71968 Federal Register / Vol. 73, No. 229 / Wednesday, November 26, 2008 / Proposed Rules 

1 17 CFR Part 4 (2008). The Commission’s 

regulations can be accessed through the CFTC’s 

Web site, http://www.cftc.gov. 

2NFA is a registered futures association pursuant 

to section 17 of the Commodity Exchange Act (Act), 

7 U.S.C. 21 (2000). The Act also may be accessed 

through the CFTC’s Web site. 

The Commission previously authorized NFA to 

conduct reviews of Disclosure Documents filed by 

CPOs and CTAs pursuant to Regulations 4.26(d) 

and 4.36(d). See 62 FR 52088 (Oct. 6, 1997). 

3The Petition also adds the word ‘‘each’’ before 

the existing words ‘‘trading program’’ in paragraph 

(d)(1) of Regulation 4.36 to make that paragraph 

read parallel to the existing phrase ‘‘each trading 

program’’ in paragraph (d)(2) of Regulation 4.36. 

The Commission previously authorized NFA to 

accept notices of exemptions or exclusions claimed 

under Part 4 and required that these notices be filed 

electronically. See Id. and 72 FR 1658 (Jan. 16, 

2007), respectively. 

4For example, NFA has adopted ‘‘Easyfile’’ for 

introducing broker and commodity pool financial 

statements required to be filed with it. 

within the Corpus Christi International 

Airport, TX, Class C airspace area. This Class 

E airspace area is effective during the specific 

dates and times established in advance by a 

Notice to Airmen. The effective date and time 

will thereafter be continuously published in 

the Airport/Facility Directory. 

Paragraph 6004 Class E Airspace Areas 

Designated as an Extension to a Class D 

Surface Area. 

* * * * * 

ASW TX E4 Corpus Christi NAS/Truax 

Field, TX [Amended] 

Corpus Christi NAS/Truax Field, TX 

(Lat. 27°41′34′′ N., long. 97°17′25′′ W.) 

Corpus Christi VORTAC 

(Lat. 27°54′14′′ N., long. 97°26′42′′ W.) 

Truax VORTAC 

(Lat. 27°41′11′′ N., long. 97°17′41′′ W.) 

That airspace extending upward from the 

surface within 1.3 miles each side of the 012° 

radial of the Truax VORTAC extending from 

the 4.3-mile radius of Corpus Christi NAS/ 

Truax Field to 5 miles north of the airport 

and within 2.1 miles each side of the 119° 

radial of the Truax VORTAC extending from 

the 4.3-mile radius to 6.2 miles southeast of 

the airport and within 2.3 miles each side of 

the 147° radial of the Corpus Christi 

VORTAC extending from the 4.3-mile radius 

of the airport to 6.3 miles southeast of the 

airport and within 2.1 miles each side of the 

329° radial of the Truax VORTAC extending 

from the 4.3-mile radius of the airport to 6.2 

miles northwest of the airport; excluding that 

airspace within the Corpus Christi 

International Airport, TX, Class C airspace 

area. 

* * * * * 

Issued in Fort Worth, TX on November 14, 

2008. 

Roger M. Trevino, 

Acting Manager, Operations Support Group, 

ATO Central Service Center. 

[FR Doc. E8–28073 Filed 11–25–08; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 4 

RIN 3038–AC67 

Electronic Filing of Disclosure 

Documents 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Proposed rules. 

SUMMARY: The Commodity Futures 

Trading Commission (Commission or 

CFTC) is proposing to amend its 

regulations applicable to the filing of 

Disclosure Documents by commodity 

pool operators (CPOs) and commodity 

trading advisors (CTAs) with the 

National Futures Association (NFA). In 

response to a petition from NFA, the 

CFTC is proposing that CPOs and CTAs 

be required to file their Disclosure 

Documents electronically with NFA 

(Proposal). 

DATES: Comments must be received on 

or before December 26, 2008. 

ADDRESSES: Comments on the Proposal 

should be sent to David A. Stawick, 

Secretary, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. Comments may be sent by 

facsimile transmission to (202) 418– 

5521, or by e-mail to secretary@cftc.gov. 

Reference should be made to ‘‘Proposal 

Regarding Electronic Filing of 

Disclosure Documents.’’ Comments also 

may be submitted by connecting to the 

Federal eRulemaking Portal at http:// 

www.regulations.gov and following the 

comment submission instructions. 

FOR FURTHER INFORMATION CONTACT: 

Barbara S. Gold, Associate Director, 

Compliance and Registration Section, 

Division of Clearing and Intermediary 

Oversight, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581, telephone number: (202) 418– 

5450; facsimile number: (202) 418–5528; 

and electronic mail: bgold@cftc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. CPO and CTA Disclosure Documents 

Part 4 of the Commission’s 

regulations 1 governs the operations and 

activities of CPOs and CTAs. 

Regulations 4.21 and 4.31 respectively 

require each CPO and CTA registered or 

required to be registered with the 

Commission to deliver a Disclosure 

Document to prospective pool 

participants and clients. Regulations 

4.24 and 4.25 specify the informational 

content of the CPO Disclosure 

Document, and Regulations 4.34 and 

4.35 specify the informational content 

for the CTA Disclosure Document. 

Regulations 4.26 and 4.36 respectively 

pertain to the use, amendment and 

filing of CPO and CTA Disclosure 

Documents. Specifically, under 

Regulations 4.26(d) and 4.36(d), the 

CPO or CTA must file one copy of the 

Disclosure Document, and any 

supplements and amendments thereto, 

with NFA.2 These regulations do not, 

however, prescribe any particular 

manner of filing. 

B. The NFA Petition 

By letter dated July 21, 2008, NFA 

petitioned the Commission to amend 

Regulations 4.26 and 4.36 in order to 

require that CPOs and CTAs file 

Disclosure Documents electronically 

through NFA’s electronic Disclosure 

Document filing system (Petition).3

In its Supporting Arguments, NFA 

explained the reasoning behind the 

Petition as follows: 

Currently, while there is nothing to 

prohibit a firm from filing a disclosure 

document in hardcopy form, the vast 

majority of CPO and CTA registrants file 

disclosure documents with NFA primarily 

via electronic mail due to its expediency and 

convenience. While the use of electronic mail 

has been a significant improvement over 

hardcopy submissions in terms of filing 

efficiency, the current approach still requires 

a considerable amount of staffing resources 

and has other disadvantages, e.g., the 

inability of registrants to obtain the status of 

the review of their filing without calling NFA 

and the lack of a central location for storing 

past filings. Accordingly, NFA has developed 

a new Internet-based electronic filing system 

for disclosure documents that will be 

significantly less resource intensive while 

also streamlining and enhancing the filing 

process for registrants. In order to realize the 

proposed benefits, however, registrants must 

be required to file their documents 

electronically through NFA’s new system. 

Consequently, NFA is petitioning the 

Commission to amend its regulations 

accordingly. 

The Commission understands that, as 

with NFA’s other electronic filing 

systems,4 the Disclosure Document 

system was designed to be easy and 

secure, such that Disclosure Documents, 

supplements and amendments will be 

uploaded through the system as either 

Word or PDF documents. Thus, 

although the CPO or CTA must have an 

Internet connection to access the 

system, it could use any public Internet 

site, such as those available in most 

public libraries. Moreover, CPOs and 

CTAs will access the system using the 

same designated login and password 

that they currently use for NFA’s Online 


jlentini on PROD1PC65 with PROPOSALS
Federal Register / Vol. 73, No. 229 / Wednesday, November 26, 2008 / Proposed Rules 71969 

5The Commission previously delegated to NFA 

registration responsibilities for CPOs, CTAs and 

their associated persons. See 49 FR 39593 (Oct. 9, 

1984). 

6Among other things, this key information 

concerns identification of contact persons, 

relationships with futures commission merchants or 

introducing brokers, and the past performance 

history and related data for the offered pool or 

trading program. 

7See Regulations 4.21(b) for CPOs and 4.31(b) for 

CTAs. 

8 5 U.S.C. 601 et seq. 

9See 47 FR 18618 (Apr. 30, 1982). 

10 Id. at 18619. 

11 Id. at 18620. 

12 5 U.S.C. 605(b). 

13 44 U.S.C. 3501 et seq. 

Registration System—which, NFA 

states, is ‘‘a well-tested authentication 

model with which participating 

registrants are already familiar.’’ 5 NFA 

additionally states that it has been 

extremely careful in the development of 

the system to ensure that the database 

it maintains of Disclosure Document 

filings will not be compromised in any 

way by unauthorized persons. 

Further in this regard, NFA explains 

that once CPOs and CTAs have accessed 

the system: 

They will be guided through the filing 

process, which culminates in the electronic 

transfer of the disclosure document through 

the secure web-based gateway. The system 

includes extensive help text to assist 

registrants with their filings, and the filing 

process includes a series of questions that 

will assist in identifying the type of filing as 

well as provide important background 

information to assist NFA staff with the 

analysis of the document itself. After the 

document is submitted, the system will 

automatically assign it to an available NFA 

analyst. By accessing the system, registrants 

will be able to track the status of their filing 

and receive comment letters as they are 

issued. Additionally, the system will serve as 

an electronic filing cabinet for registrants 

since it will maintain all previous filings and 

related comment letters filed through the 

system. 

The Commission further understands, 

then, that NFA’s process for the 

electronic filing of Disclosure 

Documents will have two components. 

One of those components will require 

CPOs and CTAs to electronically submit 

their Disclosure Documents, as well as 

any amendments and supplements 

thereto. The other of these components 

will require CPOs and CTAs to enter 

from their Disclosure Documents certain 

key information on their operations and 

activities into a standardized form 

accessed through NFA’s Web site.6

II. The Proposal 

In light of the foregoing, the 

Commission is proposing to amend 

Regulations 4.26(d) and 4.36(d) to 

require that any documents required to 

be filed thereunder be filed 

electronically with NFA, pursuant to 

NFA’s electronic filing procedures. The 

Commission wishes to emphasize, 

however, that the Proposal would not 

impact the delivery of Disclosure 

Documents to prospective pool 

participants and clients, which CPOs 

and CTAs could continue to provide 

through hardcopy distribution via postal 

mail or electronically if the intended 

recipient consented thereto.7

III. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 8

requires that agencies, in proposing 

rules, consider the impact of those rules 

on small businesses. The Commission 

previously has established certain 

definitions of ‘‘small entities’’ to be used 

by the Commission in evaluating the 

impact of its rules on such entities in 

accordance with the RFA.9 With respect 

to CPOs, the Commission previously has 

determined that a registered CPO is not 

a small entity for the purpose of the 

RFA.10 As for CTAs, the Commission 

previously has stated that it would 

evaluate within the context of a 

particular rule proposal whether all or 

some affected CTAs would be 

considered to be small entities and, if 

so, the economic impact on them of the 

particular rule.11 As noted above, the 

Commission believes that the Proposal 

will not place any significant economic 

burdens, whether new or additional, on 

CPOs and CTAs who will be affected by 

it. This is because while the Proposal 

will require these CPOs and CTAs to 

have access to and a certain degree of 

technical knowledge to file Disclosure 

Documents electronically and to enter 

the required key information, they will 

access the system using the same 

designated login and password that they 

currently use for registration purposes 

and they will be entering the key 

information directly from their 

Disclosure Documents. Thus, the 

Proposal simply alters the mechanism 

for filing Disclosure Documents, and 

does not affect the substance or 

frequency of those filings. Accordingly, 

and based on section 3(a) of the RFA,12

the Acting Chairman, on behalf of the 

Commission, certifies that the Proposal 

would not have a significant economic 

impact on a substantial number of small 

entities. However, the Commission 

invites the public to comment on this 

certification. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(PRA) 13 imposes certain requirements 

on federal agencies (including the 

Commission) in conducting or 

sponsoring any collection of 

information as defined by the PRA. If 

adopted, the Proposal would change the 

manner in which CPOs and CTAs file 

Disclosure Documents with NFA; it 

would not affect the substance or 

frequency of those filings. The Proposal 

would, however, authorize the separate 

collection from CPOs and CTAs of 

certain key information from the 

Disclosure Documents CPOs and CTAs 

would be filing electronically. 

Accordingly, pursuant to the PRA, the 

Commission has submitted a copy of 

this section to the Office of Management 

and Budget (OMB) for its review. 

Collection of Information. [Rules 

Relating to the Operations and 

Activities of Commodity Pool Operators 

and Commodity Trading Advisors and 

to Monthly Reporting by Futures 

Commission Merchants, OMB Control 

Number 3038–0005.] 

The expected effect of the proposed 

amended regulations will be to reduce 

the burden previously approved by 

OMB for this collection of information 

by 239.5 hours. This is because, while 

it will result in an increase in the 

estimated average number of hours per 

response under Regulations 4.26 and 

4.36, there will be fewer CPOs and 

CTAs subject to the filing requirements 

of these regulations owing to increased 

claims of exemption under Regulation 

4.7 from Disclosure Document 

requirements and under Regulations 

4.13 and 4.14 from registration 

altogether. 

Specifically: 

The burden associated with 

Regulation 4.26 is expected to be 

decreased by 422.4 hours: 

Estimated number of respondents: 

160. 

Annual responses by each 

respondent: 3. 

Estimated average hours per response: 

3.25. 

Annual reporting burden: 1560. 

This annual reporting burden of 1560 

hours represents a decrease of 422.4 

hours as a result of the proposed 

amendment to Regulation 4.26. 

The burden associated with 

Regulation 4.36 is expected to be 

increased by 182.9: 

Estimated number of respondents: 

450. 

Annual responses by each 

respondent: 1. 

Estimated average hours per response: 

1.85. 

Annual reporting burden: 832.5. 

This annual reporting burden of 832.5 

hours represents an increase of 182.9 


jlentini on PROD1PC65 with PROPOSALS
71970 Federal Register / Vol. 73, No. 229 / Wednesday, November 26, 2008 / Proposed Rules 

14 7 U.S.C. 19(a). 

hours as a result of the proposed 

amendment to Regulation 4.36. 

The net result of the proposed 

amendments to Regulations 4.26 and 

4.36, then, is a decrease in the annual 

reporting burden of 239.5. 

Copies of the information collection 

submission to OMB are available from 

the CFTC Clearance Officer, 1155 21st 

Street, NW., Washington, DC 20581 

(202) 418–5160. The Commission 

considers comments by the public on 

this proposed collection of information 

in— 

Evaluating whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the Commission, including 

whether the information will have a 

practical use; 

Evaluating the accuracy of the 

Commission’s estimate of the burden of 

the proposed collection of information, 

including the validity of the 

methodology and assumptions used; 

Enhancing the quality, utility, and 

clarity of the information to be 

collected; and 

Minimizing the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology, 

e.g., permitting electronic submission of 

responses. 

Organizations and individuals 

desiring to submit comments on the 

information collection should contact 

the Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10235, New Executive 

Office Building, Washington, DC 20503, 

Attn: Desk Officer of the Commodity 

Futures Trading Commission. OMB is 

required to make a decision concerning 

the collection of information contained 

in the Proposal between 30 and 60 days 

after publication of this document in the 

Federal Register. Therefore, a comment 

to OMB is best assured of having its full 

effect if OMB receives it within 30 days 

of publication. This does not affect the 

deadline for the public to comment to 

the Commission on the Proposal. 

C. Cost-Benefit Analysis 

Section 15(a) of the Act 14 requires the 

Commission to consider the costs and 

benefits of its action before issuing a 

new regulation under the Act. By its 

terms, section 15(a) does not require the 

Commission to quantify the costs and 

benefits of a new regulation or to 

determine whether the benefits of the 

regulation outweigh its costs. Rather, 

section 15(a) simply requires the 

Commission to ‘‘consider the costs and 

benefits’’ of its action. 

Section 15(a) further specifies that 

costs and benefits shall be evaluated in 

light of five broad areas of market and 

public concern, enumerated below. 

Accordingly, the Commission could in 

its discretion give greater weight to any 

one of the five enumerated areas and 

could in its discretion determine that, 

notwithstanding its costs, a particular 

rule was necessary or appropriate to 

protect the public interest or to 

effectuate any of the provisions or to 

accomplish any of the purposes of the 

Act. 

The Proposal would amend 

Regulations 4.26(d) and 4.36(d) to 

require that CPOs and CTAs file 

Disclosure Documents, and any 

supplements and amendments thereto, 

electronically with NFA. The 

Commission is considering the costs 

and benefits of the Proposal in light of 

the specific provisions of section 15(a) 

as follows: 

1. Protection of market participants 

and the public. The Proposal should not 

affect the protection of market 

participants and the public, as it 

provides an alternate method of filing 

Disclosure Documents, but does not 

alter the character or frequency of those 

filings. 

2. Efficiency and competition. The 

Commission anticipates that the 

Proposal will benefit efficiency by 

permitting NFA to streamline its process 

for receiving and reviewing Disclosure 

Document filings. Thus, the 

Commission considers the Proposal as 

benefiting efficiency and not impacting 

competition. 

3. Financial integrity of futures 

markets and price discovery. The 

Proposal should have no effect, from the 

standpoint of imposing costs or creating 

benefits, on the financial integrity of 

futures markets or the price discovery 

function of such markets. 

4. Sound risk management practices. 

The Proposal should have no effect, 

from the standpoint of imposing costs or 

creating benefits, on sound risk 

management practices. 

5. Other public interest 

considerations. The Commission 

believes that the Proposal is beneficial 

in that it should streamline the 

timeliness of filing, review and delivery 

of, and electronic accessibility to, 

Disclosure Documents. 

After considering these factors, the 

Commission has determined to propose 

the amendments to Regulations 4.26(d) 

and 4.36(d) discussed above. The 

Commission invites public comment on 

its application of the cost-benefit 

provision. Commenters also are invited 

to submit any data that they may have 

quantifying the costs and benefits of the 

Proposal with their comment letters. 

List of Subjects in 17 CFR Part 4 

Advertising, Brokers, Commodity 

futures, Commodity pool operators, 

Commodity trading advisors, Consumer 

protection, Reporting and recordkeeping 

requirements. 

Accordingly, 17 CFR Chapter I is 

proposed to be amended as follows: 

PART 4—COMMODITY POOL 

OPERATORS AND COMMODITY 

TRADING ADVISORS 

1. The authority citation for part 4 

continues to read as follows: 

Authority: 7 U.S.C. 1a, 2, 4, 6b, 6c, 6l, 6m, 

6n, 6o, 12a, and 23. 

2. Revise paragraph (d) of § 4.26 to 

read as follows: 

§ 4.26 Use, Amendment and Filing of 

Disclosure Document. 

* * * * * 

(d) Except as provided by § 4.8: 

(1) The commodity pool operator 

must electronically file with the 

National Futures Association, pursuant 

to the electronic filing procedures of the 

National Futures Association, the 

Disclosure Document and, where used, 

profile document for each pool that it 

operates or that it intends to operate not 

less than 21 calendar days prior to the 

date the pool operator first intends to 

deliver such Document or documents to 

a prospective participant in the pool; 

and 

(2) The commodity pool operator 

must electronically file with the 

National Futures Association, pursuant 

to the electronic filing procedures of the 

National Futures Association, the 

subsequent amendments to the 

Disclosure Document and, where used, 

profile document for each pool that it 

operates or that it intends to operate 

within 21 calendar days of the date 

upon which the pool operator first 

knows or has reason to know of the 

defect requiring the amendment. 

3. Revise paragraph (d) of § 4.36 to 

read as follows: 

§ 4.36 Use, amendment and filing of 

Disclosure Document. 

* * * * * 

(d)(1) The commodity trading advisor 

must electronically file with the 

National Futures Association, pursuant 

to the electronic filing procedures of the 

National Futures Association, the 

Disclosure Document for each trading 

program that it offers or that it intends 

to offer not less than 21 calendar days 


jlentini on PROD1PC65 with PROPOSALS
Federal Register / Vol. 73, No. 229 / Wednesday, November 26, 2008 / Proposed Rules 71971 

1The Commission is not proposing any new or 

modified text to its regulations. As set forth in 18 

CFR part 40, proposed Reliability Standards will 

not become effective until approved by the 

Commission, and the ERO must post on its Web site 

each effective Reliability Standard. The proposed 

interpretations would assist entities in complying 

with the Reliability Standards. 

2See 16 U.S.C. 824o(e)(3). 

3Rules 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, order on reh’g, Order No. 

672–A, FERC Stats. & Regs. ¶ 31,212 (2006). 

4North American Electric Reliability Corp., 116 

FERC ¶ 61,062, order on reh’g & compliance, 117 

FERC ¶ 61,126 (2006), appeal docketed sub nom. 

Alcoa, Inc. v. FERC, No. 06–1426 (D.C. Cir. Dec. 29, 

2006). 

5 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). 

6 16 U.S.C. 824o(d)(5). Section 215(d)(5) provides, 

‘‘The Commission * * * may order the Electric 

Reliability Organization to submit to the 

Commission a proposed reliability standard or a 

modification to a reliability standard that addresses 

a specific matter if the Commission considers such 

a new or modified reliability standard appropriate 

to carry out this section.’’ 

7NERC Rules of Procedure, Appendix 3A, 

Reliability Standards Development Procedure, 

Version 6.1, at 26–27 (2007). 

8We note that, while the NERC Board of Trustees 

approved the interpretations of the Reliability 

Standards submitted by NERC for approval in this 

proceeding, Appendix 3A of NERC’s Rules of 

Procedure is silent on the need for NERC Board of 

Trustees’ approval of interpretations before they are 

filed. NERC’s Rules of Procedure should expressly 

require such approval. 

prior to the date the trading advisor first 

intends to deliver the Document to a 

prospective client in the trading 

program; and 

(2) The commodity trading advisor 

must electronically file with the 

National Futures Association, pursuant 

to the electronic filing procedures of the 

National Futures Association, the 

subsequent amendments to the 

Disclosure Document for each trading 

program that it offers or that it intends 

to offer within 21 calendar days of the 

date upon which the trading advisor 

first knows or has reason to know of the 

defect requiring the amendment. 

Issued in Washington, DC, on November 

21, 2008 by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

[FR Doc. E8–28177 Filed 11–25–08; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 40 

[Docket No. RM08–16–000] 

Electric Reliability Organization 

Interpretations of Specific 

Requirements of Frequency Response 

and Bias and Voltage and Reactive 

Control Reliability Standards 

Issued November 20, 2008. 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: Pursuant to section 215 of the 

Federal Power Act, the Federal Energy 

Regulatory Commission proposes to: 

approve NERC’s proposed interpretation 

of certain specific requirements of one 

Commission-approved Reliability 

Standard, BAL–003–0, Frequency 

Response and Bias; and remand NERC’s 

proposed interpretation of VAR–001–1, 

Voltage and Reactive Control, for 

reconsideration consistent with this 

rulemaking. 

DATES: Comments are due December 26, 

2008. 

ADDRESSES: You may submit comments, 

identified by docket number by any of 

the following methods: 

• Agency Web Site: http://ferc.gov. 

Documents created electronically using 

word processing software should be 

filed in native applications or print-toPDF format and not in a scanned format. 

• Mail/Hand Delivery: Commenters 

unable to file comments electronically 

must mail or hand deliver an original 

and 14 copies of their comments to: 

Federal Energy Regulatory Commission, 

Secretary of the Commission, 888 First 

Street, NE., Washington, DC 20426. 

FOR FURTHER INFORMATION CONTACT: 

Patrick Harwood (Technical 

Information), Office of Electric 

Reliability, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, Telephone: 

(202) 502–6125, 

Patrick.harwood@ferc.gov. 

Richard M. Wartchow (Legal 

Information), Office of the General 

Counsel, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, Telephone: 

(202) 502–8744. 

SUPPLEMENTARY INFORMATION: 

Before Commissioners: Joseph T. 

Kelliher, Chairman; Suedeen G. Kelly, 

Marc Spitzer, Philip D. Moeller, and 

Jon Wellinghoff. 

1. Pursuant to section 215 of the 

Federal Power Act, the Federal Energy 

Regulatory Commission proposes to 

approve the interpretation proposed by 

the North American Electric Reliability 

Corporation (NERC) of certain specific 

requirements of Commission-approved 

Reliability Standard BAL–003–0, 

Frequency Response and Bias, but 

remand NERC’s proposed interpretation 

of Reliability Standard VAR–001–1, 

Voltage and Reactive Control, for 

additional clarification.1

I. Background 

A. EPAct 2005 and Mandatory 

Reliability Standards 

2. Section 215 of the FPA requires a 

Commission-certified Electric 

Reliability Organization (ERO) to 

develop mandatory and enforceable 

Reliability Standards, which are subject 

to Commission review and approval. 

Once approved, the Reliability 

Standards may be enforced by the ERO, 

subject to Commission oversight, or by 

the Commission independently.2

3. Pursuant to section 215 of the FPA, 

the Commission established a process to 

select and certify an ERO 3 and, 

subsequently, certified NERC as the 

ERO.4 On April 4, 2006, as modified on 

August 28, 2006, NERC submitted to the 

Commission a petition seeking approval 

of 107 proposed Reliability Standards. 

On March 16, 2007, the Commission 

issued a final rule, Order No. 693, 

approving 83 of these 107 Reliability 

Standards and directing other action 

related to these Reliability Standards.5

In addition, pursuant to section 

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

directed NERC to develop modifications 

to 56 of the 83 approved Reliability 

Standards.6

4. NERC’s Rules of Procedure provide 

that a person that is ‘‘directly and 

materially affected’’ by Bulk-Power 

System reliability may request an 

interpretation of a Reliability Standard.7

The ERO’s ‘‘standards process manager’’ 

will assemble a team with relevant 

expertise to address the requested 

interpretation and also form a ballot 

pool. NERC’s Rules provide that, within 

45 days, the team will draft an 

interpretation of the Reliability 

Standard, with subsequent balloting. If 

approved by ballot, the interpretation is 

appended to the Reliability Standard 

and filed with the applicable regulatory 

authority for regulatory approval.8

B. NERC Filing 

5. On July 28, 2008, NERC submitted 

a Petition for Approval of Formal 

Interpretations to Reliability Standards 

(Petition), seeking Commission approval 

of interpretations of two Commissionapproved Reliability Standards: BAL– 

003–0, Frequency Response and Bias, 

Requirements R2 and R5; and VAR– 

001–1, Voltage and Reactive Control, 

Requirement R4. 


jlentini on PROD1PC65 with PROPOSALS