk assessment to determine critical 

systems and necessary resources; 

(3) A written plan addressing: 

(i) Persons with authority to enact the plan; 

(ii) Preservation and ability to restore vital 

records; 

(iii) A method for restoring of vital member 

services through identification of alternate 

operating location(s) or mediums to provide 

services, such as telephone centers, shared 

service centers, agreements with other credit 

unions, or other appropriate methods; 

(iv) Communication methods for 

employees and members; 

(v) Notification of regulators as addressed 

in 12 CFR 748.1(b); 

(vi) Training and documentation of 

training to ensure all employees and 

volunteer officials are aware of procedures to 

follow in the event of destruction of vital 

records or loss of vital member services; and 

(vii) Testing procedures, including a means 

for documenting the testing results. 

(4) Internal controls for reviewing the plan 

at least annually and for revising the plan as 

circumstances warrant, for example, to 

address changes in the credit union’s 

operations; and 

(5) Annual testing. 

[FR Doc. E7–5070 Filed 3–26–07; 8:45 am] 

BILLING CODE 7535–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 292 

[Docket No. RM07–11–000] 

Applicability of Federal Power Act 

Section 215 to Qualifying Small Power 

Production and Cogeneration Facilities 

March 16, 2007. 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Notice of Proposed Rulemaking. 

SUMMARY: The Federal Energy 

Regulatory Commission (Commission) is 

proposing to amend its regulations 

governing qualifying small power 

production and cogeneration facilities, 

to eliminate the exemption from the 

requirements of section 215 of the 

Federal Power Act. From a reliability 

perspective, there does not appear to be 

a meaningful distinction between QF 

and non-QF generators that would 

warrant exemption of QFs from 

mandatory Reliability Standards. 

DATES: Comments are due April 17, 

2007. 

ADDRESSES: You may submit comments, 

identified by Docket No. RM07–11–000, 

by one of the following methods: 

• Agency Web site: http://ferc.gov. 

Follow the instructions for submitting 

comments via the eFiling link found in 

the Comment Procedures section of the 

Preamble. 

• Mail: Commenters unable to file 

comments electronically must mail or 

hand deliver an original and 14 copies 

of their comments to: Federal Energy 

Regulatory Commission, Secretary of the 

Commission, 888 First Street, NE., 

Washington, DC, 20426. Refer to the 

Comment Procedures section of the 

preamble for additional information on 

how to file paper comments. 

FOR FURTHER INFORMATION CONTACT: 

Paul Singh (Technical Information), 

Office of Energy Markets and 

Reliability, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, (202) 502–

8576. 

Samuel Higginbottom (Legal 

Information), Office of the General 

Counsel, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, (202) 502–

8561. 

SUPPLEMENTARY INFORMATION: 

Introduction 

1. The Commission is proposing to 

amend the exemptions available to 

qualifying facilities (QFs) so that they 

would no longer be exempt from newlyadded section 215 of the Federal Power 

Act (FPA).1 From a reliability 

perspective, there does not appear to be 

a meaningful distinction between QF 

and non-QF generators that would 

warrant exemption of QFs from 

mandatory Reliability Standards. The 

benefit of this proposal will be 

increased reliability of the North 

American Bulk-Power System. 

Background 

2. On August 8, 2005, the Electricity 

Modernization Act of 2005, which is 

Title XII, Subtitle A, of the Energy 

Policy Act of 2005 (EPAct 2005), was 

enacted into law.2 EPAct 2005 adds a 

new section 215 to the Federal Power 

Act (FPA),3 which requires a 

Commission-certified Electric 

Reliability Organization (ERO) to 

develop mandatory and enforceable 

Reliability Standards, which are subject 

to Commission review and approval. 

Once approved, the Reliability 

Standards may be enforced by the ERO, 

subject to Commission oversight. 

3. On February 3, 2006, the 

Commission issued Order No. 672, 

which implements newly-added section 

215 and provides specific processes for 

the certification of an entity as the ERO, 

the development and approval of 

mandatory Reliability Standards, and 

the compliance with and enforcement of 

approved Reliability Standards.4 On 

April 4, 2006, North American Electric 

Reliability Corporation (NERC) made 

two filings: (1) An application for 

certification of NERC as the ERO; and 

(2) a petition for Commission approval 

of Reliability Standards, with eight 

regional differences and a glossary of 

terms. On July 20, 2006, the 

Commission issued an order certifying 

NERC as the ERO.5 On October 20, 

2006, the Commission issued a Notice of 

Proposed Rulemaking proposing to 

approve 83 of 107 proposed Reliability 

Standards.6

4. In response to the Reliability 

NOPR, Cogeneration Association of 

California and the Energy Producers and 

Users Coalition (CAC/EPUC) filed 

comments pointing out that QFs are 

exempt from section 215 by virtue of 

section 292.601(c) of the Commission’s 

regulations.7 CAC/EPUC suggest that the 

Commission intentionally exempted 

QFs from section 215. CAC/EPUC 

explain that in Order No. 671 issued on 

February 2, 2006,8 the Commission 

stated that it saw no reason to exempt 

QFs from the newly added FPA sections 

220, 221 and 222,9 and explicitly 

excluded those sections of the FPA from 

the QF exemptions contained in section 

292.601 of its regulations, while making 

no similar mention of section 215. 

5. Section 215(b) grants the 

Commission jurisdiction over ‘‘all users, 

owners, and operators of the bulk-power 

system’’ for ‘‘purposes of approving 


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