12256 Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations 

1 16 U.S.C. 824o (2006). 

(3) An AMOC that provides an acceptable 

level of safety may be used for any repair 

required by this AD, if it is approved by an 

Authorized Representative for the Boeing 

Commercial Airplanes Delegation Option 

Authorization Organization who has been 

authorized by the Manager, Seattle ACO, to 

make those findings. For a repair method to 

be approved, the repair must meet the 

certification basis of the airplane, and the 

approval must specifically refer to this AD. 

Material Incorporated by Reference 

(p) You must use Boeing Service Bulletin 

767–57A0097, Revision 1, dated October 18, 

2007, to do the actions required by this AD, 

unless the AD specifies otherwise. 

(1) The Director of the Federal Register 

approved the incorporation by reference of 

this service information under 5 U.S.C. 

552(a) and 1 CFR part 51. 

(2) For service information identified in 

this AD, contact Boeing Commercial 

Airplanes, Attention: Data & Services 

Management, P.O. Box 3707, MC 2H–65, 

Seattle, Washington 98124–2207; telephone 

206–544–5000, extension 1, fax 206–766– 

5680; e-mail me.boecom@boeing.com; 

Internet https://www.myboeingfleet.com. 

(3) You may review copies of the service 

information that is incorporated by reference 

at the FAA, Transport Airplane Directorate, 

1601 Lind Avenue, SW., Renton, 

Washington. For information on the 

availability of this material at the FAA, call 

425–227–1221 or 425–227–1152. 

(4) You may also review copies of the 

service information at the National Archives 

and Records Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, or go 

to: http://www.archives.gov/federal_register/

code_of_federal_regulations/

ibr_locations.html. 

Issued in Renton, Washington, on February 

27, 2009. 

Ali Bahrami, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. E9–5953 Filed 3–23–09; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 40 

[Docket Nos. RM08–7–000 and RM08–7– 

001; Order No. 713–A] 

Modification of Interchange and 

Transmission Loading Relief Reliability 

Standards; and Electric Reliability 

Organization Interpretation of Specific 

Requirements of Four Reliability 

Standards 

Issued March 19, 2009. 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Final rule. 

SUMMARY: Pursuant to section 215 of the 

Federal Power Act (FPA), the Federal 

Energy Regulatory Commission 

(Commission) approves Reliability 

Standard IRO–006–4, submitted to the 

Commission for approval by the North 

American Electric Reliability 

Corporation (NERC). The Reliability 

Standard addresses transmission 

loading relief requirements, which 

provide a mechanism to manage and, if 

necessary, curtail interchange 

transactions. In addition, pursuant to 

section 215(d)(5) of the FPA, the 

Commission directs NERC to develop 

modifications to Reliability Standard 

IRO–006–4 to address specific 

Commission concerns. 

DATES: Effective Date: This rule will 

become effective April 23, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Patrick Harwood (Technical 

Information), Office of Electric 

Reliability, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, (202) 502– 

6125, patrick.harwood@ferc.gov. 

Christopher Daignault (Legal 

Information), Office of the General 

Counsel, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, (202) 502– 

8286, christopher.daignault@ferc.gov. 

SUPPLEMENTARY INFORMATION: 

TABLE OF CONTENTS

Paragraph 

Numbers 

I. Background ............................................................................................................................................................................................ 2 

A. Procedural Background ................................................................................................................................................................ 2 

B. Reliability Standard IRO–006–4 .................................................................................................................................................. 6 

II. Discussion ............................................................................................................................................................................................ 11 

A. Approval of Reliability Standard IRO–006–4 ............................................................................................................................. 11 

1. Transfer of Business-Related Requirements to NAESB ....................................................................................................... 15 

2. Improvements to the TLR Procedure .................................................................................................................................... 18 

B. Requirement R1 ............................................................................................................................................................................ 22 

1. Use of TLR Procedure in Conjunction With Other Procedures To Mitigate an IROL Violation ...................................... 23 

2. Use of TLR Procedure Alone To Mitigate an IROL Violation ............................................................................................. 37 

3. Use of Demand-Side Management To Mitigate IROL Violations ........................................................................................ 41 

C. Violation Risk Factors .................................................................................................................................................................. 46 

1. Comments ............................................................................................................................................................................... 47 

2. Commission Determination on Violation Risk Factors ....................................................................................................... 59 

3. Commission Determination on Violation Severity Levels .................................................................................................. 70 

III. Information Collection Statement ...................................................................................................................................................... 73 

IV. Environmental Analysis ..................................................................................................................................................................... 76 

V. Regulatory Flexibility Act ................................................................................................................................................................... 77 

VI. Document Availability ....................................................................................................................................................................... 78 

VII. Effective Date and Congressional Notification ................................................................................................................................ 81 

1. Pursuant to section 215 of the 

Federal Power Act (FPA) 1 the 

Commission approves Reliability 

Standard IRO–006–4, submitted to the 

Commission for approval by the North 

American Electric Reliability 

Corporation (NERC). The Reliability 

Standard addresses transmission 

loading relief requirements, which 

provide a mechanism to manage and, if 

necessary, curtail interchange 

transactions. In addition, pursuant to 

section 215(d)(5) of the FPA, the 

Commission directs NERC to develop 

modifications to Reliability Standard 

IRO–006–4 to address specific concerns 

identified by the Commission. 

I. Background 

A. Procedural Background 

2. On December 21, 2007, NERC, the 

Commission-certified electric reliability 

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Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations 12257 

2Reliability Standard IRO–006–4 is not codified 

in the Commission’s regulations and is not attached 

to this Supplemental Final Rule. It is, however, 

available on the Commission’s eLibrary document 

retrieval system in Docket No. RM08–7–000 and 

also is available on the ERO’s Web site, http:// 

www.nerc.com. 

3 Modification of Interchange and Transmission 

Loading Relief Reliability Standards; and Electric 

Reliability Organization Interpretation of Specific 

Requirements of Four Reliability Standards, Notice 

of Proposed Rulemaking, 73 FR 22856 (Apr. 28, 

2008), FERC Stats. & Regs. ¶ 32,632, at P 48 (2008) 

(NOPR), Supplemental Notice of Proposed 

Rulemaking, 73 FR 30326 (May 27, 2008), FERC 

Stats. & Regs. ¶ 32,635 (2008) (Supplemental 

NOPR). 

4Appendix A identifies the NOPR commenters. 

5 Modification of Interchange and Transmission 

Loading Relief Reliability Standards; and Electric 

Reliability Organization Interpretation of Specific 

Requirements of Four Reliability Standards, Order 

No. 713, 73 FR 43613 (July 28, 2008), 124 FERC 

¶ 61,071 (2008) (Order No. 713 or Final Rule). 

6Appendix B identifies the commenters on 

NERC’s September 11, 2008 filing. In addition, 

NERC filed reply comments. 

7 Mandatory Reliability Standards for the BulkPower System, Order No. 693, FERC Stats. & Regs. 

¶ 31,242, order on reh’g, Order No. 693–A, 120 

FERC ¶ 61,053 (2007). 

8The commercial requirements were transferred 

to a North American Energy Standards Board 

(NAESB) business practices document. The 

Commission approved the NAESB TLR standard, 

WEQ–008, to coincide with the effective date of 

Reliability Standard IRO–006–4. See Standards for 

Business Practices and Communication Protocols 

for Public Utilities, Order No. 676–C, 73 FR 43848 

(July 29, 2008), FERC Stats. & Regs. ¶ 31,274, at P 

7 n.11, P 9, P 80 (2008); see also Order No. 713, 

124 FERC ¶ 61,071 at P 8. 

9An IROL is a system operating limit that, if 

violated, could lead to instability, uncontrolled 

separation, or cascading outages that adversely 

impact the reliability of the Bulk-Power System. 

10NOPR, FERC Stats. & Regs. ¶ 32,632 at P 47. 

11Order No. 693, FERC Stats. & Regs. ¶ 31,242 at 

P 577. 

organization (ERO), submitted for 

Commission approval modifications to 

Reliability Standard IRO–006–4 

(Reliability Coordination—Transmission 

Loading Relief), known as the 

transmission loading relief or ‘‘TLR’’ 

procedure.2

3. On April 21, 2008, as 

supplemented on May 16, 2008, the 

Commission issued a Notice of 

Proposed Rulemaking (NOPR) that 

proposed to approve three NERC filings, 

including Reliability Standard IRO– 

006–4.3 In response, nine interested 

persons filed comments, six of which 

address the TLR procedure at issue 

here.4 (The Commission consolidated 

three ERO submissions in the RM08–7– 

000 rulemaking proceeding. This 

Supplemental Final Rule only addresses 

the ERO’s December 21, 2007 filing 

pertaining to the TLR Reliability 

Standard. The Commission addressed 

the other two ERO filings in Order No. 

713, i.e., the Final Rule in this 

proceeding.) 

4. On July 21, 2008, the Commission 

issued a Final Rule in this proceeding, 

which approved five Reliability 

Standards and approved NERC’s 

interpretation of other Reliability 

Standards.5 The Commission, however, 

did not make a determination in the 

Final Rule regarding Reliability 

Standard IRO–006–4 and, instead, 

directed NERC to submit a filing 

explaining one aspect of the TLR 

procedure. 

5. On September 11, 2008, NERC 

submitted a filing as directed in the 

Final Rule. Notice of NERC’s September 

11, 2008 filing was published in the 

Federal Register, 73 FR 75,429. Three 

interested persons submitted 

comments.6

B. Reliability Standard IRO–006–4 

6. Reliability Standard IRO–006–4 

applies to balancing authorities, 

reliability coordinators, and 

transmission operators. Reliability 

Standard IRO–006–4 modifies 

Reliability Standard IRO–006–3, which 

the Commission approved in Order No. 

693.7 In its December 2007 filing, NERC 

explained that it modified the TLR 

procedure to ‘‘extract’’ commercial 

requirements and business practices.8

Further, the modified Reliability 

Standard includes changes directed by 

the Commission in Order No. 693 

related to the appropriateness of using 

the TLR procedure to mitigate a 

violation of an interconnection 

reliability operating limit (IROL).9

7. Reliability Standard IRO–006–4 

contains five requirements. Requirement 

R1 obligates a reliability coordinator 

experiencing a potential or actual 

system operating limit (SOL) or IROL 

violation within its reliability 

coordinator area to select one or more 

procedures to mitigate potential or 

actual transmission overloads. The 

requirement also identifies the regional 

TLR procedures in WECC and ERCOT. 

Requirement R1 includes a warning that 

the TLR procedure alone is an 

inappropriate and ineffective tool to 

mitigate an actual IROL violation and 

provides alternatives. 

8. Requirement R2 mandates that the 

reliability coordinator only use local 

TLR or congestion management 

procedures to which the transmission 

operator experiencing the potential or 

actual SOL or IROL is a party. 

9. Requirement R3 establishes that a 

reliability coordinator with a TLR 

obligation from an interconnection-wide 

procedure follow the curtailments as 

directed by the interconnection-wide 

procedure. It also requires that a 

reliability coordinator desiring to use a 

local procedure as a substitute for 

curtailments as directed by the 

interconnection-wide procedure must 

obtain prior approval from the ERO. 

10. Requirement R4 mandates that 

each reliability coordinator comply with 

interconnection-wide procedures, once 

they are implemented, to curtail 

transactions that cross interconnection 

boundaries. Requirement R5 directs 

balancing authorities and reliability 

coordinators to comply with applicable 

interchange-related Reliability 

Standards during the implementation of 

TLR procedures. 

II. Discussion 

A. Approval of Reliability Standard 

IRO–006–4 

11. In the NOPR, the Commission 

proposed to approve IRO–006–4 as just, 

reasonable, not unduly discriminatory 

or preferential, and in the public 

interest.10

12. NERC and IESO support approval 

of the Reliability Standard. Lafayette 

and LEPA state that they support the 

Commission’s effort to reduce the use of 

TLRs; they support adoption of the 

Reliability Standards as proposed by the 

Commission. 

13. Pursuant to section 215(d) of the 

FPA, the Commission approves 

Reliability Standard IRO–006–4 as 

mandatory and enforceable. The ERO’s 

proposal implements the Commission’s 

directives in Order No. 693 to include 

a warning that the TLR procedure is an 

inappropriate and ineffective tool to 

mitigate actual IROL violations and 

identify available alternatives to 

mitigate an IROL violation.11 Further, as 

discussed below, the Commission 

believes that the separation of business 

practices from the Reliability Standards 

will not compromise Bulk-Power 

System reliability. Accordingly, the 

Commission approves IRO–006–4 as 

just, reasonable, not unduly 

discriminatory or preferential, and in 

the public interest, as discussed below. 

14. As a separate matter, pursuant to 

section 215(d)(5) of the FPA, the 

Commission directs the ERO to develop, 

pursuant to its Reliability Standards 

development procedure, modifications 

to IRO–006–4 to address the 

Commission’s specific concerns, as 

discussed below. Further, the 

Commission approves the proposed 

violation risk factors and violation 

severity levels and directs the ERO to 

submit a filing within 60 days of the 

effective date of this Supplemental Final 

Rule revising specified violation risk 

factors and violation severity levels. 

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12258 Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations 

12NOPR, FERC Stats. & Regs. ¶ 32,632 at P 49. 

13The IDC is a mechanism used by the reliability 

coordinators in the Eastern Interconnection to 

calculate the distribution of interchange 

transactions over specific flowgates. It includes a 

database of all interchange transactions and a 

matrix of the distribution factors for the Eastern 

Interconnection. 

14NERC’s comments in reply to NRG, as well as 

Constellation’s and, in their joint supplemental 

pleading, Lafayette and LEPA’s comments relating 

to the TLR procedure are likewise beyond the scope 

of this proceeding. 

15NERC December 21, 2007 Filing at 7. Moreover, 

pursuant to the ERO’s Rules of Procedure, a 

commenter can submit a Standard Authorization 

Request to the ERO to propose revisions to a 

Reliability Standard. 

16See NERC September 11, 2008 Response at 10. 

17Order No. 713, 124 FERC ¶ 61,071 at P 46–50. 

1. Transfer of Business-Related 

Requirements to NAESB 

15. The Commission, in the NOPR, 

sought comments on whether the 

removal and transfer to NAESB of the 

business-related issues formerly 

contained in Reliability Standard IRO– 

006–3 could compromise Bulk-Power 

System reliability.12

a. Comments 

16. NERC states that it has 

coordinated with NAESB and believes 

there is no compromise in reliability as 

a result of the removal and transfer to 

NAESB of the business-related issues 

formerly contained in the earlier 

standard, IRO–006–3. NERC notes that 

there are minor differences in 

terminology and language between the 

NERC and NAESB documents. It states 

that, although these differences may be 

confusing to industry, they do not affect 

the ability to successfully implement 

the standards as written. Further, NERC 

indicates that it is working with NAESB 

to develop more in-depth coordination 

procedures to ensure that language is 

consistent. 

b. Commission Determination 

17. Based on the ERO’s explanation, 

we are persuaded that the separation of 

business practices from the Reliability 

Standards will not compromise BulkPower System reliability. However, we 

are concerned with respect to the ERO’s 

acknowledgement that there are 

differences in terminology and language 

used between the ERO Reliability 

Standard and the NAESB standard that 

pertain to TLR procedures. The ERO 

indicates that it is currently working 

with NAESB to develop more in-depth 

coordination procedures to ensure that 

language is consistent. Thus, we expect 

that the ERO, working with NAESB, will 

resolve the inconsistencies in 

terminology between the Reliability 

Standard and NAESB standard 

regarding TLR procedures as their 

agendas permit; we do not find a need 

to direct changes at this time. 

2. Improvements to the TLR Procedure 

a. Comments 

18. Several commenters raise 

concerns regarding needed 

improvements to the TLR procedure. 

Lafayette and LEPA comment that they 

have often ‘‘suffered’’ from the 

curtailment of firm transmission service 

pursuant to the TLR procedure and 

support efforts to reduce its use. NRG 

comments that the excessive use of 

TLRs is reducing system reliability in 

some non-organized markets and that 

the Commission should require NERC to 

modify its TLR rules to limit the 

excessive use of TLRs. NRG states that 

the Interchange Distribution Calculator 

(IDC) is critical to the TLR process,13

since reliability coordinators rely on the 

curtailments specified by the IDC. NRG 

identifies two significant problems with 

the IDC that IRO–006–4 does not 

address: (1) The generation and load 

data relied on by the IDC is static, with 

no requirement that it be regularly 

updated or accurately reflect real-time 

conditions; and (2) the IDC methodology 

does not curtail certain schedules or 

determine native network load 

obligations accurately in some cases, 

leading to a discriminatory assignment 

of reliability obligations. NRG urges the 

Commission to direct NERC to modify 

the IDC to base its curtailment decisions 

on accurate native load information and 

to base them consistently on local load 

and generation amounts. 

19. Further, NRG states that there is 

a gap in the proposed TLR procedures 

that allows certain non-firm transactions 

to escape curtailment prior to the 

issuance of a Level 5 TLR (i.e., 

curtailment of firm transactions and 

firm native load). NRG reiterates its 

concerns in its comments on NERC’s 

September 11, 2008 filing in this 

proceeding. 

20. ISO/RTO Council suggests that the 

Commission clarify that, although TLR 

should not be ruled out as a congestion 

management tool, NERC should address 

the use of more sophisticated tools to 

respond to the impacts that loop flow 

and the lack of transparency in nonRTO regions can have on congestion 

management at the ‘‘seams.’’ 

b. Commission Determination 

21. The above comments on suggested 

improvements to the TLR procedure are 

beyond the scope of this proceeding, 

which pertains to the separation of 

business practices from the ERO’s TLR 

procedure and implementation of the 

Commission’s directives set forth in 

Order No. 693.14 We note, however, that 

the ERO indicated in its December 21, 

2007 filing that it has a three-phase plan 

to improve the TLR procedures, and the 

third phase will consist of ‘‘a complete 

redrafting to incorporate enhancement 

and changes beyond the separation of 

reliability and business practice 

issues.’’ 15 Therefore, the phase three 

proceeding would provide a proper 

forum for commenters to raise their 

concerns. The Commission believes that 

NRG and other commenters raise valid 

issues and urges the commenters to 

raise—and expects the ERO to 

consider—these matters in an 

appropriate proceeding. We also note 

that NERC states it is currently updating 

the IDC to more accurately determine 

the impacts of native load and network 

service.16

B. Requirement R1 

22. Requirement R1 of IRO–006–4 

provides, in part: 

R1. A Reliability Coordinator experiencing 

a potential or actual SOL or IROL violation 

within its Reliability Coordinator Area shall, 

with its authority and at its discretion, select 

one or more procedures to provide 

transmission loading relief. These procedures 

can be a ‘‘local’’ (regional, interregional, or 

sub-regional) transmission loading relief 

procedure or one of the following 

Interconnection-wide procedures: 

R1.1 The Interconnection-wide 

Transmission Loading Relief (TLR) procedure 

for use in the Eastern Interconnection is 

provided in Attachment 1–IRO–006–4. The 

TLR procedure alone is an inappropriate and 

ineffective tool to mitigate an IROL violation 

due to the time required to implement the 

procedure. Other acceptable and more 

effective procedures to mitigate actual IROL 

violations include: Reconfiguration, 

redispatch, or load shedding. 

Below, we address three concerns 

regarding Requirement R1: (1) Use of the 

TLR procedure in conjunction with 

other procedures to mitigate an IROL 

violation; (2) use of the TLR procedure 

to mitigate an actual IROL violation is 

a violation of the Reliability Standard; 

and (3) use of demand-side management 

as an effective procedure to mitigate 

IROL violations. 

1. Use of TLR Procedure in Conjunction 

With Other Procedures To Mitigate an 

IROL Violation 

a. Final Rule Discussion 

23. In the Final Rule, the Commission 

did not approve or remand IRO–006–4 

but rather directed the ERO to submit a 

filing addressing the Commission’s 

concerns regarding Requirements R1 

and R1.1 of the Reliability Standard.17

Specifically, the Final Rule explained 

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Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations 12259 

18See U.S.-Canada Power System Outage Task 

Force, Final Report on the August 14, 2003 

Blackout in the United States and Canada: Causes 

and Recommendations, at 163 (April 2004) (Final 

Blackout Report), available at http://www.ferc.gov/ 

industries/electric/indus-act/blackout.asp. 

Recommendation 31 of the report provides that 

NERC should ‘‘[c]larify that the [TLR] process 

should not be used in situations involving an actual 

violation of an Operation Security Limit.’’ 

19See Order No. 693, FERC Stats. & Regs. 

¶ 31,242 at P 577, 964. 

20Order No. 713, 124 FERC ¶ 61,071 at P 49. 21NERC September 11, 2008 Response at 4. 

that, consistent with the Final Blackout 

Report,18 Order No. 693 directed NERC 

to develop a modification to the TLR 

procedure that the Commission 

accepted in IRO–006–3 that ‘‘(1) 

includes a clear warning that the TLR 

procedure is an inappropriate and 

ineffective tool to mitigate actual IROL 

violations and (2) identifies in a 

Requirement the available alternatives 

to mitigate an IROL violation other than 

use of the TLR procedure.’’19

24. In its December 2007 filing, NERC 

stated that it modified the Reliability 

Standard in response to the Order No. 

693 directive. In particular, the ERO 

modified Requirement R1.1 of IRO–006– 

4 to provide that ‘‘[t]he TLR procedure 

[for the Eastern Interconnection] alone 

is an inappropriate and ineffective tool 

to mitigate an IROL violation due to the 

time required to implement the 

procedure.’’ (Emphasis added.) 

25. In Order No. 713, the Commission 

queried whether the language of 

Requirements R1 and R1.1 are adequate 

to satisfy the concern of the Final 

Blackout Report and Order No. 693 that 

the TLR procedure not be used in 

response to an actual IROL violation. 

The Commission explained: 

An entity is not prevented from using the 

TLR procedure to avoid a potential IROL 

violation before a violation occurs. If, while 

a TLR procedure is in progress, an IROL 

violation occurs, it is not necessary for the 

entity to terminate the TLR procedure. 

However, the Commission believes that it is 

inappropriate and ineffective to rely on the 

TLR procedure, even in conjunction with 

another tool, to address an actual IROL 

violation.[20] 

Accordingly, the Commission directed 

the ERO to explain Requirements R1 

and R1.1 of IRO–006–4 in light of this 

concern. 

b. NERC Responsive Filing 

26. NERC responds that the most 

immediate reliability goal is the 

mitigation of the IROL violation. NERC 

states that there are four acceptable 

options to respond to an IROL violation: 

inter-area redispatch, intra-area 

redispatch, reconfiguration of the 

transmission system, and voluntary or 

involuntary reductions in load. 

According to NERC, Requirement R1.1 

of IRO–006–4 identifies these options as 

‘‘reconfiguration, redispatch, or load 

shedding.’’ 

27. Further, NERC believes that taking 

concurrent action, i.e., using TLR in 

conjunction with one of the above 

operation actions, ‘‘can result in 

positive outcomes.’’ 21 NERC agrees 

with the Commission that the use of 

TLR prior to an actual IROL violation is 

an acceptable practice. NERC also agrees 

that a TLR should not be terminated 

following the occurrence of an IROL 

violation if the TLR procedure was 

already in progress. However, NERC 

points out that it is impossible to 

decouple the TLR actions of the 

previous hour from those of the current 

hour. According to NERC, the 

progressive nature of TLR requires 

constant management to ensure that 

reliability and open access are 

maintained. NERC maintains that the 

Commission should endorse a situation 

where, on a continuing basis, a TLR can 

be reissued for a constrained facility in 

order to assist in providing relief, in 

addition to the more immediate operator 

actions taken to alleviate the actual 

overload. NERC disagrees that all 

interchange transactions should be 

frozen at current levels while any new 

transactions are held, because this could 

result in aggravation of the IROL 

violation from an increase in native load 

and/or parallel flows. For similar 

reasons, NERC also believes it is 

inappropriate to let the curtailments 

issued for the current hour expire and 

not reissue the TLR, because this 

practice also could aggravate the IROL 

violation, as the single-hour established 

curtailments would expire and 

transactions would be reloaded. 

28. NERC avers that the intent of the 

Commission’s directive is that, should 

an entity experience an actual IROL 

violation, that entity should not invoke 

the TLR process with the belief that the 

IROL violation will be mitigated by the 

TLR within an acceptable timeframe. 

NERC contends, however, that any 

standard that would require a reliability 

coordinator to explicitly not use TLR as 

one of the tools it has in responding to 

an actual IROL violation could 

compromise reliability, open access, or 

both. NERC states that it is appropriate 

for an entity to use the TLR process in 

response to an actual IROL, provided 

such use is a complementary action to 

other operator actions employed to 

mitigate the IROL violation more 

expeditiously and, as such, invoking 

TLR is not the only action taken. 

29. NERC provides examples of use of 

TLR in conjunction with other 

acceptable options to provide a more 

rapid and effective return from 

emergency conditions. For example, 

NERC states that if an entity 

redispatches generation and invokes a 

TLR at the same time in response to an 

actual IROL violation, that entity may 

utilize the generation to respond 

immediately to mitigate the violation 

and bring the flow below the IROL, then 

reduce the generation once the TLR is 

able to effectively and more equitably 

address the issue. 

c. Comments on NERC Responsive 

Filing 

30. Southern agrees with NERC’s 

explanation regarding the ways in 

which a reliability coordinator may use 

the TLR procedure. Southern believes 

that the TLR procedure, when used in 

conjunction with reconfiguration, 

redispatch, or load shedding, is an 

indispensable means for providing relief 

for constrained facilities. Southern 

comments that any revision to 

Reliability Standard IRO–006–4 should 

be developed through the Reliability 

Standards development process. 

31. ISO/RTO Council comments that 

it generally agrees with the sequencing 

of TLR procedures as explained by 

NERC. While ISO/RTO Council 

supports limiting the wide-scale use of 

TLR as a congestion management tool, 

it believes that the Commission’s 

interpretation may draw too fine a line 

in ‘‘hard wiring’’ a particular sequence 

of the use of TLRs. It agrees with NERC 

that ‘‘it is impossible to decouple the 

actions of the previous hour from those 

of the current hour,’’ and urges the 

Commission to avoid placing artificial 

barriers in the sequencing of the use of 

the TLR procedure. 

d. Commission Determination 

32. The Commission is satisfied with 

the ERO’s response. We agree with the 

ERO that acceptable immediate actions 

to mitigate an IROL violation may 

include one or more of the following: 

inter-area redispatch, intra-area 

redispatch of generation, 

reconfiguration of the transmission 

system, and voluntary or involuntary 

load reductions. When an IROL 

violation occurs, the reliability 

coordinator should use the above tools 

appropriate to the circumstance and 

duration of the actual IROL violation for 

mitigation. 

33. We understand from its 

explanation that the ERO agrees that use 

of the TLR procedure is not one of the 

acceptable immediate actions to 

mitigate an IROL violation. Rather, use 

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12260 Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations 

22The ERO states that ‘‘it is appropriate for an 

entity to use the TLR process in response to an 

actual IROL, provided that it is a complementary 

action to other operator actions employed to 

mitigate the IROL violation more expeditiously and, 

as such, invoking TLR is not the only action taken.’’ 

NERC September 11, 2008 Response at 5 (emphasis 

added). 23NOPR, FERC Stats. & Regs. ¶ 32,632 at P 48. 

24N. Am. Elec. Reliability Corp., 119 FERC 

¶ 61,321, at P 10 (2007) (‘‘A vegetation-related 

transmission outage would result in a violation of 

Requirement R1, R2 or both.’’). 

of the TLR procedure is complementary 

to, and may be used in conjunction 

with, the identified tools to mitigate an 

IROL violation, provided that the action 

to implement the TLR procedure does 

not interfere with or delay an entity 

taking the immediate action required to 

mitigate the IROL violation.22 The 

Commission understands this is the 

intent of the language in Requirement 

R1.1 that ‘‘[t]he TLR procedure alone is 

an inappropriate and ineffective tool to 

mitigate an IROL violation due to the 

time required to implement the 

procedure.’’ 

34. The Commission reiterates that 

the use of a TLR is not required to be 

terminated following the occurrence of 

an IROL violation if the TLR procedure 

was already in progress prior to 

exceeding the IROL. Thus, if an IROL is 

exceeded after a TLR procedure is in 

progress, the reliability coordinator does 

not need to revoke the TLR. Moreover, 

in the event that a potential IROL 

violation progresses to an actual IROL 

violation near the top of the hour and 

a TLR is already in progress, it is 

acceptable for the reliability coordinator 

to reissue the TLR to prevent reloading 

or exacerbating interchange schedules, 

while more immediate actions are taken 

to relieve the IROL violation. 

35. During an actual IROL violation, 

the primary concern of the reliability 

coordinator should be to mitigate the 

violation immediately. Because the TLR 

procedure may take an extended time to 

fully implement, it is not acceptable for 

a reliability coordinator to invoke the 

TLR process with the belief that the 

IROL violation will be mitigated by the 

TLR. Therefore, during an actual IROL 

violation, a reliability coordinator 

should initiate more immediate actions 

to relieve the IROL violation before 

initiating a TLR and at no point should 

implementing a TLR divert operator 

resources or delay implementation of 

more immediate IROL mitigation 

actions. In accord with this 

understanding, we find Requirement 

R1.1 consistent with the Final Blackout 

Report and Order No. 693. 

36. As discussed above, based on the 

ERO’s response we believe that our 

understanding of Requirement R1.1 

comports with that of the ERO. While 

IRO–006–4, Requirement R1.1, should 

be implemented and enforced with the 

above understanding, we believe that 

the term ‘‘alone’’ in the provision could 

be improved to more precisely convey 

that it is a violation of Requirement R1.1 

to rely on the TLR procedure when an 

entity is in the process of mitigating an 

IROL violation and the entity has not 

taken more immediate and effective 

means to achieve relief. Accordingly, 

pursuant to section 215(d)(5) of the 

FPA, the Commission directs the ERO to 

develop a modification of Requirement 

R1.1 with respect to the term ‘‘alone,’’ 

consistent with this discussion. 

2. Use of TLR Procedure Alone To 

Mitigate an IROL Violation 

37. In the NOPR, the Commission 

proposed to approve the Reliability 

Standard based on the interpretation 

that using a TLR procedure alone to 

mitigate an actual IROL violation is a 

violation of the Reliability Standard.23

a. Comments 

38. ISO/RTO Council objects to the 

Commission’s proposal to approve the 

proposed Reliability Standard IRO–006– 

4 based on the interpretation that using 

a TLR alone to mitigate an IROL 

violation is a violation of the Reliability 

Standard. ISO/RTO Council expresses 

concern that the ERO has procedures for 

interpreting Reliability Standards and 

those procedures may be eroded 

through after-the-fact Commission 

interpretation without the opportunity 

for NERC stakeholder review. ISO/RTO 

Council urges greater deference to 

following the Commission-approved 

NERC process for the interpretation of 

Reliability Standards. Should that 

process prove too time-consuming, ISO/ 

RTO Council suggests that the 

Commission revisit the process itself 

rather than undertaking de facto 

amendments to it by interpreting the 

Reliability Standard in ways not 

addressed through the NERC 

stakeholder process. 

b. Commission Determination 

39. This issue raised in the NOPR is 

somewhat overtaken by the further 

Commission inquiry in the Final Rule 

regarding the appropriate tools for 

mitigating an IROL violation and our 

discussion immediately above on this 

issue. As we state above, IRO–006–4, 

Requirement R1.1, should be 

‘‘implemented and enforced’’ based on 

our understanding in this order of the 

issue. 

40. In any case, we adopt our NOPR 

proposal and approve Reliability 

Standard IRO–006–4 with the 

understanding that using a TLR 

procedure to mitigate an actual IROL 

violation is a violation of the 

Requirement R1.1 of the Reliability 

Standard, as discussed above. While 

ISO/RTO Council raises procedural 

concerns regarding the Commission’s 

interpretation, neither ISO/RTO Council 

nor any other commenter expresses 

concern regarding the substance of the 

Commission’s interpretation. Further, 

the Commission previously has 

determined—or interpreted—when a 

violation of a Reliability Standard 

would occur.24

3. Use of Demand-Side Management To 

Mitigate IROL Violations 

41. In a joint concurrence to the 

NOPR, then-Commissioner Wellinghoff 

and Commissioner Kelly noted that 

demand-side management is not 

explicitly included in Requirement R1.1 

of IRO–006–4 among the acceptable 

tools to mitigate an IROL violation. The 

concurrence noted that nothing in the 

Reliability Standard precludes the use 

of demand-side management that can 

quickly respond to emergencies and 

discussed available demand-side 

management technologies currently 

used that may be deployed as readily, if 

not faster, than involuntary load 

shedding. The joint concurrence 

expressed a preference to expressly 

include demand-side management 

among the list of tools to mitigate IROL 

violations, set forth in Requirement 

R1.1. 

a. Comments 

42. NERC comments that it did not 

intend the list of tools in Requirement 

R1.1 for addressing IROL violations to 

be an exhaustive list; effective demandside response could also be considered. 

43. Alcoa comments that demand-side 

management should be included in the 

list of alternatives to the TLR procedure 

in IRO–006–4. Alcoa claims that its 

smelters have demonstrated an ability to 

curb demand to assist in TLR efforts and 

alleviate IROL violations. In addition, 

Alcoa claims that in some instances 

load may be able to respond to IROL 

violations more quickly and effectively 

than generation reserves. According to 

Alcoa, flexible loads served at 

transmission voltages are most effective 

for immediate demand response to IROL 

violations. 

44. ISO/RTO Council comments that 

IRO–006–4 does not preclude reliance 

on demand-side management that can 

respond quickly to emergencies. It 

believes that the Reliability Standards 

should be resource-neutral in their 

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Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations 12261 

25NERC September 11, 2008 Response at 4. 

26The guidelines are: (1) Consistency with the 

conclusions of the Blackout Report; (2) consistency 

within a Reliability Standard; (3) consistency 

among Reliability Standards; (4) consistency with 

NERC’s definition of the violation risk factor level; 

and (5) treatment of requirements that co-mingle 

more than one obligation. The Commission also 

explained that this list was not necessarily allinclusive and that it retains the flexibility to 

consider additional guidelines in the future. A 

detailed explanation is provided in North American 

Electric Reliability Corp., 120 FERC ¶ 61,145, at P 

8–13 (2007). 

27Recommendation 31 states, ‘‘Clarify that the 

transmission loading relief (TLR) process should 

not be used in situations involving an actual 

violation or an Operation Security Limit.’’ Final 

Blackout Report at 163. 

28See NOPR, FERC Stats. & Regs. ¶ 32,632 at P 

51 (noting that the corresponding requirements in 

the earlier Commission-approved version of the 

Reliability Standard were assigned a ‘‘high’’ 

violation risk factor). 

29NERC Comments at 19. Unless otherwise 

indicated, citations to parties’ comments refer to 

comments filed after the NOPR, prior to the Final 

Rule. 

30See NOPR, FERC Stats. & Regs. ¶ 32,632 at P 

52. 

application. ISO/RTO Council states 

that, consistent with Order No. 693, so 

long as a resource can address system 

conditions, it should be recognized in 

the Reliability Standards as a tool upon 

which the system operator can rely. 

ISO/RTO Council also notes initiatives 

by NERC and NAESB to develop rules 

for classifying demand-side 

management and identifying methods 

for measurement and verification. 

b. Commission Determination 

45. It is clear from the comments of 

the ERO, Alcoa, and ISO/RTO Council 

that the Reliability Standard includes 

effective demand-side management as a 

tool to mitigate an IROL violation 

pursuant to Requirement R1.1 of IRO– 

006–4. In its September 11, 2008 filing, 

the ERO states that there are four 

acceptable options to respond to an 

IROL violation: inter-area redispatch, 

intra-area redispatch, reconfiguration of 

the transmission system, and voluntary 

or involuntary reductions in load. The 

ERO further explains that the reference 

in Requirement R1.1 to ‘‘load shedding’’ 

refers to voluntary or involuntary 

reductions in load.25 Thus, as clarified 

by NERC, Requirement R1.1 allows the 

use of effective demand-side 

management as one tool to mitigate an 

IROL violation. The Commission will 

implement and enforce this Reliability 

Standard as clarified by NERC. 

C. Violation Risk Factors 

46. In the NOPR, the Commission 

proposed to direct the ERO to modify 

the violation risk factors assigned to 

Requirements R1 through R4 by raising 

them to ‘‘high.’’ This proposal was 

based on the Commission’s guidelines 

for evaluating validity of violation risk 

factor assignments.26 In particular, the 

Commission reasoned that a ‘‘high’’ 

violation risk factor assignment for 

Requirements R1 through R4 is 

consistent with findings of the Final 

Blackout Report.27

1. Comments 

47. NERC, IESO, and ISO/RTO 

Council urge the Commission to adopt 

the violation risk factors proposed by 

NERC. NERC contends that the 

Commission’s reliance on the violation 

risk factors for IRO–006–3, 

Requirements R1 through R4, submitted 

in 2007 is not appropriate.28 NERC 

explains that the violation risk factors 

submitted in the current proceeding for 

IRO–006–4 received significant industry 

review and scrutiny, which was not the 

case with the 2007 submission. 

a. Violation Risk Factors for 

Requirement R1 

48. NERC agrees with the Commission 

that Requirements R1.1 through R1.3 are 

explanatory text and that a violation risk 

factor need not be assigned to each 

subsection. However, NERC, ISO/RTO 

Council, and IESO disagree with the 

Commission’s proposal to direct the 

ERO to raise the violation risk factor 

from ‘‘medium’’ to ‘‘high.’’ 

49. Specifically, NERC and ISO/RTO 

Council disagree with the Commission’s 

statement that a ‘‘high’’ violation risk 

factor assignment is consistent with the 

findings of the Final Blackout Report. 

According to NERC, the main thrust of 

Recommendation 31 in the Final 

Blackout Report (regarding the use of 

TLR in response to actual violations) 

has been addressed in Requirement R1.1 

of the Reliability Standard and does not 

warrant a ‘‘high’’ violation risk factor 

designation. ISO/RTO Council contends 

that the Final Blackout Report does not 

identify and rank the associated risk of 

not implementing each 

recommendation. ISO/RTO Council 

claims that the Final Blackout Report 

Recommendation 31 simply focuses on 

reliability coordinators using tools other 

than TLRs for a real-time emergency. 

50. Further, NERC contends that IRO– 

006–4, Requirement R1 and its subrequirements are procedural in nature, 

because they focus on how relief is 

achieved rather than on whether relief 

is achieved. NERC recognizes that ‘‘the 

result of an ineffective application of 

this requirement could impact the 

electrical state of the grid.’’ 29 However, 

NERC posits that IRO–005–1, 

Requirement R5 is the principal source 

of the reliability coordinator’s obligation 

to relieve actual or potential IROL 

violations. For these reasons, NERC 

believes Requirement R1 merits a 

‘‘medium’’ violation risk factor. 

51. IESO agrees with NERC’s 

assessment that Requirement R1 is 

administrative in nature. IESO states 

that Requirement R1 provides the 

initiating reliability coordinator options 

from which to choose to relieve 

transmission constraints, and it becomes 

a reliability requirement only when a 

reliability coordinator chooses an 

interconnection-wide procedure as one 

of the means to relieve transmission 

constraints. IESO explains that if a 

reliability coordinator chooses other 

control actions but not an 

interconnection-wide TLR procedure to 

prevent or mitigate an IROL violation, 

this Reliability Standard will not apply, 

and the reliability coordinator will not 

be subject to the requirements in the 

standard. Further, IESO contends that if 

a reliability coordinator chooses to 

apply an interconnection-wide 

procedure and the requirements 

stipulated therein are not complied 

with, there is a potential risk on the 

control and operation of the system, 

because non-compliance with the TLR 

procedure may affect other actions that 

are also being applied to prevent or 

mitigate an IROL violation. 

52. IESO and ISO/RTO Council 

disagree with the Commission’s 

statement that, if the reliability 

coordinator chooses an unapproved and 

ineffective procedure for relief or fails to 

choose a procedure entirely, potential or 

actual IROL violations will not be 

mitigated as intended by the reliability 

coordinator.30 According to IESO and 

ISO/RTO Council, with or without the 

interconnection-wide relief procedure, 

reliability coordinators and 

transmission operators are required by 

other Reliability Standards such as 

TOP–002, TOP–004, and IRO–005 to 

apply local control actions and 

procedures to prevent and mitigate SOL 

and IROL violations. 

53. ISO/RTO Council also favors a 

‘‘medium’’ violation risk factor 

assignment for Requirement R1, stating 

that interconnection-wide procedures 

are only one tool in the toolbox to 

restore system integrity. 

b. Violation Risk Factors for 

Requirement R2 

54. NERC does not believe that a 

reliability coordinator could 

successfully implement a local 

procedure to which the particular 

transmission operator is not a party. In 

any event, NERC does not believe that 

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12262 Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations 

31 IESO Comments at 8 (quoting NOPR, FERC 

Stats. & Regs. ¶ 32,632 at P 53). 32NERC Comments at 21–22. 

33Final Blackout Report at 20. 

34 Id. at 163. 

the implementation of such a procedure 

would in itself create a ‘‘high’’ 

reliability risk. NERC states that if the 

reliability coordinator were able to 

achieve the relief, then it would be 

considered as having the lesser 

infraction of using the wrong tools to 

achieve the correct results. Further, it 

states that if such a procedure did not 

provide the required relief, the 

reliability coordinator would be in 

violation of IRO–005–1, Requirement 

R5. NERC claims this requirement is 

focused on ‘‘how’’ the relief is provided, 

not ‘‘whether’’ the relief is provided. In 

addition, NERC states that the use of a 

local procedure is implemented at the 

discretion of the reliability coordinator 

and is not obligatory. Accordingly, 

NERC believes that a violation risk 

factor of ‘‘lower’’ is appropriate. 

55. IESO argues the intent of 

Requirement R2 is to ensure that a 

reliability coordinator who initiates 

actions to relieve transmission 

constraints in a transmission operator’s 

area applies the actions that are either 

totally local to the transmission 

operator’s area or which have been 

developed by the transmission operator 

jointly with other transmission 

operators. IESO states that choosing 

which procedures to relieve 

transmission constraints is an 

administrative requirement since the 

reliability coordinator, having the 

authority to ensure wide area reliability, 

may apply any procedures that it deems 

necessary to relieve transmission 

constraints. IESO contends that in the 

event the reliability coordinator applies 

a relief procedure to which the 

constrained transmission operator is not 

a party, it should not be a presumption 

that prevention or mitigation of an IROL 

violation will not be achieved since the 

reliability coordinator is obligated to 

ensure operating reliability through 

compliance with IRO–005–1. For these 

reasons, IESO believes that Requirement 

R2 is administrative and deserves a 

‘‘lower’’ violation risk factor. 

56. IESO disagrees with the 

Commission assessment that 

‘‘[v]iolation risk factors should not be 

assigned differently for requirements in 

separate Reliability Standards based on 

compliance with another Reliability 

Standard,’’ on the basis that ‘‘[t]wo 

requirements either achieve separate 

reliability goals and, therefore, violation 

of them represents independent risks, or 

two requirements share the same 

reliability goal.’’ 31 IESO states that, 

while the IRO–005–1 requirements and 

the TLR requirements share the same 

reliability goal, the latter is in fact 

subordinate to the former. Thus, IESO 

maintains that there should not be two 

simultaneous ‘‘high’’ risk penalties 

assessed for a reliability coordinator for 

failing to comply with the TLR 

procedure of Requirements R1 or R2 

and for failing to prevent or mitigate an 

IROL violation as required in IRO–005– 

1. 

c. Violation Risk Factors for 

Requirement R3 

57. NERC maintains that Requirement 

R3 is focused on the procedural aspects 

of the Reliability Standard, i.e., how the 

relief is provided rather than whether 

the relief was provided. NERC argues 

that if the entity is able to achieve the 

relief through other means that were not 

pre-approved, then it would have 

committed an administration violation 

of using the wrong tools to achieve the 

correct results. According to NERC, if 

such a procedure did not provide the 

required relief, the reliability 

coordinator would be in violation of 

IRO–005–1, Requirement R5. For 

reasons similar to those provided for 

Requirement R2, IESO agrees with 

NERC that Requirement R3 is 

administrative and deserves a ‘‘lower’’ 

violation risk factor. 

d. Violation Risk Factors for 

Requirement R4 

58. NERC claims that a violation of 

Requirement R4 is ‘‘a specific kind of 

violation of the INT family of Reliability 

Standards that is being caused by a 

reliability coordinator’s inaction, 

resulting in an imbalance in one or both 

of the interconnections involved.’’ 32

NERC comments that Requirement R4 

complements the INT group of 

Reliability Standards in the same 

fashion as Requirement R5, which the 

Commission supported with a violation 

risk factor of ‘‘medium.’’ IESO concurs 

with NERC’s assignment of a ‘‘medium’’ 

violation risk factor to Requirement R4. 

IESO reasons that complying with the 

provisions of the interconnection-wide 

procedure of the initiating reliability 

coordinator is no more stringent than 

complying with the request for relief 

based on the TLR procedure within the 

same interconnection, the latter being 

the requirement in R1. 

2. Commission Determination on 

Violation Risk Factors 

59. For the reasons stated in the 

NOPR and as discussed below, the 

Commission directs the ERO to modify 

the violation risk factors of 

Requirements R1 through R4 of IRO– 

006–4 to ‘‘high.’’ 

60. The Commission disagrees with 

NERC and others and finds that it is 

appropriate to use the Final Blackout 

Report as a basis for setting violation 

risk factors of the proposed Reliability 

Standard at ‘‘high’’ for several reasons. 

The Final Blackout Report is the result 

of the U.S-Canada Task Force’s 

investigation of the August 14, 2003 

blackout where the Task Force 

identified contributing factors and 

causes that put the Bulk-Power System 

at risk for that event. Specifically, the 

Final Blackout Report identified an 

attempt to use the TLR process to 

address transmission power flows 

without recognizing that the imposition 

of a TLR procedure would not solve the 

problem as one contributing cause for 

the initiation of the blackout of August 

2003. Based on its findings, the Task 

Force developed recommendations to 

reduce the possibility of future outages 

and to reduce the scope of future 

blackouts that may nonetheless occur.33

Thus, the Task Force developed 

Recommendation No. 31 to prevent the 

initiation of a TLR procedure during an 

actual violation of an SOL.34 Since the 

Final Blackout Report was developed to 

document the August 14, 2003 

blackout’s contributing factors and 

causes, which include specific 

violations of then voluntary reliability 

policies, guidelines, and standards, the 

Commission believes it is appropriate to 

use the findings of the Final Blackout 

Report as one of the guidelines for the 

determination of a requirement’s 

violation risk factor. Specifically, the 

Commission believes the findings of the 

Final Blackout Report are particularly 

relevant in the determination of 

violation risk factors of then-voluntary 

reliability policies, guidelines, and 

standards identified as causes and 

factors of the August 14, 2003 blackout 

that the ERO proposes as mandatory 

Reliability Standards, such as IRO–006– 

4. The Commission also disagrees for 

the same reasons with commenters that 

argue the Final Blackout Report does 

not identify and rank the associated risk 

of not implementing each 

recommendation. 

61. While we agree that Requirement 

R.1.1 discourages the use of a TLR to 

mitigate a real-time IROL violation, 

Requirement R1.1, is merely 

explanatory text. It is Requirement R1 

that establishes that the reliability 

coordinator shall choose one or more of 

the procedures, listed as subrequirements, to provide the appropriate 

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Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations 12263 

35Rules Concerning Certification of the Electric 

Reliability Organization; and Procedures for the 

Establishment, Approval, and Enforcement of 

Electric Reliability Standards, Order No. 672, FERC 

Stats. & Regs. ¶ 31,204, at P 260; see also id., Order 

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

36N. Am. Elec. Reliability Corp., 121 FERC 

¶ 61,179, at P 15 (2007). 

37 Id. P 16. 

38 Id. P 39. 

39N. Am. Elec. Reliability Corp., 119 FERC 

¶ 61,145, at P 25 (2007). 

40We note that section 3.10 of NERC’s Sanction 

Guidelines addresses multiple violations related to 

a single act or common incidence of 

noncompliance. 

transmission relief. The selection of a 

procedure to provide relief to address a 

potential or actual SOL or IROL 

violation is directly relevant to Final 

Blackout Report Recommendation No. 

31. If an inappropriate procedure is 

selected in an attempt to mitigate an 

IROL, the Bulk-Power System is 

vulnerable to cascading outages, as was 

the case on August 14, 2003. 

62. The Commission is not persuaded 

by NERC’s argument relative to ‘‘using 

the wrong tools to achieve the correct 

results’’ in the assignment of a 

requirement’s violation risk factor. 

Contrary to this argument, the 

Commission has recognized that there 

may be some Reliability Standards 

where the means, or the ‘‘how,’’ is 

inextricably linked to the effectiveness 

of the Reliability Standard.35 We find 

that this is the case here. The 

Commission has explained that the 

inclusion of implementation practices 

within requirements of such a standard 

is to reduce uncertainty and further 

objectives that foster reliability which, if 

violated, would pose increased 

reliability risk to the Bulk-Power 

System.36

63. Similarly, NERC’s argument that, 

if the reliability coordinator were able to 

achieve the relief desired without 

complying with Requirement R1, it 

would be considered as having the 

lesser infraction of using the wrong 

tools to achieve the correct results is 

also flawed. The purpose of the 

violation risk factor is to accurately 

portray the risk a violation poses to the 

Bulk-Power System,37 notwithstanding 

a violator’s avoidance of reliability 

problems in a particular case by using 

an unreliable operation. This 

Commission determination is relevant 

to arguments that a ‘‘high’’ violation risk 

factor is not appropriate because the 

subject requirement overlaps other 

requirements, duplicates other 

requirements, or could be implemented 

by alternative means. The Commission 

has previously determined that NERC 

should address those issues through the 

Reliability Standard development 

process.38

64. The Commission also disagrees 

with the characterization of 

Requirements R1, R2, and R3 as 

procedural choices without reliabilityrelated consequences. For example, 

failure to implement Requirement R1, 

i.e., failure to select one or more 

procedures to provide transmission 

relief, is not just a procedural or 

administrative choice; it is a decision 

that has the potential to place the BulkPower System at risk of cascading 

outages. Although commenters argue 

that a violation of Requirement R2 is 

essentially administrative in nature and 

that the prevention or mitigation of the 

potential or actual SOL or IROL may be 

achieved through compliance with 

another Reliability Standard, which 

would justify a ‘‘lower’’ violation risk 

factor, the Commission disagrees. 

Requirements R1 through R4 require 

that a reliability coordinator choose and 

follow the appropriate procedure to 

provide relief. If the reliability 

coordinator chooses an unapproved 

and/or ineffective procedure for relief or 

fails to choose a procedure entirely, 

potential or actual IROL violations will 

not be mitigated as intended by the 

reliability coordinator. Therefore, the 

Commission finds that violation of 

Requirements R1 through R4 present a 

high reliability risk to Bulk-Power 

System. Assigning a ‘‘high’’ violation 

risk factor to Requirements R1 through 

R4 is consistent with the Final Blackout 

Report. 

65. A violation risk factor represents 

the reliability risk a violation of that 

requirement presents to the Bulk-Power 

System. Violation risk factors should 

not be assigned differently for 

requirements in separate Reliability 

Standards based on compliance with 

another standard. This assessed 

reliability risk is independent and not 

contingent upon compliance with other 

requirements of Reliability Standards. 

While the Commission recognizes the 

complementary nature of proposed 

Reliability Standard IRO–006–4, 

Requirement R1 and Reliability 

Standard IRO–005–1, Requirement R5, 

the fact that requirements may share the 

same reliability objective as another 

requirement does not justify lowering 

one or more of the requirements’ 

violation risk factors. In fact, the 

Commission expects the assignment of 

violation risk factors corresponding to 

requirements that address similar 

reliability goals in different Reliability 

Standards to be treated comparably.39

The Commission notes that Reliability 

Standard IRO–005–1, Requirement R5, 

is assigned a ‘‘high’’ violation risk 

factor. 

66. Further, the argument that a 

‘‘lower’’ violation risk factor assigned to 

Requirement R1 is appropriate since 

Requirement R1 is administrative in 

nature (because it provides the initiating 

reliability coordinator with options to 

choose among available procedures and 

only becomes a reliability requirement 

when a reliability coordinator chooses 

an interconnection-wide procedure) is 

flawed. First, the fact that a requirement 

provides ‘‘options’’ does not 

automatically make that requirement 

administrative. It is the potential 

reliability risks the failure to take 

options mandated by the requirement 

presents to the Bulk-Power System that 

determines that requirement’s violation 

risk factor. Second, requirements 

become mandatory and enforceable 

reliability requirements only after 

Commission approval and not after any 

action, or inaction, by an applicable 

entity. 

67. For the same reasons explained 

above, the Commission disagrees with 

comments that Requirement R3 focuses 

on procedural aspects of the Reliability 

Standard founded on the arguments that 

the requirement related to ‘‘how’’ the 

relief is provided rather than ‘‘whether’’ 

the relief was provided, where the 

‘‘wrong tools’’ were used to achieve the 

‘‘correct results.’’ Even if an entity, 

having violated a Reliability Standard, 

achieves correct results, the entity’s 

success should be attributed to a matter 

of chance and may be more risky than 

the operation set forth in the Reliability 

Standard. 

68. IESO’s comment that there should 

not be two simultaneous ‘‘high’’ risk 

penalties assessed to a reliability 

coordinator who fails to comply with 

the TLR procedure of Requirements R1 

and R2 is outside the scope of this 

proceeding. The determination of 

monetary penalties for a violation of a 

requirement is a compliance issue, 

which is best addressed in the context 

of a compliance proceeding.40

69. We do not agree that a violation 

of Requirement R4 is a specific type of 

violation of the INT Reliability 

Standards as NERC and IESO suggest. 

Requirement R4 requires a reliability 

coordinator to comply with 

interconnection-wide curtailment 

procedures whereas Requirement R5 

requires reliability coordinators and 

balancing authorities to adhere to INT 

standards that largely specify 

interchange scheduling procedures. 

Failure to implement curtailment 

procedures poses a higher reliability 

risk, since it may place the Bulk-Power 

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12264 Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations 

41See N. Am. Elec. Reliability Corp., 123 FERC 

¶ 61,284, at P 3 (Violation Severity Levels Order), 

order on reh’g, 125 FERC ¶ 61,212 (2008) (extending 

compliance date). 

42See Violation Severity Level Order, 123 FERC 

¶ 61,284 at P 41 and Ordering Paragraph (E). 

43 5 CFR 1320.11. 

44 44 U.S.C. 3507(d). 

45See Order No. 693, FERC Stats. & Regs. 

¶ 31,242 at P 1905–07. The NOPR, FERC Stats. & 

Regs. ¶ 32,632 at P 76–78, provided a detailed 

explanation why each modification has a negligible, 

if any, effect on the reporting burden. 

46Regulations Implementing the National 

Environmental Policy Act, Order No. 486, FERC 

Stats. & Regs. ¶ 30,783 (1987). 

47 18 CFR 380.4(a)(2)(ii). 

48 5 U.S.C. 601–12. 

System at risk of cascading outages, 

than failure to implement scheduling 

procedures; therefore, it should receive 

a ‘‘high’’ violation risk factor. 

3. Commission Determination on 

Violation Severity Levels 

70. The ERO’s December 21, 2007 

filing included proposed violation 

severity levels corresponding to the 

requirements of IRO–006–4. Violation 

severity levels, which the ERO or the 

Regional Entity will apply to establish 

an initial base penalty range when 

assessing a penalty for the violation of 

a Reliability Standard, constitutes a 

post-violation measurement of the 

degree to which a requirement was 

violated.41 The Commission accepts the 

violation severity levels proposed by the 

ERO that correspond to the 

Requirements of Reliability Standard 

IRO–006–4. 

71. Further, in the Violation Severity 

Levels Order, the Commission directed 

the ERO to submit a compliance filing 

certifying that it has reviewed each of 

the violation severity level assignments 

for consistency with certain guidelines 

set forth in that order.42 The 

Commission also directed that the ERO 

either validate the existing violation 

severity level designations or propose 

revisions to specific approved violation 

severity level assignments where the 

ERO determines that such assignments 

do not meet the specified guidelines. 

Consistent with the Violation Severity 

Levels Order, the Commission now 

directs the ERO to review the violation 

severity levels for IRO–006–4. The ERO 

must include in the compliance filing 

required by Ordering Paragraph (E) of 

the Violation Severity Levels Order a 

certification that it has reviewed each 

violation severity level assignment 

corresponding to the requirements of 

IRO–006–4 for consistency with certain 

guidelines (specifically, guidelines 2b, 

3, and 4), validating the assignments 

that meet the guidelines and proposing 

revisions to those that fail to meet the 

guidelines. 

72. Accordingly, with respect to the 

violation risk factors and severity levels, 

we approve IRO–006–4 as mandatory 

and enforceable. In addition, we direct 

the ERO submit a compliance filing 

within 60 days that revises violation 

risk factors to ‘‘high’’ for Requirements 

R1 through R4. The Commission 

approves the proposed violation 

severity levels and requires the ERO to 

submit a compliance filing, as discussed 

above. 

III. Information Collection Statement 

73. The Office of Management and 

Budget (OMB) regulations require that 

OMB approve certain reporting and 

recordkeeping (collections of 

information) imposed by an agency.43

The information contained here is also 

subject to review under section 3507(d) 

of the Paperwork Reduction Act of 

1995.44 As stated above, the 

Commission previously approved, in 

Order No. 693, Reliability Standard 

IRO–006, which is the subject of this 

supplemental final rule. In the NOPR, 

the Commission explained that the 

modifications to the Reliability 

Standard are minor; therefore, they do 

not add to or increase entities’ reporting 

burden. Thus, in the NOPR, the 

Commission stated that the modified 

Reliability Standard does not materially 

affect the burden estimates relating to 

the earlier version of Reliability 

Standard IRO–006 presented in Order 

No. 693.45

74. In response to the NOPR, the 

Commission received no comments 

concerning its estimate for the burden 

and costs and therefore uses the same 

estimate here. 

Title: Modification of Interchange and 

Transmission Loading Relief Reliability 

Standards; and Electric Reliability 

Organization Interpretation of Specific 

Requirements of Four Reliability 

Standards. 

Action: Proposed Collection. 

OMB Control No.: 1902–0244. 

Respondents: Businesses or other forprofit institutions; not-for-profit 

institutions. 

Frequency of Responses: On 

Occasion. 

Necessity of the Information: This 

Supplemental Final Rule approves one 

modified Reliability Standard that 

pertains to transmission loading relief 

procedures. The Supplemental Final 

Rule finds the Reliability Standard just, 

reasonable, not unduly discriminatory 

or preferential, and in the public 

interest. 

75. Interested persons may obtain 

information on the reporting 

requirements by contacting: Federal 

Energy Regulatory Commission, Attn: 

Michael Miller, Office of the Executive 

Director, 888 First Street, NE., 

Washington, DC 20426, Tel: (202) 502– 

8415, Fax: (202) 273–0873, e-mail: 

michael.miller@ferc.gov, or by 

contacting: Office of Information and 

Regulatory Affairs, Attn: Desk Officer 

for the Federal Energy Regulatory 

Commission (Re: OMB Control No. 

1902–0244), Washington, DC 20503, 

Tel: (202) 395–4650, Fax: (202) 395– 

7285, e-mail: 

oira_submission@omb.eop.gov. 

IV. Environmental Analysis 

76. The Commission is required to 

prepare an Environmental Assessment 

or an Environmental Impact Statement 

for any action that may have a 

significant adverse effect on the human 

environment.46 The Commission has 

categorically excluded certain actions 

from this requirement as not having a 

significant effect on the human 

environment. Included in the exclusion 

are rules that are clarifying, corrective, 

or procedural or that do not 

substantially change the effect of the 

regulations being amended.47 The 

actions proposed herein fall within this 

categorical exclusion in the 

Commission’s regulations. 

V. Regulatory Flexibility Act 

77. The Regulatory Flexibility Act of 

1980 (RFA) 48 generally requires a 

description and analysis of final rules 

that will have significant economic 

impact on a substantial number of small 

entities. The RFA mandates 

consideration of regulatory alternatives 

that accomplish the stated objectives of 

a proposed rule and that minimize any 

significant economic impact on a 

substantial number of small entities. 

The Small Business Administration’s 

Office of Size Standards develops the 

numerical definition of a small 

business. (See 13 CFR 121.201.) For 

electric utilities, a firm is small if, 

including its affiliates, it is primarily 

engaged in the transmission, generation 

and/or distribution of electric energy for 

sale and its total electric output for the 

preceding twelve months did not exceed 

four million megawatt hours. The RFA 

is not implicated by this Final Rule 

because the minor modifications and 

interpretations discussed herein will not 

have a significant economic impact on 

a substantial number of small entities. 

VI. Document Availability 

78. In addition to publishing the full 

text of this document in the Federal 

Register, the Commission provides all 

interested persons an opportunity to 

mstockstill on PROD1PC66 with RULES

Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations 12265 

49An asterisk (*) indicates that the commenter 

addressed Reliability Standard IRO–006–4. 

50M–S–R Public Power Agency filed a motion to 

intervene without comments. 

view and/or print the contents of this 

document via the Internet through 

FERC’s Home Page (http://www.ferc.gov) 

and in FERC’s Public Reference Room 

during normal business hours (8:30 a.m. 

to 5 p.m. Eastern time) at 888 First 

Street, NE., Room 2A, Washington, DC 

20426. 

79. From FERC’s Home Page on the 

Internet, this information is available on 

eLibrary. The full text of this document 

is available on eLibrary in PDF and 

Microsoft Word format for viewing, 

printing, and/or downloading. To access 

this document in eLibrary, type the 

docket number excluding the last three 

digits of this document in the docket 

number field. 

80. User assistance is available for 

eLibrary and the FERC’s Web site during 

normal business hours from FERC 

Online Support at (202) 502–6652 (toll 

free at 1–866–208–3676) or e-mail at 

ferconlinesupport@ferc.gov, or the 

Public Reference Room at (202) 502– 

8371, TTY (202) 502–8659. E-mail the 

Public Reference Room at 

public.referenceroom@ferc.gov. 

VII. Effective Date and Congressional 

Notification 

81. The Supplemental Final Rule is 

effective April 23, 2009. The 

Commission has determined, with the 

concurrence of the Administrator of the 

Office of Information and Regulatory 

Affairs of OMB, that this rule is not a 

‘‘major rule’’ as defined in section 351 

of the Small Business Regulatory 

Enforcement Fairness Act of 1996. 

List of Subjects in 18 CFR Part 40 

Electric power, Electric utilities, 

Reporting and recordkeeping 

requirements. 

By the Commission. 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 

Appendix A—NOPR Commenters 49

Alcoa Inc. (Alcoa)* 

Constellation Energy Commodities Group, 

Inc. (Constellation)* 

Independent Electricity System Operator of 

Ontario (IESO)* 

ISO/RTO Council* 

ITCTransmission; Michigan Electric 

Transmission Company, LLC; and ITC 

Midwest LLC 

Lafayette Utilities and the Louisiana Energy 

and Power Authority (Lafayette and 

LEPA)* 

North American Electric Reliability Corp. 

(NERC)* 

NRG Companies (NRG)* 

Southern Company Services, Inc. (Southern) 

Appendix B—Comments in Response to 

NERC’s September 11, 2008 Filing 50

ISO/RTO Council 

NRG 

Southern 

[FR Doc. E9–6416 Filed 3–23–09; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF THE INTERIOR 

Office of Surface Mining Reclamation 

and Enforcement 

30 CFR Part 938 

[PA–152–FOR; Docket ID: OSM–2008–0019] 

Pennsylvania Regulatory Program 

AGENCY: Office of Surface Mining 

Reclamation and Enforcement (OSM), 

Interior. 

ACTION: Final rule; required amendment. 

SUMMARY: We are reinstating a 

requirement for the Pennsylvania 

regulatory program (the ‘‘Pennsylvania 

program’’) under the Surface Mining 

Control and Reclamation Act of 1977 

(SMCRA or the Act). The requirement 

deals with documentation for the 

bonding provisions of the Pennsylvania 

program. 

DATES: Effective Date: March 24, 2009. 

FOR FURTHER INFORMATION CONTACT: 

George Rieger, Chief, Pittsburgh Field 

Division, Telephone: (717) 782–4036, 

e-mail: grieger@osmre.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background on the Pennsylvania Program 

II. The Modified Required Amendment 

III. OSM’s Decision 

IV. Procedural Determinations 

I. Background on the Pennsylvania 

Program 

Section 503(a) of the Act permits a 

State to assume primacy for the 

regulation of surface coal mining and 

reclamation operations on non-Federal 

and non-Indian lands within its borders 

by demonstrating that its State program 

includes, among other things, ‘‘a State 

law which provides for the regulation of 

surface coal mining and reclamation 

operations in accordance with the 

requirements of the Act * * *; and 

rules and regulations consistent with 

regulations issued by the Secretary 

pursuant to the Act.’’ See 30 U.S.C. 

1253(a)(1) and (7). On the basis of these 

criteria, the Secretary of the Interior 

conditionally approved the 

Pennsylvania program on July 30, 1982. 

You can find background information 

on the Pennsylvania program, including 

the Secretary’s findings, the disposition 

of comments, and conditions of 

approval in the July 30, 1982, Federal 

Register notice (47 FR 33050). You can 

also find later actions concerning 

Pennsylvania’s program and program 

amendments at 30 CFR 938.11, 938.12, 

938.13, 938.15 and 938.16. 

Pennsylvania’s Bonding Program 

From 1982 until 2001, Pennsylvania’s 

bonding program for surface coal mines, 

coal refuse reprocessing operations and 

coal preparation plants, was funded 

under an Alternative Bonding System 

(ABS), which included a central pool of 

money (Surface Mining Conservation 

and Reclamation Fund) used for 

reclamation, to supplement site-specific 

bonds posted by operators for each mine 

site. This pool was funded by a per-acre 

reclamation fee paid by operators of 

permitted sites. 

In 1991, our oversight activities 

determined that Pennsylvania’s ABS 

contained unfunded reclamation 

liabilities for backfilling, grading, and 

revegetation and we determined that the 

ABS was financially incapable of 

abating or treating pollutional 

discharges from bond forfeiture sites 

under its purview. As a result, on May 

31, 1991, we imposed the required 

amendment codified at 30 CFR 

938.16(h), 56 FR 24687. That 

amendment required Pennsylvania to 

demonstrate that the revenues generated 

by its collection of the reclamation fee 

would assure that its Surface Mining 

Conservation and Reclamation Fund 

(Fund) could be operated in a manner 

that would meet the ABS requirements 

contained in 30 CFR 800.11(e). After a 

decade of trying to address the problems 

with the ABS, the Pennsylvania 

Department of Environmental Protection 

(PADEP) terminated the ABS in 2001 

and began converting active surface coal 

mining permits to a Conventional 

Bonding System (CBS) or ‘‘full-cost’’ 

bonding program. This CBS requires a 

permittee to post a site specific bond in 

an amount sufficient to cover the 

estimated costs to complete reclamation 

in the event of bond forfeiture. 

OSM published a final rule on 

October 7, 2003, removing the required 

amendment at 30 CFR 938.16(h) on the 

basis that the conversion from an ABS 

to a CBS rendered the requirement to 

comply with 30 CFR 800.11(e) moot. 

Subsequent to these OSM actions, a 

lawsuit was filed in the U.S. District 

Court for the Middle District Court of 

Pennsylvania, Pennsylvania Federation 

of Sportsmen’s Clubs Inc. (PFSC) et. al. 

v. Norton No. 1:03–CV–2220. The 

Plaintiffs claimed, in relevant part, that 

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