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[Federal Register Volume 74, Number 37 (Thursday, February 26, 2009)]
[Rules and Regulations]
[Pages 8747-8750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-3964]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM08-3-001; Order No. 716-A]

Mandatory Reliability Standard for Nuclear Plant Interface 
Coordination

Issued February 19, 2009.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule; order on rehearing.

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SUMMARY: In this order, the Commission denies the New York Independent 
System Operator, Inc.'s request for rehearing of Order No. 716, 
Mandatory Reliability Standard for Nuclear Plant Interface 
Coordination. In Order No. 716, the Commission approved as mandatory 
and enforceable the Nuclear Plant Interface Coordination Reliability 
Standard proposed by the North American Electric Reliability 
Corporation.

DATES: Effective Date: This order denying rehearing of the final rule 
will become effective March 30, 2009.

FOR FURTHER INFORMATION CONTACT:

Michael Gandolfo (Technical Information), Office of Electric 
Reliability, Division of Reliability Standards, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426, 
(202) 502-6817.
Richard M. Wartchow (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-8744.

SUPPLEMENTARY INFORMATION:

United States of America.
Federal Energy Regulatory Commission.

    Before Commissioners: Jon Wellinghoff, Acting Chairman; Suedeen G. 
Kelly, Marc Spitzer, and Philip D. Moeller.

Order on Rehearing

(Issued February 19, 2009.)

    1. In Order No. 716, the Commission approved as mandatory and 
enforceable the Nuclear Plant Interface Coordination Reliability 
Standard proposed by the North American Electric Reliability 
Corporation (NERC).\1\ In this order, the Commission denies the New 
York Independent System Operator, Inc.'s (New York ISO) request for 
rehearing of Order No. 716.
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    \1\ Mandatory Reliability Standard for Nuclear Plant Interface 
Coordination, Order No. 716, 73 FR 63,770 (Oct. 27, 2008), 125 FERC 
] 61,065, addressing proposals in Notice of Proposed Rulemaking 
(NOPR), 73 FR 16,586 (Mar. 28, 2008), FERC Stats. and Regs. ] 32,629 
(2008).
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Background

    2. On November 19, 2007, NERC, the Commission-certified Electric 
Reliability Organization (ERO), submitted for Commission approval the 
Nuclear Reliability Standard, designated NUC-001-1. NERC supplemented 
the filing on December 11, 2007 to propose four related NERC glossary 
terms.
    3. In Order No. 716, the Commission approved the Nuclear 
Reliability Standard and related definitions. In doing so, the 
Commission approved the applicability provisions provided in 
Requirements R1 and R2, as clarified in NERC's May 13, 2008 
comments.\2\ The Nuclear Reliability Standard applies to ``transmission 
entities,'' defined as ``all entities that are responsible for 
providing services related to Nuclear Plant Interface Requirements 
(NPIRs)'' \3\ and lists 11 types of functional entities that could 
provide services related to NPIRs.\4\ In Order No. 716, the Commission 
accepted NERC's clarification that the Nuclear Reliability Standard 
will apply to an entity that provides services relating to a nuclear 
plant generator operator's nuclear plant licensing requirements on the 
later of one of two events: on the effective date, for entities in 
NERC's compliance registry that already received notice in the form of 
a proposed NPIR, or on the

[[Page 8748]]

date that a proposed NPIR is provided by the nuclear plant generator 
operator.\5\
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    \2\ Id. P 68.
    \3\ The NERC glossary defines NPIRs as ``The requirements, based 
on [nuclear plant licensing requirements] and Bulk Electric System 
requirements, that have been mutually agreed to by the Nuclear Plant 
Generator Operator and the applicable Transmission Entities.''
    \4\ The Nuclear Reliability Standard list of the applicable 
functional entities consists of transmission operators, transmission 
owners, transmission planners, transmission service providers, 
balancing authorities, reliability coordinators, planning 
authorities, distribution providers, load-serving entities, 
generator owners and generator operators.
    \5\ Order No. 716, 125 FERC ] 61,065 at P 68.
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    4. In its Nuclear Reliability Standard Notice of Proposed 
Rulemaking (NOPR), the Commission proposed to accept the applicability 
provisions with the understanding that the Reliability Standard would 
be effective against a transmission entity when it executed an 
interface agreement with the nuclear plant generator operator.\6\ In 
its comments, NERC clarified its initial description of the 
applicability provisions and made clear that NUC-001-1 applied to 
transmission entities following receipt of the notification from the 
nuclear plant generator operator.\7\ Based on NERC's and other 
commenters' explanations, the Commission accepted the Nuclear 
Reliability Standard with the understanding that it would apply to 
transmission entities that provide services relating to nuclear plant 
licensing requirements on the implementation date, i.e., the NERC 
effective date for the Reliability Standard. On that date, the Nuclear 
Reliability Standard goes into effect immediately for transmission 
entities that have received notification from the nuclear plant 
generator, so long as the entity is registered on the NERC compliance 
registry.
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    \6\ NOPR at P 29.
    \7\ Order No. 716, 125 FERC ] 61,065 at P 60.
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Request for Rehearing

    5. On November 17, 2008, New York ISO filed a request for rehearing 
of Order No. 716. New York ISO requests rehearing of the Commission's 
determination that the Nuclear Reliability Standard applies to a 
transmission entity upon receipt of notification by a nuclear plant 
generator operator. New York ISO argues that this method for 
determining applicability violates due process because it (1) allows 
the nuclear plant generator operator to determine which entities are 
subject to the Reliability Standard, and (2) does not provide 
transmission entities that receive notice from a nuclear plant 
generator operator any ``clear recourse if they disagree with the 
nuclear plant generator operator's determination that they are 
responsible for addressing a specific NPIR.'' \8\ New York ISO states 
the Commission's ruling in Order No. 716 would allow an entity to 
become subject to the Nuclear Reliability Standard outside the NERC 
Rules of Procedure registration process, and place such an entity in 
``an untenable position'' if it disagrees with the nuclear plant 
generator operator that it is responsible for providing services 
related to a specific NPIR. New York ISO, therefore, requests that the 
Commission grant rehearing and hold that the Nuclear Reliability 
Standard is not applicable to a prospective transmission entity upon 
being approached by a nuclear plant generator operator with a NPIR 
until the entity consents to providing services, or until it has been 
found responsible for providing services by NERC or a Regional Entity, 
through a dispute resolution process.
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    \8\ New York ISO request for rehearing at 4, 13.
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    6. New York ISO contends that applying the Reliability Standard to 
an entity once it has been approached by a nuclear plant generator 
operator with a proposed NPIR is at odds with the Commission's decision 
in Order No. 693, which approved the NERC compliance registry process 
to determine those users, owners and operators of the Bulk-Power System 
that must comply with the Reliability Standards.\9\ According to New 
York ISO, this approach effectively gives a nuclear plant generator 
operator the authority to determine the applicability of the Nuclear 
Reliability Standard (rather than NERC or a Regional Entity) without 
providing any clear avenue of appeal (as would be available if the 
compliance registry process were used). New York ISO claims that this 
is an unexplained change in the Commission's approach to applicability.
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    \9\ Id. at 10, citing Mandatory Reliability Standards for the 
Bulk-Power System, Order No. 693, FERC Stats. & Regs. ] 31,242, at P 
97 (2007): Each individual Reliability Standard will then identify 
the set of users, owners and operators of the Bulk-Power System that 
must comply with that standard. While the Commission may take 
prospective action against an entity that was not previously 
identified as a user, owner or operator through the NERC 
registration process once it has been added to the registry, the 
Commission will not assess penalties against an entity that has not 
previously been put on notice, through the NERC registration 
process, that it must comply with particular Reliability Standards. 
Under this process, if there is an entity that is not registered and 
NERC later discovers that the entity should have been subject to the 
Reliability Standards, NERC has the ability to add the entity, and 
possibly other entities of a similar class, to the registration list 
and to direct corrective action by that entity on a going-forward 
basis. The Commission believes that this should prevent an entity 
from being subject to a penalty for violating a Reliability Standard 
without prior notice that it must comply with that Reliability 
Standard.
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    7. New York ISO would find that an entity is responsible for 
providing services, and subject to the Nuclear Reliability Standard, if 
it consents to provide services once it has been approached by a 
nuclear plant generator operator. Alternatively, NERC or a Regional 
Entity could find the entity responsible for providing services. New 
York ISO proposes that, to minimize delays, an entity could be found to 
constructively consent if it fails to timely invoke dispute resolution 
procedures.
    8. In order to resolve disputes over whether an entity approached 
by a nuclear plant generator operator is responsible for providing 
services relating to a NPIR, New York ISO proposes a process to govern 
the identification of transmission entities and the implementation of 
interface agreements. New York ISO states that the lack of a clear 
dispute resolution process is unjust and unreasonable, given the 
Commission's determination that ``an entity is subject to NUC-001-1 at 
the time that it is approached by a nuclear plant generator operator 
about providing NPIR-related services.'' New York ISO states that the 
Commission should implement a dispute resolution process that adopts 
the existing registration dispute procedures, found in section 501 of 
NERC's Rules of Procedure, which contain specific timelines for filing 
and resolution of the dispute.
    9. In addition, New York ISO states that in Order No. 716, the 
Commission should have clarified that an entity that becomes subject to 
the Nuclear Reliability Standard would have a reasonable time (such as 
90 days) to implement an interface agreement with a nuclear plant 
generator operator after it either agrees that it is responsible for an 
NPIR or has been held responsible for providing services to meet an 
NPIR by NERC or a Regional Entity.

Discussion

    10. The Commission denies New York ISO's request for rehearing. 
NERC previously clarified the applicability provisions in response to 
the NOPR request for comment on whether the Nuclear Reliability 
Standard is enforceable against a transmission entity upon execution of 
an interface agreement or at some earlier time.\10\ Several of the 
commenters supported NERC's clarified proposal, which was ultimately 
approved in Order No. 716, while others, including the ISO/RTO Council, 
expressed concerns that are similar to those raised in New York ISO's 
request for rehearing, and which the Commission rejected. Nothing in 
New York ISO's request for rehearing requires the Commission to revisit 
that determination.
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    \10\ See Order No. 716, 125 FERC ] 61,065 at P 34, 59. The 
Reliability Standards are enforceable against a particular entity 
once it is included on the compliance registry. See id. P 42-44.
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    11. Order No. 716 approved NERC's proposal to make the Nuclear 
Reliability

[[Page 8749]]

Standard applicable to transmission entities once they are notified by 
a nuclear plant generator operator that they are responsible for 
providing services needed to support nuclear plant licensing 
requirements as a result of the generator operator's delivery of a 
proposed NPIR. The Commission rejected arguments that use of the term 
transmission entities is inconsistent with the NERC registry 
process.\11\ Furthermore, nothing in Order No. 716 supports New York 
ISO's suggestion that an entity becomes subject to the Nuclear 
Reliability Standard outside the NERC registration process. As with all 
other Reliability Standards, the NERC registry process determines 
whether an entity is a user, owner or operator of the Bulk-Power 
System, and, therefore, is required to comply with the Reliability 
Standards. The question whether an entity must comply with a particular 
Reliability Standard--the relevant issue in this proceeding--is 
resolved based on the provisions of the Reliability Standard and the 
factual circumstances surrounding a given user, owner or operator of 
the Bulk-Power System.\12\
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    \11\ Id. P 21.
    \12\ Id. P 68 (``This [approach] is consistent with other 
Reliability Standards where an entity is subject to a Reliability 
Standard based on the factual determination of whether it operates 
certain facilities or provides a certain service, not based on the 
consent of the entity.'').
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    12. Contrary to New York ISO's position, the issues New York ISO 
seeks to raise are outside the scope of the registry process 
established in the NERC Rules of Procedure. As discussed in the NOPR, 
NERC's registry process establishes procedures to identify and register 
owners, operators and users of the Bulk-Power System, including 
organizations performing functions listed in the definition of 
transmission entities, generators that are material to the Reliable 
Operation of the Bulk-Power System, and organizations that should be 
subject to the Reliability Standards.\13\ NERC's decision to register 
an entity, because it meets one or more of the functions established in 
the registry criteria, establishes that the entity must comply with the 
universe of Reliability Standards that are applicable to the functional 
classes in which the entity is registered. However, NERC's registration 
does not determine whether an entity must comply with each and every 
Reliability Standard applicable to the functional class. Whether an 
entity must comply with a particular Reliability Standard, such as NUC 
-001-1, is determined based on the language of the Reliability 
Standard. For the Nuclear Reliability Standard, the primary factual 
issues to be addressed concern whether an entity is responsible for 
providing services related to NPIRs.\14\ Order No. 716 explained:
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    \13\ NOPR at P 24 n. 21 (citing Order No. 693 at P 92-96; NERC 
Statement of Compliance Registry Criteria).
    \14\ NUC-001-1, section 4.2 (Applicability); see also Order No. 
716, 125 FERC ] 61,065 at P 21 (``While the Commission prefers that 
Reliability Standards apply to all entities within a functional 
category defined in the Registry Criteria, it has approved 
appropriate limitations incorporated into an applicability 
section.'').

    NERC and others have made clear that NUC-001-1 was intended to 
apply to transmission entities following receipt of notification 
from the nuclear plant generator operator, rather than after 
execution of the interface agreement. The applicability of NUC-001-1 
is determined by the function performed by the entity. * * * This is 
consistent with other Reliability Standards where an entity is 
subject to a Reliability Standard based on the factual determination 
of whether it operates certain facilities or provides a certain 
service, not based on the consent of the entity.\15\
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    \15\ Order No. 716, 125 FERC ] 61,065 at P 68.

    13. Industry comments on the NOPR indicate that the nuclear plant 
generator operator is in the best position to interpret nuclear plant 
licensing requirements and system needs affecting operations, based on 
the Nuclear Regulatory Commission requirements to perform grid 
stability studies, documented in plant licensing materials.\16\ 
Industry representatives concluded that NUC-001-1 should be enforceable 
against transmission service providers whose commitments to provide 
services form part of the basis for the original plant license. They 
also concluded that nuclear plant licensees and transmission service 
providers are already obliged to provide assurances with respect to the 
capability and stability of offsite power sources for the nuclear 
plant. Thus, we find appropriate NERC's reliance on nuclear plant 
generator operators to identify the transmission entities that are 
responsible for providing services relating to NPIRs.
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    \16\ Id. P 65-66.
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    14. The Nuclear Reliability Standard applies to transmission 
entities that are registered with NERC and that are responsible for 
providing services related to NPIRs consistent with the language of 
NUC-001-1. Thus, contrary to New York ISO's assertion, this process is 
consistent with the NERC registration process, which provides for 
adequate review of NERC's determinations. An entity that is subject to 
registration for providing services to a nuclear power plant may appeal 
the registration determination.\17\ Entities who are unsure whether 
NUC-001-1 applies to a given set of circumstances may seek 
clarification through a request for an interpretation from NERC.\18\ 
Finally, an entity that believes it has been unfairly found to have 
violated NUC-001-1 may appeal NERC's determination to this 
Commission.\19\
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    \17\ NERC Rules of Procedure, section 504.
    \18\ Any person that is ``directly and materially affected'' by 
Bulk-Power System reliability may request an interpretation of a 
Reliability Standard. NERC Rules of Procedure, Appendix 3A, 
Reliability Standards Development Procedure (2008).
    \19\ NERC Rules of Procedure, sections 402(6) and 409-11 
(establishing appeals process).
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    15. We do not find that the identification process established in 
the Nuclear Reliability Standard improperly delegates authority to 
nuclear plant generator operators. Under NUC-001-1, nuclear plant 
generator operators must identify transmission entities by providing 
proposed NPIRs to transmission entities. Such identification is no 
different than the provision of any factual information under the 
Reliability Standards and represents no delegation of authority. 
Nuclear plant generator operators have no discretion to select 
transmission entities, and are subject to penalties if they fail to 
identify an entity providing services covered by NUC-001-1. As 
documented in Order No. 716, the entities providing services to support 
nuclear plant licensing requirements are known to the nuclear plant 
generator operators and such entities are familiar with their role in 
providing services, as a result of past efforts to negotiate services 
needed to meet nuclear plant licensing requirements.\20\ On rehearing, 
we affirm our finding that no additional consent is necessary for a 
transmission entity to become subject to the Nuclear Reliability 
Standard.
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    \20\ Order No. 716, 125 FERC ] 61,065 at P 28, 65.
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    16. In its request for rehearing, New York ISO objects to what it 
characterizes as the Commission's determination that a transmission 
entity may become subject to the Nuclear Reliability Standard, and any 
resulting enforcement action including penalties, upon being 
``approached'' by a nuclear plant generator operator. We find above 
that speculation as to whether an entity may be in violation of the 
Nuclear Reliability Standard if it fails to execute an interface 
agreement under such circumstances to be beyond the scope of this 
proceeding. However, we emphasize, as discussed above, that the record 
in this proceeding demonstrated that potential transmission entities 
should be familiar with their roles as providing services to support 
nuclear

[[Page 8750]]

licensing requirements.\21\ The Final Rule reflected the Commission's 
intention that the approved approach to applicability would resolve 
concerns that entities supplying services related to nuclear plant 
licensing requirements would balk at executing an interface agreement, 
if execution made them subject to NUC-001-1.\22\ Furthermore, given the 
appeal rights provided for in the NERC enforcement process, we do not 
believe that an entity that disagrees with its role in providing such 
services will be subject to enforcement without recourse. The 
Commission declines at the rulemaking phase to address issues 
concerning individual entities that may be approached to provide 
services relating to nuclear plant licensing requirements. Such issues 
are better addressed in a proceeding providing a record detailing the 
circumstances of a potential transmission entity's registration.
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    \21\ Id. P 82.
    \22\ Id. P 69.
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    17. We also reject New York ISO's request for an allotted period of 
time to implement an interface agreement. Order No. 716 stated, ``Given 
that the parties have already been able to agree to the services needed 
to meet NRC licensing requirements, the same parties should be able to 
successfully identify the services provided, confirm that they address 
NRC criteria for off-site power and system limits, and document such 
services in an auditable format consistent with the NUC-001-1 
Requirements.'' \23\ Thus, it should not be a problem for these parties 
to write up existing arrangements in the format required by the Nuclear 
Reliability Standard. In addition, in cases where there is no immediate 
risk to grid reliability, the Commission approved NERC's proposal that 
it may order mediation as a remedial measure.\24\ For these reasons, we 
find that it is unnecessary to incorporate additional time for parties 
to negotiate and implement an interface agreement.\25\
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    \23\ Id. P 82.
    \24\ See discussion at id. P 75-80.
    \25\ The Commission declines to address in this order the proper 
resolution of a dispute concerning an entity, not currently 
responsible for providing services relating to a generator's nuclear 
plant licensing requirements, that is approached by a nuclear plant 
generator operator seeking to procure such services. Such issues are 
better resolved based on a case-by-case review of a complete factual 
record, detailing any reliability concerns.
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    18. In addition, the Commission in Order No. 716 rejected calls for 
formal incorporation of dispute resolution procedures to resolve 
registration and contract negotiation disputes and, instead, left the 
use of such procedures to NERC's discretion as a mitigation option in 
the event nuclear plant generator operators and transmission entities 
fail to agree.\26\ Given our affirmation of the determination that no 
additional consent is necessary to become subject to the Nuclear 
Reliability Standard, we likewise affirm our determination that 
additional dispute resolution procedures to address a failure to 
consent are not necessary.
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    \26\ Order No. 716, 125 FERC ] 61,065 at P 75.
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    The Commission orders:
    New York ISO's request for rehearing is hereby denied, as discussed 
in the body of this order.

    By the Commission. Commissioner Kelliher is not participating.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. E9-3964 Filed 2-25-09; 8:45 am]
BILLING CODE 6717-01-P
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